Commons Sitting of 10 April 1957

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  UNIVERSITY OF EXETER BILL
  Read the Third time and passed.
WAKEFIELD CORPORATION BILL [Lords]
Read the Third time and passed, with Amendments.
PETITIONS

  Rent Bill
  Mr. M. Stewart: I beg leave to present a Petition signed by several thousand citizens of the Metropolitan Borough of Fulham and elsewhere. The Petition is addressed to this honourable House and points out that there are in this area very many families who, despite their unsatisfactory housing conditions, have no chance or hope of being rehoused for many years to come. It points out further that many of the privately rented houses in the area are in an unsatisfactory state of repair, with no hope of restoration by private landlords. It shows, further, that the Rent Bill now before Parliament would, if it became law, cause nearly one-third of these families to be subjected either to notice to quit or to rent increases without any guarantee of repairs, and would impose upon the remainder the liability to rent increases rising in some cases to 20s. a week, and that this would cause hardship and disruption of family life on a great scale.
  The Petition concludes with these words:
  Wherefore, your Petitioners pray that the Bill be so amended that tenants shall not be evicted from their homes unless equivalent alternative accommodation is provided; that rents shall not be increased unless dwellings are in good habitable repair with reasonable amenities; and that in default of these amendments the Bill shall be rejected.
  And your Petitioners, as in duty bound, will ever pray.
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  I would ask, in accordance with the Standing Order, that the Clerk of the House should read the text of the Petition.
  Captain Pilkington: On a point of order. May I ask you, Mr. Speaker, whether there is anything to stop—
  Mr. Speaker: Order. The Petition must first be presented.
  Petition brought to the Table.
  Captain Pilkington: On a point of order. Is there anything to stop an hon. Member making this sort of statement, lasting may be the whole of Question Time? Is not the rule being abused by hon. Members opposite at present?
  Mr. Speaker: I think I expressed myself quite clearly on that subject yesterday. In any event, an hon. Member could not use the whole of Question Time, because Questions are bound to start at a quarter to three o'clock.
  The CLERK OF THE HOUSE read the Petition, which was as follows:
  To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
  The Humble Petition of the Undersigned citizens of the Metropolitan Borough of Fulham.
  Sheweth:
  That in this area there are more than 4,000 families to whom, despite the serious overcrowding and unsatisfactory housing conditions from which they suffer, the local authority can offer no hope of rehousing for many years to come. Further that the privately rented houses mostly occupied by two or more families and built during the last century are mainly in a condition of decay and largely beyond hope of restoration by private landlords.
  In these conditions the proposals of Her Majesty's Government, in the Rent Bill now before Parliament,

  (a) To grant powers to the owners of nearly one-third of these houses to serve on the occupants comprising some 9,000 families notice to quit, or of rent increases without any guarantee of necessary repairs,

  (b) To serve on the occupants of the remaining houses notice of rent increase exceeding in some cases 20s. a week, will inflict misery, hardship and disruption of family life on a scale impossible to bear.

  Wherefore, your Petitioners pray that the Bill be so amended that tenants shall not be evicted from their homes unless equivalent alternative accommodation is provided; that rents shall not be increased unless dwellings

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  are in good habitable repair with reasonable amenities; and that in default of these amendments the Bill shall be rejected.
  And your Petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.
  Mr. Parkin: I desire to present a Petition, in similar terms to that presented by my hon. Friend the Member for Fulham (Mr. M. Stewart), on behalf of a large number of citizens of Paddington, St. Marylebone and elsewhere.
  To lie upon the Table.
  Mr. Hunter: I desire to present a Petition, in terms similar to those presented by my hon. Friends the Members for Fulham (Mr. M. Stewart) and Paddington, North (Mr. Parkin), signed by citizens of Feltham and elsewhere protesting at the hardship which will be caused by the threatened evictions and rent increases arising from the Rent Bill.
  And your Petitioners, as in duty bound, will ever pray.
  To lie upon the Table.

ORAL ANSWERS TO QUESTIONS
  TRANSPORT

    Road Safety Experiment, Slough
    Mr. Brockwayasked the Minister of Transport and Civil Aviation if he will now report on the results of the road safety experiments in Slough for which his Department has been responsible.
    The Minister of Transport and Civil Aviation (Mr. Harold Watkinson): The Slough experiment formally ended on 31st March. I can add very little at this stage to the information which I gave on 13th February in reply to a Question by the hon. Member. I am hoping to receive a full report in the autumn.
    The experiment has provided much valuable experience with both orthodox and new road safety measures, and the information forthcoming will undoubtedly be of great value in helping to determine future policy on accident prevention. I am much indebted to all concerned, and particularly to the Mayor of Slough, to the council of that borough and its officers, and also to the people of Slough
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    for their invaluable co-operation in this important venture.
    Mr. Brockway: May I express my appreciation of the recognition by the right hon. Gentleman of the officers and the people of Slough for their co-operation? Is it not the case that this experiment, while showing some reduction in fatal accidents, has shown an increase in lesser accidents, and is it not clear that the real solution of this problem is to provide not a number of devices but more road space for motor traffic?
    Mr. Watkinson: I think that it would not be fair to the very great efforts that have been made in Slough if I did not say that the actual fatal and serious accidents showed an 11 per cent. decrease at a time when fatal and serious accidents in the country as a whole showed 9 per cent. increase, so in respect of fatal and serious accidents Slough has done extremely well. Some of my experts say, with regard to minor accidents, that Slough people were so careful to report them all that perhaps they reported more than was the case in other places.

    Slough By-Pass
    Mr. Brockwayasked the Minister of Transport and Civil Aviation when it is proposed to begin the construction of the Slough by-pass.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. G. R. H. Nugent): The statutory scheme establishing the route of the by-pass has just been made, but I cannot yet say when constructional work will begin.
    Mr. Brockway: Will the hon. Gentleman ask his right hon. Friend to speed up the implementation of this long-promised by-pass, because not only the people of Slough but all who use this main road to the West are suffering from the congestion which takes place in the High Street and which contributes inevitably to the number of accidents?
    Mr. Nugent: We shall certainly get on with it as quickly as we can, but we have given priority, as the hon. Gentleman knows, to the Maidenhead by-pass. We shall give a date for the Slough bypass as soon as possible.

    Motor Cars (Transport by Rail)
    Mr. Thornton-Kemsleyasked the Minister of Transport and Civil Aviation, in view of the need to conserve petrol during the period of rationing, if he will give a general direction to the British Transport Commission to extend its facilities for the transport of private motor cars by rail on favourable terms to distant centres of attraction to tourists during the coming summer.
    Mr. Watkinson: Further services of this kind are being introduced this summer to the greatest possible extent.
    Mr. Thornton-Kemsley: Will my right hon. Friend bear in mind that his Answer will give great satisfaction, not only to those who have been wondering what they could do about getting their cars to distant places but to many hotels and boarding-house keepers, who have been anxious about the situation?
    Mr. Ernest Davies: Does this not show the initiative and enterprise that the nationalised British Railways has been taking in this matter?
    Mr. Watkinson: Yes, indeed; it shows what a good commercial, practical concern it is becoming.

    Victoria Line Tube
    Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation what consultations he has had with the British Transport Commission in regard to the construction and financing of the new Victoria line tube; and what action he proposes to take.
    Mr. Watkinson: My discussions with the Commission in regard to this scheme have not yet reached a stage at which I can usefully make any statement.
    Mr. Davies: Does the right hon. Gentleman realise the urgency of this matter? Are we not rapidly returning in London to the pre-rationing crawl? In view of the fact that it has now been shown that the rate of increase of traffic is in any case 3½ per cent. shall we not shortly crawl to a standstill? Is not one of the solutions, if not the only solution, to send traffic underground by tube or by tunnelling roads underground?
    Mr. Watkinson: I do not disagree with that. The fact is that the Commission
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    is actually examining this scheme and until it comes back to me there is no further action I can take.

    Transport Consultative Committees
    Sir W. Anstruther-Grayasked the Minister of Transport and Civil Aviation whether his attention has been drawn to a complaint by the Central Consultative Committee that too few people appreciate the fact that they exist to receive representations and make recommendations on any matter, including charges, affecting the services provided by the British Transport Commission; and what action he proposes to take to bring the existence and functions of this committee to the notice of the public.
    Mr. Watkinson: Yes, Sir. No suitable opportunity is lost of drawing attention to the existence of the Central and Area Transport Consultative Committees and to the most valuable work they do. I hope that my hon. Friend's Question will help in this direction.
    Sir W. Anstruther-Gray: Will my right hon. Friend bear in mind that the Committee has lost the confidence of ordinary people because so many of its members represent public bodies? Will he consider reforming its constitution?
    Mr. Watkinson: I am not at all aware that it has lost the confidence of the public. I am afraid it is inevitable that consultative committees of this type have to have a fairly large proportion of public bodies represented on them, for it very often facilitates their work to do so.
    Mr. Ernest Davies: Will not the right hon. Gentleman agree that the Committee is doing extremely valuable work, particularly in connection with branch lines? Is it not the case that before any branch line is closed the matter is referred to the Committee?
    Mr. Watkinson: I said in my Answer that most valuable work was done by these Committees. I hope that hon. Members who are interested in them will read their current reports, which are just out, for they are very good indeed.

    One-way Working, Central London
    Mr. Crouchasked the Minister of Transport and Civil Aviation if he will introduce one-way traffic in central London.
    Mr. Watkinson: One-way working is already in force in 267 streets in the inner area of London. If my hon. Friend has any particular streets in mind perhaps he would let me know.
    Mr. Crouch: I thank my right hon. Friend for his reply. I have in mind central London itself. Will he consider having one-way traffic along Piccadilly, Regent Street, Oxford Street, and Park Lane? Petrol will be coming off ration before the year is out, and yesterday the Chancellor said he anticipated an increase of £2 million in the revenue from motor taxation. In view of that, it seems that before the summer is out the traffic in central London will be brought to a complete standstill.
    Mr. Watkinson: My hon. Friend's idea is fascinating. It is a rather radical solution for the inner London traffic problem, but I will certainly examine it.
    Mr. Usborne: Is not the only permanent solution to the problem of traffic jamming in central London to prevent private cars coming into it at all without special licences? Is there any other final solution?

    River Tyne Crossing
    Mr. Willeyasked the Minister of Transport and Civil Aviation whether he has yet made a statement to the Tyne Tunnel Committee following his meeting with the deputation from the committee.
    Mr. Watkinson: No, Sir. I cannot usefully do so until I have received and considered the views of all the interests concerned about the possibility of building a bridge.
    Mr. Willey: Is the right hon. Gentleman aware that there is a great deal of interest in the matter and some suspicion about it? Will he do his best to expedite the consultations and see that a clear reply is given as early as possible?
    Mr. Watkinson: Yes, Sir, I will. As my hon. Friend has already told the House, either he or I will wish to visit the site to inspect it before we come to a final decision.
    Mr. D. Jones: How many more Ministers of Transport will have to visit the site before making up their minds whether to accede to the request of the
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    local authorities that a tunnel should be built?
    Mr. Watkinson: If the hon. Gentleman wants me to put the matter on one side, I shall be happy to accede to his request.

    Channel Tunnel
    Mr. Croninasked the Minister of Transport and Civil Aviation if he will make a statement as to the Government's policy on the construction of a Channel Tunnel.
    Mr. Watkinson: Consideration is now being given as to whether recent developments call for any change in policy.
    Mr. Cronin: Can the right hon. Gentleman reassure the House that the Government are fully aware of the enormous economic advantages of this scheme and also that the Government are no longer overawed by the advice given by General Sir Garnet Wolseley in the 1880s?
    Mr. Watkinson: I do not think that we are particularly overawed by General Wolseley at this stage.
    Mr. Gresham Cooke: If there is to be a change in policy and we have a Channel tunnel, as many of us hope, will my right hon. Friend bear in mind that it should have a road section as well as a rail section?
    Mr. Watkinson: Yes, but I must warn my hon. Friend and others interested in this interesting and possibly desirable project that so far no plans have been found feasible for a road tunnel, and a rail tunnel alone would probably cost about £100 million.

    Traffic, London
    Mr. Liptonasked the Minister of Transport and Civil Aviation what action he has taken to prevent traffic congestion in London from reverting to the conditions which existed before petrol rationing.
    Mr. Watkinson: Perhaps the hon. Member will be kind enough to look again at the Answer I gave him on 13th February.
    Mr. Lipton: Is the right hon. Gentleman aware that last week he expressed the pious hope that we shall not return to quite the state of congestion that we

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    had before? Is he aware that the traffic chaos in London has already caught up with him, before he has taken any specific action during the period of petrol rationing? Has he seen a report published the other day showing that 3 per cent. of the people who travel to work in central London and who use their private cars for that purpose are the chief cause of congestion? When will the Minister tell us what he has done or hopes to do before petrol rationing comes to an end?
    Mr. Watkinson: Petrol rationing has not yet come to an end.

    Road Accidents, Slough (Stray Dogs)
    Mr. Brockwayasked the Minister of Transport and Civil Aviation what reply he has made to the request of the Slough Borough Council for authority to require that dogs shall be kept on leads in the streets of the borough in order to reduce road accidents.
    Mr. Nugent: The Slough Borough Council has not yet submitted any order to my right hon. Friend for confirmation, but there have been some preliminary discussions with it.
    Mr. Brockway: May I ask the hon. Gentleman if he is aware that in the crowded conditions of the High Street, to which I have previously referred, accidents caused by stray dogs are quite frequent? While it would be unreasonable to have them on leash in all the back streets and estates, may I ask whether my hon. Friend will look carefully at the proposal that dogs should be on leashes at least in the main roads?
    Mr. Nugent: We shall certainly examine with great care proposals for individual streets, but not for covering whole areas.
    Mr. G. R. Strauss: In discussions on the Road Traffic Act, 1956, when this matter came before us last year, the Ministry seemed to favour the idea of keeping dogs on leashes in areas where they were likely to cause accidents. Will the hon. Gentleman consider any application with sympathy?
    Mr. Nugent: We shall consider it with sympathy, from both points of view. There is no general agreement in Slough about the extent of the proposals, but
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    we will certainly examine proposals with care and see whether we can reach the right balance.

    Auto-Cycles
    Mr. Lewisasked the Minister of Transport and Civil Aviation (1) if he is aware of the concern felt by British manufacturers of auto-cycles at the restrictions placed on their production by Her Majesty's Government's observance of international agreements on rating and classification of these types of vehicles; and whether he will agree to meet representatives of the manufacturers to discuss these problems;
    (2) whether he will publish in HANSARD details of the international agreement on the rating and classification of auto-cycles, motor cycles, etc., to which his Department is party on behalf of Her Majesty's Government; the reason for Great Britain's observance of this agreement, in view of the fact that many European countries are failing to carry out these regulations; and whether he will either withdraw Great Britain's support from this agreement or allow British manufacturers to classify auto-cycles on the same basis as manufacturers in Germany, Italy and other Continental countries;
    (3) if he is aware that, due to the strict adherence by his Department to international agreements on the classification and rating of auto-cycles, which are not observed by the rest of the European countries, British manufacturers of these vehicles are experiencing difficulty in manufacturing and exporting these vehicles to a ready world market, whilst foreign competitors are earning much hard currency at the expense of British manufacturers; and whether he will take the necessary action to ensure that the British manufacturers of the type of vehicle will have every encouragement to produce and export these types of vehicles.
    Mr. Watkinson: The British manufacturers have recently submitted a memorandum setting out arguments which in their view would justify changes in our current practice and policy. Their proposals would exempt riders of certain types of machines from the need to hold a driving licence, to pass a driving test, or to have reached the present minimum age limit. Certain questions relating to

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    the use of these vehicles are already under examination by the Departmental Committee on Road Safety. I shall be happy to arrange for a deputation to be received as suggested by the hon. Member.
    Mr. Lewis: While thanking the Minister for that encouraging and sympathetic reply, may I ask whether he has received a memorandum issued by the British Cycle and Motor Cycle Industries Association, a copy of which I have in my hand? If not, will he receive it with my compliments and give the suggested deputation which he is to receive a sympathetic hearing?
    Mr. Watkinson: I think that we have had that document, but the best thing would be for the deputation to come and make its case.

  SHIPPING

    Inflatable Life Rafts
    Mr. Hector Hughesasked the Minister of Transport and Civil Aviation if he is aware that neither fishery cruisers nor cargo vessels are required to carry inflatable rubber life rafts; and if he will take steps to alter the relevant rule so as to make it obligatory for them to do so.
    Mr. Watkinson: All fishery cruisers and a number of cargo vessels either carry inflatable life rafts or have them on order. The question of making the carriage of inflatable life rafts obligatory is at present under discussion with the shipping industry.
    Mr. Hughes: Does the Minister recall that in an Answer which he gave to me recently, he said that there was some difficulty about getting these inflatable rafts, and will he consider that in the context of the wreck last week, rescued men from which said that they would have perished had it not been for the covered inflatable rafts? Will he so alter the rule as to ensure that inflatable rafts should be not only inflatable but covered inflatable rafts?
    Mr. Watkinson: I think that most of the modern types of inflatable raft have this covered shelter which does so much to save life, and I will certainly do what I can to get as many of them in use as quickly as possible.

    Rescue and Salvage
    Mr. Hector Hughesasked the Minister of Transport and Civil Aviation what Governmental provision is made for the protection and salvage of shipping and seamen round the coasts of Britain; who carries out these duties on shore and at sea; and what are the wages, allowances, pensions and conditions of service of the persons who do this work.
    Mr. Watkinson: I would refer the hon. and learned Member to the reply which I gave him on 20th March.
    Mr. Hughes: Would it not be desirable and practicable to combine the lifeboat service with the coastguard service for three good reasons: first, to improve the conditions of service of these gallant men; second, to give them the enhanced status of national servants; and third, to make them all pensionable? They deserve it.
    Mr. Watkinson: I would certainly agree with the hon. and learned Gentleman that the members of the lifeboat service deserve everything that they can get for being some of the bravest men in this country, but I hope that he is not suggesting that we should do away with this very wonderful voluntary organisation.

    Coastguard Service
    Mr. Hector Hughesasked the Minister of Transport and Civil Aviation to make a statement on the wages, allowances, pensions, and conditions of service of men in the British coastguard service.
    Mr. Watkinson: The pay and allowances of members of Her Majesty's coastguard service are shown on pages 8 and 15 of the 1957–58 Civil Estimates. Members of Her Majesty's coastguard become eligible upon establishment for pension and other superannuation benefits on the same terms as those applicable to established civil servants generally.
    As the information about other conditions of service is rather lengthy, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Hughes: Does the Minister realise that the pensons and allowances of the gallant men in the lifeboat service do not appear anywhere because they have not the status of national servants, and would it not be right to give them that?
    Mr. Watkinson: It is a voluntary service.
    Following is the information.
    Coastguardsmen are normally recruited from pensioners of the Royal Navy or Royal Marines and must be at least 27 years old on recruitment. They become eligible for establishment, having passed a proficiency test, after one year's service. They are provided with uniform, including suitable protective clothing, and with free unfurnished accommodation consisting normally of a three-bedroomed house. Promotion from coast-guardsman to station officer and from station officer to district officer is by selection; Station officers must first pass a qualifying examination. Inspectors are normally recruited direct from retired officers of the Royal Navy but district officers of exceptional ability may be considered for promotion to inspector.
    Subject to service requirements, coast-guardsmen are entitled to 18 days' annual paid leave rising to 22 days after five years' service. Station Officers are entitled to 18–25 days; district officers 25–28 days and inspectors 30–36 days. Leave of station officers and coastguardsmen is inclusive of Bank and privilege holidays except that when Good Friday or Christmas Day forms part of a leave period it does not count against the leave allowance.
    Members of Her Majesty's coastguard do not work a set number of hours per week. but the actual periods of watchkeeping are regulated in accordance with arrangements laid down in an "hours code" which provides for free time in addition to the normal leave allowances.
    Paid sick leave is allowed in accordance with the regulations for civil servants generally, i.e. full pay up to six months in any period of twelve months followed by six months on half pay, provided that the total period of sick leave does not exceed twelve months during any period of four years or less
    Members of Her Majesty's coastguard are liable to be transferred to any station in the United Kingdom and removal expenses are paid in the case of compulsory transfers. At certain remote stations coastguardsmen become eligible for removal at public expense to another station after three or five years' service.
    Subject to maintaining a satisfactory standard of health and efficiency, members of Her Majesty's Coastguard are retained in the service until they reach the age of 65.

    Oil Pollution (Convention)
    Sir. H. Roperasked the Minister of Transport and Civil Aviation (1) what progress has been made towards the complete avoidance of the discharge of persistent oils into the sea as envisaged by the international conference which considered the matter in 1954;
    (2) when another international conference is to be held further to consider
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    measures to prevent the pollution of the sea by oil;
    (3) which nations have now signed the International Convention for the Prevention of Pollution of the Sea by Oil, 1954.
    Mr. Watkinson: Before the Convention of 1954 comes into operation ratification is required by 10 countries, including 5 with at least 500,000 gross tons of tanker tonnage. Eight countries, of which 4 have the requisite tanker tonnage, have already ratified and a number of other countries have legislation in preparation to enable them to do so.
    The countries which have ratified the Convention are the United Kingdom, Canada, Denmark, the Federal Republic of Germany, the Irish Republic, Mexico, Norway and Sweden.
    It is preferable not to convene a further international conference until the Convention has come into force and we have had some experience of its operation.
    Sir H. Roper: While thanking my right hon. Friend for that very satisfactory Answer, and his Department and he himself and his predecessors for the interest taken in this matter, may I ask whether I should be correct in saying that this country is far ahead of other countries in tackling this problem; and can he say in what countries which have not yet ratified the Convention legislation has been initiated which we may hope will result in the ratifying of the Convention?
    Mr. Watkinson: I think that we are giving a lead in this matter and that the best thing that I can say is that I hope that before long enough countries will ratify to enable the Convention to come into effect.
    Mr. Awbery: In view of the serious damage done to bird life and the heavy cost to local authorities in cleansing the oil from the beaches, will not the tight hon. Gentleman take steps to make compulsory the installation of oil separators in all oil-burning and oil-carrying vessels?
    Mr. Watkinson: That matter arises on a later Question.

    Dry Cargo Ships (Oily Water Separators)
    Mr. Callaghanasked the Minister of Transport and Civil Aviation what types of oily water separators now available will be regarded as efficient under the

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    regulations requiring dry cargo ships to fit them by 30th June, 1958.
    Mr. Watkinson: The regulations have not yet been made. I am still discussing them and the consequential arrangements with the shipping industry and the separator makers.
    Mr. Callaghan: When does the Minister think he will be able to make the regulations? Is he aware that there is a certain trepidation about the fact that the time is running out and that there are a lot of repairs to be done to ships before this scheme can be put into effect?
    Mr. Watkinson: I agree. I know the hon. Gentleman's great interest in this subject, and I am with him in this matter. I want to make the regulations as soon as possible.

    Gulf of Suez (Mines)
    Mrs. Castleasked the Minister of Transport and Civil Aviation what information he has received from the United Nations salvage organisation about the clearance of mines from the Suez Canal.
    Mr. Watkinson: I am not aware that there is any question of mines being laid in the Suez Canal itself, but the Secretary-General of the United Nations was asked for information about mines in the northern part of the Gulf of Suez. We have not yet received a definitive reply from the Secretary-General, but we understand that the clearance of mines is in progress.
    Mrs. Castle: Is the Minister aware that according to The Times of this morning, General Wheeler has now announced that the Suez Canal is now completely clear? Is he also aware that at this very moment ships of more than 10,000 tons, including Belgian and Italian tankers, are on their way through the Canal? In view of that, will he please make it clear to British shipping that there is no longer any objection to their using this vital lifeline of imperial trade and communications?
    Mr. Watkinson: The hon. Lady is not quite correct, because General Wheeler is responsible only for the Canal and I am referring to the Gulf of Suez.

    Newhaven—Dieppe Steamship Service
    Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation if he will refer the matter of the future operation of the Newhaven—Dieppe steamship service to the South-Eastern Transport Consultative Committee for its consideration and recommendations.
    The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. Airey Neave): No, Sir. Passenger services on this route were reintroduced on 5th April and summer services will be on the same scale as last year.
    Mr. Davies: The service has been restarted only for the summer period and is to close down in the autumn. As the right hon. Gentleman's explanation of the closure was that it would save oil and as, presumably, by the autumn the oil situation will have improved, may I ask whether steps can be taken to keep the service open so that we may not have the excuse of the oil shortage to close it down?
    Mr. Neave: As the hon. Gentleman knows, the conduct of the service is a joint matter for the French railways and the British Transport Commission, French Railways being the senior partner. If it is necessary to examine the future of the Commission's share of the service, I hope that that can be considered by the Transport Users' Consultative Committee, as the hon. Gentleman suggests.
    Major Beamish: Newhaven is in my constituency, and I am grateful to the hon. Gentleman for giving me any help he can. In the discussions with the French authorities, can my hon. Friend and his right hon. Friend use their best endeavour to try to ensure that the service is kept open all the year round and not closed down again next winter?
    Mr. Neave: I will certainly bear in mind what my hon. and gallant Friend has said.
    Mr. Davies: Can the Joint Parliamentary Secretary give an undertaking that before the service is closed down, the matter will be referred to the South-Eastern Transport Consultative Committee so that the Committee will be given an opportunity to consider the matter before a final decision is taken?
    Mr. Neave: I can certainly say that it would be open to the Committee to consider the matter if it becomes necessary to examine the future of the service.

  ROADS

    Route B.4265, Weycock Cross
    Mr. Gowerasked the Minister of Transport and Civil Aviation what improvements he will authorise on the main Cardiff—Wenvoe—Llantwit major road to meet the increased traffic caused by the erection of the Leys Power Station, Glamorgan.
    Mr. Nugent: My right hon. Friend is considering a proposal by the Glamorgan County Council to improve part of Route B.4265 west of Weycock Cross and will reach a decision as soon as he can. This would help traffic to and from Cardiff Airport and works and factories in the neighbourhood as well as the Leys Power Station.
    Mr. Gower: While thanking my hon. Friend for that reply, may I ask that he will represent to his right hon. Friend, in assessing the importance of this issue, that the existing road is inadequate, not only for the new power station at the Leys and also for Cardiff Airport, but also for the great cement-producing area of Rhoose and Aberthaw?

    Harbour Swing Bridge, Lowestoft
    Mr. Edward Evansasked the Minister of Transport and Civil Aviation what representations he has received from the Mayor of Lowestoft and others concerning the reconstruction of the harbour swing bridge at Lowestoft; whether he is aware of the inadequacy of the present bridge to deal with the amount of traffic passing through the town; what proposals are being examined to improve traffic facilities in this respect; and if he will make a statement on his intentions to deal with this problem.
    Mr. Watkinson: I have very carefully considered all the representations made to me about the need to reconstruct the harbour swing bridge, including those made by the Mayor of Lowestoft. I have also carefully studied the reports of traffic conditions here and all other relevant
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    considerations. I therefore fully appreciate the present traffic difficulties but the cost of a new bridge would be round about £200,000 and I regret that I cannot include it in the early years of the road programme.
    Mr. Evans: We are very anxious to see the Lowestoft swing bridge opening as often as possible for the trade of the town, but is the right hon. Gentleman aware that the agitation for the reconstruction of the bridge has been going on for a very long time, that the traffic delays are quite intolerable, that the Minister has already approved an alternative site for the bridge, and that the plans have been examined by his own experts? Will he have another look at this matter to see whether he can bring this project a little more forward in his programme?
    Mr. Watkinson: I will certainly have a look at it, but, as I have said, it will cost £200,000, and I cannot agree at the moment to give it any over-riding priority.

    Traffic Regulations (Double White-Line System)
    Mr. Gresham Cookeasked the Minister of Transport and Civil Aviation if he will consider adopting the On-No system of road traffic regulation on three-lane highways over bridges and at other places where vision is obscured.
    Mr. Watkinson: I do not think the system has any advantages over the double white-line system, familiar on the Continent and in America, with which I am now experimenting on the Portsmouth and Dover Roads.
    Mr. Gresham Cooke: As we are very short of road space in this country and as the squeezing of three lanes into two at wide bends—leaving out of account bridges—is unsatisfatcory, would it not be of advantage to the traffic flow to keep the three lanes of traffic going round wide-sweep bends by means of this rather ingenious system?
    Mr. Watkinson: I do not think that my hon. Friend has quite studied the present double white-line plan. If he had he would see that it also enables the operation of three lines of traffic on a bend as well.
    Mr. G. R. Strauss: While I tend to agree with the view expresed by the right

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    hon. Gentleman, I think that the On-No suggestion nevertheless seems attractive in some ways. Is it not at least worth while asking the Road Research Laboratory to have a look at it?
    Mr. Watkinson: I have already had some discussion with the experts, though not with the Road Research Laboratory, and I am advised that the On-No plan is much more likely to lead to head-on collisions at bends than the system with which we are experimenting.

    Parking Places
    Mr. Ernest Daviesasked the Minister of Transport and Civil Aviation what applications he has received from local authorities to make orders in regard to the provision of parking places in accordance with Sections 19 to 25 of the Road Traffic Act, 1956.
    Mr. Watkinson: None, Sir.
    Mr. Davies: Is there nothing that the Minister can do to urge local authorities to present these schemes to him? In view of the fact that traffic is deteriorating again is it not becoming very urgent that some serious schemes be presented in regard to parking or otherwise? Is it not a fact that the recent Report of the Road Research Laboratory has shown that the private car is very largely responsible for the congestion because, during the improved situation, private cars were reduced by 36 per cent. whereas the numbers of buses and taxis on the streets actually increased? Is it not quite clear that unless action is taken in regard to the parking of private cars the position will get very much worse?
    Mr. Watkinson: The London and the Home Counties Traffic Advisory Committee is on Friday examining, at my request, a number of the possible alleviations of the traffic and parking positions. So far as long-term parking places are concerned, which is what the hon. Gentleman is asking about, I prefer on the whole that local authorities should press on with their parking-meter schemes.

    Roads, Buckinghamshire (Pedlars' Settlements)
    Mr. R. Bellasked the Minister of Transport and Civil Aviation what action he has taken, or proposes to take, to abate the nuisance caused by settlements
    1120
    of itinerant pedlars on the half-constructed carriageway of A.40 just inside the Buckinghamshire boundary and at North-moor Hill on the North Orbital Road.
    Mr. Nugent: As regards the settlement by trunk road A.40 we propose to take proceedings in court if the warnings given to move are not complied with. The North Orbital Road at Northmoor Hill is a Class I road and it is for the Buckinghamshire County Council as highway authority, or the police, to take what action they think appropriate.
    Mr. Bell: Will my hon. Friend bear in mind that a wide expanse of the ground on the A.40 road is being used as a sorting ground for junk in which a prosperous trade is apparently being carried on from the site, and that part of it is being used as a tip for domestic refuse? Will he expedite an examination of the matter?
    Mr. Nugent: Yes, we are about to take action.
    Mr. Dodds: Does not the Minister appreciate that this matter affects many gipsies who have been turned off land that they have been using for many years? When will the Government take action, in a Christian country, to provide places to which these people can go so that they need not clutter up the main roads?
    Mr. Nugent: I am afraid that we cannot allow them to remain on the site of this new road.

    Junction, S.W.3 (Traffic Circulation)
    Mr. K. Robinsonasked the Minister of Transport and Civil Aviation if he is aware of the congestion at the junction of King's Road, Oakley Street and Dovehouse Street, S.W.3; and if he will utilise the space now occupied by an open-air car auction depot for improving traffic circulation.
    Mr. Nugent: I am not aware of any serious congestion at this junction, but if the London County Council as the improvement authority consider that the roads concerned should be widened, they will no doubt bear the hon. Member's suggestion in mind.
    Mr. Robinson: Is the right hon. Gentleman aware that there is not only

    1121
    congestion but also considerable public feeling about this space being used for car auctions? Does he not think that the space would be much better utilised by building a roundabout?
    Mr. Nugent: I am doubtful whether a roundabout would assist. I know that there is local feeling. The matter is one for the London County Council.

    Improvement Schemes
    Mr. Jannerasked the Minister of Transport and Civil Aviation to what extent constructional work has started on the road improvement schemes listed on 31st October, 1956, for commencement by 31st March, 1957; what schemes have not been started and why; what change there is in the stated estimated completion dates; and if he will give the revised dates.
    Mr. Watkinson: Work has started on all but 13 of the 37 schemes listed. The rest are being pressed on urgently but I cannot say at present what changes there are likely to be in the estimated completion dates.
    Mr. Janner: When is the Minister likely to know when the changes are to be made? Is he still satisfied that the amount of work which he has put in hand, or has asked to be put in hand, is sufficient to meet the serious requirements of road traffic today?
    Mr. Watkinson: I welcome the hon. Gentleman's attempt to chase the progress of my road schemes. I am just as anxious as he is to get them on as quickly as possible.
    Captain Pilkington: On the overall picture, can my right hon. Friend say whether we are in advance or behind with road work generally, as estimated originally?
    Mr. Watkinson: The road programme is going according to plan.

    Cavendish Bridge, A/
    Mr. Jannerasked the Minister of Transport and Civil Aviation why Cavendish Bridge on A.6 has not been completed as officially stated on 31st October, 1956.
    Mr. Nugent: Because of a mishap with one of the main bridge beams, completion
    1122
    of the scheme has been delayed. Despite this, I hope that the bridge will still be finished within the original contract period and opened to traffic by next July.
    Mr. Janner: Is not the hon. Gentleman aware that this is a highly essential and important matter to be dealt with? Cannot he press it forward more than he has suggested?
    Mr. Nugent: The completion will be within the terms of the original contract.

    Fly-Over Crossing, Western Avenue-North Circular Road
    Mr. R. Bellasked the Minister of Transport and Civil Aviation when he expects to start work on the fly-over crossing at the junction of Western Avenue with the North Circular Road.
    Mr. Watkinson: I hope before the end of this year.

    Trunk Roads (Cycle Tracks)
    Mr. Gresham Cookeasked the Minister of Transport and Civil Aviation whether he will consider the making of more cycle tracks on trunk roads leading in and out of London, particularly on those sections that are new or being reconstructed.
    Mr. Nugent: We are always ready to consider the provision of cycle tracks on trunk roads where the volume of cycle traffic justifies this special facility.
    Mr. Gresham Cooke: Will not my hon. Friend agree that on the new trunk roads in and out of London, such as the Cromwell Road extension and the Great Cambridge Road, the speed of traffic will tend to be higher and that vehicles may become rather more dangerous to cycle traffic, and as wide footpaths, which are very little used indeed, are being constructed on either side of the roads, and as there are also verges beside the roads, would it not be a good thing to consider as a next step the building of some cycle tracks along those roads?
    Mr. Nugent: Normally we build cycle tracks only where the volume of cycle traffic is very heavy, and the general tendency in recent years has been for the volume of cycle traffic to decrease. There are also, of course, difficulties in

    1123
    the acquisition of land. However, each case is considered on its merits. For his information, I can tell my hon. Friend that the London-Tilbury trunk road, A. 13, will have a length of 4½ miles with cycle tracks.
    Mr. Ernest Davies: The hon. Gentleman referred to the Great Cambridge Road, which passes through Enfield. The road has cycle tracks as far as Edmonton and the Great Cambridge Circus. Why is not the dual carriageway which is being built being provided with cycle tracks? There is still considerable cycle traffic along the road, particularly at peak hours when people are returning home from factories.
    Mr. Nugent: I should like to look into the matter in detail and see what volume of cycle traffic there is and whether we should be justified in extending the cycle tracks.
    Mr. Langford-Holt: Is my hon. Friend aware that the sign regulations which have been in operation for six weeks contain no sign requiring cyclists to use those tracks?

    Kerbstones
    Mr. Grimondasked the Minister of Transport and Civil Aviation if he is aware that miles of upright kerbs are still being erected on roads to the danger of traffic and the waste of public money; and what steps he is taking to stop it.
    Mr. Nugent: I would refer the hon. Member to the reply which my right hon. Friend gave to my hon. Friend the Member for Norfolk, Central (Sir F. Medlicott) on 27th March.
    Mr. Grimond: I am aware that the Government have frequently condemned this practice, but can the hon. Gentleman say whether there is any engineering advantage in having upright kerbs on roads?
    Mr. Nugent: There are some stretches of road where they are required, such as where there is a steep slope down on the outside. Otherwise, unless there is a pavement, it is far better that there should not be an upright kerb.
    Mr. Stokes: Has the Minister consulted any competent, experienced driver who has approved of vertical kerbs? Any experienced driver that I have known thinks that they are a menace and ought to be done away with.
    Mr. Nugent: We are glad to have the advice of the right hon. Gentleman in addition to that which we already have.
    Mr. Stokes: The hon. Gentleman has not answered my question. I do not want the answer of civil servants. I want to know whether the Minister himself has inquired of any competent, experienced driver who has not condemned vertical kerbs as a menace.
    Mr. Nugent: As the House already knows, my right hon. Friend has said that we have asked local authorities not to erect vertical kerbs unless there is a pavement or there are exceptional circumstances.

    Chiswick Roundabout
    Mr. Grimondasked the Minister of Transport and Civil Aviation if he is satisfied with the traffic flow at Chiswick roundabout at the beginning of the Great West Road; and if he will consider making more road space available at the roundabout.
    Mr. Watkinson: Yes, Sir, but this is only a temporary roundabout during the earlier stages of work on the Gunnersbury flyover. The permanent roundabout to be ready by the summer of next year will be about 400 ft. in diameter with a carriageway round it 40 ft. wide.
    Mr. Grimond: While thanking the Minister for that reply, might I ask whether it is possible to make the corners of the roundabout a little less sharp? Traffic is frequently jammed for some distance down all the approach roads. Might it not help to mark white lines showing the lanes which the traffic should take?
    Mr. Watkinson: If the hon. Gentleman has recently passed the roundabout he will have seen that engineering work is going on along the road. I must say quite plainly that as we go on with the new measures of road construction they will cause some temporary inconvenience to motorists.

    Ring Road Route, North-West Middlesex
    Mr. Beswickasked the Minister of Transport and Civil Aviation when he expects to make a decision with regard to the D ring road route through north-west Middlesex; and if, in view of the

    1125
    extension of the area of uncertainty and actual financial loss to house-owners, due to the publication of alternative routes, he will make an interim statement immediately he can exclude any one alternative from consideration.
    Mr. Watkinson: I am well aware of the desirability of reaching a decision on this matter as soon as possible, but my inquiries are not yet complete.
    Mr. Beswick: Is the Minister aware that there has been a very long delay in this matter? I agree that it is not all the fault of the Ministry. Where normally there may be some uncertainty or financial loss to householders, who may be dispossessed from their properties in the future, in this case there are so many alternatives that many people are affected who will never be included in the scheme. Will the right hon. Gentleman see whether he cannot make some interim statement?
    Mr. Watkinson: I will do my best, but the hon. Gentleman knows from experience in his own constituency that this is perhaps one of the most difficult road problems to solve anywhere around London.

  CIVIL AVIATION

    Air Trooping
    Mr. Beswickasked the Minister of Transport and Civil Aviation what new general directions have been issued to the corporations, and what new arrangements have been made with the independent air operating companies, as regards air trooping.
    Mr. Watkinson: The Answer to both parts of the Question is "None, Sir".
    Mr. Beswick: While the Answer may be that no directions have been issued and no arrangements have been made with specific independent companies, is it not a fact that an agreement has been made in principle that the Britannia aircraft already bought by the Government should be used by the independent companies?
    Mr. Watkinson: That is quite a different Question. I have answered the Question which the hon. Gentleman put down and have given him the correct Answer, which is that no directions have
    1126
    been issued and no new arrangements have been made.
    Mr. Beswick: There is here a question of policy. The Minister is well aware of the principle that I am getting at Would he not agree that the House is entitled to know whether a departure has been made from the policy already laid down by his Government? Does not the purchase of the Britannia aircraft mean that there has been a departure, decided in principle but not announced in this House?
    Mr. Watkinson: I hope that if I were making a complete departure in policy I should be courteous enough to inform the House.

    Airways Corporations (Promotions)
    Mr. Wadeasked the Minister of Transport and Civil Aviation, in view of the importance in the national interest of the air corporations having the best technical staff available, if he will give them a general direction not to deny promotion to engineers who may not belong to particular trade unions.
    Mr. Watkinson: The management of the Corporations must decide on the suitability of individuals for promotion. They already give consideration to all members of their staff and a general direction is unnecessary.
    Mr. Wade: If I send the Minister particulars, will he look into the case of an aircraft engineer employed by the British Overseas Airways Corporation who, I understand, was refused promotion to a higher grade on the ground that he refused to resign from a certain trade union as a condition of promotion? Will the Minister consider this as a matter of general policy?
    Mr. Watkinson: If the hon. Gentleman will send me particulars, I will look into the matter. I must make it plain that, as I have previously said, these matters are for the management and not for me.

    Airways Corporations (Jet Airliners)
    Mr. Beswickasked the Minister of Transport and Civil Aviation if a decision has yet been made with regard to the purchase by the British Overseas Airways Corporation and the British

    1127
    European Airways Corporation of British built jet airliners for operation in the 1960s.
    Mr. Watkinson: Both Corporations are conducting a searching examination into the possibilities and I hope that a decision will not be long delayed.
    Mr. Beswick: Can the Minister say whether the decisions are being left entirely to the Corporations, and how long a time he expects to elapse before a decision is made?
    Mr. Watkinson: The decisions are entirely in the hands of the Corporations at this stage and the Corporations will come to me only when they have made the decisions. I hope that they will come to me very soon after Easter.

  MINISTRY OF DEFENCE

    Nuclear Explosions, U.S.S.R.
    Mr. Bellengerasked Minister of Defence what knowledge he has of the risks to this country of fall-out occasioned by nuclear explosions in the Union of Soviet Socialist Republics in recent months.
    The Minister of Defence (Mr. Duncan Sandys): The risks to health from nuclear explosions were assessed in Command Paper 9780. The explosions since its publication could not have perceptibly affected the situation.
    Mr. Bellenger: While being somewhat reassured that the Russian explosions are not different from our own test explosions, may I nevertheless ask whether the right hon. Gentleman will consult his right hon. and learned Friend the Foreign Secretary in the hope that he may represent to the Russian authorities some of the apprehensions felt by hon. Members about test explosions, whether British or Russian?
    Mr. Sandys: As the right hon. Gentleman knows, these are matters which are being continuously discussed.
    Mr. Stokes: Will the Minister of Defence tell the House whether the Russian explosions are nearer Japan than the British explosions will be, if they take place?
    Mr. Sandys: I should think much nearer.
    Mr. Mason: As it seems that we know what takes place in Russia, how does the Minister reconcile that with the statement made by the Prime Minister that there are tests which cannot be detected?
    Mr. Sandys: I was, of course, referring only to those which have been detected.

    Middle East Operations (Report)
    Mr. Healeyasked the Minister of Defence if he will publish General Stockwell's report on land operations during the Suez military action.
    Mr. Sandys: General Stockwell's report on the land operations was made to General Keightley, the Commander-in-Chief, who will take it into account in preparing his own report embracing all aspects of the operations. With regard to the publication of General Keightley's report, I would refer the hon. Member to the reply I gave on 3rd April.
    Mr. Healey: In view of the fact that the French Ministry of Defence has released information purporting to throw responsibility for the military failure of the operation entirely on the spinelessness and incompetence of the British Government, does not the Minister agree that it would be strongly in British interests to provide information to correct that impression, if possible?
    Mr. Sandys: I do not know that that would contribute to the Entente Cordiale.

    National Service Personnel
    Mr. Dugdaleasked the Minister of Defence on what grounds National Service officers and other ranks are not entitled either to a free passage for their families or to the married rate of local overseas allowance.
    Mr. Sandys: Because it is not considered desirable to encourage National Service officers and men to take their families with them during their brief period of overseas service.
    Mr. Dugdale: Is the right hon. Gentleman aware that the answer given to me by the Secretary of State for Air was that it was thought better to reserve accommodation for the families of Regular officers and men? While appreciating that that may be so, may I ask whether this is not a ham-handed way of

    1129
    doing it? Does not the right hon. Gentleman realise that the few officers who can afford to take out their families will use the accommodation, even if there is a shortage of it, while those who cannot afford to do so will not be able to take their families, even though there is a large amount of accommodation available?
    Mr. Sandys: I may be a bit ham-handed in understanding the right hon. Gentleman's supplementary question, but I will study it.
    Mr. Allaunasked the Minister of Defence (1) if he will now grant release on compassionate grounds to National Service men in all three Services who apply for it, whose home circumstances are similar to those in which postponement of call-up has recently been permitted;
    (2) if he will publish in all units of the three Services an announcement that applications from National Service men for compassionate release will now be sympathetically considered in the case of a man who has a relative physically dependent on him, or who is the mainstay of an orphaned family or of a widow with a child or children to look after, or a man living alone with a widowed mother.
    Mr. Sandys: I am asking the Service Ministers to ensure that the conditions to be satisfied for compassionate release shall conform with the corresponding conditions governing exemption from call-up.
    There are a whole variety of grounds on which applications may be made for compassionate release. I do not, therefore, think it would be appropriate to make a special announcement in regard to the particular types of cases mentioned in the Question.
    Mr. Allaun: May I thank the Minister for that Answer, which will be very widely appreciated? May I ask whether he is aware that there are certain cases —details of which I can send to him—of National Service men in such circumstances of domestic hardship who are still being refused exemption on compassionate grounds; and as there are many men who are unaware of these new terms, would not my proposal be the best way of making them aware of the possibilities?
    Mr. Sandys: I think the best thing would be for the hon. Member to send details of those cases to the appropriate Service Ministers.
    Mr. Paget: Will the Minister publish somewhere, in some document which would be available to hon. Members, what are the general heads upon which these compassionate releases will be granted, because I feel that would be of tremendous use to hon. Members in advising their constituents?
    Mr. Sandys: I feel sure that there is such a document in existence. I do not know what it is, but I will find out and send a copy to the hon. and learned Member.
    Mr. Allaunasked the Minister of Defence approximately, how many National Service men he proposes to call up in each year from 1957 to 1960; and whether he will now reduce their period of service.
    Mr. Sandys: As was explained in the recent White Paper on Defence, the Government will shortly make a full statement to Parliament on this subject.
    Mr. Allaun: But since the Minister will have more men on his hands than he needs long before 1960, could he not reduce the period of National Service very shortly? Would not that be fairer than any form of selective call-up?
    Mr. Sandys: I do not want to anticipate the statement which will be made on this subject as a whole.

    Guided Missiles
    Mr. de Freitasasked the Minister of Defence what arrangements he made in Washington for the Royal Air Force to set up and maintain United States guided missiles the warheads of which will remain in the control of the United States of America.
    Mr. Sandys: I would refer the hon. Member to the information given by my right hon. Friend the Prime Minister on 1st April.
    Mr. de Freitas: What happened at Washington and Bermuda which induced the Government to agree to allowing the United States Government to exercise a veto on the use by the Royal Air Force of guided missiles operationally?
    Mr. Sandys: It has been explained that the restrictions on the use of these rockets are similar to the restrictions placed on the use of American bomber aircraft based in this country.
    Mr. de Freitas: Is it not a fact that they are quite different? Is it not the case that they are American bombers which are based here, and that these are R.A.F. guided missiles; and that the United States Government will have a veto on the operational use of R.A.F. equipment?
    Mr. Sandys: I sympathise with the point of view of the hon. Member, but it is no use our talking as though we had a choice between having American rockets with some restrictions or British rockets with no restrictions. As the hon. Member knows, we are a number of years behind the Americans in the development of these weapons. The choice was to have American rockets with some restrictions or no rockets at all for some years.
    Mr. E. Fletcher: What is the point of having rockets without warheads? Are we going to make our own warheads? Is the right hon. Gentleman aware that we should be much happier if he could make arrangements with the United States Government so that we could have the warheads as well?
    Mr. Sandys: Of course.

  INTERNATIONAL COMPACTS
  Mr. Usborneasked the Secretary of State for Foreign Affairs what significance there is in his use of the words "treaty" or "pact" to describe the documents he signs when making agreements with the representatives of foreign countries.
  The Minister of State for Foreign Affairs (Mr. David Ormsby-Gore): There is no particular significance in the use of the words "treaty" and "pact". International compacts are sometimes termed not only treaties or, occasionally, pacts, but agreements, acts, conventions and the like. There is no essential difference between them, and their binding force upon the contracting parties is the same, whatever be their name.
  Mr. Usborne: Since all pacts and treaties are generally signed and negotiated between sovereign States, which equally habitually interpret them differently and call them "scraps of paper" whenever it suits them, can the right hon. Gentleman tell the House how many pacts, treaties, agreements, etc., his Office has signed in the last twenty years that were worth the paper they were written on?
  Mr. Ormsby-Gore: The hon. Gentleman will realise that that is a much wider question than the one that he has on the Order Paper and I cannot answer it now.

  SPAIN (RELATIONS)
  Mr. H. A. Priceasked the Secretary of State for Foreign Affairs if he is aware that the Spanish authorities at La Linea are hostile towards British subjects, especially Gibraltarians; that they are refusing to recognise the one-year unrestricted entry visas issued by the Spanish Embassy in London; and what action is proposed to deal with the matter.
  Mr. Ormsby-Gore: I would refer the hon. Member to the replies given to the hon. Member for Goole (Mr. G. Jeger) on 25th March and 1st April. The new arrangements now appear to be working satisfactorily.

  UNITED NATIONS EMERGENCY FORCE
  Mr. George Craddockasked the Secretary of State for Foreign Affairs whether the personnel of the United Nations Expeditionary Force are required to take an oath of allegiance to the United Nations; and what is the text.
  Mr. Ormsby-Gore: Members of the United Nations Emergency Force are not required to take an oath of allegiance to the United Nations.
  Mr. Craddock: Does not the Minister think that something ought to be done about this matter? Will not the Government make representations to the United Nations organisation to have this matter resolved?
  Mr. Ormsby-Gore: It is a very complicated matter. I do not think that I can give the hon. Member a very detailed

  1133
  answer this afternoon, but these people who are members of the national contingents to the United Nations Emergency Force have presumably already sworn an oath of allegiance to their own sovereign State. That introduces a very serious complication.

  U.S.S.R. (BRITISH INFORMATION PERIODICAL)
  Mr. Osborneasked the Secretary of State for Foreign Affairs if he is aware that the United States Government has recently started publishing 50,000 copies a month of an attractively illustrated magazine in Russian for circulation in Moscow depicting the United States way of life; and if he will take steps to have a similar journal published about the English way of life.
  Mr. Ormsby-Gore: I am aware of this American undertaking and the possibility of publishing a British periodical in the Russian language is under review.
  Mr. Osborne: May I press my right hon. Friend to get on with this, since it is obviously important that the Russians should be able to see the way in which we live as well as the way the Americans live?
  Hon. Members: What about the Scots and Welsh?
  Mr. Ormsby-Gore: This is something which is under review by my right hon. Friend the Chancellor of the Duchy of Lancaster in his committee on overseas information.
  Mrs. L. Jeger: Would not the light hon. Gentleman agree that when the Foreign Office used to publish Britansky Soyuznik in Russian it was very successful and sold 50,000 copies a week, and that it is a great pity that publication ever ceased? Will he try to hurry up the starting of some similar new periodical?
  Mr. Ormsby-Gore: I have said that this matter is being looked at—
  Mrs. Jeger: It is a long time.
  Mr. Ormsby-Gore: —but the previous publication ran into very serious difficulties which many hon. Members opposite know about.
  Mr. Gibson-Watt: Would my right hon. Friend consider, within the limits of the Question, adding a little Celtic flavour to this journal which is to be sent to Russia? There are some of us who notice that the word "English" is not all-embracing in these islands.

ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee [Progress, 9th April].
  [Sir CHARLES MACANDREW in the Chair]
  AMENDMENT OF THE LAW
  Question again proposed,
  That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description and amendments reducing any of the several rates of tax generally for all goods to which that rate applies (and for which the rate is not altered in pursuance of some other resolution of the Committee of Ways and Means).

BUDGET PROPOSALS AND ECONOMIC SITUATION
3.31 p.m.
Mr. Harold Wilson: I should like to begin by joining in the tribute which my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) paid to the manner in which the Chancellor of the Exchequer presented his Budget yesterday and particularly to his clarity and vigour of presentation. I should pay a tribute to his ingenuity, also.
In view of the strong criticisms which I propose to direct against the right hon. Gentleman's basic approach, and some of his proposals and omissions, it would be churlish if I were to fail to congratulate him on those of his proposals which we welcome. We welcome his proposal to set up a new Macmillan Committee. We welcome the fact that he has finally adopted the Opposition's proposal to repeal the Entertainments Duty on the living theatre and on sport. These proposals were in our Election manifesto in 1955—
Mr. F. M. Bennett: What about 1945?
Mr. Wilson:—and would have been law for a long time now if we had won the Election. We pressed them, and particularly relief for cinemas, on a reluctant and obstructive Chancellor a year
1136
ago. We are glad that, at any rate, this Chancellor has seen the light.
We welcome, also, the partial repudiation of the Lord Privy Seal's "pots and pans" Budget and the removal of the 1s. on petrol. The Chancellor cannot claim much credit here; he is merely reducing some of the damage done by his predecessors, in both cases since the 1955 General Election. I need not remind the House that both were measures which we bitterly opposed at the time. We welcome, too, the fact that in his Income Tax changes—I am not referring to Surtax now—his concessions have gone to the family man.
I shall in a moment or two proceed to deal with the general economic situation, which I thought the Chancellor dismissed very complacently yesterday, and make a detailed examination of his proposals; but, first, it might be convenient if I were to sum up in a few sentences our main criticism of his Budget.
First, the Budget does not face the grave economic problems confronting the country. It is directed much more towards strengthening the loyalties of the wealthier supporters of the Chancellor's party than to strengthening the gold and dollar reserves. It seems to us to be rather more of an appeal to the back-woods of Beckenham or the wilds of Warwick than to any international confidence in sterling.
The second criticism is that the Budget is, in our view, an assignment with inflation. Instead of continuing to fight inflation as our major internal evil, the Chancellor now seems to be willing to come to terms with it, indeed, to take advantage of the effects of inflationary tax revenue to create the so-called surplus which makes possible his tax concessions.
Thirdly, those of his tax concessions which are economic in character seem to us to be misdirected. In particular, he does nothing to strengthen industrial investment which is now sagging, and the increase in production for which he is hoping seems more likely to be directed towards meeting the needs of consumption than to meeting the needs of either exports or investments.
Fourthly, the Chancellor's other tax concessions, and his general attitude to the disposal of his surplus, are based on the principle of concessions based not on

1137
need, but on wealth. The richer a man is, the more he gets under this Budget. If there are any among our population who should be regarded as a first charge on a buoyant revenue, they are the old-age pensioners, war pensioners, National Assistance Board claimants, and those on small fixed incomes.
These people are the victims of the inflation which the Chancellor now seems prepared to tolerate, even to encourage. Their needs must be known to him, yet he passes by on the other side. At the same time, he can find £34 million for concessions to Surtax payers, and those not just in the £2,000 to £3,000 a year range either. When an old-age pensioner is asked to go on living on £2 a week, it is surprising that the Chancellor should increase the spendable income of the £10,000 a year man by up to £13 a week.
We were told that this Budget was to be a middle class Budget. We have a new definition of the middle classes. Now the middle class is composed of the 300,000 Surtax payers. Take the example of a young scientist or technician, with three young children, who earns £2,000 a year. Is he not the man the Chancellor was proposing to encourage? He does not get a penny out of the Budget, even on £2,000 a year. And, of course, very many scientists, technicians, designers and junior executives are a long way below £2,000 a year; and they get nothing, except in so far as they have older children at school. In fact, the effect of the Budget is likely to be to lengthen the emigration queues, not shorten them.
This is supposed to be the Budget of the "Opportunity State". It confirms the definition which I advanced when the Prime Minister first used that expression; I said then that his opportunity State is like his Premium Savings Bond scheme— a few get the big prizes, rather more get smaller prizes, and the rest of the community is lucky if it holds on to what it came in with. As I said then, the opportunity State, like the Premium Bonds scheme, was specially designed to appeal to Surtax payers. I see no reason today to withdraw that definition.
It might be convenient if I were to follow the Chancellor in the main lines of his speech. He began with a review of 1956, the year just ended. I thought that he put a very brave face on the
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legacy he inherited from his predecessor. Not for him the biting phrases with which the late Chancellor summed up the record of the Lord Privy Seal a year ago. In that one respect, we have a more generous Chancellor. The Economic Survey, too, is less brutally frank about his predecessor's record than the one we had a year ago. In view of this unfortunate omission from the Chancellor's speech, I thought that perhaps it might help the Committee if I were to supply it. Let us for a moment review the record of the former Chancellor in 1956, taking it entirely from official records.
First, the reserves. If we eliminate from the account all special aid received from the International Monetary Fund, the sale of dollar securities and the Trinidad oil "sell-out", our reserves would have been at the end of the year below 1,400 million dollars, that is, below the 1949 devaluation level, and in a year when other non-dollar countries increased their gold and dollar reserves by 1,100 million dollars.
Next, exports. While they rose by 6 per cent. against 4½ per cent. the previous year, this was, as the Survey says, considerably less than the increase in world trade. Once again, in a booming world, we were still limping behind our main trading rivals.
Thirdly, I come to imports. I concede they were held at about the 1955 level and that this was done without running down stocks, but this and the resulting improvement in the United Kingdom balance of payments was only done at a heavy price, at the price of complete industrial stagnation last year.
Fourthly, we have production. In 1956 we had no increase over 1955, and industrial production was down. What about the Lord Privy Seal's doubling the standard of living in twenty-five years? We shall not do that on stagnant production. Our failure again contrasts with success elsewhere. If the Government were to publish international comparisons of output last year, the Committee would see that, as in 1955, we were once again practically at the bottom of the European production league. That was in 1956. Since then, and in the past few weeks, overall production, after stagnating for two years, has begun to decline, and in

1139
the past few weeks production has declined quite markedly.
Capital investment, in accordance with the former Chancellor's policy, was cut back sharply. Although we were lagging behind Germany in 1955, even so, comparing 1956 with 1955, new industrial building authorisations in Britain last year were cut by 22 per cent. whereas in Germany they went up by 17 per cent.
Now I come to the record of the former Chancellor in the matter of Government expenditure. Here was where the right hon. Gentleman was going to shine. Here was where he was to put his predecessor in the shade. He gave a firm pledge to reduce Government expenditure by £100 million and he based the structure of his Budget on it. He said:
"If I had not been fortified by the willingness of my colleagues in this task, I would have felt it my duty to propose very heavy increases in taxation."
That is what he said a year ago. He told us in his Budget speech that he embarked on his retrenchment campaign under the inspiration of the Gladstone portrait at No. 11 with, to quote his words:
"… those eyes… reproachful and nostalgic." —[OFFICIAL RFPORT. 17th April. 1956; Vol. 551, c. 880.]
—very moving.
But what of the realisation? Government expenditure in the financial year just ended was £372 million more even than under the Lord Privy Seal. It reached an all-time record of £4,868 million—that is, £1,600 million, or just over 50 per cent. more than in the last year of the Labour Government. No doubt, the President of the Board of Trade will remember his 1951 Election pledge to cut Government expenditure by £700 million. Compared with the estimates, the former Chancellor's Budget out-turn was up by £230 million—the biggest excess of expenditure over estimate in all Britain's fiscal history in peacetime. I think I might say:
"Turn Gladstone's face to the wall, Harold;
Nevermore mention his name.
You've brought disgrace on the Treasury,
And bowed down our heads with shame."
Now I turn to the cost of living. The year 1956 was the year of the plateau. Despite the favourable trend in world prices, the new index in January, 1957, was 4½ per cent. up on January, 1956. Taking the year as a whole, the average
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figure in 1956 was about 5 per cent. up on 1955. This was practically double the rate of increase that we had in 1948–50. when world prices were rising sharply.
Mr. Geoffrey Hirst: What about 1950–51?
Mr. Wilson: Hon. Members cannot go on living on the Korean War for ever. In fact, last year, for as much of the year as international figures were available, Britain was once again almost top of the European cost of living league table. I think that possibly Greece and Yugoslavia may have been higher, for what comfort that is to hon. Members.
We now have two league tables. We are practically bottom of the production league and we are practically top of the cost of living league. When Labour was in power and right hon. Members opposite used to whine about "Weary Willies" and the "hole in the purse," Britain was year after year top of the production league and bottom of the cost of living league. Now, with the right hon. Gentleman the Prime Minister as captain, our league position has been reversed, and the Government, instead of giving him a free transfer, have actually made him player-manager.
Here we have the right hon. Gentleman's record in figures, and even the tendentious presentation of the Survey cannot disguise it. The right hon. Gentleman has an even greater achievement to his discredit. It was in 1956, and precisely because of his promises that the Government forfeited the greatest economic asset any Government in this country could have—the asset which every Government in this country has had since 1939, namely, co-operation with the trade union movement in wage restraint. I must say that to have lost the support of both the T.U.C. and the Marquess of Salisbury in just over six months reveals a remarkable capacity for losing friends and alienating people.
The former Chancellor's one aim last year was a wage freeze. What did he achieve? The Economist this week tells us:
"Disinflationary policy … probably raised labour costs at least in British industry more than galloping inflation had done during the boom."
There we have the right hon. Gentleman's record as Chancellor, and I leave

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it to the Lord Privy Seal, in one of those noteworthy backhanders with which he eulogises his leader, to summarise it as pungently as the right hon. Gentleman summarised his record a year ago. No wonder the Prime Minister, addressing the Hampstead Conservatives at their annual "hotpot" supper at the Mayfair Hotel last week, chose these modest words of self-appraisal—I quote from a local newspaper:
"When he looked at the public opinion polls in the newspapers and saw the number of people who were 'dissatisfied with Macmillan' the only hope he took was in the growing number of 'don't knows'."
I can tell him that there are quite a lot behind him and quite a few beside him.
I turn, as the right hon. Gentleman did, to our external position. There can, I think, be no doubt about the gravity of the external position as shown by the reserves. Over the past six months, which should be seasonally the most favourable period for sterling, the reserves fell by 120 million dollars; but because of the special aid of the kinds that I have mentioned, and the net addition resulting from India's I.M.F. borrowing in the past two months, adding up to about 650 million dollars, one can see that there has been a real drain over the last six months of 770 million dollars.
There we have it, the immediate cost of Suez to our reserves—770 million dollars, or £275 million, about one-third of our total pre-Suez reserves. Looking ahead, there are other factors to be brought in, by no means on the debit side. There is the waiver on the United States loan. There is the notorious short position in sterling. We are repeatedly told that the international bear operators have not yet covered their position and that when they do there will be a useful inflow of dollars. That should certainly be so, but it is a long time coming, and confidence is not reestablished yet.
Mr. Cyril Osborne: The right hon. Gentleman is not helping it.
Mr. Wilson: I will deal with the hon. Gentleman's interruption in a moment.
Did the Prime Minister say something about nearly one-third of the reserves? It was his policy that was responsible.
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Also, due to come are the £75 million of Adenauer aid which the Chancellor has negotiated, if it is not withheld now that Dr. Adenauer has read the White Paper on Defence. This, of course, is an advance of ten years' instalments of the repayments of the debt incurred by the West Germans. When Labour was in power we used to hear a lot from right hon. and hon. Gentlemen opposite about unrequited exports in those days, but they have been very glad to have this money paid by Germany in advance repayment.
Further, in case of disaster, we have the second line of I.M.F. stand-by credit, and so far we have not touched the United States Export-Import loan of 500 million dollars. I take it that that is still true.
Then, of course, some hon. Members opposite will have noticed with mixed feelings that some, at least, of the American tobacco which Her Majesty's Ministers seem to prefer to Commonwealth varieties will now be paid for not in dollars but by the erection of houses for some of the gentlemen coming over here from the United States to fix our rockets for us.
Against those possibly favourable factors I must warn the Committee of a new and ominous development, the changing economic position of the sterling area. I hope that we shall spend some time upon debating this change in the sterling area, because it is extremely serious for our economic future. In 1955, the worsening of the sterling area's position and balance of payments was entirely due to the worsening of the United Kingdom's position. In 1956, the improvement in the United Kingdom's balance of payments was still marked by a run on the reserves, and it was not all speculation. There was considerable leakage and, in view of the change in the sterling area position, I think it is fair to say that the rest of the sterling area can perhaps no longer be relied on as a net dollar earner on the same scale in future as it has been in the past. Therefore, the United Kingdom must have an even bigger dollar surplus on current account than it has been having.
Because of all the factors which are on our side, and which I have mentioned, I certainly am not suggesting that we are facing an immediate dollar crisis. Of course we are not. The sum total of

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mobilisation of all the second line reserves and special payments, borrowing or living on future income, means that sterling should be safe for this year, at any rate.
Time and time again I have said—we all have said—that sterling is not a party asset or only a national asset, but is a world asset, and we have said, what is obvious, that not only would devaluation be a tragedy but, also, that it is quite uncalled for. Sterling is not overvalued. I do not think that can be too strongly emphasised or repeated.
But the reprieve may be only for a matter of months. We are living, as I have said many times, on borrowed money and on borrowed time. When The Times said, a week ago, that
"The battle of Britain 1957 will be the battle to build up the reserves"
it was not, in my view, over dramatising the situation. Britain's fighting spirit and bearing this year, and the paramount need for leadership capable of bringing forth the efforts that are required, may well be as decisive for our economic future—indeed, our survival as a nation —as that earlier Battle of Britain in 1940 was for the outcome of the war and our national freedom.
We have, therefore, a few months— at most a year; not much more—in which to build up our economic strength, to increase our exports, to restrain our imports to what we can pay for, to hold back personal consumption, and, as a means to those ends, to resume increased production of the things we most need to produce and to fortify the industrial base on which we rely by increased and purposive capital investment. That is the criterion by which all our efforts, all our policies, all our statesmanship, must be judged in this year of decision.
Take this opportunity now—and it is not yet too late, despite the wasted years and the lunacies of the past few months —and we can win through to fortune. Miss the tide, as the Chancellor, I believe, missed it in his speech, and for this generation and, perhaps, generations to come
"All the voyage of their life
Is bound in shallows and in miseries."
What does this mean? It means that just as, ten years ago, Sir Stafford Cripps resisted the claims of home consumption,
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of inessential investment, of easy living, of private interests, and the claims of political popularity, to build up our exports and our essential investment, so we must once again, in the changed but still critical days of 1957, refashion a system of priorities that will put national survival first and all private and partial interests second. The Chancellor, in his speech yesterday, showed no sense of urgency and no awareness of the need to do this.
Let me now follow him in what he said about exports. He thinks that we may do well, that we may exceed or fall short of last year's 6 per cent.: not a word about the way we are limping behind our competitors. Let him look at the figures since 1953. Western Germany has increased her exports by 58 per cent.; Austria by 54 per cent.; Italy by 39 per cent.; Norway by 30 per cent.; the Netherlands, Belgium and Luxembourg by 28 per cent.; Sweden by 22 per cent; Switzerland and Finland both by 21 per cent.; Portugal by 20 per cent.; Denmark and France by 17 per cent.— the United Kingdom by 16 per cent. Ireland, Spain and Turkey, I concede to the Government, may be lower.
I refer the Chancellor, also—I am sure that he must have studied it—to the Board of Trade Working Party Report, recently published, which shows that we have fallen behind our main competitors in all groups except metals and metal manufacturers, and our record there has been maintained by arms exports during the post-Korean boom. That, again, is falling away. So, here again, in the most vital of league tables of economic solvency, Britain is near the foot. I hate to remind right hon. and hon. Gentlemen opposite that under Labour we led Europe in the exports league.
Is this change an accident? Is there no connection between these figures and the reckless scrapping of controls, the free for all, the irresponsible inflation? We must ask the Chancellor, when replying to the debate, to tell us: has he no policy for exports except standing on the touch-line, or, alternatively, cheering and booing British industry?
What we need is this: negatively, to restrain competing demands by anti-inflationary measures—yes, and by controls, too; and, positively we need to

1145
expand investment in those sectors which can most readily expand exports or which provide the industrial base for the export industries. The Chancellor is taking neither negative nor positive measures but is leaving it to chance, discouraging investment in total while he hopes that what investment there is will be of the right kind.
I think that the most dangerously complacent passage in the Economic Survey is the one right at the end, which speaks optimistically of the export situation and says:
"The very heavy investment of the last two or three years has improved our industrial efficiency and expanded our capacity.… Thus our equipment for a further export drive has been considerably strengthened."
That is all wrong. It has not been the exporting industries which have been expanding during this investment boom. The Economic Survey itself points out that
"Since 1954 … the greatest expansion has been in manufacturing industry and in the distributive and other services; investment in both these groups increased by more than a quarter between 1954 and 1956."
The volume of expenditure in vehicles and in paper and printing in 1956
"was about double the 1952 level."
This is all very nice. It is nice to have such a pretty packaging of the goods we buy in the shops. It is nice to have all these delivery vans blocking our streets, and nice to have such pretty advertising brochures and detergent "puffs". But what have all these to do with our economic survival?
What we ought to be expanding is the machine-tool industry. There was a very important and significant article in the Manchester Guardian about it last week. It said that this capacity is increasing by only 3½ per cent. per year, yet order books are long and orders have been lost. Similarly, the steel industry should have expanded more rapidly over the past years. It has always been too conservative in relation to demand. On the Government's own showing, investment has been wantonly misdirected, and we are losing ground to Germany, America and the Soviet Union.
The Chancellor shows the same complacency about production. Last year, it fell by 2 points—between 1 per cent. and 2 per cent. The Chancellor now admits, as I have always thought, that this cut
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in production last year was deliberate. The former Economic Secretary to the Treasury, now the Parliamentary Secretary to the Ministry of Education, told us last year that it was not. I kept asking the Prime Minister whether he expected production to rise or fall. He would not answer, but the hon. Gentleman said:
"We shall, of course, achieve an appreciable increase in production this year."—[OFFICIAL REPORT, 23rd April, 1956; Vol. 551, c. 1472.]
I asked the Prime Minister, then Chancellor of the Exchequer, if he agreed. He said that he was sure that whatever the then Economic Secretary said was very wise. Wise or not, we are now told that the Government set out to cut production—and they succeeded.
Has the Chancellor calculated the effect of industrial stagnation? Under Labour, industrial production rose by 6·9 per cent. per annum. Under the Conservatives, it increased by 3·4 per cent. We have lost, in all, £1,500 million to £1,700 million of production through this slowing up, and this loss is growing at the rate of £700 million to £750 million a year. Just think what the Chancellor could do with that production in terms of more exports, more investment, and in the social services.
The Chancellor told us that 1956 was a year not of stagnation but of "vitally needed redeployment." We warned him last year that negative policies were not enough and that merely to squeeze workers out of inessential industries does not get them into the right ones. Last year, the manufacturing industry lost 125,000 workers, many of them women who went out of industry altogether. But the number employed in distribution went up by 20,000, and professional, financial and miscellaneous workers increased by 19,000. Over the last two years, since the Lord Privy Seal began to disinflate, employment in distribution has gone up by 78,000 and in the professional, financial and miscellaneous category by 64,000.
Do the Government consider this to be redeployment? Will the Chancellor get more production this year? He tells us that he hopes so. In his interesting broadcast last night he said:
"I think there is room for some increase in production now and I think it will take place because there is every indication that consumers are going to consume rather more this year than they did last."

1147
When the right hon. Gentleman was asked whether this consumption would compete with exports he said that he hoped it will be a bigger cake. Instead of a positive increase in production and in investment, in exports and in the vital sectors of the economy, the right hon. Gentleman hopes that an increased production will be called for by increased consumption and that, somehow, this will not compete with his exports or push up imports from abroad.
In our view, the Chancellor is facing a grim dilemma. Last year, we held imports back because production was held down, but what happens if production goes up, as the right hon. Gentleman hopes? What guarantee is there that we shall not run into the import boom and the balance of payments crisis of two years ago? Let the right hon. Gentleman be warned by the fate of the Lord Privy Seal. From 1954 to 1955 the gross domestic product rose by 3 per cent., whereas imports rose by 9 per cent. Comparing 1955 with 1952, the gross domestic product rose by 12 per cent., and imports by 21 per cent. Therefore, we are very vulnerable on any increase in production to a more substantial increase in imports.
I must warn the Committee that, under the present Administration, an import boom is heavily concentrated on American goods. In the Lord Privy Seal's boom of 1954–55, imports from the sterling area rose by 2 per cent. and from the dollar area by 30 per cent. It was the result of dollar trade liberalisation and the reversal of Labour policies of Commonwealth development and reduced dependence on dollar sources of supply.
There are hon. Members opposite who needed to get cross with Mr. Dulles's Suez policy before they saw the wisdom of what we on this side of the Committee have been urging upon them—the need to replace dollar sources by Commonwealth sources of supply. But I frankly acknowledge that over the last few months they have shown commendable enthusiasm for these policies of Commonwealth development.
I should like to commend to hon. Members opposite figures recently extracted from the Economic Secretary. Between 1948 and 1952, that is, during our period of office, imports from the sterling area were up by 25 per cent.,
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while imports from the dollar area were down by 6 per cent. We cut dollar imports and increased sterling area imports. From 1953 to 1956, under right hon. Gentlemen opposite, imports from the sterling area fell by 2 per cent. and imports from the dollar area rose by 30 per cent. Is that a coincidence? We welcome the support of the converts opposite to our point of view about this, but we must tell them that if they will the end they must will the means. Sterling area trade cannot be increased and dollar dependence cannot be reduced by free commodity markets and a free for all. We shall need bulk buying and long-term contracts.
The Chancellor turned, next, to inflation and the credit squeeze. I do not propose to follow him in those remarks, because some of my hon. and right hon. Friends will be dealing with them, but I cannot refer to the credit squeeze and the "gently sloping plateau", which the right hon. Gentleman discovered yesterday, without referring to the serious situation in the minds of all of us—the problem of industrial relations at present. It is not the business of any hon. Member to prejudice the work of the Industrial Courts which are now sitting, or to add to the difficulties of either side of industry, but the Minister of Labour said last week:
"… there will be many matters which, when the dust has settled, it would be right for the country to look at very closely indeed."— [OFFICIAL REPORT. 2nd April, 1957; Vol. 568. c. 240.]
The right hon. Gentleman is right. There are. And one of them is the responsibility of the Government for the present state of industrial relations.
The main purpose of the plateau speech and the credit squeeze was to force a degree of wage stability that the former Chancellor of the Exchequer had failed to get voluntarily because of his policies. There was talk of a showdown in industry last year, and there was talk of a showdown on wages. I believe that Ministers encouraged that talk and I am not alone in believing that. It is all very well for the Minister of Labour to flit from room to room in his Department like a little ministerial cupid, but he bears heavy responsibility, as a member of the Cabinet, for the state of industrial relations from which the nation has been suffering over the past few months. Time

1149
and time again we warned the Government that a policy which, on the one hand, forces prices up and, on the other, seeks to make it impossible for industry to pay more wages could lead only to industrial strife.
In November, I quoted the menacing words of the Deputy Chief Government Whip—[An HON. MEMBER: "Who is he?"] He is a Treasury Minister officially—in a speech which he made in his constituency on the Saturday after the T.U.C. rejected wage restraint. Even in this divided Government it is impossible to think that a Deputy Chief Whip could make a speech on a matter of such importance without consulting the Chancellor or the Minister of Labour. This is what he said:
"The trade unions arc 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."
In November, I called that government by ultimatum. Those words have not been repudiated by any senior Minister, so now the Government cannot be surprised at the strikes that have occurred. It is nauseating to hear some of their sanctimonious utterances about their responsibility for them, because there is the man—the Prime Minister—who, more than any other, is responsible for our present industrial troubles.
It is now clear that the Government are no longer going to light inflation. They are ready for a consumption boom. I must ask the Chancellor what will be the effect on the trade union movement, and on industrial relations, of the sweeping concessions to Surtax payers that he announced yesterday. I want him to answer that question. I believe that the right hon. Gentleman has made the task of responsible trade leaders a great deal more difficult by the Budget.
Now I will turn, as the Chancellor did, to his revenue position and the tax changes. I have referred to last year's out-turn above the line, and I have also referred to the monumental miscalculations of the previous Chancellor. I feel that the present Chancellor is far too complacent when he suggests that the worsening above the line was offset by an improvement below the line of some £182 million. It is due, as he said, to
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local authorities borrowing £111 million less from the Treasury than was even expected.
But this is not a saving. This is not disinflation. This is not a cut in capital expenditure. It simply means that the local authorities have been driven to the market for their borrowing. The figures show that while the borrowing from the central Government fell for 1955–56 from £413 million to £88 million, other borrowing net rose from minus £8 million to £332 million. So there has been no saving in terms of the real call on our national economic resources, and it is extremely dangerous for the Chancellor to argue in this way; that just because he shifts the responsibility for the local authorities on to the market, with all the difficulties that has caused for them, that is in any way disinflationary. That is a complete fallacy.
The Chancellor rightly paid tribute to increased savings, which we all welcome, but one-third of these was the reduction of debt, largely hire-purchase debt, and also saving to put down the higher hire-purchase deposits. It is noteworthy that consumption is now rising again, probably because of the changing hire-purchase position, and the fact that hire-purchase debt has been reduced.
Then there are the Premiums Bonds. Well, of course, two-thirds of the investment, if that is the right word—I think that is used by the football pools—was represented by the initial November scramble, mainly of Surtax payers, and it is doubtful whether we can expect the same amount of investment in Premium Bonds in the future.
Turning to 1957–58, the Chancellor bases what he calls his room for manoeuvre on a prospective surplus of £560 million, but this improvement in the surplus compared with that actually achieved last year is almost entirely due to an inflationary rise in the revenue. We have argued before that there is nothing disinflationary in accepting a situation of inflation in the public revenue, and then proceeding to ride it. The Manchester Guardian made the same point this morning, when it said:
"One must be careful not to confuse the impact of monetary depreciation on the Exchequer accounts as proof of sound finance."
That is a fair point. I hope that the Chancellor will think carefully about

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this; that, in fact, his surplus is largely due to inflation, and the bigger the inflation the bigger his surplus will be. Would he then say that, now his surplus is so big, he can give more tax concessions? He may do that, but he will not fight inflation by doing it.
However, the Chancellor decided to cut the prospective surplus to £462 million this year by tax concessions of about £100 million, and I will spend a few minutes in dealing with these. As regards Entertainments Duty, I have said that this was obvious and long overdue. I think we are bound to say to the right hon. Gentleman that we do not see anything very unfair in the proposed impost on television. There is a point he might consider, however. There are special cases of old age pensioners, bed-ridden people, and so on, who have been provided with a television set by some means or another. Perhaps he might look sympathetically at their problem?
The Chancellor could, in fact, get a lot more from television if he were to reduce the amount by which advertising qualifies as tax free deduction for Income Tax and Profits Tax. Let no one say that we are not proposing means of fortifying the revenue.
Coming now to overseas trade corporations, this, as the right hon. Gentleman said, is a complicated subject on which there will be a rather lengthy Clause in the Finance Bill. We shall want to look at it. I must say, however, that on what he has so far told us, and what we know of the Report of the Royal Commission, we view this proposal with some suspicion. Relief by the pioneer tax concession was the subject of Amendments which we debated on last year's Finance Bill. There is a great deal to be said for this special relief in relation to the double taxation agreements. Indeed, we had an Amendment on the Notice Paper to give effect to that concession.
As regards the proposal for overseas trade corporations, which makes it easier for companies to escape the tax jurisdiction, and possibly to open the door to all kinds of "fiddles" about the prices which British firms charge their overseas sales agencies, or the prices which overseas raw material procurement subsidiaries charge the main company in this country, I think that the Chancellor will lay in
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store for himself some very difficult problems.
Now I come to Purchase Tax and the concession for pots and pans, linoleum and carpets. I do not need to say that we welcome this. We kept the Lord Privy Seal up five days and five nights fighting his autumn Budget in 1955. We remember all the arguments he then used. We remember the arguments of the then Economic Secretary, especially "Boyle's Law." We remember the arguments of the then Financial Secretary, now the Minister of Housing and Local Government, about his yawning gap in taxation. Time after time those Ministers stated that these high taxes were necessary to fight inflation. We said that they would create inflation.
Does this mean that the Chancellor now agrees with us and disagrees with the Lord Privy Seal on that argument, or does it mean that he is ceasing to fight inflation? Is "Boyle's Law" repealed or half repealed? If the Chancellor accepts our argument on this—and I can well understand that he might do so— I suggest to him that he now goes the whole way and entirely removes the kitchen tax, as we suggested. And if the right hon. Gentleman is expecting any trouble from the Lord Privy Seal, or from the Parliamentary Secretary to the Ministry of Education, we can promise the Chancellor our full support in the Division Lobby.
As for the removal of the petrol tax, this is simply a concession to sense, justice and Her Majesty's Opposition. We voted against the imposition of the tax, whereas hon. Gentlemen opposite voted for it, as recently as 10th December last. It is good to know that the Chancellor has at last decided to remove it. We would like to ask him what will happen now about fares, about the provisions in the Hydrocarbon Oil Duties (Temporary Increase) Bill? Are we now to expect fares to remain at the present level, or are they to come down, as was envisaged in the Bill? There again, we should like to know what the great oil companies will do. They had their profits guaranteed throughout this period—an allegedly difficult period. Will they now remove their special surcharge, which resulted from the reduction in the amount of oil available for distribution?
I turn now to the investment allowances. In my view, and in the view of

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all of us on this side of the Committee, the Chancellor missed a great opportunity in not restoring the investment allowances. We need the investment, because it is falling away, and the Board of Trade figures for the first quarter of 1957 show that industrial building authorisations were 13½ million square feet against 21·7 million square feet in the same quarter of 1956. They are, in fact, the lowest since the beginning of 1954.
I suggest that the Chancellor should have restored the investment allowances, if possible, on a selective basis, but, if that is not possible, and I know it is debatable, what he should have done was to provide a general incentive to more investment by restoring the allowances, and be prepared, by building licences or other means to hold back the inessential building which might have resulted, and so give the green light to the essential factory building which we so much need.
I do not want to say much about the further concessions to the shipping industry, because we can debate that on the Finance Bill as well. If the aim is to stop British shipping from passing under other flags, his first task is to end the present confusion in the chartering market and the impossible position in which British shipowners are placed, and the sooner the Government can extricate themselves from the shipping consequences of their action over the Canal the better it will be for the industry.
Now I turn to the reliefs proposed in direct taxation. The relief for the aged we welcome, but this, once again, only goes to emphasise the contrast between those old-age pensioners who pay tax and those who are below the tax level, including the 1·6 million on National Assistance. What about the child allowance? I think that the Chancellor was right, as the Royal Commission recommended, to concentrate the reliefs on families rather than on single persons, and I agree that the method which he has chosen of greater allowances for older children, which is a suggestion which I think he took from the Economist, is better than the scheme proposed by the Royal Commission, which would have given a greater child allowance as income rose, which would have been difficult to defend.
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On the other hand, and I am sure the Chancellor will be the first to realise this, by this proposal, which does help very many families, he does not help the millions of lower income parents who pay no tax at all, and that is why we as a party are pledged to a system of State maintenance grants. But when the Chancellor talks of incentives and about helping the middle classes, the only ones who get help in this Budget, right up to the £2,000 a year limit, are those with children over 12. The family with young children gets no help at all up to the Surtax level.
I turn, lastly, to Surtax. It is true that the Chancellor can make a case for extending the child allowances into the Surtax range. The Royal Commission suggested that this should be done, and that it should be paid for by reducing the starting point for Surtax-paying bachelors down to £1,500. The Chancellor has increased the child allowances, but did not reduce the starting point for bachelors, so that, net, the Surtax payers, as a group, gained from the concession, which was not the proposal of the Royal Commission.
But this gain for the Surtax payers pales into insignificance when compared with the earned income relief right up the Surtax range to £10,000 a year. The Chancellor can make a case based on historical arguments for raising the starting point for Surtax, or, better, by extending the earned income relief beyond the £2,025 ceiling. Many of us expected him to raise the ceiling for earned income relief perhaps to £2,500, and, certainly, we on this side of the Committee could have accepted such a proposal if it had been part of a socially just Budget which gave the biggest relief to those in the greatest need—the old-age pensioners and others on small fixed incomes—and if it had been part of a Budget which tackled the evils of tax avoidance, capital gains, and the rest. But to make this one concession and do nothing for the old-age pensioners, is, in our view, a monstrous perversion of social justice.
What did the Chancellor do? I have said that the young scientist or technician, even with three young children, gets nothing up to £2,000 a year—and how many of these young scientists, designers, supervisors, superintendents,

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foremen, craftsmen and others, earn more than £2,000 a year today? The greatest frustration in this country is at the level of £600, £700 or £800 up to £2,000, not beyond it. But the £5,000 a year man with three young children gets a tax relief of £324, or £6 a week. The £10,000 a year man with three young children gets £617 10s. a year, or £12 a week, under this Budget, and the £10,000 a year man with three older children gets £681 back, or £13 a week. Even the single man, who, we must presume, has no dependants, who is earning £10,000 a year, gets a relief under this Budget of £467 a year, or nearly £9 a week. So this Budget is not entirely a family Budget.
When we get these vast tax concessions, we wonder what the Chancellor meant when, in his broadcast last night, he referred to "belated justice to the heavy taxpayer." We wonder what he really meant when he said that he "aimed to ease the taxes where the shoe was pinching worst," because this is what he said in his broadcast. The Committee should remember that the upper income ranges are those which benefit most sumptuously from the Top Hat superannuation schemes, or in the case of the professional or self-employed man, from the extensive superannuation concessions which were made, with the agreement of the whole House, last year in the Finance Bill. In fact, the State contributes more to their superannuation in tax relief than it contributes to the National Insurance Fund. There is a Welfare State for the rich which costs in terms of taxation more than the Welfare State in terms of insurance. They are the people who, in addition, have most opportunities for business expenses and for tax-free capital gains. The Chancellor looks surprised, but he will find the figures in HANSARD for last March.
How does the Chancellor justify these concessions? In one word—"incentive" the last refuge of an unjust Chancellor. There must always be room at the top, he told us yesterday.
Mr. Osborne: In the Labour Party, too.
Mr. Wilson: The hon. Member had better be careful, because the Chancellor, in his broadcast last night, said this of himself:
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"It gives me something to work for. because I am not earning £10,000 a year."
The Prime Minister has been warned. The Chancellor thinks that he will get production and exports by helping the "top brass." We must remind him that battles are not won by generals.
Mr. Emrys Hughes: They are usually lost by them.
Mr. Wilson: They may be lost.
In judging a Budget, we must look more widely than at these tax changes. We must examine the expenditure estimates on which the Budget is based. The Chancellor's concessions were made possible by cuts in the Estimates before they were presented to the House—welfare milk, school meals, and the increased poll tax on the Health Service. Not only has he done nothing for the old-age pensioners in this Budget, but last October, and as a contribution to £5 million in this Budget, their position was immeasurably worsened by the prescriptions charge. If he had money to give away, why did he not undo the damage of the prescription charges? Why did he not replace the cuts which he made in February? Yet he gives £13 a week away to richer taxpayers.
When the Prime Minister, by the grace of God and the Marquess of Salisbury, achieved his present office, last January, he made a political broadcast in which he said that his aim was to make Britain "Great Britain". Among civilised men. greatness among nations is judged not by a country's battleships, supersonic bombers, armies or H-bombs, or by the speed and efficiency with which it can mount an imperialist military excursion. It is judged by its treatment of the least privileged of its citizens—its young children, its old folk, its war disabled, and those injured in factories or mines.
It is on these criteria, on Britain's ability to solve her economic problems and look the world in the face, and on our ability to give the world the lead that it seeks, that the Budget and the Government stand condemned.
4.32 p.m.
The President of the Board of Trade (Sir David Eccles): We enjoyed the opening passages of the speech of the right hon. Member for Huyton (Mr. H. Wilson). The political knock-about was a compliment to the Budget.
Mr. William Ross: Tell us about the Entertainments Duty.
Sir D. Eccles: The measures of the Budget and the manner in which it was introduced have been warmly welcomed by a far larger section of the people than pleases the "shadow" Chancellor. Listening to him, one appreciated how he had to resort to politics and how the politics spoilt his economics. I thought that many of the things which the right hon. Gentleman was saying were not as significant as the things which he was omitting. He is broadcasting this evening, and he will have a chance to fill in the gaps, so I propose to give him one or two suggestions.
The right hon. Gentleman lectured us about the loss of the gold reserves. He said we had been living on borrowed money to the tune of over 700 million dollars. He did not mention that when the Labour Party was in office it received in loans and aid 7,000 million dollars. Will he give an assurance that if he talks about the gold reserves tonight he will mention the 7,000 million dollars? It is very important, for without the 7,000 million dollars and the imports which they enabled the Labour Government to buy, production could not have risen as it did when the Labour Government were in office. Hon. Gentlemen opposite forget that when they make comparisons.
If the right hon. Gentleman talks about production tonight, let him also mention that while he and his right hon. Friends were in office our working population rose by 2½ million and that since we have been in office it has risen by 900,000.
The right hon. Gentleman talked about investment and seemed to say that we were doing very badly. Will he please mention on the air tonight that investment by manufacturing industry was a quarter greater last year than in the Labour Government's best year?
Will the right hon. Gentleman, when he makes comparisons with overseas countries, mention that we won the war and that others lost it, or were occupied?
Mr. Gordon Walker: What did we win?
Sir D. Eccles: We won a position from which our industry could get going much quicker than that of a defeated country.
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Will the right hon. Member for Huyton remember that the working population of Germany, since 1952, has increased by no less than 26 per cent. as against an increase in our working population of 4 per cent? His comparisons with Germany are nonsense.
I am sure that, if he gets a chance in the broadcast, the right hon. Gentleman will compare the various rates of investment. He never mentions that the United Kingdom does far more overseas investment than any other European country. If we want to reckon the total amount that we are putting into tomorrow, instead of today, we must reckon the capacity of our capital goods industries which is taken up by the investment that we make overseas and which everybody wants to see increased.
There is one other thing about the right hon. Gentleman's speech that I want to mention. I think that he tried to undermine the conception which the Chancellor put before the Committee of the under-the-line deficit. The fact is that with a total demand for savings—that is, for investment—which, this year, is about the same as the high level we had last year, my right hon. Friend is budgeting for another £200 million to be provided through the Budget. That is a very prudent and, some people might say, disinflationary action. I think it disproves the general notion that, because local authorities have gone into the market to borrow, and the nationalised industries have come into the Treasury to borrow, there has been a change very much for the worse in the savings and investment position. If one looks at the situation in total, it is improving, and my right hon. Friend has made a substantial improvement in the estimates for this year.
When he came to the economic part of his speech, the right hon. Gentleman agreed that the balance of payments would really be the test of the Government's economic policy. I would add, too, that it is the best service which we can render to any section of the population to keep the £ steady and strong and to provide a sound basis for a further increase in the standard of living. On that central point, I understand from the right hon. Gentleman's speech that the essence of the charge which he makes against us is that last year we lost production and that next year we may lose exports. I think that that

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summarises what he said. In trying to answer that, I hope to show that, as a consequence of the credit squeeze and of the Budget introduced by my right hon. Friend yesterday, the country can look forward to both higher production and a stronger £.
As the right hon. Gentleman said, that can happen only if exports continue to rise, because when production increases it inevitably pulls in more imports, but there is no such certainty that exports will correspondingly increase. In fact, there have been several examples since the war where a rise in production has been followed by a worsening of the balance of payments.
At this time, production—and this is before anything happened in the Budget —shows every sign of expanding. The question is whether this expansion will be due to inflation, or to the more efficient employment of labour and plant. If inflation smothers efficiency, then exports will suffer.
As that and the whole subject of external trade are so important, I hope that the Committee will allow me to devote my remarks to them and my right hon. Friends the Treasury Ministers will answer the points put on taxation and probably on investment, too, when they speak in the debate.
The prospect for exports is somewhat better than when the Economic Survey was being drafted. We knew then that as a result of the credit squeeze, British prices had become competitive and delivery dates reasonable in almost all markets in the world, but what we did not know was how much the improvement in the balance of payments would be checked by the closing of the Suez Canal, the loss of the Egyptian market, and the repercussions of those events in other markets. As the Chancellor told the Committee yesterday, it is now clear that the troubles arising from hostilities in Egypt had a sharp effect on our banking reserves, but remarkably little effect on either industrial activity or the volume of exports.
The March trade figures have just reached me and the Committee may like to have them. They are: imports, £362 million; exports, £297 million; re-exports, £16 million; and the trade gap,
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£49 million. The March figure for exports is the highest ever recorded and it affords convincing proof of the underlying strength of our trade position. The Committee knows that there have been distortions in the shipping position over the last few months and I think that the best period for comparison that I can take, the fairest period, would be the last five months, November to March this year, and November to March a year ago. On that basis the monthly trade gap has been £47 million in the current period against almost £60 million a year ago.
According to the information that has been coming into the Board of Trade. export orders in the last few weeks have been a good deal better than our forecasts and they have been very well spread among different classes of goods. As I think the right hon. Member for Huyton himself said, the demand for capital goods greatly exceeds the capacity to meet it. In physical terms, domestic investment in plant and machinery cannot now be significantly increased, as the right hon. Gentleman suggested it should be, without cutting into exports. It is true that there is now probably a little slack in the building industry, but not in plant and machinery, owing to the increasing orders from overseas. It is, therefore, very necessary that there should be enough movement, enough give, in the economy to allow more capital goods to be produced.
Overseas demand for semi-durable and consumer goods has recently improved. In the domestic market the restrictions placed on credit last year acted like raising the height of a dam; there was a pause while the cash piled up to the new level; it has reached it now and it is beginning to flow over. The Committee may ask what was the good of the hire-purchase restrictions, but during that pause some very useful redeployment has taken place and industry itself has become more efficient owing to the further investment.
There is one straw in the wind which I am sure will interest the Committee. The motor car industry has suddenly started to pick up. In the last few days, the motor car manufacturers have written to the Board of Trade forecasting that British steel mills will be unable to meet their demands for steel sheet in the third quarter of this year. That turn round

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in output is due to both increasing home and export orders.
I want to say a word about each of the main markets overseas. The sterling Commonwealth was disappointing as a market last year. Important countries in the group had to restrict their imports. In other words, they had the same sort of situation as we had here. India was an exception and greatly increased her purchases. Unfortunately, India is now in the position of having to restrict imports. The Indian development plans are so vast that difficulties over imports are bound to occur from time to time. If we in this country can earn a larger surplus on our balance of payments, we should and we could help India more in her search for capital.
Australia, on the other hand, has just come out of one of her periodic spells of light diet. The Government have substantially relaxed the import restrictions that were imposed last year for balance of payments reasons. In consequence, we expect to do more trade with Australia in the near future. The prospects are also better in South Africa. The Minister of State is going to South Africa at the end of this month to support in the Union a trade week which has been promoted by the Federation of British Industries and the British Manufacturers' Representatives' Association.
On Monday last, the Minister of Agriculture and I began trade talks with a mission from New Zealand. This mission is headed by Mr. Holyoake, whom we are very glad to see again in this country. We have some very difficult problems to solve, but, as the Committee knows, when New Zealand and the United Kingdom sit down together, there always is the maximum of good will.
Last year, the United States became Britain's best customer for the first time since 1895. Australia has held that position in recent years and, we may hope, now intends to recapture it. Be that as it may, our exports to the United States in 1956 rose by over 20 per cent., that is excluding the Lease-Lend silver returned. The sale of civil aircraft and aero engines contributed a great deal to that total, which is more than three times in volume and six times in value the trade we were doing with the United States ten years ago. Hon. Members may have noticed that an award for excellence in design, which the Americans give
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and which has never before been given to any product of industrial design or been bestowed outside the United States, has just been given to the Jaguar car.
Our exports to Canada rose even more, by more than one-quarter in 1956 compared with 1955. A rapidly increasing population and a sprouting national income in Canada offer to our exporters more and richer customers if they continue to offer them the right goods at the right price. The fact is that all our exporting industries do well in the dollar area and the greatest credit is due to our commercial services in North America and to the Dollar Export Council whose ebullient Chairman, Sir William Rootes, tells me that British goods are still not nearly well enough known in certain parts of the United States, on the Pacific coast, in the Midde West and in the South.
Second to the dollar area, Europe was our most successful market last year. Sales to Europe expanded by 12 per cent., and to Germany by 20 per cent. It is quite clear that we are now competitive, by and large, with European prices. Indeed, it must be so, judging from the complaints that are brought to the Board of Trade that European manufacturers have to get subsidies in order to sell in this market.
I have also had complaints on the other side, from the Continent, that our manufacturers are not taking the advantage they might of the favourable conditions in Europe. That seems to be particularly true of the Swedish market. I am glad that our cotton industry is, at this moment, undertaking an intensive survey of the whole of the Sandinavian market. I have great hopes of that. In going round—
Mr. R. Moss: Before the right hon. Gentleman leaves Scandinavia, can he say whether any effort has been made to sell electrical appliances there? When I was in Sweden I was asked why we did not make a bigger effort to do so.
Sir D. Eccles: I cannot give the hon. Gentleman an exact answer, but he is on to a pretty big thing. Complaints have been coming from Sweden that we are not making the sales drive there that we might make with advantage. In going round the country discussing the prospects of the European Free Trade Area, I have learned with great interest

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of the high expectations our clothing manufacturers have, when tariffs come down in Europe, of doing a great deal more trade. With incomes rising all over the world, the demand for men's and women's clothing is certain to expand. It is a trade in which we are particularly good.
The Committee is much concerned about trade with Communist countries, and in particular with China. The position there remains as stated by the Foreign Secretary in the debate on the Bermuda Conference. My right hon. and learned Friend said:
"We are prepared to wait, but only a little longer, to see whether by further effort we can proceed by agreement with the United States and our other friends and allies."—[OFFICIAL REPORT. 1st April, 1957; Vol. 568. c. 167.]
Discussions with the United States Government and the other Governments concerned for ironing out the China differential will, we hope, start very soon indeed. The items on the Soviet and China list were placed there for strategic reasons. Those considerations can change, and no doubt they ought to change from time to time; but they are outside the Board of Trade's responsibility.
On the other hand, I should like to remind the Committee that there are plenty of goods not on the embargo lists which we should like to sell behind the Iron Curtain or to China. I should have thought it was generally true that the better off men became the more independent they became in their individual thinking and in their freedom to move around and express their fears and hopes. Therefore, it seems sense to be always on the look-out for more trade with the Communists. If they did enjoy a higher standard of life—more cars to ride in, more pretty hats to wear—it would do them a power of good.
The Foreign Secretary is strengthening the commercial staff of Her Majesty's Embassy in Warsaw. We have had some interesting discussions with the Polish Mission which recently came to this country. I think more trade will follow. I ought to tell the Committee frankly what the trouble is in Poland.
The fact is that the Russians have sucked the country dry and that there are not the consumer goods to act as incentives to the Polish workers. For example,
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it is not possible, I am told, to raise coal production in Poland until there are articles like bicycles for the miners to buy; and until coal production is raised they cannot pay for the bicycles. Such is the miserable poverty forced upon that gallant country for whom we went to war in 1939.
I must say a word about Latin America. That fascinating half of the New World is full of promise for the exporter. In the old days, Britain made many loans to South America, and trade followed. Now, the United States has become the chief provider of new capital. American investments are bearing fruit both in growing wealth and in greater political stability. Mexico, Venezuela and Brazil, to mention only three of the Latin American Republics, are lands of the future where population and income may be expected to increase as fast as anywhere in the world.
We are often told that to increase trade in these markets requires the grant of more credit. Something has been done to help in that direction. The Export Credits Guarantee Department has improved the terms which offers to exporters for guaranteeing the credit and transfer risks in all markets. In addition, the Department offers a special range of facilities to exporters to the dollar account countries.
It has been suggested that the period of credit which the Department will guarantee should be lengthened. That may sound attractive, but I do not think we should do much good if we encouraged a race in giving longer Government-sponsored credit to our customers in this part or in any other part of the world.
I have already said that, apart from the loss of the Egyptian market, our trade in the Middle East held up well, remarkably well, as it is based on the exchange of oil against the capital and consumer goods which the Arab countries need so badly. Our exports to Iraq have been particularly good.
The work done in the Middle East by our building and civil engineering firms deserves recognition. One day the full story must be told of the growth overseas of British contracting business and the contribution which it makes to the balance of payments. These contracting firms need to establish depots and works

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on the spot. Therefore, they are the kind of firm which will benefit from my right hon. Friend's provision in the Budget relating to oversea trading corporations. Following from what was said by the right hon. Member for Huyton, I had better deal a little more fully with the oversea trading corporations.
First of all, taxation encourages not only young men but companies to emigrate, particularly companies registered in the United Kingdom and operating overseas. This movement abroad is bad for our trade. Once the control has left the country a company is less likely to look to Britain for its personnel, its capital equipment and its current supplies. I could name a number of well-known mining concerns which have gone abroad for these reasons. The advantage of keeping the sources of supply of metals in British hands is too clear to require argument. [HON. MEMBERS: "Hear, hear."]
The unequal competition which our companies have had to meet has often been not with companies of local nationality but with American or European companies operating in the same territory. For example, American oil companies operating in the Caribbean have had a very big advantage.
Another way in which this tax relief to British oversea companies will help is directly concerned with exports. The methods of selling overseas have changed in recent years. International trade now has to wear a national disguise. Local susceptibilities must be considered, and, with the rise in wealth, local discrimination in style and packaging becomes very important. The right hon. Gentleman, who has now left the Chamber, did not seem to like the increase in the investment in the paper trade, but what we should do in the export markets without the products of the paper business I do not know.
It is often good business to import components and assemble them locally, and in some cases to manufacture locally part or the whole of the article to be sold, under licence. For these purposes, the single agent may not be suitable. A company must be formed. Money has to be put into it to cover the initial expenses and later to expand it as fresh opportunities occur. As taxation stands today, if the control of that company is
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kept in the United Kingdom, all the profits retained overseas in building the business up are taxed as if they were earned in this country. It follows that the greater the difference between the rate of company taxation in the overseas country and in the United Kingdom, the greater the handicap on British companies. If control is not kept in the United Kingdom, it may be difficult to maintain the channel to British goods which was the purpose of setting up the company.
That, clearly, will appeal very much to large businesses who can afford to set up such an overseas trade corporation, but I should like to make it clear that there is a great opportunity for a number of small businesses to join together and to take an interest in a selling organisation of that kind. I am sure, therefore, that the relief which my right hon. Friend proposes to give will bring us a big return —we cannot calculate just how much or how soon—in exports.
I should like to answer one point which the right hon. Member for Huyton made—namely, that it might be an open invitation to rig prices and in some way to export goods so that a far larger proportion of the profit was made abroad than at home. I can assure him that when he looks at this proposal in detail he will see that care has been taken of that, for this other reason, that in no circumstances is the relief a subsidy to exports. Those provisions, therefore, have to be written into the Finance Bill.
Mr. J. T. Price: I appreciate the significance of what the right hon. Gentleman is saying, but what puzzles me in considering his speech and the Chancellor's speech yesterday is the position in which the British-based company which transfers its activities abroad to a foreign country, as distinct from a Commonwealth country, is manufacturing as well as conducting a selling organisation. It provides no addition to the employment possibilities in Britain. It does not employ British labour and it makes no contribution to the revenue of this country if taxes are exempted on the profits it makes abroad. What does it do, apart from providing a selling agent as distinct from manufacturing?
Sir D. Eccles: I think perhaps the hon. Member has not had a chance to study

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this matter in detail. He will find that this applies only to companies which are operating overseas anyway, in mining, in tropical plantations and so on. It will not deprive us of any employment in this country. What I hope and believe will happen is that, as a result of more efficient selling organisations overseas, we shall receive more orders for manufactures in this country, and in the end it should strengthen the industry of Great Britain.
I must say a word about salesmanship, because in the opinion of many good judges salesmanship has been the weakest link in our export trade since 1939. There is a good reason for this. During the war we were forced to concentrate upon production, and immediately after the war there was such a world-wide scarcity of goods that selling was neglected by Government Departments as well as by industry.
For example, the Ministry of Education, for good reasons of economy, held back the expansion in the provision for further education in any subject connected with commerce. Commerce went to the bottom of the class. Science and technology stole the limelight. But, one might ask, what is the good of inventing a computer if there are no sales to analyse? I believe that it would be time well spent if all firms now asked themselves the question whether, of the best brains in the whole company, the proportion on the sales side is right.
I have one suggestion to make. When I was in Lancashire last week I noticed that a manufacturer had bought some Italian textile designs, and I asked him about them. He said that he never would have bought them had they been offered to him by a British salesman but that he had fallen for the charms of an Italian saleswoman. I then made some inquiries and was told that foreign manufacturers of consumer goods are employing more women to sell their wares overseas and that it is generally very successful. I wonder whether we could not with advantage do the same. I am sure there are many British saleswomen who would make the success of selling consumer goods which Commander Whitehead, with his beard, has made in the soft drink trade in the United States.
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Vigorous selling is what we need, and it will collect large orders, but only on the assumption that our prices and delivery dates are right; and it is here that we join issue in policy with the Opposition. As I understand it, the opinion of the right hon. Member for Huyton and his hon. Friends is that unless physical controls are brought back we cannot safely allow production to rise because in a free market prices will rise, too, and deliveries for exports will lengthen. We have to face that danger. Wage increases and any other increases in money in circulation can be a threat to the export trade because they pull goods back from export and because higher costs raise our export prices.
What would the Opposition do about it? They tell us, in general terms, that by holding down consumption and prices they would make sure that enough was left for investment and exports. What exactly would they do to our economy? I think we ought to be told that in some detail. I understand from reading their speeches and listening to the speech we have heard today that they would go back to bulk purchases of imports, import quotas, price controls, building licensing and export targets, and that in some cases the export targets would be tied to allocations of materials.
But they tried all this before, and in spite of 7,000 million dollars which they received in aid and loans during their period of office, they led us to a devaluation in 1949, and another was round the corner in 1951 when they ran away. Why should be believe that the policies which failed then would succeed now?
I should like to take the example of export targets, because it seems to me that export targets may appear to be the most innocent of their proposals and the most relevant to the balance of payment. I believe they are a favourite device of the right hon. Member for Huyton.
When the Opposition were in office before and they tried export targets, circumstances were entirely different. After the war there was such a dearth of goods at home that manufacturers could sell with a good profit in either market, at home or abroad, and if they agreed to sell more abroad they knew they could find a buyer.

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Look how the circumstances have changed today. All over the world markets are now competitive. Germany and Japan are back. What Minister today could fix with any reality the export target for textiles, for chemicals, Frisky motor cars, or almost any other article one could think of? If the "shadow" Chancellor ever had the opportunity to try this game on industry, it would tell him, no doubt very politely, to go away and think again.
On this side of the Committee—and this comes out of what the right hon. Gentleman said about the domestic side of the Budget—we are all the more sceptical about a return to physical controls because, quite clearly, the object is to hold down consumption in order to free resources for investment or export. But what hope have the Socialists of holding down consumption? When it suits them they tell the electors that they intend to abolish all National Health Service charges, to raise pensions, to subsidise food, to bring in a system of State maintenance grants—we heard that one today —to reduce the rate of interest and, on top of all that, to throw about £2,500 million of Government stock on the market in compensation for the rented houses which are privately owned.
All that clearly adds up to a rip-roaring inflation. Their policy is to dish out money with one hand and then with the other to control the public's spending. The extra money will still be there and prices, some prices, will have to rise. We know what happened last time. The prices of the less essential goods rose— those not controlled—and capital and labour were diverted from the making of necessities to the making of these less essential goods. That would happen again. Perhaps the right hon. Member for Battersea, North (Mr. Jay), who is a self-styled expert in controls, will tell us just how his party intends to combine controlled consumption with all the extra spending that flows from his party's domestic policy. I think he knows that they would be driven to raise the taxes to mop up the extra money. I think he knows, also, that they would have to raise the taxes on the things which the wage earners buy, because there is no other way in which it could be done.
Our policy is different. As the Chancellor said, the Government do expect a
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moderate rise in consumption this year. The forces at work are the increase in wages ahead of output, a renewal of buying by the public both for cash and credit, and some of the tax reliefs given in the Budget. All those forces are there, but against them there is the undoubted slack in the economy. The men and machines are there to produce more. That is one of the things we have gained through the pause last year. The spare capacity could more than meet the extra demand on the home market. If we can get that capacity into action while still maintaining a stern credit policy, industry can absorb a part, at least, of the increase in costs and prices which otherwise would be inevitable.
There is this consideration. The deliberate restraints imposed last year, together with the oil shortage, have shown many managements that they can make substantial economies. Useful lessons have been learned. I should tell the Committee that over last year stocks in this country increased in volume by the equivalent of some £200 million. That is an extra cushion against the extra demand. Then the defence cuts will release capacity in the engineering industries, where it is badly needed for the production of capital goods. The Government will take every step to smooth the changeover for the workers and the managements affected. I think in many cases the men will go to civilian production in the same factories. Although the number of those who will change jobs is relatively small, none the less the scientists, technicians and skilled craftsmen released will make a positive contribution of real value to our industrial capacity, especially for exports.
Finally, in securing a surplus on the balance of payments there is that incalculable factor, confidence. I think there could be no better tonic to the men and women in responsible positions than the relief which the Chancellor proposes to give to earned income over £2,000. It is all very well for the right hon. Gentleman to point out how small is the number of people in this country earning over £2,000. The point which really matters is that all those who aspire to £2,000 will now see that because there are more plums at the top of the tree—if one likes to put it that way—it is worth their while to go on and to get on. That is not so now.

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One cannot measure the frustration among these people. It must be true— hon. Members on both sides of the Committee know that it is true—that if managers and technicians have a sense of grievance—the young ones and the old, those starting their career, those in mid-career and those at the end—production and efficiency are bound to suffer. What actually happens? They get the habit of not bothering to do more than they absolutely must, and that attitude is catching. It spreads outwards and downwards.
Mr. Cyril Bence: I just cannot sit here and listen to such nonsense. In modern industry today and great technical establishments the technician and the executive who reaches such a position in his life's work and reaches a salary of £1,750 to £2,000 has training, education and background of a kind that his job becomes so interesting and absorbing that he really is not frustrated in his salaried position.
Mr. H. Rhodes: I think so also. This is a slight on the technicians and managements who have been bearing the brunt during the last few years.
Sir D. Eccles: I think the slighted technicians and managers, if we asked them, would say that this provision in the Budget is of very great assistance. [Interruption.] Hon. Members can have their point of view, but if they were to ask those who employ these people they would know what difficulty they have had recently to get young men to stay in this country, or even to come to London to work in head offices, because the cost of living here is so much higher than it is outside. We on this side of the Committee know that we cannot convince the Opposition. We know that they have no faith in the managers of British industry.
Mr. J. T. Price: Nonsense.
Sir D. Eccles: If they had any faith, the medicine they have in store for these people would be rewards, not controls —the same controls which failed last time.
Our policy is quite different. It is written large in the Budget and is a bold move to encourage the export trade,
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to help shipping, and to give reliefs to men and companies which will put emigration out of their thoughts. It is a policy of confidence in the right kind of ambition. We believe time will show that we were right.
5.20 p.m.
Mr. Frank Allaun: In his opening remarks, the President of the Board of Trade has referred to history, to what happened twelve years ago. I think that the common people of the country are much more concerned about what is happening today. In our country we have a variable climate. Today has been a very cold day. This evening hundreds of thousands of old-age pensioners will go to bed at six o'clock, because that is their way of keeping warm and because their £2 a week pension is so low that they have not enough money to spend on extra coal.
In our view, it is absolutely wrong that men and women should have to spend the last years of their lives in this way, and it is even more wrong that the Government can lavish money on the Surtax payer and not give a penny to the old-age pensioner.
Few of us on either side of the House look forward to old age. Not many of us manage to grow old gracefully, but when we add to the natural trials of old age and loneliness the unnatural burden of extreme poverty, then we are making old age into a tragedy. I do not know whether the Chancellor saw the Gallup poll, published within the last two days, which showed that 91 per cent. of the people wanted more than anything else something to be done for the old people. While the Government's heart is bleeding for the Surtax payer, the members of that Government seem to be quite unconscious of the fate of the poorest of the poor.
During the last few months, in Salford, I have been conducting an investigation into the budgets of old people. There is a remarkable sameness about them, though this is not surprising when we realise that they have so little money to play with that they naturally tend to spend it in the same way. A very interesting report by Dr. R. C. F. Smith, who has investigated 1,000 similar budgets in the area surrounding Sunderland, expresses the same conclusion. A

1173
third investigation by the Rev. T. E. Nuttall of the National Federation of Old Age Pensions Associations again reveals budgets of a similar character.
I want to quote one only. It is a typical budget, by no means the worst. It happens to be that of a 79-year-old widow who lives in Ordsal, Salford, who came out of hospital recently. I stress that this is a typical budget which could be repeated 100,000 times. These are the people who are hearing on the wireless and reading in the newspapers that they are to receive nothing at a time when money is being given away.
This lady's total income is £2 14s. a week, which is composed of £2 pension and 14s. supplementary allowance from the National Assistance Board. That is, of course, two or three shillings above the average. Out of that £2 14s. she spends 10s. l1d. on rent, 10s. 9d. on a bag and a half of coal, 3s. on gas, 2s. 6d. on laundry, roughly 6d. towards a wireless licence, 1s. on a wireless battery and accumulator, 8d. for newspapers and 1s. for soap and washing powders. I do not think that any item could be cut down very easily.
This leaves her, and hundreds of thousands like her, with 23s. 6d. a week for everything else, for food, shoe repairs, fire lighters, clothes, bus fares—everything. It means that she is left with roughly 2s. 10d. a day for food. That is not enough. There are terrible omissions from her budget: no fresh fruit, no tinned fruit, no green vegetables, 1s. a week for one bottle of milk and a tin of condensed milk. When asked what she would like if she could afford it, she said "More milk, and a little bit of something tasty to eat."
This example can be multiplied by many. As for clothes, she is wearing a dress she made herself out of an old worn-out overcoat. What kind of a life is this? What kind of a diet is this? Are we to ignore these people who are so numerous in our community?
In other budgets I have examined there are pitiful items. Two ounces of butter a week—hardly enough to cover a couple of rounds of toast. It is no wonder these people are underfed and anaemic. The cost of living index does not fully reveal the situation of these people. Their plight is inadequately revealed. It
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is significant that one of the unions pressing for £3 a week for the old-age pensioner and £5 a week for the married couple who are pensioners is the Union of Shop, Distributive and Allied Workers which is 350,000 strong. It is significant for this reason: it is the shop assistants, who have to serve these pensioners with their little bits of meat, their milk, loaves and coal, who know more than anybody else the suffering that they endure.
Last summer a deputation came to the Minister of Pensions from the National Federation of Old Age Pensions Associations. It asked him for £3 a week for single old-age pensioners and £5 a week for married couples. He turned them down. He said that to give those pensions would cost an extra £225 million a year, which is a lot of money. Where could this money come from? It could come from one of two sources. In 1955, according to the Government's Economic Survey, there was an increase on the previous year in net incomes of £865 million—in a single year. It is true that last year there was not such a big increase, but that was largely due to the Government's invasion of Egypt.
If we are to assume that production is to continue to increase in future years and there is anything like the 1956 increase in net incomes, it means that only one-quarter of one year's increase in national net incomes would cover the pension rises that the old people are seeking. Instead of this—and I must repeat it—there has not been one penny increase.
The second source from which this increase could come is from the money at present being spent on defence—a fantastic total of £1,420 million a year, or roughly double the figure spent in 1950. This is mostly sheer waste, as the Minister of Defence has himself tacitly admitted in the White Paper on Defend. There has been a saving, it is true, of £79 million, but that is not enough. If one-sixth of our expenditure on arms were spent on the old-age pensioners, £1 increase in pension could be granted, and in my view that would be a far better way in which to spend the money.
The value of £1 today is 16s. 1d. when compared with its value in 1951. Even on a strict cost-of-living basis, the pensioners are entitled to an increase, although I am myself not bursting with

1175
enthusiasm for tying the old-age pensioner strictly to a cost-of-living basis. It smacks far too much of the old Poor Law. If in Australia the Government can afford a pension of £4 a week for a single person and £8 a week for a married couple, surely we can do better than we are doing in this country. If a free vote were taken in this House—if the Whips were off—and hon. Members voted each according to his conscience, I have no doubt what the result would be.
It seems to me that such cruelty must arise from ignorance of the conditions of the people whom hon. Members opposite are supposed to represent. The Chancellor must be unaware of what is happening to the people even within his own constituency, because if he were aware of what is happening he would stand even more strongly condemned. How could he live on £2 a week? I certainly should not like to do so, and it is unfair to expect these people to live on such a sum when bonuses are being handed out to people with over £2,000 a year.
I say to the Government that these old-age pensioners are no longer helpless. There are 4½ million of them. They have sons and daughters and are a formidable electoral force which any Government must take into consideration—whatever Government are in power and of whatever colour—because, unless these pensioners get an increase, they will bring that Government down.
The National Federation of Old Age Pensions Association has 1,600 branches and, according to its general secretary, Mr. Melling, whom I was talking to a few minutes ago, their attitude is this: "We bitterly resent the Government's callous disregard of the pensioners' urgent needs." I hope that the Chancellor gets a bigger letter-box at No. 11, because all these 1,600 branches will shortly be writing to him in no uncertain terms. They have already obtained 650,000 signatures on their petition, with more to come, and it is significant that of these 650,000,100,000 have been obtained by trade unionists: so any attempt to drive a wedge between the wage earner and the old-age pensioner will fail. I repeat to the Government: the old-age pensioners will put this Government or any other Government out if it does not give them an improvement when it can be afforded. The old-age
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pensioners are a new force in British politics.
To conclude on a completely different point, I would say that this Budget indicates the predicament with which the Government are faced. I believe that the Government are being run by the backwoodsmen—the extreme right wing, the wild men of the party, the kind of people who believe, though heaven knows why, that they have not been sufficiently Conservative and have not hit the ordinary worker hard enough. They are the kind of people whom we saw on television at their Llandudno Conference saying, "We want more guts." There was terrific acclamation for that. They want what they call "stern action" whether it is in Egypt or in the back streets of England.
That is the kind of attitude which explains a number of Government actions recently, such as the Rent Bill, the extra 1s. on prescriptions, the increased charge on school meals, the invasion of Egypt and, I would suggest, this refusal to grant the old-age pensioners an increase. It also explains this Budget. I do not think that this worries the Government very much, because they are men of the right themselves; but now comes the difficulty.
Mr. Norman Dodds (Erith and Cray-ford): They have done very well out of it; they have made a fortune out of it.
Mr. Allaun: I quite agree. The further the Government go along this road, the more they antagonise the electorate. That is quite natural. The Gallup poll shows an 11½ points lead for Labour over the Tories. The by-elections at Leamington, North Lewisham, Carmarthen and Tonbridge all show this effect.
I feel certain that there must be a number of hon. Members opposite, particularly those in marginal seats, who feel very concerned about this policy— and I would say that anything less than a 9,000 Tory majority is now a marginal seat. If the Government listen to their plea, then they are attacked by those who are more conservative than the Conservatives, by organisations which put up by-election candidates, such as the League of Empire Loyalists and the so-called People's League for the Defence of Freedom. So they are in a grave difficulty. I cannot see any solution to this problem, and I do not think that the

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Prime Minister or the Chancellor of the Exchequer sees any solution. In my view, this Government has had it.
5.37 p.m.
Mr. John Arbuthnot: The hon. Member for Salford, East (Mr. Allaun) has talked to us about the problems of the old-age pensioners and they are, of course, problems which we have very closely at heart; but we all of us have to remember that if we are effectively to help the old-age pensioners or any other section of the community which has fallen on difficult times, it is essential first that the community as a whole should be strong and that we should have industrial employment which enables us to earn that which is necessary to come to the rescue of those who are weaker than others.
I would say that the hon. Gentleman was really talking nonsense when he suggested that anyone was asked in this day and age to live on £2 a week. That is just not so. An increasing number of people who are reaching the age of retirement have built up private pensions through schemes run by their firms and an increasing number of people through retiring late earn increments which enable them to get a little more than the standard rate. There are also other schemes to help people in difficulties.
A Budget debate is not the proper place to deal with these problems, since the Budget deals with reliefs from taxation, and the majority of these people do not pay Income Tax. The proper place to deal with problems of this kind is in a debate upon the social services.
I now want to refer to some of the boxing of the compass by the right hon. Member for Huyton (Mr. H. Wilson). He started off by telling us that we ought to give reliefs in certain directions where the temptation for spending would be greatest, but if we give reliefs in those directions before we have built up the strength of the economy we shall fail completely to convince the Swiss banker of the strength of sterling and of our determination to pay our way.
The right hon. Member for Huyton said that we had done nothing to strengthen industrial investment, which is now sagging. His argument does not seem to me to add up. I do not see how we are to dissuade the banks, as we do, from lending as much as they would like to
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lend and, at the same time, say that we should impose a greater pressure upon demand by restoring investment allowances at this stage.
My right hon. Friend the President of the Board of Trade pointed out that this country was fully stretched in regard to the supply of machinery, and that to add to the resources of the people who are pressing for more machinery would merely intensify the difficulties in which we find ourselves. As I listened to my right hon. Friend the Chancellor of the Exchequer unfolding the figures for last year, in a speech which commended itself to hon. Members on both sides of the Committee for its clarity and brilliance, what astonished me was how much better the figures were than any of us could have expected two months ago.
It seems to me that that was no accident, but was part of the result of steady planning over the years and the restraint of the predecessors of my right hon. Friend. Yesterday, in the unfolding; of these figures, we were able to see Tory planning working—[Interruption.] Oh, yes, indeed; and the Chancellor would be one of the first to acknowledge how much his Budget owes to the spadework put in by his predecessors. His Budget is the result of team work, which is at last beginning to bear fruit—and not only the team work of his predecessors but of the other members of the Government now. The Chancellor would not have been able to produce such a Budget if, for example, it had not been for the White Paper introduced a few days ago by my right hon. Friend the Minister of Defence.
While on the subject of team work, I should like to thank my right hon. Friend the Chancellor, on behalf of all those who are closely associated with the National Savings Movement, for the generous tribute which he paid to the work of that movement. His words are very much appreciated and will be a spur to the Trustee Savings Banks Association and all other organisations in the savings movement working to try to strengthen the £.
Now for the Budget itself. I was specially pleased to see that in spite of his considerable surplus the Chancellor has decided to remit only £100 million this year. By that action he has given no hostages to fortune, and the Swiss banker—that mythical creature to whom

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we pay so much attention and who figures so prominently in our economic thinking —will recognise this as a conservative Budget; using the word in no party sense.
The Chancellor's decision to limit the remission to £100 million this year will result in the £ hardening. The old taint of "bread and circuses" will recede and everybody will recognise and be determined that the history of the Roman Empire will not repeat itself here. I believe that £100 million was the right sum to remit this year and, having taken that decision, I do not think that my right hon. Friend could have distributed it better and more effectively, taking the long view, than he has done.
One quarter of it has gone to encourage overseas trade corporations, which are earning so much money for this country and are giving employment to our people. Another quarter has gone in direction taxation; and I am sure that my right hon. Friend was right in concentrating that quarter upon the work providers and family men. If it is said by way of criticism that my right hon. Friend did not do so much this year for the man earning £1,500, £1,600 or £1,700 a year, it has to be remembered that we must look at the Budget as part of a whole—as part of a continuing plan—
Mrs. Harriet Slater: Your plan.
Mr. Arbuthnot: Yes—our plan, and it is working, too. We must remember the remissions which were given in past Budgets specifically to those people who have not benefited this time.
Mr. Arthur Lewis: Surtax payers.
Mr. Arbuthnot: A third quarter has gone to reduce indirect taxation to help particularly those people who do not come within the Income Tax bracket— and I draw the attention of the hon. Member for Salford, East to that fact. The remaining quarter has gone to other deserving causes, such as sport, entertainment, and allowances for the elderly and to those living on small incomes. Incidentally, while we are talking about the position of the elderly, I would point out that the Financial Statement this year
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shows that an additional £6 million is being provided for National Assistance, for help in cases of real need.
I wonder if the Committee has the same view as I have of the taste of the colour pink. That may be thought to be a contradiction in terms. It may be said that a colour cannot have a taste, but to me it is a very vivid experience. The colour pink tastes cheap and nasty. There is something spurious about it. I was reminded vividly of that taste by the speech of the right hon. Member for Huyton. It seemed to me to be just about as synthetic as the raspberry essence which goes into those highly-coloured sweets which sometimes deceive our children in the shops.
One of his suggestions was the introduction of a capital gains tax. Let us consider what that would really amount to. The value of the £ has fallen, due to the fact that some sections of the community are greedier in pressing their claims at the expense of others. The imposition of a capital gains tax would mean that when the small investor required his money—and some investors are trade unions—he would receive more £s, but they would be emaciated £s, because of the decrease in their value. The investor would be taxed upon the difference, as though the £s he received were the original robust £s that he invested, which would not be so.
The Labour Party would not be content with robbing the people by allowing the £ to depreciate at a rate unprecedented in peace time, as they did when in office, but they would also rob the people further when the time came for them to sell their savings, and that at a time when the wages of the average wage-earner—the man now on about £11 a week—are 60 per cent. higher in real terms than the wages of the average wage-earner before the war.
I want to end, not on a note of dealing with the Opposition's false criticisms, but on the note of my right hon. Friend the Chancellor's considerable achievements. By the Budget which he opened yesterday, he has strengthened sterling. He has given an impetus to overseas trade. He has given encouragement to the work providers. He has taken a first step towards righting the wrongs of the married man and the family man and he has

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encouraged everybody who is interested in sport.
In short, what my right hon. Friend's Budget has done is to galvanise our economic life in a way which should result in a far higher surplus next year. This should open the way for more generous concessions on an even wider scale than he has been able to give us this year.
5.52 p.m.
Mr. J. Grimond: The Chancellor at least has one satisfied client in the hon. Member for Dover (Mr. Arbuthnot). I join with the hon. Member in paying tribute to the work of the Savings Movement, although I must say I wonder how long the Savings Movement can continue to attract savings in a £ which is steadily decreasing in value.
When the hon. Member came to paying tribute also to the planning potentialities of Tory Chancellors, it crossed my mind that some of the planning had been crowned with rather curious results. The £100 million cut in expenditure which was planned has not so far emerged from the planning stage, the "plateau" has been abandoned, and I feel that in some ways the Chancellor of the Exchequer would possibly be glad to be freed from some aspects of his predecessor's planning.
Earlier this afternoon, we had an encouraging survey of exports from the President of the Board of Trade. There is no doubt that the prospects for British exports are by no means gloomy. What is vital is that we should take the fullest possible advantage of export openings, because now more than ever this country depends on trade.
I would question only one or two of the points made by the right hon. Gentleman. He compared our situation with that of Germany and said that we were fully competitive now with the Germans. That is probably true, because the Germans are suffering from inflation to some degree, as we are; but I understand that personal savings in Germany are much higher than in this country. That must cause us some concern.
Secondly, we are losing our proportion of world trade. To a certain extent that was inevitable because after the war it was certain that some of the manufacturing countries like Germany and Japan
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would come back into world trade; and as every primary producing country is now building up secondary industries, it was inevitable that we should lose our place to some extent. But this process goes on year after year, and it is a Little disturbing unless we can see a definite end to it.
The right hon. Gentleman paid a charming tribute to the sex appeal of British saleswomen, which, I am sure, was well deserved. I do not know why they should all be reserved for the export trade. A brighter Britain might result from keeping some of them at home I dare say that the slogan of the Tory Party will now be "Physical claims not physical controls." We shall need a little more than that if we are to maintain our position.
The only other point in the right hon. Gentleman's speech which I should like to question is about what has happened over hire purchase. It is notoriously difficult to discover the effect of the Government's restrictions on hire purchase, but it seems that some of the hire-purchase companies have been doing very big business. One wonders how effective the measures taken by the Government have been.
Liberals, I hope I may say without embarrassing him, have a slightly soft spot for the Chancellor of the Exchequer, as we believe that he has some Liberal tendencies and on occasion he has fought and won battles against reactionaries on the benches behind him. We like to see the gloomy science approach with the gaiety which the right hon. Gentleman gives it. I feel that those "damned dots" will be pushed about a good deal during his period of his office at the Exchequer. Certainly, like other hon. Members, I congratulate the Chancellor on holding the attention of the House during the Budget speech. Probably fewer people went to sleep this year than has been the case for many years.
I would say that within the framework set by the right hon. Gentleman, there is a great deal to be said for many of the measures which he has outlined, but I wonder whether he is right to restrict his Budget this year to that framework. This, after all, is the last chance really of the Tory Party to stamp their own pattern on the economy. They will produce only one or two more Budgets at

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most, and it did not seem to me that they have so far tackled the big questions that face us today.
The Chancellor explicitly said in his Budget speech that he thought it would be inappropriate to deal with the question of wage increases. I should have thought that in these days, when the Budget is a general survey of the state of the nation, the most important thing to deal with was the Government's attitude to the wage increases which, we know, will be taking place. Do the Government intend to try to hold their "plateau" or are they abandoning it and starting up the hill of a rising cost of living again?
The President of the Board of Trade today made it fairly clear that the Government envisage further inflation. He spoke of the slack of the economy being taken up. Furthermore, looking at the estimates given by the Chancellor of the Exchequer—for instance, the estimates that Profits Tax will rise by £60 million and Income Tax by, I think, £116 million —it appears that the Chancellor, too, is expecting gradual inflation during the coming year. I should have considered that a serious prospect facing the country.
The next point which was dealt with, I thought rather cursorily, was the state of our reserves. The White Paper talks about our being down to the second line of the reserves. Surely, we are down not to the second line, but to the last line. We are down right to the bottom. We know that there is a likelihood of difficulties in the sterling area. The Chancellor or some other member of the Government might say a little more about whether they think that those reserves can be adequately replenished or whether, on the other hand, for the time being, they are prepared to run the economy on a fairly narrow margin.
The third big question which was not touched upon is the necessity to start recasting our whole taxation system. Surely, we should take some of the weight of taxation off earnings, not only off Surtax payers, but off earnings in general. Certainly, we should like to see encouragement given to the wider ownership of industry.
It seems to me that there is a case at least for examining altogether new sources of taxation. Far be it from me
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to encourage the Government to increase taxes overall, but it is notorious that the taxation base is getting rather small. As an instance, there are such things as the taxation of land values, a subject on which I do not claim to be very expert. That is the sort of thing that I think the Government should now be re-examining if they are really to run a fair, liberal and free economy in this country.
There was little or no talk in the Budget speech about cuts in Government expenditure which, as the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) pointed out, has reached a new maximum. I wonder whether we are to hear that, apart from cuts in defence, it is intended to go forward with the Macmillan economies in administration, or whehter that is to be abandoned this year.
I very much welcome the appointment of the Radcliffe Committee. I suggested such a Committee in the autumn of 1955, and was then told by eminent economists and others that it would take too long. We have now wasted two years, but it is better late than never. I should like to touch on one or two of the matters which I think should be inquired into. The main difficulty is how to retain a reasonably stable £ with full employment. A second point is whether we can rely on interest rates to keep the economy stable when Government expenditure is so high. Thirdly, I take it that it will be within the Committee's purview to examine the finances of the nationalised industries—I think that perhaps a word should be said about that—and that it will also consider the whole financial mechanism of the sterling area. I hope that the Committee's work will not be confined only to the economic and financial system of this country.
Another pressing matter is the state of the gilt-edged market. It is notorious that the Government cannot float a genuine loan on that market. It has to be taken up by the Departments. That is a serious development in our financial scheme of things.
Lastly, it is very important that we should face the implications of running this country on a very narrow margin. Chancellor after Chancellor gives the impression that we shall get back to the ideal of plenty of reserves and elbow room.

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Personally, I doubt whether we shall see that in our lifetime. I think that we shall have to face a future in which we are always trying to capture another bit of the export trade here or develop a new technique there, with 50 million people striving to maintain their standard of living, we shall always be living on a knife edge. I hope that the implications of that will be brought out by the Radcliffe Committee.
The Chancellor is reducing taxation by about £100 million or £130 million. I should have thought that as he will have a surplus of £560 million above the line, it would not have been grossly extravagant had he gone a little further, on condition —and it is an important condition—that under-the-line expenditure should be met by genuine savings. That is not the case at present, and it is an important matter. If we could be sure that the finances of the nationalised industries were really to come from genuine savings, I think that we could afford to go a little further above the line.
If we can put the local authorities into the market—and I do not say that that is a good or a bad thing—I do not see why we should not do the same with the nationalised industries, though not, at present, for equity capital. As I say, if we can do that with the local authorities, there is no reason why we cannot do it with, say, the nationalised electricity industry. In that case, the Chancellor might have gone so far as to take just a little off Income Tax and give considerable encouragement to the people who so need it.
The right hon. Gentleman has reduced Purchase Tax—everyone will approve of that—but he has told us nothing about its future. Surely the Government must soon tell us whether they propose to have a sales tax or whether this is to remain as a sumptuary tax. Every year there is confusion about the incidence of Purchase Tax, and I should have thought that a general statement on that subject would have been helpful.
I do not think that anyone will object to the reduction in the petrol tax and to the duty of £1 on television. The notable thing about the reduction in petrol tax is that a Government have at last fulfilled their pledge. That is a very important precedent. I now recommend the Chancellor to look at post-war credits.
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I feel that there is really a very strong case for raising the lower levels of Surtax in some way. The big jump round about the £2,050 level was obviously anomalous, but to carry on this relief up to incomes of £10,000 a year seems to be unjustifiable at present. The £10,000-a-year man, if he has several children, will get a reduction of £500—
Mr. Lewis: It is the Tory votes.
Mr. Grimond: I do not think it is the Tory votes that count—it is the Tory subscribers.
The concessions to overseas companies and shipowners are considerable. They will cost nearly £50 million in a full year. I do not object to them, but I wonder what effect that will have on other companies. It is quite true that shipowners need this relief, but the shipbuilding industry has not expanded as some of us had hoped it might, and I feel that these concessions will need to be watched.
I must say that I regret that so little has been done for those earning between £500 and £1,500 a year—the technicians, managers and the like whose earnings lie in that bracket. I do not doubt that the Chancellor has that in mind and does not want to anticipate his next Budget, but I hope that he will not have to forgo the pleasure of giving those in that income bracket some concession.
I turn to the question of child allowances. It may be true that older children are more expensive in some ways, but many people can often do without as much domestic help as their children grow older. Indeed, the children themselves supply the help. There is the case for saying that younger children also are expensive. Like every hon. Member I do think that the old-age pensioners now have a considerable case for some improvement. The whole insurance basis of pensions has gone by the board, but I understand that those around me are to produce for the party opposite a very fine scheme for getting them out of their actuarial difficulties. We have been told that the hon. Member for Coventry, East (Mr. Crossman) is to produce a rabbit from the hat, and when it comes it will be very useful.
Mr. Osborne: Will it be a very large one?
Mr. Grimond: We shall have to wait and see.
I regret that the Chancellor did not see fit to alter the historic—cost basis for writing down plant. But what he can say about his reliefs is that, on balance, a good deal of them will be saved. I imagine that many of the high Surtax people have all the Rolls-Royces they want on expense account by now, and that the right hon. Gentleman can expect a considerable saving there.
I want to finish by discussing the Capital Issues Committee. The Capital Issues Committee is a piece of Socialism invented by the Conservative Party. I do not know whether its functions are to be investigated by the Radcliffe Committee, but I hope that they will be. I doubt whether the C.I.C. is able to make better decisions than those made by bankers, but if it is to be a permanent institution should it not be set up in the open, make a report each year, and publish regular statistics of what it does? I do not defend it or want it, but if we are to have it, or something like it, could it not be turned into a general investment board to examine all investment, including the nationalised industries? I understand that it will have very wide powers. If I want to go to Monte Carlo on money borrowed from the bank, that may be a matter for the Committee—
Mr. Bence: Or get an overdraft to get married again.
Mr. Grimond: I do not want to marry again. I have done it once, and I am quite satisfied.
I suppose that we are to have a Finance Bill, and I put these points to the Chancellor in the hope that at least he will see his way to adjusting the tax system a little; possibly think again about carrying the reliefs up to incomes of £10,000 a year; possibly give some incentives to companies to give shares in ownership to their workpeople; and possibly look again at incentives to saving and investment which, I would say, even remembering all the difficulties of the present Budget, are not adequate to meet the case.
6.10 p.m.
Mr. G. B. H. Currie: I am sure the hon. Member for Orkney and Shetland (Mr. Grimond) will forgive me if I do not comment fully on his speech. On the occasion of my maiden speech he
1188
referred to some barbed wire entanglements in Northern Ireland which, as I understood, had vanished when his troops were detailed to collect them. I suggest that on this occasion the barbed wire entanglement which the hon. Gentleman has erected is insurmountable.
He suggested that my right hon. Friend the Chancellor of the Exchequer may have an opportunity of introducing only two further Budgets. I should have thought it was obvious that the Liberal Party is not in a position to take over the government of the country, and I am absolutely convinced that the Labour Party is not in a position to take over. Therefore, it would seem that many more Budgets will be introduced by my right hon. Friend if he remains Chancellor of the Exchequer.
The hon. Member for Orkney and Shetland made an interesting suggestion with which I agreed. He said that some of the weight should be taken off the taxpayer in the form of direct taxation so that it might be transferred to some other means of tax collection which would give an incentive to people. I believe he is completely right. I should have liked to see some form of sales tax replacing Purchase Tax—some form of tax directed, not towards the essentials of life, but more towards articles of semi-luxury and general luxury, which would have given an incentive to people not only in the factories and offices but throughout the country generally to indulge in increased effort. We hope that a tax on those lines may be introduced in the future.
I should like to congratulate my right hon. Friend the Chancellor upon this Budget. It is a courageous Budget, a sign-post Budget which shows the way in which we can look forward to increasing prosperity under a Conservative Government. I congratulate my right hon. Friend upon his Budget proposals which afford relief to those with family responsibilities. I should have liked those proposals to have gone a little further. I should have liked to see some additional relief afforded to those parents who pay for the education of their children out of their incomes. They are relieving the State of some of its obligations. They are, in many cases, incurring great hardship in finding the money to pay for the education of their children, and they should be encouraged to continue in that course.

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The reliefs given in petrol duty and Purchase Tax are most welcome. These reliefs will extend to every class and shade of the community. They have brought reliefs which will affect all the people. I welcome my right hon. Friend's proposal to give relief to those who bear the incidence of Surtax. I think it is recognised that Surtax has driven away from this country many of those technicians and younger people in management who have been so essential to the well-being of the country. This country relies on the inventive skill and workmanship of its craftsmen. It relies on an expanding economy, and I believe that this additional incentive in the form of relief from Surtax will help our export drive.
The Chancellor has coupled this incentive very well with his proposals to afford relief to corporations developed for the expansion of our trade abroad but managed in this country. I believe that the overseas trade corporations visualised by the Chancellor will give a great stimulus to the development of the British Commonwealth and our overseas trade. I cannot see how the Opposition can criticise the overseas corporation tax concessions while criticising the sale of the Trinidad Oil Company. Criticism of both those features is completely inconsistent and shows the sort of means to which the Opposition has been driven by my right hon. Friend's proposals.
My right hon. Friend has granted some relief to the elderly. One could wish that that relief could have been spread further, but I would say that the Conservative Party's record in assisting those who have reached old age is infinitely better than the record of the Opposition. I have no doubt that, as soon as it becomes possible for my right hon. Friend to do it, he will introduce proposals which will extend that relief to the elderly who rely upon the State for their only source of income.
The elderly living on small pensions and those who have saved against their retirement will welcome my right hon. Friend's proposals. They will be grateful to him, and I think all of us who have elderly parents, no matter on what side of the House we sit, will also feel some gratitude for my right hon. Friend in this respect.
Mr. A. E. Hunter: Would not it have been better to have helped the
1190
old-age pensioners first, and the £10,000 a year people later?
Mr. Currie: I was dealing with the relief afforded by my right hon. Friend to retirement pensioners. I was not dealing with Surtax. There may be something in what the hon. Gentleman says, but, in these remarks I was intending to deal only with the relief given to elderly people
There is one type of pensioner whom I should like to bring to the close attention of my right hon. Friend. The class I have in mind gave great service to our nation in the face of real and terrible personal danger. I refer to those who before 1922 served in the Royal Irish Constabulary and who enlisted in the Royal Ulster Constabulary when that force was set up.
The policy of disbanding the Royal Irish Constabulary was contemplated and provided for in Article 10 of the Irish Treaty. It was carried into effect by the Government of Ireland Act, 1920, and a compensation allowance was made payable to policemen disbanded under the provisions of that Act. It was given as compensation for loss of office, but I believe that it was given also in recognition of their great courage and personal sacrifice in the dangers which they and their families ran in those dark days of Irish history. The Government here not only guaranteed the payment of all pensions to those who retired before disbandment but also guaranteed the payment of compensation allowance to those still serving in the Force at the time disbandment came.
In 1922, the Government passed the Constabulary (Ireland) Act. Speaking on that Act when it was a Bill passing through Parliament, the then Chief Secretary for Ireland, Sir Hamar Greenwood said:
"I must now express my regret that it was not possible to ask the House to give this Bill a Second Reading before disbandment commenced."—[OFFICIAL REPORT. 10th May, 1922; Vol. 153, c. 2230.]
It was obvious that many of the officers and men who served in the Royal Irish Constabulary joined the Royal Ulster Constabulary before they discovered that, as a result of joining the Royal Ulster Constabulary, they would sacrifice their right to this compensation allowance.

1191
Under the 1922 Act, the compensation allowance payable to policemen was suspended if the policeman took service in a police force in Ireland or elsewhere. These terms were never communicated to many of those who gave service in the Royal Ulster Constabulary, when that new Force was created to bring order again to the northern part of Ireland.
At the time, there was great confusion. There was disturbance in Ireland, and sometimes it was not possible to bring to the notice of isolated policemen in remote stations the terms which were being imposed upon them. The legislation passed was itself most complicated. It is doubtful whether many of the officers and men would have been able to understand it, even if it had been brought to their notice. Lord Carson, a judge of the Supreme Court of Judicature said in another place that he had the greatest difficulty in understanding the Act which dealt with compensation to these men. Many who joined the Royal Ulster Constabulary would not have done so had they known about the terms as to their compensation allowance. If they went into any other form of Crown service, into the Civil Service or any other employment, they were enabled to continue to draw their compensation allowance and on retirement to draw their newly won pension and the compensation allowance as well. It was only those who took service in the police force who were deprived of their allowance.
I have a table of figures here showing the figures of the loss of allowance in certain cases. On the average, these men have lost £3,000 a head, and that money has gone to the Treasury. On many occasions, my hon. Friends have raised the matter with the Home Secretary, but without success. A grave injustice has been done. The services of these men were obtained on promises in the Government of Ireland Act which were torn up by the Act of 1922 to which I have referred. I ask my right hon. Friend to consider whether he cannot now, even at this late stage, do something for them. Their numbers are depleted; many of them have died. I ask my right hon. Friend whether he cannot, even at this late hour make some provision in this Finance Bill for those who are left and for the widows of those who have gone.
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I realise that some years of service were credited to those men who went into the Royal Ulster Constabulary. They were given the entitlement to count some years of service towards their Royal Ulster Constabulary pension. But when their case is contrasted with that of those who went into the Civil Service and other forms of employment, the hardship is obvious. Not only would my right hon. Friend be doing them a service, but he would be doing himself and his party a service if he were now to make some provision to relieve them as I have requested. I hope he will look at the matter again.
I apologise for trespassing on a Budget debate in order to mention this particular incident in the raising of money—that is what it really comes to; money must be raised to deal with this—but no other occasion was available to raise the matter in this House. I am sure that the Committee will forgive me for having raised it in this way.
6.27 p.m.
Mr. R. Moss: The hon. Member for Down, North (Mr. Currie) referred to the Budget as a "signpost" Budget, the finger of which was pointing in the direction of increasing prosperity under Conservative rule. If that were so, I should not quarrel with it. I have lived with poverty and misery, and I have no desire to see it perpetuated for any section of the population under any Government. But, of course, the hon. Gentleman will remember that the Chancellor emphasised that the prosperity of this country will depend upon its success in respect of the international balance of payments and the building up of its gold and dollar reserves.
The Chancellor's first Budget statement has almost coincided with the appearance of a new comet. In ancient times, this was regarded as a portent. I should like to quote from an article in the Observer last Sunday on the appearance of this comet. I hope that this is not a portent so far as the Chancellor personally is concerned:
"There seems to be a widespread idea that comets shoot across the sky like rockets. In fact, the new comet will rise and set much like the moon itself."
The right hon. Gentleman's future depends upon the risk which he has taken for the year 1957.

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I should like first to deal with production during 1956. The Economic Survey in paragraph 1 refers to
"a temporary check to our industrial growth"
in 1956, implying that in 1957, or perhaps in 1958, there will be some recovery of progress. The Treasury Bulletin for Industry for March, 1957, refers to the economy in 1956 as "steady but not stagnant".
In his Budget statement the Chancellor of the Exchequer seems to take that view. He said:
"It is a story not of stagnation, but of immense variety."
He also said:
"It is a picture not of industrial apathy, but of a nation girding itself for renewed and greater effort."—[OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 967.]
I suppose that the Conservative Party will get the benefit in the country during 1957 and 1958 and thereafter over the General Election, if that is true. I would not blame them for that; if it is true, that is what I expect to happen. In paragraph 33 of the Economic Survey it is stated:
"Industrial production did not expand at all."
An article in the Economist some time ago was headed, "The Year the Economy stood still."
It is admitted that during 1956 industrial production, though not, of course, agricultural production, did stand still in the sense that overall production did not rise. But I agree that there was movement internally, and it is on those changes which took place internally that the Chancellor based his hopes. However, what happened in 1956 in Britain contrasts with what happened on the Continent of Europe. That is made clear in paragraph 5 of the Economic Survey where it is stated:
"Between 1955 and 1956 the industrial production of the continental European countries rose by 8 per cent."
When industrial production is not rising the real burden upon the economy of such services as defence and the rest of the social services is increased. Therefore, when we are considering the prospects for 1957, we have to base out hopes upon changes that have taken place, such as the shifting of labour from one section of production to another— although I hold the view that that has
1194
not taken place to the extent that it might have done—and upon the success that we can achieve externally regarding our balance of payments.
The Economic Survey, in paragraph 92, makes this clear. It states:
"We can look forward to further progress in industrial investment and with it further improvements in the living standards of the whole community only when the balance of payments has been placed on a really secure footing."
It is, therefore, necessary to look at the balance of payments position and I am sorry that the Chancellor of the Exchequer did not devote as much attention as he should have done to the urgency of that question.
The trade deficit during 1956 was reduced from £859 million to £571 million. That was assisted by an improvement in the terms of trade which, of course, may not continue, and it was due to the fact that imports scarcely increased at all, while exports increased significantly. The chief reason for the improvement in 1956 was an improvement in the export performance of about 10 per cent. in value and, so far as I can make out, 5½ per cent. to 6 per cent. in volume. That is to be welcomed, and praise should be given to those who have helped to achieve it. No matter what the political complexion of the Government of the day may be, we must seek to achieve just that result in the years to come.
It seems to me that the export performance in the dollar world was substantially improved. I may be wrong in these percentages, because I have worked them out for myself, but my figures are that there was an improvement of 31 per cent. in value—if the £22 million of silver bullion in included—and nearly 26 per cent. without the silver. That is according to Table 18 in the Economic Survey. I regard that as a substantial achievement. There was a current surplus, chiefly for this reason, of £233 million in 1956 or an improvement on 1955 of £312 million.
That is an achievement which should not be discredited or denigrated. We must hope that it continues. All that is to be welcomed, but there are certain shadows to which I wish to refer. The first is that in the Treasury Bulletin for Industry for February, 1957, it was stated that from

1195
the middle of 1956 to the middle of 1957 we should be roughly in balance. No reference was made to that by the Chancellor. I, and I am sure all other hon. Members, would like to know whether that is still true, or whether the latest information gives an indication of some improvement upon that forecast. To be roughly in balance is not good enough.
Last December, the Minister of Labour and National Service said:
"… to be roughly in balance … is nothing like good enough and … we must try to earn a continuing surplus year in year out to meet our commitments."—[OFFICIAL REPORT, 20th December, 1956; Vol. 562, c. 1522.]
Moreover, it appears to be true that although our export achievement was creditable, world trade in manufactured goods continued to expand during 1956 at the same rate as in 1955. In fact, it continued to expend rather more than did our own exports. Here again, that is made clear in the Treasury Bulletin for Industry for January, 1955, which reported:
"We have been increasing the volume of our exports in a world which has been doing the same: in each of the three years 1954–56 the volume of world exports of manufactures rose, in fact rather more rapidly than the volume of United Kingdom exports."
And the Board of Trade Journal of 26th January this year stated:
"The decline in our share of world trade has not been halted."
All this affects the gold and dollar reserves. The Economic Survey was, I think, rather cold in its statement of the position—
"Thus, at the end of the year the gold and dollar reserves were slightly larger than at the end of 1955."
The Chancellor did not face that problem with the urgency that it demands. It is a problem to which the Government have in the past few years had to pay regard.
Unlike the President of the Board of Trade, I do not propose to fall into the trap of comparing what happened after 1945 with what happened after 1951. It is fallacious to do so. Nor shall I refer to the level of gold and dollar reserves in 1951 without referring to the fact that they were falling rapidly during 1951. That seems to me to be the sort of argument that no intelligent man would advance.
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Nevertheless, the position as given in Table 14 of the White Paper, United Kingdom Balance of Payments, 1946 to 1956 (No. 2), is that on 30th June, 1954, our gold and dollar reserves stood at£l,078 million, on 31st December, 1955, at £757 million, and on 31st December, 1956, at £762 million. At present, I suppose, they stand at £790 million or about that. That is a serious decline in the level of the gold and dollar reserves. It is a decline which has to be halted, and then the level must be made to rise.
From the middle of 1954 to the end of 1956 it seems that we lost £316 million from our gold and dollar reserves, and that is roughly one-third of the reserves which we then held. During 1955 alone we lost £229 million worth and during 1956 we gained a nominal £5 million.
Mr. R, E. Winterbottom: Has my hon. Friend taken into consideration that last year this country withdrew £200 million from the International Monetary Fund, and that we defaulted on the American loan, so that the loss in gold and dollar reserves of this country was nearer one-half than one-third?
Mr. Moss: My hon. Friend must have some very close spiritual affinity with me, because that is precisely the point to which I was coming. I was going to say that this paltry gain of £5 million was made because we sold the Trinidad oil holdings, because we borrowed about £200 million from the International Monetary Fund, negotiated standby credits of about £440 million with the International Monetary Fund and the United States Export-Import Bank, and sought and gained a waiver of interest on the American and Canadian loans.
Therefore, it seems to me that even at the low figure they stand at the gold and dollar reserves do so in only nominal terms and that in fact they are not worth even the nominal level at which they stand. The real position must be much worse; perhaps the level is £762 million or £790 million; and it may be fair to say that the gold and dollar reserves which are ours are nearer to £600 million than they are to £800 million.
I agree with Sir Oliver Franks that the gold and dollar reserves are painfully inadequate. There is no escaping that

1197
fact. I should like to know what level of gold and dollar reserves the Government think desirable. Is it £1,000 million or is it £2,000 million? There must be a level of gold and dollar reserves at which to aim. There must be a surplus in our international balance of payments which it is desirable to achieve and a level of gold and dollar reserves we should all desire to see.
The Economic Survey, in paragraph 90, says that the 1956 surplus
'"was still quite inadequate to enable this country to meet all its overseas commitments and to start to build up the reserves to a point at which they are strong enough to take in their stride a temporary reverse such as they have recently suffered."
I believe that it should be the first objective of this country to secure a continuing surplus in our balance of payments with the object of building our gold and dollar reserves. Unless we achieve that we can have no prosperity.
I wish now to say a word about the employment position. The Economic Survey shows no emotion about that either. It says that in 1956 there was
"some rise in unemployment and short-time working and some falling off in overtime."
According to the figures that I saw yesterday, there were 363,000 unemployed, 1·7 per cent. of the working population. It is true that there has been an increase in unemployment recently, a decline in the number of jobs available, and an increase in short-time working, so that it appears that there are ten men seeking for six or seven jobs. I shall not go into all the statistics of the employment position which has been brought about by the policies of the Government.
Mr. Osborne: Do I understand the hon. Gentleman to say that there are ten men seeking for six or seven jobs? If so, he must surely be wrong, taking the whole working population?
Mr. Moss: The figures which I gave were that there are ten men seeking six or seven jobs—vacancies, unfilled posts.
Mr. Osborne: I see.
Mr. Moss: I apologise to the hon. Member if I inadvertently misled him.
Behind the story of these figures there is very often a story of human tragedy. For instance, a friend of mine who was working in the motor trade in Coventry
1198
is now cleaning windows. He looked after himself; he managed to get a job of that kind. He was lucky, as one of my hon. Friends remarks. Another friend of mine who lost his job in a Coventry motor works was unable to find another job for a long time, but eventually found one in insurance, and he was so unhappy in that job that he had a nervous breakdown. Now he is out of work again. There are men who become so accustomed to doing a job, an unskilled or a semi-skilled job, that they find it impossible to adapt themselves to any other.
I could give many examples of the human tragedies behind the statistics relating to employment and unemployment, which lie behind the shift in the labour force from declining to expanding industries. It is to these cases that the Committee ought to devote some attention. In my view, it is necessary for the Committee to help workers who become redundant in a declining industry, and to help them in four different ways to ease their transition from one industry to another.
The first way is to help them financially. Many of them have wives and children and commitments. A friend of mine was just about to enter upon a mortgage for the purchase of his house when he was sacked, and he refrained just in time from entering upon that commitment. The second is by way of accommodation, because workers may have to leave their homes and go long distances to find other jobs. The third method relates to the termination of employment and the conditions upon which it is ended. The fourth is to retrain workers so that they are able to find other jobs even if they are getting older and have become rather settled in their ways.
It will be of great help to the country that defence is being remodelled. It is interesting to note that the economic argument has at last been admitted in the Defence White Paper, which says that defence has taken 10 per cent. of the gross national product during the past five years. Paragraph 72 of the White Paper adds that both exports and capital investment will gain as a result of the new policy. That is very desirable, but we shall still be spending about £2,700 a minute on defence, even at the reduced

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rate of expenditure of £1,420 million or about £28 per head of the population.
It would be desirable to seek even further economies in defence in order to make better use of the money spent on what, after all, is economically wasteful. As I said last year, a reduction in defence expenditure, which I hope will now continue, is an essential part of the battle against inflation. I said then that it was wrong for Ministers to speak as though the relationship between defence expenditure and inflation did not exist. I am extremely pleased that at last something is being done about it.
I, too, congratulate the Savings Movement, because I believe that savings are essential. I noticed that Premium Bonds were only 2 per cent. of the total savings last week and that withdrawals exceeded new deposits. It is undoubtedly true that savings improved last year, but not because of the introduction of the Premium Bonds scheme. The White Paper states that the improvement was probably due to hire-purchase restrictions and it seems to me that it would have taken place in any case, with or without Premium Bonds. The best way to encourage savings is to halt the fall in the value of the £, an action which is long overdue.
We now face a year in which prices may rise. I personally face increases in the rates and in mortgage charges, and increases in various other prices and in insurance contributions. I believe that there will be great danger of rising prices this year, but we must hope for the best.
The year 1956 was not a good year on any showing. Lord Harlech, of the Midland Bank, described it as
"Altogether, a year in which interest rates were lifted on to a still higher level, tax burden further increased, a scheme of Government prize bonds introduced as an incentive to saving, capital investment restricted and hire-purchase controls widened and stiffened, petrol rationing reintroduced, arrangements made for fresh borrowing abroad, and a waiver of interest sought on Government debts in the United States and Canada—such a year could not be regarded otherwise than as revealing once again the narrowness of the margin of resources upon which the United Kingdom economy has been working since the end of the war."
In 1957 we face a year of doubt, with gold and dollar reserves inadequate, prices rising, more working days lost
1200
already through industrial disputes than in the whole of 1956, and industrial production sagging. We live in hope, but I do not see that concessions to Surtax payers will help to solve the important economic problems that the country has to face.
6.55 p.m.
Mr. James Ramsden: The hon. Member for Meriden (Mr. Moss) is one of those on the benches opposite with whom I find myself least often in disagreement. Apart from his rather pessimistic review of results last year, there was a great deal of what he said with which I have no quarrel. I should, like, however, to take up one point which he made in connection with production. He quoted at length from a table in the Economic Survey which he thought relevant to the argument, but surely when we talk about production the table in the Survey which we ought to look at with particular interest is Table 12. It contains remarkable and I think rather daunting figures. It shows that during the past year earnings increased by 8 per cent. but output per man-year decreased by 2 per cent.
I hope that the hon. Member will agree with the conclusion which I draw from those figures. It is that in industrial relations for the future we should not concentrate so much upon holding down the level of wages, which is a rather unrewarding pursuit in the light of past events, as upon the need to get rid of restrictive practices, wherever we can, and so improve as best we can the rate of production.
I, too, am concerned at the apparent standstill in industrial production, but there is a great deal of reassurance to be drawn from the speech of the Economic Secretary to the Treasury in the economic debate in January. He showed very convincingly that what has happened is that though production has dropped in those industries producing goods for consumption it has gone up where we need it, namely, in those industries producing goods for export.
Mr. Moss: I was referring to such matters as that the coal industry, for instance, gained 3,000 workers but the distributive trade gained 20,000 workers in 1956. I said that I agreed that there had been a redeployment of labour, but

1201
not to the extent that I should have liked to have seen. The workers have not gone into the right places.
Mr. Ramsden: I agree with the hon. Member that redeployment has not gone far enough, but it is certainly arguable on the figures that there has been some redeployment, and that is highly desirable.
Mr. Moss: Yes.
Mr. Ramsden: There has been some redeployment into the export industries from industries making, for example, electrical goods for consumption on the home market.
As to the reserves, about which the hon. Member for Meridan spoke with feeling, their future has been safeguarded in the Budget by the refusal of the Chancellor to follow the suggestion of the right hon. Member for Huyton (Mr. H. Wilson) and be too ready to stimulate new investment on a broad front. He has done well this year to beware the danger that befell the Labour Government in 1950–51.
Mr. Gordon Walker: And the Lord Privy Seal.
Mr. Ramsden: Yes, and the Lord Privy Seal in 1955. The Chancellor has been wise to avoid the danger of stimulating new investment on a scale that might have serious reactions on our balance of payments and on our reserves.
The hon. Gentleman the Member for Leeds, West (Mr. C. Pannell), who is not in his seat but who has given me permission to quote him, yesterday made the remark to me that this is a good Budget for Harrogate, which is my constituency, but not for West Leeds, the industrial constituency not far away which he represents. I want to take that thought a little further. I am content to have it said that this is a good Budget for Harrogate. As a town we depend on the hotel and tourist trades, and those interests will be assisted by the reliefs of Purchase Tax on the things used in hotel kitchens and on floors. Also the 1s. off petrol will be a help to a town to which people come from long distances in order to shop.
The right hon. Gentleman the Member for Huyton had a great deal to say about petrol. This has been rationed as much
1202
by price as by coupons during the last few months and hon. Gentlemen opposite were foolish to object, as they did, when the Bill on this subject was introduced by the Government. I should have thought that their own experience when in office had shown that it is not much use having physical rationing of a commodity which is at the same time too cheap. Now that petrol is in better supply the tax reduction is justified and will be welcomed.
Now a word about the concessions to personal incomes. I have no doubt that these also will be welcomed in my constituency. And why not? I think that even hon. Gentlemen opposite will recognise a certain justice in this. The people who will benefit from these reliefs, and who may welcome this as a good Budget on that account, have had to put up with a series of what were, from their point of view, bad Budgets introduced by successive Socialist Chancellors. I cannot see why it should be held to be the first duty of a Chancellor deliberately to pass over the just claims of his own supporters.
Mr. Winterbottom: The hon. Gentleman has given the whole case away.
Mr. Ramsden: I did not notice that when hon. and right hon. Gentlemen opposite were in office Socialist Chancellors of the Exchequer showed themselves ready to ignore the claims of those whom they might suppose would vote for them.
This Budget is being attacked from the benches opposite as a class Budget, and I want to try to deal seriously with that point. I think the charge is unfounded and I do not believe that there is one of the reliefs given to income in the higher ranges that cannot be abundantly justified on serious economic grounds. My own constituency is one of the domitory areas for the industrial West Riding. Many of the top executives in Leeds and Bradford and the other West Riding towns live in my constituency. I should have thought it was in the best interests of the industrial areas, and of the people living in them, that the top men should be rewarded by salaries commensurate with the value of the job they do. That is one of the conditions of having thriving industries.
One of the troubles about high taxation on the incomes of top executives has been the difficulty which it has put in the way

1203
of firms which have wished to attract good new personnel at the top. Many have not been able to offer salaries good enough to make it worth while for the executives to go to the bother of changing their jobs and moving house. One of the good things about these tax reliefs will be that they will help growing industries to attract the best men. To use the jargon of the economists, which one tries to avoid as much as possible, these reliefs will have a good effect on the mobility of labour in management grades. I think that this object is worth while, and that these reliefs are justified economically for this reason alone.
I also believe that these tax concessions will promote the growth of personal savings which, as the hon. Member for Orkney and Shetland (Mr. Grimond) reminded us, are most important. As he said, it is strange that people should still want to save in view of the trend over the past few years in the value of money under all Governments. Yet they do, and it is lucky that they do, in view of the importance of personal savings to the economy.
It is apparent from the Economic Survey that it is desirable for personal savings to increase this year. The Survey seems to show that much of the welcome increase in such savings last year was of a once-for-all character. For instance, one cannot reduce a bank overdraft twice. Having got it down once, it has gone. Also, when a hire-purchase debt has been paid, that commitment cannot be reduced again. Therefore, if the welcome growth in personal savings is to continue, we shall have to look elsewhere for sources of savings. Last year there was a concession to the self-employed to enable them to save through pension schemes by relief to their Income Tax and Surtax.
I myself looked into one of these schemes. The snag was that although the ultimate benefits were very good— especially when one was dead—and the tax relief was obviously attractive, before one could qualify for anything one had to find £25 or £50 ready money to pay the premium. I gather from the insurance companies that I was not alone in finding difficulty in getting ready money to pay the premium and that business in these pension schemes has not been as brisk as the Chancellor expected origin-
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ally. My point is that these tax reliefs will help people to find money for such schemes and so to save. In fact, I believe that they are complementary to the plan for savings by the self-employed which was introduced last year.
I want to say a few words about the position of pensioners, many of whom live in Harrogate. Probably there is a rather larger proportion of pensioners in my constituency than in the constituencies of some other hon. Gentlemen. Many of these people are in straitened circumstances compared with those they once enjoyed, and compared with what they looked forward to enjoying in their retirement.
I think the Committee would agree on the whole that financial hardship in retirement depends not only on the absolute level of a person's income. Someone may get quite a bit more than the basic State pension and still suffer a great deal from falling money values. The fall in money values has made a mockery of the position of many of those on small fixed incomes.
I recall a Socialist speaker saying at a recent by-election in my constituency that there were more cases of hardship behind the lace curtains of Harrogate than in many other places. That may be true, so once again I am glad that a Conservative Chancellor has done something for these people. A letter which I received the other day from a contituent makes this point far more cogently than I can. He wrote:
"The only other thing that can help we small and ageing pensioners would be a relief in Income Tax. For my part I am still employed—61 and still with the Air Ministry. On the one hand I get badly mulcted … on my small joint incomes, and I dread the day when I must revert to £425 as my sole income. Even that will fall under present Income Tax collections."
That letter was written before the Budget—
"The small fixed incomes in the ageing group are indeed punished in these days of such high cost of living. Many of my people are older and unable to work.…"
That seems to me to hit the nail on the head, and I am grateful to my right hon. Friend, as the recipients of that relief will be.
May I make one last point on a rather different tack, in order to give something to my right hon. Friend the Economic

1205
Secretary to the Treasury to answer when he speaks at the end of the debate? Some weeks ago, a group of us on these benches, after weighing well the dictum of the Economic Secretary that it was easy to talk nonsense about investment, wrote a letter to The Times, advocating among other things, which have been done, higher investment allowances, which we suggested might be selectively applied. The Chancellor gave us his reasons yesterday for not applying any further stimulus to investment this year, and I accept them. There will be industrial growth, anyway, in the basic industries, as my right hon. Friend showed yesterday, and in agriculture; and I would, therefore, put just this one point for consideration.
It is admitted that one serious limiting factor to new productive investment is the physical shortage of steel. Home-produced steel is relatively cheap, and is in short supply. We have become accustomed to relatively cheap steel in this country, just as we became accustomed for long years to relatively cheap coal. [An HON. MEMBER: "It still is."] It still is, as an hon. Member says. I wonder whether in our building techniques we are inclined not to use steel as economically as some other European countries do. One has only to travel on the Continent and observe conditions there to see how much more careful and sparing they are in the use of steel in construction work.
Mr. Jack Jones: Is the hon. Gentleman aware of the difference between the safety margins demanded in specifications by our engineers in this country, as against the steel required to do the job? They are far less than the safety margins required by engineers in any other nation of the world.
Mr. Ramsden: I am much obliged to the hon. Member for Rotherham (Mr. Jack Jones), but he surely means far greater?
Mr. Jones: Yes, far more.
Mr. Ramsden: That is a point with which I was not familiar, but which obviously should be given consideration.
I suggest that it might be possible, on the analogy of the investment allowance for fuel economy devices, to devise some means of encouraging the wider production and use of substitute materials for
1206
steel. One thinks of reinforced concrete and timber, particularly, though not so much timber, perhaps, because much of it has to be imported. Obviously, a direct investment allowance for steel manufacturers would be inappropriate, since the industry is at full stretch already—
Mr. Jones: It is not.
Mr. Ramsden: The hon. Member for Rotherham, knows best, of course, but I understand that production plans are in a high state of preparation and that the industry is at full stretch. I wonder, therefore, whether steel economy, like fuel economy, might be encouraged by the Government by some fiscal device.
To conclude, I want to welcome this Budget, and especially the way in which it was expounded to the Committee yesterday. I am glad that my right hon. Friend the Chancellor eschewed metaphors this year. He did not "breast any waves" or seek to "stem any tides." He was much more pedestrian, but no less incisive for that, and I am sure that he has made a real contribution to the economic well-being of the nation.
7.15 p.m.
Mr. R. E. Winterbottom: I want to deal for a moment with the problem of steel, and to say that I agree with the hon. Member for Harrogate (Mr. Ramsden) that the probability is that some kind of examination in the use of steel must be made. As one coming from a steel-making constituency, I agree with the hon. Gentleman, though I do not think that all his facts about steel were quite right. I do not blame him for that, because it is very difficult to get them from the quiet seclusion of a boarding house in Harrogate. Anyway, we will leave it at that, and I only add that I agree with the hon. Gentleman on the question of an inquiry into the use of steel.
I want, first of all, to deal with a headline which appeared in an evening newspaper yesterday, which read: "A Bit for Everybody." I think those concerned must have written the headline before the Budget speech was delivered. I think they had that headline ready and were then somewhat misled in using it by the honeyed words of the Chancellor yesterday. I do not think this Budget in any way, shape or form, can be described

1207
as a Budget that contains a bit for everybody, and I hope that the writer of the headline, in the cold light of this morning, will have had other thoughts.
He will probably realise, as most of us have now realised, that 300,000 people at most will benefit from the Budget that was introduced yesterday—300,000 who will benefit by the—I must say it—partisan nature of the Budget. On the other hand, there are at least two million people, the old-age pensioners, who have supplementation of their income, and those who are chronically sick, some of the unemployed and some of the destitute in Britain today, who will certainly not agree that they are participants in a Budget which offers a bit for everybody.
I wonder whether it has struck the attention of the Committee that, when this country is going through an economic crisis and a Tory Government are in power, we hear cries about equality of sacrifice. I could give examples from my own experience in 1931, in the days of the "Geddes Axe" and before that, and before the present Tory Administration came into power in 1951. We have heard talk from Tory speakers about the necessity to the economy of this country of equality of sacrifice. If there is anything going in the Budget, I wish some of the Tory speakers would start talking about equality of benefit for everybody and start to apply it while the going was good. That is the reason why I am bringing this point before the Committee.
Roughly speaking, a man with an earned income of £10,000 a year will receive approximately an addition of £600 to his income as a result of the Budget.
Mr. Ellis Smith: £600? That is more than a skilled engineer gets. It is a shame.
Mr. Winterbottom: The wage advance given by the Chancellor yesterday to the £10,000-a-year man is far more than the engineers could ever hope to get, however many negotiations they conducted.
The man with an earned income of £5,000 a year will benefit to the extent of about £250 a year, but the old-age pensioners on supplementation and others dependent on welfare provisions will get nothing.
Why do I dislike the Budget? To be perfectly frank, I think it is a crime of
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calculated neglect against the poorest in the community. When we think that so many of these people who are dependent on a pension or the provisions of the Welfare State are living in privately owned houses and will be subject to heavily increased rents in the near future, we realise that the Budget is an even bigger crime.
These are matters which have been argued since the Budget was introduced yesterday, but I can speak on behalf of the old-age pensioners by telling the right hon. Gentleman the Economic Secretary to the Treasury, who is on the Front Bench, that I think the treatment of old-age pensioners in the Budget is nothing short of scandalous.
My purpose was not so much to deal with the old-age pensioners' problems as to deal with one or two other simple problems in respect of the Budget. I hope to put them in question form. First, I want to quote what the Prime Minister said on 4th December last year, when he was Chancellor of the Exchequer and was dealing with the problem of the gold and dollar reserves. He said:
"I do not, therefore, propose to take any immediate steps on the Income Tax. but I must warn the House and inform the world that the Government will not hesitate to use this weapon, if needed, when the time comes. What will be required can far more easily be judged in three or four months' time, when it should be possible more precisely to judge the impact of the last four months on the economy."—[OFFICIAL REPORT. 4th December. 1956; Vol. 561, c. 1055.]
That is what the Chancellor, now the Prime Minister, said four months ago. From that statement, I judge that the then Chancellor had surveyed the position whether or not an increase in Income Tax was necessary. We had had a very serious difficulty in the Middle East which had cost this country, directly, at least £100 million. According to my right hon. Friend the Member for Huyton (Mr. H. Wilson), the overall cost, direct and indirect, to this country of the Suez catastrophe was £275 million. I can therefore understand that at that time the Prime Minister, then the Chancellor, seriously considered whether there should be some increase in the Income Tax levels in view of the heavy financial cost of Suez.
Arising out of that, I must ask this question: what has caused the Government's change of mind between considering, in December last year, possible

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Income Tax increases and on this occasion giving tax concessions, especially to the wealthy people of the country? I hope my voice reaches the Economic Secretary; I do not think there is much doubt that it will, and I hope he will take note of the question. Why have they changed their minds now compared with their views last December?
If the right hon. Gentleman wishes, I will give him the answer. It is that there have been certain by-elections, and I have no doubt at all that the by-elections of the last four months have put the wind up the Government. I have no doubt that the Gallup poll has shown the writing on the wall, and it is pretty rude writing about the Government.
I have given him those reasons, but why increase the allowance on unearned incomes for the wealthiest in industry? What is the explanation of the Government's action? I can find no logical reason at all to justify the generous gift of £37½ million to about ½ per cent. of the population in the country's present economic conditions. That, I think, is the most serious indictment which could be levelled at the Government. Why has the Chancellor given this money in taxation relief to those earning between £2,000 and £10,000 a year? Does the Chancellor feel that we have now turned the economic corner? Does he think that we have achieved economic rehabilitation? I put those questions to him. If so, then in his answers to the House he should give evidence. What is the evidence to justify the concessions to those earning between £2,000 and £10,000 a year, bearing in mind the statement made by the former Chancellor of the Exchequer last December?
I do not think the right hon. Gentleman can plead either production or productivity. Unfortunately, this country cannot boast an increase in production or productivity to compare with that of competing countries in the world. Our reserves have been bolstered up with £200 million from the International Monetary Fund, and we have had the benefit of the sale of the Trinidad Oil Company. We have defaulted on the American loan.
Mr. Douglas Glover: No.
Mr. Winterbottom: We have defaulted on the interest.
Mr. Ellis Smith: It is the same thing. In any case, they would like to default.
Mr. Winterbottom: Nevertheless, our reserves today are only about half the total when the Tory Party came into power in 1951. That is a sad indictment of a Government which came into power saying that it would save the £.
Mr. Jack Jones: And mend the hole in the purse.
Mr. Bence: Now they have lost the purse.
Mr. Winterbottom: I will make no comment on successive Tory Chancellors since 1951, except that the job of Chancellor of the Exchequer seems to be a political graveyard unless one can get out of it very quickly. At a time when the country has not recovered from the direct or indirect cost of the Suez fiasco, the Chancellor gives his friends a financial windfall of £37½ million. In view of the economic circumstances of a struggling industrial Britain, in my view that is entirely unjustifiable.
I know that the Chancellor may say he has done this as an incentive, but I do not think he would go to the length of saying that this is an incentive Budget. He also said that he wanted to help investment, and the hon. Member for Harrogate said the Budget would help investment.
What guarantee has the Chancellor that the £37½ million he is giving in relief in Surtax will go into investment or savings? There is not the slightest guarantee that that will happen. That relief has been given without conditions. Even if that £37½ million could be ploughed back into British industry, it would still be infinitesimal compared with what is necessary to put British industry on its feet as a competing unit in world markets.
Mr. Jack Jones: I am interested in this giving away of £37½ million. For the sake of the record, will my hon. Friend make it clear that the Chancellor would probably say that he is not taking £37½ million from them?
Mr. Winterbottom: It is a case of spinning the coin—it comes to the same thing.

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The fact of the matter is that next year men with salaries of £10,000 a year will have £600 more and there is no guarantee that they will use the money for the benefit of Britain, in spite of the fact that the Chancellor has allowed the money at a time when we are facing economic difficulty and distress. What will be said by the lower ranks in industry —if they can be called that—the men in the steel factories, in the cotton mills and in transport? We now know that the recent difficulties in the docks were intensified by the overt or tacit encouragement by the Government of employers in the docks to pursue a policy of wage restraint. Statements were made by the chairman of the directors of the docks to that effect.
The Government cannot logically plead wage restraint when they give the biggest increase in annual income to a small percentage of people, as they have done with this Surtax relief. I suggest to the Chancellor that the reflection of this partisan Budget will be seen in every wage negotiation during the next twelve months. Snowball strikes will become booms' boomerangs. In the light of these unnecessary concessions by the Chancellor, I should not decry the application for wage advances by trade unions, because the evidence has been gratuitously supplied to them by the Chancellor. The Chancellor has robbed the poor to give to the rich, and I cannot find a reason.
I want to say what I think of the Government and the party which supports them. I want to start with 1945, when a Socialist Government gained power for the first time, facing all the economic, political and social difficulties of the aftermath of a war, with most of the active men and many of the women in the Forces, having to turn a war economy into a peace economy. In six years, that Government not only introduced the Welfare State but completely rehabilitated the economic condition of the country at home and abroad. One of the greatest things which that Government did was to narrow the gap between the rich and the poor.
I remember in my early days as a Socialist standing on street corners and asking what would happen if we got into power. It then seemed to be a remote
1212
possibility, and I asked what would be the counter-revolution. The counterrevolution has been shown in the last six years. While we may have not yet seen the final culmination, we have seen one more step in the Budget introduced yesterday, because from 1951 to the present time there has not been a major Bill which has not had for its purpose the enriching of those who contribute most to the Tory Party funds. That has been the counter-revolution.
That was what was the behind the Budget yesterday. I have no doubt that if the Government continue in office for another twelve months, next year we shall see a continuation of the policy demonstrated yesterday. More will be given to the rich and less to the poor. An Administration of that description is less than the dust. It is the salt which has lost its savour and is fit only to be trodden under the feet of the electorate.
7.36 p.m.
Mr. Douglas Glover: We have had a most pleasant debate this afternoon until the last two minutes. I think that the hon. Member for Bright-side (Mr. Winterbottom) has chosen his constituency with great misfortune, because whenever I hear him he sounds more like the hon. Member for "Dark-side" than Brightside. I apologise for bringing that in.
I shall not at the beginning of my speech deal with what he said, but I shall perhaps refer to some of his remarks later. I want first to say how very much I congratulate the Chancellor not just for what was in his Budget yesterday, but for his method of delivery, his clarity, lucidity, and forcefulness, and —joining with my hon. Friend the Member for Harrogate (Mr. Ramsden)—for the fact that we did not have any clichés. I think that every hon. Member found the Chancellor's presentation of the Budget most successful.
This afternoon we had a most enjoyable knockabout turn by the right hon. Gentleman the Member for Huyton (Mr. H. Wilson). I wondered in the early part of his speech whether he was trying to emulate Benny Hill, or to make a constructive speech from the Opposition Front Bench. After he had got over the quips which he had been collecting in the last fortnight during which he had not made any speeches, he settled down to a

1213
more coherent and serious approach to the Budget and economic problems.
At one point he seemed to contradict himself. At one moment he was castigating the Chancellor because my right hon. Friend had budgeted for an increase in the out-turn from tax revenue, which the right hon. Gentleman said was the result of a continuing inflationary spiral. That seems to be a contradiction of what he said a minute or two before, which was that it was a disaster that the short-fall in last year's accounts was still an indication of inflation. He cannot have it both ways.
If the Government estimate last year in the out-turn showed a short-fall, then if the estimates for taxation and revenue during the current year are as the estimates laid down, the right hon. Gentleman cannot have it both ways. One shows that we appear to have killed the virility of the inflation—I will not say that inflation is dead, because I do not see how under a full employment economy it can be stopped altogether—so I say that an increase in the out-turn expected in the current year must be a sign of a genuine increase in productivity.
I congratulate the Chancellor upon the removal of Entertainments Duty. This tax was bringing in so little revenue and creating so much distress in the living theatre and among all kinds of sport that it really was not worth collecting. If our affairs this year run in a progressive and buoyant manner I suggest that the Chancellor might have a look at the question of the removal of Entertainments Duty altogether, from the cinema as well as from the living theatre.
Mr. A. E. Hunter: Does not the hon. Gentleman realise that in taking away this burden from the theatres or cinemas the Chancellor has put it upon television viewers instead?
Mr. Glover: I was just coming to that point. I was glad to hear the right hon. Member for Huyton say that he did not disapprove of the increase of £1 in the television licence fee, because I believe it is quite right that if the pattern of entertainment changes the load should be removed from those who are finding things difficult and put upon those who have a growing audience. There is nothing unfair in that. Those hon. Members who have television sets see
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very little of the programmes, anyway, for they spend most of their time in the House. We must remember, however, that we shall get this entertainment at the cost of 4d. a week in Entertainments Duty, and I do not think that that is an exceptional price to pay.
Mr. Hunter: The hon. Member should bear in mind the fact that the Chancellor receives £40 a year by way of Purchase Tax on television and radio sets.
Mr. Glover: I will not follow the hon. Member into that matter because it would make my speech too long. I am dealing purely with Entertainments Duty as such, and I do not intend to be carried away into the field of Purchase Tax or sales tax.
I was impressed by the survey by the President of the Board of Trade of our export prospects for the coming year. From what I, with my limited knowledge, can gather, his estimate of the buoyancy of the export market and the conditions that we are likely to experience—the slack in that part of our economy which can increase its exports—will be borne out by events.
As he says, in an estimate and survey of the prospects for exports we cannot be dogmatic. Various Chancellors and hon. Members on both sides of the House have in the past been very wide of the mark in forecasting gloom and boom. I believe that the Chancellor himself, in his estimate, is saying, "The out-turn of revenue would appear to be buoyant, but because of the dangers to our external account I am not going to give away anything like the whole of my distributable surplus." He is fortifying the revenue by keeping an additional surplus of £200 million—which I regard as a very good fortification—against increased consumption, and is therefore encouraging a continued export drive.
I should like to take up the question of women salesmen, which was also referred to by the President of the Board of Trade. There is nothing new about charming ladies being salesmen, but I agree with my hon. Friend the Member for Louth (Mr. Osborne) who interjected to say that sales can be effected only once by those means. In other words, we can sell a product, at home or abroad, only once if the quality or the price is wrong. No salesman will be able to maintain

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continued business unless what he is selling is sold upon its quality and turnout and not upon the ability of the salesman, charming or otherwise.
I agree, however, that we could do far more to build up in our selling attitude the cult of personality. I mentioned this matter a few days ago in a very short debate upon the Lancashire textile advertising programme. Today an enormous personal approach is pertinent to nearly every problem. If we could build up more personality in our advertising and selling methods we should reap the benefit. I shall not detain the Committee longer by going into that question at further length.
I return to the remarks of the hon. Member for Brightside in relation to the Surtax payer. I congratulate the Chancellor upon most of his measures, but I think that this is the one item in the Budget which will cause serious controversy outside. Let us for once try to look at the matter in the 1957 perspective, and get rid of our preconceived ideas. I want to try to be practical. It was the Labour Party which nationalised various industries, and when it did so, and when the value of the £ was higher than it is today—I am giving the Labour Party a very good point there—it thought it right and proper to pay the head of a nationalised board £8,000 a year, and so provided in an Act of Parliament.
By doing that it showed that it regarded £8,000 a year as a reasonable salary for a man who accepted that amount of responsibility. The Government today are not saying that the Labour Party was wrong in that; what they are saying is that if it is right and proper to pay a man that salary for taking on those responsibilities he is entitled to the same justice in regard to his earned income allowance. Some hon. Members, on both sides of the Committee, seem to have forgotten that this concession applies only to earned income. It is perfectly right and proper that such a man should receive the same benefit in respect of earned income that anybody else would.
Mr. Winterbottom: At the same time as the Labour Party gave substantial salaries to the leaders of the essential industries it also gave a tremendous rise to old-age pensioners—from 10s. to 26s.
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The crime of this Government is not so much that they have helped the man earning from £2,000 to £10,000 a year, in respect of his earned income; their crime is that they have neglected the poor at the same time. It is the comparison between the two things that condemns the Government.
Mr. Glover: I thank the hon. Member for that intervention, but if everybody who interjected in my speech spoke for as long as he has I should have to have an extension. He did not make an interjection; he made another speech.
I am going to deal with the problem of the old-age pensioner. What the Chancellor has done—and I believe that it was fully justified; and I can say this because it does not affect me—is to bring a common basis of justice in respect of earned income up to a higher level. The Socialist Party themselves view the sort of salary that my right hon. Friend covers as being a quite legitimate and sensible salary to be paid in present-day industrial life.
It may be asked whether that money will be saved. The Chancellor has rightly helped the small fixed income group— these are, perhaps, the most important benefits in his Budget—by raising the level of the allowance to £250 and £400 in respect of single and married persons respectively. That money will be spent. The reduction in Purchase Tax is also an encouragement to consumption. The increased family reliefs for people who have the responsibility of families will be spent. Therefore, up to that stage at least, it can be said that the Chancellor's Budget will increase consumption to that extent.
The one concession about which there is substantial reason to believe that a good part will be saved is the concession in the earned income relief for the Surtax payer. If it is saved, it will be of benefit both to the Surtax payer and to the nation. Therefore, of the £100 million relief my right hon. Friend has the right to expect that it will not all result in an increase in consumption.
Although we have been very friendly this afternoon, I must say that I have never heard so much utter hypocrisy from the other side of the Committee as about old-age pensions. As the question has been raised, let us go back through the

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history of old-age pensions. The hon. Member for Brightside said that his party raised the pension from 10s. to 26s. In fact, the pensioners were mostly drawing 20s. as a result of wartime Measures. Even though in 1946, by that year's assessment, the basic need was for a pension of 26s., by the time that it was brought into operation in 1948 its value was not, in fact, the 26s. which had been assessed in 1946.
Mr. Ellis Smith: No one doubts that.
Mr. Glover: From 1948, when the pension came into operation until 1951, despite a continuous and uninterrupted rise in the cost of living, the Socialist Party did nothing whatever for the pensioners. In 1951, before the party opposite went out of office and ran away from the problem, the then Chancellor of the Exchequer, who is now Leader of the Opposition, brought in a limited increase which applied only to one segment of old-age pensioners.
Mr. Tom Brown Mr. Tom Brown(Ince) rose—
Mr. Glover: I am not giving way until I have finished this part of my speech. It was then left to the Tory Party, who came in to face a crisis left by the Socialists, as is usually the case when a Socialist Government has been in office, to increase the pension in 1952. We have increased it three times while we have been in office, and in 1955 we raised the pension to the highest purchasing value that it has ever had. In 1957, on Budget Day, the purchasing power of the retirement pension is higher than at any time between 1948 and 1951, when the Socialist Party was responsible for old-age pensions.
Nobody in this Committee—I do not give way even to the hon. Member for Ince (Mr. T. Brown) or the hon. Member for Brightside—has the real interests of the old-age pensioner more at heart than I have, but what I want is a pension that maintains a stable value in purchasing power. I do not want to keep putting up the pension in paper money. That is the most deceitful thing that a nation could do to its old people.
Before we all go off on a wild chase over old-age pensions, I would say that the pensioner has a very strong case. The pension problem, however, has never been dealt with as a matter of budgetary
1218
policy. Therefore, for the Opposition to complain that the matter of pensions was not mentioned in the Budget—
Mr. Ellis Smith: Not a word about it.
Mr. Glover: —and to say that the Chancellor has neglected his duties is a complete misunderstanding. The problem of pensions is one for my right hon. Friend the Minister of Pensions. Of course, he must consult the Chancellor of the Exchequer, but it is not a matter that one would expect to find as part of the Budget proposals. I will now give way.
Mr. T. Brown: I want to correct the hon. Member's statement; it is essential to have complete accuracy on the record. He said that we increased the old-age pensions in 1948. We did no such thing. They were increased in October, 1946.
Mr. Glover: The hon. Member is quite right and I apologise. It was the National Insurance Act which was introduced in 1948. I am glad to have the record straight. That does not, however, weaken my case. If anything, it strengthens it.
I have a constructive suggestion to make to my right hon. Friend the Chancellor. I know that he has not been able to do anything this year concerning death duties. We in the Tory Party, and the Liberal Party too—
Mr. Ellis Smith: They are part of the Tory Party.
Mr. Glover: —never lose an opportunity of putting the same case forward; we believe in a property-owning democracy. We realise, however, that there is difficulty in bringing about such a state of affairs. Particularly with the Welfare State, the contributions week after week, the rates of taxation, and the Purchase Tax, it is difficult for people to save.
Death duties are not at their present level because the Chancellor must have that amount of money year by year. They are a method of redistributing the wealth of the nation. Unfortunately, however, under the present system, each Chancellor takes this capital money each year into the Treasury and spends it as income. I am sure that the hon. Member for Sowerby (Mr. Houghton) would not disagree.
Mr. Douglas Houghton: When this capital is sold in order that the money shall reach the Treasury in liquid form, somebody else buys it. One set of savings, therefore, is replaced by another.
Mr. Glover: That is true on paper, but when it goes on continuously it is one of the greatest causes of paper inflation.
I should like to see an alteration of the existing death duties into an inheritance tax. If a person with an estate of, say, £200,000—it is on that sort of figure that death duties are high—leaves the whole of the estate to one person, perhaps to his wife, it bears probably £120,000 in tax. That is to say, his widow is left with £80,000. On her death, tax is paid on the £80,000 and the capital soon disappears. If we were to introduce an inheritance tax with a steeply-graded ladder, so that if a person left more than a certain amount to any one individual the rise in the curve would be even steeper than it is today, while at the smaller figures it would be next to nothing.
I think we could provide an incentive for a person who had built up a substantial business during his working life to leave his wife comfortably off in the sort of position which she enjoyed when he was alive. In preparing his will, he might say, "If I leave more to my wife, it will all go in tax, but if I give Joe Smith, the foreman at the works, £5,000 and the manager £5,000, they will get it free of tax." I believe that in that way we would provide the incentive, which would be a good thing for the nation, and lead to a much wider distribution of property over the years. I am only asking the Chancellor to have a look at that suggestion with the idea that in his next Budget, or future Budgets, he may bring about an alteration.
In my final remarks I want to say something on a more general line. We in this House have party debates on the economics of the country. We debate whether it is right that £10 million should be given here, £20 million given there, whether it is right to take £6,000 out of an income of £10,000 in taxation or whether it is right to take £5,600, but all these problems come down to the fact that we are arguing, and I believe that today most of it is shadow boxing.
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The future of this island depends on increased productivity, on us all knitting together and working as a whole. The minor things we discuss in the broad concept of our lives are not vital to the problem. The problem which few of us realise is that there is no international welfare state. The problem of productivity and the standard of living of this country depend on the nation working as a whole
I am not for a moment saying that there is no fault on the side of management; of course there is fault on the side of management. I should like to take some managements behind the back of the shop and give them a damn good hiding. Probably they would give me one instead and, under the present law, I would be arrested and sent away as a juvenile delinquent. The far bigger power today, because it is collective power, is the trade union movement. I am not for a moment criticising the trade unions. I believe the trade unions have done a wonderful job in this country, but I also remember as I read my history that at different times there have been people who have had too much power, or wielded the power they had in the wrong manner.
I do not want to be controversial and I am not saying that we have reached that stage at the moment, but when we consider the trouble there has been in the shipyards I understand that many of the men will tell us that it was due to difficulties over demarcations between different unions. All that is retarding production and the amount which we can turn out on which all our standards of living are based. I wish we could have a conference to do away with most of these problems and increase productivity.
When we have disputes it seems to me that we should try to narrow those disputes instead of widening them. We have all been reading in the newspapers the remarks of the hon. Member for Rother-ham (Mr. Jack Jones) over the question of Lancashire steel workers being brought out on strike. So far as I could see, Lancashire Steel was not involved in the engineering and shipbuilding dispute but the steel works was closed down and it will be a fortnight before it is again in production.
Mr. Jack Jones: A lot longer.
Mr. Glover: That makes the matter worse. It means that many men who

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went on strike for higher wages in the electrical industries have jeopardised their future employment because the metals on which they will depend for their jobs when they go back will not be there as a result of Lancashire Steel not having worked.
Mr. Ellis Smith: Who caused the strike?
Mr. Glover: I am not criticising the Confederation of Shipbuilding and Engineering Unions. I am saying that we should narrow these things and they should be official. From the information I have been able to get, it seems that there was a determined effort to make the strike as wide as possible on district levels rather than to narrow it down as far as possible. That attitude of mind will never lead to a great nation. I believe this nation is still the greatest in the world and is still the greatest example—
Mr. Bence Mr. Bence rose—
Mr. Glover: No, I will not give way again. This nation has a great example to give to the world. We have kindly relations one with another—
Mr. Bence Mr. Bence rose—
Mr. Glover: I am not going to give way—
Mr. Bence: It is very important.
Mr. Glover: The hon. Member may be called and can then say what he wishes to say. I have been very good at giving way and I am not going to give way again.
So far as my information goes, there was an attempt to take this dispute out of its official circles where it was official. If my information is right, that surely was a bad thing for the trade union movement, for the nation and productivity as a whole.
Mr. Bence: Put the other side and be honest.
Mr. Glover: That is the issue which we in Britain have to solve. It is not an issue as to whether this bit of relief should be given here or there, whether old-age pensioners should have a rise in their standard of living. The old-age pensioners' standard of living is based on the productivity of the nation.
Mr. Ellis Smith: And so is that of everybody else.
Mr. Glover: The amount of goods we can produce and can share together will determine whether this country overcomes its problems or fails. I believe that today we have a good Government who are slowly knitting a pattern which will give us that incentive. I view the future, therefore, with confidence.
Mr. Jack Jones: As the hon. Member mentioned me, may I say that I do not want any controversy to arise on this problem, but that I intend to try to catch the Chairman's eye tomorrow to put the matter in true perspective and to give the facts?
8.8 p.m.
Mr. Austen Albu: I cannot say that the more recent intervention of my hon. Friend the Member for Rotherham (Mr. Jack Jones) has really helped the issue. I think my hon. Friend and the hon. Member for Ormskirk (Mr. Glover) should keep industrial disputes off the Floor of this House, especially when they involve two unions of which my hon. Friend represents one and I represent the other.
Mr. Jack Jones: This mattter will be raised, not as a matter of industrial dispute, but of public mischief.
Mr. Albu: What is a public mischief and what is not is a matter which is very clearly understood by those not most closely associated with it on both sides. I thought it unfortunate that the hon. Member for Ormskirk, with much of whose closing remarks we agreed, should have brought in what is and what is not an industrial dispute. Anyone concerned with industry, on either side, knows that the facts are difficult to discover.
When the hon. Member said that our debates on how we distributed the national income or the levels of taxation on different incomes were pure shadow boxing, he could not have understood what are the issues which cause strikes and industrial disputes. This is the climate which the Government are creating within which demands for wage increases take place. It is no use pretending that if one relieves Surtax at higher levels or other levels and removes subsidies at the other end of the scale so that the cost of living is not stable, that does not have an effect on wage demands. The

1223
hon. Member referred to one or two industries in which managements were known to be backward, and certainly much more would have been done if some managements had been more progressive. The shipbuilding industry is a good example.
I support much of what he said about the necessity for ensuring in future that retirement pensions should maintain their values in face of the falling value of the currency.
The Chancellor claimed at the end of his Budget speech that his proposals would make a striking contribution to our balance of payments and the stability of our economy. The first part of his speech consisted, of course, of the usual lecture, to which we have become accustomed, on the progress of the economy during the year. I thought that I detected some refinements made by the Treasury in its exposition and, like hon. Members on both sides, I welcomed the lack of metaphors and clichés to which we have been accustomed by Chancellors on the other side ever since the party opposite came into office. I must say that the rather more brutal method of the present Chancellor makes the real position clearer.
I was particularly interested in the clearer definition of the rôle of monetary policy, and to hear of the intention to continue using those methods of direct control over it which gave so much offence to the Leader of the Liberal Party —and if back benchers opposite had understood them, would have offended them also. I welcome the inquiry into the functioning of monetary policy but I would warn the Chancellor that the answers one gets to the problems will be according to the political complexion of the Committee. There is no such thing as a purely technical answer to questions of monetary policy and I have no doubt that the Committee will produce as many answers as there are economists on that Committee.
When we turn to the Chancellor's actual proposals, it is difficult to see their relevance to the situation or to the claims he made for the economy. As several of my right hon. and hon. Friends have already said, if it is true that the technical and managerial classes need some tax relief, it is certainly not true at the levels
1224
between, say, £5,000 and £10,000 a year. There may be many admirable men at those levels, but so often we find there the "stuffed shirts" of industry. Apart from the inequity of the proposals, they will have to be judged, as the Chancellor himself asked for them to be, on the contribution that they make to the development of our economy. Here I must say that I think that he, like his predecessors, has been much too complacent.
The arguments in the first part of his speech—no doubt written in the Treasury—seemed to be in the direction of restraint, but the conclusions to which he came seemed to be in very considerable contradiction to the arguments in that first part—
Mr. Osborne: Who has written the hon. Member's speech?
Mr. Albu: Does the hon. Member wish to intervene?
Mr. Osborne: As the hon. Member sneered first at the back benchers on this side, and then went on to say that my right hon. Friend had not written his own speech, I wondered who had written the rubbish the hon. Gentleman is now reading.
Mr. Albu: The hon. Member is not very polite, but I may inform him that I wrote it myself in the Library this morning. I am not in the habit of going outside the House to have my speeches written for me. I go out of it for information, perhaps, but I do not go out to have my speeches written. I have no doubt that the hon. Member has many trade associations that would write his for him.
As has been said by several of my hon. and right hon. Friends, we are maintaining our gold and dollar reserves by borrowings, and by welshing on our debts; and the full effects of the Suez folly have not been felt as they will be, particularly in higher dollar costs for oil and, perhaps, for freight charges in the coming year. Although we have an overall surplus in the balance of payments, it is quite insufficient to enable us to play our part in overseas investment and to build up the reserves necessary to ensure the continuance of the existence of the sterling area.
Unlike the years before the war, when we depended largely on our invisible

1225
exports, and when the City played a much more important part than it does today— although I think it still believes it does play that part—we are dependent on the balance on our visible trade and, in an expanding economy, that means expanding exports. In a changing world, that means that we have to keep on changing the kind of goods we sell in accordance with changing world demand. The main feature of our economy today must be change, which is more important even than productivity.
In the Board of Trade Journal for 30th March, an attempt was made to estimate the extent to which the fall in our trade was due to changes in trade in the areas in which we normally sell and how much was due to changes in the demand for the commodities we normally sell. The article came to the conclusion that these are not the main causes for the fall in our share of world trade which was shared evenly between the areas and the commodities that we sell. I do not altogether agree with that. I do not think that this article went fully into the present facts. The truth is that it did not take account of the fact that total world trade would expand if there were supplies of the goods which the world needs.
In particular, of course, the world is short of capital goods—of transport equipment, including ships; generating equipment, metallurgical plant, chemical and oil producing plant, oil refinery plant, machine tools, and so forth. There is a great and growing demand for capital goods, as anyone can see who examines the investment plans of the under-developed areas, or the World Bank loans and the like.
I was recently in Canada, and although I saw British hydro-electric plant being installed, and although it is true that British thermo-generating plant has been installed in Toronto, the Aluminium Company there told me that the English firms making hydro-electric generating plant were either unable or unwilling to tender for the further stages of the Kittimac aluminium works, because they could not deliver in time. In other words, they had not the capacity. In another place Lord Crookshank has drawn attention to exactly the same inability of British firms to quote for capital equipment in
1226
Australia, and the Chancellor himself referred to the fact that we are unable to do as much as we should like to do in, for example, India.
These are the industries which we should expand, and it is in that direction that we might have expected some incentive policy from the Chancellor. As an instance, as one or two of my hon. Friends have suggested, the Chancellor could have done that by means of investment allowances, particularly by selective investment allowances, directed towards those industries which would make the most useful contribution to our exports. I am interested to see that even the Financial Times, which I should have thought pretty orthodox on this subject, supports selective investment allowances and has said so in one or two recent leading articles.
The Chancellor and other Government spokesmen have claimed that there has been a higher rate of investment in industry in the last two years, but a very large proportion of this investment has been in the manufacture of motor cars, durable consumer goods and the other less essential goods to which my right hon. Friend the Member for Huyton (Mr. H. Wilson) referred. I think that this is very wrong. In my view, this expansion in the durable consumer goods industry, including motor cars, has been one of the major inflationary factors in the last two or three years, as I have often said during the last two or three years—in fact, as I said when it started.
The development of the Free Trade Area in Europe will mean a very great increase in competition in consumer goods. In my opinion, it will lead to a reduction in the number of firms manufacturing these goods in each country and to a very considerable rationalisation in the manufacturing of these goods, to lower costs and lower prices, which will be all to the good, and will assist European industry, including our own, to keep down the costs of the capital goods on which, I believe, its future will depend for the purchase of food, raw materials and commodities—which are the main purchases which Europe will make in the world outside.
If there is to be this reduction in the number of firms and in the size of the industries making consumer goods, although, no doubt, the actual output will

1227
be increased during the period in which this is happening—the next ten to fifteen years—we must have a very substantial corresponding expansion in our capital goods industries. Otherwise we shall only have unemployment and a very deflationary situation.
The problem, as others have pointed out, is not only that of finding the actual capital and financial resources for investment or the plant and machinery which form the physical basis of investment. The problem is also the serious one of changes in the employment of labour. Some of my hon. Friends have pointed out the inadequacy of the changes that took place last year—the fall in employment in the manufacturing industries, the very small gain made by the basic industries against the large gain made by the distribution and miscellaneous services. I have no doubt that the numbers moving into the manufacture of capital goods was not high enough and this is something to which the Government must pay serious attention. There are problems here of housing, wages, policy, retraining, compensation for temporary unemployment and other things to which I am certain we in this country must pay more attention than we have done in the past.
Although I have been arguing about the necessity to restrain the expansion of the durable consumer goods industries, and perhaps to reduce the size of other consumer goods industries, one cannot take people out of one industry and push them into another. The industries are frequently in different places; the houses are not available, and people need new training for new skills. These problems are not receiving enough attention, and if we are to make the sort of changes which we shall have to make in the next few years, we shall have to devote more time to thinking about these things.
The capital goods industries need many more skilled workers and more scientific and technical personnel. Here great hopes are placed on the changes in defence policy and it is hoped that these skilled and trained personnel will be released from the defence manufacturing industries. I am beginning to have my doubts about this. We have heard very little about how far the agreement with the United States will enable us to economise in the development of these new weapons.
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It does not look as if the economies which we have been promised are as great as appeared at first sight, if one can judge from Questions which have been asked in the House and from replies which have been given by the Minister of Defence.
I detect a serious contradiction in the White Paper. Paragraph 72 says:
"It should not however be expected that it "—
that is, the level of expenditure—
"will show a decline in any way comparable in the manpower strengths of the forces. This is primarily due to the ever-increasing complications of modern weapons and equipment, the higher cost per man of regular forces and the fact that proportionately more civilians will be employed."
In the same paragraph it says:
"… it will release skilled men, including many badly needed scientists and technicians, for employment in civilian industry."
If the cost is not going down, while the numbers in the forces are going down radically, I can only conclude that those who remain in employment are paid at a much higher level.
The increasing complication of the weapons will mean that there will be a continuing and even growing employment of scientifically trained people and skilled workers. From the White Paper, from the replies that we have had from the Minister of Defence and from what we know about the agreement made with the United States, it does not look as if the release which we badly need for the capital goods industries of this type of manpower will be enough. We shall, no doubt, hear more about it when we debate the Defence White Paper, but so far I must say that I feel that we are not making the sort of changes in defence expenditure that are needed.
I make no bones about it. If we can get the designs in the United States, let us get them there, and let us get our scientists, engineers and skilled workers out of this very expensive programme. Although I hope there will be a reduction in the numbers of people employed in defence, when this reduction comes it will be essential that the Government use their powers, for instance under the Distribution of Industry Act, to make sure that it does not lead to unemployment in those areas, like Coventry, which are dominated by one or two industries.
There are some industries which are backward in the use of scientifically

1229
trained people. If we get a real reduction and these people are released, it is sometimes said that there might be a danger of them not being absorbed by industry itself. I hope the Government are not using this excuse—I have heard the argument used—for not reducing defence expenditure and releasing these people. The Government could use them. The Government should not hesitate to undertake suitable development in civilian industry, particularly where industry is backward—for instance, in the machine tool industry. There is great scope for the use of many of these people in a Government-owned machine tool research and development organisation where, in a few years' time, a substantial contribution might be made to our export trade.
I agree with those hon. Members who have said that the capacity for expansion in our economy is very great. Unfortunately a large part of that capacity was dissipated by the electioneering Budget of the Lord Privy Seal and by the wicked and incompetent action which was taken in Egypt last year for which the present Cabinet is completely responsible. The present Budget can hardly be expected to restore the confidence of the electors.
8.26 p.m.
Sir Henry d'Avigdor-Goldsmid: The hon. Member for Edmonton (Mr. Albu) has. obviously passed a profitable morning writing his speech in, I think he said, the Library of the House of Commons, although, judging by some of the concluding passages, some of it might have been written in the Smoking Room.
Nevertheless, I cannot help feeling that the hon. Member does not help to establish in any way the credit of this country when he describes us as "welshing" on our American debt. The fact is that we have taken no action that was not foreseen at the time that that pact was initiated more than ten years ago. We have taken advantage of the waiver provisions which were originally included in the draft treaty. The term "welshing" suggests failing to meet one's obligations, and in this case there has been no failure to act in accordance with the terms of the treaty.
Mr. Osborne: It was the party opposite that drew up the agreement.
Sir H. d'Avigdor-Goldsmid: It is only right that, even at this late hour, I should congratulate the Chancellor upon yesterday's Budget. Despite the intense amount of expert assistance which he had in drawing it up, he produced a most lucid and striking document, delivering if in such a way that one could understand it. In spite of what the hon. Member for Edmonton said, I believe that most of us did understand the Budget.
Mr. Albu: That is what I said.
Sir H. d'Avigdor-Goldsmid: If I may remind the hon. Gentleman of some of his words, no doubt prepared in the Smoking Room, he said that if back benchers had understood it they would not have liked it. Those were his words.
One other good thing emerges from the Budget, namely that the phantom Chancellor, Mr. Butskell, has disappeared for ever, and I see no likelihood of his being replaced by Mr. Thornwill. This is a very satisfactory state of affairs, because there can now be no doubt whatever in the minds of the electors as to the views of the parties they ask to represent them at the next Election. The Budget presented by my right hon. Friend was a virile and businesslike document, and will be so judged.
One or two features of the Budget have given particular satisfaction in my constituency of Walsall. The first is the freedom from Entertainments Duty now given to sport. There has been a very curious anomaly in connection with charity boxing tournaments. Up to now, these have been exempted from Entertainments Duty provided they made a sufficient profit. If the profit they made sank below a certain figure, Entertainments Duty was clamped down on them into the bargain. I am glad that this rather ridiculous anomaly has gone from the Statute Book, we hope for ever. The exemption from Entertainments Duty granted to cinemas serving villages having a population of less than 3,000 also is a matter which will give satisfaction in my constituency. It is a subject which has claimed some attention locally, and I am glad to think that justice has been done.
The main point about the Budget is that it represents an attempt to restore financial sanity to our system. We are to have the Radcliffe Committee on

1231
monetary policy. I am reminded of a remark which the late Lord Asquith made about his colleague Lord Haldane. Lord Haldane, he said, was not content to watch the characters of the ghostly ballet of metaphysics from the stalls, but liked to go into the wings and ogle the performers. I have no doubt that many hon. Members on both sides of the House who feel intensely on these matters will be wishing to ogle the performers on the Radcliffe Committee.
The situation we have to face presents to us a ridiculous anomaly. My right hon. Friend warned us perfectly clearly that:
"If we fail"—
to control inflation
"there is no Government of any party that this country has to offer that can stand between us and a drab decline in all our fortunes."— [OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 971.]
This is generally recognised in the House, but unfortunately it is not remotely recognised in the country as a whole. We therefore have a situation such as we experienced last year, when, according to the Economic Survey, there was a 9 per cent. increase in wages and salaries but no increase in production.
The fact is that the general standard of living of the people is higher now than it has ever been. They simply cannot take seriously the conjectures, threats and menaces which they hear, not only from Members of the House of Commons but from the newspapers, that they are on the road to ruin. People see themselves as better off, and it simply does not present itself to them in any intelligible way that in using up their reserves they are imperilling their future.
There is a sort of blindness on this subject which I can but compare with the blindness of manufacturers some hundred years ago when they felt that it was essential for the prosperity of British industry that children should be employed for ten hours a day, when even a great philanthropist such as Robert Owen thought that this was absolutely essential and regarded the ghastly conditions of our industrial towns as a necessity of the system. That great Tory, Lord Shaftesbury, came along and removed that illusion, but it had been held by honest and genuine people of, in
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many ways, enlightened opinions. There was a miasma of misunderstanding then, and there is a similar miasma of misunderstanding today about our present position. However much the Chancellor warns us, we simply do not as a country take it in because we do not see any reduction whatsoever of our standard of living or prospects.
I have given some thought to this matter, and I wonder whether we are being over-sophisticated in dealing with our problems, whether we are not discarding what were simple remedies in favour of things very far-fetched indeed. In 1918 and 1919, the Government of the day, being very nervous about post-war prospects, particularly about inflation, appointed a committee called the Cunliffe Committee, which reported very briefly. Lord Cunliffe was a man clearly not nearly so enlightened as we should like him to have been, but he produced a report which killed inflation in this country absolutely stone dead.
Mr. Gordon Walker: It nearly killed the country too.
Sir H. d'Avigdor-Goldsmid: It is perfectly true that it was obviously much too drastic, and I am glad to say that since that time we have had experience of "tempering the wind to the shorn lamb."
I should like to come back to the Cunliffe Report, which recommended that the way to take the inflation out of the system was to reduce what was then called the fiduciary note issue. The original suggestion was that the issue should be reduced by 3 per cent. per annum, but that idea was discarded as being too drastic, and the final recommendation of the Committee was that the maximum of fiduciary circulation in any year should be the legal maximum for the following year. In those simple days there was not an unlimited supply of £ notes. The fact that £ notes were restricted had the effect of making people value them. Today we are much more sophisticated. We have all the benefits of a managed currency. A managed currency has many advantages but the supply of it is unlimited.
Mr. Manning Dacey, the economic adviser to Lloyds Bank, has done some rather remarkable research on the growth in the circulation of notes among the

1233
public. I do not wish to bore the Committee with figures and tables, but, roughly speaking, the circulation of notes among the public at present amounts to £1,771 million, and it has grown by nearly 50 per cent. since 1950. This circulation keeps almost exact pace with the growth in wages of the previous year. Apparently it takes about a year for a rise in wages to be translated into additional cash in the pocket of the public.
Mr. Manning Dacey notes that
"during the war, the currency circulation rose more rapidly than wages; no doubt people held abnormally large cash reserves to safeguard themselves against a possible interruption of communications, and other special reasons. By 1955. however, the two indices were more or less in phase again. Since 1950, the currency index has almost exactly followed that for wages with a lack of one year."
From that we can see perfectly clearly at the moment what the requirement for currency will be, on the basis of present wage rates, by this time next year. I put it to the Committee that we might do much worse than limit ourselves to that figure and so keep that as the maximum which should not be exceeded except by Resolution of this House. I understand that in fact a fiduciary issue is increased, as it has to be for the holiday season and Christmas, by Resolution of the House, but I cannot trace such a Resolution being debated within recent history.
I feel that if we had some such restriction on the growth in currency it would be an inducement to people to save. They would realise that they were not saving a piece of paper which was deteriorating in value month by month, but that they were saving something which was in limited supply.
Furthermore, if the Government applied this form of self-denying ordinance to their own activities, it would have an encouraging effect not only in making people save in this country but also in inducing foreign investment here and in inducing foreign residents to leave their money for employment here. We have tried low interest rates and we have tried high interest rates, and we have come to the conclusion for the moment that a fairly high interest rate, such as the one we now have, is best suited to a time like the present.
I should have thought that to be common sense because, owing to the enormous technological developments of
1234
the last ten years, I do not think that there has ever been such a world shortage of capital and such a world demand for it as there is now. Therefore, there is world need to induce savings. As far as I can see, that is the only way to create the capital which will be required to put into action the developments that are absolutely necessary to our future prosperity.
I come back, therefore, to the idea that not only must savings be induced but they must be true savings. It is no good the savings being financed by the Government "out of the system", either by the creation of Treasury bills or by issues of stock which are then immediately sold to Government Departments. That is not true saving. Indulgence in that system has been considerably responsible for getting us where we are now.
I welcome the suggestion made by the hon. Member for Orkney and Shetland (Mr. Grimond), the Leader of Liberal Party, that consideration might be given to the nationalised industries borrowing from the market exactly as the corporations do. There can be no suggestion that they should borrow on equity, because their capital is not their property and their issues must carry a Government guarantee, but it seems to me that there should be a closer relationship between their capital requirements and the capital available in the country in the true sense. I hope that the Radcliffe Committee will seriously consider that point.
At this late hour when other hon. Members wish to speak, I will not go over ground which has been fully covered already in the debate, but I should like to stress the suggestion of a top limit to the note circulation. It seems to me that there is a common-sense attraction in it and that it would have the effect on the Government that if they saw that the requirements of notes were reaching a figure where they would either have to ask for an increase in issue or curtail their own expenditure, the would really face the problem. It would not be an insuperable one, of course, but I am quite clear in my own mind that if the Government could obtain their requirements without having to debate them in the House of Commons they would much prefer to do it in that way. When the Government are compelled to

1235
have a debate in the House they make sure that they can justify their demands up to the hilt. This Budget is businesslike and virile and it will be a tonic to the country.
8.45 p.m.
Mr. Cyril Bence: I will not follow the hon. Gentleman the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) into the various factors which should be investigated by the Committee when it is set up, except to say that I agree wholeheartedly with the appointment of a committee of inquiry. Indeed, I am a member of the Parliamentary Industrial Committee which has been urging this course for the last three years. We are indeed grateful that the Chancellor of the Exchequer has decided to investigate the monetary system in the light of the present situation in which every industrial country finds itself.
I must point out to the hon. Gentleman, however, that in a world in which we hope for a rapid expansion of international trade, we cannot expect to have in our country a deflationary situation, or even to keep a balance so that we can contract out of the general inflationary pressure of an expansion in world trade. That could be done only through subsidies within our own system.
If there is a free-for-all in a world expansionist trading situation, I do not think we can avoid some fall in the value of money during the period of expansion. It may be that as the expansion tapered off there would be a fall in the general world price level, which would mean a stabilising of the price level in our own country. But with world trade expanding, I do not think anyone should imagine that, without incurring serious domestic consequences, one country could expect a substantial increase in the value of money, or, in other words, a fall in prices.
This is not a unique situation. The hon. Member for Walsall, South, referred to the period between 1918 and 1919. If the industrial and business community want stability of business and full employment, they can have it, but within the present monetary system they must expect fairly heavy taxation. The alternative in this system is a state of instability that must lead to a heavy bankruptcy rate throughout the country. That
1236
is what happened after 1921. We all know of the heavy rate of bankruptcies all over the country.
In the area of South Wales from which I come, Cardiff was known as the city of broken millionaires. My right hon. Friend the Member for Llanelly (Mr. J. Griffiths) will know, and my hon. Friend the Member for Stechford (Mr. Roy Jenkins) may have been told, that although there were millions of us unemployed in South Wales then, there were also many men who shot themselves. We had been brought up in hardy households and were strong and virile, but those poor fellows at the top shot themselves to get out of it all in the period under Conservative Governments that followed the First World War. I am sure that the hon. Member for Walsall, South does not want that situation to return, but if we did anything on the lines suggested by Lord Cunliffe, heavy bankruptcies and heavy unemployment would follow, so it would be fatal if we indulged in that kind of thing.
The Government say that they believe in full employment. Well, let us accept that. I believe that many hon. Gentlemen opposite have no wish to create unemployment. I have never believed that individuals really want to see a situation of unemployment, instability, poverty and misery. The difficulty is that people become members of institutions, and the prosperity of the institutions of which they are members depends upon certain actions. They just lend themselves to those actions and accept the results as inevitable. No doubt the industrialists of the nineteenth century really believed that unless they could get children in the mines or factories at the age of 6 years, they would go bankrupt. They probably would have gone bankrupt because of the general mentality and climate of society at that time.
In the present situation of this country, with full employment, with the considerable distribution of money, wages and salaries through the producing system— especially of capital goods, a point with which I will deal later—we cannot give the freedom to the banking and monetary system that it has had in the past to create credit on the basis of the creditworthiness of individuals who are customers of the banks. To the hon. Member for Louth (Mr. Osborne) that may

1237
sound shocking. It may not, but perhaps it does.
It was all right before the war, when the Macmillan Committee said, as the Chancellor quite rightly pointed out yesterday, that the problem was how to pump credit in. Obviously, now, when the productive system is fully employed, both in producing durable consumer goods and processing in general and also in producing capital goods for export and for home use for further production, we cannot permit the pumping of banking credit into the system on top of all that. If we do permit it, we are bound to have an inflationary situation much worse than it would be if there were some balance between those different factors.
I have seen during my own life, and no doubt other hon. Gentlemen here have seen, the time when, forty years ago, with £50,000 of capital, we would employ 100 men in producing consumer goods, or even fifty men in producing capital goods on a capital of £50,000. In other words, the cost of capital equipment in 1922, 1923, 1924 and 1925 was a much smaller percentage of the cost of production than it is today. In fact, in writing off depreciation, in providing ourselves with reserves to replace capital, technological development is now so fast and so vast that, if we are to replace machinery which we put in five years ago with machinery that will bring us up to date, we are faced with a cost of replacement sometimes as much as 500 per cent. above the cost of that installed five years ago.
Indeed, in many processes of industry, one could put down plant today which in five years' time would be completely out of date, and that would mean that, from the production point of view, it would destroy the capacity to compete, in terms of monetary considerations, because the variable price factor becomes smaller and the fixed price factor becomes higher. That is very important in competing in foreign markets. That phenomenon has led to trade associations and fixed price agreements.
As I see the matter, the Chancellor has done nothing in this Budget to help in that situation. What is happening in modern industry? The Chancellor talks about the man at the top and says that there must be room at the top. Let us take the case of Messrs. John Brown's shipyard at Clydebank, which is not,
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perhaps, a typical instance of the engineering industry, because of its heavy capital structure, but what do these men at the top in Messrs. John Brown's shipyard get? Who are they? The draughtsmen, the top shipwrights and the designers— there is not one of them who comes within the £2,500 range of income. I feel that the draughtsmen in the drawing office and the tool designers are not in the £2,500 range. Far from it, and these are the men on whom we depend.
I signed a form last week for a man who was leaving Clydebank. He was an electrical engineer on the staff of an engineering company, and is now going to Canada. He received £875 a year and had recently asked for an increase and had no hopes of getting one. He is one of the top men, one of the men we are talking about today. The President of the Board of Trade, in a statement which I am going to denounce wholeheartedly, although we can take it as an isolated case, referred to the effect of taxation on such men. It is wrong to give the impression in the House that in British industry and commerce today that there are men who are not doing their best because of the effect of taxation in the particular jobs in which they are functioning. It is not true.
I know many cases of my own contemporaries in industry—I know them very well and correspond with them—who are at the top of their profession in many respects and who are engrossed in their work. They grumble about taxation, and if one says, "Would you like £300 knocked off your tax?", they immediately reply, "Not half." But I have another friend, a lecturer in biochemistry, who has had opportunities galore to go into industry at a far greater salary then he is receiving now but who prefers the freedom of the university laboratory where he is doing the work he loves. That is his main purpose. His brother is in a dying industry, and the same consideration applies in his case.
When these people reach that level in their career, their income comes in and they are not very much concerned about making money. The man who goes out merely to make money will do any job under the sun. If anyone wants to make money he will probably make more from selling newspapers at the corner of Piccadilly than from taking a degree in

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economics at Edinburgh University. If he wants to make money, academic training and scientific know-how are not always the best way of making it. I agree with the hon. Member for Bolton, West (Mr. Holt), who tells me that more money is made from fish and chip shops.
The hon. Member for Walsall, South talked about this being an incentive Budget, but the main part of the Budget is that which removes Entertainments Duty from all forms of sport. Sport covers a vast field. If one thinks of the sport in which people indulge one can say that in certain aspects that part of the Budget was an incentive to drive Britain to the dogs. Is that the incentive? I like sport; I am not talking of dog racing but of football, cricket and tennis. I think it is good that people should indulge in these things in their leisure time. But when the Chancellor introduces these as factors to strengthen the economy and the fight against inflation and to help our balance of payments, to me that is all nonsense.
In the fight aganst inflation and against our balance of payments problems, only one part of the Budget statement made a contribution, and that was the reference to setting up a committee of inquiry into the monetary system. That is the only step which the Chancellor took in that direction. I was glad that he made the statement on that subject.
Let us consider the problem of helping people with small incomes and doing justice to the old folk. Most of the people who now have post-war credits must be between 50 and 65 years of age. The Government took the money from us in taxation during the war, in varying sums, and I think the post-war credit holders are the only section of the community whose money the Government have without paying interest. They pay no interest at all. If the Chancellor had all this money to spend and wanted to spread it a little he could have done something about post-war credits. That has been suggested before—indeed I have suggested it myself.
I see no reason why post-war credits cannot be converted to bearer bonds at, say, 3½ per cent. The cost, I believe, would be about £16 million a year. That is a way in which the Chancellor and the nation could honour a debt, for it is a
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debt of honour; we were promised the money back when hostilities ceased and we have not had it. How long are we to continue to say that? If I am here in 1985 and I have still not had my postwar credits and someone tells me that it is because the Labour Government did not pay them in 1945, I shall be annoyed.
Mr. E. Partridge: The hon. Member said that they were not paid after the war, when they should have been paid. That was when a Labour Government should have paid them and did not.
Mr. Bence: When Sir Kingsley Wood introduced post-war credits, he said that they would be repaid when the war ended. Hostilities ceased in 1945, but the war did not end until the peace treaties were signed. But that is not good enough for me. How much longer will the Government refuse to pay post-war credits because they were not paid in 1945? It is no use telling people that they are not being paid in 1957 because the Labour Government did not pay them in 1946. That is absolute nonsense and the matter should be settled now. [An HON. MEMBER: "Get to the Budget."] It is only during the Budget debate that this sort of matter can be raised. When we are discussing the Finance Bill, I shall be ruled out of order if I try to raise the matter. If the Chancellor's revenue is so buoyant, I see no reason why that concession could not have been made.
I want to deal with the Surtax reliefs. I have made it my business to ring up some of the people at the top of their professions, deputies and chiefs. Three or four of them are in research, but I shall not mention the institutions with which they are connected. One, a junior, starts at £870 and one, a senior, has now reached, with his increments, £1,250 and is 40 years of age. He informed me that he will get the benefit of the Chancellor's proposals for Surtax when he is about 60.
There are thousands of people whom the Chancellor has not benefited and yet these are the people about whom the Chancellor has been talking. The people to whom he is giving relief are very often those in executive posts where they can recover expense allowances. But many others are not in the Surtax range. Many backroom boys receive nothing approaching £2,500 a year when they are rearing

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their children, and yet that is the very period of their lives when they could do with extra money. As a result of the Rent Bill, they will have to pay very high rents for flats in the large cities, or buy houses at enhanced property valuations.
I see the hon. Member for Louth wants me to sit down, but I have a few other things to say, because it has been very galling to sit here all afternoon and for two or three hours yesterday and to hear Member after Member opposite telling us that the old folks in this country are nearest to their hearts and yet within five minutes we have found that they are furthest from their pockets. It is not right that we should have to listen to that sort of thing.
One of the first charges on the child is his parents. Good children who live near their parents do look after them, but in Scotland I know not one or two, but hundreds, of people whose children have migrated all over the world. I am not complaining about that, and they are not complaining about it. It is good for young British people to emigrate and take our traditions and customs about the world. We are a great nation and a great people.
But many of these old folk have no children at their beck and call. Society must accept some responsibility for them. especially in a situation of continued inflation. These old people have never had a chance to save. Many of them are now in their 70s and between the wars they were unemployed for years and years. Even when they were working they received shockingly low wages. They have never had a chance to put anything away for their old age. We should be doing something for them, but we are doing nothing.
It is no excuse to say that the Labour Government did not do this or that. It is no answer for me to tell my child, "I am not doing that for you because my father did not do it for me". We are living in a different world. It fills me with disgust to hear this platitudinous, patronising talk about the old folk, coupled with this blank refusal to do anything for them, and with every argument under the sun brought out to excuse the Government for not doing something now. then, or at any time. I am sorry that I am annoying the hon. Member for Louth for continuing, but it is only five minutes past nine.
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When will the party opposite and our people realise that Britain can no longer command a living from the rest of the world? Two or three centuries ago Great Britain was able to command such a living by way of food and raw materials.
Mr. Partridge: And she worked for it.
Mr. Bence: Somebody else worked for it. We were able to command vast resources and raw materials for next to nothing. We brought the material here by slave labour. In case of trouble we were able to send out a couple of wooden gunboats, and that was that. When we had got the material here we were able to manufacture it, and we had a monopoly both ways.
Many people are still living in that age, mentally. Although their bodies are in the twentieth century their minds are back in the eighteenth. They have a nostalgia for the good old days. We can no longer gain our living like that. We cannot get our ships through the Canal with gunboats any more. We have to earn our living. We can do that only by providing the world with the goods and services that it wants.
It is not the stockbrokers who do that; it is the men in the factories. These men are not the ignorant labourers of sixty or seventy years ago. They are intelligent and skilled men. They can no longer be pushed around, and their co-operation has to be sought. Therefore, if we are to maintain our standard of living, the first charge of any British Government is to see that the greatest incentives are given to the people on the floor of the factory and at the administrative and executive level; the managers, the technicians, the foremen, the skilled workmen, the labourers, and the progress men are the ones who should be given the incentives, not the people whom the present Government regard as vital to British industry.
It is not the £10,000 a year man who is directing our industry; it is the technician and the expert, who in most cases are earning £1,800 or £2,000 a year. The people to whom the Government are giving incentives are not saving. The only form of saving which they carry out is the repayment of overdrafts which they take up in order to invest. I admit that the Bank Rate has changed that a little, but a report issued last year

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showed that the bulk of savings of this high income group takes the form of the repayment of bank credits. The biggest of their forms of saving was the repayment of bank credit.
Those are the people who are causing the inflation, but the Government are giving them more and putting further charges upon the man in industry, thereby almost compelling him to demand recoupment of what he feels he is losing by the onerous burden placed upon him, especially with the imposition of the Rent Bill in a few months' time.
The man in industry sees the £10,000 a year people getting a further tax rebate to the extent of £12 a week, while the man who earns £1,500 a year from a technical or scientific job in industry gets no relief whatever. The Government are completely wrong. They are giving relief to the wrong people and giving their incentives in the wrong direction. They are causing a great deal of trouble in the country.
Earlier, I used the metaphor that the Government were driving us to the dogs. If they continue to pursue this stupid policy, they will lead us to decay, because they are destroying the ambitions and confidence of the scientific, engineering and commercial men in the lower and middle income groups and causing frustration among them. The quicker the Government get out and make way for another Government who really understand the problem, the better.
By methods and techniques of controls and planning, we could gain the confidence of the people. [Interruption.] I will continue longer if the hon. Member for Louth wishes. I am convinced that the country is ready to reject this idea of a free-for-all. In the world in which we live, that is impossible. More people are coming to the conclusion that some form of control and planning of the economy must be introduced if we are to save ourselves and hold our own in the modern world.
9.12 p.m.
Mr. Cyril Osborne: I hate to quarrel with the hon. Member for Dunbartonshire, East (Mr. Bence), because personally we get on so well together. The hon. Member, however, pleaded for greater equality in the economic sphere.
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I hope that he will look at the OFFICIAL REPORT tomorrow and see for how long he spoke tonight. If only he practised the equality for which he pleads, I should not feel myself to be in such a tough spot, because his hon. Friend the Member for Stechford (Mr. Roy Jenkins), who is to conclude the debate this evening from the Opposition Front Bench, has asked me to finish by 9.30 p.m.
I want to say three things about the Budget. First, however, my right hon. Friend the Chancellor of the Exchequer might like to know the reactions I got this morning from my works in the Midlands when I telephoned to ascertain the views of the ordinary workers about the Budget. There are two reactions which I should pass to my right hon. Friend. First, the people say that the men who are earning between £1,200 and £1,700 a year—the top executive men—feel that they are getting nothing out of the Budget.
Mr. Bence: That is what I said.
Mr. Osborne: The hon. Member took a long time to say it.
Secondly, the women workers ask, "If the Chancellor can afford to take off all the tax on sport and on amusement, why did not he first take off the other tax on pots and pans and furniture?" In the opinion of the women workers who have to run a home as well as do a hard day's work in a factory, the tax on pots and pans and furniture is far more irksome than the tax on sport. I should like my right hon. Friend to bear in mind these two messages which I had from the Midlands this morning.
The first of the three points I should like to try to make is that in my opinion the Budget is a cross between a great act of faith and a sheer gamble. The Committee will remember it was said that:
"…faith is the substance of things hoped for, the evidence of things not seen."
This Budget, in my opinion, cannot be justified either morally, economically or politically unless it produces the results which, at the moment, we only hope for. I want to tell my hon. Friend the Financial Secretary to the Treasury the things which I think the nation is entitled to hope for which will justify what is being done in this Budget. The Chancellor, I believe, is taking a risk with the

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managerial class, the men in the £2,000 plus income group. He is giving them the incentive for which I have pleaded so often in this House and for which they have asked. On behalf of the whole country, especially on behalf of the old-age pensioners and the poorer section, he is entitled to get from the managerial class in higher productivity and in a greater national "cake" the results of that incentive. If he gets those results, then indeed, his act of faith will have been justified and his gamble will have come off. If he does not, what is being done cannot on any ground be justified.
There are two quite simple tests to this result. The first is that he has to say to managements throughout the country, to those getting the incentive that he wants from them and is entitled to get from them such higher productivity, such better quality production, such lower-priced goods that the result will be an immensely greater national "cake" from which everyone can get a bigger slice. If he does that, then indeed his gamble will have been a good one. Those on both sides of this Committee who plead the cause of the old-age pensioner will then have something from which they can legitimately take more to give to the old-age pensioner. We should never forget that it is out of the industrial profits of the successful businesses that all our welfare payments must come.
The second test of the policy is this. Will these incentives result in a shorter queue outside Canada House? Will the able, brilliant young men who at present want to go to Canada, America and other places now be tempted to stay at home and take advantage of the opportunities the Chancellor is providing? I am glad that the Chancellor of the Exchequer has now come to the Front Bench as I want to make this personal plea to him. Having given these incentives to the industrial leaders, I want him to stump the country—[HON. MEMBERS: "Hear, hear."]—and to say these two simple things to those to whom the benefits have been given; that this is only a first instalment of the genera] policy he will follow and that in his Budget for 1958 he will do still more and in 1959 even more, on one condition. The condition is that they produce the national wealth for him to give to them. I would commend to my right hon. Friend what is said at the
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end of the editorial in this morning's Manchester Guardian. The Manchester Guardian summed up the first point I make by saying:
"The Conservative party will only live it down…"—
that is, the Budget—[Laughter.] We will all have a good laugh at the end of this—
"if it can show, at the end of a year or two, that incentives to surtax payers have more than paid for themselves in increased national prosperity."
If that is the result then, as the Manchester Guardian says, my right hon. Friend will have been justified to the hilt.
My second point is that these incentives will prove a disaster to the nation, and even to the Surtax payers to whom they are largely going, if the Chancellor is unable to control inflation. The control of inflation is more important even than the giving of the extra incentives. On this point, I am not at all certain. I think that the most depressing sentence in the whole of the Economic Survey appears in page 15, where it is stated that in 1956
"Industrial production did not expand at all."
That is a tragic statement to have to make. In the previous page, there is a column showing wages and profits distributed over the last few years. It shows that the wages and salaries for 1956 were increased over those of 1955 by no less than £890 million. Therefore, apart from the increase of productivity in agriculture, we actually paid ourselves, as a nation, £890 million more to produce the same wealth. If that continues, nothing can stop inflation.
This is the simple issue which we have to face, and I hope that my right hon. Friend will take any and every step, no matter how unpopular or unpleasant it may be, to control inflation. To do that he must bring home, not only to the workers but to the managements, the immensity of the problems that face us all. I believe that it is just as stupid for certain sections of shareholders to demand greater returns and greater bonuses at a time like this, as it is for others to demand higher wages and salaries merely for the same work.
Mr. Bence: And higher dividends.
Mr. Osborne: I have just said that.
I want to say to my right hon. Friend that this will be no easy task. Sir Stafford Cripps, whom hon. Members respected so greatly, tried it in 1949 on two occasions. In the debate in this House on the devaluation of sterling on 27th September, 1949, he said this—and I commend his words to hon. Members on both sides:
"Any worker by hands or brain who goes slow, or is an absentee, or demands more money for no more output"—
that is exactly what we were doing last year—
"is, in fact, doing his best to put up his own household bills and to put somebody—quite possibly himself—out of a job."—[OFFICIAL
REPORT, 27th September, 1949; Vol. 468, c.31–2.]
I should like to see that statement put in every wage packet throughout the country, and accompanying every dividend cheque sent out in the next month.
A month later, when we were discussing the economic situation resulting from the devaluation, Sir Stafford Cripps said:
"Unless we can all quickly produce more and get our costs down, we shall suffer a tragic fall in our standard of living accompanied by all the demoralising insecurity of widespread unemployment." — [OFFICIAL REPORT, 26th October, 1949; Vol. 468, c. 1352–3.]
I do not underestimate the difficulty which my right hon. Friend faces in trying to get this over to the country as a whole—all sections, all classes alike—for, apparently, although various Chancellors during the twelve years I have had the honour to sit in this House, have warned the nation we have been living beyond our means and facing an economic crisis, almost every section is living better today than it did ten years ago. People will not believe that we are in a crisis and that a greater effort is necessary, and my right hon. Friend's greatest problem is to get this over to workers and managements alike.
In order to finish by 9.30 as promised I will come to my third point. Hon. Members opposite do themselves and the country a disservice, especially when their speeches are reported in the foreign Press, when they suggest that either by design or by accident—many have suggested by design—the Tory Government have, as a matter of policy, set themselves to grind the faces of the poor and to bring down the standard of living in this country.
Mrs. E. M. Braddock: Of course, they have.
Mr. Osborne: It has been suggested that our policy is to bring poverty and hunger to the doors of the working people.
Mrs. Braddock Mrs. Braddock indicated assent.
Mr. Osborne: This is completely untrue. The facts are that the British people today are better fed, housed and clothed than they have ever been in their long history.
Mrs. Braddock: In which world is the hon. Gentleman living?
Mr. Osborne: According to the figures given to us in the official statistics, we are eating more, drinking more and smoking more. We are spending more on entertainment, sport and gambling than ever before in our long history. To say that the Tory Government are deliberately trying to make the poor poorer is to do a grave injustice to the nation as a whole. British people have never had it so good as they have in the last few years under Tory government. [Laughter.] Hon. Members opposite laugh. I wonder if they would look in page 13 of the Economic Survey and ascertain the facts. It is useless and stupid to jeer at the cold facts.
We must face the facts, which are these. The average daily consumption per head of protein in 1952 was 429 grammes per day and last year it was 48·7 grammes. The fat consumption per person was 122·5 grammes and it has risen to 138·2. The total calorie intake has gone up from 2,950 to 3,130. The country has never been so well fed as it is today.
Let us take the next group, the annual consumption per head of basic foods. Three or four years ago hon. Members opposite jeered at us because Lord Woolton had promised that the nation should have a lot more good red meat. What are the facts? In 1952 the average consumption of meat was 84·6 1b. and last year it was 113·6 1b. It is no good saying that a handful of Surtax payers have eaten up all the extra meat. The sugar consumption in 1952 was 93 1b. per year and it is now up to 116 1b. The consumption of fresh fruit has gone up from 105 1b. to 116 1b.

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We had a great song and dance some two years ago about the tea position. It was said that the poor would not be able to get tea and we heard other nonsense like that. In 1952 the average consumption of tea throughout the country was 8·5 lb. and last year it was 10·1 lb. Hon. Members opposite are unwittingly doing the nation a great disservice by suggesting that the poor people are being made poorer by the legislation of this Government.
Mrs. Braddock: Of course they are.
Mr. Osborne: The hon. Lady says, "Of course they are". If she continues to say that, against all the evidence given in the Economic Survey, I can bring forward nothing further to try to convince her.
The last Socialist Budget was introduced into the House on 10th April, 1951, by the right hon. Gentleman who is now Leader of the Opposition. His speech contained a remarkable statement, and when I quote it I ask hon. Members opposite to remember that this was after six years of the type of economic planning they now want our party to accept.
Miss Margaret Herbison: The hon. Member must not forget that it was after Korea.
Mr. Osborne: After six years of Socialist planning, the right hon. Gentleman said:
"…we have to recognise that there must be some reduction in our standard of living."— [OFFICIAL REPORT. 10th April, 1951; Vol. 486,
c. 827–8.]
The figures today show that, as a result of four years of Conservative administration, the standard of living has gone up. All I ask hon. Members opposite to do is to try to be fair to their own intelligence and fair to their own nation; they should stop saying that we are trying to grind the faces of the poor.
Mrs. Braddock: That is just what is happening.
Mr. Osborne: If my right hon. Friend's policy is justified, then the old-age pensioners will get a great deal more. If it is not, there is no method by which they can get more. Because of that, I support the Budget.
9.32 p.m.
Mr. Roy Jenkins: The hon. Member for Louth (Mr. Osborne), for whose courtesy in assuring me so frequently that he would sit down at 9.30 I am very grateful, made three points in the course of his speech. The first was a very powerful point; the second two, which I remember more clearly at this stage, were these. First, he said that we were all greatly to blame for not going round the country and warning people of the nature of the crisis they were continually living in; and, secondly, he pointed out with great force and a show of statistics how very fortunate the country was in its standard of living today and how it could look forward to a continuance of this state of affairs under a Tory Government.
I am glad that the hon. Gentleman in the course of the last five years or so has been converted to a belief in the accuracy of Government statistics about food consumption and matters of that kind. In 1950, of course, Government statistics used to show exactly the same sort of thing. Standards of diet and standards of living had been rising quite rapidly during the previous four years, but the hon. Gentleman and his friends said that they did not believe the figures. Now, the hon. Member for Louth is willing to put an entirely different point of view before us.
The hon. Gentleman always makes a refreshingly candid speech to the Committee. His speech tonight was no exception to that general rule, and I am only sorry that the Chancellor, whom we are very glad to see back in our debate, did not arrive quite in time to hear the most glowing of the hon. Gentleman's tributes to his Budget, the most striking of which was the suggestion that the Budget was a cross between a great act of faith and a sheer gamble. That was in some contrast to the speech of the hon. Member for Dover (Mr. Arbuthnot) earlier this afternoon, who paid a most moving tribute to the Chancellor, referring to the Budget as a monument of Tory planning, and describing the Chancellor's achievement as having been the result of team work over a number of years by himself and his predecessors. I must say that this painted a most affecting picture of the Lord Privy Seal and the Prime Minister

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having worked with great self-abnegation through previous budgetary periods in order to allow the Chancellor to do what he has been able to do in the last two days—the Lord Privy Seal putting a tax on pots and pans eighteen months ago in order that the Chancellor might bring it down, and the Prime Minister deliberately putting forward false Budget forecasts this year in order to make rather easier the Chancellor's task in giving away concessions.
Earlier today we had a speech from the President of the Board of Trade who told us some things about export prospects. But he did not add very much to our general knowledge of the economic policy of the Government. If one has to make a choice, I am bound to say that I find the speeches of the President on the Budget rather more interesting when they are made before the Budget is announced than afterwards. But in his speech the right hon. Gentleman told us that the policy of the Government was to keep the £ steady and strong. I hope that policy will not be carried out by the same methods as were adopted in the past year, because I am not sure that we could afford a repetition of them.
The right hon. Gentleman said that he understood the fears of my right hon. Friend the Member for Huyton (Mr. H. Wilson) could be summed up by saying that last year we lost production and that this coming year we shall lose exports. But the fact is that in this past year—in one single year—we have lost both production and gold on a very heavy scale indeed. These two salient and extremely unfortunate facts about the past year are brought out very clearly, I think, in the Economic Survey, where it states:
"Outside the United Kingdom and the United Slates industrial production rose as fast or nearly as fast as in 1955."
On another page it states:
"Apart from the United Kingdom, most countries outside the dollar area, with the notable exception of France, increased their gold and dollar reserves during the year …"
Therefore, from this point of view, in the past year we have had the worst of two worlds. We have lost production, we have had stagnant production for two years, yet at the same time we have had a heavy and damaging drain on our gold reserves which it will take a long time to repair.
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We have had a similar sort of position regarding prices and production. I think that many of us would agree that for some time past one of the difficult things in the economic policy today has been to combine a buoyant economy and rising production with a stable, or nearly stable, price level. That, most of us would agree, is a difficult but a worthwhile object of economic policy. But also most of us would think that we could have one or the other fairly easily; that we could have either rising production or stable prices fairly easily. But we have been shown in the past year that under this Government we can have neither; we have had a year in which we got neither the advantage of a buoyant economy and rising production nor the advantage of any approach at all to price stability.
From the point of view of price stability, the prospect for the future is still bleaker than anything we have had in the past, because this Budget is not merely complacent about inflation, but is founded upon inflation. The surplus which alone makes it possible for the concessions to be dressed up as being part of a reasonably cautious, conservative financial policy is itself founded upon the assumption that our costs and prices and incomes will continue to rise at a very rapid rate.
I was surprised to hear the President of the Board of Trade say this afternoon, speaking on his own subject, that the competitive position of our exports over the past year, as a result of the credit squeeze, had considerably improved. Is this really the case? Can it be the case in a situation in which—as the Economic Survey told us—because production has been held back, productivity has fallen and labour costs per unit of output have increased very substantially?
Surely, the true position is that in so far as the competitive position of our exports has increased during the past year, it is not because the credit squeeze or any other measure of Government policy has produced anything approaching price stability here, but because, rather luckily for us, many of our competitors, notably Western Germany, have begun to inflate as fast as we have inflated. The position, therefore, is that our exports can go along, perhaps expanding a little as they have done last year but still being a steadily shrinking proportion of world exports. As long as other countries continue to

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inflate as we are doing, there is in the Budget and in Government policy generally no indication of how the position can be made more competitive.
I turn to the investment position and prospects, as put forward in the Budget. There is no doubt at all that from the economic point of view the most important negative decision which the Chancellor announced yesterday was the decision not to re-introduce the investment allowances, except to increase the shipping allowance. Their re-introduction was a proposal which had been widely canvassed by most reputable financial and economic commentators of a great range of opinion. Certainly the Financial Times this morning, for instance, expressed great disappointment that it had not been done.
What is the Chancellor's argument, as I understand it, for not taking this step to reintroduce investment allowances, whether on a selective or on a general basis? It is that fixed investment, as a proportion of our national output, has increased from 12 per cent. to 16 per cent. over the past ten years and that this is perhaps as much as we need, and certainly is as much as we can afford. Is it as much as we need and can afford? I should have thought that, as long as we had a position in which exports were a falling percentage of world total exports, it was very difficult to argue that we had as much investment as we needed.
What do the Government propose for this coming year? Surely, their proposals amount to going back on the very achievements that they put forward as a reason for not doing anything to reintroduce investment allowances. Surely, the prospect is that, in the coming year, investment as a proportion of national output will fall. And that may well be a more severe tendency in 1958–59. Investment in 1956, the Economist calculates, was, in real terms, 3 per cent. up on the previous year, but what is the position so far this year? It is that while investment may again be a little up, probably less than the 3 per cent. on last year, the tendency, without the Budget, was already for consumption to rise substantially more.
The retail trade figures, to which the Chancellor himself referred, showed that in January and February consumption, without the Budget, was already up 8 per cent. on the corresponding months for
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last year. That was quite a substantial rise. The right hon. Gentleman himself, in his own analysis, referred to the possibilities of some fairly substantial increase in consumption and—to use his own words—"a slight increase in fixed investment". Therefore, the position before the Chancellor introduced this Budget was that it was likely that in the coming financial year consumption would increase quite a bit more than would fixed investment.
In those circumstances, what does the Chancellor do? He gives a number of concessions which will further stimulate consumption, and does nothing to stimulate investment except for the one shipping point. Therefore, without any question, taking only the coming year, there is no doubt that the figure which the Chancellor himself boasts has increased since 1947 from 12 per cent. to 16 per cent. of the national income going for fixed investment, will be slightly whittled away. The Financial Times agrees that the prospect for 1958 and 1959 is a good deal worse.
There is, of course, the one shipping concession. I should have liked to see investment allowances introduced either completely, or at any rate much more generally, so I would not wish to quarrel with the shipping concession as such, and I would be disposed to think there was something of a special and forceful economic case as regards the shipping industry. There is also another case. It is a different kind of case, and it may well have been more decisive in the mind of the Chancellor. That is the fear that more shipping companies were removing themselves to Bermuda—as I think the phrase is. I ask the Chancellor to consider whether there are not grave dangers in doing too much to respond to blackmail of this kind; whether there is not too much concession to blackmail in this Government, both in the case of the shipping investment allowance, in the case of concessions to overseas companies who are thought likely to move away, and also in the general presentation, unconvincing though it may be, of the Surtax concession as having something to do with the queues of people at Canada House.
Now I would like for a short time to turn to the question of the direct taxation concessions; the £37½ million which are

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to be given away in direct tax concessions. The substantial bulk of these must certainly go to the very limited group of 300,000 Surtax payers, and a substantial part of them must go to a much more limited group of fairly heavy Surtax payers. Because there is no doubt that Surtax payers with incomes of between £2,000 and £3,000 a year will not get a vast amount out of this concession, and certainly those with incomes above £3,000 are a comparatively small proportion even of the limited number of 300,000 who come within the Surtax range at all.
One should begin by saying on this point that very rarely indeed can such a big budgetary concession have been concentrated on such a small number of taxpayers. The Chancellor's justification for it, as I understand it, is the general one of incentive. Indeed, the right hon. Gentleman gave us his views on this point, speaking as President of the Board of Trade in the Budget debate a year ago. when, referring to my right hon. Friend the Member for Huyton, he said:
"Finally, the right hon. Gentleman said that the greatest wrongs were often being done in the name of incentive. That is an attitude to our economic affairs which we on this side of the Committee cannot accept. We believe that such an attitude must lead inevitably to the stagnation of production."— [OFFICIAL REPORT, 18th April. 1956; Vol. 551. c. 1038.]
At least the experience of the last year shows that other things besides this attitude might lead to the stagnation of production. The position is now that we are asked to accept these concessions on the ground that they are an important incentive. I would not dispute the point that there has been a certain case for giving some relief to Surtax payers, particularly in the lower ranges of Surtax, and especially if they happen to have large family responsibilities. But I thought it was right to pay for that relief, in so far as it was given, by getting money from broadly the same category of people—not exactly the same—but from taxing those who, in the phrase which one of my right hon. Friends used last year, live on fiscal privilege.
I am sorry to see that the Chancellor in his approach to this Budget has completely ignored the possibility of broadening the tax base and of trying to deal in some form or other with tax avoidance
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in its widest sense. When he talked about tax avoidance in the Budget last year, the present Prime Minister, he was Chancellor of the Exchequer at that time, spoke in his winding-up speech as if we were casting some sort of slur on the efficiency of the Inland Revenue officials by pretending that there was a lot of tax avoidance. That is to treat the whole question in an excessively narrow way. It is not just a question of that sort. It is a question of the erosion of the tax base, which is the view put forward quite strongly, not merely by my hon. and right hon. Friends, but by the Royal Commission on the Taxation of Profits and Income, in the majority as well as the minority Report, as well as in a series of articles in the Economist during the year, and by other people who have been thinking seriously about the subject.
I am certainly sorry, if the Chancellor thought it necessary to make tax concessions to Surtax payers, that he did not explore the possibility of widening the tax base and reviving the proposal for a capital gains tax, which we understand the Government were very near to accepting some time ago. I am bound to say that, on the general Stock Exchange prospects at the time, I would not have thought it a bad moment to introduce a capital gains tax, of looking at other means of tax avoidance and generally seeking to broaden the tax base. Instead of which, of course, a very different lot of people have paid for these tax concessions.
In the modern practice, which is becoming increasingly regular, of having the Budget by instalments, it is a little difficult to remember exactly who it is who pays for the particular tax concessions, though I am sure that the Chancellor would agree that it would be quite false not to relate the February changes relating to welfare milk, to school meals and to the increased poll tax in the form of the National Health Service contribution to these budgetary concessions which he has been able to make. They are very decisively part of his financial arrangements for the year, and because he chooses, whether for reasons of political convenience or other reasons, to introduce them at a different time from Budget day, there is no reason at all why we should not take them into account and put them

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on the other side of the balance-sheet in evaluating what is the true effect of the Budget throughout the whole community.
Apart from the question who is paying for the Surtax concessions, there is also the question, which was raised to some extent by my hon. Friend the Member for Dunbartonshire, East (Mr. Bence), whether the right people, even those within the upper ranges in industry in the country, are getting these concessions. I would have thought that the overwhelming case, in so far as it was a case, was for those in the lower Surtax range, and not those within the upper ranges—the people, if we like, between the £2,000 and possibly £4,000 a year range, and not for those above the £5,000 a year range, and, finally, for this reason.
I think it is the case, and I believe that many hon. Members opposite would agree with me, that once we get people above the £4,000 or £5,000 a year level, then we are getting the people who are in a position in many cases to make capital gains, who are in a position to take advantage of business expenses on a particularly substantial scale. We are, in other words, getting into the range of people who are living on fiscal privilege, and the hardship is more than proportionate at a slightly lower range in the managerial group.
These concessions in taxation, which were after all very ingenious, have been very carefully drawn, and one has every reason to think that the Chancellor, in making his concessions in the way he did, and not by any straightforward cut in the standard rate or even in the Surtax rate, but by a series of very ingenious proposals fitting closely together, indicated that he intended to do precisely what he did.
What he did, of course, was to concentrate the relief overwhelmingly upon those above £4,000 a year—not upon the lower Surtax payers but upon the middle and upper Surtax payers. There is no doubt that this is the case, because we see not merely that the absolute amount of relief increases as we go up the scale, as tends to be the case with direct taxation concessions, but also that the proportionate amount of relief increases as we go up the scale.
If we consider the case of a married man with two children and assume both of them to be in the middle age range,
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we shall find that at £2,000 a year the relief that he will receive will be £21 or 1·05 per cent. of his gross income. Even at £2,500 a year the relief will be only £96, or 3·8 per cent. of his gross income. But at £4,000 a year it rises to £261 or 6·5 per cent. of his gross income. While the absolute amount increases to over £600 at £10,000, the proportionate amount falls a little beyond £6,000 but remains above 6 per cent. right up to the £10,000 level. It is very unusual to have tax concessions which are not only absolutely more valuable the higher we go but which are also relatively very much more valuable. As it has been done with great precision by the Chancellor, one has every reason to assume that he was using this weapon with great accuracy and that this was precisely what he intended to do.
The hon. Member for Orkney and Shetland (Mr. Grimond), with some part of whose speech I agree, particularly the part in which he said it was very unlikely that the Chancellor would be allowed to introduce many more Budgets, put forward in support of these concessions a suggestion that a substantial amount of them would be saved because people in this income range already had enough money to do most of the spending they wanted to do and had already bought their Daimlers on expenses, which I think was his phrase.
Mr. Grimond: Rolls-Royces.
Mr. Jenkins: We have had no indication from the Government whether they expect a substantial degree of saving from these Income Tax concessions. It will be interesting to know whether this is their view. If it is their view that a substantial amount of the concessions will be saved, it will be somewhat difficult to reconcile it with the view expressed by the Chancellor in his broadcast yesterday that he was giving the concessions where the shoe pinched most tightly. I hope we may be told in the debate what estimate the Government make of the saving from these concessions.
The depressing thing about the Budget is that to some extent it is founded upon a cut in defence costs. I have always thought that when we were able to make defence economies it was essential that the money saved should be diverted into investment. In a sense, it is our last real chance of jerking this country up from

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a still comparatively low investment economy to a high investment economy. Here we have the beginning of the defence savings, and none of it is to go into increased investment.
Furthermore, there are no proposals at all for dealing with the inflationary spiral. These are the two problems facing the country at the present time—the still comparatively low level of investment and the continuation of the inflationary spiral. The Budget makes no contribution towards solving either of them. Although the Chancellor's presentation was lucid, I therefore could not congratulate him on the substance of his Budget. I hope his tenure of office at the Treasury may be as short as that of his predecessor but that his rewards will be more in accordance with his desserts.
Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again.—[Mr. Redmayne]—put and agreed to.
Committee report Progress: to sit again Tomorrow.

AGRICULTURE (CALF SUBSIDY)
Motion made, and Question proposed, That this House to now adjourn.—[Mr. Redmayne.]
10.0 p.m.
Mr. Robert Crouch: For the last two days we have been listening to debates concerning our national finances. Unfortunately, Mr. Speaker, you have been unable to listen to them. I want to bring a breath of air from the countryside. I wish to raise some questions about the calf subsidy. I feel that I have a real grievance to present to the House on behalf not only of many of my constituents but many stock-breeders throughout the country.
Their grievance is about the subsidy which is given to cattle of beef type. It has been suggested to me that if a private individual behaved in the way in which the Minister of Agriculture has behaved since the beginning of January, he would be brought to the courts and accused of fraud. I have with me a form of application for the beef subsidy. The form says that the Minister is not paying the subsidy on all types of calves at the moment.
We realise that the Channel Islands breed and Friesian and Ayrshire heifer calves are excluded from beef subsidy, but the form says that the subsidy will be given for calves which are reasonably well reared and suitable for further rearing for beef production, or if they can be used for breeding for beef production.
I know that there has been a certain amount of difficulty for a number of years about distinguishing various types of Shorthorns. There are three distinct types, the beef, the dual-purpose, and the Dairy Shorthorn. Dairy Shorthorn breeders are quite prepared to accept that their heifer calves are not considered suitable for further beef production.
My right hon. Friend the Member for Richmond, Yorks (Sir T. Dugdale) recognised this difficulty when the Agriculture (Calf Subsidies) Act, 1952 was introduced. He was aware that the original Bill was introduced in 1947 by the then Socialist

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Government which let it go into default. My right hon. Friend said:
"Now I come to the difficult group, the large number of heifers which are so called "dual-purpose" breeds. I refer to the Dairy Shorthorns and other breeds like the Welsh Black, the Red Poll, the South Devon and the Lincoln Red. In this category every heifer will have to be judged on its merits when it is inspected. If it is of a marked dairy type it will be excluded! if it looks as if it will make a good beef animal it will be accepted."—[OFFICIAL REPORT, 25th July, 1952; Vol. 504. c. 981.]
I accept the statement of my right hon. Friend, but I object to the fact—and I was quite unaware of it on Thursday last, when I found that I was to have this Adjournment debate—the Livestock Committee of the National Farmers' Union were not looking at animals that had been rejected. That is definitely wrong. I shall not mention any names in this speech, but one of the Minister's inspectors turned up to inspect a herd which I saw on Sunday, and said to the dairyman, "What are these?" The dairyman answered, "Shorthorns". The inspector said, "They are out in any case. It is not worth while my getting out of the car." That was grossly wrong. He should have looked at those animals, but he did not. His predecessor last year granted a subsidy to certain animals in that herd.
I saw that herd on Sunday. The calves were well reared according to the Minister's ruling, and quite suitable to be carried on for beef production. I saw the dams of those heifer calves. There was no question about the steers. I saw the dams and would say that they would probably average 13 cwt. each, which is the purpose of a dual-purpose Shorthorn and not a Dairy Shorthorn. As a result of this toughening up on the Minister's part, I believe that we shall lose a great many animals which would be suitable for beef production.
I think that the average milk production in the herd which I visited is about 600 gallons a year, which is not very much, compared with that of Friesians. Recently three heifers proved to be barren, were sold for beef at £90 apiece. They must have been the dual-purpose type; they could not have been the dairy type. If the Minister insists upon including all Shorthorns except those of the extreme beef type we shall lose a great many potential beef animals. If the Minister persists in his ruling this constituent of mine will be worse off by about £1,300 a year.
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In the recent Price Review the Minister definitely stated that he wants to encourage beef production. He has put a premium upon beef. In round figures, since my right hon. Friend the Member for Richmond, Yorks reintroduced the beef subsidy scheme for calves in 1952, the number of cattle in England and Wales has increased by between 750,000 and 1 million head. The scheme has therefore proved successful and I cannot understand why the Minister has decided to exclude Shorthorn heifers from its benefits.
From conversations that I have had with responsible people in the National Farmers' Union, I understand that the Minister has done nothing in relation to the Lincoln Red Shorthorn or the Red Poll, which I believe have only two types —either beef or milk. The Shorthorn breed definitely has three types—beef, dual-purpose and dairy.
I remember the late Arthur Hiscock, a great breeder of Shorthorns. They were beef cattle, but he tried always to say that they were a dual-purpose type. No one could say that Arthur Hiscock produced a Shorthorn that was of the proper dairy type. I am sure that if he were alive today, he would be horrified at the treatment that the Minister is giving to our Shorthorn cattle.
My hon. Friend the Joint Parliamentary Secretary may be unaware of what has happened today at the monthly council meeting of the Shorthorn Society. The Secretary and one of his officers have been to sec me this evening after the meeting. They endorsed the resolution passed by the South-Western Shorthorn Society deploring that the Shorthorn should be singled out for treatment in this way and be refused subsidy. They argued, quite rightly, that the dual-purpose Shorthorn is quite capable of producing a good body of beef—and we do not want the type of body of beef that was produced by the late Arthur Hiscock. We do not want spiny cattle. We want reasonably well-fed cattle which have not an excess of fat, but an excess amount of lean. These people feel that if the Minister pursues this policy concerning the calf subsidy, instead of the amount of home-produced beef being increased it will be reduced. So far as Shorthorn cattle are concerned, the Minister is prepared to accept any steer.

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I challenge my hon. Friend the Joint Parliamentary Secretary whether he can tell me the difference between a well-fattened Shorthorn dual-purpose heifer and a well-fattened dual-purpose steer. As a practical farmer, I have probably fattened more of the medium type of steer and heifer than he has done. I appeal to him tonight not to pursue this toughening up policy. There is no need to set about us in the South and the farmers in Cheshire also. I see one of my hon. Friends from Cheshire, the hon. Member for Middleton and Prestwich (Sir J. Barlow) present, but I wish that my hon. and gallant Friend the Member for Knutsford (Lieut.-Colonel Bromley-Davenport) were also present to plead the case of the Cheshire dairy farmer.
I ask the Minister not to make an example of the Shorthorn breed and single it out for persecution by this toughening up policy that he is apparently pursuing. I hope that as a result of my intervention tonight, he will treat us fairly. Let us be honest about this. Do not persecute the people of Dorset, who do not have a high-yielding cattle but have dual-purpose cattle. I ask the Minister to continue the policy that was pursued prior to the beginning of the year.
10.14 p.m.
Mr. Brian Harrison: I have been approached today by the Red Poll Cattle Society, which represents a breed that is particularly well-known and indigenous to East Anglia. The Society has no complaint whatever at the standards demanded by the Ministry's inspectors. There appears, however, to be a certain amount of misunderstanding amongst those inspectors about the stock that they are permitted to inspect and on which subsidy can be granted. The result is that in some cases the inspectors have not even come to look at Red Poll heifers, which are suitable for the breeding of beef animals, and so have not given them the opportunity of proving their worth to the eye and so attracting subsidy.
The point I would put to the Joint Parliamentary Secretary is to ask him to ensure that all the inspectors understand which animals and breeds are entitled to attract subsidy. Will he ensure that throughout the whole country those qualifications or instructions are consistent?
10.15 p.m.
The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): I am most grateful to my hon. Friend the Member for Dorset, North (Mr. Crouch) for raising this matter tonight, because it will, I hope, enable me to clear up one or two misunderstandings.
However, before I go on to deal with the points he has raised, I should like to reply very briefly to the intervention made by my hon. Friend the Member for Maldon (Mr. B. Harrison) with regard to Red Polls. I was not aware until a few moments before this debate started that that matter would be raised, but I should be very glad to look into the point in so far as it goes beyond the general aspect with which I shall deal in a moment. I am disturbed to think that anyone should have said that they would not even look at a Red Poll. That certainly was not the intention of the Ministry, and I shall most gladly look into it.
My hon. Friend the Member for Dorset. North has drawn attention to certain difficulties in the administration of the calf subsidy which have been causing my Department some concern during recent months. It is a very good thing that he has raised this matter on the Adjournment as I can try to explain the position.
The purpose of this subsidy, as I am sure hon. Members are aware, is to encourage the rearing of calves for beef production. The description of eligible calves in the statutory scheme is as follows:
"Any steer or heifer calf, except a heifer calf of the Jersey, Guernsey, Friesian or Ayrshire breeds, which has been reasonably well reared and is suitable for further rearing for beef production or, if a heifer calf, for use for breeding for beef production, being in either case an animal which after further rearing and fattening would be likely, after slaughter, to yield a carcase of reasonably good quality beef."'
Those are the exact terms of the scheme which allows these payments to be made. They are pretty specific, I think. What we are trying to do is to adhere to this. My hon. Friend quoted from the speech of my right hon. Friend the Member for Richmond, Yorks (Sir T. Dugdale) on 25th July, 1952. My hon. Friend quoted from one paragraph, and I should like to quote from the next one to get this matter in its right context. After saying:
"if it looks as if it will make a good beef animal it will be accepted"

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my right hon. Friend went on to say:
"I do not pretend that the decision will be easy; there are bound to be borderline cases. But the farmers' representatives have accepted the principle that the object of this subsidy is to increase our supplies of good beef animals and that wherever a line is drawn some heifers must be rejected."—[OFFICIAL REPORT, 25th July. 1952; Vol. 504, c. 981.]
That, I suggest, is what we are trying to carry out. The limitation to beef type calves does give our calf certifying officers a difficult task with certain types of calves. While it is comparatively easy to judge whether a calf at eight months is worth further rearing, it is frequently very hard to say whether a calf of the dual purpose breeds, such as a Shorthorn or Red Poll—especially a heifer calf—possesses at that age the qualities needed to make it a good beef animal. That arises because in cattle of the dual purpose type, particularly Shorthorns, there is a tremendous variation.
Mr. Crouch: I should like my hon. Friend to support me and not one of his officers who arrived at a farm quite recently and said, "Shorthorns? You have had it." Does my hon. Friend support that?
Mr. Godber: I am coming on to deal with the point that my hon. Friend has made, if he will allow me, but at the moment I am trying to state the general principle involved here. As I have said, these Shorthorns, in particular, vary from the pure beef type to almost a pure dairy type, and it is therefore always a matter of difficulty to decide at which particular point one characteristic predominates over another.
Hon. Members may ask whether, in these circumstances, it is not possible to describe these beef characteristics in more detailed and precise terms so as to help our certifying officers. We would, of course, have done that if we could have done, but while it is comparatively easy to do that with a mature beast it really is not possible with an immature animal. The whole object of the subsidy is to encourage people to rear more calves for beef, and for that reason we aim at judging the calf when it is about eight months old.
That means that the decision on the eligibility of a calf must depend on the personal judgment and experience of the certifying officer. If we are to maintain a reasonably uniform standard of
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eligibility throughout the country, those officers must be specially trained on a standard acceptable to informed farming opinion. That was done in 1952, when a standard set by the principal livestock husbandry officer of my Ministry was demonstrated to members of the C.A.E.C.s and of county branches of the National Farmers' Union, and was then used as the basis for training certifying officers.
Safeguards, of course, were provided for the farmer who is aggrieved by the rejection of a calf—and this is where my hon. Friend's point arises. An aggrieved farmer can ask for an independent inspection by an officer of the Ministry's livestock husbandry service. He can also present the calf again—and more than once—if he thinks that it has developed since the original inspection was made, provided that he does so before it gets its first permanent incisor tooth. There are, therefore, several safeguards whereby further inspections can take place.
With a system like this, however, there is the problem of ensuring that the agreed standard is subsequently maintained. This we endeavour to do by a system of check inspections by livestock husbandry officers but, despite these precautions, we have found during the last year or so that the standard of certification in the difficult class of dual-purpose heifer calves has tended to fall away in some areas from the 1952 standard, and calves of predominantly dairy type have been accepted for the subsidy.
That is quite clearly a misuse of the subsidy, and as my predecessor said in this House on 4th June last, when the present scheme was under consideration, we had consultations with the National Farmers' Union to tighten up the standard for heifers of the dual-purpose breeds and to restore the 1952 standard. A standard which was agreed to fulfil that requirement was decided, and our certifying officers were rebriefed last January. The application of the restored 1952 standard has appeared to many farmers, in areas where officers had become too lenient, as a raising of the standard. As a result there have been complaints such as those to which my hon. Friend has referred.
I should say that, in the main, those complaints are mistaken. As I have said, the 1952 standard has been restored, but it has not been raised. I do emphasise that,

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because there has been a certain misunderstanding. In reply to Questions in this House not very long ago my right hon. Friend made that clear. There may have been misunderstanding in my hon. Friend's constituency. I have checked the percentage figures of calves rejected last year, and in Dorset it was well below the percentage of neighbouring counties— and, indeed, below that of the whole country. It is perhaps, significant that since the beginning of this year that figure has levelled up and has come well up to the national average.
All the same, I do not rule out the possibility that some officers, in an excess of zeal, may have tended to go from one extreme to another. That is clearly possible, and it may have happened to one or two of the farmers of whom my hon. Friend has spoken—I do not know —but I should be very happy, of course, to look into the matter further. I will give him this assurance tonight, that if, in fact, he is referring to the one or two farms about which he has been in touch with me, I am quite prepared, in order to satisfy him completely, to arrange for a further inspection to be made of the particular calves in question.
In order to make certain that it is perfectly fair and that his constituents will see that it is fair, I will arrange for that to be done by a senior officer of my Ministry. I shall ask him to go down from headquarters; he will not have seen the calves before and he will be able to consider them without any bias and in relation to the national standard. I cannot offer more than that.
Mr. Crouch: I thank my hon. Friend for what he has said. Can he also give me an assurance that never again will a certifying officer sit in his motor car and say, "Because they are Shorthorns they are out"?
Mr. Godber: I was hoping to deal with with that point. I have given an assurance, and I hope it will go a long way to meet the point which my hon. Friend has raised.
With regard to my hon. Friend's reference to a certifying officer sitting in his car and making a statement such as my hon. Friend has alleged, I have had no information about that. It is not the intention of the Ministry that that should be done. We want these
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animals to be judged on their merits, and particularly in the case of these dual-purpose breeds we are determined to see that that is done. I would certainly frown on any attempt by any of my inspecting officers to make a snap decision in cases like this without even seeing the calves.
Mr. Eric Fletcher: This is a matter which interests the whole House and not only those who represent agricultural constituencies. May we take it that the Minister is now saying that he will give instructions that breeders of Shorthorn dual-purpose calves will not be automatically excluded from certification and that any breeder will have the right to have such cattle inspected by the inspectors?
Mr. Godber: Certainly. That is the point that I have been trying to make. Dual-purpose Shorthorns will be judged on their merits. There is no question of excluding them altogether.
I would, however, remind the hon. Gentleman that if a calf is judged by our officers as being a dairy type and if it is turned down after appeal by another officer, then it is definitely out; but it is certainly judged on its merits and is not excluded because it is a dual-purpose type.
I should like to make one last point. My hon. Friend referred to the conditions that are printed on the form. He mentioned this to me before the debate. In fact, some of these forms were issued at one stage with one phrase eliminated, and perhaps this has led to a misunderstanding. That phrase has been reinserted; it says:
"provided in either case that the calf, after further rearing and fattening, would be likely after slaughter to yield good quality beef."
That has been reinserted to make the position plain—that in fact it is beef cattle that we want.
The intention was never to imply that calves of a dairy type going into dairy herds should qualify. There can be no exceptions, but by and large the principle is to encourage beef production rather than milk. We want this matter to be judged on its merits and we shall certainly try to clear up any difficulties connected with other herds which may come to our notice.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.