Commons Sitting of 15 April 1957

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  PORT OF LONDON BILL [Lords]
  Read the Third time and passed, without Amendment.
  TAMAR BRIDGE BILL
  As amended, considered; to be read the Third time
PETITIONS

  Rent Bill
  Mr. W. Edwards: With your permission, Mr. Speaker, and that of the House, I desire to present a Petition, signed by approximately 8,000 residents of the Metropolitan Borough of Stepney in the County of London, complaining of the provisions of the Rent Bill, which is now before Parliament. These citizens of Stepney maintain that the effect of this Bill, if passed, will be to inflict hardship on many families and, in particular, on pensioners and others with small fixed incomes.
  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.
  To lie upon the Table
  Mr. Jay: With your permission, Mr. Speaker, I wish to present a Petition, in similar terms, from over 1,000 citizens of the Borough of Battersea.
  To lie upon the Table
  Mr. Weitzman: I desire to present a Petition from some thousands of persons in the Boroughs of Stoke Newington and Hackney and the district of Camberwell.
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  It protests against the hardships which will result from evictions and rent increases arising from the Rent Bill. The Petitioners ask that the Bill be amended, and conclude:
  And your Petitioners, as in duty bound, will ever pray.
  To lie upon the Table

ORAL ANSWERS TO QUESTIONS

  CONTRACTS (PRINTED CONDITIONS)
  Mr. Fletcher-Cookeasked the Attorney-General if he will request the Law Reform Committee to study and report upon the desirability of changing the law relating to printed conditions in contracts between commercial concerns and individual members of the public.
  The Attorney-General (Sir Reginald Manningham-Buller): The Law Reform Committee is at present fully engaged on the consideration of other topics recently referred to it by my noble and learned Friend the Lord Chancellor. My noble Friend will consider this subject among others when he next comes to select a question for reference to the Committee.
  Mr. Fletcher-Cooke: Is my right hon. and learned Friend aware that, according to my information, one division of this Committee is occupied only in the rather profitless pursuit of the modification of the rule in Chapman v Chapman and would very much welcome a more widespread and wide-appealing topic such as this, as appears from the correspondence in The Times recently?
  The Attorney-General: That being the case, the Committee may have something to look forward to.

  DR. ADAMS (TRIAL)
  Mr. Wiggasked the Attorney-General whether he will institute an independent inquiry into the preparation, organisation, and conduct of the prosecution's case against Dr. Adams, who was recently acquitted at the Old Bailey on a charge of murder, excepting the proceedings in court.
  The Attorney-General: No.
  Mr. Wigg: Is the Attorney-General quite unaware that, throughout the length and breadth of the British Isles, the recent case of Dr. Adams has evoked discussion in terms which bring discredit upon the law and upon his office— [HON. MEMBERS: "Shame."]— upon the law and in his office? Will he not, therefore, in the interests of British justice, have an inquiry into this case, into the circumstances in which the prosecution was brought, and also into the circumstances in which the Attorney-General found it necessary to oppose the application of the defence that preliminary proceedings should be held in camera?
  The Attorney-General: The hon. Gentleman is misinformed. Counsel appearing for the Crown in the preliminary proceedings made it perfectly clear that he did not oppose the application that certain evidence should be heard in camera. The hon. Gentleman is equally misinformed, in my belief, about the other matters, and I have nothing to add.
  Mr. Anthony Greenwood: I beg the right hon. and learned Gentleman not to underestimate the public anxiety there is about this case. In view of the widespread misgivings, could he give the House an assurance that the widespread rumours that the prosecution was launched against the advice of the Director of Public Prosecutions and the Chief Constable of Eastbourne are quite unfounded?
  The Attorney-General: I can, certainly. I am glad to have an opportunity of repudiating some rumours which have been maliciously circulated. There has been no disagreement between the Director of Public Prosecutions and myself as to the course which should be pursued in this case.
  Sir L. Heald: Is my right hon. and learned Friend aware that the statement made by the hon. Member for Dudley (Mr. Wigg) appeared in a weekly publication, which I will not dignify by naming in this House, and is it not most undesirable that statements of that kind should be made, without verification? Does my right hon. and learned Friend realise that there is widespread indignation at the unfair personal attacks which have been made upon him?
  The Attorney-General: I am grateful to my right hon. and learned Friend for what he has said. Many attacks have been made upon me; that is, perhaps, to be expected. Whether they are well founded or not is another matter. I am glad to have an opportunity here and now of putting an end, I hope, to criticisms of my learned friend who conducted the case in the magistrates' court, who did not oppose the application that certain evidence should be heard in camera.
  Sir L. Ungoed-Thomas: I am sure the Attorney-General appreciates that we all very much welcome the statements which he has made at the Box today, but will he bear in mind the deep public anxiety there is about certain aspects of this case? I am sure he is well aware of them, as we all are, and I will mention just one. He appreciates, I am sure, as we all do, the terrifying consequences which might have ensued if certain documents were not available at the trial. I will not go into the matter further. Is it not desirable to have an independent inquiry into these matters so that public concern about them should be allayed and the matter dealt with in one way or another?
  The Attorney-General: I appreciate that there is a certain concern in certain quarters, but I do not accept the hon. and learned's Gentlemans' view that there is public concern about, for instance, where those nurses' reports came from. Nor do I accept his view as to the possible consequences if those reports had not been available, in view of the observations made by the learned judge at the trial.
  Mr. Wigg: In view of the unsatisfactory nature of the right hon. and learned Gentleman's reply, I beg to give notice that I shall take the earliest opportunity open to me of raising the matter on the Adjournment of the House.

  GOVERNMENT INFORMATION SERVICES

    Information
    Mr. Anthony Greenwoodasked the Chancellor of the Duchy of Lancaster if he will publish a guide to the Government Information Services for the convenience of home and overseas journalists and broadcasters.
    The Chancellor of the Duchy of Lancaster (Dr. Charles Hill): I share the view of the hon. Member that not enough is known of the work of the Government Information Services. I will certainly consider this and other suggestions on ways of providing more information about them. Meanwhile, I am sending the hon. Member a copy of a new series of leaflets, provided by the Central Office of Information, for distribution to journalists, describing publicity for export promotion and indicating how industry can help the information services.
    Mr. Greenwood: I am most grateful to the right hon. Gentleman, but I wonder whether he would bear in mind also the possibility, perhaps after Easter, of arranging an exhibition in the Palace of Westminster of the material which is produced by the Central Office of Information?
    Dr. Hill: There is a good deal in the hon. Gentleman's suggestion, and I have it in mind to do what he asks. I am sure that hon. Members in all parts of the House would be glad to see some indication of the output of the Central Office of Information.
    Mr. Shinwell: Does that mean that the right hon. Gentleman will not confine this guide to overseas journalists and broadcasters but will make it available to hon. Members?
    Dr. Hill: I had in mind a small exhibition of the material of all kinds produced by the Central Office of Information, for the benefit of hon. Members.

    Review
    Mr. Anthony Greenwoodasked the Chancellor of the Duchy of Lancaster what progress he has made so far with his review of Government Information Services.
    Dr. Hill: The general survey of existing overseas services has been completed, and suggestions for their modification are now being sifted.
    Mr. Greenwood: Would the right hon. Gentleman tell the House in what form he proposes to make this report. Will it, for example, be available to hon. Members in the form of a White Paper?
    Dr. Hill: I did reply earlier to that Question. While I am unable as yet to
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    give a firm indication of the form of the Report, it will, of course, give an indication of the Government's decisions and conclusions.
    Mr. Emrys Hughes: Could the Minister tell us whether he is handling publicity and information about the Budget, and will he see to it that hon. Members are supplied with reasons why the Government reduced taxation for the Prime Minister and the Archbishop of Canterbury by £520 a year, so that we may answer the questions which are put to us by old-age pensioners?
    Dr. Hill: The Question relates to overseas information services.
    Mr. Ernest Davies: Will the right hon. Gentleman give an assurance that no fundamental changes in these services will be made, particularly in the overseas services, before the House has been informed of the Government's proposals and has an opportunity of debating them?
    Dr. Hill: The question as to debate is not for me. I have told the hon. Gentleman before that an indication of the Government's conclusions and decisions will be reported to this House.

    Staff
    Mr. Anthony Greenwoodasked the Chancellor of the Duchy of Lancaster what changes have taken place in the staffing of his Department since he undertook his present responsibilities for the co-ordination of Government Information Services.
    Dr. Hill: To assist me in my responsibility for the co-ordination of Government Information Services, I have a small central staff with general experience of Press and public relations work. My principal assistants are the Prime Minister's Adviser on Public Relations and his Deputy; in addition, apart from my private secretaries, I have two staff with information experience.
    Mr. Lipton: Can the right hon. Gentleman say what further information of any kind has been made available to the British public since he took over his present appointment?
    Dr. Hill: The Question relates to the size of my staff, and I have faithfully answered it.

  PENSIONS AND NATIONAL INSURANCE

    Old-age Pensioners
    Mr. Pentlandasked the Minister of Pensions and National Insurance if he will arrange for further studies to be made of the conditions of old-age pensioners similar to that prepared by the Medical Officer of Health for the Sunderland Rural District Council, a copy of which has been sent to him.
    Mr. Blytonasked the Minister of Pensions and National Insurance if he has yet received the memorandum of the Medical Officer of Health for the Sunderland Rural District Council relating to the drab existence of old-age pensioners and what reply he has made.
    The Minister of Pensions and National Insurance (Mr. John Boyd-Carpenter): The position of pensioners is, as I told the House on 25th February, certainly watched both by my Department and by the National Assistance Board and, as soon as the memorandum referred to appeared, the author was asked to supply us with copies of it. This he kindly did, and I have recently received a further copy from the hon. Member for Chester-le-Street (Mr. Pentland). The memorandum has been carefully studied by my Department and the Board, but, in view of the considerable body of information based on systematically organised surveys which we already have on this subject, I do not think it is necessary to adopt the suggestion of the hon. Member for Chester-le-Street.
    Mr. Pentland: Is the Minister aware that people in the north-east of England are appalled at what this survey has revealed about the old-age pensioners' plight, and does he not agree that, in order that the Government may get a true picture of how old-age pensioners are existing in this country, he should at least encourage local authorities to follow the pattern set by Sunderland Rural District Council?
    Mr. Boyd-Carpenter: The hon. Gentleman will have heard me say in my Answer that we have a great body of information collected under carefully organised surveys. I mean no disrespect to this survey— it is a most interesting piece of work— but I will point out, for example,
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    that some of the incomes stated in it are clearly below the Assistance Board level.
    Mr. Shinwell: Will the Minister not agree, having read this extraordinary document, that it discloses that a very large number of old-age pensioners in the County of Durham, and presumably elsewhere, are suffering malnutrition and are quite unable to make both ends meet? Will he look into these disclosures rather more earnestly and try to do something about them?
    Mr. Boyd-Carpenter: I have read this most carefully, but, as I said in answer to the hon. Member for Chester-le-Street (Mr. Pentland), in point of fact, seven I think, of the twenty-one incomes stated are actually below the Assistance Board level. As a result, the local office of the Assistance Board sought the names and addresses of these people so that it could give help in the normal way; unfortunately, it has not yet been possible to obtain them.
    Dr. Kingasked the Minister of Pensions and National Insurance how many hon. Members have forwarded to him petitions from the old-age pensioners urging that pensions be increased; and what is the approximate number of signatories to such petitions to the nearest convenient date.
    Mr. Owenasked the Minister of Pensions and National Insurance how many petitions he has received during recent weeks pleading the case of the old-age pensioners; how many signatures were appended; and whether he will make a statement indicating what action the Government propose to take on these petitions.
    Mr. Boyd-Carpenter: Up to last Friday, 138 hon. Members had either forwarded petitions from their constituents or had written to me about petitions they had received. It is not possible to say even approximately how many persons signed the petitions which were sent on to me. With regard to the last part of the Question of the hon. Member for Morpeth (Mr. Owen), I have nothing to add to my reply to the hon. Lady the Member for Coventry, South (Miss Burton) and other hon. Members on 25th February.
    Dr. King: Is the Minister aware that there are more to come and that the petitioners are to be considered as additional to the 100,000 petitioners who petitioned the House through my hon. Friend the Member for Ince (Mr. T. Brown)? Will the Minister hear in mind that the Government are giving to some Surtax payers relief greater than the amount that the old-age pensioner has to live on, and that if he will bring in with the Finance Bill a Pensions Increase Bill he can have the support of pretty well the whole House?
    Mr. Boyd-Carpenter: As the hon. Member knows, we thrashed out this matter very fully on the Floor of the House a few weeks ago, and I will not be led, even by the hon. Member's blandishments, to intervene in discussions on the Budget, which have already taken some days and may take a little longer.
    Mr. Allaunasked the Minister of Pensions and National Insurance what is the proportion of the old-age pension to national average weekly earnings today;

    Average Weekly earnings*

    Retirement Pension

    Single rate pension as percentage of all earnings

    Married rate pension as percentage of men's earnings

    All workers

    Men only

    Single Rate

    Married Rate

    s.

    d

    s.

    d

    s.

    d

    s.

    d

    Per cent.

    Per cent

    October, 1946

    …

    …

    101

    0

    120

    9

    26

    0

    42

    0

    25·7

    34·8

    October, 1956†

    …

    …

    200

    8

    237

    11

    40

    0

    65

    0

    19·9

    27·3

    *Average weekly earnings of manual wage earners employed in manufacturing industries generally and in a number of the principal non-manufacturing industries, as published in the Ministry of Labour Gazette.

    † Latest date for which figures are available.

    Prescription Charges (Chronic Sick)
    Mrs. Castleasked the Minister of Pensions and National Insurance what amendments he proposes to make to the National Assistance (Determination of Need) Regulations in order to meet the needs of the chronic sick who are suffering hardship as a result of the increase in the prescription charges.
    Mr. Boyd-Carpenter: The initiative in proposing amendments to the National Assistance (Determination of Need) Regulations is not mine but rests clearly on the National Assistance Board; but I have no evidence that the present arrangements for the refund of prescription charges are not working satisfactorily.
    and what was the proportion in October, 1946.
    Mr. Boyd-Carpenter: I assume that the hon. Gentleman has in mind the National Insurance retirement pension rather than the non-contributory old-age pension, and, as the Answer contains a number of figures, I will, with permission, circulate it in the OFFICIAL REPORT.
    Mr. Allaun: Is the Minister aware that this is a diminishing proportion? Is it his contention that as production and incomes advance the old-age pensioner must stand still, or, in terms of purchasing power, actually go backwards?
    Mr. Boyd-Carpenter: I think the hon. Member knows that the general view has been taken in the Phillips Report and in other directions that this is one, but only one, of the factors that have to be taken into account in considering what is the correct rate of payment.
    Following are the figures
    Mrs. Castle: Is not it a fact that at present no old-age pensioner can get repayment of these prescription charges unless his or her income is on the present National Assistance level? Does not this mean that hardship is caused, and will the right hon. Gentleman at least take steps to approach the National Assistance Board to discuss the possibility of the chronic sick being included in the same category as blind persons and T.B. persons under the National Assistance Regulations?
    Mr. Boyd-Carpenter: The Assistance Board discharges its duty to persons at or about the Assistance level. The questions which the hon. Lady raises as to whether refunds should operate higher up

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    the income scale are clearly not for me but for my right hon. Friend the Minister of Health.

    Ex-Service Organisations (Deputation)
    Mr. Lewisasked the Minister of Pensions and National Insurance on what date he met representatives of the disabled ex-Service men's organisations; what organisations were represented; who constituted the delegation; what was the nature of their demands and his reply thereto; and whether he will make a statement.
    Mr. H. Hyndasked the Minister of Pensions and National Insurance whether he will give the result of his consideration of the request for an increase in pension made by a deputation from the British Legion and other bodies on 20th March.
    Mr. Boyd-Carpenter: I received a deputation from a number of ex-Service organisations on 20th March; I will circulate in the OFFICIAL REPORT details of its composition and the matters raised. The answer to the last part of the Question of the hon. Member for West Ham, North (Mr. Lewis) and to the hon. Member for Accrington (Mr. H. Hynd) is "No, Sir."
    Mr. Lewis: Is not the Minister aware that, rightly, both sides of the House have always paid tribute to these ex-Service men who have been disabled in fighting for their country? Does not he think that it would have been far better, instead of giving the wealthy Surtax payers £34 million a year, to have given this to the ex-Service men who have been disabled in fighting for their country? That would have been welcomed, certainly on this side of the House.
    Mr. Boyd-Carpenter: The hon. Gentleman knows very well that this Government have paid scrupulous regard to the nation's debt to these men and that they will continue to do so.
    Mr. Hynd: In view of the great benefits which have been given by the Budget to Members of the Cabinet and other Surtax payers, is not the Minister aware of the dissatisfaction felt by people like war pensioners and others at the unfairness of all this?
    Mr. Boyd-Carpenter: The hon. Gentleman will not really expect me to discuss the Budget, which I gather will be discussed later this afternoon. These Questions relate to a specific matter within my concern, and I have, in fact, answered them.
    Mr. Lewis: On a point of order, Mr. Speaker. You may perhaps have heard the Minister say that I know that the Government have done better for the ex-Service men and the pensioners. May I just say that not only do I not know that, but that that is not a statement of fact?
    Mr. Speaker: That is not a point of order; it is a point of controversy.
    Following is the information:
    The deputation consisted of:
    Sir Ian Fraser, C.B.E., M.P., Major J. T. Spinks, D.L., J.P., General Sir Roy Bucher, K.B.E., C.B., M.C., Major R. Hargreaves, M.B.E. and Dame Regina Evans, D.B.E.— British Legion.
    Dame Helen Gwynne-Vaughan, G.B.E., LL.D., D.Sc., F.L.S.— Royal Air Forces Association.
    Captain A. A. Andrews— Soldiers', Sailors' and Airmen's Families Association.
    Major F. C. Emery— Royal Artillery Association.
    Major J. R. Donnelly, M.B.E.— Ex-Services Welfare Society.
    Brigadier H. R. Firth— Royal Signals Association.
    Major-General G. E. Wildman-Lushington, C.B., C.B.E.— Burma Star Association.
    Major V. W. Davidson, n. B. E. — Royal Marine Association.
    Mr. D. Wigman— Association of Jewish Ex-Service Men and Women.
    Mr. A. D. Lloyds, A.C.A.— St. Dunstan's. Mr. T. E. Watkins— Forces Help Society
    and Lord Roberts Workshops. Major-General J. M. L. Grover, C.B., M.C. — Officers' Association.
    Air Commodore J. M. Birking, C.B., D.S.O., O.B.E., D.F.C., A.F.C.— P a t h fi n d e r Association.
    Mr. H. Harper. M.M.— Old Contemptibles Association.
    Mr. G. Benton— Dunkirk Veterans' Association.
    Mrs. L. M. Caddy— Association of Wrens. Mr. C. H. Wheeler— Royal Naval Association.
    Mr. J. P. Howard— National Federation of Far Eastern Prisoners of War Clubs and Associations of Great Britain and Northern Ireland.
    The deputation raised the following points:
    The basic rate of war disablement pension. War widows' pensions and rent allowances. Exemption of war widows' pensions from income tax.
    Pension for post-injury war widows whose husbands died before 3rd September, 1939.
    The amounts of war disablement pension and war widow's pension disregarded by the National Assistance Board.
    Formal right of appeal in connection with unemployability supplement and allowance for lowered standard of occupation.
    Questions to pensioners as to time lost from work.
    Provision of two-seater vehicles.

    Contributions (Pension Increments)
    Mr. Swinglerasked the Minister of Pensions and National Insurance if he is aware of the misleading nature of certain leaflets issued by his Department, in that they fail to make clear that contributions credited during the weeks of sickness of workers of pensionable age do not count towards pension increments; and if he will give instructions to have these leaflets amended forthwith.
    Mr. Boyd-Carpenter: No, Sir. The retirement pension leaflet, which deals with increments and which is sent to all persons approaching pension age, is quite clear on the point raised by the hon. Member. I am sending him a copy.
    Mr. Swingler: Is the Minister aware that that Answer is not quite accurate? Will he consult his Parliamentary Secretary to whom a few weeks ago I sent a leaflet received by a worker of pensionable age in which it was not made clear that credits did not count towards pension increments? Such leaflets are in circulation. Will the right hon. Gentleman take action to withdraw them so that they do not mislead pensioners?
    Mr. Boyd-Carpenter: No, Sir. The document which the hon. Gentleman sent to my hon. Friend was a form not in connection with retirement pensions and increments but one relating to sickness benefit. The leaflet which is sent to every retirement pensioner uses these words:
    "The amount by which your pension will be increased will depend on the contributions actually paid (credits, e.g., for weeks of sickness and unemployment, do not count)…"
    Mr. Beswick: Whether these words appear in any leaflet or not, is it not a fact that many contributors are not aware of this and that there have been many cases where the full entitlement of increments has not been received because of their unawareness of the position? In any event, will the Minister say whether he has any experience at all of any abuse, or potential abuse, in this matter? Would
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    it not be possible to allow at least a Proportion of credits to count for the increments?
    Mr. Boyd-Carpenter: The last part of that supplementary raises a very different question. For years it has been the rule that increments must be for actual contributions. On the question of misunderstanding, the leaflet which I quoted to the hon. Member for Newcastle-under-Lyme (Mr. Swingler) is one which is sent to every person as he approaches retirement pension age and is coming up to the paint when he has to decide whether he should go on and earn increments or not. If the hon. Gentleman has any further suggestions for making quite sure that everybody knows his rights in the matter, I shall be glad to consider them.
    Mr. T. Williams: If a person who continues to work happens to have one week's sickness in a year, he is deprived of his increments. Does not the right hon. Gentleman think that it is time we amended the law in that respect?
    Mr. Boyd-Carpenter: I think that the right hon. Gentleman misunderstands the matter. A pensioner earning increments over the full five-year period, for the maximum increment, can have ten contributions missing over that period and still get the full rate of increment.

    Unemployment Benefit
    Mr. Fernyhoughasked the Minister of Pensions and National Insurance why the hon. Member for Jarrow was refuted permission to be present at the tribunal held at South Shields on 4th April, when a test case, affecting the rights of some scores of his constituents to unemployment benefit, was heard.
    Mr. Boyd-Carpenter: Under the present Regulations (S.I. 1144 of 1948) the question of the presence of the hon. Member was a matter for the tribunal itself. As the House will be aware, the question of the rules governing tribunals of this kind is at present before the Committee on Administrative Tribunals under the chairmanship of Sir Oliver Franks.
    Mr. Fernyhough: Would not the right hon. Gentleman agree that, having regard to the fact that some scores of my constituents were having their right to benefit decided on a test case, it was quite

    1535
    reasonable for me to be present and unreasonable for the tribunal not to permit it? Does not he think that in circumstances like this it would be helpful if he sent out a general instruction indicating that the spirit of the Regulations should be met, because it is obvious from what is laid down in Regulation 13 that the tribunal may allow an interested party to be present? Does the Minister agree that a Member of Parliament who has been approached by scores of his constituents who are contesting a regulation is a very interested party indeed?
    Mr. Boyd-Carpenter: I am not without sympathy, but I must not be led to comment on a matter which by law is within the discretion of the independent tribunal. So far as the future is concerned, I think it is clear that I should be quite wrong to take any steps such as that which the hon. Gentleman himself suggests, at least until we have the Report of the Franks Committee, to whose attention the question of the admission of people to these tribunals has been specifically drawn.
    Mr. Fernyhoughasked the Minister of Pensions and National Insurance if he will give the occasion and dates, over the last twelve years, when unemployed workers on Tyneside were denied unemployment benefit under circumstances similar to those under which workers have recently had their unemployment benefit suspended, particulars of which have already been brought to his attention by the hon. Member for Jarrow.
    Mr. Boyd-Carpenter: I am afraid that the records of my Department and of that of my right hon. Friend the Minister of Labour and National Service are not kept in such form as to make this information available.
    Mr. Fernyhough: Is the right hon. Gentleman aware that I have the information, if he has not, and that these men were denied benefit on the decisions made by the umpire over twenty years ago? Does he not think it is time that the Regulations were amended so as to avoid decisions such as those which occurred in this case, where men who were not connected with the shipbuilding industry but employed outside were denied unemployment benefit because they fell out of work within twelve days of the strike?
    Mr. Boyd-Carpenter: If the hon. Gentleman is speaking of the same decisions as those which I have in mind, they have been decided in the sense of disallowance by the local tribunal; but as any party concerned can, if it so wishes, go on appeal to the Commissioner, I think I should be very ill advised to comment on the decisions.
    Mr. Fernyhoughasked the Minister of Pensions and National Insurance by what authority some hundreds of men on Tyneside, who were dismissed from their employment within twelve days of the commencement of the recent strike in the shipbuilding and engineering industries, have been refused unemployment benefit.
    Mr. Boyd-Carpenter: By reason of decisions given by the independent statutory authorities who decide all claims for benefit under the National Insurance Acts.
    Mr. Fernyhough: Is the right hon. Gentleman aware that when the blanket instruction was sent from London to all the exchanges covering the shipyards that any men who signed on within twelve days of the ending of the strike should have their benefit suspended, the immediate reaction of men in the shipyards and those unemployed in that area was that the Government were taking sides in the strike to starve the men back to work?
    Does he not think it is desirable, if we are to avoid a feeling of that kind arising in any similar dispute which may occur in future, that amending legislation should be introduced so that only those pay the penalty who are actually involved in the strike?
    Is he aware that the men who were signing on were told at the employment exchange that they could not get benefit because they were connected with the strike, and that the trade unions to which they belonged, because they had not called them out and because they were not part and parcel of the strike, denied them strike benefit? [HON. MEMBERS: "Speech."] Is he aware that these men got neither unemployment benefit nor—
    Mr. Speaker: Order.
    Mr. Boyd-Carpenter: I do not think the hon. Member fully appreciates the position of the independent statutory authorities which determine these matters

    1537
    and which determined them up to this stage in this case. As, however, this is a case in which an appeal is open, I must decline to be drawn into making any comments on the merits of the decision, which may well again become sub judice
    Mr. Marquand: Can the right hon. Gentleman please clear up one point? Is the statutory authority in this case the insurance officer on the spot, and was it correct for my hon. Friend to say that blanket instructions were sent to him from London?
    Mr. Boyd-Carpenter: The insurance officer on the spot is the independent statutory authority. As the right hon. Gentleman knows, advice is sometimes given by the chief insurance officer, who is also an independent statutory authority and the most senior of the insurance officers, Whether in this case the chief insurance officer, who would have been within his rights in doing so, did so, is not a matter for which I have responsibility or of which I am aware; but as the matter has been determined in the normal way thus far under the Act of 1948 and, as I have said to the House, further stages are possible, I must not comment on the merits or demerits of this or any other decision of the tribunal.
    Mr. Marquand: It is a very important matter as to how far the insurance officer may receive what may be described as guidance, but which may be taken as instructions, from London. Will the right hon. Gentleman circulate in the OFFICIAL REPORT the guidance which was sent by London to this insurance officer?
    Mr. Boyd-Carpenter: I have already said that, if any guidance was given, it was given by the chief insurance officer, who in this respect is not subject to me. I would have thought therefore that I should be going completely beyond my powers to circulate such advice as he, as an independent statutory authority, gave to his colleagues, who are independent of the Ministry in this respect.
    Several Hon. Members—
    Mr. Speaker: Order. The hon. Member for Jarrow (Mr. Fernyhough) is raising this matter on the Adjournment on Wednesday. I think that that is enough.

    Retirement Pensions (Late Age Entrants)
    Mr. Gowerasked the Minister of Pensions and National Insurance his estimate of the annual cost of the late entrants who will qualify for retirement pensions next year; and if he will make a statement.
    Sir K. Josephasked the Minister of Pensions and National Insurance how many late-age entrants will start drawing retirement pensions in July, 1958; how many of these are dependent wives; and what will be the estimated annual cost to the National Insurance Fund of this new liability.
    Mr. Boyd-Carpenter: It is estimated that about 425,000 late age entrants will start drawing retirement pensions in July, 1958, of whom about 115,000 will be married women qualifying for pensions on their husbands' insurance, and some 15,000 men will be able to receive an increase in the rate of their pensions for a dependent wife under age 60. The cost of these pensions will amount to about £40 million a year initially.
    Mr. Gower: Is my right hon. Friend able to state approximately how many people of retirement age will be wholly without retirement pensions after these arrangements have been completed? As, presumably, the numbers of such people must be relatively small, would it now be possible for my right hon. Friend to consider anew their position?
    Mr. Boyd-Carpenter: My answer to the first part of the Question is, "Not without notice." The second part, therefore, does not at this moment arise.

  MINISTRY OF POWER

    Smokeless Fuels
    Mr. Moyleasked the Paymaster General the tonnage of natural solid smokeless fuel, Manufactured solid smokeless fuel, other than coke, and smokeless briquetted fuels produced in 1954, 1955 and 1956, respectively; and what is in his view the estimated total tonnage necessary to implement the provisions of the Clean Air Act, 1956.
    The Parliamentary Secretary to the Ministry of Power (Mr. David Renton): About 17 million tons were produced in each year. The smokeless fuel requirement under the Clean Air Act will ultimately be met by coke, other solid smokeless fuel, electricity, gas and oil, and it is impossible to estimate how much of the various fuels will be required.
    Mr. Moyle: May I conclude from the Parliamentary Secretary's statement that there is sufficient smokeless fuel for the purposes of the Clean Air Act? If so, and having regard to the fact that domestic consumers of smokeless fuel will have a big part to play in ensuring clean air, will the hon. and learned Gentleman explain why domestic consumers have to wait months before they can get a hundredweight of smokeless fuel?
    Mr. Renton: The last part of the hon. Member's supplementary question raises a distinct point. I assure him, however, that bearing in mind that it will inevitably take some years wholly to implement the Clean Air Act, we are confident that with increased production of the various fuels that will be needed the requirements of the Act will be met.
    Mr. Moyle: In view of the fact that local authorities have already had their smokeless zone orders approved by the Ministry, may I take it that in those areas there will be sufficient smokeless fuel available for domestic consumers?
    Mr. Renton: Yes, Sir.
    Mr. Moyleasked the Paymaster-General the percentage of the solid smokeless fuels produced by the nationalised industries and private enterprise, respectively, in 1956.
    Mr. Renton: Excluding hard coke supplied to blast furnaces and foundries, about 94 per cent, and 6 per cent. respectively.
    Mr. Doddsasked the Paymaster-General by how much he estimates the production of smokeless fuels, exclusive of coke and anthracite, will be increased this year over 1956.
    Mr. Renton: The expected increase this year in the production of solid smokeless fuels excluding coke and anthracite, is about 450,000 tons.
    Mr. Dodds: Is the hon. and learned Gentleman not aware that there is widespread dissatisfaction because so many people who are persuaded to have fittings with which to use the smokeless fuels in order to avoid the harmful effects of smoke, find that they cannot get the smokeless fuel to burn in them? Is it not about time there was some co-ordination between Departments to ensure that people are not let down, as they often are, in this way?
    Mr. Renton: I do not accept what the hon. Member says. The smokeless fuel which is principally in use and which will principally be required to achieve smoke abatement is coke, and that is in very plentiful supply.
    Mr. P. Noel-Baker: In view of the heavy losses to the nation due to air pollution, amounting to hundreds of millions of pounds a year. will the Minister press the nationalised industries to maximise the production of all kinds of smokeless fuel?
    Mr. Renton: If the right hon. Gentleman studies the plans which the nationalised industries have for these matters, he will realise that they do not need much further pressing at the moment.

    Ex-Municipal Employees (Pensions)
    Mrs. Castleasked the Paymaster-General if he will now approve the scheme submitted to him by the Gas Council for an increase in pensions of ex-municipal employees.
    Mr. Renton: The Gas Council scheme and the consequential amendments to the pension schemes of nine of the twelve area gas boards have already been approved.

    Nuclear Power Station, Bradwell (Switch Gear)
    Mr. B. Harrisonasked the Paymaster-General to what extent plans for the switch gear necessary to utilise the electricity generated by the nuclear power station at Bradwell on Sea were submitted at the public inquiry held to decide the siting of this station.
    Mr. Renton: No plans either of the proposed nuclear power station or of any switch gear were submitted at the inquiry

    1541
    which took place before tenders had been received.
    Mr. Harrison: Does my hon. and learned Friend not think it is a pretty disgraceful state of affairs, because some 17 acres, I believe, are to be occupied by the switch gear and are to be built on beside this station, consequently completely altering the original plans approved by the inquiry?
    Mr. Renton: No, I do not think there is anything disgraceful about it. The inquiry was to enable the previous Minister to decide whether there should be a power station at Bradwell, and the switch gear is a separate item connected with transmission.
    Mr. Snow: As one of the members of the public who attended the inquiry, may I ask the hon. and learned Gentleman if he is aware that I had correspondence with Sir Anthony Eden about the conduct of the inquiry and that at the inquiry it was promised that there would be no subsidiary industries, yet in addition to that mentioned by the hon. Member a second subsidiary industry is now being planned, and that thus two promises have been broken?
    Mr. Renton: I am not aware of that, but that is a quite separate matter.
    Mr. B. Harrisonasked the Paymaster-General if he will give a general direction to the Central Electricity Authority to review its arrangements for co-ordinating the work of those branches of the Authority responsible for providing generating plant and those responsible for distributing electricity.
    Mr. Renton: No, Sir. This is an internal matter for the Authority.
    Mr. Harrisson: Does not my hon. and learned Friend think it pretty disgraceful that when one gets planning approval for a building like this a subsidiary building has to go up which was not considered in the original planning? It is essential that there should be some co-ordination in the Central Electricity Authority.
    Mr. Renton: There is some co-ordination. I do not think there is any strong evidence of lack of it.
    Mr. Snow: The hon. and learned Gentleman ought to have been at the inquiry then.

    Petrol Companies (Emergency Surcharge)
    Mr. Ernest Daviesasked the Paymaster-General what consultations he has had with the oil companies regarding reduction of the emergency surcharge, following the removal of the temporary extra 1s. tax; and with what result.
    Mr. Lewisasked the Paymaster-General for how long he intends to allow petrol companies to keep the Suez surcharge on petrol prices, after the ending of the additional 1s. tax and derationing.
    Mr. Renton: The hon. Members will have noted the reduction of 1d. per gallon in the surcharge, which was announced by the companies last Thursday after consultation with my noble Friend. The position will be kept under review, and the remainder of the surcharge will be removed as soon as circumstances permit.
    Mr. E. Davies: Yes, but while welcoming the removal of the 1d., may 1 ask whether it is not a fact that, ¾d. was for the extra cost to the oil companies of distribution and 1½d. was to assist retailers in view of the fall in the through-put? Is it not a fact that supplies are pretty close to normal? Certainly consumption appears to be normal judging by the number of vehicles on the roads. Does the hon. and learned Gentleman consider there is any justification for continuing this surcharge, at any rate that part of it to which I have referred?
    Mr. Renton: I cannot accept what the hon. Gentleman has said. The details of the surcharge are not exactly as he has stated. The surcharge was intended to account for the conditions which arose through tankers having to be diverted round the Cape and the disturbance in production from the refineries which also occurred. As soon as normal circumstances are restored, the surcharge will be brought to an end.
    Mr. Lewis: Yes, but can the hon. and learned Gentleman explain why it was he agreed to this surcharge when at least one company issued a report last week announcing it has made a million pounds more profit on top of many millions, and that it paid an 18·66 per cent. tax-free dividend? Why did he agree to give any surcharge at all? Why should not the companies pay it out of their profits and

    1543
    thus get the cost of living down? Can he answer that?
    Mr. Renton: If the hon. Gentleman will look into the matter a bit farther, I do not think he will find that the suggestion he is making is well founded.
    Mr. Lewis: It is.
    Mr. Renton: Indeed, no. The question of the profits during the whole of the year 1956 has not very much to do with the surcharge— — [HON. MEMBERS: "Oh."]— which applied only in the last few weeks of 1956 and the first few months of 1957.
    Mr. Nabarro: Would not my hon. and learned Friend agree that the major part of this surcharge is to be attributed to the cause which he gave, bringing the oil round the Cape? In order to put a stop to much of this pernicious propaganda from hon. Members opposite— [HON. MEMBERS: "Oh."]— will he tell the House that it is the major part of the increased cost and how much it amounts to— that is, for bringing the oil round the Cape?
    Mr. Jay: How does the Parliamentary Secretary explain the fact that while his Department has been approving this increase in price, Royal Dutch-Shell profits and dividends have risen to record levels? Its shares now stand at record levels. Is the hon. and learned Gentleman aware that in many people's opinion the oil companies are making rings round him and his Department?
    Mr. Renton: The company which has been mentioned is one which has international connections far exceeding its activities in this country. It is surely familiar to the House by now that it is rightly part of its policy to build up for future expansion.
    Hon. Members: Oh.
    Mr. E. Davies: In view of the most unsatisfactory reply, I beg to give notice that I shall raise this matter on the Adjournment.

    Petrol Rationing
    Mr. Liptonasked the Paymaster-General when he will announce the end of petrol rationing.
    The Paymaster-General (Mr. Reginald Maudling): I said on 20th February that the removal of petrol rationing depends
    1544
    on the assurance of an adequate and regular flow of supplies. It is the Government's view that, having regard to the present situation in the Middle East, it would be unsafe to assume that this condition is yet satisfied, and it has been decided, therefore, that petrol rationing must stay for the time being. Nevertheless, petrol supplies have improved, and this has been reflected in the increased allowances already announced for the new rationing period beginning Wednesday.
    Mr. Lipton: Is the right hon Gentleman aware that his reply today will be received with profound regret by large numbers of people who know that present stocks are quite adequate and that there is no reason at all why petrol should not be derationed forthwith? Does his Answer mean that there is no prospect at all of derationing before Easter?
    Mr. Maudling: Everyone, including the Government, regrets the necessity for having rationing. My Answer means no more than it says. It has to continue for the time being.
    Mr. J. Griffiths: Is rationing being kept on to justify the surcharge referred to just now, of which there seems to be no other justification at all?
    Mr. Maudling: The answer to that is, obviously, "No."
    Mr. H. Morrison: Is it not the case that consumption is within normal consumption by about 3 per cent.? I understand that to have been admitted in the House. Is it worth while keeping this elaborate machinery in the circumstances? Is the right hon. Gentleman aware that there were confident headlines in the newspapers last week saying that rationing was to be stopped, with the result that many people — not I: I do not trust the Government all that much yesterday and during the weekend used their cars? Do these confident predictions appear in the Press without the Government's having given a tip in some way or another?
    Mr. Maudling: So far as the predictions were "confident," they were clearly inaccurate. The future supply position in the next quarter looks like being somewhere about 90 per cent. Supplies are not sufficiently certain to warrant the removal of rationing at this period.

  AGRICULTURE, FISHERIES AND FOOD

    Agricultural Land Commission
    Mr. Vaneasked the Minister of Agriculture, Fisheries and Food why the costs of management and administrative expenses and salaries should amount to more than double the cost of repairs as shown in the accounts of the Agricultural Land Commission for the year ended 31st March, 1956; and when the accounts for the succeeding year will be published.
    The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. J. B. Godber): There is no direct relationship between the Commission's repair costs in a particular year, its headquarters salaries, and the charges made on it for the management work of the Agricultural Land Service. The accounts of the Commission for 1956-57 will, in accordance with the usual practice, be published with its Annual Report in the autumn of this year.
    Mr. Vane: In spite of what he says, will my hon. Friend look into the figure again, because the central office expenses and management expenses are double the expense of repairs on the Commission's very expensive estates, and would appear to be excessive, even allowing for the very special position of the Commission?
    Mr. Godber: I am quite willing to look at this again, but I really think it is not quite right to make the assumptions my hon. Friend appears to be making. I would remind him that in 1955 to 1956 the Commission made a profit on management of some £47,000 and that, for the first time since the Commission was established, the balance-sheet showed an accumulated profit on the Commission's management operations.

    Fishing Industry (Conversion Grants)
    Mr. Duthieasked the Minister of Agriculture, Fisheries and Food whether he is now able to announce the date to be appointed for the starting of the conversion grants scheme under the White Fish and Herring Industries Act.
    Mr. Godber: Yes, Sir. Subject to the enactment of the Bill, my right hon. Friend and my right hon. Friend the Secretary of State for Scotland intend to
    1546
    make an Order prescribing 17th April, 1957, as the appointed day.
    Mr. Duthie: Will my hon. Friend accept my assurance that the statement he has just made will be received with much approval by the section of the industry concerned?
    Mr. Godber: I thank my hon. Friend very much.

  MINISTRY OF SUPPLY

    Nuclear Tests
    Mr. Beswickasked the Minister of Supply what area of sky over and around Christmas Island is likely to be affected by the hydrogen bomb test explosion at Christmas Island; what action will be taken to police the affected area; and under what authority action will be taken against any foreign aircraft which takes test scoops of particles from the atmosphere after the test explosion.
    The Minister of Supply (Mr. Aubrey Jones): The danger area which has been declared more than covers any area of sky likely to be affected. All reasonable precautions, including search by aircraft, will be taken to ensure that no unauthorised vessel or aircraft is in the area when tests take place.
    Mr. Beswick: Is it not a fact that Her Majesty's Government have neither the legal right to enforce this ban nor the physical means of enforcing it? Is the Minister not aware that there is absolutely nothing to stop any other country interested from sending aircraft into the affected area and taking samples and measurements, without any interference by Her Majesty's Government?
    Mr. Jones: I have implied nothing more than that a danger area has been declared, and those who enter the danger area clearly do so at their own risk.
    Sir L. Ungoed-Thomas: Do the Government take the view that they are legally, under international law, in a position to declare a danger area and to make an area so dangerous both for other aircraft and shipping that they cannot go upon their normal courses?
    Mr. Jones: I think that Question on these matters of law really should be addressed to the Foreign Secretary rather

    1547
    than myself. It really is a convention that the danger areas are declared, and such declarations have not been regarded in the past as infractions of the freedom of the high seas.
    Sir L. Ungoed-Thomas: On a point of order. The Minister has said that the Question should be addressed to the Foreign Secretary. A Question in almost these terms, and certainly to this effect, was put down by my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) a week or two ago, and it was then transferred from him to the Prime Minister. Does the Minister now say that his Ministry is not responsible for this? It is an impossible position when we are told by one Minister that it is the responsibility of another Minister.
    Mr. Beswick: Further to that point of order. The fact of the matter is that this question was originally addressed to the Prime Minister, and the Prime Minister's Office wrote and informed me that the Minister of Supply was the person to answer. In that case, ought we not to expect a reply from the Minister of Supply?
    Mr. Jones: I think that, if I am not mistaken, the original Question which was put down by the hon. Member for Nelson and Colne (Mr. S. Silverman) has since been re-addressed to the Prime Minister and is down for tomorrow.
    Mr. Speaker: These are not points for me. I have frequently said in the House that the transfer of Questions is quite outside my control.
    Sir L. Ungoed-Thomas: On a point of order. Is it in order for the Prime Minister to transfer a Question to another Minister, then for the Question to be put down to that other Minister, and then to be re-transferred to the Prime Minister? Is there anything to prevent the Prime Minister re-transferring it again and this ridiculous game continuing quite indefinitely?
    Mr. Speaker: In answer to the first part of that question, there is nothing in the rules of the House against that. That is all I am saying. If the hon. Member thinks it has been an ill-advised action, it is a matter for him to take up with the Minister. It is not one for me.
    Mr. H. Morrison: May I ask the Leader of the House whether he would be
    1548
    good enough to look into this procedure of Ministers about this matter, because we are getting into a muddle, and I think there is an obligation on the Leader of the House to try to straighten it out.
    The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler): I shall be glad to look into it, provided that I reserve absolutely the position of the Table in the matter, and while I am looking into the position of Ministers to have regard to the position of the Table.
    Mr. Beswick: Further to that point of order—
    Mr. Speaker: It is not really a point of order for me at all.
    Mr. Beswick: The aspect of the point of order which I wish to raise is this. The Minister of Supply informed me that certain parts of my Question should be transferred to the Foreign Secretary. I now ask you, Sir, whether, if I put down this Question to the Secretary of State for Foreign Affairs on this occasion, it will be accepted and placed before him, even though, quite clearly, the Foreign Secretary is unable to answer any technical questions as to other aircraft coming in and taking samples of the affected atmosphere?
    Mr. Speaker: It is not a question for me. It is a question for the Foreign Secretary and the Ministers concerned.

    Royal Ordnance Factories
    Mr. Swinglerasked the Minister of Supply if, in operating the programme of defence cuts, he will give preference to the maintenance of employment at the Royal Ordnance factories.
    Mr. Jones: Yes, Sir. Preference will be given to the Royal Ordnance factories in the allocation of orders which they are equipped to undertake.
    Mr. Swinglerasked the Minister of Supply to what extent the programme of defence cuts will affect employment at the Royal Ordnance factories at Radway Green and Swynnerton.
    Mr. Jones: Until the Services have revised their requirements in detail, I cannot say how the new defence plan will affect employment at particular factories.
    Mr. Swingler: Will the Minister bear in mind that some months ago, after about 500 workers were made redundant at the Radway Green factory, an assurance was given at that Box by the right hon. Gentleman's predecessor that there would he no more redundancies at this factory for a period of twelve months, at a time when several hon. Members for North Staffordshire were pressing for civil production there? Will he keep that in the forefront of his mind when considering the programme when he hears from the Services?
    Mr. Jones: My Answer related to the long-term rather than to the short-term implications of the White Paper.

  HOSPITALS

    Miss Mary Betteridge
    Mr. Doddsasked the Minister of Health if the medical superintendent of the St. Margaret's Mental Hospital, Birmingham, has yet approved the application by the honourable Member for Erith and Crayford to visit a patient, Miss Mary Betteridge, as requested by her and her foster parents.
    The Parliamentary Secretary to the Ministry of Health (Mr. J. K. Vaughan-Morgan): I do not know, and I would refer the hon. Member to my right hon. Friend's reply of 18th March.
    Mr. Dodds: Will the hon. Gentleman explain how, week after week, I get fobbed off with the answer to the effect that the final decision rests with the medical superintendent? Does not his Department know the Act of Parliament, and will he not refer to Regulation 48, which says at the end:
    "If the superintendent refuses, prevents or obstructs the admission of any person duly authorised by the Board to visit a patient, he shall for every offence be liable to a fine not exceeding £20."
    Why does the Minister say that it finally rests with the medical superintendent, when it does not do anything of the sort? Is not this one more example of the conspiracy both here and in Birmingham to prevent me seeing a patient when the foster-parents have asked that I should be allowed to do so?
    Mr. Vaughan-Morgan: If the hon. Gentleman will carry his studies of the Regulations a little further, he will see
    1550
    that Regulation 48 (1) also has a bearing on the matter, and that my right hon. Friend has no power to direct either the medical superintendent or the Board of Control.
    Mr. Dodds: Is the hon. Gentleman aware that Regulation 48 (1) should be mentioned to the House, because it says:
    "The Board—
    that is, the Board of Control—
    "—may at any time grant permission in writing for the admission of any person to visit a patient either on a single occasion or for a limited number of times or generally at all reasonable times and with or without restriction as to the presence of attendants or otherwise."
    The second point is that it imposes a penalty on the medical superintendent if he prevents that being carried out. Is not this a diabolical trick to prevent that being done?
    Mr. Vaughan-Morgan: I do not think that that supplementary question has any bearing on the original Question.
    Mr. Dodds: On a point of order. In view of the highly unsatisfactory answer that has been given week after week, I give notice that I shall raise the matter on the Motion for the Adjournment, when I hope the Ministry will be ready to apologise.
    Mr. Doddsasked the Minister of Health under which of the Mental Deficiency Regulations, 1948, it is laid down that the decision as to who can visit a patient apart from the special rights of adult relatives or guardians rests with the medical superintendent.
    Mr. Vaughan-Morgan: Regulation 47 (1) provides that visits may be paid at such times as the superintendent may direct.
    Mr. Dodds: But will the hon. Gentleman remember that Regulation 48. which follows, has a heading, "Power for Board to Permit Visits "? Since the Board of Control is above the medical superintendent, and since no Parliament will be barmy enough to give this power to one medical superintendent, why does not the Minister apologise for the gross inefficiency of his Department?
    Mr. Vaughan-Morgan: I think these Regulations have to be read in conjunction with one another, and I would remind the House and the hon. Member

    1551
    that, as I have said before, my right hon. Friend has no power to direct the Board of Control or the medical superintendent.
    Mr. Dodds—
    Mr. Speaker: Order. The hon. Member has given notice that he will raise the matter on the Adjournment. I think that this is the same matter as he was raising before, and therefore that concludes it.

    North Staffordshire Infirmary Stoke-on-Trent
    Mr. Ellis Smithasked the Minister of Health why the undertakings made have not been carried out at the North Staffordshire Infirmary, Stoke-on-Trent; why the capital expenditure has not been allowed; what are the present proposals; and if the requirements will now be granted as matters of urgency.
    Mr. Vaughan-Morgan: I am not aware of any undertakings which have not been carried out. As my right hon. Friend told the hon. Member on 4th March, it is hoped to begin a new casualty and accident department next year.
    Mr. Ellis Smithasked the Minister of Health (1) if his attention has been directed to the proceedings of the inquests held at Stoke-on-Trent on those who died after undergoing operations at the North Staffordshire Infirmary, Stoke-on-Trent, and the evidence given at the inquests by Dr. E. M. MacKay-Scollar, Director of the Public Health Laboratory, Stafford; and what action he is taking in regard to this hospital; and
    (2) if he will make a full statement on the evidence of the tetanus spores which were shown to have been widespread throughout the operating theatre of the North Staffordshire Infirmary, Stoke-on-Trent; and what action has been taken in the past by the Birmingham Regional Hospital Board.
    Mr. Vaughan-Morgan: My right hon. Friend is aware of the evidence given at the inquests and is awaiting a final Report from the regional hospital board on the full investigation, which is not yet complete. The hospital authorities closed the three operating theatres as soon as the outbreak occurred and they will remain closed until any necessary alterations have been made.
    Mr. Ellis Smith: While making no reflection whatever upon the medical and nursing staff, may I ask if it is the intention of the Ministry to have a close investigation into this matter, and especially into the administrative and managerial side?
    Mr. Vaughan-Morgan: I think my right hon. Friend would like to await the final report before he comments.

  HOME DEPARTMENT

    Magistrates' Courts (Indictable Offences)
    Mr. Liptonasked the Secretary of State for the Home Department whether he will introduce legislation to limit or prohibit the reporting of cases of indictable offences sent by magistrates for trial in higher courts.
    Mr. R. A. Butler: I will, with permission, answer Question 61.
    The question whether any restraint should be placed on the publication of reports of proceedings before examining justices raises difficult issues of principle, and I have decided to appoint a Departmental Committee to consider it with the following terms of reference:
    "To consider and report whether it is necessary or desirable that any restrictions should be placed on the publication of reports of proceedings before examining justices."
    I am glad to be able to inform the House that Lord Tucker has been good enough to accept the chairmanship of the Committee. I shall announce the names of the remaining members as soon as possible, and I shall ask the Committee to complete its work with the minimum of delay.
    Mr. Lipton: May I thank the right hon. Gentleman for the commendable speed with which he has dealt with this important matter, which could not possibly be left to a Private Member's Bill? May I ask whether, as soon as the Committee reports, he will take such action as may be desirable in the light of the Committee's recommendations?
    Mr. Butler: As soon as I know what the recommendations are, I shall decide what to do.

ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee [Progress, 11th 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
3.33 p.m.
Mr. Hugh Gaitskell: In his interesting speech on Wednesday last, my hon. Friend the Member for Edmonton (Mr. Albu) welcomed the lack of metaphors and cliché s in the Budget speech of the Chancellor of the Exchequer. As to cliché s, I did not detect a great reduction in the number. As to metaphors, I confess that I have a feeling of mild nostalgia for the days of the Lord Privy Seal. I recall the captain of the ship in the stormy sea, battling against difficult weather, turning the ship hard to port at one point, encouraging the crew, waving us all on; and then the Everest team, struggling up the last col to what we must now, I suppose, describe as the plateau beyond.
But the best of all, and the one that I miss most was the horse. The Committee will remember that the horse ate too much oats, or smelt the oats rather too strongly and got out of hand altogether. Then there was the further country metaphor, the gentle one, that of the gardener busily pruning his roses so that they did not produce too many blooms.
The Prime Minister cannot rival this, even with his weekend speech about kissing and squeezing. The Committee
1554
may have seen reports of the speech. The right hon. Gentleman said:
"Investment without saving"—
in a bold effort to try to humanise economic terminology—
"is like a kiss without a squeeze."
The right hon. Gentleman continued, to his 3,000 audience:
"So now you know why, when I was Chancellor, I squeezed you— it was because I loved you so."
I do not believe that even a Tory audience can have been tremendously convinced by that particular metaphor.
But I hope that the Chancellor will think again about the possibility of introducing a few metaphors. He will need a rather light touch to get all this legislation through in the Finance Bill. I promise that if he does we shall riot make too much fun of him. The right hon. Gentleman need not worry, either, if he supposes that the metaphors of the Lord Privy Seal were really the cause of his downfall. It was not the metaphors. It was just the way that the horse behaved. He eventually threw his rider with a rather loud crash and the rider had no clear idea how to control him.
The new Chancellor, with his controls, is much more careful than was the Lord Privy Seal. He has begun an inquiry into monetary policy. When I recall all that was said about the wonderful instrument of the Bank Rate, how flexible it was, how one could turn it this way and that and produce exactly the effects that one wanted in the economy, and how it was the counterweight, in 1955, to the Budget give-away just before the Election and, therefore, would offset any adverse consequence that Budget may have had, I cannot help being slightly entertained by the fact that at last there is to be an inquiry and by how differently the Chancellor speaks about monetary policy today.
The right hon. Gentleman told us, referring to arrangements about control of credit, that this was
"… evidence that the monetary machine is working under great difficulties."
Then, after speaking about the objectives of monetary policy, the right hon. Gentleman said:
"This country stands determined to maintain a fixed and stable exchange rate. The primary requisite for this is that we shall be able and

1555
determined to avoid inflation at home. Equally, it is also agreed policy to avoid slumps and severe unemployment, if these perils should again confront us."
That is quite unimpeachable.
But the right hon. Gentleman added:
"These objectives are not open to question. But there are the widest differences of opinion among those best qualified in this difficult field about how to attain them."— [OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 985.]
That is now the latest view about the Government's chosen instrument of monetary policy which they introduced with such pride a few years ago.
The Financial Times is perhaps even more severe in speaking of the inquiry. It says:
"This should provide the Government with an opportunity to correct such mistakes as the decision to rely upon steep increases in short-term interest rates as one of its main disinflationary weapons— a decision which has seriously aggravated the country's external payment difficulties and imposed major additional stresses on the internal budgetary situation without bringing worth-while advantages in other directions."
I am delighted to see the Financial Times taking this line.
How right it is and how right we were in drawing attention to this time and time again in earlier Budget debates. For, of course, it is true that this policy since 1951 has involved an increase of no less than £200 million a year in interest on the National Debt— an additional burden of that amount on the Budget. It is, of course, true that this policy has also involved a very considerable increase— I would not give an exact figure— of the amount we have to pay abroad to foreigners who happen to own English bonds or Treasury bills, perhaps £70 million to £100 million.
At least, it is a good thing that the Government have realised the problem and are investigating it. Let us hope that the committee of inquiry will be a genuinely impartial one. Let us hope that it will contain among its members people of different views, and that they will not all be entirely of one political persuasion.
Having made this point, I must go on to say, in all fairness, that at the cost of these things the policy of the Government has achieved, at any rate, one of the objects which it set out to achieve: it has produced stagnant production. Of
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course, I know that the Government do not like the word "stagnant". The Treasury Bulletin for March says, in its headline, "Steady but not Stagnant," and the Chancellor himself said:
"It is a story not of stagnation, but of immense variety."— [OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 967.]
I think that perhaps one can detect in these niceties the activities of the Chancellor of the Duchy of Lancaster. I have no doubt that he was on the telephone to the Chancellor. No doubt he will have said, "Now, old boy, what about 'stagnation'? That is a dangerous word to use. Cannot you think of something else?" And the Chancellor said, "Yes, I see the point. I will call it steady'— no, I think 'variety' will make an appeal to the public."
But these verbal niceties and qualifications of the Chancellor do not hide the facts which were presented in that devastating speech made by my right hon. Friend the Member for Huyton (Mr. H. Wilson), that last year, while industrial production in France rose by 10 per cent in Germany by 8 per cent., in Italy by 8 per cent., in Belgium by 6 per cent., and in Holland by 5 per cent., industrial production here fell by about 1 per cent.
It is true that as a result of this policy, as a result of holding down production through the credit squeeze, the hire-purchase restrictions and other things, imports have also been held back and exports on a buoyant world market have gone up by 6 per cent. That is all perfectly true, but do not let us overlook the cost which is involved. For this is not a matter of just losing what we had to lose anyhow when we had an excess of imports over exports— that is to say, doing without some of the imports and doing without other things which had to be exported; this is a matter of losing far more than that— of losing the actual increase in output which we might otherwise have had.
My right hon. Friend rightly pointed out that this amounts in terms of the increase in production which we might reasonably expect to, say, £1,500 million worth of goods and services at the rate of £750 million a year. That is not something which one can simply shrug off on the ground that we were engaged on a consolidation operation, and if it goes

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on very much longer it will, indeed, become a very serious loss to the country.
However, I do not intend to argue about the past. It is true we believe that with a less hasty removal of controls, with a judicious use— a reimposition— of some of them, with much swifter budgetary action, much of this could have been avoided. But I think that the question of whether the price is worth while, on the basis of the Government's own philosophy, really depends now on what emerges from the stagnation of the last two years, and that is the acid test of the Budget.
I think I shall carry the Committee with me if I say that we need to aim at three things. First, we have to get the surplus on our foreign balances at a reasonable level, sufficient to protect and to increase our gold reserves. Secondly, we have to increase investment. Thirdly, we have to stop inflation. I think all of us realise that those are the three cardinal problems which face the country today. To begin with, I should like to say a little more about the gold reserves and the foreign balances
First, I wish to endorse what my right hon. Friend said about our attitude to sterling and the importance of maintaining the exchange rate. However, I do not think that we can be satisfied, despite the improvement on current account to a surplus of £230 million, that this is at present sufficient to achieve the objects we have in mind. It is not enough to take care of the strain on capital account, which comes out very plainly in the Balance of Payments White Paper.
This strain consists of three things: First, the need to repay debt, in particular to the United States and Canada; secondly, to carry the burden, because it is a burden on the balance of payments, of overseas investment; thirdly, to enable us to repay sterling balances held by foreign countries here— their withdrawal and conversion. In addition to these three things, we have to try to build up our reserves.
The plain fact is that even when meeting the claims of the first three items— that is to say, the repayment of debt, the financing of overseas investment and the meeting of the withdrawal of sterling balances— we needed a surplus of £430 million last year. That is quite apart from any increase in the gold reserves.
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Of course, we could not achieve that surplus, and because we could not achieve it we had to close the gap by borrowing, as we did, £200 million from the International Monetary Fund.
Looking ahead, with the best will in the world, it is difficult to be particularly cheerful about this prospect. First, there is the fact that the sterling balances owned by Colonial Territories, which have steadily increased over the past ten years until they now total just under £1,300 million, are almost certain to be drawn down in the course of the next few years as Ghana and Malaya wish to draw their funds down for their own development. The Committee will agree that we have an obligation to see that those debts are met. In fact, in these recent years we have been to some extent, certainly as far as our dollar position is concerned, living on the willingness of the colonial peoples to accumulate balances here.
The second point that arises is with regard to overseas investment, because if we have to meet the withdrawal of sterling balances, and. at the same time, to finance a large amount of overseas investment, the strain will be very great indeed unless we can contemplate a balance of payments surplus on current account of, say, £500 million. But that, I think the Chancellor will agree, is an extremely difficult task to achieve. We have only once touched the £300 million mark, and that was in 1950 and I add at once that it was in a year when we were running down stocks at home. So far since then we have never been able to get higher than a little above £200 million.
That leads me to make a comment on the proposal to give tax concessions to companies operating overseas. There can be no doubt that one effect of this tax concession is to encourage overseas investment. The point is brought out very clearly in the discussion of the subject in the Report of the Royal Commission on the Taxation of Profits and Income. I question, therefore, whether this was quite the right moment to encourage overseas investment still further when, without any encouragement, it is already running, and has been for some years, at a level which it is extremely hard for us to sustain through our balance of payments surplus. That is a matter which we shall no doubt return to during our debates on the Finance Bill.

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As I have said, with all this we face great difficulties in building up our reserves. Yet if there is one lesson that I think every Government has learned from the experience of the past decade it is the tremendous handicap from which we suffer because of the absolutely low level of our gold and dollar reserves. So long as those reserves are low then the slightest deterioration in the current position, or some change in capital movements, can very easily create an exchange crisis.
It has another effect, as well. It means that the Chancellor of the Exchequer is apt to have to be exceptionally cautious in his budgetary policy lest, by going slightly beyond the level at which the right balance of payments surplus would be achieved, he runs into another exchange crisis. It has been suggested by the Press that the Chancellor chose to give away no more than £100 million this year, not because he thought that was all that was needed to stimulate the economy to full employment again, but because he was afraid that if he went beyond that there would be another sterling exchange crisis.
If that is so, it raises a very serious problem for all of us, because it points to the difficulty that, on account of the weakness of sterling and, in a sense, independent of our own balance of payments surplus, we may have to hold down our production and employment here because of the dangers in the City of London. These are matters which can probably be discussed more fully and appropriately in another debate, and I hope there will be an opportunity of doing so before long, because they are ultimately matters of very great importance to all of us.
I turn to investment, the second aim which any Chancellor must have in mind. This year, to the surprise of most of us, investment has been treated not as the goose that lays the golden eggs, but as the Cinderella. Nothing whatever has been done to encourage it; rightly or wrongly, the Chancellor appears to feel not only that it is not necessary, but that it is positively dangerous.
I want to detain the Committee for a few moments on what, in many ways, is the most unsatisfactory feature of the Chancellor's Budget decisions from the economic point of view. As he points out, investment has risen steadily since 1946,
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but it was very low at the end of the war and, measured as a proportion of the national income, it is still well below that of our major competitors, Germany and the United States. I know that there are difficulties in making the exact international comparisons here, but I do not think that the Chancellor will deny that we are still quite a long way behind those two countries and several others, too, I think, in Europe.
A further point which we cannot ignore is that only half the increase in investment at home since 1952 has been in industry; only £287 million out of the total of £526 million. The rest of it is in distribution, housing and other matters of that kind.
Mr. Ellis Smith: And luxury offices.
Mr. Gaitskell: In distribution, and, as my hon. Friend says, luxury offices and petrol stations.
I do not think that this is in dispute and it is a matter which ought to cause us some concern about the future. I would not deny that the boom in investment in 1955 helped to create the crisis of that year, but it is very unfair to put all the blame on investment which, when all is said and done, the Lord Privy Seal did his very best to encourage. The real weakness of that year was that the increase in investment was not sufficiently offset by keeping down consumption, and that, as we all know, was due more than anything else to the Budget of April, 1955, just before the Election.
With this background, can it be denied that one of the most urgent needs of our economy was to try to get our level of investment on to a higher plane as a proportion of national income? It has risen, I know, from 14 per cent. of the national income in 1951 to 16 per cent. in 1956, but as my hon. Friend the Member for Stechford (Mr. Roy Jenkins) pointed out the other night, in view of the fact that it is now tapering off and that the Chancellor has himself told us that there will be only a very small increase next year, all of it, as far as I can see, in the nationalised industries— and I make no complaint about that— then if there is to be an increase in the national income next year, as we presume there is, with no increase in investment, the percentage of investment to the national income is

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bound to fall again. Instead of carrying the matter further and jerking us all to that higher level which is so desirable, what the Government appear to be doing is to allow us to fall back again to the lower level from which we were struggling two years ago.
The Government's answer to this seems to be, first, that the Chancellor of the Exchequer does not want any more investment this year. I find that very hard to understand, and when he replies to the debate I should like him to tell us why he takes that view. Why is it necessary in his opinion to accept this lower standard of investment— lower, certainly, than most of us contemplated as necessary a year or two ago?
Of course, the President of the Board of Trade went further. He said that we cannot have any more investment this year because it is physically impossible without cutting into exports. That may be true in the short period, but what a defeatist attitude to adopt! If, because, at present, an increase in investment in certain industries, placing orders for certain industries here, is likely to affect exports, we therefore do nothing about it, what is the conclusion to be drawn? The conclusion surely is that the Government should be making every possible effort to expand the capacity of those industries. We have a problem no doubt in steel, we have a problem no doubt in heavy engineering and we certainly have a problem in machine tools, but merely to ignore them and to say we can do nothing about them is to leave us to face the same bottlenecks as we have faced in the last two years.
Another argument which is used is that there has been a substantial redeployment of manpower. The President of the Board of Trade claimed that all this had been very satisfactory and implied that there was no need to go any further. But if we look at the manpower figures it is extremely difficult to see that there has been any substantial redeployment at all. If hon. Members look at the table in page 19 of the Economic Survey they will find, first, that the total of persons employed in civil employment has declined during the year by 64,000 but that the whole of that is accounted for by a decline in the number of women at work, which has fallen by 70,000.
If hon. Members look at the redistribution of manpower, what do they find?
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They find that in metals, engineering and vehicles the figure has fallen by 63,000, in textiles by 18,000 and in other manufactures by 36,000. If they look for the increases they will find them, to be sure, in building and contracting to the extent of 19,000— and I will say a word about that in a moment— but they will find that the rest have been in the distributive trades, by 20,000, and in professional, financial and miscellaneous services, by 19,000.
The net effect of all this is that 70,000 women have gone out of industry and there has been some redistribution of manpower among those remaining in industry, but it has been at the expense of manufacturing and predominantly into the distributive and service trades. How that can possibly be described as a satisfactory redeployment of labour in the interests of higher investment, I fail to understand.
Sir Lynn Ungoed-Thomas: Variety.
Mr. Gaitskell: As my hon. and learned Friend said, it is variety, but, like the other variety to which I referred earlier, the net result is not very good for us.
The President of the Board of Trade spoke of the expanding demand for motor cars and referred with pride to the fact that the motor car industry had been warned by the steel industry that the steel industry would be unable to meet its demands for sheet steel in the autumn. Is that a ground for comfort? Is not this exactly what happened in 1955? Was it not followed by an enormous increase in imports of sheet steel, and was that not one of the major reasons for the balance of payments crisis later in the year?
It seems to me that this is where we came in. [HON. MEMBERS: "Where the Labour Party went out."] My right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) says "denationalisation". I think we might say that there is a board of control even under a Tory Government. I should like to know what is being done to expand the investment of the steel industry so that it may meet the additional demand of the motor car industry. I should also like to know how much of this additional demand is really from exports and how much from the home market.

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Finally, is it really necessary to take such a defeatist view about the possibilities of expanding investment when the Government have proudly proclaimed their cuts in the defence programme? The cuts in the defence programme are bound to release additional capacity in the metal and metal using industries. Can we not ensure that at least that goes to investment and not to consumption?
All this leads me to the conclusion that the Government have made a mistake, and a very serious mistake, in not taking the opportunity this year to restore investment allowances. It may be that the immediate impact would be too great, but the Chancellor could at least have said that they would be restored, say, as from a year hence He would then be giving notice to industry generally that we wished for a revival of investment as soon as the capacity set free by the cuts in the defence programme was available. Looking at the whole question of the way in which manpower has moved in the last two years, and the opportunities which were offered, it seems to me that we are losing a great chance to get the rate of investment in this country up to the sort of level which is essential if we are to have increasing productivity and the opportunity to compete effectively with other countries.
I turn to the third question, that of inflation. Here I must say that the Budget seemed to me to do no better than it did on inflation. I need hardly remind the Committee of the continued fall in the value of money; certainly, it occurred when we were in power and continued under the present Government. But there is this one difference: whereas the cost of living rose between 1946 and 1851 by 32 per cent. import prices during that period doubled they went up by 103 per cent.— between 1951 and 1957 the rise in the cost of living was almost exactly the same, 28 per cent., but there was no increase in import prices which actually declined by 3 per cent.
I ask the Chancellor, who. strangely enough, made no reference to the prospect here, what he thinks will happen to prices in the coming year. Are we still on the plateau, or is it still a gently rising slope? Does he think that it will go up rather more steeply? He will recall that the
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plateau, if that is still the word to be used, was connected with a plea to the nationalised industries not to raise their prices for a year. They agreed to do that, but that year has now come to an end. Does he expect that those prices which have been, so to speak, artificially held down, will now go up? I will venture the prophecy that the rise in prices this year is certain to be as great and probably greater than it was last year, that is to say, it will probably be at least 5 per cent. over the year.
If that is so, that is a rate of increase which is really continuing inflation. Yet the Chancellor says nothing about this. He does not make any attempt to deal with it, because in his prdget speech—
Mr. Ellis Smith: Leave it to the engineering employers.
Mr. Gaitskell: My hon. Friend may be right there.
I shall refer to what the Chancellor said about the wage-cost spiral and I will preface my remarks on that by replying to some criticisms of the speech of my right hon. Friend the Member for Huyton. When he spoke of the Chancellor having an assignment with inflation, he meant, of course, with cost inflation. We are not accusing the Chancellor of giving away too much money and creating a demand inflation this year. I do not think that anybody would say that. It is very difficult for us, without the facts and figures available, to make a precise judgment, but what we do say is that the Chancellor is at best doing nothing whatever to restrain the increase in costs, which, in turn, of course, increases prices.
What did he say about this problem? He spoke of it in sonorous terms as being a national rather than a party problem. Of course it is, in the sense that it is a problem facing the nation, but if he means that it is a problem to which the parties have the same solution, he is very wrong indeed. He spoke of it as being the most difficult issue that the country has to face. I would not quarrel with that, but what he has to propose is extraordinarily thin. He says:
"… if we are not to rely upon the policies of subsidy or of all-out deflation, then we must seek a degree of restraint and common sense and recognition of common interest far greater and far stronger than exists today."
That is very fine, excellent phraseology.

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The right hon. Gentleman went on to say:
"This afternoon, I will content myself by saying this. We ought all to ask ourselves whether we have adjusted our outlook to the responsibilities as well as the benefits of high levels of employment."
An excellent sentiment. Finally, he aid:
"If we fail, 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."
Always emphasising the immense importance of the problem:
"The Government have their rô le play in grappling with inflation. I shall be discussing shortly the steps they have taken and intend to take "— [OFFICIAL REPORT, 9th April, 1957; Vol 568. c. 970–1.]
A little later the right hon. Gentleman did discuss his Budget proposals. Is he seriously suggesting that the Budget proposals this time are likely to have any beneficial effect whatever upon the problem of the wage-cost spiral? Does he really believe that the changes he made have helped in that respect? Does he really think that the changes in Surtax will make it any easier to get policies of restraint accepted?
Certainly, the Purchase Tax changes are acceptable. We do not quarrel with them, nor with the Entertainments Duty changes. But if he believes that these will have a serious influence on our problem, then I am afraid that he has completely spoiled it by what he did in Surtax reliefs, concentrating them, as he did quite deliberately, on the better-off people and the richer taxpayers, All he did in his proposals on taxation seems to me to make his earlier comments and his pleas for restraint, vague as they were, appear even more meaningless and hollow.
The fact is that if we want restraint, if we want people to behave in a responsible manner as individuals and as members of groups, then we must persuade them that if they do that they will get fair play. In other words, we must give them a policy of what they regard as social justice. We will not get a reaction of the kind we want if our policy is "Treat 'em mean and keep 'em keen" for those at the bottom of the scale, and glittering prizes for those at the top of the scale.
I do not need to repeat the exact effect of these tax concessions. That has been done often enough in the debate. As to
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the family tax concessions, I urge most strongly that the Chancellor should consider helping those families who are either not paying Income Tax, or paying very little Income Tax, but who have great difficulty in keeping their children at school long enough to send them to a university as well. There is a gap or weakness in our arrangements at the moment.
While, in England at any rate, the university grants are not unreasonable, the grammar school grants for the children of 16 to 18 are definitely far too low. Although it is a help to those who are better off to get this tax concession, they are mostly people who, somehow or other, would have seen to it that their children did stay at school, whereas people below tax level are those who are too poor to keep them at school and it is there that the universities are losing talent which they should be getting.
The changes in Surtax are very nice for those who get them. None of us has denied that there is, in general, a case for relief in the lower ranges, so long as this is financed either out of other revenue derived from the Surtax payer, as posed in the Minority Report of the Royal Commission, or as part of a general Budget which shares out any tax remissions fairly.
What is the Government's argument? They speak of incentives. Exactly how does this apply? How many of the Surtax payers are in industry at all, to begin with? A very large number are in the professions, and many more are in occupations where the relationship between what they do and national productivity is much too obscure to be understood at all. The Second Report of the Royal Commission, which consisted of people with great experience in this field, including Lord Heyworth, chairman of Unilever's said, upon this question of incentives
"… if we are asked to infer from this that the heavy rates have any special disincentive effect upon the receivers of the higher levels of income, so as to justify a shifting of the existing weight of taxation from these ranges to lower levels of income, we are bound to reply that we see no evidence that the higher income earners are specially affected by disincentive."
It concludes:
"Rut in the meantime we should not can-elude, either from our own observations or

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from such evidence as we could extract, that the high managerial post, for instance, is declined because its rewards are not thought worth obtaining or that the artist or the professional man abates his energies because tax has made it not worth while that he should exercise them to the full."
There is really no argument there, and it should not be put forward seriously.
The other argument put forward by the Government, strangely enough— as it seems to some of us— is the argument of justice. They say that the Surtax payers have had a raw deal and that it is time we gave them a break. The Financial Secretary to the Treasury was at pains the other day to draw attention to the concessions which had been made to those earning less than £2,000 a year. Oddly enough, he did not go on to say what concessions had been made to those earning £2,000 a year. I propose to repair that omission.
I will not go over the figures which the hon. Gentleman gave in respect of those earning less than £2,000 a year — I do not challenge them— except to say that at the figure of £2,000 a year— and I take the same case as he did, the married man with two children, aged between 11 and 16 years— had received, before this Budget, £134 a year in tax remissions. Since the Budget he will get £154 a year, or a further gain of £20.
But before this Budget the £3,000 a year man had already received remissions of £185 a year, and now he is to get a further remission of £151 a year. The £5,000 a year man had already received remissions of £283 a year and he is to receive another £223. The £10,000 a year man had already received a remission of £535 a year, and his total concession now goes up to £1,137. How it can be claimed that the Surtax payers have had nothing from previous Budgets. I really do not understand. It may be the view of the Government that they should be given still more. All I can say is that that is not our idea of justice.
It is not our view of justice for another reason. We cannot consider this problem without taking into account the pre-Budget policies pursued by the Government. The Chancellor has argued that he can make these concessions because of the prospective surplus which lies ahead of him. That prospective surplus
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is due to the anticipation of an inflation of incomes on the one side and of cuts in expenditure on the other. But the cuts in expenditure include a series of measures which, in our opinion, appear definitely designed to bring the greatest hardship upon the people who can bear it least.
I refer to the cuts in the bread and milk subsidies; the imposition of increased prescription charges; cuts in welfare milk, the increase charges for school meals; and the increase in insurance contributions. The plain fact is that it is only because the Chancellor has done these things that he is able to give the money away to the Surtax payers. That seems to me to be what I described over the weekend as outrageous behaviour.
I think that we would all agree that the test of a Budget is whether it is wise and fair. In our judgment this Budget is neither. It makes no contribution to solving the problem of attaining a high rate of investment, which is the basis of our future prosperity and our competitive power in overseas markets. It does not attempt to grapple with the vital issues of rising costs and prices and the steady erosion of inflation; and not by any stretch of imagination can it be described as fair, for it not only helps those who are better off and does nothing for those who are worse off. It actually finances the concessions to the rich by measures which increase the hardship of the old and the sick.
It will neither help our economic problems nor give us that sense of national unity which only policies based upon social justice can provide. For those reasons, and to indicate our deep disapproval, which we believed is shared by the majority of our fellow citizens, we shall divide against the Motion tonight.
4.16 p.m.
The Economic Secretary to the Treasury (Mr. Nigel Birch): The right hon. Gentleman the Leader of the Opposition has put up a closely reasoned case which I shall do my best to answer. I cannot he expected to agree with everything that he has said, but I would like to commend the remarks he made about the capital side of our balance of payments. He made some very weighty points there, and I agreed with every word he said. I also commend the

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absence of metaphor from his speech, although he did talk about facing bottlenecks, which I am not sure is the happiest of metaphors.
At the close of his speech the right hon. Gentleman dealt with the increased earned income allowances, as have very many other hon. Members opposite. I want to begin my speech by saying something about that aspect of the Budget. Curiously enough, no hon. Member opposite who has spoken so far has made any comparison between taxation here and taxation in other countries. I believe that this is a highly relevant consideration. In most cases, these earned income allowances benefit men of ability, and, in very many cases, men of quite exceptional ability.
Exceptional ability is something which is scarce and is in great demand not only here but all over the world, and in the long run it is dangerous if our taxation system is right out of line with those obtaining elsewhere. We cannot expect to keep men of the highest ability if that is the case. When I say that, I am thinking not so much of men who are paying Surtax now as of the younger men of ability who know that they will get into that range in due course.
If we cannot keep men of exceptional ability we shall obviously lose our place in the world. The right hon. Member for Huyton (Mr. H. Wilson) said that generals do not win battles. It is quite true that they do not win them by themselves, but bad generals can lose battles without any assistance from anybody, and they frequently have. What we want to do is to keep our good generals here and not be run by bad ones.
I come now to comparisons. I will take the case of a man with two young children. If he had been getting £3,000 a year and got his salary put up to £4,000 a year, before this Budget he would have kept £400 off the extra £1,000; in Canada, he would keep £737; in the United States of America, £772; while in Socialist, egalitarian Sweden he would keep £493. So, following the metaphor of the right hon. Member for Huyton, we were "at the bottom of the league ". After this Budget, this same man will retain £509 8s. 11d so we are now just ahead of Sweden, but still very nearly at the bottom of the league. This is not a very sensational change.
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Outside this Committee these earned income allowances have been very savagely attacked by people on the extreme Left, but I cannot help feeling that they must be forgetting what happens in Russia. In Russia, a man who has his salary put up from £3,000 to £4,000 a year keeps £865 of it. In Russia, they do not believe very strongly in the principle of progressive taxation. If a man in Russia gets his salary raised from £9,000 a year to £10,000 a year he still keeps £865 of it. Let no one think that there are no higher salaries in Russia. A factory manager earns over £6,000 a year, an academician earns £20,000 a year, arid if one happens to be a ballet dancer one earns still more.
Mr. E. Fernyhough: How much does a Tory Minister earn there?
Mr. Ellis Smith: How many Sir Bernard and Lady Norah Dockers are there?
Mr. Birch: One thing which startled our aircraft designers who went out to Russia for the Russian Air Day, last summer, at the same time as I did, was the way in which their opposite numbers in Russia lived. Their standards of living were far higher than those of our aircraft designers. They had palatial compartments, dachas outside Moscow, estates in the Crimea, and so on. I would say to people of the extreme Left who criticise the Government's proposals that they ought to exercise a bit of Marxist self-criticism.
I do not think that anyone would want to go as far as the Russians in differentials. I think that we would all agree that it was wrong. But what about the actual practice and the theories of right hon. and hon. Gentlemen opposite about differentials? When they set up the nationalised industries they gave salaries of £8,500 a year to the chairmen of the principal ones, and these salaries were very rightly accompanied by what the hon. Gentleman the Member for Stechford (Mr. Roy Jenkins) called "fiscal privileges". I do not criticise that; I think that they were absolutely right to do it. But it showed that they realised that if we wanted to get first-class men we should have to give them a differential and pay them a worthwhile salary.
So far as the question of their theory goes, hon. Members who have read the

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report of the Royal Commission on the Taxation of Profits and Income will have noticed what the minority Report, which was contributed to by some very good Socialists, had to say on this matter. In paragraph 129 of the minority Report, they said this:
"Earned income relief should be available to all incomes assessed under Schedule E without any upper income limit."
Those were the practices and the theories of right hon. and hon. Gentlemen opposite.
The truth is that there always have been rewards for ability, and it is dangerous to blunt and blur them by penal taxation. Every country abroad, whether it is capitalist, Socialist or Communist, believes that this is true, and I do not doubt that they are right. Yet in this debate right hon. and hon. Gentlemen opposite seem to have drawn away both from their practices and their theories. I except the hon. Member for Sowerby (Mr. Houghton) who, in what I think was a very distinguished speech on Thursday, seemed to say that he thought that the actual concessions themselves were just, but he doubted whether they were expedient. I wonder whether these concessions ever would be expedient in the view of hon. Members opposite. They never were and I suspect that they never would be.
I now turn to the comment with which the right hon. Gentleman was dealing concerning taxation benefits lower down the scale. Apart from the reductions in the standard rate there have been very substantial adjustments in recent years. In 1954, the personal allowance was £80; it is now £140.
The marriage allowance was £60; it is now £100, and the child allowance was £50 and is now £100, with further increases for the older children. The band of income charged at the lower rates was £165 and is now £360. Earned income relief was then one-tenth on £1,500, whereas it is now two-ninths on £2,025. Those are very substantial reliefs.
It is perfectly true that these reliefs benefited the Surtax payer on the first £2,025 of his income and it is equally true that he was benefited by reductions in the standard rate of Income Tax. But the point is that none of these concessions benefited him above the level of about £2,000 a year fixed in 1920. It seems to be
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very strange that we should conduct our affairs according to some historical accident that happened thirty-seven years ago. I know that hon. Members opposite like to live emotionally in the 'twenties, but it seems rather absurd to regulate our practical conduct by what happened in those days. Circumstances are now very different indeed.
I myself believe that this is a belated act of justice. I believe that it is right in the national interest, and I do not believe that it will be misunderstood in the country. Perhaps I may quote from a rather sub-acid remark in The Times leader, the day after the Budget, which said:
"Politically, the Chancellor's tax changes arc well advised and well balanced and should prove intelligible in spite of the misrepresentation which they are likely to encounter."
I believe that that is the case.
Mr. Donald Chapman: Will the right hon. Gentleman read a little further in the same editorial in The Times where it says that, of course, the Chancellor's Budget was based on a gamble? It said that if there were a run-away deterioration in wages the gamble would not come off. Does not he link the two sentences together?
Mr. Birch: No, I do not think that they have to do with each other at all.
The Chancellor has not seen fit to bring in a capital gains tax. I think that that is what the right hon. Gentleman hinted at in his speech and several other right hon. and hon. Gentlemen have spoken about it. Those who read the Royal Commission's Report will remember that the majority came out very strongly against a capital gains tax. They said that it would be anomalous, that it would be difficult to administer, and economically damaging. That is to say, that it would be a handicap to enterprise and initiative; but the main point which they made was that it was only really attractive to the Revenue in periods of chronic inflation, the reason for that being, of course, that losses had to be put against gains. It was only in a period of chronic and runaway inflation that such a tax would be a certain winner for the Exchequer.
Perhaps I may quote the actual words used in paragraph 105:
"A capital gains tax would indeed have some general effect, in an inflationary phase,

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as a deterrent to investment in securities and real property; but this effect is the same as that produced by monetary policy, which does the job much more directly and is vastly easier and cheaper to administer."
That brings me to the question of monetary policy which the right hon. Gentleman dealt with in his speech. The Government's monetary policy has been accompanied by other measures of restraint and it is not easy, therefore, completely to isolate the effect of monetary policy; but the total policy combined has produced some very considerable effects. Last year, the increase in consumption at constant prices was only £90 million compared with £670 million increase in the previous year. As the result of that, we were able to hold our imports steady and bring about a very steady increase in our exports. As a result, there was an improvement of £300 million in the balance of payments and the visible trade gap was one of the lowest that we have had since the war.
If we look rather more carefully into the effect on this of the monetary policy, I think that the first thing that strikes one— and it is pointed out in the Economic Survey— is that personal savings were estimated to have gone up by £500 million. Why was that? One of a number of reasons was that, although incomes were rising, consumers found it harder to supplement their spending by borrowing. It was harder to borrow from the bank; it was harder to borrow from other institutions; it was harder to borrow on hire purchase. The effect of all this was to account for about one-third of that increase in personal savings.
One other factor may have had some marginal effect, and that was the weakness of the stock market. Hon. Gentlemen have noticed that in a paper produced today that it is estimated that the value of all Stock Exchange securities last year declined by £1,396 million. That, I should have said, was a very good illustration of the rightness of the majority view of the Royal Commission on the Taxation of Profits and Income on the effects of this monetary policy, as opposed to a capital gains tax.
I now come to the question of the effect on investment. Of course, again, it is not possible to say what has been exactly the effect of monetary policy by itself, on investment. Many hon. Gentlemen
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opposite have pointed out that, last year, investment went up by 3 per cent. It was essential to do something to restrain home demand for plant and machinery— and for two reasons. The first was that plant and machinery were among our most successful exports, and the second was that it was essential to reduce the congestion in the order books.
The Government had no wish to reduce the physical volume of investment— nor did we. Investment last year was the highest in the whole of our history. What we have brought about is a state of affairs in which the capital goods industries are fully employed without being grossly overloaded; that is to say, we have the boom under control, and it is very doubtful indeed if that could have been done without a restrictive monetary policy, and without higher interest rates.
Now, it is quite true, as the right hon. Gentleman has today pointed out, that this puts a substantial burden on the Budget. So it does upon the budgets of other countries. Since 1951, almost every other country in the free world has adopted an active monetary policy, and interest rates are everywhere higher than they were in the immediate post-war years. Our interest rates are higher than those in Canada and America, but they are lower than those in many other places.
In Germany, which is always held up as an example, a provincial Government or public utility has to pay 8 per cent. for its money. It is what is going on elsewhere that makes it unrealistic, I believe, to talk about going back to things as they were before 1951. We cannot afford to have interest rates here altogether out of line with what they are elsewhere. That is why it seems idle to talk about going back to things as they were before 1951.
What are the alternatives to our tight monetary policy? They are higher taxation and physical controls. My right hon. Friend has been forced, in this Budget, to keep on a very high rate of taxation to deal with inflation, but who would welcome higher taxation to enable us to have a cheaper monetary policy? What is the sense in creating hundreds of millions of credit by a liberal monetary policy and then raising taxation to mop up the mess which we have ourselves created? I do not think that anybody wants to do that.
Mr. Austen Albu: Which would the right hon. Gentleman think the most effective in restraining the boom last year— monetary policy, or direct controls by hire-purchase restrictions and increased Purchase Tax on motor cars and durable consumer goods?
Mr. Birch: They both played a part, obviously. What I was about to say was that in a fully employed economy the disincentive effects of higher taxation are obviously far greater than those of a tight monetary policy.
Just one word about controls. I sometimes wonder how far right hon. and hon. Gentlemen opposite themselves really believe in controls. They are very delicate in what they say about these things. Their attitude is curiously ambivalent. They are always in favour of controls in general, but never in favour of controls in particular. This afternoon, the right hon. Gentleman said that he was in favour of the judicious use of controls. That is a very nice way of putting it, but he did not say what controls he was actually in favour of.
Hon. Gentlemen opposite always shy away from the inevitable consequences of rationing and allocation. The right hon. Gentleman the Member for Huyton once boasted of making a bonfire of controls; and in his T.V. broadcast he said that we could not go back to the methods of 1947. The point I want to make here is that unless our fiscal and monetary policy is right, physical controls cannot produce any desirable result; and they cannot do it for the very simple reason that they cannot be all-embracing. Whether the controls are on imports, on investment or on consumption, if one's monetary and fiscal policy is wrong then the money which one stops people from spending on one thing they spend on something else.
A classic statement was once made on this subject by a Socialist Minister in this House, on 5th November, 1946. He was talking about the shortage of raw materials, and he said:
"We sought to alleviate these difficulties by substitution of raw materials, and the search is still going on, but sometimes by so doing we find that new shortages are created. We substituted steel for timber, and then we found that there was a shortage of steel. We proceeded to substitute aluminium for steel, and now we are up against a shortage of capacity for manufacturing aluminium."— [OFFICIAL REPORT, 5th November, 19145; Vol. 425, c. 1237–8.]
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Unless one's monetary and fiscal policy is right, one gets that sort of process of chasing one's tail.
The policy pursued in 1946 by the right hon. Gentleman I believed to be dangerous then, as I said at the time, but I believe that that kind of monetary policy would be far more dangerous now. Fixed capital investment is over double what it was in 1946. It is now running at over £3,000 million a year. Does anyone really believe that genuine lenders may be found for that vast sum of money at artificially depressed interest rates? And if genuine lenders are not found, investment can be financed only by inflation, and nothing more damaging could well be imagined.
My right hon. Friend has announced that he is to set up an inquiry, and I think that it is generally agreed that this is a good thing to do, but, meanwhile, the monetary weapon is necessary, and it will be used.
I claim that as a result of the policies of restraint, we have produced a great improvement in the position of this country. The balance of payments has greatly improved. Production of steel is up; production of coal is up; production of chemicals is up; and the production of capital goods, both for consumption at home and for our export trade, is up. There is a strong revival in the motor trade, and last month our exports were the highest in our history. If this is utter industrial stagnation, all I can say is that the more we have of it the better.
Hon. Gentleman opposite are fascinated by index numbers— a sort of billiards marker's approach to economic policy. What matters is the solvency of the country, and an improved standard of living measured over a period of years. It is to that end that the policy of Her Majesty's Government is devoted. The real question of this Budget is, "Are we running the country on too tight a rein? Is the policy too severe?" Or, "Is it not severe enough? Are we running the country on too loose a rein?"
Many well-informed commentators outside the House of Commons have taken the view that the Government are running the country on too tight a rein. I gather that hon. Gentlemen opposite do not take that view. Certainly, the right hon. Member the Member for Huyton took the view that this Budget was "an assignment with

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inflation." In spite of the gloss put on what he said by the Leader of the Opposition in the speech he has just made, the general view of hon. Gentlemen opposite has been that we are running on too loose a rein.
The attitude of hon. Gentlemen opposite is rather difficult to interpret. They want us to have more exports, more investments and more reserves. They want extra demand to more up any slack in the economy and more vial benefits. They want lower Purchase I ax and they want cheaper money. If all that is not an assignment with inflation I really do not know what is.
All that we have on the other side of the ledger is a rather vague remark of the right hon. Member for Huyton that we ought to cut consumption. We have asked what consumption, how it is to be cut and by how much, and we have not had an answer. The only thing beyond that is an even vaguer reference to controls. Massive physical controls, rationing: we have had them all. When right hon. Gentlemen opposite were the Government there was very little in the world which was not controlled, and it is a fact that the controls did not work. To go back to that sort of world would be folly.
When the right hon. Member for Huyton was advocating this policy he quoted some lines spoken by Brutus, in Julius Caesar:
"There is a tide in the affairs of men, Which, taken at the flood, leads on to fortune …"
I think that the right hon. Gentleman must have forgotten that Brutus was persuading his friends to fight a battle at the wrong place and at the wrong time. The result was a disaster. Her Majesty's Government will not take the road to Philippi.
In his Budget my right hon. Friend has taken the measures which he believes to be right in the general interests of the country. Its theme is more exports, more reserves and more opportunity. It is very generally agreed that this is not a vote-catching Budget. It shows that my right hon. Friend the Prime Minister and his colleagues are determined to govern and to stay.
4.47 p.m.
Mr. Hugh Dalton: The right hon. Gentleman the Economic Secretary, the ex-Secretary of State for
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Air, finished up in a very lively and amusing fashion— in a very airy fashion— in contrast with the ex-professor of Greek who, on Thursday last, made a speech of great intellectual intensity.
We are interested to watch the changes of junior Treasury Ministers. When we get into the long haul of the Committee stage of the Finance Bill, it will be interesting to watch whether the present Chancellor is equally well served by his two new assistants as was the Lord Privy Seal by the present Minister of Housing and Local Government and the present Parliamentary Secretary to the Ministry of Education. I am inclined to think that the Lord Privy Seal's pair lasted better than his new pair will, through the late sittings and the intricate discussions of complicated Clauses. We shall watch them with interest.
I wish to speak today upon a matter to which a rather sinister reference was made in the Chancellor's Budget speech, the National Land Fund. The Chancellor was kind enough to say that this was an imaginative concept. I created it in the 1946 Finance Bill and, as the older Members of the Committee will recall, I set aside £50 million derived from the sale of war stores and put it into a new fund which I called the National Land Fund. This was to be used to facilitate the payment of death duties, in suitable cases, in real estate, by handing over to the Treasury historically and architecturally interesting houses, or fine stretches of unspoiled open country. I hoped that within a comparatively short period of years the total would be expended for these purposes.
In fact, it has not been expended at anything like the rate which I and my advisers at that time expected. There is one reason for that, to which I should like to direct the Chancellor's attention because it raises a separate fiscal issue. It appears that in many cases the probate valuation of real property has been below the market value, with the result that it has very often been more profitable for executors not to hand over the property to the Treasury at the probate value but to sell it, sometimes with difficulty and delay, in the open market. That suggests to me that the death duty valuation of real property may very often be too lo w relatively to the market value. I suggest that the Chancellor might look into the question of whether, and if so to what

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extent, that is the case, because if that is so, he is being deprived of Estate Duty revenue which he should be receiving.
That is the way in which the National Land Fund began. It has since been carried further, as the Chancellor reminded us, by an extension in the Finance Act, 1953, to enable chattels— works of art, and other movable objects such as furniture, and so forth— to be taken over through the National Land Fund in addition to immovables in the form of land and buildings. I welcomed that extension at the time. Now we should proceed further along that road.
For the record I should like briefly to speak of the use that has been made of the National Land Fund in the ten years which have elapsed since the Fund was created. The properties received have been transferred to a number of suitable bodies, outstanding among which is the National Trust, which alone has been entrusted by the Treasury in these ten years with the care of 26 properties of varying nature and value, while a number of other cases are now under discussion.
Of the properties which have thus already come into the care of the National Trust I shall give no long list but, to indicate their variety, I will mention four. The National Trust has become the owner of more than 40,000 acres of the old Penrhyn estate in North Wales, containing some of the finest mountain scenery in Snowdonia and some of the best walking and climbing country in this island. I will mention a few places which will be familiar to those who know the area: Tryfan, the Glyders, Carnedd Llewelyn, Llyn Ogwen and Llyn Idwal [HON. MEMBERS: "Hear, hear."]— I gather that my pronunciation of these names is not unintelligible to Welshmen. It is splendid that they have been safeguarded in perpetuity against any attempts at misdevelopment, and I am delighted that this estate is now in the hands of the National Trust.
I turn to a different type of property. Some very fine historic houses have been transferred to the Trust, of which I will first mention Cotehele in Cornwall, west of the Tamar River. This is a medieval mansion of great architectural and historic interest, dating from the fifteenth century. There is also Ickworth in Suffolk, a very remarkable building
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dating from the early nineteenth century. It has a very fine rotunda and also contains a valuable collection of chattels. These are two outstanding examples of what has been achieved in the transfer to the Trust of historic houses.
Finally, to take an example of chattels only, there is a unique collection of works of art at Petworth in Sussex which quite recently has been turned over to the Trust on long loan by the Treasury — a quite proper provision. That very valuable, important and interesting collection, to which the public will have reasonable access, is worth more than £½ million.
So far I have spoken of what bas come to the National Trust, but some of the properties acquired through the Land Fund machinery have been transferred, not to the National Trust, but to a number of public bodies. The Scottish Office has received a fair share; Scotland is never backward in making claims for these things. The Forestry Commission, I am glad to say, has had a fair quantity of land suitable for its own purposes transferred to it, and the Agricultural Land Commission has also benefited.
There is one very striking example of which I would remind the Committee. It had some publicity when it was first transferred. That is the Glanllyn Estate in Merioneth, which belonged to the Williams-Wynn family. It was so derelict that, when it was transferred, the boundaries of the estate were unknown. They were not even properly fenced. It was in a derelict, miserable and run-down condition, but since it has come into the hands of the Agricultural Land Commission it has been very much improved. Money has been spent on improving the farms and cottages and food production has substantially increased.
To give one final example— which gave great satisfaction to me when I was Chancellor— a number of small but suitable houses have been transferred to the Youth Hostels Association and are now available for use by young people of vigour in various beauty spots throughout the country. I think of one in particular, Ardrowan on the banks of Loch Lomond. I visited that after it was transferred and found there a most happy party of young people of both sexes

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drawn from many parts of the Commonwealth and a number of foreign countries. That is a very agreeable and useful gathering place.
Those are examples, of which I could give more, drawn out of a fairly long list of beneficial transfers of private property under the Land Fund procedure. We expected the transfers to proceed more rapidly and on a larger scale. I have given one reason why that has not taken place. Nonetheless, looking back over those which have been transferred and looking forward for ten, fifteen or twenty years, I think it reasonable to expect that there will be a high mortality among the private owners of some of our fine houses and of much of the beautiful and remote countryside of Britain which, in my opinion, it would be well to have in safe public keeping.
Many opportunities will undoubtedly arise, even under the existing law and even as things now stand, for further operations of this Fund over the next ten or fifteen years. They may well amount to substantially larger figures than we have experienced in the last ten years and, therefore, this apparently embarrassingly large balance in the Fund may be run down. Even if no other changes are made in the law, it could be run down substantially. There are whispers about Chatsworth. If so be that some of the splendid treasures of Chatsworth were to pass into public keeping, that would involve a larger figure than anything in the transfer of the Petworth estate or others to which I have referred.
In our view—I think I speak not only for my right hon. and hon. Friends but for many hon. Members in all parts of the House and people in the country—it is part of our duty towards our national heritage that we should prevent the destruction, or decay, or even spoiling of many of these splendid mansions and wide areas of beautiful and often mountainous country. They should be regarded in the truest sense as part of our national heritage, quite regardless of who happens to own them now. This is a matter which should transcend any rights of present or future private ownership. By whatever means are most appropriate we should seek to keep them in the hands of some body which can be trusted to serve national, and not private, interests.
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In his Budget speech the Chancellor gave warning that he is proposing to raid the Land Fund to the extent of £50 million. That, I think, would require a Clause to the Finance Bill, as it required a Clause in an earlier Finance Bill to establish the Fund. There will, therefore, be another chance to discuss this matter with fuller details before us, and I shall look forward to what the right hon. Gentleman may say on that occasion. But I say now that the proposal to take £50 million out of this Fund is a most dull and reactionary proposal. As this sum has accumulated to an unexpectedly large amount, how much better it would be to seek for new socially beneficial uses to which part of this fortunate wind fall, due to my prudent budgeting years ago, could be diverted.
I shall make two particular proposals, hoping that the Chancellor will think them over between now and the appearance of the Finance Bill. I do not know whether any hon. Members from Northern Ireland are present. [HON. MEMBERS: "They are."] I remember that the right hon. Member for Woodford (Sir W. Churchill) once said in this House in the course of a speech, "I am going to do something which has never been done before. I am going to say a good word for the War Office." I am going to do a thing which I think has never been done before from this side of the Committee; I am going to say a good word for the Government of Northern Ireland.
When we started the Land Fund arrangements in 1946—they began to operate in 1947—the Northern Irish Government followed our lead. It was not the first time that they had followed our lead, but they did better than that—they went a step ahead of us. Under the Ulster Land Fund Act of 1949 a fund was created similar to ours, but with wider objects. The Ulster Land Fund Act provided not only for the payment of death duties, as our own Act provided, but the Fund could also be used to buy land, houses and chattels while the owner was still alive. That was an exceedingly valuable and beneficial widening of the purposes of the Act. I know that the National Trust has received some valuable and attractive properties in Northern Ireland under the operation of that Act, and some of them would not have been possible unless the Act had been so widely drawn.

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I ask the Chancellor seriously to consider whether he would not like to win all-party applause in this House by moving in step with Northern Ireland. It is a matter for serious consideration whether the surplus accumulated in our Land Fund is not now so large that we should give to the Treasury those additional powers which have been given by the Northern Ireland Parliament. It would always be a decision which was in the hands of the Treasury. There would be no compulsion on either side. It is in the discretion of the Treasury and the Inland Revenue whether a particular property is suitable to be handed over. On the other side there would be a discretion not by the executors, but by the actual owners during their lifetime. I urge consideration of that extension upon the Chancellor.
The second consideration that I wish to put to the right hon. Gentleman relates to the National Parks. In 1946, when I created the Land Fund, I had in mind that one of its uses should be to assist the national parks, when they were formed, to carry out much necessary, but not very costly, work which would fall upon anybody controlling those parks. And I said so. At that time there were no national parks—the national parks legislation came later—but I hazarded the hope that in due time something might be done to assist them from the Fund.
Frequent representations have been made on the matter to successive Chancellors of the Exchequer. I do not know whether the present Chancellor has received any yet, but some were made to his predecessors, and, I think, to both the Prime Minister and the Lord Privy Seal. A Motion was put on the Order Paper of the House last Session, signed by hon. Members on both sides, urging that some help should be given to the national parks from the overflowing capital of the Fund. For my part, I am not concerned whether it should be a lump sum to be expended over a series of years or whether it should take the form of an annual grant. What I would urge, however, is that the National Parks Commission should be furnished with additional finance.
The parks have been designated and the boundary lines have been drawn on the maps. In addition, governing bodies have been set up, often composed of very
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busy and public-spirited people who are doing good work, in an attempt to make the parks a success. But they are all frustrated by lack of finance. I would, therefore, hope that the Chancellor would think carefully again about this suggestion before this matter is further considered.
It is not only hon. Members on both sides of the House who have made representations. Lord Strang, the Chairman of the National Parks Commission, has, I understand, made a strong representation to the Minister of Housing and Local Government—the Minister to whom he would naturally make representations—and that representation will no doubt have been passed on to the Treasury. There is here a very strong case indeed.
I have tried, when travelling in many parts of the world—including Scotland, as I shall relate in a moment—to see what is being done in this field. It is quite humiliating to find how little has been done in this country as compared with practically every other country which has deliberately set aside areas to be used as national parks. I quote three very disparate countries as examples—Sweden, Brazil, and Queensland. In the course of my journeys about the world I have made inquiries and kept my eyes open. In all those three countries better provisions have been made than anything we have yet had here. Even in Scotland, the Argyll National Forest Park, which is the creation, of course, of the Forestry Commission, is far in advance of anything that can yet be shown in any of the national parks south of the Border. North of the Border they do not have national parks.
What sort of expenditure has one in mind? Surely, what is needed is a reasonable improvement of communications—not too much. In my view, there should not be too much motoring about in national parks. The roads should stop short in many places so that the traveller may proceed on foot. I think that, on the whole, national parks should be kept as places where it is necessary for men and women to take physical exercise. At the same time, there is a certain scope for increased road construction, but roads not too wide and not too far into the mountain fastnesses. But I think that approach roads are worth spending money on in our National Park areas. In addition, there is need for simple facilities—camping

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sites, water for washing and cooking, simple hostel accommodation, both youth hostels and hostels for middle-aged people and for families.
All these things would add enormously to the amenities and the general benefits conferred by our national Parks at no great cost. How very little it would cost out of the £60 million which has attracted the gloomy and kill-joy eyes of a group of hon. Members who made a Report through the Select Committee of Public Accounts. I think it is a little shaming that we should have so financially narrow an approach to this potentially extremely vital and valuable work.
Let the Chancellor consider, if he will, this suggestion. For my part, I would be prepared to do a deal. I would not deny the right hon. Gentleman some pull-out from this large sum now standing to the credit of the National Land Fund. By all means let him appease the financial pedants, but let him also give a little the other way. If the right hon. Gentleman is to pull some of this sum out, let him at any rate do something to extend the purposes for which this legislation was originally intended. In particular, let him extend the purposes to which the money in the Fund could be used to include, first, acquisition during the lifetime of the owner, and, in the second place, to do something to bring our national parks a little nearer to the standard which can be shown by practically every other country in which national parks exist.
My hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) has been very active and untiring in the pursuit of this object, and I think we should all be grateful to him and to certain other hon. Members who have brought it well to the front through doleful days. But now that we have this new brightness at the Treasury—this bright new Chancellor and his two bright new aides—let us hope that some light will fall on these open spaces, which I am sure we all wish to see more fully enjoyed, giving opportunities for healthy open air holidays, particularly for people of small means.
5.8 p.m.
Mr. Geoffrey Lloyd: When in 1920, as a student sitting for the Economics Tripos at the University of Cambridge, I listened to the right hon.
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Member for Bishop Auckland (Mr. Dalton) lecturing on economics, and indeed on some aspects of public finance, I never imagined that I should have the opportunity of following him in a Budget debate. I know that the right hon. Gentleman will excuse me if I do not follow his interesting speech on the specialised subject which he has made his own, but I am hopeful that the first point in my speech today may not attract his disagreement. It relates to the promise of the Prime Minister and the Chancellor of the Exchequer to improve the statistical services at the Treasury.
Many years ago, when I first travelled in America, I was humiliated by the extent to which the Americans had developed their statistics with regard to industry, etc., as compared with us. Since then there has been an enormous improvement in this country, but it still remains the fact that American statistics are more detailed and arrive faster. I think we ought all to use what influence we possess with businessmen and firms in the country to get them to co-operate as much as they possibly can in the speedy production of statistical information which is essential for the Chancellor to do his part in regulating the national economy.
I want to say only a few words on the problem of the Surtax concessions. I have listened fairly continuously to the debate since it started, and I believe that, in the end, the comment which The Times originally made will be the correct one. It was quite obvious that the party opposite had to criticise the concessions, but, at the same time, I do not feel that there is any passionate conviction, and certainly any great bitterness, on the subject.
As a footnote to the excellent argument of my right hon. Friend the Economic Secretary this afternoon about the relationship between the level of taxes upon this class here and abroad, I should like to add that I was, some three weeks ago, in a big Midlands factory and, in the course of conversation, I was told by the manager that he had previously been managing one of the subsidiary factories of the firm in South Africa. He had been promoted back to this country, at a considerable rise in salary, but when he got here he found that his net receipts after tax were less than he had had on a lower salary in South Africa. As a matter of fact, he was very nice indeed about it;

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he rather gave me the impression that to him, as a senior man, it would not really make a great deal of difference. But he said that he was worried about the younger men coming on, and wondered whether they would feel a sense of unfairness about it.
During the visits that I have had the opportunity of paying to Harwell and the other establishments of the Atomic Energy Authority during the last year or two, I have noticed a disturbing tendency among some of the younger men to give the impression that they feel that they are not going to get the fairness here which they consider their ability deserves and that the only type of career for men of their kind is on the other side of the Atlantic.
The relationship of tax and expenditure is one of the great subjects in every Budget debate, but in recent times the other function of the Budget as a regulator of the economy has come increasingly to the fore. If I had to decide as to the relative importance of one or other subject in Budget debate, I would say that the second question regarding the regulation of the economy is, in the long term, the more important of the two, because it deals with a subject-matter vastly greater even than Government expenditure and the raising of taxes. This point was brought out extremely clearly by my hon. Friend the Financial Secretary last Thursday when he demonstrated that, in spite of a rise in Government expenditure in absolute terms during the last six years, there had been a net fall of 20 per cent. in the real burden of taxes in relation to the national economy. Therefore, when we look to the future, although we must work all the time to reduce or at least to contain Government expenditure, the really big contribution towards lightening the burden of taxes is bound to come from an expansion of the national income itself.
I ask the Committee to consider this matter, and particularly the contribution to be made by investment and savings. It was dealt with at some length by the Leader of the Opposition. We know, of course, that the problem is not just a simple one of expanding the national economy, because we know that a limiting factor on the expansion of the national economy is the state of our balance of
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payments, healthy or otherwise. Let us consider first the role of investment in relation to the balance of payments.
In the White Paper on national income and expenditure there is a very interesting figure in table 7 which deals with our transactions with the rest of the world. It shows that even in these days, after the losses in foreign investments during the war, we received as a contribution to our balance of payments last year a net income from our foreign investments of £178 million. If we take the net receipts from our foreign investments just before the war, applying to them, as I think would be fair, a factor of three—that is really to be conservative in the circumstances—we find that, if we had still retained that amount of property, we should have had an income of about £576 million from foreign investments. That is £400 million more than we did receive. It is tempting to think of what that would mean in present circumstances. It would have meant a balance of about £600 million and, according to the calculations we have recently been told about, we should have been, so to speak, in clover.
Mr. C. R. Hobson: The hon. Gentleman will, of course, appreciate that the figures that he has given exclude earnings from shipping, which is a factor of great importance in his argument.
Mr. Lloyd: Yes, I agree; my calculation excludes shipping and all earnings from insurance activities. I am referring simply to property income.
We see how much we have suffered from the fact that our sudden poverty after the war precluded us from taking part in some marvellous opportunities for investment in Canada, for example, and even in Australia and other parts of the world. But let us not think that these opportunities have suddenly some to an end. They have not, as I hope to show in a moment. My conclusion is that we must strive to the greatest possible extent to increase our foreign investments, because they would give steady support to our balance of payments more or less in good times and bad.
In studying these matters, it is obvious that, in a country with a relatively stable population, a big increase in national production is bound to come from an increase in productivity, which is, by

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definition, really an increase in investment. We would all agree on that. Some hon. Members have been alarmed at the very large figures of investment in the basic industries which will be necessary in years to come, as we now know. But what of secondary industry?
I came across a very interesting example of the kind of increase in capital expenditure that is now going on when I was in a big Birmingham factory about ten days ago. The factory is largely engaged upon export work. It happened that, in the largest shop of all, the company was actually changing over from old machines to new. Two things were quite obvious to me at first glance. First, there were far fewer men about in relation to the mass of the new machinery; secondly, the job that the men had to do on the new machines was much less hard from a purely physical point of view.
I thought it would be interesting to inquire what was the actual capital cost of the old machines in relation to the number of men employed and compare it with the cost of the new. A little conference was held with the works manager and the manager on the spot, and we worked out that the direct cost of the old battery of machines per man engaged at work, on present prices, was £5,000. Of course, it would be much less in the days when the machines were originally installed. The direct cost of the new machinery per man employed was £80,000. It is to operate on the three-shift system, getting absolutely the maximum utilisation of the machines in relation to the manpower engaged.
We can make the same calculation, with rather interesting results, in the basic industries. If one takes the example of a large power station consuming about I million tons of coal a year and the colliery necessary to supply that station with coal, one finds a figure for combined investment in relation to the men involved—miners, and workers in the power station—of about £9,000 per man; but when we consider atomic power stations, like a big one in Scotland of about 320 megawatts, we find that the expenditure per man is between £120,000 and £130,000.
If we become associated with the Common Market, and there is a larger industrial market giving the possibility
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of longer industrial runs with the premium which they place upon highly automatic and mechanised equipment, we shall find that this capital requirement of investment in the future of British industry is not merely large but surprisingly and staggeringly large.
Mr. Hobson: I think that the right hon. Gentleman is painting a far too sombre picture of the electricity industry, of which he has a great knowledge. The cost per kilowatt installed is actually lower.
Mr. Lloyd: It is most important from the point of view of the employment of our men that we should, somehow or other, provide this enormous amount of capital to place behind the men in terms of machinery and equipment; whereas we all know that to try to have investment without savings is either impossible —as I think it is—or it leads straight to roaring inflation. Therefore, I propose to ask the Committee to consider certain ideas about the raising of the necessary savings, because if our need for investment is so great then by definition we need to have an enormous savings fund if we are to do the job successfully.
Of course, as the Chancellor knows better than anyone else does, all our main system of taxes was devised long ago in circumstances quite different from those of today. The question is whether we ought to make some readjustment of our financial machinery. Here I should like to comment on the criticism of the Leader of the Opposition about investment allowances. The Committee will not be surprised to know that I am a strong supporter of the Chancellor in this matter. I thought that the Leader of the Opposition gave away the fundamental weakness of his case when he asked, "Why did not the Chancellor take this opportunity of jerking up' the investment?" For a Chancellor of the Exchequer to use an instrument like the Budget to "jerk up" a massive thing like investment in industry would be wrong.
What is wanted is a steady and persistent encouragement of investment. That object might be better served by some cleaning up of the system of company taxation and by, for example, getting away from the profits tax and possibly substituting, if necessary, a corporation tax and a lesser investment allowance

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which might be more satisfactory than this jerking up and down which I feel would be bound to be bad for the economy.
However, the Leader of the Opposition agreed that my right hon. Friend had made a very important step with regard to investment by his institution of a system of foreign trade corporations, and he has done that at a point that I regard as particularly important, because it will encourage investment overseas which will stand us in good stead later on.
The Chancellor made another statement about investment which has attracted very little attention. He said that the advances to the National Coal Board, at £26 million, were £37 million below the estimate, but he hastened to add that that did not mean that there had been any reduction in the actual amount of investment carried out by the Coal Board and that it was due to the fact that the Board had been able to meet more of it from its own resources. This is very important.
The Coal Board has, among the nationalised industries, always led in providing the greater proportion of its investment requirements from its own resources. As the figures with regard to all nationalised industries are so vast and as, if they are to be followed by all outside industries, they will make such a tremendous call upon savings which will be badly needed, I think we ought to suggest that this movement might well be encouraged. It would be a very good thing if the Electricity Authority and the Gas Board, and some of the other basic industries, followed the example.
It would not be entirely an innovation, because the greatest and most successful industry of a basic fuel kind outside the nationalised industries—the oil industry —has always raised its capital requirements by the internal generation of its funds. Only a day or two ago we saw that one company alone was to spend £300 million on capital investment without going to the outside market at all.
I come to another point. Could we adapt out taxation system to the changes in our society, because there have been very big changes? The hon. Member for Northfield (Mr. Chapman) was the first person that I saw describe this change in print, when he wrote an article in, I think, 1954 in the "Political Quarterly".
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He drew attention to the way in which the more prosperous sections of industrial operatives were rising into a new income range as compared with the past, and he said that they constituted a new class in the community.
I do not know what is the best description to use. One could call them the "new middle class," but the fact is that they are industrial operatives who now have a range of income which in the old days was thought appropriate to middle-class occupations and which is now being achieved to an increasing degree by the higher-paid industrial operatives. Those in this new class have been bred in a working-class tradition, yet they now have what used to be called middle-class incomes. Therefore, they have not yet adopted, in reference to the subject which we are discussing today, a middle-class attitude about savings, although they have the resources.
Of course, exhortation can be made, but I do not want to exaggerate its importance. I venture to put a suggestion to the Committee. Could we have some special tax inducement for saving, particularly aimed at this special class in the community? Although I tread somewhat nervously with regard to the sacred preserves of the Inland Revenue, I am fortified in this suggestion by the fact that Canada, faced with a somewhat similar problem, has adopted a method of this kind.
In Canada there is a special reduced rate—a reduction of about 20 per cent.—of Income Tax for dividends from equity capital in Canadian companies. I do not say that that is a suggestion which we could adopt straight away; but is there a germ of an idea there which we could use to encourage savings, especially from the class of people of whom I have been speaking? Those hon. Members who consulted the last Report of the Commissioners of Inland Revenue will have found that in this range of income, which I consider to be roughly between £12 and £20 a week, there is tremendously big money earned. A year or two ago I calculated it to be about £3,000 million a year.
Mr. Chapman: Does not the right hon. Gentleman agree that probably more important than that is the suggestion from this side of the Committee, which has

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been made more than once, that this class of people would be particularly attracted by some sort of universal superannuation scheme which would then be giving to them in retirement some of the appurtenances of the middle-class community which they have now entered?
Mr. Lloyd: I do not want to go too far into this matter at the moment, but I do not believe that we want all the saving to be done on an institutional basis. We want also to encourage people to save by investment themselves, both for the purpose of their old age and also for venturing in business themselves.
If that is too large a departure from Inland Revenue principles, ought we to consider afresh the balance of direct and indirect taxation from the point of view of making less of the weight of our tax system fall upon the point of earnings and production and more upon the point of consumption? I recognise that I am treading on dangerous ground and that we have to consider all the questions of whether taxes are regressive and so on. The classical theory of regressive taxation, however, postulated the existence of a very large class of poor persons who must be saved from the weight of indirect taxes. The question is whether a system could be devised which, while protecting those who are really badly off, might do something to assist the general interest of savings.
I should like to say a word about the world background in which these efforts of ours to expand the national income by investment and saving at home and abroad are taking place. Last year, in company with the right hon. Member for Lewisham, South (Mr. H. Morrison) I went on a delegation to South-East Asia and had an opportunity of seeing the development of those parts of the world. Without going into detail, I should like to say that there can be no question but that the whole of Asia is making a movement forward such as it has never done in centuries, not only politically, but also economically.
If I was asked to give one single example of the kind of really important development that was taking place, I would cite the Sindri fertiliser factory in India, built with British technical assistance and costing £20 million, which was thought by many old Indian hands to be a "white elephant" but by means of
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which the Government of India has at last succeeded in getting the peasants to use these more modern methods of agriculture, with a very considerable increase in the products of agricultural operations by those people. I understand that three more plants are now to be ordered.
No emphasis is needed from me of the importance of that in increasing the buying power of the great Asian masses. I suggest that we have not only a duty, but also a tremendous opportunity, by our savings and by our increased production, to take part in the development of the whole of the Asian world.
5.33 p.m.
Mr. C. R. Hobson: This is the second occasion within recent months that I have followed the right hon. Gentleman the Member for Sutton Cold-field (Mr. Geoffrey Lloyd) and it is also the second time that I find myself largely in agreement with many of the things that he has said.
I stress, in particular, the importance which the right hon. Gentleman laid on the question of invisible earnings. Had we still had our old investments, the figure would now have been in the region of £578 million. The fact is that at the end of the war we were bankrupt, as has been repeatedly stated. It is a tribute to the work particularly of the Labour Government that as a result of the strong foundations on which we have laid our post-war economy, we have succeeded in getting back external investment to the extent that it now brings in no less than £150 million.
This debate on the Budget has two advantages. First, we can speak on the Budget proper, and secondly, we can also review the year's work. Anybody who has studied this will agree that the picture is not a good one. Production is entirely static. Wages have gone up 8 per cent. and profits 4 per cent. This, therefore, means that there is some degree of inflation.
Added to that, we have had the folly of right hon. and hon. Members opposite in introducing the Rent Bill, which will increase the outgoings of working-class people, which, in a time of full employment, as we have today, inevitably will mean that workers will demand more money. The result is that we shall have a speeding up of the inflationary spiral. If this goes on unchecked, it can lead

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only to hardship and, finally, to disaster. I do not think, therefore, that the Government have really tackled the problem.
I have one or two suggestions to make. First, I think that it is about time, whatever Government are in power, that we had a small committee of Ministers with a small expert staff to study the whole question of British industry and what our requirements are likely to be both in five years and in twenty-five years' time. Hon. Members opposite may object to that on the ground that they do not like planning, but they must cast aside their doctrinaire approach to economic problems if the country is to go forward.
We must come down to deciding what industries should definitely expand. What industries are at present successful and likely to be successful in the next five years and the next twenty-five years. I would put nuclear power first. There is not a shadow of doubt that we lead the world in the peaceful uses of nuclear power. The construction of nuclear power stations, however, imposes a great strain on the manufacturers of boiler plant, because they are largely the same companies which make the reactors. That, therefore, is an industry which must expand.
The same is true of the heavy electrical industries. The growth of power in this country doubles every ten years and there is unquestionably a great export market for heavy electrical products. In fact, we compete most successfully even in the United States, despite their, I was going to say, Anglophobia towards British electrical contractors. We have succeeded in getting some very important contracts. Those, therefore, are two industries which should expand and should be given every possible help.
The next is shipbuilding. In this case, I am very pleased that the Government have done something. I have for many years advocated that the shipbuilding industry is in a special position—so, also, are the shipowners—and that something should be done to ease its taxation burden. It is a serious matter from the British point of view that whereas, before the war, half of the ships that sailed the seas were flying the "Red Duster ", today the proportion is only one-fifth. That is a very serious decline indeed,
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but it is something which even now we can retrieve.
As the right hon. Member for Sutton Coldfield said, shipping is important in its contribution to our invisible earnings. Traditionally, the British people can build ships and we can sail them. This industry too should expand. We are told that it has full order books for about four years. There are still a lot of fleets requiring renewals and the Government's proposals will help the owners of the ships. There is also, of course, a good overseas market for ships. The time has come, therefore, for an overall expansion of the shipping industry.
What went wrong in shipbuilding during the inter-war years was that many of our shipyards closed down and our capacity for the building of ships was considerably reduced. Today there is need for more shipyards and more development. I want particularly to put this to the Economic Secretary. Tomorrow, we shall be discussing defence. We are told there is to be a reduction in the number of Admiralty establishments. There is a considerable labour force in the Admiralty dockyards. What are those people to do?
I make one specific suggestion about Devonport. There is a deep-water harbour there. I was there quite recently and I saw empty slips How are we to employ all those men who work in that dockyard? It seems to me that there is a case to be made out for building merchant ships there in competition with the existing owners of shipyards. I think that that would be ultimately to the advantage of the shipbuilding industry.
We cannot afford to have those thousands of skilled craftsmen at Devonport idle if, when the Navy is reduced in that part of the south-west of England, there is no production similar to that of Devon-port, except at Falmouth. We cannot afford to have men idle, and we ought to be thinking hard of the problem of the redeployment of that labour to merchant shipbuilding.
Then there is the expansion of the civil aviation industry. Our civil aviation industry has been very successful, and it ought to expand. Likewise, the machine tools industry should expand. The economic future of the country is unquestionably dependent on the engineering

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industry. That means that there must be some sound wages policy for it, and the thought of hon. Members on both sides of the Committee has to be given to that subject, because our main export trade these days is ultimately dependent upon that industry.
As a corollary to the expansion I have forecast for those industries, there has to be contraction in certain other industries. I know that it is hard for hon. Members who represent cotton towns to hear this, and harder still for them to accept it, but I think that the cotton industry is one which is bound to contract. It may be able to continue with the spinning of fine numbers, but apart from that, because all the industry's raw material is not obtainable in the Commonwealth, and because so many countries abroad, such as India, are already spinning cotton— with machinery manufactured in this country—I do not think that there is much future for that industry here.
Wool is entirely different. I do not want to argue that, because I do not want to speak too long, but we have to face the fact that the cotton industry has to contract. There is no reason at all, however, why there should not be different industries to take its place in Lancashire.
Mr. William Shepherd: Is the hon. Gentleman saying that the cotton industry should contract in the sense that he does not visualise its having in future an output commensurate with its present output, or that the number of units producing ought to be reduced?
Mr. Hobson: I believe that the present output is bound to be reduced. I think so because of the competition that industry will have from other countries within the Commonwealth. That has been the history of the industry, and I do not think we can say other than it has been exceedingly backward in modernising itself. I do not want to start a controversy between Lancashire and Yorkshire, which spins wool, but the Yorkshire woollen industry is much more up to date than the cotton industry, on the other side of the Pen nines.
I was very pleased to see that the Budget makes concessions to companies operating overseas. That is a very wise development. I do not think that there is much fear that countries within the
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Commonwealth will not get the necessary capital, provided, of course, that there is political stability. If there is no political stability the capital will not go there. That is something which, I think, many of the young countries which are gaining their independence in Africa have to learn, but where there is some form of political stability the capital will go, and, no doubt, the proposals in the Budget will help in ensuring that. I should say that that is particularly true of Rhodesia.
Whatever excuses may be put forward by the Government for the reduction of Surtax, I am definitely opposed to that provision in the Budget. It would have been far better for all concerned if there had been granted tax allowances in place of that reduction. Large sections of the people who are carrying on the work of the country have got nothing at all out of the Budget. This Surtax provision is almost class legislation, and not in the best interests of the country.
I should have thought, too, that in view of the inflationary policy carried out by the Government they would have been able to have done something for the old folk, because there is no doubt that as a result of increased prices and the inflationary policy their standards have been lowered. If right hon. Gentlemen opposite did not want to do anything for the old folk they should have done something earlier to have controlled inflation, instead of having encouraged it.
There is an omission from the Budget. I revert now to a subject which I have mentioned on other occasions in this Committee when it has been considering Budgets. I regret that there is no mention at all of the rating of site values. There certainly ought to have been some provision for that. The whole of local government finances are absolutely chaotic, and it seems to me mad that, when we want increased production, we penalise, through the extra rates they have to ray, those companies which expand, while the people who own the land benefit by receiving increased rents and by the work of industrialists and of the community.
This matter has been before us on many occasions. Legislation about it was nearly passed under the Government of 1929 to 1931. It is a problem which will have to be tackled, because it cannot be allowed to go on as it is. I should

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have thought that this Budget would have been an opportunity to have paid some attention to this urgently needed reform, particularly when the country wants production above all.
Finally, I do not think that the Budget is adequate to the needs of the country at the moment. As I say, I particularly regret that there is not provision for Income Tax concessions to all those who pay Income Tax, while a special class is singled out for benefit. That being so, I am only too pleased that my right hon. and hon. Friends are going into the Division Lobby tonight against the Budget.
5.48 p.m.
Sir Patrick Spens: I find that I agree with about one-third of what the hon. Member for Keighley (Mr. C. R. Hobson) has said and disagree with about two-thirds of it. Throughout the speeches from the Opposition benches in this debate there has been one theme, which is a very serious proposition, and that is that every Budget must benefit every class each year. I do not think it is possible. The Chancellor is limited in what he can do by the amount which, as it is said, he has to give away—by the amount, rather, he can afford to leave in the pockets of the people. I imagine every Chancellor would love to make concessions to everybody every year. That is the ideal thing, but I do not believe it is a possibility in nine years out of ten.
What is much more important is that when there is a reasonable chance of a Government's lasting the Chancellor should have a scheme, and what I congratulate my right hon. Friend upon is that this year he has indicated that there is a scheme which will be carried out during the next two or three years. I believe that in this Budget he has started with the factors that ought rightly to be dealt with first.
As I was the one who last year moved the new Clauses suggesting this relief for overseas companies, I must start by expressing my very great thanks to my right hon. Friend for having undertaken this task, and for having gone the whole way that some of us asked him to go, instead of just dealing with what was called a tax holiday for pioneer overseas companies. Of course, we shall have to
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spend a very great deal of time on this matter when we get the Finance Bill, and there is not the slightest doubt that the legislation will be difficult; but I am absolutely certain that it is the right thing, and I am more certain now than I was when I spoke last year, because since then I have had the opportunity of going overseas twice.
It is quite obvious that the British system of taxation on companies which are registered here was literally killing enterprise overseas by British companies, and nothing could be worse for us at this time, when, as was said by both the right hon. Member for Leeds, South (Mr. Gaitskell) and the hon. Member for Keighley, we are endeavouring to rebuild our position overseas. Of course, it is to our advantage that it should be British companies which are developing raw materials. It is to our advantage that it should be British companies which are setting up sales agencies overseas, and I believe that where overseas territories have reached the stage of starting their own industrial development, it is to our advantage that British companies should also help in starting industrial companies overseas.
I do not like the idea of British companies going out to these territories and turning themselves foreign, Dominion or colonial companies. We want this job to be done by British companies operating from and managed here in this country. I do not think there has been the slightest criticism against the idea of British companies developing raw materials or setting up sales agencies overseas. There have been one or two doubts expressed in the Press and elsewhere during the weekend about the desirability of British companies setting up industrial companies overseas. It has been said that that would detract from industrial employment in this country.
My feeling about that is that if the conditions overseas have reached the stage when industrial companies are being set up by anyone, either because of the vicinity of raw materials or because of labour conditions and so forth, some one is going to do that job, and if British companies do not do it, foreign companies will do it instead. It is far more to our advantage that it should be British companies rather than foreign companies. So long as British companies do it, orders

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for machinery, personnel and everything else will come to this country, whereas if it is a foreign company which does it., inevitably those orders will go to the foreign country concerned.
I come back now to a point which the hon. Member for Keighley made about political stability. If one looks at what is happening as a result of the Owen Falls scheme in Uganda, here we have an enormous electricity supply scheme, and people are rushing to make use of it. Already, there are one or two foreign companies, a number of Asiatic companies, and, I am glad to say, some British companies operating there, but I am quite certain that the tax liability of the British companies would, stop development by British shipping unless this concession was given. I think it is absolutely essential that everything should be done to make it possible for British companies to operate overseas in these great developing areas.
What is more, I think that the political stability of the areas concerned, particularly in so far as they are inside the British Commonwealth, depends to quite a substantial amount on British companies getting going there. I would much rather have British companies rather than foreign companies, and I say that with great respect, having regard to a past period in my life, in respect even of Asiatic companies in Africa.
The other point that is so important is that inevitably if British companies go out and register themselves overseas, that adds to the emigration problem affecting our best technicians, executives and so forth. If those companies go foreign, there is a tendency for the people from this country who go out to serve them to settle down permanently out there, whereas if the headquarters of the company is here in Great Britain, the staff will go from Great Britain, go overseas for a spell, and come back again, and we would not lose them to anything like the same extent as if we drove all these companies to register overseas because of the taxation problem here.
Therefore, I think that from every point of view this concession ought to be of very great value, and I am quite certain that all sides of the Committee will assist in trying to make it work, because I think we all want to see it work. This is a matter on which in this Budget and in
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this Committee both sides want to make the arrangement work favourably.
There has been much party criticism about the Surtax allowances. There again, I look at it very largely from the point of view of retaining in this country the brains that we want here. Of course, it is perfectly true that these allowances are no incentive to the people already inside the Surtax class, but I do suggest that they are a very substantial incentive to those who are getting near to the Surtax class. Figures have been given this afternoon showing what a man would earn in Canada and elsewhere as compared with this country, and this emigration of our best brains is a very serious matter indeed. A million and a half people have emigrated from this country since the war, and, while it is perfectly true that a million and a half other people, or very nearly that number, have come in, the percentage of brains and talent that has emigrated, as compared with what has come in, represents a very adverse factor for the future of this country, unless we can stop this process in some way.
I welcome this provision also because of a matter on which I spoke last year in connection with the pension arrangements made for the self-employed. The Leader of the Opposition spoke a little disparagingly about the effects of Surtax on the professional classes, but one of the serious things that has been happening is that the self-employed professional classes either have been emigrating or have been taking salaried jobs inside commercial concerns. We have been losing future members of the self-employed professional classes largely because of taxation troubles when they reach about the £2,000 a year limit, particularly when they have families.
Therefore, however much people may say that this is a class Budget, I am absolutely certain that it will do us a great deal of good in this respect. We ought not only to keep in this country the best of our technical and professional people but we should keep them in the independent professions and not have them all become salaried servants inside companies and similar institutions.
I realise that I am not the first Privy Councillor to have spoken this afternoon. Therefore, I apologise to the Committee for taking the time of hon.

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Members and I will endeavour to be brief with the remainder of my remarks. I should like to comment on the new instructions to the Capital Investment Committee. I say "new ", though I believe that someone said that we were going back to the 1935 position.
Mr. Gordon Walker: The 1953 position.
Sir P. Spens: I am sorry, I should have said 1953.
I still do not know exactly what these instructions are intended to mean. It would be helpful if, in his reply, the Chancellor could develop this point a little more. As I understand it, this is the present position. An industrial company gets an overdraft which rises to a very substantial sum and the company is required to fund it. At that point the company goes to one or other of the institutions that deal with these matters—and here, of course, I have a personal interest to declare—and asks for terms to be arranged for the funding. The overdraft may have risen by degrees over three, four or five years until the funding operation becomes desirable. Now I understand that if the overdraft is for capital purposes, there must be some indication of the manner in which it will be funded in the comparatively short future. In other words. it must be an investment of savings and not merely a financial facility put at the disposal of those requiring it by the banks. That is all to the good, but there may be some difficulty in getting the machinery working smoothly and there are doubts as to what is exactly required of everybody concerned. I hope, therefore, that my right hon. Friend will be able to make a little more explicit statement on exactly how all this will work.
In one way, despite what has been said on the other side of the Committee, the Chancellor has been fortunate. The figures for 1956 have worked out better than some of us at one time expected. On the other hand, it is quite ridiculous to think that the country has an absolutely assured financial future. I do not believe that anybody on either side of the Committee believes that. I feel, therefore, that my right hon. Friend was right in limiting the amount of money he allowed to remain in the people's pockets. He was probably right also
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at this moment in limiting the investment allowances to shipping, which is far and away the most important industry to be encouraged at present.
At this particular crisis everything depends upon our getting our shipping back into the most healthy state possible. That, combined with the other provisions to stop changes of flag, may make a very great difference to us in the immediate future. I know that there is a great deal of criticism, but I very much doubt whether a general restoration of investment allowances could be fully justified at present. Therefore, I think that the Chancellor has taken the right and moderate line. I hope that next year he will be able to go on some way farther.
6.5 p.m.
Mr. John Cronin: I enjoyed very much the customarily able speech of the right hon. and learned Member for Kensington, South (Sir P. Spens). He certainly put some interesting arguments, some peculiarly his own, fortunately. I should like to award the right hon. and learned Member the prize for the under-statement of the Session when he said that this country's financial future is not an assured one. He also seemed to beg several questions. He suggested that the people whom we are losing abroad by emigration were the skilled professional classes. I do not see any real evidence of that. The impression I get is that what we are really losing are the skilled technicians.
Sir P. Spens: I meant both. I think I said "the technical and professional classes."
Mr. Cronin: I accept the right hon. and learned Member's correction, but there is very little evidence to suggest that the skilled professional classes are involved. If he has any evidence we should be interested to hear it.
I should like to congratulate the Economic Secretary to the Treasury on his very amusing speech. It was certainly very entertaining to all of us. I fear very much that, like Caesar's ghost, this Budget will haunt him at the next electoral Philippi.
Mr. Birch: Caesar is dead.
Mr. Cronin: I said "Caesar's ghost."
The Budget is conspicuous not merely by what it contains but also for certain

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omissions in it. Perhaps the most impressive thing about it is the complete absence of any evidence of knowledge of social psychology. It seems quite extraordinary that Ministers at the Treasury in the last few years seem to have had no idea of what sort of emotional response they produce in the minds of people when they bring forward these various fiscal proposals. That is the cause of much of our difficulty.
This country is in a comparatively exceptional position in that it has a very strong and powerful trade union movement. It is also characteristic of the country's financial position at present that a great deal of restraint on wages—as well as on profits—is desirable if we are to overcome inflation. Yet, unions are all the time receiving constant pin-pricks and annoyances in the form of fiscal proposals from right hon. Gentlemen opposite who often say that such and such a tax will cause an increase in the cost of living of only some fraction of a point. They do not seem to appreciate that the reaction produced by such a proposal is often out of proportion to the proposal itself.
It produces an emotional response. I give the example of a case to which my attention was drawn recently. A motorist struck a pedestrian and grazed his shin. The motorist got out to inquire about the injury and the pedestrian promptly struck him on the jaw and knocked him unconscious. He was carried to hospital. That is an example of extreme emotional reaction to a comparatively mild injury.
I suggest that the right hon. Gentleman should pay some attention to the effect of these constant annoyances. I ask him how he can expect the co-operation of the trade unions when they face a situation in which Surtax payers are receiving large monetary rewards at the expense of sick people and of people deprived of milk and bread subsidies and school dinners? How can he expect any effective co-operation if those constant annoyances and attacks on the welfare of the families of workers continue?
The Economic Secretary spoke at some length today on credit restrictions and referred to the importance of keeping a tight rein. I concede willingly that there was some argument in having credit restrictions last year. There is no doubt that by raising interest rates, by restrictions on hire purchase facilities and by
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restrictions on bank credit there was some easing of pressure on the capital goods industries, but is it really necessary to continue that state of affairs?
The hon. Gentleman advanced a good argument in favour of credit restrictions a year ago, but I cannot accept such an argument for the present and the future. Indeed, one of the disappointing things about this Budget is that there has been no suggestion of any relaxation of credit restrictions. Yet the right hon. Gentleman must be aware that during the last eight months of last year there was actually a fall of 11 per cent. in the output of investment goods industries. What use, therefore, are further credit restrictions if we are already faced with such a fall?
We know the harm that has been done. We know that production has been stagnant. To say that it has been stagnant is an under-statement to some extent because, during the last eight months of last year, production was actually 2 per cent. lower than in the same months of 1955. So production has actually receded and has not been merely stagnant. This loss of production is irreparable, and in terms of goods and services lost it amounts to £700 million a year. What possible good can that do? How can it possibly help inflation if £700 million of goods and services are being dissipated by the monetary policy of the Government? I beg the right hon. Gentleman to give some consideration to the idea of ameliorating the present tight credit situation.
Another aspect of the Budget is the inadequate attention given to investment. Great Britain has a substantially higher standard of living than most other countries. This is not on account of any superiority in natural resources or in climate or in soil. It is on account of the massive accumulation of capital goods over the last 100 years or so. That advantage of capital accumulation will not serve us unless it is nourished and sustained. I think the right hon. Gentleman will agree that in terms of capital reinvestment this country's situation is deteriorating steadily as opposed to that of our principal competitors.
I am sure that the right hon. Gentleman will agree, for example, that since 1955 the Federal Republic of Germany has roughly double the rate of capital

1607
investment as compared with ourselves, and Germany is one of our principal competitors. How does the right hon. Gentleman imagine that the future will be looked after if capital investment is allowed to slide in this manner? How will we compete not only with our competitors but with other countries when we enter the European Free Trade Area? How shall we be able to do that if we are a low capital investment country? We are sliding back continuously compared with other countries.
Viscount Hinchingbrooke: The hon. Gentleman is complaining that we do not invest as much as the Germans, but is he aware that in 1956 we invested £2,199 million? Does he say that this sum could be doubled over the course of two or three years?
Mr. Cronin: I think the noble Lord misunderstood me. What I said was that Germany, in proportion, had double the rate of investment in capital industries since 1955. I recommend him to look at page 100 of the Eighth Report of O.E.E.C., where he will see the figures in detail.
The Chancellor has done nothing to encourage capital investment in this country except in the case of the shipping industry, and of course there he had no option because the capital goods of that industry are peculiarly mobile. They can move off to Bermuda, so the Chancellor is in a position where he cannot do otherwise if he wants to retain a shipping industry in this country. It would seem, therefore, that industries whose capital goods cannot disappear over the horizon at a speed of between 15 and 30 knots have no consideration from him. I suggest that there is a powerful argument now for the return of investment allowances, particularly on a selective basis. I refer the Financial Secretary to an able letter which was written to The Times recently by the hon. Member for Ealing, South (Mr. Maude) and by several of his other hon. Friends, in which they recommended strongly that a system of selective investment allowances should be introduced.
Turning to the positive items in the Budget, one is astounded by the extraordinary concession to Surtax payers. It is clearly unnecessary, because I do not
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think it could be suggested seriously that Surtax payers with incomes of £5,000 or £10,000 a year require financial inducements to continue to do their work. The right hon. Gentleman surely will not suggest that people such as the chairmen of large corporations will join the queue at Canada House unless they have some Surtax relief? So this relief seems to me to be a remarkably ill-advised proceeding in our present financial situation.
The same Surtax payers have already had extensive assistance from the Chancellor in previous Budgets. They are the very people who benefit enormously by the use of expense accounts and by the receipt of numerous benefits in kind which are not available to people whose incomes, on the whole, are lower than £2,000. Obviously, this considerable financial benefit will have an inflationary effect. Most of us saw on the day after the Budget advertisements in the papers of large and expensive cars, which were particularly timed to coincide with the reliefs for Surtax payers. Not only will there be an immediate inflationary effect but this will lead to bigger demands for high salaries. It will now be worth while for someone earning £5,000 a year to try to get a rise in salary to £7,000 or £10,000, and it will be worth while giving it.
Turning to the comparatively minor aspects of the Budget, there is certainly a good case for relieving overseas trade corporations in respect of Income Tax. Yet, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) pointed out, there is a great danger of tax avoidance by under-pricing exports to them. Also there will be some difficulty in distinguishing between producing and merchanting profits when goods from overseas corporations are re-exported to the United Kingdom. Obviously, there will be a large inducement for British companies to invest abroad on a substantial scale, and in the short-term future that will have a deleterious effect on the balance of payments.
The right hon. and learned Member for Kensington, South drew attention to the increased powers given to the Capital Issues Committee. In many ways they will be of dubious help to the country, because the firms which are successful and which have a tendency to obtain new plant on a large scale are the very firms

1609
which will suffer from them. They are the people who have either to go to the market for their capital or have to borrow from the banks. Now they will be driven to the market, and unless they have a very high earnings yield, they will have difficulty in raising money on the open market. The Chancellor must know that the majority of firms are net spenders and that it is only the more progressive and the heavier users of capital who will be seriously restricted by this proposal.
No one could speak on such an occasion as this without expressing some astonishment that no relief has been given to the more unfortunate members of the community, the old-age pensioners, the war pensioners and the numerous other classes who are in difficult financial circumstances. These represent the one group of people for which I should have thought right hon. and hon. Members opposite would have had particular care. The retirement pensioners now are the very people who, in the prime of their lives, lived under appalling conditions of mass unemployment, slums and social misery of every kind, which were a direct result of the policy of the same Conservative Party when it was in power in the 'twenties and 'thirties.
Viscount Hinchingbrooke: Nonsense.
Mr. Cronin: The noble Lord cannot say "Nonsense" when there were 2 million unemployed under a Conservative Government.
Viscount Hinchingbrooke: There were 3 million under a Labour Government
Mr. Thomas Williams: There were 3 million under the Conservative Government in 1932–33.
Mr. Cronin: The noble Lord is bored with these references to unemployment. There can be no doubt that the party of right hon. and hon. Members opposite were responsible for that state of affairs before the war, and they are inflicting similar miseries on the same people twenty or thirty years later—the very people whom one would expect to deserve some remorseful good work from the Government.
This is certainly an unhappy Budget. It does nothing to help the country in its very painful and difficult economic situation. It will exasperate the trade unions
1610
even more than they are exasperated now. It will not obtain co-operation from them. It will certainly cause some loss of confidence overseas. The Chancellor is a very unhappy Chancellor to be behind this Budget. I think we can say that in the drama he has been enlightened and that he has shown that he is prepared to be instructed in monetary policy, but he has produced a very unfortunate and unhelpful Budget, and I think most of my right hon. and hon. Friends will agree that in the foreseeable future he will be the Conservative Chancellors to end all Conservative Chancellors.
6.25 p.m.
Mr. William Shepherd: The hon. Member for Loughborough (Mr. Cronin) is, I understand, a very skilful surgeon. After listening to his analysis of the British economy, I profoundly hope that he will stick to the human body and never be let loose on the economy. If he were, I can assure him that the good results which he obtains in his own profession would become disastrous in a wider sphere. I will refer in my speech to one or two of the points which he made.
I approve of the Budget and of the manner in which the Chancellor has handled it. I think it shows imagination and ingenuity. It very materially restricts the increase in consumption, and for that I am profoundly thankful, for I should not have liked to see any further inducement to consumption than that which is contained in the Budget.
I do not share the optimism of the hon. Member for Orkney and Shetland (Mr. Grimond), who thought that the majority of the money which will be returned to the Surtax payers will be saved. That will not be so. I imagine that if we get out of the remissions of taxation this year savings of 25 per cent., which is three or four times the average of savings from disposable incomes, we shall do extraordinarily well. I think my right hon. Friend was very wise indeed to introduce a Budget which is largely deflationary and to make few, if any, concessions to consumption.
Of all the comments made by hon. Members opposite, that which I wish to underline is not immediately connected with the Budget itself. It is the reference which was made by the hon. Member for Stechford (Mr. Roy Jenkins) and the right

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hon. Member for Huyton (Mr. H. Wilson) to the exposed position of sterling at present. I hope that the forthcoming conference of Prime Ministers will see a determined attempt made to assess the dangers and to find a way out of them. I do not know what is proposed for this discussion, but I hope that the Government will make a firm attempt to deal with the present exposed position of sterling, because that is at the back of a great deal of our present trouble. The £is not over-valued. It is the exposed position of these balances which is causing the present uneasiness.
When I said that I supported the Budget, I also meant that I supported the concessions for those with relatively large earnings. I support them because I believe in a just society and not in an egalitarian society. It is sometimes fitting to give some inducement to those who are not in the lowest earnings level. In my opinion, the inducements to the Surtax-paying class are wholly justified on the grounds of equity, and I support them because of that. Indeed, we had reached a position in which it was exceedingly difficult to give a worth-while increase to a man on a high salary, and I do not think it is a good thing for a society that that situation should arise. One can have an egalitarian society but not a progressive society, and if I have to choose between the two I will very readily choose the progressive society.
Some hon. Members opposite may have given the impression that a man who earns £5,000 today—
Mr. Frederick Lee: Earns £5,000 a day?
Mr. Shepherd: I mean £5,000 a year. I am not talking about members of the Amalgamated Engineering Union.
Some people have suggested that people earning £5,000 a year are being particularly well treated in this country, but let us consider the figures. A man who earns £5,000 a year and has two children will pay, even on the projected basis of taxation, £1,897 in tax—well over a third of his income and nearly £40 a week. That is still a very heavy rate of tax upon an individual income, and I do not think that in giving a measure of small relief to this class of person we have done the country any disservice.
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There is a further point which has perhaps escaped the attention of hon. Members opposite. It is that, by the provision of earned income relief on the higher levels of income, we have increased the differential between earned and unearned income. I hope that hon. Members opposite will approve of that. I do. I know that some of my hon. Friends do not, but I think that it is a very good thing to have a marked differential between earned and unearned income.
I want to see my own party backing the entrepreneur rather than the rentier, because on the entrepreneur we depend for the increase in our share of world production and the maintenance of British industry in a fit and proper state. I am not so unhappy about the position of the rentier. In times of inflation, rentiers have done very well. if they have been holding property in the form of housing, or have had portfolios on which there were no restrictions, they have done exceedingly well in the last fifteen years.
I turn for a moment to one or two comments upon the out-turn of last year. I want to add one or two things to what I said in my speech in the last economic debate. Despite the gloom of hon. Members opposite, in many respects last year was the best year we have had since the end of the war. It was the best year in terms of the balance of payments. [HON. MEMBERS: "No."] Hon. Members say "No ", but before they say that I wish they would let me say what I have to say about it.
The right hon. Gentleman the Member for Huyton has often said that it is no good talking about the balance of payments unless one talks about the stock position as well. Taking the balance of payments on the one hand, and, on the other, the stock position, last year was the best of all years. I urge hon. Members opposite, who condemn what we have done, to realise that we succeeded last year despite all the difficulties and troubles which arose from Suez; that we did better in terms of a general appreciation in the balance of payments position than in any other year since the end of the war. That is a very significant achievement.
Mr. Victor Collins: Will the hon. Member also

1613
explain, if it was the best year since the war, why production actually fell for the first year since the war?
Mr. Shepherd: I will deal with that in a moment. I am just saying that the balance of payments is a critical factor in the British economy and that, taking the balance of payments and the stock position together, we had the best year since the war. I will deal with the question of production later.
The second fact I want to underline about the year's out-turn is that personal savings ran at a level higher than we have ever had since the end of the war and at a level higher than was customary before the war. Even in those bad days, when everybody was very much afraid of the future and wanted to hedge against it, we did not get a percentage such as we have had in the last year. I know that exceptional circumstances are attached to the savings of last year, but, nevertheless, we have succeeded in raising personal savings to a really high and effective level. If we keep personal savings at this level, I shall be very delighted, although very surprised.
I turn to the question of the hon. Member for Shoreditch and Finsbury (Mr. Collins), about production. Of course, we all want to see a continuously increasing level of production. That is the aim of both sides of the Committee. A very strange remark was made by the Leader of the Opposition this afternoon. He said that we had had two years' stagnation. That is not true. Manufacturing industry, in 1955, increased production by 6·5 per cent. It is true that in 1956 manufacturing industry did not do at all well, but it is a little unkind and not very sound to deal strictly in terms of one year. To make a judgment on the basis of one year, although it may be convenient, is not a sound basis for making an economic judgment. If one takes the two years together and spreads the rise to about 3 per cent. per annum, the picture does not look so black.
Mr. Roy Jenkins: There is some force in what he is saying. The point about increased production is that, seasonally corrected, it is no higher now than it was at the same time two years ago. The rise which took place in 1955 was concentrated in the first three months of that year and.
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therefore, we have had 24 months, which on the hon. Member's own showing is a not unreasonable cycle, of stagnant production.
Mr. Shepherd: I am taking the two years 1955 and 1956 and I say that there is a fair level of increase, not so much as we would have liked, but nevertheless, a definite increase. The first three months of this year have not been as good as one would wish, but it is early in the year and I hope for better things.
I believe that hon. Members opposite, and some of my hon. Friends, are getting a little too impatient about investment and investment allowances. I welcome the provisions for shipping, but, having looked at the figures, I am not sorry that my right hon. Friend has not seen fit to extend the allowances. If there were a genuine shortage of monetary resources among companies for investment purposes, I should be happy to see the investment allowances extended, but it is not the case that there is a shortage of monetary resources among corporations.
Mr. Frank Tomney: We are about to enter a period of great shift from industry to industry. The hon. Member argues against extending investment allowances, but he can judge investment only against that of our competitors, chiefly Germany, where production advanced by 6 per cent.
Mr. Shepherd: In just a moment I shall deal with the case of Germany. I am making the point that, in my view, monetary resources available to British industry are sufficient to meet expansion needs of industry.
Company trading profits, after tax and dividend distribution, rose from £796 million in 1952 to £1,513 million in 1956. In other words, company profits after tax and dividends more than doubled from 1952 to 1956. In coming to the judgment that investment allowances ought not to be given, it seems to me that my right hon. Friend was perfectly justified in the light of those figures.
The hon. Member for Hammersmith, North (Mr. Tomney) said that our investment was inadequate. I do not know how one judges the standard of adequacy. The Leader of the Opposition was wrong once more when he said this afternoon that our investment, expressed as a percentage of national income, was lower

1615
than that of the United States. That is not true and I advise the hon. Member for Stechford to draw the attention of his right hon. Friend to the correct figures. We have a level of investment which, expressed in terms of a percentage of the national product, is higher than that of the United States at present.
I urge hon. Members to consider some of the factors of investment. We could have faulty utilisation of investment, as we have at the moment. I know, Mr. Blackburn, that there is a mill, not very far from the constituency which you have the honour to represent, which was fitted with the latest machinery, at enormous cost, and which cannot get the labour to operate the new machinery. If we are to superimpose upon an already extended economy a higher rate of investment, we shall not get mobility of labour to make the maximum use of our existing resources.
All over the country there are physical assets which are not being properly utilised because of the shortage of labour. If we were to superimpose upon this situation a greater rate of investment we should not achieve a greater rate of production—we might well achieve a lower rate.
Let me take the case of the motor industry. In the last few years it has multiplied its capital resources quite unnecessarily.
Mr. Chapman Mr. Chapman rose—
Mr. Shepherd: I will tell the hon. Member why I say that it is unnecessary.
Mr. Chapman: I was not disagreeing with the hon. Gentleman. Hon. Members on this side have said the same thing time and again.
Mr. Shepherd: I thought that the hon. Member was muttering dissent. I am glad that I have him with me in this matter, although we may have slightly different reasons for agreeing.
I say that the motor car industry has multiplied its capital assets to an unnecessary extent, because it has not been able to obtain sufficient labour to enable it to work a double-shift system. In the main, it works on a single shift system, as against our main world competitors, who work two or three shifts. That is another example of how, by having too
1616
much pressure on the resources of the economy, we are unable to maximise thė use of our investment.
The shipbuilding industry has poured back into itself a great deal of capital investment in the last few years, but I am sure that not one Member of the Committee can say that a proportionate amount of production is flowing from that increased investment. When hon. Members opposite talk about maximising investment they must appreciate that if we push the rate of investment and the total demand upon the resources of the economy beyond a certain point we shall obtain a decreasing reward from that investment. I maintain that that position was reached in this country last year.
It is true that Germany has a bigger overall rate but, like all other overall figures, it disguises some very important factors. The most important factor is that in Germany the building of factories, public buildings and houses occupies a very high proportion of that investment.
Mr. Collins: Double that of this country.
Mr. Shepherd: Yes, as the hon. Member says, it is about double that of this country. Taking the last period for which figures are available, and separating out the factor described in the E.S.E. Report as "Manufacturers' durables ", we find that our investment is roughly on a par with that of Germany. We invest well over £2,000 million in our own country, but we have also invested £150 million per annum overseas for the last five years.
The most important and depressing factor in the whole of our economic life is the danger of inflation. We have now had ten years' experience since the war, and although we have had a great deal of success in many ways we have had a great deal of failure in our effort to curb inflation. We have done rather worse than the rest of the world and our immediate competitors, and we cannot go on doing as badly as we have been doing. It is not merely a question—as the Leader of the Opposition said—of comparing the value of imports for one period with that for another. The right hon. Member knows that the cost of our imports is only 25 per cent. of our production costs and that it does not make

1617
very much difference to the level of internal prices.
Last year we achieved price stability from April to November, but we did so at the expense of a levelling off in production and also by means of some very irksome controls. Even with all those irksome controls and with all the effort which was concentrated into keeping down prices, if there had been an increase of 3 per cent. in production from April to November there would have been price increases. In other words, it seems fairly clear that if we try to superimpose increased production upon an already full employment situation we shall inevitably have a rise in prices.
I want to see whether there is an answer to this problem. I cannot look with unconcern at the prospect of there being a rise of 3 per cent, or 4 per cent. in the level of prices every year. It is something that we must face. I realise that an increase in the level of prices depends to some extent upon wage demands, but we must look upon wage demands as an effect rather than a cause of inflation— although such demands cause a wage-price spiral afterwards.
Those hon. Members opposite who are trade union representatives should show a greater interest in a policy to combat inflation. I do not know of anything which makes trade union leaders' jobs more difficult than rising prices, when they are faced with the prospect of being pushed all the time by their own members. The position becomes almost impossible.
Mr. Robert Edwards: We do take an interest when there are fair shares.
Mr. Shepherd: I will not go into that question now, but I say that they should take a deeper interest in the cause of inflation and in methods of dealing with it, because it would be in their own interests.
We have an alternative way of dealing with the problem of inflation, namely, by restraining consumption. But who is there in this Committee who really believes that a Government can easily restrain consumption? Any such Member is a very foolhardy one. It is one of the most difficult operations for a modern Government, in a modern society.
Hon. Members opposite talk about restraining consumption but they never
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say a word as to how it should be done. I agree with them that it is a very difficult problem, yet we have to find an answer, because if we have full employment and an expanding economy minus a sense of social responsibility we are heading for bankruptcy. I hope that we shall not lose sight of the idea of producing our way out of inflation. That must always be an objective, although it cannot be as easy a proposition for us as it is for the United States, which has no balance of payments problem.
We must employ new techniques to deal with these inflationary problems. I submit that one of the new techniques should take the form of covering the below the line expenditure fully, and even having a surplus. This cannot be done under existing arrangements, because it would involve far too heavy a burden of taxation, and we must continually try to lighten rather than increase that burden. There is one way in which we could attain both those objectives—a truly deflationary Budget situation, plus a lightening of Lax —and that is by doing away with the enormous payments that we have to make to the nationalised industries each year.
There is absolutely no reason—except a political one—why nationalised industries should not have to find at least two-thirds of their capital requirements themselves. Both parties have played politics with the nationalised industries and it is about time they stopped doing so and got down to realities. There is no reason why the nationalised industries should demand hundreds of millions of pounds of State money each year. If we are to get all the savings we need to run our economy properly we must have some forced or ingenious savings, and we must shape our future policy so as to make sure that much more of the capital resources of the nationalised industries are obtained from their own earnings.
Mr. Gerald Nabarro: In view of the magnitude of the investment in the nationalised industries, especially of capital investment in the coal, gas and electricity industries, to which, I presume, my hon. Friend was primarily referring, and which was published in the recent White Paper, if an even higher percentage of this huge sum is to be obtained through ploughing back resources it can only be at the price of all

1619
services being very substantially increased, which, in itself, would be highly inflationary to the general body of industry.
Mr. Shepherd: There is something in what my hon. Friend says, but he has ignored the fact that part of it would come out of domestic consumers and that in all these services where we are supplying the commodity at lower than its true market price we are encouraging waste. But it would not be true to say that the whole of this increased cost would in fact be a true increase, because there would be a much more careful utilisation of these resources if they were more expensive to the community. If there is to be a truly deflationary Budget and if we are to get away from the present high rate of taxation, I believe that is the course we have to pursue.
I have taken up rather more of the time of the Committee than I intended, but I wanted to deal with those matters because I thought them of some importance. Some hon. Members opposite are pessimistic about the position of this country. I am not pessimistic. I agree that we have an exposed position in sterling which is a cause of real anxiety, and which I should like to see dealt with, but the basic industry of the country is sound. During the last ten years we have equipped ourselves remarkably well. We are today one of the most competitive economies in the whole world. Great Britain, in general terms, has no need to fear competition with any other country. Only one thing can rob us of our prize, and that is inflation. I believe that a tremendous effort should be made to fight and kill this dragon of inflation.
Let me say to my right hon. Friend on the Front Bench that economic and monetary policy can achieve a lot, but they will never be properly successful until we can get the whole of the nation working together towards this end. It is not enough to deal purely in economic, monetary and financial terms. One must strike the imagination and make our people aware of the dangers and cause them to face up to them. We have in this country the right sort of people. I believe that with the right leadership they will respond. I believe that this Budget is a start, although it does not appear to be so to hon. Members opposite.
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I feel sure that if we tackle the problem of inflation there is no end to what we can do, because we now have really first-class industrial equipment and young men and women flowing into the universities and technical colleges with a new eagerness to serve the country better in the years ahead. There are great potentialities before us if we will take advantage of them. We must realise that only the danger of inflation stands between us and the realisation of the benefits of that effort. Therefore, I hope that the Chancellor of the Exchequer will go on presenting Budgets which are deflationary and which give the right sort of encouragement, and that he will realise that, above all else, there is the need to strike a note which will cause the country to be aware of the danger and be determined to overcome it.
6.55 p.m.
Mr. David J. Pryde: I have no intention of following the hon. Member for Cheadle (Mr. Shepherd) into the depths of his argument, except to say that I liked very much his allusion to the rentier and did not like so much his allusion to the responsibility of the working class for the present state of prices.
The working class own nothing in this world except their skill, while the capitalist class owns everything except the nationalised industries. We had today a great river of figures flowing from the Economic Secretary to the Treasury, which came cascading down the benches with such force that I wondered whether it reached the fountain at Dalkeith or the Toll at Bonnyrigg. He told us that all over the world the particular section of society on which so much depends, the executives were all better off than they are in this country. If I go back to my old-age pensioners and tell them that the Economic Secretary told us frankly in the House of Commons that even in Russia they are better off—that he himself had been there and examined the position for himself—they will ask me why he came back again.
If there is one thing about this Budget which stands to the disgrace of Her Majesty's Government it is the omission to do something for the old-age pensioner. Everyone knows just how much prices have risen. Everyone knows that the old-age pensioner cannot possibly keep body and soul together. I remember the day

1621
when the Chancellor and several other young Tories, some of them in another place, set out to reform the Tory Party. If this is the result of their reformation, I deeply regret that they have been kidnapped and are now treading the age old road of Toryism. Our people are waiting for the day when the Prime Minister declares an Election. Hon. Members opposite say that they look forward to it with equanimity, but I can tell them that he will draw the plug and they will be washed away.
There is one grave omission in the Budget which cannot be overlooked and will not be overlooked in Scotland. The well-to-do have been well catered for in this Budget. I waited last Tuesday very patiently for a hint that the Government would do something for a stricken industry. The noble Lord the hon. Member for Dorset, South (Viscount Hinching-brooke) told the Committee that over £2,000 million had veen invested out of profits made by the people of this country in Western Germany, yet lying at their feet they have one of the finest investments—
Viscount Hinchingbrooke: I think that the hon. Gentleman has mistaken what I said. I said that £2,199 million had been invested in this country last year and I rather questioned whether his hon. Friend the Member for Loughborough (Mr. Cronin) could possibly suggest that we could double that figure, as he alleged it was being doubled in Germany.
Mr. Pryde: I understood the noble Lord to say that it was invested in Western Germany.
We in this country have an outlet for investment. I refer to the shale industry of Midlothian and West Lothian. I have here a history of the coal and shale industry of Scotland, written by the late Andrew S. Cunningham, which is authentic to a degree. Midlothian and West Lothian was the home of oil shale.
When one of my hon. Friends and I last year raised this question we were told that America was not doing this or that. Only last week a mining engineer from South Africa, who had examined the American technique, informed me that all over America they are experimenting with oil-bearing coal and shale. I am told that wherever it is not possible for engineers to sink a borehole for oil they commence
1622
operations on coal and shale; and neither the coal nor the shale of the United States has the calorific quality of the shale in Scotland.
In South Africa, where there are no deposits of oil within the borders, they are making a success of extracting oil from coal—and South African coal has not the calorific quality of the coal from the coalfields near the Firth of Forth and in other parts of Scotland. Yet still we find the Government shovelling out money all over the world, and keeping our old-age pensioners on a level which is disgraceful to humanity.
The right hon. and learned Gentleman the Member for Kensington, South (Sir P. Spens) told us of the great number of executives who were leaving the country. I work overtime almost every day in this House of Commons. At present, I am a member of two Committees which are considering two Bills. When I go home I also work overtime, because I am a justice of the peace for the County of Midlothian, and, naturally enough, having been very long established there, most of the people in my area come to me on magisterial business.
I can tell the right hon. and learned Gentleman that those people who are leaving Scotland are not executives at all, but the skilled craftsmen, and, as an hon. Member has said, therein lies a danger to the employing classes. When I expostulate with them for going away, they say, "Well, David, what is the good of us staying here to rear children and have them blown to pieces by atomic weapons?" or, "Even if there is no war, what is before us? Look at the plight of the old-age pensioners. Is it worth our while slaving all our days and coming to the end of our tether with nothing but the old-age pension?"
Right hon. and hon. Members opposite should look at the problem from that point of view, because that state of affairs may not always continue. They should remember that there could not be a capitalist class if there were not a working class, and some day those working people will possibly take it into their heads to take an easy time of it. The Government would be far better off to take the advice of a man who worked in the pits for many years and who was never afraid to work, because the employers gave me a good character. They said, "You can

1623
tackle any job you like and we will not object, but you are a dangerous man." I said, "I am not a Bolshevik ". They said, "No, that is the trouble, you reason out your case."
I am prepared to reason out our case here, to make out an irrefutable case for both the old-age pensioners and the shale fields of Midlothian and West Lothian.
7.4 p.m.
Viscount Hinchingbrooke: I should like to start with a few words about savings, taking up two important points made by my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd). He referred first to savings within the nationalised industries, and implied that by increasing prices the nationalised industries could recover sufficient wealth to enable them by internal means to satisfy a large part of their capital requirements, that that would relieve both the Exchequer below-the-line expenditure and, later—as the policy develops, as we hope it will—the market itself of a need to provide such a high degree of savings for these vast and important industries. I doubt, personally, whether we can reach such a high figure as two-thirds, mentioned by my hon. Friend the Member for Cheadle (Mr. Shepherd) without a very large increase in prices, which might have adverse results in other fields. In principle, however, I agree with very much that he said.
My right hon. Friend's other point dealt with increasing inducements for what he called the new middle class—the artisan or working classes, who might be induced to save a great deal more money by appropriate methods. I am very attracted by the United States mutual funds scheme, which seems to be getting under way, and I hope that that scheme can be looked at by the Treasury in the coming year. It is in line with the idea of developing a property-owning democracy, if we can induce large classes of the working community, who have satisfactory wages today to invest, not only directly in these National Savings but also in some more regionalised industrial concept which they can understand as relevant to their immediate circumstances. Such equity ownership would be a hedge against inflation which today, I am afraid National Savings are not. I very much
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hope that during the next year the Government will look at the possibility of developing ideas on those lines.
One notices that Income Tax concessions are given for life assurance. I have not had the time to research into the antiquity of that, but one wonders what was the original reason for it. If it is possible to give Income Tax concessions for personal life assurance, why cannot we extend it to personal savings for old age? I give that thought to my right hon. and hon. Friends.
I should like to congratulate my right hon. Friend the Chancellor, particularly on his analysis of last year's economic activities. It was one of the most brilliant descriptive passages that I have heard in any speech by himself or anyone else, and I am sure that it greatly pleased the House and satisfied the country. I should like to praise also the provision for children's allowances, and particularly for the age differential, which is a new and important feature. I hope that it can be maintained in the future. I congratulate him further on what he has done for old-age relief.
My right hon. Friend was also adventurous in breaking through the Surtax sound barrier. I think that the whole country, at least on our side, will agree— and I should not be in the least surprised if some right hon. and hon. Members opposite and their friends are inclined to agree—with me about that. My only anxiety—and it needs a little explanation, if the House will bear with me—is over the extension of the earned income differential. I know that with Income Tax it has been the practice for many years to give an earned-income relief. At a time when we were struggling to recreate our wealth after the war there was everything to be said for it, because the entrepreneur class, the class that produces, had to be given some financial incentive, and there had to be some barrier or differential against the rentier class—or the consumer.
Today it is rather disturbing to see this Income Tax differential carried through into Surtax—and for two reasons. The first is that our post-war poverty has been largely overcome, and we are entering, not the politics of scarcity but the politics of glut. That will need a very rapid reorientation of our thinking, and many

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new policies devised to meet it. I do not think that special privileges should any longer be extended to the maker, as against the possessor, of wealth. That applies also in the field of saving, because it is surely a disincentive to saving to say that if a man has earned his income and saved it, and it becomes an investment income, it should immediately attract the full load of tax. While that persists, of course, it will be an inducement to spend the money which is returned from the Treasury in taxation remission, instead of saving it.
As we pass into a society which is industrially and economically far more satisfying than it was in the years immediately after the war we should think again about this earned-income relief, to ensure that it is serving a proper national purpose. Next year, having broken through the sound barrier for the entrepreneur the Government should have the courage to let another jet plane come in behind for the benefit of the rentier, and let him draw abreast in the race for a more prosperous and agreeable life.
I come to the more serious part of what I have to say. I am afraid that I am of the opinion that more finance should have been provided for relief this year, when the overall picture which the Chancellor so well portrayed is very much better. In 1956, the gold and dollar reserves increased by £5 million as against drawings of £225 million in 1955. The explanation lies very largely in the calling up of reserves in recent months. Our overseas sterling holdings increased by £15 million in 1956 against a decrease of £133 million in 1955. Likewise, our net investment overseas of £243 million this year has to be set against a net investment of only £17 million in 1955. So much for the overseas figures. I take the strategic ones to prove how much more satisfactory the position is this year.
I turn to the home position. Last yeas the Chancellor of the Exchequer, now the Prime Minister, budgeted for an overall deficit of £343 million, and no great harm was done. There was not a wild spasm of inflation, so far as I can make out. The Cost of Living Index rose only 4 points from January, 1956, to the present day and that—I want to impress this point upon the Committee—in spite of massive wage claims that went through in the winter of 1955–56 and the severe dislocation of Suez.
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Why is there this caution in the Treasury this year? My right hon. Friend has budgeted for a deficit of only £27 million overall, as against the estimated overall deficit last year of £343 million. Why has only £130 million been given away? It cannot be because it would be too inflationary of itself, when we see what happened last year; and against the background of a gross national product of £18,000 million the sum is trifling.
Is there a far more serious reason? I want an answer on this point from my right hon. Friend. I appreciate that he cannot be here at the moment. Is it because of the wage claims that are in progress? A wage advance of 5 per cent. over the whole of industry might release £375 million to £400 million of extra purchasing power, and that would set up a considerable inflationary situation. Is it from fear of something like that happening this summer and autumn that the Government have not been able to release more than £130 million?
If that is true, it produces an intolerable feature in our society. It means that the hard-pressed taxpayer—I am thinking now of the Income Tax payer for whom nothing has been done this year—has to wait until a year comes in which an inflationary wage claim does not go through. When shall we see the cessation of such claims? The Government must be urged to prove that a supposition of this kind is untrue and incorrect by a tighter credit policy and more taxation concessions. In my belief they could well have afforded 1s. off the Income Tax this year on personal incomes. That would only cost £75 million today, owing to the tremendous exemptions from Income Tax that have previously been given.
I should like to see a much tighter credit control policy in all the three or four main ranges of fiscal control, the Bank Rate, hire-purchase restriction, and something we have not tried in this country and which the Americans have used with great success, an increase in the bank liquidity ratios. These strategic fiscal controls the Government should use rigorously, while releasing taxation underneath for people who must have a chance to live their lives in the way in which it should be lived.

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I turn now to discriminatory taxation in general. There was a time, pre-Keynes, when we had to tax the rich in order to provide for the poor. That was a reasonable idea; the rich were supposed to be in surplus and the poor were needy. Therefore, we creamed something off the rich and gave it to the poor, and we levelled off society in that way. That method proved to be wholly unsatisfactory in the 1920s and 30s.
Then came Lord Keynes, who said that it was the function of the State to take up the slack in the economy by loan expenditure. The State created wealth by opening Aladdin's Cave and drawing out bank money, so meeting the requirements of the economy. That method would have worked satisfactorily but for the war. Since the war, we have seen Keynes overworked. Now we are in the post-Keynes era.
This is something far more menacing. It relates to what I have just been saying. No longer is the State in real control of the economy of the country. We achieved an overall surplus of £500 million, but inflation went galloping ahead. That happened under Sir Stafford Cripps. In another year we had an overall deficit of £300 million or £400 million but so far from inflation receiving an impetus the price level evened out. The budgetary figures no longer have any relevance.
The people who are controlling the economy today and are producing inflation year by year are the trade unions, with their massive wage claims [Laughter.] There is no doubt about it. The Prime Minister had better look at that aspect of things, and I hope that the Opposition will assist in getting this steeply declining line of the course of the pound, which The Times so graphically portrayed—this bar sinister on our national life—put an end to. We shall never survive as a great Power while this process goes on.
It is quite safe now to abolish discriminatory taxation. It is two fiscal eras out of date. I would abolish or drastically reduce Surtax, Profits Tax, death duties and Purchase Tax. I would substitute a sales tax, and new or increased taxation on products the demand for which is rising. I am glad to see that the Government have in part recognised that by putting an extra duty on the
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television set and consequentially reducing the taxation on the cinema industry. Where an industry or a service is dying from overstrain, why give it the coup de grace of taxation? Where an industry or service or a new form of activity is soaring ahead, why should it not stand extra taxation?
We must give up discrimination in taxation and adopt the very satisfactory —old-fashioned if hon. Members like, but traditional, liberal—principle of going where the money is in order to get what the State needs, and no more than what the State needs, to discharge its expenditure obligations.
Mr. Collins: Is not that precisely what the noble Lord is objecting to in taxation of the wealthy—going where the money is?
Viscount Hinchingbrooke: I do not want to spend too long on the subject of the wealthy, but I assure the hon. Member that private wealth is not what it was.
I recommend the Government next year to have a look at home advertising. A tax on advertisements in newspapers and periodicals would do three things. It would bring in a lot of money, it would help the export trade and—best of all— it would improve the quality of the national Press, although that is a rather long argument which I do not think is suitable for this debate.
In recollection of something that I said in a debate not long ago, I declare that the annual Budget is an anachronism. Something more streamlined and modern must be found for the needs of the time. I am glad that a monetary committee is to be appointed. I do not know whether it is to have terms of reference which will get anywhere near that, but I hope that some of these things will be looked at. We have been waiting now for four months. Everyone has been in a state of deadly secrecy. One or two people who have lifted the veil a very tiny bit have been heavily castigated by this House and the national Press, but what has happened? The mountain of the Treasury has been in labour all this time, since Christmas; it has brought forth not a mouse, it is true, but an animal of only moderate size.
The annual Budget is much too slow and cumbrous an instrument for these

1629
days. We have already taken power to reduce Purchase Tax by Orders in Council at the appropriate time of the year. I quite agree that anything demanding fresh increases of taxation must come before the House by Resolution, Report, Second Reading and Committee stage and be fought line by line by the people's representatives against the overweening authority of the Executive. I could not agree more with that, but we are in an age when taxation is crippling and we are thinking of reducing it and ameliorating it. Why not take power by Order in Council to reduce, not only Purchase Tax, but Income Tax and other forms of taxation according to the needs of the time? I cannot bear the thought that I have to wait another twelve months before I hear my right hon. Friend speak again.
This brings me to the final thing I want to say—this question of the Treasury citadel, its impregnability, its slow tempo, its lack of thinking. [HON. MEMBERS: "Hear, hear."] I am not talking about my right hon. Friend. He dwells with us in this House and only spends his mornings in Great George Street. That citadel of power must be invaded, and invaded properly. We have had three Conservative Chancellors of the Exchequer since 1951. They have been great generals with their troops behind them all ranged for the charge. They have gone into battle once a year, but the fortress has remained virtually impregnable.
In my constituency there is a beautiful place called Corfe Castle. Three times it was battered by the Cromwellians without effect. Finally, it was taken by a ruse. There was a little bit of unpleasantness inside and then someone put a charge of explosive in the castle. Now it is a fine, picturesque ruin and one can pay 6d. to see over it. This is my right hon. Friend's last chance. He has one year in which to take the Treasury by a ruse, put a time bomb in and explode the place. Then, perhaps, we shall all have the joy of going there and paying our sixpences and shillings in the coming years.
My right hon. Friend the Economic Secretary today, in a magnificent speech which greatly impressed the Committee, gave some good figures to the nation, but good figures are not enough. The nation has to be put into better heart than it is today. I agree with what was said by
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my hon. Friend the Member for Cheadle —inflation is the bugbear. It has to be stopped. It has to be stopped, if possible, by a united effort on the part of my right hon. Friends, ourselves and right hon. and hon. Members opposite, because they have the key to this situation. The trade unions are now in many ways the masters of our society. It is they who are producing this terrible inflation which is driving certain aspects of our national life virtually to perdition. I beg them to assist us in the task ahead.
7.25 p.m.
Miss Elaine Burton: I think that we have all enjoyed the speech of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), who was certainly honest when he said that hon. Members opposite appreciated what is being done for the Surtax payer. I hope that in what I have to say tonight I can add something to what he said about the attitude of the trade unions to the Budget. He will not be surprised if it is in complete contradiction to the views which he expressed.
I think that I am paraphrasing the Economic Secretary fairly when I say that today he told us that we could not afford, because of high taxation—which was higher than in other countries—to lose men who would be valuable to us. I gathered that he went on to say that it was not only to those paying Surtax today that the Government were directing their goodwill, but that they hoped to stimulate those who in the near future might be paying Surtax.
I wonder whether the right hon. Gentleman has realised that skilled pieceworkers have been completely forgotten in this Budget. From inquiries which I have made, to which I shall refer later, it is those skilled piece-workers who have been in the emigration queues—they certainly have been in Coventry—and not the £5,000 or £2,000 Surtax payers.
In most of what I have to say I wish to direct my remarks to two matters, the question of an expanding economy and the question of an increase in exports. I have with me two quotations from the speech of the Chancellor on Budget day. The first is contained in col. 980 of the OFFICIAL REPORT for that day. The right hon. Gentleman said:
"The condition of an expanding economy is, indeed, that we should sell more abroad."

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He went on to say, as reported in col. 988:
"I seek to create conditions in which our economic future, collective and personal is seen by all to be worth striving for and worth saving."—[OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 980–8.]
No one would disagree with those remarks, but I wonder whether, I could come from the realms of high finance to what is actually happening.
Let me take, first, the declaration by the Government, as one of the aims of their Budget policy, of an increase in exports. The Chancellor was at the Board of Trade for five or six years before becoming Chancellor of the Exchequer. He will be as well aware as I am that before 1951 the motor car industry exported more than two-thirds of its output. Twelve months ago it exported less than one-half. On behalf of an area which is concerned largely with the motor industry, I should like to ask him what is the intention of the Government in the matter of exports for the motor industry.
That is not just an idle query. The workers in the area which I represent want to know what the Government have in mind. We have in that area, as the Chancellor will know, the problem of men who are on short time and of men who are wholly unemployed. The Chancellor will realise that many of the thousands of men whom we have had on short time in the motor industry in Coventry have remained on short time even if they have had the opportunity of doing other work, because they have hoped that the time would come when they would regain fully their jobs in the motor industry. Those who are wholly unemployed and who have been looking for work have been reluctant to leave the city because they have been hoping that when the motor industry picked up again, they would get their jobs back.
We want to know what sort of labour force the Government envisage in their plan for exports and for the home market, particularly so far as it concerns the motor industry. It is essential to ask that question, because when I was in Coventry on Saturday I obtained some figures which I think the Chancellor will agree are worthy of mention. I do not expect the right hon. Gentleman to be able to give me detailed answers. I am
1632
trying to give him facts based on evidence 1 do not want to give him generalisations.
In June, 1956, the number of people employed directly in the motor industry in Coventry was 43,000. Today, the number is 35,000, or, in other words, 8,000 less. I know that when the Minister of Labour gives me figures later concerning the present unemployment position in Coventry I shall find that it has improved, but the feeling among the unions in Coventry is that so far as our city is concerned the improvement will not last for long. In view of what the Chancellor is wanting to put over in the Budget, that is a rather alarming feeling.
There is, as the right hon. Gentleman would naturally expect, a feeling of distrust towards a Conservative Government, but, what is even more serious is the existence among the workers to whom I have talked of a feeling of cynicism about the future. They feel that there is no security of employment under this Government. That is a feeling which. I am sure, the Chancellor would agree that he should remove if he can.
The motor car has had the finest record for exports, not only in this country but in the world. As the workers in the industry see the position, it has been a direct result of Government policy, whether that be good or bad—first, by the General Election Budget, then by having to pay for that Budget, then by hire-purchase restrictions and then by the credit squeeze —that redundancy and unemployment came to them. The Suez affair, of course, made the position a great deal worse. As the workers see it, they brought the industry up to its position of being the first for exports and they have worked themselves out of jobs. They cannot envisage how the Government, with their present policy, will change that situation for them.
The Chancellor probably saw the cartoon in the Observer on Sunday. I see that he nods. It showed a queue of people emigrating, obviously to Australia. The Chancellor was asking them whether there were any more for the "Opportunity State." Without bothering about the signpost pointing to the "Opportunity State" and the Surtax payer who appeared in the cartoon, I should like to pass on to something which is very important in regard to that cartoon.

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During the last five months, I have made it my business to go round among the different trade unions in Coventry— we are a trade union city—and find out from them the real position about emigration. A good many people, quite irrespective of party, are disturbed at the quality of the people we are losing. What alarmed me in my inquiries of one union was that most of the people who were emigrating to Canada were not only those who were unemployed, but included some of those who had regained their jobs at the car factories.
At another union, I found that the average age of the emigrants was around 30. There were a few aged 50, but the average age was about 30. On Saturday, a trade union secretary told me that more people from his union had emigrated in the last seven months than in the previous seven years. In making these inquiries I have not given any lead in my questions, but have simply asked why the men were going. None of them, incidentally, was going because of taxation. They were all going because they did not feel that under the present Government they had any security of employment whatever.
Mr. Alan Green: I accept the hon. Lady's sincerity, but did she find any awareness among those to whom she talked of the undoubted fact that security of employment is less in Canada than in this country?
Miss Burton: No. I do not think that one would expect to find that from people before they had gone. We all know that emigrants who have gone, for instance, to Australia and have found conditions not to their liking have returned.
My point is the simple one that under the present Government, workers in the car industry do not feel that they have any security of employment. That view is in no way invalidated by the conditions in Australia or Canada. None of the incentives offered by the Chancellor in the Budget will induce any of those people to change their minds. In fact, as in the cartoon, none of them is interested because none of them is affected. I should have thought we would all agree that the type of man whom I have mentioned—an engineer or technician, skilled and comparatively young—is the very type that we cannot afford to lose.
1634
Leaving that unfortunate aspect of he "opportunity State," I should like to turn to the question of an expanding economy. It is very easy for hon. Members and for Ministers to utter these phrases without knowing how they are received in the country. The Chancellor wants the good will of the trade unions and I should like to explain to him how the unions see the position of his expanding economy.
In Coventry, we have five main industries—motor cars, aircraft, electrical engineering, machine tools and rayon. I have explained to the Chancellor already that the numbers employed in the motor car industry have dropped from 43,000 in June to 35,000 today. Those figures are supplied locally by the Ministry of Labour and are accepted by the unions. The biggest aircraft firm we have in Coventry is, of course, that of Armstrong Whitworth Aircraft, by which we have been told that skilled men are to be turned off because of the defence cuts.
I am trying to explain to the Chancellor that just as his vision of an expanding economy is not being reflected in the motor car industry at the moment, neither is it being reflected in the aircraft industry. We do not know the future employment position in the Chancellor's vision of an expanding economy, but we do believe that the cuts in defence expenditure, which. presumably, will be discussed tomorrow, quite seriously affect employment.
If the Chancellor is sincere in speaking about an expanding economy I hope that when he replies to the debate he will tell us what is to happen to large areas such as the one of which I am speaking, where there seems no sign of expansion but, on the contrary, according to the unions, definite signs of contraction all round.
It may be that the firms which will be most affected by the defence cuts will be the smaller engineering concerns which rely on aircraft sub-contract work for their survival, but we think that it will lead to many more people being put on the employment market. I do not know what is so amusing the Treasury Berch, but I am glad to understand from the Chancellor it is not I who am amusing right hon. and hon. Gentlemen. I hope also they do not find the unions of which

1635
I am speaking amusing, or any of these serious matters. The Secretary of the Coventry District Committtee of the Confederation of Shipbuilding and Engineering Unions, Mr. Harry Urwin, whom, obviously, the Chancellor would wish to secure as an ally in coping with this serious matter of unemployment, feels that the defence cuts could have a serious effect on the employment available for local aircraft workers in Coventry.
Apart from the 10,000 or so employees of the bigger aircraft firms in the City of Coventry, there are many who are employed on sub-contract work, and they and the unions are anxious to know exactly what is envisaged for the future employment position in the entire area of Coventry. We want to know from the Chancellor, who would seem to be in a dominant position in the matter, whether the cuts in employment which are being or are to be made, whether in defence work or in the motor car industry, under his expansionist economy, are likely to be made lighter by an allocation of civil contracts to the area.
I know that the Coventry District Committee has asked the Minister of Defence whether he will meet its representatives to discuss this matter of unemployment and contracts, and I hope that the Chancellor will persuade his right hon. Friend to receive such a deputation. Now, if we were to have men turned out of the motor car industry and men turned out of the aircraft industry under the defence outs, the unions hope that they would be able to find work in the electrical engineering industry in Coventry. And the electrical engineering industry in Coventry really means the General Electric Company, who employ about 14,000 workers, and who are dependent chiefly on Government contracts.
I remind the Chancellor of his expansionist economy. Does he know how Government Departments are carrying out his ideas of an expansionist economy? I ask that because the G.E.C. factory had a Government contract from the G.P.O. in December, 1956, for the manufacture of telephone equipment, and it was to take 12 months to complete. Two months ago, in February, the Government told the G.E.C. that that same order was to take 18 months instead of 12; in other words, there was a cut of 50 per cent.
1636
When I was in Coventry on Saturday I found a deputation from the G.E.C. workers waiting for me in the offices of the Confederation with the news that this contract now, instead of taking 18 months, was to take two and a half years. Obviously, I need not emphasise the significance of that. It means that the same number of people cannot be kept on in a factory which has two and a half years to do a job instead of 12 months.
The workers who are at the G.E.C. have been specially trained to work there, and I was told that those who were turned off and who went to the employment exchange to inquire for other jobs would not be able to find in Coventry jobs requiring their training, because there were not such jobs for them. I went to the employment exchange to find out if that was true. It was.
I therefore put it to the Chancellor that of the five main industries in Coventry the position in three is gradually getting worse. That leaves us with two, the machine tool industry, which is a small one in Coventry, and the rayon industry. As to the last, the right hon. Gentleman will know that Courtaulds and British Celanese are to merge. Courtaulds have told us that that should not mean any difference in the employment position.
I have put this to the Chancellor because I am sure that he would not expect people, employed in an area suffering as Coventry would seem to be at the moment by these threats to its employment, to believe in his "Opportunity State" and expansionist economy unless he were able to do something to rid them of their disillusion and to reassure them.
I want to spend just a few moments on one other aspect of the Budget. Whatever the Budget has done or has not done, whatever the Government have done or have not done, I would condemn them first and foremost for doing nothing for the old-age pensioners. I have not a television set, but I heard the Chancellor's Budget broadcast on sound, and I noticed that he was rather pressed upon the subject of the old-age pensioners, and he replied that the Budget was not the suitable time for helping them. That, roughly speaking, is what he said. What the old-age pensioners want to know is when there is a suitable time to help them.

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I do not know how the rumour got about, but the old people were expecting, as long ago as last January, some assistance in the Budget. I do not know where they heard that, and I do not suppose that they had it from the Chancellor, but they certainly thought they would. Recently, my hon. Friend the Member for Coventry, East (Mr. Crossman) and I went to a delegate meeting of old-age pensioners. They gave us a petition, signed by more than 22,000 old-age pensioners in Coventry, and they gave it us urgently because they wanted it to be put in the bag behind Mr. Speaker's Chair before Budget day. They want it done before Budget day because they were so sure that the Chancellor, in his Budget, would do something to help them if he knew their plight.
I cannot understand why the Government have done nothing for them. I should have thought that the whole country, irrespective of party, would have agreed that the shoe pinched worst for the old-age pensioners. When I was trying to find out the answer to this I was reminded by an article which appeared in the Economist as long ago as March, 1949, which, in describing political parties told us:
"The Conservative Party was erected from the top downwards after the Reform Acts of the later nineteenth century."
It certainly would seem to us that the Tory Party must have been erected from the top downwards judging by the way it has treated the poorest section of the community.
I ask hon. Members opposite whether they do not agree that there can be only three reasons why something has not been done for the benefit of the old-age pensioners. The first reason is that the Government do not know of the conditions of the old people today. The second is that though they do know they do not care about them. The third is that they do not believe them to be true.
We know that the Joint Parliamentary Secretary to the Ministry of Pensions and National Insurance does not believe that these conditions really do exist. In fact, the hon. Lady told us on 25th February this year that she did not believe that old-age pensioners were going without essential food. I wonder how much evidence we have to produce to the Government before they will believe with us that
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where the shoe pinches most is in the case of the old people who are in receipt of National Assistance and have nothing else at all.
The Chancellor was not in the House this afternoon at Question Time, when the Minister of Pensions and National Insurance was asked whether he had seen a report which was made by the Medical Officer of Health to the Sunderland Rural District Council. If he has not, may I refer him to The Times of 4th March, in which a report was given about the needs of old-age pensioners in North-East Durham, and in which the statement was made quite categorically that these old-age pensioners had a diet which was monotonous and tasteless?
Would not the right hon. Gentleman agree that this really should have been a first priority, and that, whatever else was done, he ought to have considered these old people, who have waited so long. If the Financial Secretary to the Treasury thinks that the old people find this amusing, I can assure him that they do not. I do not know whether, in Wolverhampton, he has the same sort of old people as we have in Coventry, but we have a great many who are in real need.
I have had letters written to me about the increase in the costs of the television licence by people who wonder how they will be able to pay it. One old person has said, "This means two weeks' pension." I do not know whether the Financial Secretary to the Treasury is amused at that, or whether he cannot help looking amused, but I should like to assure him that we on this side of the Committee, and, I would have thought, the whole country, think that such humour is rather out of place when speaking of people who just do not know how to manage to make ends meet. I hope that the pensioners of Wolverhampton will realise the hon. Gentleman's attitude, so that we can have a change at the next General Election.
7.52 p.m.
Mr. Alan Green: I do not think that, after nearly four days' discussion, I shall take very long to make the points which I wish to put, and I am sure that the hon. Lady the Member for Coventry, South (Miss Burton) will forgive me if I do not follow her

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altogether into—I will not call them byways—the streets of Coventry, near which city I happened to be born.
I want to follow up one question that I put to her, because it seems to me to be quite an important point. If it is now being said that skilled young members of this British community are going overseas, and particularly to Canada, because Canada offers more security of employment than this country, then I think that —and I am sure the hon. Lady will wish to join with me in this—they should be told what are the true facts about security of employment in Canada, as compared with here. When we talk of full employment under both the major parties since the war in this country, we should remember that full employment here has been far better than the record of full employment in any other organised country that I can think of in the world, and substantially better than it is in Canada.
I do not believe that young people are going to Canada for security of employment. Canada is really not the kind of country to which one goes for security. It is an expanding, pioneering country, and I think that they are going for opportunity. Certainly, those whom I know are going, many of them from Lancashire—and I have helped some of them to get there—have gone there precisely because in this age that country offers more opportunity than does this country. If they have been going because they get more security there, or think they will do, I hope that the hon. Lady will join with me in disillusioning them, and getting them to go for the right reasons and not for the wrong ones.
There are two points on which very briefly I should like to speak. Before doing so, I want to mention one other factor which is always being introduced by the right hon. Member for Huyton (Mr. H. Wilson), who is not here now, and his right hon. Friend—I nearly called him the "Shadow Leader "—but I mean, of course, the right hon. Gentleman the Leader of the Opposition. We are constantly having thrown at us this curious suggestion about league tables in Britain's performance in production, exports or investment, as compared with Germany.
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I am extremely surprised that hon. and right hon. Gentlemen opposite do not in fact point to the major factor, which I should have thought should be before them more than anything else, and that is that Britain is at the top, or very near the top, of the league in maintaining full employment. When we compare this country with any of the other countries with which otherwise we are disadvantageously compared, we find that our percentage of full employment is very much better than that of Germany, and very much better than that of America or Canada, or indeed of any European country of which I have knowledge. It astonishes me that hon. Gentlemen opposite should wish us, apparently, to behave more like the Germans than in fact as we do behave.
What we have got in this country, as we all know quite well, and I do not believe there is any dispute between us, is the major economic problem of how to maintain that high degre of full employment on an inadequate basis of existing reserves without inflation and without the consequent hardship for those people who are no longer able to work for their living. That is a very real problem, and I want to make two points about it.
I do not pretend that they are original, but it seems to me that even at this late hour they are worh while underlining. The first is this. I am delighted to hear that my right hon. Friend the Chancellor has said that it really is accepted that we cannot make new investments without new savings unless we are to produce inflation. I am delighted to have that point made in official thinking in this country, because I am sure that it was not followed in the years immediately after the end of the war. It is quite impossible to stimulate investment, as so many hon. Members so rightly wish to do, and however praiseworthy the investment, unless we have the new, real, genuine savings to match it, without running into inflation. If we have learned that, I believe that we in this country are on the way to overcoming this particular problem which I have already defined.
In that connection, I would ask my right hon. Friend to go on taking the most careful notice, not only of the way in which we raise the money which we require for the expansion of our nationalised industries—and I accept

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the fact that more power and more coal are required by the country if our total production is to expand—but that we do not put into that so much that investment is out of balance with the other investment in the rest of industry and in agriculture, which is to use the power produced.
At the moment, as I understand it, around 20 per cent. of our industrial effort is concerned, both in production and services, with the nationalised industries. Last year, about 20 per cent. of our savings went into the nationalised industries. So far, then, we are in balance, but there are very large expanding programmes for the nationalised industries and much more investment is required for roads than has been accounted for so far.
If we reach the point where 25 per cent. of our new savings are invested in that 20 per cent. sector of the nationalised industries, we may have too big an investment, at too low a percentage cost, in that one sector and not enough investment, at far too high a cost, in the rest of the producing effort of the country. We must be very careful to keep these two slices of investment in phase with one another, otherwise we may find ourselves in the peculiar position of having too big a power industry for us to be able to use profitably. It is quite possible for that to happen.
Mr. Nabarro: I really do not follow my hon. Friend's argument. He has referred to 20 per cent. of savings. Does he mean 20 per cent. of personal savings, or of corporate savings, or 20 per cent. of all savings? As to power, would he not consider that every developing economy must increase its electrical generation by 10 per cent. per annum, an arithmetical progression which means doubling it every ten years? Surely, in view of the colossal cost, that cannot be money mis-spent.
Mr. Green: I understand the point, but I do not think that it follows the premise which I made before I started the argument. If we get the basic investment programme in the fuel and power industries out of phase, we shall do so only at the cost of inflation, and if we have a great deal of inflation we shall simply not be able to use the industries that want to use the power in which we have
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already invested. We must keep our investment policies in phase.
I have accepted the fact that we need to expand our fuel and power industries, but if too big a slice of available new savings goes into those industries, too little will go into the industries that use them and we shall have waste. I hope great care and attention will be paid to the need to keep these investment policies in phase. I know the great interest of my hon. Friend the Member for Kidderminster (Mr. Nabarro) in this, and that he is almost prepared to say, "Hang the consequences. Put everything in fuel and power."
Mr. Nabarro: Certainly not.
Mr. Green: Perhaps not quite that. Perhaps my hon. Friend agrees with me that we should get these things into phase and that we should not rush blindly into investment in one industry and say, "This is more important than the rest."
The hon. Member for Sowerby (Mr. Houghton) made a brave and thought provoking speech on Thursday. He went very near to making the point that unless we could cure or find the means of avoiding the present malaise in our labour relations the investments that we were making would be inefficiently used. Because we are short of capital and short of genuine new savings of all kinds, for whatever purposes they might be used, it is correspondingly more important that we should use with maximum efficiency such new savings as we can make.
I take the view very strongly that wee the war we have had two almost anachronistic ideas, from employers and from the unions on what labour relations should be. I certainly think that we have an anachronism in our thinking nationally on what wage bargaining should be. I should like to see on the employers' side much more recognition of what is a true, proper and fitting basic wage in the present economy. I think that the basic wage is too low, and I speak as an employer. If the union side paid more attention to the place at which the work is done, namely the factory itself, both sides might get rid of their present fears.
The unions have the old fear that only by collective bargaining can they possibly have strength in a time of unemployment,

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and there is still the fear that that unemployment will return. On the employers' side, in a time of full employment, there is the belief that collective bargaining by the unions is one of the protections against swiftly increasing wages. I believe that both those ideas are anachronistic. I should like to see a higher basic wage and, in return for it, less overtime and far more shift-work.
We are getting far too much into the habit of the take-home pay being made up to far too great an extent of overtime pay, bonus increments and all sorts of fringe benefits. All that makes a distortion in the use to which we put the existing capital equipment, let alone that which we hope to have in the coming years. I want to see a fresh approach. I know that I give considerable hostage to fortune in speaking of these matters and that I stick my neck out, but I am not fully satisfied with what has been going on since the end of the war. I do not want to see a revolutionary approach. Revolutions do not suit this country. Things are done by stages, very properly, in this temperate climate, but one can see signs of a new approach already.
Above all, I hope that we shall avoid any suggestion of a national wages policy from any interested party. It has been tried elsewhere and it has never really succeeded. I do not believe that it will succeed here. [HON. MEMBERS: "Hear, hear."] I am glad to have the support of hon. Members opposite. But there is a danger that we shall got such a demand for a national wages policy that many people will succumb to that demand. I do not think that such a policy would give the kind of flexibility and mobility that we must have in our whole industrial effort if we are to make full use of the limited amount of saving that we can make in certain circumstances.
8.8 p.m.
Mr. Frank Tomney: The hon. Member for Preston, South (Mr. Green) has raised several very interesting points. First, he took up the point made by my hon. Friend the Member for Coventry, South (Miss Burton) about emigration. I agree with the hon. Member. I do not take the view that young people who leave this country, whatever their skill, calling or present
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category, are a direct loss to the economy. It is only by a fair proportion of export to the Commonwealth of the brains and ability in the country that we can be assured of expanding economies in the Commonwealth coming back to us in the form of further trade and industry. I feel that the hon. Member made a fair point on that subject.
The point which the hon. Member made about the penalty of full employment is one which has engaged the notice not only of politicians, but of economists for several years. It is true to say that a shift of 2 per cent. either way in the balance of payments, in investment or in unemployment figures can throw the country out of balance, but I fail to see how the hon. Member's argument tied up on the question of investments and savings, especially in relation to nationalised industries. The hon. Member was adequately answered by the hon. Member for Kidderminster (Mr. Nabarro). It is wise to recall that the nationalized industries are basic industries. They were greatly run down in the inter-war period. They were starved of capital equipment and they were neglected. They need reinvestment.
Mr. Nabarro: As the hon. Gentleman has referred to me, may I interrupt? I would not like him to think that my intervention in the speech of my hon. Friend the Member for Preston, South (Mr. Green) connoted what he is now saying. It is, perhaps, true that certain sections of the coal industry did not have enough investment, but that was not true of the electricity industry, which always had plenty.
Mr. Tomney: I take the point and I was coming to that— with the possible exception of the electricity industry which, in the main, is municipally owned, and has had all the investment it needed from the local rate fund and from bank borrowing. It is true to say that, generally, the railways, the gas industry, and the transport industry were run down to a great extent.
The argument of the hon. Member for Preston, South reminded me forcibly of a man building a house and putting on the roof before securing the base. It is the past reinvestment in those industries which will supply the capital goods industries and the secondary consuming industries with the much needed power that is

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the basis of Britain's fast changing economy. That must be recognised.
Mr. Green: It will not have escaped the attention of the hon. Gentleman that we have had some years since the war in which to make some of that reinvestment. Yet many of those industries were run down. I was looking to the future to make certain that we do not put a disproportionate amount of the limited savings we can make into the basic industries.
Mr. Tommy: I accept the figure of 10 per cent. advanced by the hon. Member for Kidderminster, which is the right figure for the basic development of the consumer and capital goods industries.
The argument of the hon. Member for Preston, South about wage bargaining was interesting and, as he said, he stuck out his neck to a certain extent. As a trade unionist, I welcome any raising of the base rates, but the hon. Gentleman must realise what that would carry with it. The differentials in piece work and bonus are always calculated on the base rates. If he is advancing that theory, it means vast gains to the trade unions in future negotiations. I hope that the hon. Gentleman realises the full implication of his argument.
Mr. Green: I want a high wage, a high profit and a high productivity society.
Mr. Tomney: So far, I am in agreement with the hon. Gentleman. I also agree with his further point regarding the build-up of the general wage packet, the extra shift system and overtime. Now that I have reached my present age I can tell him that I regret every minute I have spent in working overtime.
It is true that the composition of the wage packet should be on the basis of the base rate plus the piece work or bonus system in operation, as distinct from the accrued and extra earnings that a person gets by work on extra shifts. The temptation is for the worker to live up to his income, and he will imagine that it is higher than it is. He will take on commitments and liabilities which are not justified by his base rate.
Mr. Nabarro: Why not?
Mr. Tomney: Because in a period of depression or changing techniques that person will find himself back on his base
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rate and then he will be in difficulties over his personal arrangements.
Turning now to the Budget statement of the Chancellor, when all is said and done what it and every Budget is concerned with is the economy of he country. The estimate for the next 12 months can only be made on the performance of the previous year. Mistakes and achievements are estimated on the same basis, and we can only decide on future pattern of industry in the light of the past.
The Budget, therefore, can only be judged against past industrial development and, as has been pointed out by my hon. Friends on this side of the Committee, for two years there has been industrial stagnation. That must be faced because there has been no improvement in the figures. In those conditions the country must ask itself what are its price commitments? These can only be measured against those of the nations with whom it is in competition, in particular industrial producing countries such as Germany and Japan.
German competition has risen at a tremendous rate, 53 per cent. since 1953, despite the influx of 12 million refugees from East Germany—a point which the hon. Gentleman conveniently forgot to make. Germany is our biggest competitor and its reserve in gold and dollars is the biggest in Europe. Delivery dates and credit terms are better than anything that we can offer.
At the other end of the world Japan, strategically placed geographically to take advantage of the Eastern market, is rapidly expanding and is in the same position as Germany. She is able to offer very low freight rates and is building ships fast. It is obvious to me that it is the intention of the Japanese to become the shipping market for the Far East. This is of great concern to us in view of the fact that our economic development plan for the Commonwealth is also concerned with that area. It is we who are pouring in the money, the men and the goods, but if we are not careful it will be the Japanese who will reap the overall reward.
Jobs and men have always been a concern of the trade unions. Government and industrial policy and industrial retrenchment to improve our position have

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always been a prime concern of the trade unions of this country. Only yesterday, in a Press release, the T.U.C. Economic Committee showed itself fully aware of the need to increase investment in the basic and capital goods industries of the country things that the Chancellor has completely neglected in his Budget.
There is a feeling on the Conservative Benches that investment has reached such a peak that there need be no further effort or help, either from Government or from the banks with Government backing. In my view, that is an entirely mistaken conception. A great change-over is going on today in engineering. The capital value of new machines put at the disposal of engineers has greatly increased in money terms. As a consequence, the demand for investment allowances is, in my opinion, and that of the T.U.C., just as urgent as it was.
We cannot afford to lag behind for one minute. We speak airily of the special concessions that are being given to overseas trading corporation by way of tax remissions, and of the need to expand overseas trade. But if the capacity in this country is not sufficient to fulfil orders obtained overseas, they will be useless. The need for investment today is just as great as ever, in fact more so. The Chancellor was complacent about production. Yet production fell last year by 2 per cent. and that is something we would do well not to forget. We should be seriously concerned that in a world expanding economy British production has fallen by 2 per cent.
In paragraph 90 of the Economic Survey reference is made to the necessity for maintaining the balance of payments and for earning a current surplus sufficient to finance our long-term investment overseas. If we bear in mind the context of that statement we shall realise that to achieve these things there must be more investment allowances for industry. For instance, the machine tool industry, which is vital to British economy, expanded last year by only 3½ per cent., in spite of full order books.
The allowances awarded to Surtax payers, amounting to £34¼ million, would have been far more wisely used by being distributed throughout industry in the form of investment allowances. But the Government have not seen fit to take into
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consideration in this Budget the long-term, as distinct from the short-term advantage. This may react on us within a short time, perhaps even quicker than we think.
The change in the armaments industry and the run-down in the number of armaments workers will create a great problem in the engineering industry in respect of new plant and machinery. We cannot take thousands of workers from skilled work on an aircraft and expect them to be switched into other industry without the necessary machines or without houses being made available for them. Until we take measures, both as a Government and as a nation, to remedy the situation we are in grave danger, within two years, of running into the situation which we have been trying to avoid.
I see no justification at all, especially when I think of people earning £5,000 a year, for the Surtax reliefs which the Budget has given. I think it is true that people receiving those salaries, and also receiving expense accounts, car allowances, free insurance and free superannuation, have always been the most favoured section of the community in stringent times. The argument advanced by my hon. Friend the Member for Sowerby (Mr. Houghton), that it is inexpedient even to seem to do justice at the wrong time is perfectly true. With a democracy the Government cannot expect to put things across the country in that manner. They cannot put it across people in industry, on a weekly basic wage of £11 10s., the majority not paying tax and having families to support, and the old-age pensioners who receive no help in the Budget. With such people the kind of argument advanced by hon. Members opposite will not go down.
I agree that there is a better case to be made for the important professional classes, people with high qualifications, earning between £1,000 and £2,500 a year.
Mr. Nabarro: Hear, hear.
Mr. Tomney: These people, who are the products of the advance in our educational system, are very important people to any technical civilisation. In their case and at those incomes there is an argument for some relief for reward and ability, but the rewarding of ability

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should not extend beyond that class at this juncture.
It may be said that there are some men in the country who are worth £10,000 a year tax-free. No doubt that argument will be advanced.
Mr. Nabarro: Hear, hear.
Mr. Tomney: But in my opinion such men are few and far between, and certainly the hon. Member for Kidderminster (Mr. Nabarro), who keeps saying "Hear, hear," is not one of them.
Mr. Nabarro: I hope that the hon. Member did not consider that when I said "Hear, hear" I was putting myself in that category. I was not. As an afterthought the hon. Member added the words "tax-free", after having referred to £10,000. I remind him that when his Government were nationalising certain important industries they recognised the principle that if we want first-class brains to run important industries we must pay them first-class salaries. That is why the head of the electricity industry receives £8,500 and an area board chairman receives £4,000.
Mr. Tomney: That is true. I agree that men of great ability require salaries commensurate with their ability. I was on the Select Committee on Estimates which reported on the aircraft industry. When we looked at that industry, after examining witnesses over 14 months, with all the knowledge which politicians have and the technical advice we could draw on, we came to the conclusion that had there been at least one good brain directing this industry, at whatever salary we were prepared to pay, it would have saved hundreds of millions of pounds. In such cases such salaries are justified.
There are men of that ability in the country, but they are few and far between, and the people who will gain from the Chancellor's Surtax concessions are, by and large, not the people who are engaged in directing industry at the director level or otherwise. There are thousands of people who will gain from these concessions who also make capital gains, who are on boards of directors, who have expense accounts and who get a lot to which they are not entitled out of these Surtax concessions.
Mr. R. J. Mellish: He is referring to you, Nabarro.
Mr. Nabarro: On a point of order. I have been called by my name, Sir Gordon. Would you ask the hon. Member for Bermondsey (Mr. Mellish) to withdraw the remark?
The Deputy-Chairman (Sir Gordon Touche): I did not hear the remark.
Mr. Nabarro: The hon. Member called me "Nabarro ". I do not think that is in order during our debates.
The Deputy-Chairman: I do not think that the hon. Member for Kidderminster (Mr. Nabarro) need be upset about being called that
Mr. Tomney: I will refer to the hon. Member as the hon. Member for Kidderminster. If my hon. Friend the Member for Bermondsey (Mr. Mellish) will allow me, I will make an apology on his behalf.
It is true that, generally, the position of the old-age pensioner depends, in the long run, on the amount of the total national product. We must face the fact that before 1980 the problem of the old-age pensioners will be a considerable national problem. They are living longer and their needs are just as great. The relief which can be afforded to them, as distinct from the payment direct from the national product to them, is something to which the House of Commons should give attention.
How it should be done I cannot say in full, but I could offer one or two suggestions. We might relieve them, by a direct fuel subsidy, of the cost of the coal or other fuel to warm their houses. We might grant them free travel on public transport. We could abolish the National Health Service prescription charges, which were increased last year. That would be a promising relief to a hard-pressed section of our community.
It is true, I suppose, that the old-age pensioner does not exist simply upon the basic pension plus the National Insurance grant in cases in which he is entitled to it. The workers in industry know how the pensioners exist. Most of them exist upon contributions which their sons and daughters can make out of their wage packets to the comfort and well-being of the old-age pensioners. That is a very noble thing, but it penalises industrial workers, especially those with children, in that their income is reduced by the

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amount they are prepared to pay towards the personal comforts of the old people.
This sort of thing should not impinge upon the weekly wage packet of a family man. We should make provision either by fiscal arrangements or by special arrangements, if necessary by legislation, to relieve the old-age pensioners on the lines I have suggested. We could grant them free transport or fuel allowances. This could easily be worked out and could be fully justified. Until we do something like this, the worker who has the cost of living constantly pressing on his wage packet, who has to maintain himself and his family and to contribute to the old people, is bound constantly to be reviewing his position in the queue for awards to be won from industry.
It is no good anyone saying, as the noble Lord the Member for Dorset. South (Viscount Hinchingbrooke) said, that today the unions have taken control of the nation's economy. Nothing can be more fallacious. The unions are aware of their responsibility. When they see flagrant privilege handed out to Surtax payers, as in this Budget, then the House of Commons and the Chancellor especially cannot be surprised if they kick about it. and kick very hard.
8.28 p.m.
Mr. Gerald Nabarro: Before referring to the attractive speech of the hon. Member for Hammersmith, North (Mr. Tomney), I should like to congratulate my right hon. Friend the Chancellor of the Exchequer upon the very concise presentation of his Budget statement last Tuesday and to congratulate him, in addition, upon the contents of that statement, which in many important regards I found most agreeable. In saying that I found it most agreeable, I have regard not only to those people who are paying direct taxation in one form or another but to the fact that it is conducive to a continuing process of expansion and increasing production in this country and conducive to a continuance of the desirable trends which we have seen during the course of the last few years.
A great deal has been said during the passage of our long Budget debates about the state of industrial production in Britain today and I noted particularly
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that the hon. Member for Hammersmith. North used the expression "industrial stagnation". Manifestly, that is untrue. There is no industrial stagnation in Britain today. What has happened is that in 1956 our overall industrial production was approximately the same as the preceding year, but what also occurred in 1956, comparing it with the preceding year, was a tremendous improvement in our balance of payments oversea resulting from a substantial increase in our export trade to all part of the world, and most notably to the dollar areas.
In support of what I say in this context, I draw the attention of the Committee to the fact that in 1955 we had an overall deficit on our balance of payments over-sea amounting to £79 million. In 1956, that had been converted into a surplus of £233 million. That in itself is an overall gain of about £312 million in a single year. I do not dispute that 1955 was a bad year. The terms of trade were somewhat against us and we had other vicissitudes with which to contend. In general. I think that history will record that conditions were not dissimilar to those which caused a run down in our reserves and similar adversity four years earlier, in 1951.
However, I want most emphatically to say to the hon. Member for Hammersmith, North that while overall production may have been nearly static, the fact is that whereas exports greatly increased, consumption at home substantially declined as a result of the credit squeeze. Surely my right hon. Friend intended that, surely it was desirable in the interests of our balance of payments, and surely no hon. Member opposite can contend that in broad concept the economic and financial policy of Her Majesty's Government during the last year or two has not succeeded in this regard. It may have been painful, but it has succeeded.
I hope, therefore, that there will be no relaxation of the credit squeeze. I am its strongest possible supporter in the various applications and phases, and I hope that in the next year or two, until we have reinforced our gold and dollar reserves, until we have expanded still further our export trade, there will be no relaxation at all of these necessary and, from time to time, painful measures. I should not like the Committee to think, therefore,

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that the hon. Member for Hammersmith, North was being quite fair when he talked of industrial stagnation, because I do not believe that either side of industry today would generally subscribe to that view.
Passing from that brief preface to my following remarks, I want to say a good deal today about savings.
Mr. Frederick Peart: Will the hon. Member continue his thesis and say why he supports the need to restrict consumption, but agrees to increasing the consumption of Surtax payers?
Mr. Nabarro: I have a separate heading later in my speech for mentioning Surtax, and I should be grateful if the hon. Member for Workington (Mr. Peart) would allow me to leave his question while I refer to savings.
The present Prime Minister, when Chancellor of the Exchequer, last year placed the whole of the emphsis in his Budget upon savings. He did four things. He introduced Premium Bonds; he introduced a new issue of National Savings Certificates; he gave pensions to the self-employed, and he exempted from Income Tax the interest on the first £600 of deposits in savings banks. Although a good deal of fun has been poked at the introduction of Premium Bonds, they were very successful at the outset, and though investment in this connection has tailed off during the last few months I think that we shall find an upsurge again, after the results of the drawing of winners is first announced.
Overall, my right hon. Friend's savings policy has been extremely successful, as is manifested in the fact that this year we have reached the highest-ever level of personal savings. It has reached approximately £500 million, which represents about one-tenth of personal incomes. That is a very great achievement, and a process which might be extended still further to finance investment in industry and otherwise during the next year or two.
It seemed to me, however, that one important avenue for increased savings remained unexplored last year. Each year there is a substantial volume of savings in the form of life assurance. Under the Finance Act of 1948 the law at present provides that no more than
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one-sixth of a person's income may be invested in life policies if an Income Tax rebate at the rate of 3s. 6d. in the £is to be attracted.
My hon. Friend the Financial Secretary will find an admirable survey of the position in the Millard Tucker Report dealing with provisions for retirement in chapter 2 of which a certain recommendation is made that the limit of one-sixth should be increased to one-quarter. I suggest that that provides an opportunity for greatly increasing personal savings. It would not cost anything very much in terms of revenue because, in exactly the same way as happens with self-employed retirement pensions and the relief granted by my right hon. Friend last year, any temporary falling off in revenue as a result of increasing the allowance—which is at present at the rate of 3s. 6d. in £— from one-sixth to one-quarter would come back in the form of additional savings over a period of years ahead.
Mr. Gordon Walker: There is one fallacy in the hon. Member's argument. The tax remitted at present is remitted upon a high income, at high marginal rates, and if his proposal were adopted it would be remitted upon a smaller income, at smaller marginal rates, so that the Revenue must lose.
Mr. Nabarro: The right hon. Member is a little less than accurate in his intervention. The fact is that life assurance policies are bought by people in every income group. Immediately they start paying Income Tax, generally at the rate of 8s. 6d. in the £, they receive a tax relief of 3s. 6d. in the £for income tax purposes only, subject to a maximum of one-sixth of their total income. However, the whole of the facts are set out in the Report to which I have referred, and I believe that it would be wise, if not this year certainly next year, to increase the income tax allowances referred to, and give a greater encouragement to savings in that important field.
I want to say a few words about investment generally, and notably in regard to the references made about this Budget surplus by my right hon. Friend. He has mentioned a Budget surplus of £560 million, at current rates of taxation—which means the rates of taxation applicable before the proposals contained in the Budget statement are applied—and as

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about 100 million of that has now been disbursed in taxation reliefs it follows that he might have a Budget surplus of about £460 million this year, most of which is to be devoted to the financing of nationalised industries.
That is a huge sum of money to take out of the taxpayer's pocket most largely in order to finance the National Coal Board, the Central Electricity Authority, the gas boards and the British Transport Commission. I do not believe that, in principle, nationalised industries should be financed by means of a Budget surplus. I would much prefer them to be financed from real savings, although that might not be immediately practicable. As a matter of long-term policy I suggest that we must change our approach to this matter.
First, those sectors of nationalised industry which are capable of doing so should borrow their money upon the open market, in the same way as the larger municipalities do with considerable success. No difficulty is experienced by, for example, the City of Birmingham, the City of Glasgow or by any of the other larger authorities in raising the money they require for essential development in the open money market instead of resorting to the Public Works Loan Board. [Interruption.] There is no difficulty at all. They succeed in doing it and they do not have to pay disproportionately high interest rates for doing so. There has been no complaint from those authorities—
Mr. James Simmons: Oh.
Mr. Nabarro: Does the hon. Gentleman the Member for Brierley Hill (Mr. Simmons) who is a Whip—Whips should be seen and not heard—wish to intervene?
Mr. Simmons: The Birmingham Corporation is paying an enormous amount of increased rates as a result of the higher interest charges.
Mr. Nabarro: At least we have drawn a statement from the hon. Gentleman, but it is completely inaccurate. The larger municipalities are paying the market rate for their funds, which is what they should pay. They should not be subsidised at the expense of the remainder
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of the country. I disagree with the principle that all nationalised industries should be financed by Treasury guarantee and by the way in which we are providing capital sums today.
I think that over the next few years it would be desirable to allow certain sections of the nationalised industries to raise their capital moneys on the market, thereby removing part of the burden from the below-the-line provisions in the Budget, to which so much of this substantial Budget reserve is being devoted at the present time.
I should like to say a word about investment allowances. A good deal of play has been made by hon. Members opposite in support of the Trades Union Congress recommendation that investment allowances should be restored over the whole field of British industry. I disagree with that proposal. There is more than adequate money available today in general industry, excluding the nationalised industries, to provide for the expansion needs of industry. For example, I am not sure, because I have not been able to attend the whole of these debates, whether these figures have been quoted before, but they are highly instructive. On page 24—Is the Whip wishing to intervene again?
Mr. Simmons: Yes, I am not content to be seen and not heard. The hon. Member should read the debates, even if he did not hear them.
Mr. Nabarro: Of course I have read them. I said that I was not sure, since so many figures had been quoted, whether these particular figures had previously been used; but they will bear repetition because I believe that they are of some importance. Undistributed profits after tax in 1952 amounted to £796 million. In 1956, they had increased to £1,513 million after tax. Those are strictly net profits. Having regard to the declining value of money between 1952 and 1956, I calculate that the net sums available to industry for re-investment had increased by 60 per cent. in the period of four years to which I refer.
My hon. Friend the Member for Cheadle (Mr. Shepherd) made this point earlier in our debate when he said with considerable force that he doubted the wisdom of the Trade Union Congress proposal to restore investment allowances

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over the whole field. The rate of investment in industry is not dominated by the single factor of the investment allowance. It is also motivated, I submit, by the availability of capital goods, for the most part plant and machinery, and the speed with which new industrial buildings may be erected.
Perhaps I may take the second point first—the speed at which new buildings may be erected. Last year, we erected 41 million square feet of new factory space. That was the biggest single addition, in terms of factory building, made at any time in our history. Compared with 1951, it showed an increase of approximately 35 per cent. It meant that the building industry was fully employed, and was at full stretch, having regard to the need for house and other forms of building. In circumstances such as that, why should one seek to stimulate still more industrial building, when we arc already filling the maximum capacity of the industry to build, and fulfilling the call for all the additional factory space that industry immediately requires?
The second consideration is plant and machinery. Hon. Members opposite, who advocate the restoration of investment allowances over the whole field of capital goods, should look at the order books of our machine tool firms, or our boiler makers, or the makers of heavy presses and equipment such as that. And surely no hon. Member opposite will contradict me when I say that that is the whole basis of increased productivity and industrial expansion. All machine tool firms in this country are very full of work. They have no additional capacity available. Many of them have order books three years long for particular types of machine tools—does the right hon. Gentleman wish to intervene?
Mr. Gordon Walker: Not particularly, but I say that that shows they need more investment.
Mr. Nabarro: I am afraid that I do not follow the right hon. Gentleman's reasoning.
Mr. Gordon Walker: Their capacity is full—they need to produce more. The only way to produce more is to have Greater capacity, and the only way to have greater capacity is to have greater investment.
Mr. Nabarro: I think that the right hon. Gentleman is falling into the fallacy of talking only of the needs of makers of capital equipment. I am not talking only of those needs, but I am saying that the makers of capital equipment have their order books full, and that if the remainder of industry had investment allowances, it could only quicken the demand for more capital investment in machine tools and plant like that. He would only overload them still further, and nothing would thereby be derived by way of benefit.
Though I think that my right hon. Friend is right in not restoring investment allowances over the whole field, I do want to say one word of criticism about the proposals for the shipping industry. Of course, there must be some special dispensation for shipping. All that my right hon. Friend has really done in this Budget in restoring the investment allowance of 40 per cent. is to go back to the system which we had between 1950 and, I think. 1953, whereby the initial allowance for ships was at the specially favourable rate of 40 per cent., whereas for other classes of industrial equipment it was only, from time to time, at 20 per cent. There was an especially favourable treatment for ships.
The situation today is worsening rapidly, when comparing the financial terms on which the British mercantile marine operates. There are these "flags of convenience "operated by foreign nations, and every year that goes by there are literally millions of tons of additional shipping on the high seas registered in Liberia, in Panama, in Honduras—and now we even have British companies seeking to evade the high level of taxation here by registering offices in Bermuda in order to obtain some fiscal advantage.
I suggest that as these "flags of convenience" operate on behalf of foreign concerns on the basis of paying practically no taxation at all, whereas our shipping companies have to pay, as an aggregation of Income Tax and Profits Tax, a rate of approximately 50 per cent. The additional advantage given in this Budget in the form of a doubled investment allowance, although an improvement of the position and a contribution to the shipping companies' difficulties, is no real long-term solution.

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May I ask my hon. Friend the Financial Secretary— if he cannot do it now, then later— to look up the fiscal arrangements in the United States of America? There, they are allowed to depreciate the capital asset— that is, a new ship— over only five years, and to write it off over five years. That is immensely different from the British shipping industry, which can write off a ship only over twenty years, or at the rate of 5 per cent. per annum depreciation allowance, on the reducing balance.
This is a matter of crucial importance to both sides of the Commitee and is entirely non-party-political in content. How can it be upheld that a motor vehicle owned by a company in this country—a motor lorry or a car—may be written off for depreciation purposes after five years whereas something which is immensely more important in the national interest, namely ships plying in the British Mercantile Marine, are required to be written off over twenty years and at only 5 per cent. per annum? That is grossly inequitable and ought to be remedied. It is hastening "flags of convenience" in competition with our own ships. During the Committee stage of the Finance Bill I hope to introduce Amendments which the Government might consider, in the hope that that position can be improved.
I promised the hon. Member for Workington (Mr. Peart) that I would say something about Surtax. About four-fifths of those who pay Surtax and are assessed on earned income fall into the group earning between £2,000 and £4,000 while only one-fifth are above £4,000 per annum. My right hon. Friend is giving relief to Surtax payers who are assessed on earned income and is giving nothing on unearned income. Those with between £2,000 and £4,000 of earned income are 80 per cent. of the Surtax payers, and include most of the brains of British industry, the high-up executive people who occupy managerial positions and are almost indispensable. All of them have been far too heavily taxed during the past few years.
The hon. Member for Hammersmith, North inferred that many of these Surtax payers in the earned-income group are commercial men. He rather disparaged the idea that Surtax payers who are
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assessed for earned income and who are not directly engaged in productive industry should have any Surtax relief. On the contrary; this country earns hundreds of millions of pounds every year by invisible exports—banking, insurance, and shipping services, and all the other magnificent services associated with the City of London—and many executives in those important services have high salaries, and earn them. Should not they, as direct contributors to the wealth of the nation be given at least equal relief from Surtax with those who occupy managerial and executive positions in manufacturing industries? I consider that they should. This relief to Surtax payers for earned income is very long overdue.
I should be ungrateful if I did not say a word about my right hon. Friend's relief of Purchase Tax on domestic goods —I am glad to see my right hon. Friend just resuming his place on the Government Front Bench—notably on carpets. As a very high proportion of our carpet manufacturing industry is centred in Kidderminster and as we have made many representations for relief, which I supported, from Purchase Tax, I might be excused for feeling a measure of satisfaction that my right hon. Friend has been able to give this relief in the first Budget that he has presented.
I hope that in the next year or two my right hon. Friend will consider Purchase Tax generally. All the arguments against it are well known. I object to the purely arbitrary assessment by the Treasury of the rate to be applied to products, according to what it considers to be the national interest. For example, why should motor cars today pay Purchase Tax at 60 per cent. and carpets pay Purchase Tax at 15 per cent.?
Mr. Harold Wilson: The hon. Member voted for 60 per cent.
Mr. Nabarro: Yes. I am not complaining, necessarily, that the 60 per cent. is too high. I am not complaining, certainly, that the Purchase Tax on carpets at 15 per cent. is too low. What I am complaining about is the whole system of arbitrary adjudication by the Treasury as to the relative or comparative contributions that individual manufactured goods should make to our national economy.

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My noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) said that he wanted Purchase Tax replaced by a sales tax. He did not say what he meant by a sales tax. There are many different variations of a sales tax. I hope that in the course of the next year or two my right hon. Friend will be able to examine the whole structure of Purchase Tax and the really dreadful effect that it is having on production, with a view to replacing it by a form of retail sales tax levied over the whole field of production and assessed year by year on the invoiced sales of each individual company, whether manufacturers, whole- salers or retailers.
Such an overall retail sales tax, based on an auditor's certificate to avoid evasion, would certainly be much more efficient and much more equitable from every point of view, for all concerned in trade and industry in Britain today. It would yield a bigger sum of money than the present Purchase Tax provides, and of course it would be infinitely less discriminatory in character.
Mr. Cyril Qsborne: It would depend on the rates applied to it.
Mr. Nabarro: It would depend on the rates applied to it, but the rate would certainly be much lower than even the lowest rate of Purchase Tax today. I do not want to delay the Committee by going further into this matter today. There will be other opportunities of doing so.
May I conclude by warmly congratulating my right hon. Friend on the contents of his Budget proposals. I have no doubt that there will be endeavours to amend minor details, but I consider his proposals to be very constructive and objective and well attuned to the needs of our national economy today.
8.58 p.m.
Mr. Donald Chapman: Although I have only about five minutes in which to speak, I want to ask some questions of the Chancellor about the balance of payments. We have had a debate in which the Chancellor began by speaking about the supreme importance of the balance of payments. He did not give us an estimate, during the rest of his speech, of what is to happen to the balance of payments in the next 12 months. I want to ask him to be kind
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enough to tell us how he expects the position to work out in the coming year.
During the last 12 months there has been a peculiarly fortunate combination of figures. Exports, imports, consumption and investment and production have been in a peculiarly satisfactory ratio and relationship for the balance of payments. Indeed, the Chancellor himself said:
"Put in the simplest terms, we kept the exports rising while we checked imports.… The price we paid was a check to the growth of total industrial production and of personal consumption."— [OFFICIAL REPORT, 9th April, 1957; Vol. 568, c. 967.]
What does the right hon. Gentleman expect to happen in 1957? So far as I see, the outlook is not at all as hopeful as it might be. Far from continuing in their fortunate combination, it is quite possible that these factors will move back into what was the relatively unfortunate combination of previous years. Indeed, the figures are already starting to move that way.
Roughly speaking, so far as we can estimate from the figures in the Economic Survey and those mentioned by the Chancellor it seems quite likely that production this year as compared with last year will be up by about £500 million. But we have now started off with January and February of this year at an enormously increased rate of personal consumption. The Economist this week estimates that we might end the year quite easily with an increase in consumption of about £350 million.
That, of course, will make an immediate effect on what is left to improve our balance of payments surplus. Some of what is left, however, will be needed to go out extra in exports to pay for the extra imports of materials and so on that the advance in production will demand. Therefore, we shall be back in a very difficult situation: if we have an increase in production, it will draw in more imports; we shall have an increase in consumption, which might well be £350 million out of £500 million; and at the end, as far as one can see, there will be nothing left to improve the balance of payments surplus. This, of course, is crucial.
This is what I want to ask the Chancellor. He has said that so far he does not know what will happen this year, but now that consumption is rising again,

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now that his fortunate factors are beginning to disappear and consumption is beginning to rise and production is starting to rise, have we any real prospect of that £350 million surplus on the balance of payments which we have set out to achieve?
My own feeling is that we shall do very well indeed if we can hold on to the £230 million that we achieved this year. Indeed, it is not even £230 million. One thing that the Chancellor has managed to get away with throughout these debates is the impression that there was a surplus of £233 million. There certainly was not, because included in the £233 million is the £37 million which we should have paid in interest on the American loan and the real current surplus is just over £180 million in the last 12 months. That is only halfway towards our target surplus in this balance of payments and yet consumption is beginning to rise, imports are beginning to flow in at an increasing rate and production is going up and drawing in more imports and, possibly, preventing more exports from going abroad.
Even though it is a late hour at which to put questions to the Chancellor, I ask him to treat the Committee at least to some estimates on this very vital problem. We have all paid lip-service to it. I can think of a dozen hon. Members through these debates who have said how crucial the balance of payments surplus is and yet nobody on the Government side, at least, seems to have made an estimate of what might happen now that the Chancellor is allowing these factors which influence it to get hack into the 1954 and 1955 relationship. It is a great dilemma which confronts him once he has had this pause in our economy in 1955 and now that things are starting to move again.
Once we start on expansion, once we start the thing going again, how does the Chancellor plan to avoid the balance of payments crisis which we had when this happened previously? I suggest to him that the figures we have had so far are by no means adequate to explain the situation, and I join with the Economist and other newspapers which have been pressing the Chancellor in saying that even though his estimates are tentative, he ought to tell us what they are.
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Does the Chancellor really expect that we will get the £350 million surplus in the next two years? Is it not more likely that this year we will only hold what we have got and that the pressure from behind the Chancellor next year will demand the demolition of the remainder of the credit squeeze— he has held on to half of it this year—and that then we will be nowhere near getting the £350 million surplus that the country needs?
9.5 p.m.
Mr. Alfred Robens: We have reached the last hour of four days of intensive debate upon the Budget, and I suppose that this Chamber has heard many times over every possible argument for and against the proposals of the Chancellor of the Exchequer. I had not the opportunity of listening myself to the Chancellor's Budget statement as I was abroad when he made it, but I have read thoroughly the OFFICIAL REPORT of our debates from their beginning.
It seems to me that it is not a question of my finding something new to say but a question of my finding something to say which has not been said more than three times, because the Budget had not a tremendous lot in it and the arguments for and against its contents have been deployed on both sides adequately and effectively.
Therefore, I do not myself propose to dig too deeply into the Budget itself; but, as this is also an economic debate, it may be worth while to move to another theme—the question of industrial production and labour relations in this country.
Before I come to that theme, however, there is just one matter I want to refer to which has been referred to many times, and I do not apologise for doing so because of its gravity. I refer to the deep distress which all of us, certainly on this side of the Committee, have felt, our honest and sincere disappointment, at the fact that the Chancellor found himself unable to announce, at the time when he was prepared to give certain privileges to Surtax payers, that he also intended to do something for those who so badly need it, the old-age pensioners. As I say, I make no apology for returning to this matter although it has been raised time and time again, for I doubt whether a single Member of the Committee has not

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had very many letters from old-age pensioners and has not been affected very much by the way in which their appeals have been made and has not seen in his constituency the very great hardships that so many old-age pensioners are undergoing at present.
One of the significant pointers to the greater difficulties which old-age pensioners are meeting is the increasing number, year by year, who are going to the National Assistance Board for extra payments. I, as a very much younger person than the old-age pensioners, find that the men and women of that age, who are now in receipt of pensions, belong to a generation which was a very proud generation.
If I were in need, I should not worry at all about going to a board, under the Welfare State, to seek to add to what other income I had, if that were necessary, and I should not worry because I have been brought up with the Welfare State. However, the men and women now in the old-age pension class belong to a very proud generation, and regard it as something of a disgrace to go to the National Assistance Board. They think in terms of the old Poor Law, in terms of the workhouse.
The fact that today, out of 1½ million people on National Assistance, over 1 million are old-age pensioners, and that that number has grown during the last five years from about 750.000, is the clearest indication that the old-age pensioners are going through a really difficult time. I am quite sure that but for the pride of those old people the numbers on National Assistance would be considerably greater than they are.
I can hardly think that the treatment of the old-age pensioners is in keeping with the brave words of the Chancellor himself when he presented his Budget. He said:
"I seek to create conditions in which our economic future, collective and personal, is seen by all to be worth striving for and saving."—[OFFICIAL REPORT, 9th April, 1957, Vol. 568, c. 988.]
That should be posted in every National Assistance office for the old-age pensioners to see, because they have seen very little worth striving for in the closing years of their lifetime.
In defence of not making any announcement in favour of the old-age
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pensioners, the right hon. Gentleman has said that the Budget is hardly the appropriate time to make such an announcement. In that case, I ask him, when he replies to the debate, to make an announcement about the old-age pensioners. I hope that that will be one of the matters to which he will give some attention. There is no doubt that many millions of people throughout the country are deeply anxious about it.
The right hon. Gentleman's predecessor once told, when making a speech as Chancellor of the Exchequer, that it was his aim to double the standard of living in twenty-five years. It seems to me that this Budget gives the Surtax payer a nice start in the race, and has left the old- age pensioner heavily handicapped. That is something that ought to be remedied. If the right hon. Gentleman is seeking to carry out the policy of his predecessor, to double the standard of living in twenty-five years, I think that he would agree that there can be no question of that happening from a stagnation of production. If we are to double the standard of living of the people in that time we must have an enormous increase in production, but, at the same time, that tremendous increase in production has to be matched with our ability to sell these goods abroad, whether they are consumer goods or capital goods.
No one, I am sure, in any part of the Committee would minimise the difficulties which the country faces in finding markets for the goods it produces. I have never felt that our sales policy abroad was vigorous enough. Some firms and organisations do an extremely good job, but as one travels round the world, one seems to see limitless opportunities for the sale of British goods that seem to be missed. Nevertheless, we should not underestimate either the fierce competition that is meeting the British salesman abroad: and. of course, this competition is intense, because the international situation has twisted the whole channels of trade.
We have a situation today in which, now that the war has receded by so many years, Japan and Germany are our very keep competitors. In normal circumstances, Japanese trade would largely move into China and into countries on that side of the world, while German trade would tend to move into Eastern

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Europe. Because of the twisted international situation, that is not happening, and, therefore, there is an emphasis in all industrial countries, and particularly Germany and Japan, to move into the markets which, in the main, we have considered as traditionally British markets.
We are now having to face intense competition from two countries which have, so to speak, built up their industrial production from scratch, and both countries have had a tremendous incentive to do it, because both were left in a devastated state after the war. There is not the slightest doubt that that competition is intense, and, therefore, it is very clear that there are at least two things we have to do.
We have to have a much greater increased investment in and development of the underdeveloped nations, to create purchasing power so that the world market is expanded to give us an opportunity of selling t and, secondly, we have to produce capital and consumer goods for export at competitive prices, consistent with quality—and pricing, of course, will be extremely difficult.
Despite the difficulties, I view the future with a good deal of optimism, because I share the view of the hon. Member for Cheadle (Mr. Shepherd). I thought that the hon. Member made a first-rate speech on this matter and one which would repay reading by any hon. Member. The country is capable of facing its tremendous economic problems. After all, we have a number of advantages which we can use. The nation is composed of a population which is highly skilled. We have first-class technicians and administrators and, on the whole, well-disciplined workers. I was sorry that one of my hon. Friends, the other day, came to the conclusion that we were turning into a lazy country. I do not believe that for a moment.
Anybody who is prepared to spend time going into factories, workshops and mines would hardly come away with the impression that the workers of Britain, or the country itself, were getting lazy. There are people who do not work as hard as others and there are inefficient as well as efficient managements but, by and large, I believe that our manpower is as well capable of meeting these tasks as that of
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any country in the world, including the United States.
Another of our advantages is the smallness of our country and the fact that our industry is so concentrated that we have no place which is more than 70 miles from the sea. Therefore, we have cheap, sea traffic at our doorstep. We have also more miles of roadways and railway lines at our disposal per spare mile than any other country. We have plenty of advantages, many of them our inheritance since the Industrial Revolution. These are the things that we must use together in our endeavour to boost our efficiency in industry, to create an increasing, expanding market and to ensure that we are producing goods which other people want at prices that they can afford to pay.
The Chancellor of the Exchequer indicated that one of his aims was greater industrial efficiency. I agree entirely that that is an aim which we hope to succeed in achieving, but if we are to have efficiency in industry it will not be done by lecturing managements or workers, or both. Efficiency in industry can only come about if we have co-operation between Government, workers and employers. Indeed, I believe that if we had the right climate in industry it would he possible, even with our present equipment, to produce from 5 per cent. to 7½ per cent. more, without any increased investments in plant and machinery. Other people have made other calculations. I make a very conservative calculation—[HON. MEMBERS: "Hear, hear."] —definitely with a small "c".
Most people in industry would agree that, if the will were there and the management were there and industrial relations were right and we had real cooperation between management and men, this 5 per cent. to 7½d per cent. increase, with present equipment, is something that could be done, and it would be extremely valuable. How arc we to get it? The industrial atmosphere is now, and. for the last year or so, has been bedevilled by the endless battle for wages. I do not believe that workers and management can possibly get down to discussing efficiency in industry, with well-meaning on both sides, while this endless argument about wages is going on, because this is the most sensitive part of our industrial relations. While rows are going on about wages I am afraid that the question of

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efficiency is something that gets left on one side.
The recent disputes in shipbuilding and the engineering industry are a case in point. One thinks back to the statements made on both sides and the bitterness that emerged. Today, there is only an armistice while the courts of inquiry are at work. How can we talk about getting rid of restrictive practices, on whatever side they may be, and about efficiency, when we have bitterness such as we saw in those disputes?
I believe that we cannot consider efficiency in industry and that we will not be able to reap the benefit of our present equipment until we get rid of the endless argument about wages. I also believe that the main responsibility for the worsening industrial relations, because of the endless argument about wages, lies fairly and squarely upon the shoulders of the Government. I do so because it is the failure of the Government to prevent the constant rise in the cost of living which is causing the trade unions constantly to ask for increased pay.
If the cost of living had been advancing as the result of matters over which the Government had no control, there would be some excuse for them, but all their policies over the past four years have contributed extensively to deliberately increasing the cost of living. It has been done because of the Conservative doctrine of a "free-for all" economy. Well, they are the Government and they are entitled to have the policy in which they believe. All I am saying is that when the Government adopt the policy of "free-for-all ", and, as a result, have increased the prices of such things as basic food, school meals, transport and health over the past year, and with the cost of living constantly going up, they must expect constant friction between the trade union movement and the employers over wages.
It seems to me that if the Government want to get a change in industrial relations their most important task is at least to halt the rise in the cost of living. Of course, to reduce it would be ideal, but if they could only halt the rise it would enable us to go for at least 12 months or more without a rise in the cost of living and would provide an opportunity for the trade union movement to play its part better.
Mr. Osborne Mr. Osborne rose—
Mr. Robens: There is not time to give way.
The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) seemed to take the view that the unions have taken control of the country. This is where he makes a fundamental error, and it shows what a strange conception the noble Lord has of the rôle of the trade union movement. The truth is that the pressure for wages does not start with the trade unions. The pressure for wage increases starts in the home. It starts when the housewife says to her husband, "I cannot manage on what you give me." The usual answer to that by the wage earner is, "Well, what do you do with it?" The answer to that one usually is, "If you can do better, take the housekeeping money and do it."
It is the pressure in the home, beginning with the housewife demanding additional money to pay for the increased cost of the everyday purchases that she has to make, which causes the trade unionist to go to his union and to exert tremendous pressure for higher wages. So it is no use thinking that it is the mysterious organisation, the trade union, which is deliberately thinking up wage advances every other month. Wage advances are pressured from the home because those who have to maintain the family find that they cannot manage on the amount of money available for them to buy their everyday requirements. When one considers that the £today purchases about 16s. worth of goods compared with 1951, it would seem strange indeed if the trade unions had not constantly made application for wage advances.
The Government cannot expect a wage freeze in a period of rising prices, because a wage standstill in a period of rising prices is asking the trade unionist to accept a cut in his wages. In my view, there is no hope of any success falling to the right hon. Gentleman in his appeals for the stabilisation of wages, for a wage freeze or restraint, call it what we will, until the Government, for their part, have stopped the constant rise in the cost of living.
The Government have tried a number of ways in which to bring about wage stabilisation. It is common knowledge

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that members of the Government have been responsible for telling employers that the only way in which wage stabilisation can be brought about is for them to "get tough" about wage advances. Sir William Grant and other employers have made it clear from the word Go that they will be" tough" about wage increases.
Then we had had the mysterious incident, which we have not yet thoroughly investigated, of a Government agency or Minister actively interfering in the recent dispute in relation to the "Queen Mary ". The interference, not, I understand, by the Minister of Labour but by another Minister, in that matter and the private arrangements which were made with the Cunard line to move with Admiralty tugs a ship about which there was a dispute could easily have brought the whole port of Southampton to a stop.
May I say quite plainly that until the Government realise that they cannot have a "free-for-all" economy and wage restraint at the same time, and until they take some notice of what is said both by the T.U.C. when it meets the right hon. Gentleman prior to his Budget, and from this side of the Committee from time to time, so that the trade union movement can assist in stabilising wages or preventing the erratic movement of wages, there can be no success for the right hon. Gentleman's appeal. This can be done only if the Government are successful in stabilising the cost of living.
A number of speeches have been made in the Committee about the need to end restrictive practices, and I believe that most people want to see the end of restrictive practices both by employers and by trade unionists. There is no doubt that if restrictive practices, as practised by monopolists and by certain workers in certain industries, were obviated, the steady improvement in productivity and in competitiveness which would arise as a result of breaking down monopolist practices would give greater efficiency in industry.
But it seems to me that there can be no chance whatever of increasing the standard of life of the ordinary men and women of this country if, even with a stable cost of living, we ask them to remain on the same wage rates. If their wage rates are constant, even if the cost
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of living is constant, there will be no increase in their standard of life.
As a result of any contribution which they are prepared to make by giving up restrictive practices and by co-operating with industry, they are entitled to share in the increased profits which ensue from the greater productivity. [HON. MEMBERS: "Hear hear."] I am glad that I carry the Committee with me in this matter. It is very different from what the employers are saying when wages are discussed around the conference table. If that point is accepted by hon. Members opposite, it is an interesting commentary that at no time in my experience have I known employers to give wage increases based upon efficiency. They have always waited for applications to be made by trade unions.
Provided that the Government are prepared to take such action as would keep the cost of living steady. I believe that, if this matter is discussed with the T.U.C. by the Ministry of Labour, the T.U.C. would be prepared to sit down and discuss ways and means of improving efficiency in industry, at the same time providing formulae on which the benefits of the increased efficiency could be shared by workers in industry.
While the trade union movement and trade union leaders generally have always indicated their willingness to make their contribution to a more prosperous Britain, it lies with the Government, first, to produce the atmosphere in which this work should go on. The first prerequisite of the right Government policy is stability in the cost of living and saving the value of the £. I believe that the Government have miserably failed in that prerequisite. The Budget has shown no imagination and only adds to that failure.
9.31 p.m.
The Chancellor of the Exchequer (Mr. Peter Thorneycroft): I rise to make the concluding comments in the debate. I listened with attention to the right hon. Gentleman the Member for Blyth (Mr. Robens). He made a speech with large parts of which I did not find myself in disagreement. It was a speech which was intended to be, and which indeed was, helpful on the wages front. He largely reiterated what I saw Mr. Harry Douglass was saying only the other day, as reported in the Observer newspaper, that
"…responsible trade unions … may find it necessary to concentrate on the avoidance of

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unemployment rather than on immediate wage increases which are instantly wiped out by inflation… Trade unions are so powerful today that they can make or mar the economy … that power brings responsibility."
We can count ourselves lucky in this country that we have trade union leaders with a sense of responsibility in these matters.
I make no complaint whatever that the right hon. Gentleman did not say very much about the Budget proposals. I understand that it is his intention presently to march through the Lobbies against them, arid I must say that I had expected a rather more forthright condemnation of the propositions we put before the Committee.
Mr. Robens: If the right hon. Gentleman wishes, I can do so.
Mr. Thorneycroft: I make no complaint that the Opposition should vote against the Budget. Indeed, in many respects, I take that as a compliment. This is a Conservative Budget. There is no reason why the Opposition should not register their objections to it. After all, it is for them to make their own explanations in the country about why they do it. I must say that I think that they will find it a little difficult.
Let me first recall the Committee to the main theme and purpose of our discussions. After all, the Budget must be regarded as a whole. First, as to its background; it follows a steady process, followed with a few interruptions since 1951, of lightening the burden of taxation upon the British people, not only those receiving more than £2,000. During those years, almost every income has received some tax benefit. The married man, with two children, at £600 a year, £36 less: at £800, £67 less; at £1,250, £117 less: and so on over the whole range, below and above £2,000.
Moreover, we have done that over a number of years, not simply in the Surtax range, but in the £1,500 a year range. In 1952. such a man paid £357 in tax; in the next year, £296; the year after that, £277: the year after that, £248; and now, £227. It is Conservative policy to secure a steady reduction in the weight of taxation. That is the point of policy which we have debated, and no doubt it is the point of policy upon which we shall be voting in a few minutes.
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Secondly, the opportunity that we hive this year is based upon the firm foundation of the achievements of 1956. In that year we turned a deficit into a surplus. We held imports and expanded exports. That is the answer to the hon. Member for Northfield (Mr. Chapman). We switched from consumer to capital goods; we built fewer houses and more factories, and we turned spending into saving. That is a magnificent record and a full justification of my right hon. Friend's Budget.
Before that Budget was introduced the right hon. Member for Battersea, North (Mr. Jay) attacked the credit squeeze. He said:
"it has almost entirely failed to do the one thing that it was designed to achieve t that is, either to limit imports or to encourage exports.—[OFFICIAL REPORT, 21st February, 1956; Vol. 549, c. 209.]
In the event I would say that it did both —and very satisfactorily.
A satisfactory Budget is possible only through economy in spending. There is no other way in which a Budget can be arranged. In all democratic assemblies there is endless pressure to spend more. In relation to this Budget I would like to pay tribute to my right hon. Friend the Minister of Defence. His plan for streamlining and modernising our forces saved £79 million this year, and it will save more in future. In the event we estimate to spend £41 million less this year than we spent last year. This is some measure of the lengths to which the Government have gone in their determination to curtail expenditure.
This Budget is part of a process of consolidation and growth. It extends the tax reliefs contrived by my predecessors, and it is based upon the economies achieved in co-operation with my colleagues. It has been our policy, it remains our policy, and it will continue to be our policy, to lighten the burden of taxation which the people pay.
I want to say a few words upon the subject of investment, and I do so because it was part of the principal theme of the speech of the right hon. Member for Leeds, South (Mr. Gaitskell). I shall say a great deal more about the other parts of his speech later. Should we or should we not have reintroduced investment allowances? A good deal of comment has been made both inside and outside the House upon that point. In my

1675
Budget speech I said that we have to have a high investment economy. It is, indeed, a condition of our success. The Opposition has not a monopoly of belief in investment; indeed, in the years of the soft and easy export markets immediately after the war it is at least arguable that it would have been better to invest rather more.
In the coming year, and even beyond, I see no stagnation of investment. Our investment programme in fuel and power and public transport will exceed that of 1956 by £100 million. The private sector is likely to remain at the record level of 1956. Total fixed investment in productive facilities is likely to be higher than it has ever been before. Critics should remember that there cannot be more investment than there are capital goods in which to invest. They should remember, too, that capital goods are a vital part of our exports, and an attempt to overstretch the capital goods industry will merely result in lengthening order books, higher prices and larger imports of steel.
The right hon. Member for Huyton (Mr. H. Wilson) was worried about the building approvals for the first quarter of 1957. I do not think that one needs to be too much influenced by any quarter's figures, and those are peculiarly variable. But even if there were a decline in building, that does not mean that private investment has dropped. It probably means that industry is putting some machines into the factories which it has already built. In general, there is no ground for decrying the investment effort of this country.
The key to our whole investment policy is a steady, gradual approach, and the idea that we should take some panic measures to jerk the economy to a particular percentage of investment is wrong and is likely to be damaging if we attempt it. I do not think that it could be urged that we should seek to push it up by a cut in the absolute level of existing consumption or exports. The real policy to be pursued must surely be that a relatively large proportion of any increase in the national product should go into new investment. That is just what has in fact been going on. Between 1951 and 1956, one-third of the increase in national output was used to raise the
1676
level of investment. There was nothing poor or feeble about that. It reflects a sensible policy by a prudent and determined country, and I think that it will be reflected in our export efforts this year, as well as in the supply of goods to the home market. I think that we shall all see its benefits.
Mr. Roy Jenkins: Would it be possible for the right hon. Gentleman to assure the Committee that in his view it is unlikely that our expansion of fixed investment as a proportion of the national income will fall in the coming financial year?
Mr. Thorneycroft: I think that over a period it will continue to grow as it has been growing up to now. I do not say that it will grow at the same pace in every year. May I add this: let us not overdo the comparison with Germany, and of the percentage of investment there as against ours. Investment depends on many things, including the rate of increase in the working population, the burden of defence and other matters, and the position in Germany, as one or two of my hon. Friends have pointed out, is really radically different from the position in this country.
To summarise, I do not think that there is any disagreement between us about the importance of investment. We are investing, we shall go on doing it at a pace we can sustain and a pace that we can match by the real savings in the economy.
I should like to refer to one or two of the speeches which have been made in the course of the debate. I think that the kindest thing to be said about the speech of the right hon. Gentleman the Member for Leeds, South was that it was rather good in the middle. At that point, he referred to the sterling area capital account. He pointed out to the Committee that the claims on the sterling balances might not be a transitory feature —that they might represent a future trend. If that is so, there is an added need for a surplus on the balance of payments. There is an added reason why we should put the balance of payments first, and it is the most solid argument in favour of this Budget that the right hon. Gentleman could have advanced.
He differed sharply from his shadow Chancellor. One cannot really attack this Budget both as being an assignment with inflation and because it fails to jerk us

1677
up to a higher level of activity. Those two arguments really run in absolutely opposite directions. It really did not help matters to follow that with a painful explanation of the difference between cost and demand inflation. It only served to remind his right hon. Friend of those 15 terrible minutes on television when he was trying to explain how a demand inflation could be checked by cutting back consumption and when he could not think of anything in particular to cut except the petrol stations.
The right hon. Member for Leeds, South and I have one thing in common. Each of us has introduced one Budget. He introduced his after five years of Socialism whcih, as we are constantly reminded, unlike Conservatism minimises, if it does not eradicate, the blind play of economic forces. The right hon. Gentleman put up the standard rate by 6d., softening the blow a little by some personal allowances. I have left it untouched at 1s. lower, and have also improved the children's allowances, and given some help to the elderly. The right hon. Gentleman increased Purchase Tax by £30 million; I have reduced it by £24 million. The right hon. Gentleman increased Entertainments Duty by £10 million I have reduced it, allowing for the television tax, by £4 million.
The right hon. Gentleman put on an extra £36 million on petrol; I have brought it down to last year's level—[Interruption.] As for encouraging industry, the right hon. Gentleman suspended the initial allowances altogether and put up Profits Tax by £68 million. For my part, I have continued the initial allowances unchanged, and have found £11½ million for shipping, and £35 million for British companies operating overseas. I think that, on the whole, the country will prefer Conservative finance.
The right hon. Member for Bishop Auckland (Mr. Dalton)—another former Chancellor to partake in this debate—expressed his interest, as he is entitled to, since he initiated it, in the National Land Fund. He had a number of ideas for spending more money out of that Fund. May I say that I will study all his comments with the interest that they certainly deserve, but I would say that in this country there has, over the centuries, grown up a practice whereby
1678
money is in general voted in Supply? I believe that it is a good practice.
It may be right that we should buy mountains to walk over—I do not know; it may not be necessary to buy mountains for that purpose; but whatever the purpose it should be someone's responsibility; it should be on the Vote of some Minister, and should be debated here in this House by those who defend it and those who oppose it. In that matter, I think that the Public Accounts Committee was right, and was safeguarding the interests of Parliament when it criticised the size of the Fund in question.
My right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) referred to the question of statistics, and he was right to do so. I do not think that it is possible to conduct a modern economy without full statistical information. We have done much to improve the service. If I may say so to my right hon. Friend the Prime Minister, we are no longer using last year's Bradshaw, but the up-to-date version—and we will not drift into Old Moore's Almanac like the right hon. Gentleman the Member for Bishop Auckland, but will search by every means open to us to improve the statistics which we already have available.
If I might, I should like to say a few words on the tax reliefs on which we shall vote in a few minutes' time. I believe that they have been very widely welcomed in the country. In some quarters it is said that they are too diffuse—that there are too many of them, that it would have been simpler to lower the rate of Income Tax, or increase the fraction of earned income, or raise the Surtax level. But those particular reliefs are out of scale with the total amount that we thought it wise or right to deal with in this Budget.
The £24 million relief in Purchase Tax is an important reduction in what the housewife pays—
Mr. Robens: Put on pots and pans last year.
Mr. Thorneycroft: —and is much wider than was put on the pots and pans. It extends over linoleum, carpets, cutlery and many other things. Right hon. Gentlemen, when they vote against it, will not be able to get away with just saying it was put on last year—and even

1679
if it was, there is no reason why it should not be taken off this year.
Virtually the same sum is dealt with in the case of direct taxation over the £2,000 income level. May I say, first, that nothing is being given to Surtax payers. Nothing is being given at all. This is merely a case where some of the money which they earn is not, on this occasion, being taken from them. The second thing to say is that this is not a Surtax relief; it is a relief of Income Tax, and it is not a new relief. It is a relief which already exists over the whole of the rest of the range. The question here is, why should earned-income relief stop suddenly at just over £2,000? I do not believe that in their hearts many people think it should. Indeed, listening to the debates, we heard right hon. and hon. Members move up from £2,000 to £2,500 or £3,000 as a proper level. Some went as far as £4,000 and £5,000.
A good case has been made out for the justice of this relief, but that is not its main basis. The case here is that this is a good relief from the point of view of the economy. We cannot, in this island, be altogether oblivious of what appears to be good sense to the United States, the Soviet Union, the Commonwealth, and the Continent of Europe. In every one of those areas men with these responsibilities are taking back a larger proportion of what they earn. I do not think that it is enough for the right hon. Gentleman to say that battles are not won by the generals. Plenty of battles are lost by the generals. A nation which ill rewards its management is ill rewarding itself.
We have concentrated not simply upon Purchase Tax or upon the tax relief that I have been discussing but upon a range of tax reliefs designed to help the family and to secure that parents who wish to keep their children at school, whether fee-paying or not, are allowed tax reliefs rather larger than they were permitted before. Our aim here is to ensure that such parents are given an opportunity of seeing that those children remain at school, go to universities, and have opportunities when they enter upon their careers.
I will not deal with the overseas trading corporations or the relief to shipping because they are perhaps more appro-
1680
priately to be dealt with in the Committee on the Finance Bill, and they have received general acclaim in all parts of the Committee, including that in an able speech by my right hon. and learned Friend the Member for Kensington, South (Sir P. Spens).
A number of other speeches have been made in the course of the debate. My hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke) favoured a fairly radical approach to our taxation problems and wished to storm the Treasury. We have at least made a start on some of the tax reliefs which have appealed to him.
The hon. Lady the Member for Coventry, South (Miss Burton) referred to the problems of Coventry. It is true that in the industrial survey published by the Manchester Guardian reference was made to the fact that Coventry was one of the few places where real anxiety about the future was found. She referred to young men, technicians and others, who are emigrating. I do not believe that young men are emigrating to Canada because they hope to find greater security of employment or more favourable rates of Surtax. If they are emigrating for those purposes they are going to be very surprised when they arrive. They are emigrating, in the main, because they want more opportunities. One of the ways of keeping them here is to ensure that they have more opportunities if they remain and make their lives in this country.
If I might summarise the case which is put by the Opposition it is, as I understand it, a varied case. In some quarters it is said that we have been too cautious; that we ought to have risked more. I do not mind that sort of criticism. I am bound to say that I believe that in the situation in which we find ourselves in this country we are right to be cautious, and we should have been indeed irresponsible to have gone further, risking the balance of payments, risking the threat to sterling, in the hope of having some momentary popularity with large-scale tax reliefs.
Hon. Members opposite have varied very widely in the attack they have made. Sometimes they were urging greater incentives and activity and at other times a kind of Crippsian austerity: The Opposition really cannot argue all ways at

1681
once. It cannot argue that this case is limited to 300,000 Surtax payers and yet is in some way designed to muster many millions of Tory votes. It cannot say that it is inflationary and at the same time urge us to spend more over a whole range of new types of expenditure. It cannot say that the gold reserves are in peril and at the same time that we must boost investment at the expense of more imports and fewer exports.
At one time the right hon. Member for Huyton was urging that we should have an artificial impetus to investment, plus controls to hold it back. The accelerator and the brake were both to be applied at the same time, with steam rising from the bonnet and flames from the back of the car. The country must be very grateful that it does not have him as the driver. It has also been suggested that this Budget would be more palatable and even acceptable if it contained some sop to Socialism such as a capital gains tax. I do not believe taxes should be used as a kind of counter game. I think they should be dealt with on their merits.
The truth is that we seek objectives which are quite different from those of the Socialist Party. Hon. Members oppo-
site have described their policy in their pamphlet "Towards Equality." At every stage of a young man's life he is to pay tax on his capital, on his capital gains, on his expenses, even on his personal expenses. We do not believe that that is the sort of equality this nation wishes to have. This country, rich in its variety, boundless in its prospects, cannot be easily fitted into the austere pattern of Socialist thought and dogma. We prefer greater opportunities and greater rewards. It is against that that right hon. Gentlemen opposite will be voting in the lobby tonight.
Question put:
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).
The Committee divided: Ayes 317, Noes 252.

Division No. 97.]

AYES

[9.59 p.m.

Agnew, Sir Peter

Bromley-Davenport, Lt.-Col. W. H.

Doughty, C. J. A.

Aitken, W. T.

Brooke, Rt. Hon. Henry

Drayson, G. B.

Allan, R. A. (Paddington, S.)

Brooman-White, R. C.

du Cann, E. D. L.

Alport, C. J. M.

Browne, J. Nixon (Craigton)

Dugdale, Rt. Hn. Sir T. (Richmond)

Amery, Julian (Preston, N.)

Bryan, P.

Duncan, Capt. J. A. L.

Amory, Rt. Hn. Heathcoat (Tiverton)

Bullus, Wing Commander E. E.

Duthie, W. S.

Anstruther-Gray, Major Sir William

Burden, F. F. A.

Eccles, Rt. Hon. Sir David

Arbuthnot, John

Butcher, Sir Herbert

Eden, J. B. (Bournemouth, West)

Armstrong, C. W.

Butler, Rt. Hn. R. A.(Saffron Walden)

Elliot, Rt. Hon. W. E.

Ashton, H.

Carr, Robert

Elliott, R. W.

Astor, Hon. J. J.

Cary, Sir Robert

Emmet, Hon. Mrs. Evelyn

Atkins, H. E.

Channon, Sir Henry

Errington, Sir Eric

Baldock, Lt.-Cmdr. J. M.

Chichester-Clark, R.

Erroll, F. J.

Baldwin, A. E.

Churchill, Rt. Hon. Sir Winston

Farey-Jones, F. W.

Balniel, Lord

Clarke, Brig. Terence (Portsmth, W.)

Fell, A.

Barber, Anthony

Cole, Norman

Finlay, Graeme

Barlow, Sir John

Conant, Maj. Sir Roger

Fisher, Nigel

Barter, John

Cooke, Robert

Fletcher-Cooke, C.

Baxter, Sir Beverley

Cooper, A. E.

Forrest, G.

Beamish, Maj. Tufton

Cooper-Key, E. M.

Foster, John

Bell, Philip (Bolton, E.)

Cordeaux, Lt. Col. J. K.

Fraser, Hon. Hugh (Stone)

Bell, Ronald (Bucks, S.)

Corfield, Capt. F. V.

Freeth, Denzil

Bennett, F. M. (Torquay)

Craddock, Beresford (Spelthorne)

Garner-Evans, E. H.

Bevins, J. R. (Toxteth)

Crosthwaite-Eyre, Col. O. E.

George, J. C. (Pollok)

Bidgood, J. C.

Crouch, R. F.

Gibson-Watt, D.

Biggs-Davison, J. A.

Crowder, Sir John (Finchley)

Glover, D.

Birch, Bt. Hon. Nigel

Crowder, Petre (Ruislip—Northwood)

Godber, J. B.

Bishop, F. P.

Cunningham, Knox

Gomme-Duncan, Col. Sir Alan

Black, C. W.

Currie, G. B. H.

Goodhart, Philip

Body, R. F.

Dance, J. C. G.

Gough, H. R.

Boothby, Sir Robert

Davidson, Viscountess

Gower, H. R.

Bossom, Sir Alfred

D'Avigdor-Goldsmid, Sir Henry

Graham, Sir Fergus

Boyd-Carpenter, Rt. Hon. J. A.

Deedes, W. F.

Grant, W. (Woodside)

Boyle, Sir Edward

Digby, Simon Wingfield

Grant-Ferris, Wg Cdr. R. (Nantwich)

Braine, B. R.

Dodds-Parker, A. D.

Green, A.

Braithwaite, Sir Albert (Harrow, W.)

Donaldson, Cmdr. C. E. McA.

Gresham Cooke, R.

Grimond, J.

Llewellyn, D. T.

Rees-Davies, W. R.

Grimston, Hon. John (St. Albans)

Lloyd, Rt. Hon. G. (Sutton Coldfield)

Remnant, Hon. P.

Grosvenor, Lt.-Col. R. G.

Lloyd, Rt. Hon. Selwyn (Wirral)

Renton, D. L. M.

Gurden, Harold

Longden, Gilbert

Ridsdale, J. E.

Hall, John (Wycombe)

Low, Rt. Hon. A. R. W.

Rippon, A. C. F.

Hare, Rt. Hon. J. H.

Lucas, Sir Jocelyn (Portsmouth, S.)

Roberts, Sir Peter (Heeley)

Harris, Reader (Heston)

Lucas, P. B. (Brentford & Chiswick)

Robertson, Sir David

Harrison, A. B. C. (Maldon)

Lucas-Tooth, Sir Hugh

Robinson, Sir Roland (Blackpool, S.)

Harrison, Col. J. H. (Eye)

Macdonald, Sir Peter

Robson-Brown, W.

Harvey, Air Cdre. A. V. (Macclesfd)

Mackeson, Brig. Sir Harry

Rodgers, John (Sevenoaks)

Harvey, Ian (Harrow, E.)

McKibbin, A. J.

Roper, Sir Harold

Harvey, John (Walthamstow, E.)

Mackie, J. H. (Galloway)

Ropner, Col. Sir Leonard

Harvie-Watt, Sir George

MoLaughlin, Mrs. P.

Russell, R. S.

Hay, John

Maclay, Rt. Hon. John

Sandys, Rt. Hon. D.

Head, Rt. Hon. A. H.

Maclean, Fitzroy (Lancaster)

Schofield, Lt.-Col. W.

Heald, Rt. Hon. Sir Lionel

McLean, Neil (Inverness)

Scott-Miller, Cmdr. R.

Henderson-Stewart, Sir James

Macleod, Rt. Hn. Iain (Enfield, W.)

Sharples, R. C.

Hesketh, R. F.

Macmillan, Rt. Hn. Harold (Bromley)

Shepherd, William

Hicks-Beach, Maj. W. W.

Macmillan, Maurice (Halifax)

Simon, J. E. S. (Middlesbrough, W.)

Hill, Rt. Hon. Charles (Luton)

Macpherson, Niall (Dumfries)

Smithers, Peter (Winchester)

Hill, Mrs. E. (Wythenshawe)

Maddan, Martin

Smyth, Brig. Sir John (Norwood)

Hill, John (S. Norfolk)

Maitland, Cdr. J. F. W. (Horncastle)

Soames, Christopher

Hinchingbrooke, Viscount

Maitland, Hon. Patrick (Lanark)

Speir, R. M.

Hirst, Geoffrey

Manningham-Buller, Rt. Hn. Sir R.

Spence, H. R. (Aberdeen, W.)

Hobson, J. G. S. (Wwck & L'mgtn)

Markham, Major Sir Frank

Spens, Rt. Hn. Sir P. (Kens'gfn, S.)

Holland-Martin, C. J.

Marlowe, A. A. H.

Stanley, Capt. Hon. Richard

Holt, A. F.

Marples, Rt. Hon. A. E.

Stevens, Geoffrey

Hope, Lord John

Marshall, Douglas

Steward, Harold (Stockport, S.)

Hornby, R. P.

Mathew, R.

Steward, Sir William (Woolwich, W.)

Hornsby-Smith, Miss M. P.

Maude, Angus

Stoddart-Scott, Col. M.

Horobin, Sir Ian

Maudling, Rt. Hon. R.

Storey, S.

Horsbrugh, Rt. Hon. Dame Florence

Mawby, R. L.

Stuart, Rt. Hon. James (Moray)

Howard, Gerald (Cambridgeshire)

Maydon, Lt.-Comdr. S. L. C.

Studholme, Sir Henry

Howard, Hon. Greville (St. Ives)

Medlicott, Sir Frank

Summers, Sir Spencer

Howard, John (Test)

Milligan, Rt. Hon. W. R.

Sumner, W. D. M. (Orpington)

Hughes Hallett, Vice-Admiral J.

Molson, Rt. Hon. Hugh

Taylor, Sir Charles (Eastbourne)

Hughes-Young, M. H. C.

Moore, Sir Thomas

Taylor, William (Bradford, N.)

Hulbert, Sir Norman

Morrison, John (Salisbury)

Teeling, W.

Hurd, A. R.

Mott-Radclyffe, Sir Charles

Temple, John M.

Hutchison, Sir Ian Clark (E'b'gh, W.)

Nabarro, G. D. N.

Thomas, Leslie (Canterbury)

Hutchison, Sir James (Scotstoun)

Nairn, D. L. S.

Thomas, P. J. M. (Conway)

Hyde, Montgomery

Neave, Airey

Thompson, Kenneth (Walton)

Hylton-Foster, Rt. Hon. Sir Harry

Nioholls, Harmar

Thorneycroft, Rt. Hon. P.

Iremonger, T. L.

Nicholson, Godfrey (Farnham)

Thornton-Kemsley, C. N.

Irvine, Bryant Godman (Rye)

Nicolson, N. (B'n'm'th, E.&Chr'ch)

Tiley, A. (Bradford, W.)

Jenkins, Robert (Dulwich)

Noble, Comdr. Rt. Hon. Allan

Tilney, John (Wavertree)

Jennings, J. C. (Burton)

Nugent, G. R. H.

Turner, H. F. L.

Jennings, Sir Roland (Hallam)

Ormsby-Gore, Rt. Hon. W. D.

Turton, Rt. Hon. R. H.

Johnson, Dr. Donald (Carlisle)

Orr, Capt. L. P. S.

Tweedsmuir, Lady

Johnson, Eric (Blackley)

Orr-Ewing, Charles Ian (Hendon, N.)

Vane, W. M. F.

Johnson, Howard (Kemptown)

Orr-Ewing, Sir Ian (Weston-S-Mare)

Vaughan-Morgan, J. K.

Jones, Rt. Hon. Aubrey (Hall Green)

Osborne, C.

Vickers, Miss Joan

Joseph, Sir Keith

Page, R. G.

Vosper, Rt. Hon. D. F.

Wade, D. W.

Joynson-Hicks, Hon. Sir Lancelot

Pannell, N. A. (Kirkdale)

Wakefield, Edward (Derbyshire, W.)

Kaberry, D.

Partridge, E.

Wakefield, Sir Wavell (St. M'lebone)

Keegan, D.

Peyton, J. W. W.

Walker-Smith, Rt. Hon. Derek

Kerr, H. W.

Pickthorn, K. W. M.

Ward, Rt. Hon. G. R. (Worcester)

Kershaw, J. A.

Pike, Miss Mervyn

Ward, Dame Irene (Tynemouth)

Kirk, P. M.

Pilkington, Capt. R. A.

Waterhouse, Capt. Rt. Hon. C.

Lagden, G. W.

Pitman, I. J.

Watkinson, Rt. Hon. Harold

Lambert, Hon. G.

Pitt, Miss E. M.

Webbe, Sir H.

Lambton, Viscount

Pott, H. P.

Whitelaw, W. S. I.

Langford-Holt, J. A.

Powell, J. Enoch

Williams, Paul (Sunderland, S.)

Leavey, J. A.

Price, Henry (Lewisham, W.)

Williams, R. Dudley (Exeter)

Leburn, W. G.

Prior-Palmer, Brig. O. L.

Wilson, Geoffrey (Truro)

Legge-Bourke, Maj. E. A. H.

Profumo, J. D.

Wood, Hon. R.

Legh, Hon. Peter (Petersfield)

Raikes, Sir Victor

Woollam, John Victor

Lennox-Boyd, Rt. Hon. A. T.

Ramsden, J. E.

Yates, William (The Wrekin)

Lindsay, Hon. James (Devon, N.)

Rawlinson, Peter

Linstead, Sir H. N.

Redmayne, M.

TELLERS FOR THE AYES:

Mr. Heath and Mr. Wills.

NOES

Ainsley, J. W.

Bellenger, Rt. Hon. F. J.

Bowles, F. G.

Albu, A. H.

Bence, C. R. (Dunbartonshire, E.)

Boyd, T. C.

Allaun, Frank (Salford, E.)

Benn, Hn. Wedgwood (Bristol, S. E.)

Braddock, Mrs. Elizabeth

Allen, Arthur (Bosworth)

Benson, G.

Brockway, A. F.

Allen, Scholefield (Crewe)

Beswick, Frank

Brown, Rt. Hon. George (Belper)

Awbery, S. S.

Blenkinsop, A.

Brown, Thomas (Ince)

Bacon, Miss Alice

Blyton, W. R.

Burton, Miss F. E.

Baird, J.

Boardman, H.

Butler, Herbert (Hackney, C.)

Balfour. A.

Bowden, H. W. (Leicester, S. W.)

Butler, Mrs. Joyce (Wood Green)

1684

1685

Callaghan, L. J.

Irving, Sydney (Dartford)

Pursey, Cmdr. H.

Carmichael, J.

Isaacs, Rt. Hon. G. A.

Randall, H. E.

Castle, Mrs. B. A.

Jay, Rt. Hon. D. P. T.

Rankin, John

Champion, A. J.

Jeger, Mrs. Lena(Holbn & St. Pncs. S.)

Redhead, E. C.

Chapman, W. D.

Jenkins, Roy (Stechford)

Reeves, J.

Chetwynd, G. R.

Johnston, Douglas (Paisley)

Reid, William

Clunie, J.

Jones, Rt. Hon. A. Creech(Wakefield)

Robens, Rt. Hon. A.

Coldrick, W.

Jones, Elwyn (W. Ham, S.)

Roberts, Albert (Normanton)

Collick, P. H. (Birkenhead)

Jones, Jack (Rotherham)

Roberts, Goronwy (Caernarvon)

Collins, V. J. (Shoreditch & Finsbury)

Jones, J. Idwal (Wrexham)

Robinson, Kenneth (St. Pancras, N.)

Corbet, Mrs. Freda

Jones, T. W. (Merioneth)

Rogers, George (Kensington, N.)

Cove, W. G.

Kenyon, C.

Ross, William

Craddock, George (Bradford, S.)

Key, Rt. Hon. C. W.

Royle, C.

Cronin, J. D.

King, Dr. H. M.

Shinwell, Rt. Hon. E.

Crossman, R. H. S.

Lawson, G. M.

Short, E. W.

Cullen, Mrs. A.

Ledger, R. J.

Shurmer, P. L. E.

Dalton, Rt. Hon. H.

Lee, Frederick (Newton)

Silverman, Julius (Aston)

Darling, George (Hillsborough)

Lee, Miss Jennie (Cannock)

Silverman, Sydney (Nelson)

Davies, Ernest (Enfield, E.)

Lever, Harold (Cheetham)

Simmons, C. J. (Brierley Hill)

Davies, Harold (Leek)

Lever, Leslie (Ardwick)

Skeffington, A. M.

Davies, Stephen (Merthyr)

Lewis, Arthur

Slater, Mrs. H. (Stoke, N.)

Deer, G.

Lindgren, G. S.

Slater, J. (Sedgefield)

de Freitas, Geoffrey

Lipton, Marcus

Smith, Ellis (Stoke, S.)

Delargy, H. J.

Logan, D. G.

Snow, J. W.

Dodds, N. N.

Mabon, Dr. J. Dickson

Sorensen, R. W.

Donnelly, D. L.

MacColl, J. E.

Soskice, Rt. Hon. Sir Frank

Dugdale, Rt. Hn. John (W. Brmwch)

MacDermot, Niall

Sparks, J. A.

Dye, S.

McGhee, H. G.

Steele, T.

Ede, Rt. Hon. J. C.

MoGovern, J.

Stewart, Michael (Fulham)

Edelman, M.

McKay, John (Wallsend)

Stokes, Rt. Hon. R. R. (Ipswich)

Edwards, Rt. Hon. John (Brighouse)

MacMillan, M. K. (Western Isles)

Stonehouse, John

Edwards, Rt. Hon. Ness (Caerphilly)

MacPherson, Malcolm (Stirling)

Stones, W. (Consett)

Mahon, Simon

Strachey, Rt. Hon. J.

Edwards, W. J. (Bilston)

Mainwaring, W. H.

Strauss, Rt. Hon. George (Vauxhall)

Edwards, W. J. (Stepney)

Mallalieu, J. P. W. (Huddersfd, E.)

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

Evans, Albert (Islington, S. W.)

Mann, Mrs. Jean

Summerskill, Rt. Hon. E.

Evans Edward (Lowestoft)

Marquand, Rt. Hon. H. A.

Swingler, S. T.

Fernyhough, W.

Mason, Roy

Sylvester, G. O.

Fienburgh, W.

Mayhew, C. P.

Taylor, Bernard (Mansfield)

Finch, H. J.

Mellish R. J.

Taylor, John (West Lothian)

Fletcher, Eric

Messer, Sir F.

Thomas, George (Cardiff)

Forman, J. C.

Mikardo, Ian

Thomas, Iorwerth (Rhondda, W.)

Thomson, George (Dundee, E.)

Gaitskell, Rt. Hon. H. T. N.

Mitchison, G. R.

Thornton, E.

George, Lady Megan Lloyd

Monslow, W.

Timmons, J.

Gibson, C. W.

Moody, A. S.

Tomney, F.

Gooch, E. G.

Morris, Percy (Swansea, W.)

Ungoed-Thomas, Sir Lynn

Gordon Walker, Rt. Hon. P. C.

Morrison, Rt. Hn. Herbert(Lewis'm, S.)

Usborne, H. C.

Greenwood, Anthony

Mort D. L

Viant, S. P.

Grenfell, Rt. Hon. D. R.

Moss, R.

Warbey, W. N.

Grey, C. F.

Moyle, A.

Watkins, T. E.

Griffiths, David (Rother Valley)

Mulley, F. W.

Wells, Percy (Faversham)

Griffiths, Rt. Hon. James (Llanelly)

Neal, Harold (Bolsover)

Wells, William (Walsall, N.)

Griffiths, William (Exchange)

Noel-Baker, Rt. Hon. P. (Derby, S.)

West, D. G.

Hall, Rt. Hn. Glenvil (Colne Valley)

O'Brien, Sir Thomas

Wheeldon, W. E.

Hamilton, W. W.

Oliver, G. H.

White, Mrs. Eirene (E. Flint)

Hannan, W.

Oram, A. E.

White, Henry (Derbyshire, N. E.)

Harrison, J. (Nottingham, N.)

Orbach, M.

Wigg, George

Hastings, S.

Oaswald, T.

Wilcock, Group Capt. C. A. B.

Hayman, F. H.

Owen, W. J.

Wilkins, W. A.

Healey, Denis

Padley, W. E.

Willey, Frederick

Henderson, Rt. Hn. A. (Rwly Regis)

Paget, R. T.

Williams, David (Neath)

Herbison, Miss M.

Paling, Rt. Hon. W. (Dearne Valley)

Williams, Rev. Llywelyn (Ab'tllery)

Hewitson, Capt. M.

Palmer, A. M. F.

Williams, Ronald (Wigan)

Hobson, C. R. (Keighley)

Pannell, Charles (Leeds, W.)

Williams, Rt. Hon. T. (Don Valley)

Holman, P.

Pargiter, G. A.

Williams, W. R. (Openshaw)

Holmes, Horace

Parker, J.

Willis, Eustace (Edinburgh, E.)

Houghton, Douglas

Parkin, B. T.

Wilson, Rt. Hon. Harold (Huyton)

Howell, Charles (Perry Barr)

Paton, John

Winterbottom, Richard

Hubbard, T. F.

Peart, T. F.

Woodburn, Rt. Hon. A.

Hughes, Cledwyn (Anglesey)

Pentland, N.

Woof, R. E.

Hughes, Emrys (S. Ayrshire)

Plummer, Sir Leslie

Yates, V. (Ladywood)

Hughes, Hector (Aberdeen, N.)

Price, J. T. (Westhoughton)

Younger, Rt. Hon. K.

Hunter, A. E.

Price, Philips (Gloucestershire, W.)

Zilliacus, K.

Hynd, H. (Accrington)

Probert, A. R.

Hynd, J. B. (Attercliffe)

Proctor, W. T.

TELLERS FOR THE NOES:

Irvine, A. J. (Edge Hill)

Pryde, D. J.

Mr. Popplewell and Mr. Pearson.

Resolution to be reported Tomorrow; Committee to sit again Tomorrow.

WELFARE FOODS
10.10 p.m.
Mr. Frederick Willey: I beg to move,
That an humble Address be presented to Her Majesty praying that the Welfare Foods (Great Britain) Amendment Order, 1957 (S.I., 1957, No. 411), dated 13th March. 1957, a copy of which was laid before this House on 20th March, be annulled.
The effect of this Order is both to increase the price of National Dried Milk and to increase the price of welfare milk. In fact, to increase the price of welfare milk from 1½d. to 4d. a pint: that is to say, to more than double the price of welfare milk. The House will well remember that the Labour Government in fact reduced the price of welfare milk.
In recent months, we have frequently debated milk prices. The Government have twice increased the retail price of milk. Then we had a particularly petty economy when the Government reduced the amount of milk for the unfortunate children attending day nurseries. On each of those occasions, embarrassed Government spokesmen paraded by way of mitigation the virtue of the subsidy on welfare milk. In fact when we debated the day nurseries, the hon. Lady who is now one of the Joint Under-Secretaries at the Home Office, in mitigation, expressly claimed the fact that the Government, while they were imposing that mean economy, were nevertheless subsidising welfare milk, which was selling at 1½d.
The effect of this Order is that what the hon. Lady said by way of defence is no longer true. When we last discussed the increase in the retail price of milk, the Joint Parliamentary Secretary to the Ministry of Agriculture, more flamboyant than previous Government spokesmen, in fact expressly claimed as his excuse the increase in the amount of the subsidy on welfare milk. In fact, speaking on the subject of welfare milk. he said:
"There has been no cut here at all. On the contrary. I claim that these very striking figures show how much wiser has been our policy of concentrating on those whose need is greatest."—[OFFICIAL REPORT, 4th February, 1957; Vol. 564, c. 195.]
Little did the Parliamentary Secretary know what his Government were going to do within fourteen days.
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We have opposed the Government's deliberate, callous policy in regard to milk because, first, it has led to a fall in the consumption of fresh milk of about 4 per cent. and, secondly, it has been the instrument of a socially unfair redistribution of the national income. As I said when we last discussed the retail price of milk, it is in effect taking the burden off the Surtax payer and putting it on the child and the large family. The fall in consumption has borne more heavily on the lower income groups and on the larger families. Now, having abolished the consumer subsidy altogether, the Government have begun a direct attack upon these groups by more than doubling the price of welfare milk.
We oppose this Order because, in the first place, it is stupid and ill-timed. This Order is bound to depress the demand for liquid milk: in fact that is not disputed. The right hon. Gentleman himself said that there will be no appreciable fall. He concedes that there will be a fall in the demand for fresh milk. What is appreciable or not is a matter of politics, but this is a serious matter to the farmer, because, after all, welfare milk comprises 15 per cent. of the total fresh milk consumed in this country. Now, at a time when the Minister of Agriculture is pointing out that there is a surplus of liquid milk, an excess of supplies over demand. I should have thought that the Government would have taken every step to stimulate demand and not depress it in this stupid way.
Secondly, the Order is nutritionally and socially objectionable. The Minister of Health was quite correct when, in calling attention to the Report of the Milk Marketing Board, he said that some of the variations in the pattern of milk consumption are due to variations in tradition and habit. But these variations in tradition and habit, which are illustrated by the fact that Beckenham consumes far more milk per head than Leeds, will not he overcome by an Order increasing the price of welfare milk.
In any case, the Board, in its Report, came to two major conclusions. The first was that milk consumption per head is higher in families where the heads of the household have higher incomes and, secondly, is lower in larger families, presumably because of the pressure on the family purse. In other words, this Report

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confirms the reports of the National Food Survey that milk consumption per head is affected by the income of the wage-earner and the size of the family. It is because these facts are widely known and appreciated that we pay particular regard to this provision of cheap welfare milk. It is for that reason that the Labour Government reduced the price of welfare milk.
The Minister of Health has raised the astonishing argument that, bad as the Order may be, it preserves the proportionate contribution by way of subsidy, but surely the right hon. Gentleman will appreciate that at a time when the Government have twice increased the retail price of milk it is specially important to ensure that there should be full consumption of welfare milk. We have seen that as each increase in the retail price of milk has been imposed it has had an adverse effect on the consumption of welfare milk.
Thirdly, the Order is patently unfair and unjust. The Chancellor of the Exchequer claims that, by virtue of the Order, he is making an Exchequer saving of £14 million. that is to support the Government's present fiscal policy. In other words, the price of milk is being raised for the poorer children to relieve the Surtax payer. It is as simple as that. We have now had the Budget, and the right hon. Gentleman knew what he was about to do when he imposed this increase on children and expectant mothers who take welfare milk. This Order is ill-timed, nutritionally unwise and grossly unjust, and for those reasons we shall oppose it.
10.19 p.m.
Mr. Sidney Dye: I beg to second the Motion.
I do so for the simple reason that we are dealing with an Order which raises the price of welfare milk from 1½d. a pint to 4d. a pint. Roughly, that is a 166 per cent. increase and, as my hon. Friend has pointed out, it relates to about 15 per cent. of the liquid milk consumed in this country.
This Order is related purely to the Exchequer. It is not related to the production of milk or to the need of the people who receive the milk. On the one hand, there is this great increase in
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the production of milk, to such an extent that farmers are talking about quota schemes and one thing and another to reduce production. At the same time the poorest and most needy people in the island are finding that the price of milk is being raised.
I remember right from the days of the old board of guardians how my father as a milk seller used at this time of the year to receive the certificates issued by the relieving officer to the larger families, to the old people and to others in distress. They were able to bring tickets along to him because those on the board of guardians knew that, by enabling the people to have fresh milk to consume, they were doing them as much good as by anything that could be done. I regret very much that in this modern age far greater quantities of drugs and other things for treatment are given when one and a half pints of really good milk at night would do people far more good. Milk is essential for protecting the body against ills and decay.
As I have said, this Order is not related to the needs of thousands of people in the country or to the producers of milk but to the demands of the Exchequer. Only last week the Chancellor showed that there could have been £100 million more in the Exchequer but, because it was not wanted, taxation was reduced. At the same time that was only possible because of such economies as this one—saving on the poorest of people in order that the Chancellor might come to the Dispatch Box opposite on Budget clay and say with pride, "I am not giving— I am not taking from people El million in taxation which I should have done if I had continued tax at the same rate as it was during the past year."
We must relate these two things. Can the Minister who is to reply to the debate say that the people who would have received, or are receiving, this milk will be much better off in 1957 than they were in 1956? Is the argument that the health of those people is that much better, or that their needs are that much less? He cannot possibly argue on the basis that there is not the milk available for them or that milk is not so good for them. It is purely on the question of the monetary policy of Her Majesty's Government that we this evening have to debate this

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most miserable of all the propositions that have come from the Government during the past twelve months. It would be a good thing if the House would accept this Motion and annul the Order.
10.23 p.m.
Mr. Tom Brown: I know that the Order now under consideration carries the name of three right hon. Gentlemen who are Minsters connected with three branches of Her Majesty's Government. I have been wondering if they ever stop to think of what the effect of their actions would be upon the poor, the needy and the old-age pensioners? It appears to me that they blunder along without any thought.
The situation prevailing in this country at present is that the production of milk has increased beyond all expectation. If we were to apply what is called the economic law of supply and demand, instead of increasing the price of milk the duty of the Government would be to reduce it in order to make it easier for the people in the lower income groups and the old-age pensioners to get the milk that they need.
I do not know whether the three Departments concerned have considered the effects which this Order will have. There are 4½ million to 5 million people who are disappointed about the Budget they are disappointed because no relief has been given to them in the Budget. They are wounded, and in my opinion this Order will pour iodine and brine salt into the wounds which the Government have caused to the poor and needy. The Government should be ashamed of themselves for bringing forward this Order now.
If there had been a scarcity of milk one could have understood it, but in fact the farmers of this country, in response to the Government's requests, have increased the production of milk. They have responded nobly and done exceedingly well. I will not go into the question of subsidies, but the fact remains that the farmers have done exceedingly well. Now that they have increased the production of milk, the Government produce this Order and raise the price of milk. To me, as a very ordinary man, it is a crazy idea. It is crazy, it is immoral, it is dishonest for the Government, by in-
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creasing the price of milk, to impose greater hardships upon those who already are hard pressed.
A few days ago there was a reference in the House to the National Food Survey, which indicated that people with incomes of £2 a week spent 25s. 5d. a week on food. Now these people with very low incomes are to be asked to spend even more on food instead of having the situation eased for them as it ought to have been eased.
Surely, the Government should have regard to the effect of their actions upon the poorer people. I could give the details of the budget of one of the low income group, a copy of which I have in my hand. Even by the most economical way of living she is left with only about 10d. out of her £2 a week. I will not give the items, but she now spends 10d. a week on milk and in future she will have to spend 1s. 2d. a week on it.
Surely we have got beyond such an action as this. The Government should realise the effect of their actions upon these people. Without going into the statistics which I have here, I submit that the Government ought to be thoroughly ashamed of themselves for bringing forward an Order of this kind at this time of the year.
Mr. Harold Gurden: Before he finishes, would the hon. Member explain in what way this Order affects the old-age pensioner? He has referred to the old-age pensioner and this Order, but I cannot see how this increase in the price of welfare foods affects the old-age pensioner.
Mr. Brown: I may have mentioned the old-age pensioners, but I meant those in the lower income groups.
10.29 p.m.
Mr. Victor Collins: This is the meanest and the most stupid Measure—I emphasise the word "stupid"—that even this Government have introduced. My hon. Friends have emphasised its meanness.
We on these benches can remember when there was a shortage of almost everything to eat in 1947 and 1948. Visiting specialists and doctors came to this country then and told us that we

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had the brightest and bonniest babies to be found anywhere in the world. That was because, despite the real shortages, we saw in those days that those in the greatest need, the babies, the old, and the sick, had their fair share, and, in particular, the schemes for welfare foods were born and carried through.
Despite the shortages, we took steps to build up healthy babies. This is not funny. If hon. Members opposite were in touch with the people, if any of them had done any real work on the workshop floor and had any contact with the people in field, mine and factory, they would know the kind of thing they are doing
We introduced those measures in time of shortage, and now they are being rapidly destroyed. I have no doubt that hon. Members opposite will tell us that this sum of £14 million will work out to only about 4½d. per family per week over the country as a whole. What they will forget to add is that it means very much more than that to the people who are really in need of this assistance. I have a constituent with seven children. She tells me that the alteration in the price of welfare milk, plus the recent increase in the price of bread, will mean more than 10s. a week for her, out of a wage of little more than £8. That is a very real difference. The only answer to that is that the family will have to go without some other necessity.
I do not want to dwell on that aspect over much. I want to mention the stupid part of this Measure. I am an employer and, despite the difficulties which hon. Members have in trying to do a job here while at the same time keeping in touch with industry, during the twelve years since I first came to this House I have contrived on most days to spend at least a part of the day on the workshop floor.
I know most of my employees by sight and many by their Christian names, and I have some knowledge of what they are thinking and feeling. I shall not pretend that this 4½d. a week is a tremendous financial burden on all workers, but I am sure that the Government have not realised the psychological effect of what they are doing. To the ordinary worker it appears exactly as though the £14 million is being taken out of the stomachs of the babies to provide more for the Surtax payers. That is exactly the comparison they will make and that is
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exactly how it will appear to them. This and similar things which the Government have done will be translated, whether the Government like it or not, into demands for wage increases tenfold larger than the cost of this piffling Measure which the Government are now trying to enact.
For twenty-five years I have been president of an employers' federation. I know something of wage negotiations with the men. Both the industries with which I am connected have sliding scales for cost-of-living bonuses which move as the cost of living rises. We do not even bother to talk to the men about cost-of-living bonuses. They know that they are worse off. They know that without any of the kind of figures which hon. Members opposite will no doubt produce. They know that they are being kicked around.
This country needs more production and a contented working people. We do not want incentives to be only at the top. We want incentives on the floor of the workshop, in the mines, and in the fields. All that is happening to these people, the people on whom the future of the country really depends, is that they are being kicked around in mean ways of this kind. It is time that the Government realised just what they are doing, just how impossible it is for those of us who are trying to increase production and do a job which the country really needs when the Government do these things and make the job more and more difficult.
Hon. Members may go away, after the inevitable result of the Division which I suppose will take place at the end of this debate, feeling that they have gained a victory. It will not be any kind of victory; it will be a mean political triumph over the people upon whom we depend most of all. There can be no possible justification for it. It is mean and stupid in its intent and purpose. Measures of this kind have an effect far beyond their own limits. It is about time the Government began to try to understand our people, stopped knocking them about and stopped the silly actions which they keep on taking and. instead, started to try to do things in the right way, so that we can go forward in a decent way.
I do not suppose that the Minister will attempt to answer the points which I have made, but I would say to him in all sincerity that the stupidity of the

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action which the Government are now taking far transcends the importance of its effect upon farmers or upon production. I hope that they will pause before they make any similar enactments to this in the future, even if they do not do so in relation to this Order. They should think not only of the number of pounds, shillings and pence that they can save and which, in turn, they can give to the better-off sections of the community, but also of the overall effect upon all our workers, our production, and our future prosperity.
Sir Charles Taylor: Will the hon. Member say something about the increased children's allowances which have been given in this Budget? Secondly, will he give some sort of comparison between the price of milk and wages before the war and its price and wages since the war?
Mr. Speaker: It might be a little out of order to go into all those matters. This Order is concerned with milk.
10.37 p.m.
Mrs. Jean Mann: We often describe a person for whom we have the greatest contempt as one who would steal milk out of a child's bottle. That is exactly what the Order does. It hits directly at the babes and the toddlers. It takes away the milk from the little toddlers under 5 years of age and also from the infants in their mothers' arms. It has nothing whatever to do with the old-age pensioners. They do not get any subsidised milk.
I feel very strongly upon this matter. I was one of those who saw the inception of controls in the schools, in Lanarkshire, when so many children were put on to milk and so many were taken off it. Day by day the doctors recorded the weights and heights of both sets of children, and the results showed how much advantage accrued to the children who were getting milk. It is even more important that the new-born babe and those up to 18 months old, or even up to school age, should have a plentiful supply of good, certified milk.
I understand that there is so much milk that we now have on the hoardings the faces of film stars with the message to drink more milk; so much milk that
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it often has to be emptied into pits and various shrubberies in quiet country spots in order to be rid of it.
I regarded the welfare milk as one of the finest achievements of the Welfare State. We could look with pride at the great decrease in infant mortality. Much of that decrease was ascribed to the advance of medical science, the discovery of the antibiotic group and the like, but it was due chiefly to a great available supply of milk—and in particular, of dried milk.
Dried, sterilised milk was a great boon to the mother of a very young infant. As doctors know, gastric troubles in infants are very often set up by the use of ordinary milk. We are now overcoming bovine tuberculosis, but we still have those gastric troubles, and sterilised milk has been an absolute boon. One tin of it costs 10½d. When making up the feeds of my grandchildren I find that I require two tins. The new price of two tins represents an increase of 2s. 11d, per week. I have two other grandchildrentoddlers—and a pint and a half of milk has been coming each day for each of them. A mother who has three pints for the toddler has to find another 4s. 4d. a week. A mother with two children aged between 18 months and 5 years, and one baby on sterilised milk, has to find 7s. 3d. a week extra.
Quite frankly, in my home they do not make much of that. The parents of my grandchildren are very much higher-salaried than are M.Ps. Even so, it is a considerable increase. Where it is really felt is where the total income is £7 or £6 a week, with rents of perhaps 30s. to pay out of that, with coal and lighting accounting for another £1, and children's clothing so very expensive. Today, my grandson's coat costs as much as my own. I think that it is time that there was an inquiry into that, because there is no Purchase Tax there—but I do not want to be stopped by you, Mr. Speaker, for wandering too far from the point. I stress how every item is adding to the cost.
I came across a little exhortation in a broadcast by a Conservative Party leader on the eve of the General Election:
"What is needed is that we should make the £buy more… I believe we Conservatives can do it. We must do it."
Then he said:
"When the Conservatives return to power we will bring down costs and we will all be better off"

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The babies, the toddlers and the old-age pensioners will not be better off. I do not know how much milk the Surtax payers drink, but possibly if they confined themselves to milk instead of their usual drink they would be better off. The Conservative leader went on to say:
"Well done. Is this clear enough? I said tonight and I repeat that we will reduce the cost of living."
This Order might be withdrawn in view of that promise, of the attack upon those who cannot hit back, and the fact that the proudest boast of our nation lies in the virility, health and strength of our little children.
10.47 p.m.
Mr. William Ross: I do not know which of the three Ministers whose names support the Order will reply. I sincerely hope that it will be the Secretary of State for Scotland.
Mr. Frank Beswick: What about the former Secretary of State for Scotland?
Mr. Ross: No. The right hon. Gentleman has done enough speaking tonight.
In the absence of the Secretary of State, I hope that the Joint Under-Secretary of State, the hon. Member for Craigton (Mr. J. N. Browne), will address himself to this matter. He has been congratulating the City of Glasgow upon having got 700,000 people voluntarily to be X-rayed at no cost to themselves to help to remove the scourge of tuberculosis from Glasgow.
It is a question of how we are to spend our money at the right time and in the right place, either to prevent the disease or to have a massive and highly publicised effort to tackle it. The Joint Under-Secretary is a Member for Glasgow. Does he appreciate that the Order will affect every child in Glasgow below school age? He knows the children of Glasgow as well as I do. One of the reasons for the massive publicity drive to wipe out tuberculosis is that we had no welfare scheme before the war. The health of our children has improved precisely because of the welfare scheme.
I wonder that the Joint Under-Secretary can sit here and support the Order. No wonder that the Secretary of State is not here. He has spent his weekend in
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Ayr. He was in my home town last weekend. I know that the right hon. Gentleman was playing golf in Prestwick. I wonder that the Prime Minister did not talk to the Ayrshire farmers while he was there. They have talked to my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) and me about milk supplies. The Minister of Agriculture, Fisheries and Food has been concerned about the consumption of liquid milk and has promised to do what he can to brash up the advertising activities of the Milk Marketing Board to sell more milk. The Order will make that job much more difficult.
Here is a position in which the price of milk to those who are getting necessary supplies is going up by 2½d. a pint. The same applies to National Dried Milk, which will be going up from 10½d. to 2s. 4d. a tin. I can understand why certain hon. Members opposite are delighted about that. When they harry us about this and ask irrelevant questions it would be pertinent to ask whether they are directors of dried milk firms.
Sir C. Taylor Sir C. Taylor rose—
Mr. Ross: The farmers of Ayrshire are very concerned—
Sir C. Taylor Sir C. Taylor rose—
Mr. Ross: The farmers of Ayrshire—
Mr. Speaker: I understood the hon. Member for Kilmarnock (Mr. Ross) to make a reference to the hon. Member for Eastbourne (Sir C. Taylor).
Mr. Ross: Yes, I did, Sir.
Mr. Speaker: It is customary when that is done for the hon. Member who is speaking to permit the hon. Member to whom he refers to say what he has to say.
Sir C. Taylor: I did not disclose my interest in the milk industry tonight because, quite frankly, I have done so very often and I think most hon. Members know that I am a director of milk companies. I apologise most humbly that I did not disclose the fact tonight.
Mr. Ross: We are indebted to the hon. Member for Eastbourne (Sir C. Taylor) for making that remark tonight.

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Ayrshire and other farmers throughout the country are concerned about the fall in the consumption of liquid milk, and this Order will make it worse.
We are having this Order presented to us at a time when the Government should be considering expansion of the welfare services to take in old-age pensioners. It will affect seriously the pockets and the health of people with low incomes. We have just finished discussion of something else on which the Government have been priding themselves about doing something for parents with children over 12 years of age. Here we are dealing with children under school age. The Government are robbing the poorest children, children of people who are not in most cases paying Income Tax, while the Tories pride themselves on doing something for parents who pay Income Tax and have children over school age.
Mr. James Stuart: Do children pay Income Tax?
Mr. Ross: I wish that the right hon. Member would confine himself to milk. I make a last appeal to the Government. From the point of view of the national needs in regard to agriculture, this is really stupid. From the point of view of national health and the standards we have built up since the war it is criminal. Is there no depth to which the Government will not sink? If they cannot do better than this they should clear out altogether.
10.54 p.m.
Mrs. Harriet Slater: I consider that this Order is one of the many mean things introduced recently by the Government. If I were asked to say what, in my lifetime, were the greatest changes in the lives of our people I would say that one of the greatest was that in the last few years we have reduced the infantile and maternal mortality rates.
I well remember the time when I was a young city councillor and the infantile mortality rate in the hospital wards of Stoke-on-Trent was 144 out of every 1,000. It is true that those were the slum wards of the city, but it is also true that the poorest of the poor lived in those areas. There were no welfare centres. There was no opportunity for those
1700
mothers in those areas to get any extra milk or any extra help to try to reduce the infantile and the maternal mortality.
We are proud today that our babies are, in the main, bonny babies and that we are rearing healthy children. At the end of his term of office, the Minister of Health will, I am sure, want to keep that record of having the bonniest children and improving the standard of health of the babies. The Order is not the way to do it.
Many of the children who are able to get the welfare milk, whether liquid or dried, are from large families whose mothers are now accustomed to the fact that they can go either to the welfare centre or to centres where the milk is now distributed, and they can get the service of giving additional milk and, therefore, additional nourishment to their children.
I remember the time when it was difficult to persuade even working-class mothers to go to the welfare centre. In those very early days they felt, as many of our old-age pensioners feel today, too proud to go. We have broken down that feeling and the young mothers now accept that service as a right and as part of the Welfare State. This Order is a way of attacking these mothers who have now become accustomed to going to the welfare centre or to the distribution centre for their milk and getting it at a reasonable rate.
I notice on the Order Paper today that my hon. Friend the Member for Manchester, Exchange (Mr. W. Griffiths) has tabled a Question to the Minister of Health drawing his attention to the fact that the infantile mortality rate in Manchester has increased for the first time in ten years. Manchester is a big and important city. That is an indication that we should not be doing anything to undermine the standard of health of our children, and particularly the very young ones, because if it happens in Manchester the effect can become cumulative and it can happen in other parts of the country.
An hon. Member opposite asked about the price of milk before the war as com pared with its price today. Does he realise that the increase in the price of milk, and the fact that this increase will be made, is only one of the increases in

1701
price of essential commodities? Does he also realise that when the ordinary working-class people had to cut down in the days of poverty before the war, it was on milk that they began to cut down, because they regarded it as a food which was almost a luxury? We have stopped that. This is nothing to laugh at.
Mr. F. A. Burden: I would like to say, through you, Mr. Speaker, that I was not laughing at the hon. Lady, but at something quite outside the debate.
Mrs. Slater: I accept that, but there has been continuous laughing on the benches opposite, which makes one assume that Members on the Government side are treating the subject almost with disdain and scorn.
Mr. Gurden Mr. Gurden rose—
Mrs. Slater: I cannot give way. To treat this matter with disdain and scorn is not worthy of any Member of the House.
We were also asked whether we had taken children's allowances into account. Hon. Members opposite claim some credit for having increased those allowances. Is there any credit in it if, at the same time, they reduce their value? That has happened time and time again. First, they attack school milk, then milk in the nurseries and now welfare milk. In addition, the price of milk has been increased.
I want to ask the Minister of Health, in particular, whether he does not think it worth while to reconsider this Order. Should not the Government ask themselves how many times they can introduce these Orders, one after another, framed with the same deliberate intention of cutting down the benefits to those who are in the greatest need? Ought they not to reconsider the Order, not merely having in mind a saving of £14 million, but having at least a little concern for the welfare of our children and of those who will be the future workers of this country? Is it not worth while reconsidering the Order not merely from the financial aspect but from the humanitarian aspect, too, so that, even at this late stage, they could withdraw the Order?
11.2 p.m.
The Minister of Health (Mr. Dennis Vosper): I can find a measure of agreement with most hon. Members who have taken part in the debate, and that is on the value of milk for expectant mothers and young children. I could extend that to the value of milk for people in general, but the Order and the Prayer which relates to it relate only to welfare milk for children under five and expectant mothers. The value of that welfare milk is not in dispute, and I do not intend for one moment to dispute its beneficial effects on the health of the children over the last 10 to 15 years. Indeed, the annual reports of my chief medical officer have on more than one occasion endorsed the contributions which have been made to health by welfare milk.
The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) referred to the infant mortality rate in Manchester last year. I will tell her, as I have told the House previously, that the infant mortality rates for England and Wales last year were the lowest ever known in the history of this country. It is a fact that the health of our children has been improving.
What is in dispute is the amount of subsidy necessary to encourage the consumption of welfare milk. The effect of this Order is to provide a subsidy of 50 per cent. when the retail price of milk is 8d. a pint, as it is for most of the year, and slightly less than 50 per cent. in the flush period, which includes the months of April, May and June.
This Order in itself does not deprive any child, any toddler, as the hon. Member for Coatbridge (Mrs. Mann) said, of its welfare milk. Indeed, the saving on my Estimate this year of £12½ million on liquid milk and £l½ million on the National Dried Milk assumes that the take up of welfare milk will be exactly the same as it has been in previous years, and there is no reason to assume that as a result of this Order any less welfare milk will be consumed in the coming year.
Some hon. Members have related the saving under this Order to Surtax concessions in the Budget. I suppose that is a legitimate point, but they could have related the saving here to the taxation

1703
relief of old persons on small incomes; they could have related it to the tax reductions on pots and pans; and they could even more properly have related it to the increase in family allowances for the third child and subsequent children from 8s. to 10s., because there is a definite connection between those two items.
The hon. Member for Sunderland, North (Mr. Willey) was the only hon. Member to refer to the history of this scheme, and I think this is important because it relates to the year 1940 when the welfare milk scheme was introduced to encourage the consumption of milk by young children and expectant mothers whose health might otherwise have been affected by food shortages. The retail price of milk in 1940 was 4d. a pint and the subsidy was 2d. That is to say, the subsidy was 50 per cent.. which is exactly the effect of this Order, and it was a subsidy of 50 per cent. in wartime conditions when food was daily getting shorter and incomes bought less than they do today.
It is true that the party opposite, in 1946, reduced the price of welfare milk to 1½d. That, together with an increase in the price of milk, had the effect of increasing the subsidy. Thereafter, as the price of retail milk has increased to the present price of 8d. a pint so, of course, the subsidy has risen, since the price of welfare milk has remained at 1½d. Therefore, now, before the introduction of this Order, the subsidy has risen from 50 per cent. to 81 per cent., at a total cost to the Exchequer of £33·3 million.
If 50 per cent. represented the real need in 1940, or, as it has been said tonight, 66 per cent. in 1946, now, when rationing has been abandoned and a wider choice of nourishing food is available, and when incomes purchase more, it is difficult to argue that the subsidy should be at a greater percentage rate than in those early days. To argue that the subsidy should be increased year after year as the wealth of the country increases seems a fancy of Socialist economics.
Mr. Willey: Has the hon. Gentleman read the speech of the Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food? I have previously argued in debate that one of the cones-
1704
quential effects of increased milk prices is to increase the subsidy on welfare milk. When we discussed the last increase in the retail price, the Joint Parliamentary Secretary made a virtue of this and called attention to the figures. That was only 14 days before the Chancellor of the Exchequer gave notice of this vicious cut in the subsidy on welfare milk.
Mr. Vosper: I am fully aware of that. It does not affect the argument, which is that if 50 per cent. subsidy was necessary in 1940 it is not necessary to have one of 80 per cent. today.
In addition, this subsidy is paid to rich and poor. It does not seem reasonable to provide a subsidy of 80 per cent. regardless of need. It seems sense to have an alternative policy of a 50 per cent. subsidy for welfare milk and to encourage the consumption of milk over and above that, by education and salesmanship through the National Milk Publicity Council. I would again refer hon. Members, as I did in a previous speech, to the Milk Marketing Board's Report on this very subject. It said:
"Family income and the price of milk are probably not the main barriers to increased sale. In many cases there are tradition and habit which can be overcome by persistent effort through education and propaganda."
A survey has shown that there are geographical differences in the consumption of milk. The obvious case is that of Battersea, with a consumption of 4·7 pints per head, and Leeds, where there is a consumption, in exactly the same income group, of only 3·7 per head.
I agree that people of larger incomes on the whole show a higher consumption of milk. Taking groups on an income between £9 and £15 a week and groups of an income under £9, that same survey, together with the National Food Survey, shows very little difference between them in the consumption of milk. Therefore, the policy of Her Majesty's Government is not to discourage consumption but to encourage the consumption of milk by education and propaganda and to provide a subsidy of 50 per cent., the original subsidy, for welfare milk.
I accept that there are two groups, to whom surprisingly little reference has been made in this debate, who can be affected by the Order. The first is the

1705
group with large families and the second the group on low incomes. I accept that large families, on the whole, consume less milk per head. I do not believe that the answer to assist them is by an indiscriminate subsidy for all families, whatever their income and number of children.
My hon. Friend the Member for Eastbourne (Sir C. 'Taylor) was quite right when he referred to the change in family allowances, a policy introduced on two occasions by the Government. The first was in 1952 from 5s. to 8s., a 60 per cent. increase, and the second last October, when the allowance for the third child and subsequent children was increased to 10s. That increase cost £10 million and affected nearly 2 million children. If we are really concerned with large families—and the argument for large families is a serious one upon this Order—the hon. Member for Sunderland, North would have made a better case for them, by proposing helping them in that way, than by spreading the assistance thinly through an indiscriminate subsidy of this nature.
As to those with the low incomes, I should place on record the fact that those receiving National Assistance automatically receive books of milk tokens entitling them to free supplies of welfare milk. Furthermore, those not on National Assistance but whose available resources do not exceed their needs on National Assistance standards— and I have been into this most carefully— can obtain free supplies for 13 weeks at a time. If the applicants have not sufficient margin to meet the whole charge they can receive the full payment for welfare milk.
I do not accept that any child under the age of 5 need be deprived, however low the income of its parents, of welfare milk as a result of this Order. I would remind hon. Members that it is not the only welfare food. Children under 5 receive orange juice at 5d., whereas the retail price is 1s. 4d. They have free supplies of cod liver oil and vitamin tablets. Children in day nurseries, nursery classes and nursery schools are receiving one-third of a pint of milk free, in addition to one pint at 50 per cent. of the price.
Mr. Ellis Smith: A good investment.
Mr. Vosper: I agree that it is an extremely good investment. I am placing on record that this is not the only welfare food available to this important group in the community.
The increase resulting from the Order is 1s. 5½d. per beneficiary per week, but the subsidy will be 2s. 4d.—and 2s. 0½d. during the flush period. The cost to the Exchequer in this year is about £25 million.
My conclusion is that to restore the subsidy to approximately the level it occupied in 1940 is not unreasonable when, during the intervening period, there has been a rise in purchasing power and a wider choice of foods has become available and there has been an increase in milk production and food consumed. I do not accept that there is need for any decline in welfare milk. The reduction of the subsidy is not inconsistent with the policy of the Minister of Agriculture. Fisheries and Food in encouraging the consumption of milk. Education, propaganda, a further rise in real incomes with assistance for large families and for those in need are preferable to a general subsidy.
For these reasons, I ask the House to support the Order and to reject the Prayer.
11.13 p.m.
Dr. Edith Summerskill: I desire to say only a few words. We have just listened to one of the most deplorable speeches ever to be made in this House by a Minister of Health. It might have been a speech delivered by a Chancellor of the Exchequer who was desperately trying to defend a monetary policy which was immoral.
The Minister of Health has completely ignored the fact that he has a function which, in my opinion, is more important than the function of any other Minister on the Front Bench. His obligation is to protect the health of the people. The right hon. Gentleman did not mention that once in his speech. He must know, his officials must have told him, this simple fact, that the reduction in the incidence of mortality and morbidity among children is closely related to the improvement in the feeding of children during the last ten or twenty years.
Mr. Vosper Mr. Vosper rose—
Dr. Summerskill: I said I should say only a few words. I shall not be long. [HON. MEMBERS: "The right hon. Lady ought to give way."] The Minister really cannot now try to amend anything that he has already said.
The function of the Minister of Health is not to defend the policies of the Chancellor of the Exchequer. His function is to do his best to improve the health of the people, but tonight we have heard that he is prepared to defend the policy which must inevitably reduce the protection afforded to the health of the children. We have already heard that the infant mortality rate in Manchester has increased for the first time for many years.
What the Minister has said tonight about infants' milk cannot be supported on medical grounds. He has said, or he
certainly implied, that every individual in the lower income groups will receive milk free of cost. That is what the Minister says, but if one presses the Chancellor of the Exchequer on the point it will be found that the only people to get such milk are those who come within the National Assistance grade. Does not the Minister know that there are hundreds of thousands who do not come within the scope of National Assistance benefit, and who will not be able to afford the price of milk as it is today?
We on this side of the House deplore the fact that the Minister of Health has identified himself with this reactionary policy.
Question put:—
The House divided: Ayes 171, Noes 212.

Division No. 98.]

AYES

[11.16 p.m.

Ainsley, J. W.

Gibson, C. W.

Morris, Percy (Swansea, W.)

Albu, A. H.

Gooch, E. G.

Mort, D. L.

Allaun, Frank (Salford, E.)

Gordon Walker, Rt. Hon. P. C.

Moss, R.

Allen, Scholefield (Crewe)

Greenwood, Anthony

Mulley, F. W.

Awbery, S. S.

Grey, C. F.

Neal, Harold (Bolsover)

Bacon, Miss Alice

Griffiths, Rt. Hon. James (Llanelly)

Noel-Baker, Rt. Hon. P. (Derby, S.)

Baird, J.

Hall, Rt. Hn. Glenvil (Colne Valley)

O'Brien, Sir Thomas

Bence, C. R. (Dunbartonshire, E.)

Hamilton, W. W.

Oliver, G. H.

Benn, Hn. Wedgwood (Bristol, S. E.)

Hannan, W.

Oram, A. E.

Benson, G.

Harrison, J. (Nottingham, N.)

Orbach, M.

Beswick, Frank

Hastings, S.

Oswald, T.

Blenkinsop, A.

Hayman, F. H.

Padley, W. E.

Blyton, W. R.

Healey, Denis

Paget, R. T.

Boardman, H.

Henderson, Rt. Hn. A. (Rwly Regis)

Paling, Rt. Hon. W. (Dearne Valley)

Bowden, H. W. (Leicester, S. W.)

Herbison, Miss M.

Palmer, A. M. F.

Bowles, F. G.

Holman, P.

Pargiter, G. A.

Boyd, T. C.

Holmes, Horace

Parker, J.

Braddock, Mrs. Elizabeth

Houghton, Douglas

Pearson, A.

Brown, Thomas (Ince)

Hubbard, T. F.

Peart, T. F.

Burton, Miss F. E.

Hughes, Emrys (S. Ayrshire)

Pentland, N.

Butler, Herbert (Hackney, C.)

Hunter, A. E.

Plummer, Sir Leslie

Carmichael, J.

Hynd, H. (Accrington)

Popplewell, E.

Castle, Mrs. B. A.

Hynd, J. B. (Attercliffe)

Price, J. T. (Westhoughton)

Champion, A. J.

Irvine, A. J. (Edge Hill)

Price, Philips (Gloucestershire, W.)

Chetwynd, G. R.

Irving, Sydney (Dartford)

Probert, A. R.

Clunie, J.

Isaacs, Rt. Hon. G. A.

Proctor, W. T.

Coldrick, W.

Jay, Rt. Hon. D. P. T.

Randall, H. E.

Collick, P. H. (Birkenhead)

Jeger, Mrs.Lena(Holbn & St. Pncs. S.)

Robens, Rt. Hon. A.

Collins, V. J.(Shoreditch & Finsbury)

Jones, Elwyn (W. Ham, S.)

Roberts, Albert (Normanton)

Corbet, Mrs. Freda

Jones, T. W. (Merioneth)

Roberts, Goronwy (Caernarvon)

Cove, W. G.

Kenyon, C.

Robinson, Kenneth (St. Pancras, N.)

Craddock, George (Bradford, S.)

King, Dr. H. M.

Rogers, George (Kensington, N.)

Cullen, Mrs. A.

Lawson, G. M.

Ross, William

Davies, Ernest (Enfield, E.)

Lee, Frederick (Newton)

Short, E. W.

Davies, Harold (Leek)

Lee, Miss Jennie (Cannock)

Skeffington, A. M.

Deer, G.

Lever, Leslie (Ardwick)

Slater, Mrs. H. (Stoke, N.)

Delargy, H. J.

Lindgren, G. S.

Slater, J. (Sedgefield)

Dodds, N. N.

Mabon, Dr. J. Dickson

Smith, Ellis (Stoke, S.)

Donnelly, D. L.

MacColl, J. E.

Soskice, Rt. Hon. Sir Frank

Dye, S.

MacDermott, Niall

Steele, T.

Ede, Rt. Hon. J. C.

McGhee, H. G.

Stewart, Michael (Fulham)

Edwards, Rt. Hon. Ness (Caerphilly)

McGovern, J.

Stonehouse, John

Edwards, Robert (Bilston)

McKay, John (Wallsend)

Stones, W. (Consett)

Edwards, W. J. (Stepney)

MacMillan, M. K. (Western Isles)

Strauss,Rt. Hon. George (Vauxhall)

Evans, Albert (Islington, S. W.)

MacPherson, Malcolm (Stirling)

Summerskill, Rt. Hon. E.

Fernyhough, E.

Mahon, Simon

Sylvester, G. O.

Fienburgh, W.

Mann, Mrs. Jean

Taylor, Bernard (Mansfield)

Finch, H. J.

Mason, Roy

Taylor, John (West Lothian)

Forman, J. C.

Mitchison, G. R.

Thomas, George (Cardiff)

Gaitskell, Rt. Hon. H. T. N.

Monslow, W.

Thomas, Iorwerth (Rhondda, W.)

George, Lady Megan Lloyd

Moody, A. S.

Thomson, George (Dundee, E.)

Thornton, E.

West, D. G.

Winterbottom, Richard

Timmons, J.

Wheeldon, W. E.

Woodburn, Rt. Hon. A.

Tomney, F.

White, Mrs. Eirene(E. Flint)

Woof, R. E.

Usborne, H. C.

White, Henry (Derbyshire, N.E.)

Yates, V. (Ladywood)

Warbey, W. N.

Willey, Frederick

Watkins, T. E.

Williams, David (Neath)

TELLERS FOR THE AYES:

Wells, William (Walsall, N.)

Willis, Eustace (Edinburgh, E.)

Mr. Simmons and Mr. Wilkins.

NOES

Agnew, Sir Peter

Gresham Cooke, R.

Neave, Airey

Aitken, W. T.

Gurden, Harold

Nicholls, Harmar

Alport, C. J. M.

Hall, John (Wycombe)

Nicholson, Godfrey (Farnham)

Amery, Julian (Preston, N.)

Harrison, A. B. C. (Maldon)

Nicolson, N. (B'n'm'th, E. & chr'ch)

Anstruther-Gray, Major Sir William

Harvey, Air Cdre. A. V. (Macclesfd)

Ormsby-Gore, Rt. Hon. W. D.

Arbuthnot, John

Harvie-Watt, Sir George

Orr-Ewing, Charles Ian (Hendon, N.)

Armstrong, C. W.

Head, Rt. Hon. A. H.

Osborne, C.

Ashton, H.

Heald, Rt. Hon. Sir Lionel

Page, R. G.

Atkins, H. E.

Heath, Rt. Hon. E. R. G.

Pannell, N. A. (Kirkdale)

Baldwin, A. E.

Hesketh, R. F.

Partridge, E.

Balniel, Lord

Hill, Rt. Hon. Charles (Luton)

Peyton, J. W. W.

Barber, Anthony

Hill, Mrs. E. (Wythenshawe)

Pickthorn, K. W. M.

Barlow, Sir John

Hill, John (S. Norfolk)

Pike, Miss Mervyn

Barter, John

Hinchingbrooke, Viscount

Pitman, I. J.

Baxter, Sir Beverley

Hirst, Geoffrey

Pitt, Miss E. M.

Bell, Philip (Bolton, E.)

Hobson, J. G. S. (Wrwck & Lmngtn)

Powell, J. Enoch

Bennett, Dr. Reginald

Holt, A. F.

Prior-Palmer, Brig. O. L.

Bevins, J. R. (Toxteth)

Hope, Lord John

Profumo, J. D.

Bidgood, J. C.

Hornby, R. P.

Raikes, Sir Victor

Biggs-Davison, J. A.

Hornsby-Smith, Miss M. P.

Ramsden, J. E.

Bishop, F. P.

Hughes Hallett, Vice-Admiral J.

Rawlinson, Peter

Body, R. F.

Hughes-Young, M. H. C.

Redmayne, M.

Bossom, Sir Alfred

Hulbert, Sir Norman

Ridsdale, J. E.

Braine, B. R.

Hurd, A. R.

Rippon, A. G. F.

Braithwaite, Sir Albert (Harrow, W.)

Hutchison, Sir Ian Clark (E'b'gh, W.)

Roberts, Sir Peter (Heeley)

Bromley-Davenport. Lt.-Col. W. H.

Grimond, J.

Robertson, Sir David

Brooman-White, R. C.

Grimston, Hon. John (St. Albans)

Roper, Sir Harold

Browne, J. Nixon (Craigton)

Grosvenor, Lt.-Col. R. G.

Ropner, Col. Sir Leonard

Bryan, P.

Hyde, Montgomery

Schofield, Lt.-Col. W.

Burden, F. F. A.

Hylton-Foster, Rt. Hon. Sir Harry

Sharples, R. C.

Channon, Sir Henry

Iremonger, T. L.

Shepherd, William

Chichester-Clark, R.

Irvine, Bryant Godman (Rye)

Simon, J. E. S. (Middlesbrough, W.)

Clarke, Brig. Terence (Portsmth, W.)

Jenkins, Robert (Dulwich)

Smithers, Peter (Winchester)

Conant, Maj. Sir Roger

Jennings, J. C. (Burton)

Soames, Christopher

Cooke, Robert

Johnson, Eric (Blackley)

Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)

Cooper, A. E.

Joseph, Sir Keith

Stevens, Geoffrey

Cooper-Key, E. M.

Kaberry, D.

Steward, Harold (Stockport, S.)

Cordeaux, Lt.-Col. J. K.

Keegan, D.

Steward, Sir William (Woolwich, W.)

Corfield, Capt. F. V.

Kerr, H. W.

Stoddart-Scott, Col. M.

Craddock, Beresford (Spelthorne)

Kirk, P. M.

Storey, S.

Crosthwaite-Eyre, Col. O. E.

Lambert, Hon. G.

Stuart, Rt. Hon. James (Moray)

Crouch, R. F.

Leavey, J. A.

Studholme, Sir Henry

Crowder, Petre (Ruislip—Northwood)

Legge-Bourke, Maj. E. A. H.

Sumner, W. D. M. (Orpington)

Currie, G. B. H.

Legh, Hon. Peter (Petersfield)

Taylor, Sir Charles (Eastbourne)

Davidson, Viscountess

Lindsay, Hon. James (Devon, N.)

Taylor, William (Bradford, N.)

Deedes, W. F.

Linstead, Sir H. N.

Teeling, W.

Digby, Simon Wingfield

Llewellyn, D. T.

Temple, John M.

Donaldson, Cmdr. C. E. McA.

Low, Rt. Hon. A. R. W.

Thomas, Leslie (Canterbury)

Doughty, C. J. A.

Lucas, P. B. (Brentford & Chiswick)

Thompson, Kenneth (Walton)

Drayson, G. B.

Lucas-Tooth, Sir Hugh

Thornton-Kemsley, C. N.

du Cann, E. D. L.

Macdonald, Sir Peter

Tiley, A. (Bradford, W.)

Duncan, Capt. J. A. L.

Mackeson, Brig. Sir Harry

Tilney, John (Wavertree)

Duthie, W. S.

McKibhin, A. J.

Turner, H. F. L.

Eden, J. B. (Bournemouth, West)

Mackie, J. H. (Galloway)

Turton, Rt. Hon. R. H.

Elliot, Rt. Hon. W. E.

Maclean, Fitzroy (Lancaster)

Tweedsmuir, Lady

Elliott, R. W.

McLean, Nell (Inverness)

Vane, W. M. F.

Errington, Sir Eric

Macpherson, Niall (Dumfries)

Vaughan Morgan, J. K.

Farey-Jones, F. W.

Maddan, Martin

Vosper, Rt. Hon. D. F.

Fell, A.

Maitland, Cdr. J. F. W. (Horncastle)

Wakefield, Edward (Derbyshire W.)

Finlay, Graeme

Maitland, Hon. Patrick (Lanark)

Ward, Rt. Hon. G. R. (Worcester)

Fisher, Nigel

Markham, Major Sir Frank

Ward, Dame Irene (Tynemouth)

Fletcher-Cooke, C.

Marlowe, A. A. H.

Watkinson, Rt. Hon. Harold

Garner-Evans, E. H.

Mathew, R.

Williams, Paul (Sunderland, S.)

George, J. C. (Pollok)

Maude, Angus

Williams, R. Dudley (Exeter)

Gibson-Watt, D.

Mawby, R. L.

Wilson, Geoffrey (Truro)

Godber, J. B.

Maydon, Lt.-Comdr. S. L. C.

Wood, Hon. R.

Goodhart, Philip

Medlicott, Sir Frank

Woollam, John Victor

Gower, H. R.

Milligan, Rt. Hon. W. R.

Yates, William (The Wrekin)

Graham, Sir Fergus

Molson, Rt. Hon. Hugh

Grant, W. (Woodside)

Morrison, John (Salisbury)

TELLERS FOR THE NOES:

Grant-Ferris, Wg Cdr. R. (Nantwich)

Nabarro, G. D. N.

Mr. Wills and Colonel J. H. Harrison

Green, A.

Nairn, D. L. S.

KENYA (AFRICAN EDUCATION)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bryan.]
11.25 p.m.
Mr. Frederick Mulley: I desire to raise some questions concerning African education in Kenya. I should like to begin by thanking the Under-Secretary of State for attending at this late hour to reply to the debate. It may be that in the days to come the Adjournment Motion will often be moved at about this time.
I had the privilege of visiting Kenya in January as a Member of the Commonwealth Parliamentary Association delegation, and the points which I want to raise arise from that visit. I would make it clear that I do not regard education as the only problem in Kenya; nor do I regard African education as the only educational problem, but it seems to me that African education is one of the highest priorities, if not the first priority, and it may be that we shall have a general debate upon Kenya or East Africa in the near future, when the other matters can be discussed.
Following the Beecher Report the Government of Kenya's policy has been to provide eight years' education, from 7 to 15, for every African child. This is a policy with which no one would quarrel. But we found upon inquiry that if Kenya has to do this from its own foreseeable resources it will not be until 1985 that it can be attained.
Some idea of the problem can be gauged from the estimated cost, which would be at the rate of £22 million per year. Since the total budget of Kenya at present is a little over £30 million this project obviously cannot be carried through from Kenya's own finances. Anyway, it would be impracticable to attempt to provide universal education at the moment, because of the shortage of teacher and other facilities.
In the matter of teachers, I understand that this year it is hoped to train 1,800 in Kenya, against the average rate of 1,200 over the preceding few years. We were told that the minimum need for this programme, is 2,900 teachers, and one
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of the most urgent needs is £500,000 to provide additional teacher training facilities. In the modest three-year plan that the Government of Kenya have set in the field of African education they need about £2½ million in addition to the £500,000 for teacher training, over three years. The most that they are likely to be able to provide from their own resources is about one-third of this figure, because we must remember that there is other expenditure of high priority, such as that for agriculture, industry and health, in addition to the winding-up of the emergency, which is still very costly.
In Kenya, as in many other parts of Africa, the original education was provided by missions, and these missions still provide a very large amount of such education as there is. But it is provided on the basis of a 100 per cent. Government grant for recurrent expenditure, and it seems to me that in the future the provision of education must increasingly be a wholly Governmental responsibility. In passing, although I do not make much point of this, I think that it is a pity that the Government should today be finding so much money for mission schools over which they have no control.
Another encouraging feature was the great interest in education shown by the African district councils—indeed, the Government need to be careful here, because the district councils' enthusiasm is so great that they may overtax themselves in this direction. Perhaps the clearest impression one brought back was the overwhelming desire on the part of all communities and all Africans for educational opportunities.
All the African children pay school fees. Although, in our terms, the annual fees of 45s. represents not very much, it represents a whole month's wages in rural Kenya. In many cases, men work in the towns or on the European farms only in order to get the school fees. In Nairobi, where, I believe, a pilot scheme of universal African education is to be introduced shortly, the Africans, in addition to paying the fees have also agreed to an extra poll tax to make the necessary money available. Not only do they want education, but are prepared to pay for it, but have not the resources to pay anything like the full cost.
I visited, also, the approved school at Wamumu, which was set up, as the

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Minister will know, to deal with Mau-Mau delinquent boys. This school, which has a technical basis, is run, one might almost say, on a kind of public school design, and has been so popular that some African youths are committing offences simply to try to get into it. The demand for education has been enormous, particularly among the boys.
Further encouragement has been the growth in recent years in the number of girls attending, and wanting to attend schools. This is particularly important, because in many other fields—like health —progress can be made only if the more educated Africans are available to take responsibility. For example, in Kisu there were in one area over 600,000 Africans, but only one trained midwife. They could not get more because of a lack of educated girls to come forward to train. It is not only a question of proper education, but of the education necessary to extend in other directions, which the Government rightly want.
In addition to this general requirement of eight years at school there is need to extend technical and secondary school education. As against 450,000 African children in primary and intermediate schools, there were only 2,500 in secondary schools, and 2,300 in teacher training colleges. The most disappointing thing is that the majority of those going to school do so for only four years. There seems to be some kind of 11-plus arrangement, but the object of the examination is to decide whether or not they leave after being there for four years, not whether they should go to this school or that.
It may well be that a child may be worse off with four years' education than with none at all. That period is just sufficient to get away from the basic, primal, tribal discipline but not enough to put any constructive alternative in the child's mind. With this enormous problem, something other than the ordinary educational programme will have to be devised; something on the lines that have been successfully tried in West Africa. Kenya is not ready for that kind of experiment, although there is scope and opportunity for more adult education. It is an enormous problem. I hope that 1985 will not be a significant date in Kenya, and that we shall hear from the Under-Secretary that the Government will
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find the minimum of £3 million necessary for the Government of Kenya's three-year plan.
My other point is the question of a multi-racial secondary school in Kenya. I know that this is an explosive topic. I do not suggest that all or even many of the schools should be on a multi-racial basis. The priority for African education is to provide the eight-year school programme of which I have been talking, but I believe there is also an urgent need for one voluntary multi-racial school. To succeed, it must have a very high academic standard, so that there will be no sacrifice of educational attainment by European and Asian parents. I would like to see such a school established and become the best school in Kenya. There is already a primary school on a voluntary basis that has made good progress. At the other end of the scale is the Royal Technical College, on a multi-racial basis. I was happy to note that hostels are run on a multi-racial basis, very satisfactorily, I understand.
I make this plea not only on purely educational grounds but because I believe that such a school would contribute substantially to better race relations, which have improved a good deal in Kenya in the last two or three years, although no one pretends that there is not a lot to be done. The cost of setting up this voluntary school as an experiment would not be considerable, after the millions of pounds that we have been discussing earlier today. Because of the controversy that this subject arouses in Kenya the British Government should take the bold step of earmarking money for this purpose. I was already of the opinion that there should be a multiracial school before I came back from Kenya, but my opinion that it would be worth while was fortified by a conversation I had with coloured students from the West Indies recently. They said that the multi-racial schools in the West Indies were the biggest factor in developing the multi-racial society that has been established in the West Indies. Such a school in Kenya would be worth a good deal.
When one makes a special case for a special Colony the question is bound to be raised: what about the other Colonies? Such moneys as we are able to provide for the Colonial Empire

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must, of course, be spread among competing claims, but I think that there is a special case for Kenya because of its special problems. It is, I think, the only remaining Colony in which there is a large European population owning land and regarding themselves as Kenyans. The whole future of the Colony depends on the willingness and ability not only of people in Kenya, but of the British Government, to establish a multi-racial society.
Time is not on our side in this matter. I believe we have a good chance—I put it no higher—of achieving the kind of society in Kenya which will permit Europeans, Asians and Africans to work together. I believe that constructive steps are needed for African education and the establishment of a multi-racial school to contribute to solving the problem we all desire to solve.
11.41 p.m.
Mrs. Eirene White: I want to emphasise what my hon. Friend the Member for Sheffield, Park (Mr. Mulley) has said, because I was on the delegation which went to Kenya. I wish to stress the fact that all hon. Members from both sides of the House who went on that delegation were very much impressed by the really urgent necessity for more assistance to be given to Kenya in this matter of education.
The two subjects on which greater assistance are needed are agriculture and the one with which my hon. Friend has been dealing, education. I hope very much that in his reply the Minister will not merely give a recital of facts, interesting as they might be, but tell us that the Government may be able to do rather more than they have felt able to do in recent times to assist education. The emergency has taken a great deal of money and agriculture has had fairly generous grants, but we feel that education needs more than it has had up to now.
I feel that nothing could be of greater benefit and a better investment than support for education at the primary stage, the multi-racial school—I strongly support my hon. Friend on that—and further education for women and girls.
11.42 p.m.
The Under-Secretary of State for the Colonies (Mr. John Profumo): I should like to start by saying how grateful I am
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to the hon. Member for Sheffield, Park (Mr. Mulley) and the hon. Lady the Member for Flint, East (Mrs. White) for their speeches tonight.
I think that the last time this subject was brought before the House was in 1950, by the hon. Member for Rugby (Mr. J. Johnson). This occasion gives me an opportunity of saying something about this very important matter. I should like also to take the opportunity of saying, on behalf of my right hon. Friend and myself, how grateful we are to the hon. Members who were members of the delegation for the extremely useful report that they produced. It interested us very much, not least the part which pertains to the subject we are discussing.
The history of the growth of African education in Kenya is a most remarkable one. We have not time to go over the whole background. I think that hon. Members know it as well as I do. I should like to take my starting point from the Beecher Report, which has been referred to tonight. The plan which resulted from that Report, with some slight changes, has been accepted as the programme of the Kenya Government ever since. One of its most important virtues is that it is an integrated whole which ensures that intermediate and secondary schools can be provided for at least a reasonable proportion of those attending primary schools and, also, that trained teachers will be available to carry out the programmes.
Perhaps I can best explain the progress which has been made so far in reaching the Beecher targets by giving the House some simple facts and figures. In 1946, there were 326 Africans at secondary schools of whom 16 passed the School Certificate. In 1955, there were 3,060 at secondary schools, of whom 233 passed the School Certificate. In 1946, there were 738 primary and intermediate teachers in training. In 1956, the number was 2,951 and the 42 centres where they were training had a capacity of 3,175 places. In 1946, there were 4,994 teachers at work, of whom only 49 had been graduates. In 1955, the total was 9,431, of whom 162 were trained graduates. In 1946, there were in all 2,291 schools and in 1955 there were 3,488. In 1946, 208,580 Africans were at school, and in 1956 there were 439,646.

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That describes how progress has been made towards—and, indeed, in some cases surpassing—the Beecher targets, which were, and remain, the general aim of the Kenya Government. It is the Kenya Government's policy not only to fulfil this plan, but also to move as rapidly as means permit towards compulsory education for children whose parents are normally resident in urban areas.
In those urban areas, the problem has already been met by extending the present four-year primary course by two years to cater for those who fail to gain admission to an intermediate school; and, by 1960, this course should be available to the great majority of children in the urban areas. After that, the system will be expanded to eight years as circumstances permit—that is, the full primary-cum-intermediate course—while intermediate education in rural areas is further developed at the same time.
What are the limitations on the development of education as we see it at present? In Kenya, the limitations are financial and not physical. There is, of course, a great shortage of capital to finance ail desirable projects, even those to which hon. Members have referred, outside the subject which we are discussing tonight; but this is just as true of any other part of the Commonwealth, including the United Kingdom.
The essential consideration, surely, is that Kenya should not embark on a programme of development which is beyond her capacity to maintain. These matters are kept under constant review, as, I think, hon. Members know, and the present plans for the Kenya Government represent the full extent of their capacity to execute and maintain development work.
Mrs. White: We were told most emphatically in Kenya that if the Kenya Government could have greater help with initial capital, they could manage the maintenance.
Mr. Profumo: I was coming to that.
It would only be possible to do more if the Kenya Government were to accept a permanent grant from Her Majesty's Government. In fact, of course, this country does make grants and loans for capital purposes to all Colonial Territories, including Kenya, through the
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Colonial Development and Welfare Act, but such grants are made only for purposes which it is known in advance a territory will be able to support permanently. Kenya has been allotted, I think, a fair share of the money which is at my right hon. Friend's disposal under that Act, but that share has been fully taken into account when the new overall plan was developed.
The House will appreciate that it would not be possible for Her Majesty's Government to finance educational development without giving to Kenya an advantage which would be denied to all other territories which do not receive a grant in aid. Apart from this, extra expenditure on education of the size suggested by the hon. Member—£3 million—would, I am advised, cause the Kenya Government to bear a permanent burden of recurrent expenditure which at present will be beyond their capacity to sustain.
The second limiting factor in the expansion of education is the need to place the greatest emphasis, within the development plan as a whole, on schemes which will generate enough wealth to carry the recurrent cost of expanding social services. This is especially important in a young country.
The third limiting factor in developing education, as the hon. Member pointed out, is the need for teachers, and especially trained teachers. Teacher training figures largely in the Beecher recommendations, which envisage by 1960 centres training 2,500 teachers in a two-year course—that is, turning out about 1,250 teachers every year. Unfortunately, however, this did not allow for the heavy wastage rates which the profession now shows, and it does mean that the Beecher programme has had to be expanded.
Apart from revising and unifying teachers' conditions, therefore, the Kenya Government have increased teacher-training provision. Although the Beecher target for teachers in training has already been surpassed—there were 2,951 in training last year—the 1957–60 plan will add a further 40 classes and by 1960 there will be 4,150 teacher-training places, turning out over 2,000 trained teachers every year. This will be enough to ensure that over 10,000 trained teachers—more than the Beecher

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recommendations—are at work by 1960, even allowing for the wastage to which I have referred.
It has been suggested by some people that even within the reduced capital plan adopted by the Kenya Government, African education has far too low an allocation. I do not think that that is true. Within the current plan, African education accounts for 3·46 per cent. of all expenditure, while education as a whole accounts for 10·46 per cent. In the new plan African education will have 4·03 per cent. while education as a whole is reduced to 9·47 per cent., and this means that the provision for the other races is reduced.
Quite apart from this, however, there is the first allocation ever made separately to technical and trade education. If this is taken into account the expenditure on the development of African education is rising from 3·46 per cent. to 4·7 per cent. Those are percentages of the territory's entire development plan.
What do we hope to achieve in the next few years? If I may summarise this shortly, we hope to achieve two new intermediate boarding schools; 65 new secondary classes, including two new schools; 120 new primary and intermediate classes, 40 new teacher-training classes and two new trade schools.
The hon. Member mentioned multiracial education, and I should like to say a word on that. It is the policy of the Kenya Government not to create secondary multi-racial schools at present. Because of the differing backgrounds, and particularly the language problem created by the existence of the three major communities, education has developed along racial lines. The Hospital Hill School is an experiment the results of which are not yet fully apparent.
Experience of integration in other parts of the world shows that much more is involved than just common schooling and that it is most likely to be successful where the social pattern in each com-
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munity has first evolved into the same mould, otherwise definite harm may be done to racial and cultural relations and to the children themselves. I should explain that there is no bar whatever to the private creation of inter-racial secondary schools for those children whose parents wish them to be educated there.
So far as mission schools are concerned, it is not true to say that there is no control over those. All schools are liable to full inspection by the Government, and the Government have the obligation, which they carry out, to see that the money given by way of grant in aid is properly spent. I hope that I have covered points put to me by hon. Members. I should have liked to have dilated, had there been time, on the special problem in Nairobi. That is being tackled, although there are special problems there. We hope, however, that within the next few months a really practical scheme will have been worked out.
I may not have been so forthcoming as hon. Members would have wished, but I hope that I have at least been able to indicate the importance which my right hon. Friend attaches to this matter, and how carefully he is studying it, and what the Kenya Government are doing to tackle the problems with which they are faced. I assure hon. Members that this matter of African education will continue to receive the most careful consideration not only by the Government of Kenya, but by my right hon. Friend within the limits of the financial restrictions which must, of course, have our attention, and especially in relation to what was said by the hon. Lady the Member for Flint, East.
I hope that what I have been able to say does show how carefully we are considering this matter.
Question put and agreed to.
Adjourned accordingly at six minutes to Twelve o'clock.