DEBATE ON THE ADDRESS

HC Deb 03 November 1958 vol 594 cc614-736

[FIFTH DAY]

Order read for resuming adjourned debate on Question [28th October]:

That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

Question again proposed.

3.37 p.m.

Mr. Harold Wilson (Huyton)

I beg to move, at the end of the Question, to add: but noting with concern that the policies of Your Majesty's Government have led to a fall in industrial production, a continuing increase in unemployment and a failure to make full use of our industrial capacity, humbly regrets the omission from the Gracious Speech of any measures directed towards the expansion of production and employment while maintaining stable prices. I should like, first, to present to the House these facts as a background to the debate and this Amendment: unemployment in this country today is around the half-million mark, excluding a great deal of short-time working and concealed unemployment of one kind or another, such as the guaranteed week and the fact that many firms are still holding on to labour which they cannot fully use; unemployment is 200,000 more than it was a year ago and has increased in real terms every month this year; unfilled vacancies at the employment exchanges have fallen by 100,000, with the result that there are now three unemployed men for every unfilled job; industrial production has fallen this autumn to a figure 4 per cent, below even the stagnant level of a year ago and it stands today at a figure of only 4 per cent. above 1954—four points in four years; steel production has been running as much as 20 per cent, below last year; coal is being stacked on the ground at an enormous rate because the coal requirements of our sluggish industrial machine are down by 8 million tons this year compared with last year—and I ask the House how many miners are working today who would be swelling the ranks of the unemployed if we had the private coal owners back and if this stacking of coal on the ground were not going on; in manufacturing industry 79 per cent. of the firms covered say they are working below capacity; the Board of Trade's estimates for capital investment next year show a prospective fall of 16 per cent. in investment by manufacturing industries, 25 per cent. down in building work and 10 per cent. down in plant, in machinery and in vehicles, and already the building industry, machine tool and other capital equipment-producing industries are feeling the draught.

In the Budget debate last April I described the Chancellor's economic policy, including his Budget, as an assignment with deflation, and I think that the figures which I have just given justify that warning. I must remind the House that we have been warning against the development of this situation for several years past. Even when the Lord Privy Seal was Chancellor of the Exchequer, my right hon. Friend the Leader of the Opposition warned him that the premature dash for sterling convertibility would lead to a situation in which the £ could be preserved only by internal deflation and unemployment. I must repeat those same warnings to those who today, on the basis of a very short-run windfall gain in our balance of payments position, are talking of a further move towards full convertibility—including, of course, the Chancellor himself.

Also, year after year, we warned that a Government which placed undue reliance —over-reliance—on the monetary weapon as its main instrument in fighting inflation, would one day be driven to extremes of policy that would bring deflation and unemployment in their train. That situation was reached, a year ago, with the crisis of September, 1957. We warned the then Chancellor in the clearest terms that the policies he was pursuing would lead to unemployment. We told him, a year ago, that the problem was no longer one of inflation, but that not only in this country but in the world economy as a whole it was deflation that we were facing.

In the economic debate that followed the 7 per cent. crisis, I remember warning the House that it was commodity prices and not Wall Street or the London Stock Market that we should all be watching. I then forecast three developments, and I remind the House of this only to show the dangers that we are facing today; particularly the dangers resulting from Ministerial complacency on the situation.

I said: The first effect will be one which appears favourable to us, an improvement in Britain's terms of trade, import prices will fall and export prices will be maintained, or rise. This, in fact, is already happening and it will generate more Government complacency. That forecast, I think, has already been justified. We have had the improvement in Britain's terms of trade, resulting from the fall in import prices, and we have certainly had the Ministerial complacency, pressed down and running over.

I went on to say that the second stage would be that the dollar earnings of the other sterling countries would suffer. That has happened. For the third stage, I warned the House that as a result of the fall in commodity prices our biggest difficulty would be in selling our exports abroad. As I said then: That has happened in every internal depression for a century and a half. Unemployment in this country always began in the export trades and the export trades lost their markets because of monetary depression in the primary producing countries."—[OFFICIAL REPORT, 29th October, 1958; Vol. 575. c. 68.] That is certainly happening at the present time. Exports which, in the first six months of this year, were only 2 per cent. down on last year, have, in the last three months, been 7 per cent. down on last year—and are still falling.

Our criticism of the Government, against this background, is that in a rapidly changing world they failed to take action in time. Just as in foreign affairs they have carried over the sterile and negative attitude of the cold war into a world of opportunity, so, in a world and a nation calling for economic expansion, they have continued the negative and restrictive policies to fight an inflationary situation that has long passed. In every economic debate—in January, in the Budget debate, in the various stages of the Finance Bill—we warned them that they were missing the tide.

I want for a moment to deal with the Tory legend, because we have heard a good deal of this Tory economic legend in the last few weeks; and not only at Blackpool, and we shall no doubt hear more of it in this debate. This is the legend. The story that we are first asked to believe is that this Government came to power only in January, 1957, with a new and immaculate Prime Minister—Minerva sprung ready-armed from the forehead of Jupiter—and this Government, of course, inherited a dreadful situation. They never clearly said from whom they had inherited it, of course. There was no reference in the legend to Suez, for example, or to the Lord Privy Seal's policies, or to Tory freedom, or, indeed, to the disastrous failures of the Prime Minister himself when he was at the Treasury.

The implication is, somehow, that in January, 1957, more than five years after the Tories took power, they inherited a catastrophic situation from the outgoing Socialists. Indeed, such is the Prime Minister's obsession with 1951 that the years from 1951 to 1957 are to him rather like the lost years of a person suffering from amnesia.

Then, carefully forgetting the 1957 Budget, the hand-out to the Surtax payers, the decontrol, and the Kuwait Gap, and so on—the legend takes us on to the September crisis. Then it was the strong man acted; not afraid to be unpopular, to lose votes, even by-elections, confident that the country in time would understand. Actually, in the legend there is now very little reference to the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) who took the action, because his position in the Tory legend is rather like that of the late Mr. Beria in the Soviet Encyclopaedia. He is the one we do not mention. They have turned Peter's face to the wall.

The legend goes on that this firm action brought immediate results—improvement in the gold reserves, the balance of payment surplus, the price plateau, with the result that we can now ease up, expand and be joyful, and the credit squeeze, hire-purchase controls, the investment restrictions can now all go and every one can live happily ever after—or, at least, until after the next General Election.

That is the legend. We do not, of course, mind the Conservative Party deceiving the electorate—that has been their stock in trade for a century and more. The danger for the country comes when they start to believe in these delusions themselves—then one reaches the point where one has to call in the psychiatrist. Take, for example, the President of the Board of Trade on the removal, last Monday, of hire-purchase restrictions. This is what he said: We can give you this extra bit of freedom"— We—and I emphasise "we"—can give "you" this extra bit of freedom—the cheek of it! because the credit squeeze and the other stern measures we took a year ago have worked. Other Ministers suffer from their hallucinations. The worst victim of all is the noble Lord, Lord Hailsham. This is the kind of thing that he believes. I should like to quote from a television interview that he gave at Blackpool just before the Tory Conference. He then said: The whole ethos of our conference is based on responsible discussion and sensitivity to other people's opinions. The noble Lord went on: In our conference it is very often the minorities that count a great deal. Lord Hailsham concluded: If you've ever been to a Quaker meeting you'd find the sort of atmosphere prevailing, of sympathy, understanding and responsible discussion. Of course, if the Government will believe that, no wonder they believe the economic legend.

Let us turn now from the legend to the reality. The crisis of 1957 was a speculators' crisis, caused by the decontrol over movements of speculative capital and, in part, a flight of British-owned capital to the North American stock market. The crisis ended, as we said at the time, as soon as it became clear that the International Monetary Fund meetings, in Washington, would pass without either devaluation of sterling or the upward revaluation of the Deutschmark; the 7 per cent. and the capital investment cuts in the nationalised industries, the intensified cuts in local authorities, the spiteful little manoeuvrings with the Health Service employees—all these cuts were as irrelevant to the problem as the Cohen Council Reports are to the twentieth century.

In fact, September, 1957—and this was clear from the Washington pronouncements of the then Chancellor, the one we do not mention—marked the date when the Government finally decided to sacrifice full employment to the fight against an inflation which had already passed. That is very clear from what the then Chancellor said.

What has happened since? The gold reserves have risen we welcome that. We predicted that. [Laughter.] This is on the record. It is in the OFFICIAL REPORT of 29th October, 1957. I said: This is bound to happen…The further the tide goes out—and it went out a very long way in August and September—the higher it usually comes in."—[OFFICIAL REPORT, 29th October, 1957; Vol. 575, c. 65.] The reserves are, in fact, more comfortable today.

I say to the Prime Minister: go on like this and they will be as high as they were in 1951, although, of course, if one excludes the Suez borrowings, last year's borrowings, help from the Monetary Fund, Adenauer aid and all the rest of it, they do, in fact, stand lower today than at the time of devaluation in 1949, only four years after the end of the war.

What about the balance of payments surplus? Do Ministers really take credit for this year's balance of payments surplus? I know that back benchers do, but Ministers, I think, probably know the facts. The Financial Times, not a Socialist newspaper, said: It is an achievement, of course, which has been made possible only by sharp drop in commodity prices. It pointed out that this had caused a fall in imports of £191 million while exports had fallen by only £29 million. Comparing the first half of this year with the first half of last year, the improvement was £180 million, and the improvement in import prices was £190 million.

If it were not for the Prime Minister's "little bit of bloomin' luck"—£190 million worth of it—our balance of payments in the first half of this year would have been no better than it was in the first half of 1957, when things were pretty bad because of the post-Suez imports.

On prices, on which Ministers preen themselves these days, the Treasury Bulletin, issued a month ago, pointed out that in the first half of 1958 compared with the first half of 1957, import prices fell by over 10 per cent. and retail prices rose by over 4 per cent. So it is not a very creditable record.

Speaking generally, if one were being charitable, as I usually like to be, one would say that Ministers have been complacent about the favourable effects of a shift in the world economic position and have been far too slow to alter direction to avoid its unfavourable effects. But, in fact, the present situation has been created not so much by incompetence as by the deliberate, wrongly-conceived restrictionist policies of a year ago and earlier. To claim credit for a belated reversal of those measures, as the President of the Board of Trade did last week, when even Ministers can now see the harm they are doing, is pretty cool, even for them.

Very often during the imposition of these restrictive measures we have likened their economic policies to the medical practices of an eighteenth century quack whose only remedy for all kinds of complaints was a prolonged course of bloodletting. The Government have now carried the bloodletting so far that they have gravely weakened the patient, and now they have claimed credit for the fact that they have had to administer a blood transfusion.

Let me now tell the House what they should have done and what, I can honestly say, at each stage in this rapidly developing situation we have said that they should do. It is not being wise after the event. We have said it at each stage in the debates over the past year. In fact, it was clear eighteen months ago that the investment boom would shortly come to an end and the newly installed capacity was not being used.

In the Budget debate, in 1957, we suggested to the then Chancellor that he should announce that he would restore investment allowances in the following Budget, in April, 1958. We felt that if he had made that announcement it would have given industrialists time and the assurance necessary to enable them to plan their investment programmes ahead, so that they would be able to take up the slack that was likely to develop in 1958–59. But the then Chancellor, in April, 1957, refused to accept our proposal. Even more surprisingly, this year's Chancellor in this year's Budget refused to restore investment allowances, and actually voted down an Amendment to the Finance Bill for the purpose of restoring investment allowances, on the ground that the economy was not strong enough to stand it.

Once it was clear that demand inflation was out of the system, we pressed for a full expansion of industrial production—not haphazard or uncontrolled, not a Lord Privy Seal type of "boom and bust," but a purposive expansion weighted heavily in favour of increased investment. It will be within the recollection of the House that that was the theme of all our speeches last autumn, last winter and in the spring. Indeed, I think I can claim that we said that precisely because of the improvement in the balance of payments resulting from the favourable turn in import prices, this year 1958 was the year for the great surge forward.

As we said at the time of the Budget, there was no danger of an import crisis if we proceeded to increase production, partly because of the payments surplus and partly because the steel and coal industries as well as other marginal importers were working below capacity. But while we went on hammering these points at the Government month after month, the Chancellor dillied and dallied to the point now where investment has sagged so much that he can avoid a slump now only by stimulating con- sumption—indeed, by promoting a spending spree.

We maintain that action taken earlier could have maintained full employment by means of increased investment which is what the country needs. But now, because he missed that opportunity, he has to gamble on a consumption boom. It is widely admitted now that he cannot even get an increase in investment from manufacturing industries without an increase in consumption first. Industrialists will not put in new machines when their existing ones, including the so far under-used installations of the so-called Butler boom, are still working below capacity.

As a result of this delay, the Government are now giving the wrong twist to the economy, just as the Lord Privy Seal did a few years ago. We all remember that after years of failure to stimulate investment, the Lord Privy Seal finally brought about a boom in investment but so much of it was the wrong kind of investment. It was plant and machinery to produce consumption goods and not to strengthen our investment industries.

If the House compares the direction of the Butler boom with that of recent German development, we find not only that year by year German industrial investment has been higher than ours, but a much higher proportion of that has been in the basic and heavy sectors of the economy, industries themselves producing for investment and for exports, and a much smaller proportion than ours in building up the consumer goods industries. If we are to maintain our place in the world we need to stimulate not consumption but investment.

We all said that, on both sides of the House, in the debate on the Free Trade Area, two years ago. I do not know whether there is to be a Free Trade Area or not. Black smoke is still issuing from the proceedings of the Maudling Committee—thicker than ever—but, Free Trade Area or no Free Trade Area, we have to face the inexorable and menacing rise in industrial production in Russia and China, as well as in Germany and Japan.

In this document "Onwards In Freedom", the Prime Minister repeats his great thought. He says: First and foremost, we believe in the continuing greatness of Britain, and he talks of the part our people must play in what he calls "the new industrial revolution, scarcely less exciting than the first one"—exciting for some people, I suppose. We do not achieve industrial greatness with a stagnating economy. We do not achieve industrial greatness with a frothy consumer goods boom. When the Government took over in 1951—not 1957—we were the second industrial Power in the world. Now, we are about the fourth. We have been passed by Russia and Germany, and Japan and China are putting on the pace, while we are drifting about in the shallows of an industrial depression and an induced consumer goods spree.

The plain fact is that the Government have let deflation go too far over the past year, and, as we have warned them, while it is one thing to stop a boom, it is another to stop a slump. Many months ago, we reminded the Chancellor of the saying which is used in America that one can pull a piece of string, but not push it. We may, perhaps, for a period of time, get a temporary increase in production by our induced consumption boom, but we must ask the Government, in view of the speeches we have had from them, what it means in terms of the continuation of the inflationary danger, of increased imports, of the home market's pull on goods that ought to go for export, and of our competitive power.

For three years, until a few weeks ago, the Government did not even dare to think of industrial expansion, because of their fears of inflation. Now, they have suddenly taken the lid off. I hope that we shall hear nothing from the Chancellor this afternoon about the fight against inflation. What could be more inflationary than the banks falling over themselves with their personal loans schemes, unprecedented even in the years of the prewar slump? Or hire purchase? It is really no good preaching the inflation sermon any more. There is nothing more inflationary, after all, than buying this year's goods out of next year's income.

Of course, these panic measures are completely inconsistent with the Government's determination to cling to other measures which were introduced in the past in the fight against inflation. They still have not dared to reintroduce investment allowances, which were scrapped by the present Prime Minister. We must, apparently, go to any lengths to increase consumption, even to the point, as I have said, of buying this year's goods out of next year's income, and yet maintain the wages freeze. Last Tuesday, the Prime Minister talked of the increase in personal savings. Does he want the increased personal savings to continue? Does he want consumers to go on increasing their savings, or to save less and consume more? Will he tell us how a hire-purchase boom helps increased national savings? These are the things which the Government should get clear in their minds and should tell us about.

What about investment in the public sector? When the private sector got out of hand a few years ago under the Lord Privy Seal's boom, the Government tried to redress the situation, not by controlling the private sector, but by cutting the nationalised industries and the local authorities. A year ago, the then Chan cellor made further cuts in the investment programmes of the nationalised industries, and, with their typical bias against public industry, it is these cuts which are the last to be removed. We scrap the whole credit squeeze, but still leave control on the nationalised industries.

I hope that the Chancellor will tell us this afternoon, since he is taking the lid off everything else, that the investment programmes of the publicly-owned industries will be free from control. They ought to have come first, not last, because these are essential investment programmes. Then we would ask about the Post Office investment programme, and I hope that the Chancellor will refer to it, because it was cut last year and is still suffering.

Now I must ask the Government what about the local authorities? They have been the whipping boys of four successive Tory Chancellors—three of them still sitting on the Front Bench opposite. On top of all the cuts of 1956–57, and they were very severe as far as the local authorities are concerned, we have been reading right up to the present time of further cuts by Ministers of the local authorities' capital programmes. In July, for example, the Minister of Education cut the L.C.C. educational building programme to nearly one-third, including a cut from £900,000 to £265,000 in a major scheme for improving the teaching of science and mathematics. How does that square with the Prime Minister's great speeches? I hear similar reports from Lancashire.

I hear on the radio of a statement that we shall have slashing cuts in the county roads programme in the South-West—cuts which are severe even by comparison with last year. How do the Government reconcile these cuts in essential local services with this "free-for-all" for the banks in the hire-purchase business? Again, we must ask, if the Government are to make substantial allowances to the building societies, whether they are to include the local authorities in that scheme. Are there to be the same facilities provided on equal terms for the local authorities, or is this purely restricted to private enterprise? I hope that we shall be told something about that.

Let us take the question of the social services, and I put this direct question to test the sincerity of that self-styled expansionist, the Prime Minister. Two years ago, when he was playing his "Mac the Knife" rôle, he introduced as part of his so-called anti-inflationary policy a series of mean and vicious cuts in the standard of life of those least able to make sacrifices. There were not only the food subsidies, but the meanest and most vicious of all his economies was the individual prescriptions charge on the old-age pensioners and the chronic sick. We were told that that measure was essential for fighting inflation.

Now, the fight is off. The real enemy is identified as a lack, not a surplus, of spending power. In these circumstances, will the Government now remove the imposition introduced by the Prime Minister, because unless the right hon. Gentleman really believes in it as a means of disciplining the sick against taking too many prescriptions, or disciplining the doctors, unless he believes in it on these grounds, the excuse he gave for it when he introduced it—the need to fight inflation—has, on his own admission, gone.

What is now happening? It does not add up to a policy at all. It is a combination of panic measures and political cynicism. It creates unemployment and slack in the economy, so that he can then offer a series of Election bribes, culminating in an Election Budget, compared with which the Lord Privy Seal's 1955 Election Budget will look like the very soul of fiscal integrity. Again, I think we can claim that we foresaw this strategic manoeuvring in our debates last spring. I think then that I gave credit for it, not to the Chancellor, who would not be capable of such a thought, but to the Prime Minister himself. The trouble is that the present stagnation in British industry measures the damage which they are prepared to inflict on the economy to create the room for this political manoeuvring.

I have given the figures of unemployment. Does the House realise the remorseless growth in unemployment month by month? In January, there were 13,000 more than in the previous January; in February, the gap compared with a year earlier had risen to 44,000; in March to 70,000; in April to 101,000; in May to 134,000; in June to 165,000; in July to 167,000; in August to 180,000; and in September to 209,000. As I said, these are figures which understate the real position because of the very heavy degree of under-employment which is going on. Let there be no doubt that these men and women are unemployed as a result of decisions taken on the grouse moors by Tory financiers and discredited politicians a year ago.

Hon. Members will, no doubt, underline the position in different parts of the country. In Scotland, unemployment has increased by more than a half. It is now 3.7 per cent., and in parts of Scotland, Greenock and Port Glasgow, for instance, it is 7½ per cent. In Wales as well, it is 3.7 per cent., with pockets of unemployment very much higher than that. In Wales, against over 35,000 workers out of work, there are less than 7,000 unfilled vacancies at the employment exchanges. This is less than one vacancy for every five people on the dole.

How does that born expansionist the Prime Minister reconcile these facts with the speeches we keep on hearing from him? I gather that, because of tradition, he is not speaking in the debate on this Amendment; I think that it is unusual for the Prime Minister to reply.

The Prime Minister (Mr. Harold Macmillan)

I made my speech a few days ago—a very fine speech.

Mr. Wilson

The Prime Minister is always telling us how good his speeches are. He suffers, to an advanced degree, from a form of oratorical narcissism. It really is unfortunate that he feels unable to speak in this debate, because he bears so much responsibility for the present state of affairs. This policy of holding down production began in his year as Chancellor, and, as Prime Minister for nearly two years now, he must take full responsibility. It would need the oratory of a Khrushchev, I think, to do justice to the way that this Government have thrown over collective leadership in favour of the cult of the individual, to the point where, now that they have enlisted the help of Treasury officials in the job of putting across Tory propaganda, we are almost daily expecting a special pictorial issue of the Monthly Digest devoted to the Prime Minister's own personal statistics.

So that the House will not be too disappointed at not having the benefit of a speech from the Prime Minister, perhaps I may, for a moment, summarise what he would have told us. We all know by heart what kind of speech he makes on these occasions. He would begin, of course, by complaining that my right hon. Friend the Leader of the Opposition had made a party speech. He would then say that, reluctantly, he must reply in kind, and then he would take out from his pocket a carefully typed speech. We should then have all the old routine. He would mention 1951, of course. Yes; I see the right hon. Gentleman looking over at some notes I have. I am reading his own speech. We have heard it so often.

Next, we should have a reference to his twenty-five years as candidate and Member for Stockton-on-Tees. Frankly, we are becoming about as tired of that as we arc of the crofter's cottage.

The Secretary of State for Scotland (Mr. John Maclay)

And of the statement by the right hon. Member for Huyton (Mr. H. Wilson) about bare-foot boys.

Mr. Wilson

The difference. I will tell the right hon. Gentleman, is that, though the Prime Minister is always talking about this particular episode, I never talked about what the right hon. Gentleman referred to; it was made up by the Tory Press. I challenged the right hon. Gentleman about it, as I challenged the Tory Press to produce evidence that I ever said it.

However, the mere fact that it took twenty-five years for the electors of Stockton to get wise to the right hon. Gentleman the Prime Minister is, of course, no basis for his claim to be a born expansionist. Perhaps he would like to know that unemployment in Stockton has increased in the past year by 174 per cent., and unemployment among men in Stockton is now three times as high as it was a year ago. The Stockton foundries are working a four-day week, and I see from a headline in one of the local papers that Tees-side has 4,570 on short time. So the Prime Minister's twenty-five years do not seem to have done much good.

As we have said before, we accept his sincerity about not wanting to return to pre-war figures of unemployment, but sincerity is not enough. We told him last year that, with those very professions on his lips, he was walking backwards into unemployment, and these figures, both for the nation and for Stockton, I think, prove how right that warning was. We have speeches from the Prime Minister, but words really are not enough. He told us once that he went to the Treasury determined on a policy of expansion. But it did not last long. Within six weeks he scrapped investment allowances and he was imposing restrictions. It was like his policy on Suez—first in, first out.

Words, for the right hon. Gentleman, are like the false trail laid in a paper chase to cover up the way he is really going. It is when he has just been attacking the social services that he most likes to quote Disraeli. I always thought that Disraeli was one of his heroes until he went to Hawarden this year and made a speech about Gladstone. The right hon. Gentleman is the only statesman of this century to claim, with characteristic modesty, to embody all that is best in both Disraeli and Gladstone. In fact, of course he is wrong. He has inherited the streak of charlatanry in Disraeli without his vision, and the self-righteousness of Gladstone without his dedication to principle.

I hope that, before long, we shall have a clear statement from the Prime Minister about where he thinks the Government's economic policy is leading. We want to know. Have the Government really turned their backs on stagnation? Are they prepared to plan now for a steadily increasing production? Do they want genuinely to expand, or only to take up the present excessive slack in the economy? Last Thursday, Lord Cohen, speaking, with the Chancellor, at the Institute of Directors, I think it was, said that, if demand builds up again to the peak levels of the past we should certainly see a return to inflation. That was Lord Cohen. Is that the Government's position? Are they aiming merely to get back to the 1957 level of production, or do they now think that they can go beyond that without fear of inflation or an import crisis? Is it a steady increase that they want to achieve or the usual one step forward and two steps backwards—what the French would no doubt call, "Sauter pour mieux reculer"? Have they now dropped the defeatist arguments of a year ago? These are the questions which we want the Chancellor to answer, and I hope that the Prime Minister will, one day, tell us.

Do the Government recognise that one cannot have a strong £ on the basis of a weakened economy? Do they now agree that, apart from times when one may reap temporary benefit from a windfall gain in world prices, the only way to keep prices down is not to restrict production below capacity but to increase production? Are the Government prepared to agree that the only way to achieve what my right hon. Friend called last week expansion without inflation is by planned expansion, encouragement of investment, and controls to give a clear priority to essential projects? These are the questions to which, I hope, we shall have an answer in this debate.

In our view, this nation can afford neither the industrial stagnation of 1958 nor the threatened investment slump of 1959. I have, on past occasions, given the House an estimate of the loss of real resources. between £3,000 million and £4,000 million a year, due to the Government's policy over the past seven years to equal the rate of expansion achieved in this country during the period which hon. Gentlement opposite like to call six years of Socialism. We lost between three and £4,000 million last year because of the failure to equal that rate.

I know that that is a difficult target for the Government to contemplate. Let me give them a less ambitious one. Suppose that industrial production in the past three years—that is, roughly since the great expansionist became Chancellor of the Exchequer—had risen as much each year as it did on the average between 1945 and 1951. We would have had last year £1,700 million more in increased resources for the use of this country for investment, for exports, and for aid to the under-developed areas, and so on. The Treasury would have had £450 million more of additional tax revenue without raising a single rate of tax. That is the answer, of course, to all the Tory propaganda, of which we expect to hear more, about the cost of implementing our policy statements. The cost of social justice, of improved education and pensions, of our housing proposals, and aid to the under-developed areas will not come out of higher taxation; it will come out of plant and machines which are now standing idle and out of economic expansion which this timid Government have not dared to call into being. The truth is that the Government dare not expand for long. Tory freedom works, if it works at all, only when plant and machinery and men and women are standing idle.

I said a few moments ago that it would be pleasant to be able to assume that the present and prospective waste and misdirection of our national resources were simply the result of miscalculation and incompetence, of straying a little from the narrow path which the Prime Minister rightly said has to be trodden between inflation and deflation. I fear that it is not merely miscalculation and incompetence. What has happened has been deliberate. It was started by the Prime Minister and two subsequent Chancellors have carried it further. They have been gambling with full employment, with men's livelihoods and with the economic security of this country. It is becoming more than ever clear that the Government's economic policy is directed not to investment in Britain's industrial future, but to investment in Tory votes at the next Election.

4.23 p.m.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory)

I thought that the right hon. Member for Huyton (Mr. H. Wilson) revealed the shallowness of his case by striking out rather too wildly in too many different directions, and also, if I may say so, in deploying the arts of the comedian, something which he does extremely well.

The right hon. Gentleman referred to a number of warnings which he had given us, but there was one warning to which he did not refer and might have. That was a warning to be very careful not to repeat the grievous errors of policy of the Labour Government which landed the economy of this country in a very bad mess indeed. I think that more weight would have attached to his warnings if he and his colleagues had, in their turn, been successful in ending inflation, and if they had not handed over the economy of the country in 1951 in a very parlous state.

I would remind the House that in 1951 we had a deficit on current account of £403 million. During the past twelve months we have had a surplus of £488 million. The case of the right hon. Gentleman is that we have permitted, or even engineered, an increase in unemployment and a stagnation in production, and that we have caused hardship and waste and got no advantage from it. If that were so, it would be an effective charge; but, of course, the truth is very different.

Let us look back over the years since the war. Until recently, every effort to get our economy on to a firm basis has been defeated by one insidious but very formidable enemy—inflation. While inflation lasted, both our balance of payments and our internal price level remained, to a greater or lesser extent, in a precarious position. We enjoyed brim-full employment and rising production, but the last bit of production was secured to the detriment of our balance of payments and price stability. Both Governments tried to find a way through, but as long as inflation lasted neither was successful.

From what the right hon. Gentleman said, it is clear that the important difference between us is not so much in the objectives of our policy, but in our ideas as to how to achieve these objectives. We would probably all agree that the true aim of sound economic policy is to build up a secure and improving standard of life for the whole community. That, of course, means that as many people as possible should be kept productively at work. But in our island, two conditions have to be fulfilled if that aim is to be achieved, which are very closely related. They are the maintenance of the strength of sterling and the preservation of stable prices. Given these, a high and rising standard of living, with full employment, is attainable, but without them it is impossible.

The mistake made by the Labour Party—and it is one from which our economy suffered sadly in the post-war years —is to suppose that, because high output and full employment are the objectives, the proper course is to go bald-headed for them in all circumstances, whatever the immediate consequences. But experience has repeatedly shown that that may, in fact, be a fatal course, a course leading only to inflation and balance of payments crises and a threat to full employment that has subsequently to be diverted by sharp cuts of one kind of another. The truth is that in our situation there are certain times when full employment is rather like happiness: the worst way to achieve it is to go directly for it regardless of all other things.

I know that the right hon. Gentleman says that he and his party put the £ first, but the trouble is that they are not really convincing about it. They never put forward a practical policy which would be likely to achieve that aim. Our prescription, after all, is one that they kept on administering some years ago, with the result that the exact opposite to which they professed to aim was achieved. It has all been tried before. The truth is that the real conditions of long-term full employment are those that I have stated —a strong £, stable prices and measures of economic policy which will, in fact, ensure the two things to which I have referred.

It is because these things have been fulfilled, and especially because sterling is now in a position of established strength, that we can now move safely and effectively to correct temporary setbacks in the economy, to restore a higher level of employment, and, in due course. I have no doubt at all, to resume the interrupted rise in total output.

If the right hon. Gentleman doubts this diagnosis of our situation, I would ask him to take the opinion of any experienced foreign observers of the United Kingdom economy. He would have to go a long way and search for a long time before he would find any of them who would prefer his policies to those that we have been pursuing. Foreign observers are almost unanimous in testifying to the improvement in the strength and resilience of the British economy today as against a few years ago; and independent witnesses are, at all events, always worth listening to.

The right hon. Gentleman has mentioned the amount by which the national product might have increased if maximum production at any cost had been our top priority. If, however, that increase had been accompanied, as, on past experience, it would have been, by renewed balance of payments difficulties and galloping internal inflation, far from being a boom it would have proved an unmitigated disaster.

The right hon. Gentleman has quoted the rate of increase in production under the Socialist Government. Under that Government, we did, in fact, have rising production and full employment, with one notable interruption. It took a brilliant stroke of Socialist planning to create nearly 2 million unemployed in 1947. [HON. MEMBERS: "Oh."] Indeed, in the years of recovery from the war, with the vast unfilled demand at home and abroad, it would have been amazing if we had not had rising production.

We had rising production and full employment, but we did not have stable prices. Prices rose 40 per cent. in six years and food prices even more. Prices rose 12 per cent. in 1951 alone. They did this despite restrictions, regulations, price controls, food subsidies, and so on, and all this at a time when net investment was actually lower than before the war and 60 per cent. lower than it is at present, and when we were borrowing heavily from abroad at the same time.

If the opposition criticise our management, they must show that it has a workable alternative. This is what Socialist Commentary of September, 1958, thinks of the Opposition's efforts to find one. I quote: Where are the new ideas since 1950? The overriding impression is given that if only we returned to what Labour did ten years ago, and expunged the intervening Tory malefactions, then all will be well. There is no glimmer of recognition that where Socialist planning broke clown then, was not in its aims, but in finding the means to achieve them. The right hon. Gentleman has speculated upon the results that might have flowed from a prolongation of the trend of production increase under the Socialist Government. It is just too easy to continue trends. What would have happened if savings had continued as low as they did under the Labour Government, or taxes as high, or if prices had continued rising as fast as they did then? What if the gold reserves had continued to fall at the rate at which they fell in 1951? The right hon. Gentleman has surely embarked on a rather dangerous exercise there.

The elimination of inflation has been, and will always remain—because it is the most dangerous thing of all—our dominating economic objective, but a price has to be paid to make sure of success. This price was the deliberate damping down of demand, which entailed a temporary reduction of activity and contributed to an increase in unemployment, which has been partly due to other causes such as lower exports. To date, however, it is unquestionable that the improvement both in our general economic strength and in stability has been worth the price paid.

The level of the unemployment at about 2.2 or 2.3 per cent. is by any standards still a low figure and, relatively to most other industrial countries today, an excessively low figure. [HON. MEMBERS: "Excessively low?"] Certainly, it is an extremely low figure—[HON. MEMBERS: "Extremely low?"]—relatively to other industrial countries.

I want to say this about unemployment, in passing. In the context of my economic responsibilities, I sometimes find myself inevitably having to talk about this problem in rather cold economic terms, but I hope that no one in this House who knows me will think that I do not regard this problem as the very real human problem that it is.

The highest level of employment that we can get with stability in the long term will always be an economic aim very close to my heart. The temptation that we must avoid—it is sometimes a strong temptation—is to take action to cure a temporary malaise which would endanger the basic health of our economy and so put the foundations of long-term employment, and, indeed, our whole livelihood, in jeopardy. Nothing is more in the true interest of employed and unemployed alike than that we should ensure that the foundations of our economy are sound and correct.

Mr. John Cronin (Loughborough)

The Chancellor said that 2.2 per cent. unemployment is excessively low. Will he, please, tell us what he regards as the ideal figure of unemployment?

Mr. Amory

No. The limited point I was making was that 2.2 per cent. is extremely low relatively to the rates current in most other industrial countries today.

I want now to turn to the events of the past year and the progress that has been made. First, let me deal with our external affairs. It is an encouraging report which I have to give sterling has made a satisfactory recovery from the difficulties of a year ago. We have done well on trade account and we have enjoyed a heartening return of confidence in the £. As a result, our reserves have gone up month by month, £450 million in the past year. At the end of September, they had reached a level of £1,114 million. A further increase for October will be announced tomorrow, Over the past year, we have also been able to carry a substantial reduction in the sterling balances and also, at the same time, I am glad to say, to continue a very high rate of new investment, mainly in the Commonwealth. That is the broad picture and it is one with which, I think, the House will feel encouraged.

I will now go into a little more detail. In the first half of this year, we earned a surplus on current account of £334 million. This was a larger surplus in six months than we have earned in any twelve-month period since the war. The right hon. Gentleman has mentioned the improvement in the terms of trade as being mainly responsible for the improvement in the balance of payments and in the reserves. He would deny the Government any credit for this improvement. He implies that we have merely been lucky. Well, to start with, I think that the country quite likes to have a lucky Government. There is an old saying that one of the qualities of a good general is to have luck.

It is amazing how, in the years from 1946 to 1951, we heard nothing but moans about bad luck. Either the United States was buying too little abroad in 1949 or was buying too much in 1951. Either the winters were too cold, or the money too hot. What an amazing change in our luck took place in 1951. It is quite true that if all the other factors in our balance of payments had stayed the same but import prices had not fallen, we should not have attained anything like as striking a surplus as £334 million. But the other factors would have been extremely unlikely to have remained the same. Exports, for instance: if our import prices had remained up, exports might well have been higher still.

The size of the surplus owes a very great deal to the right internal policies of restraint which have helped to keep our exports up and our imports moderately restrained. One reason, of course, why our imports are lower is our policy of allowing our merchants to buy freely in the cheapest markets of the world, a policy with which, I do not think, the right hon. Gentleman would have complied. With the wrong policies, and if I may say so, with the right hon. Gentleman's policies, we should have thrown away the opportunities presented to us by lower import prices.

My information does not enable me to take the full story of the balance of payments beyond the middle of this year. I would, however, draw the attention of the House to two figures which appear monthly, those for the reserves and for our visible trade. In the third quarter of this year the reserves rose by £15 million, a satisfactory result bearing in mind that the third quarter is normally a quarter in which we draw on our reserves. The trade figures show that our imports are running at a fairly steady level but that our exports are now definitely falling. There was a small decline in exports in the earlier months of this year. This decline has accentuated since and has recently been at the rate of about 6 per cent.

The main feature of the recent downturn in exports has been the fall in the exports to the rest of the sterling area and to other primary producing countries. This fall has long been expected and was bound to take place when the primary producing countries had drawn on their reserves as far as they thought it prudent to do so. I drew attention to this prospect in my Budget statement, when I said: Exporting is going to become more difficult…with our foreign customers running into difficulties, export demand may slacken."—[OFFICIAL REPORT, 15th April, 1958; Vol. 586, c. 50] Looking to the future, I would expect the declining trend in our exports to certain markets, though not to all, to continue for a while. Of course, there may be an early recovery in the fortunes of the primary producers. It is very difficult to forecast the trend of commodity prices. The vast American economy is picking up, and other manufacturing countries may soon follow. Even so, I think that we must expect to have to wait for a while until the primary producing countries have replenished their reserves before we find these markets for our exports picking up again.

The fall in our exports will, of course, affect the balance of payments, but our expectation is that it will only bring down the surplus on current account from the quite exceptional level of the first part of this year to a level which perhaps may be aptly characterised as still respectable. As far as I can see, our balance of payments is likely to remain strong over the months ahead.

So much for our own balance of payments. I must say something about the efforts we have been making to promote the expansion of world trade and development overseas. These are associated particularly with the conferences at Montreal and New Delhi. At Montreal, we announced a number of measures designed to assist the development of both Commonwealth and world trade. These included the liberalisation of imports of a number of kinds of dollar goods, and a statement of our intention to introduce a new system of Commonwealth economic assistance loans to Commonwealth countries and to make Exchequer loans more freely available for Colonial Territories. At New Delhi we strongly advocated the expansion in the resources of the International Monetary Fund and the International Bank, and made concrete proposals for its realisation.

This is a need which we have long foreseen. I am confident that a substantial increase in the resources of these two international institutions will be approved, and I am hopeful that they will be in working order, as it were, by the time of the next annual meeting next autumn. In that event, the Government will place before the House proposals for the legislation which will be necessary to enable the United Kingdom to accept an increase in its quota to the Fund and its subscription to the International Bank.

Everything done at Montreal and at New Delhi reflects the belief in growth, and the determination to promote it. This, as I have said before, is, I think, the keynote of the economic policies of our age, as opposed to those of the inter-war era. Montreal, I believe, will help promote the expansion of the Commonwealth, and New Delhi, that of the whole world. I will not say more about this, or about the European Free Trade negotiations, as my right hon. Friend the President of the Board of Trade will be speaking later.

Next, I want to say something about price stability. I think that there are two aspects of this. The first is the level of demand, and the second the growth of wages and incomes generally. There is. of course, a responsibility on the Government, which we accept, to do all we can to ensure that demand does not develop in the economy in a way which would lead to price inflation. For the present that particular kind of demand expansion does not seem to be an immediate danger, but it could very easily become one again, and it is for that reason that we have proceeded gradually and cautiously in our encouragement of re-expansion.

I am certainly not here today to apologise for the cautious way in which we have proceeded in these circumstances. We have not been willing, nor are we willing today, to open the floodgates. I hope that in considering the problems of economic policy hon. Members will remember that it is in the nature of most of the methods by which we operate on the economy that they take some time to develop their full effect. If we try to get results too quickly we may later find that we have once again overloaded the production system and built up inflation.

The other side of this problem, of course, is the growth of incomes, which is, of course, related to the level of demand, but which also has a part of its own to play in promoting price inflation. In particular, what happens to levels of wages is crucial, not merely because wages are themselves so large an item in costs and have been rising in recent years faster than either production or the cost of living, but also because other kinds of income have a strong tendency to move in sympathy with them. The increases in wages which have been negotiated this year average out at about 4 per cent., which represents a smaller increase than the figures of previous years. We have been able, in spite of those increases, to preserve price stability this year only because of the fall in the prices of our imported food and raw materials, and that is not likely to happen again.

A general increase in money incomes in present circumstances is justified neither by the cost of living, which has been fairly stable now for almost a year, nor by increasing production. So wage increases in this coming year on the scale which we have had this year might be quite sufficient to generate another round of price inflation. It is vitally important that this should not happen.

I cannot emphasise too much that whether we can expand production safely or not depends on moderation in claiming higher money incomes more than on any other single factor. The objective of our policy has been to strengthen the base upon which the economy as a whole rests, because of our conviction that full employment itself could not long endure unless sterling is strong and prices reasonably stable; and the home base has certainly been strengthened.

It is true that there have been a fall recently in the index of industrial production, but we must keep this in perspective. After rising to a peak about the middle of last year it has now fallen by about 3 per cent. compared with a year ago. The index of production of all goods and services—that is wider than industrial production—has fallen rather less. It is down by about 2 per cent. in the second quarter compared with the same period in 1957. The main causes have been a decline in exports, some reduction in Government expenditure on goods and services, and some decline in the rate of stockbuilding—an extremely difficult thing upon which to assess the day to day position. But stocks as a whole were still increasing at the date of our latest estimate, though they were increasing then at a considerably lower rate.

In fixed investment, the foundation of economic strength, there has been no setback. Net investment in fixed capital last year was about 65 per cent. above what it was in 1951. Total investment in 1957 was 5 per cent. above that of 1956, and the latest figures were have, that is, for the the second quarter of this year, show the volume to be about 3 per cent. higher this year than in the corresponding period of last year.

Therefore, total investment expenditure, the current rate, is not unsatisfactory at all, and consumption too has tended to increase and I believe is still tending to increase. In the first half of this year personal consumption is about 2½ per cent. above that of the same period last year. Therefore, people are spending, eating and saving more than ever before. For most of the past year prices have been pretty nearly stable, the retail price index being the same this last month as it was ten months ago.

Personal savings were already running at a record rate last year, enormously greater of course than in the days of the Socialist Government. The figures for national income and expenditure recently published show that the proportion saved in the first half of this year remains at the same all-time record level. The total amount saved also reached record figures. In this connection, I feel that congratulations are due to the workers in the National Savings Movement for having already achieved their target of £150 million which they set themselves for the whole of the present financial year.

Taking the picture as a whole, therefore—record investment, record personal consumption, record savings, a strong £, strengthened reserves and more stability in the internal prices than we have had for years—surely it is absurd to talk about stagnation. The economy has been fortified almost at every point. It is with this knowledge that I can turn in confidence to the future.

I begin with what the Government have done to stimulate the resumption of steady expansion. We have lifted the credit squeeze and we have allowed easier access to the capital markets. The Bank Rate has been reduced from 7 per cent. to 4½ per cent. We have raised the initial allowance by 50 per cent. and thus encouraged capital expenditure. We have abolished restrictions on hire-purchase and have taken measures to encourage development in areas of relatively heavier unemployment. We have raised the ceiling somewhat on public investment expenditure and have brought forward a substantial amount of work in this field, and by the increases in overseas loans and credits, to which I referred earlier, we have taken effective action to sustain the demand for our exports.

The right hon. Member for Huyton referred to the removal of the hire-purchase restrictions and the regulations of last July. I seem to remember hon. Members on some of the benches opposite pressing the Government hard to remove these restrictions, but in time of inflation these controls are perfectly legitimate. We do not believe in maintaining controls in circumstances which make it no longer necessary to do so. The best experience shows that when this particular control is relaxed one has quite a sharp immediate stimulation which begins to taper off after some months.

That is exactly the kind of stimulation which we think is required in that sector of the field at the present time. Our view is that, like the ending of control on the aggregate bank lending, this was a step which could safely be taken in present conditions and we could leave the scale of the credits to be decided upon by the industrialists themselves. I believe that all these measures are already beginning to take effect on the economy and will gather momentum steadily.

The growth of investment is, of course, one of the crucial elements and I will deal, first, with investment in the public sector. Here one finds that for several years now there has been a very strong upward current. A year ago this was running so hard that my predecessor found it necessary to call a halt for a time. It was then laid down that the aggregate of public sector investment in 1958–59, that is to say, the current year, and next year should not exceed that of 1957–58. I would remind the House here that, as my predecessor pointed out, this has not been and never was a matter of reducing the total level of public sector investment. It was a decision not to cut down that level, but to be content for the time being to go on at that level instead of climbing higher.

My predecessor also announced a procedure of review of these public investments to keep them within the national resources. I would emphasise in this matter, as I have done before, that a great deal of this public sector investment consists of long-term projects, work that will take two, three, four or more years to carry out and cannot efficiently be interrupted when once begun. During the summer we conducted this review and decided that it would be possible, in view of the changing circumstances of the economy, to allow public investment to rise somewhat. In the course of this general re-examination of programmes we put into operation a series of specific but limited relaxations designed to stimulate employment during this coming winter, particularly in those areas which were suffering most heavily from unemployment.

I do not accept personally the more startling estimates now going around of the extent to which the economy could expand its output rapidly without running into trouble, but that there is some degree of slack is true and it is in that context that the planned expansion of public investment should be set.

These increases to which I have referred were put into operation promptly, and most of them are now under way. As a result, I expect that by the end of this year the rate of public investment will be running appreciably above that of last year, which is estimated to have been about £1,425 million. For next year, 1959–60, we envisage a level of public sector investment about £125 million to £150 million higher than that of last year. This should be sufficient to offset any fall that is at all probable in private fixed investment.

Of course, it will not be acting in isolation because there are always other changes going on in the economy. As an illustration of its importance, I may say that by itself this increased expenditure is the equivalent of jobs for up to 150,000 workers in the two-year period, a major reinforcement for the economy.

In laying out this increase in the public sector investment we have based our plans on the expectation of a resumption in economic expansion and its continuation over the next few years. Some people, I know, detect signs that the present record level of private industrial investment may not be maintained next year, but I must say that I have been impressed by the resilience which it has shown so far, which seems to me to illustrate a fundamental confidence in the future—an effective answer to those who may feel that our springs of resource and initiative and invention are dying out.

It is my expectation that when the level of production turns upwards this will usher in a further period of expansion of every part of our economic life. For public sector investment this has two consequences: first, it means that our task must be to ensure that enough resources are devoted to what may be called the productive public investment needed to support expansion—electric power, railways and roads. We are, therefore, providing a very considerable investment under these heads, a large increase over last year, both in absolute and in percentage terms.

In other areas of public investment, the big programmes in the non-industrial sphere—schools, technical colleges, universities—are continuing to unfold. The expenditure on hospital development continues to increase and we expect increasing investment, too, in water supplies and sewerage and in quite a wide range of other services. But, secondly, we must be aware of the danger of making a mistake which has been made before, that is, embarking upon expansions of public investment without fully weighing the likelihood that by the time the programmes come to fruition they may be overloading the economy.

We must be careful to avoid excessive expansion here which would absorb resources—building and engineering capacity and savings—in two or three years' time, which may well by then be needed to support the next wave of industrial development. What we have done, therefore, taking advantage of the easier economic conditions of the present moment, is to bring forward into the next twelve months some of the expenditures which would otherwise have had to be incurred later. Typical examples are maintenance and minor works, but there will be some projects, too, of more substantial dimensions. Looking forward a little further, our present expectation is that we shall need to keep the level of public sector investment in 1960–61 at about the same level as that to which it will be rising in 1959–60.

To sum up, therefore, over the next twelve months we shall be bringing forward some public investment at a time when private investment is slackening, but without embarking upon a long-term expansion which would leave insufficient room in a couple of years to accommodate without inflation the further expansion of private investment which we confidently expect.

I claim that the survey I have just given shows that we can regard the past with satisfaction and the future with confidence. I shall not try to make a confident, precise prophecy about the immediate future. I do not believe myself that any decline in activity will be large before the upturn comes—the upturn to which our policies are directed. In the meantime, we shall continue to take such action as the situation demands. We have reason to feel fortified and encouraged by our recent progress and I believe that now, building on the foundations of a strong economy, we can hope to enjoy a measure of progress without losing stability, and move ahead with confidence in our aims and in ourselves.

3.6 p.m.

Mr. Frederick Lee (Newton)

One thought that while the Chancellor was telling us about the future plans for expansion even he felt that this was something like a Parliamentary paraphrase of the story of the woman who said she did not mind her husband smacking her over the head with a stick because it was so nice when he stopped. It seemed to many of us that the right hon. Gentleman, during the course of his speech, made two or three specially disquieting statements. For instance, his disclosure that exports are now running at some 6 per cent. less than last year, and that the rate at which they have fallen is extremely steep, puts before us all a most serious situation in which, I suppose, one can expect Government efforts to stem imports, which of itself may lead to more unemployment.

The right hon. Gentleman suggested that foreign observers believe almost as a whole that the policies of the present Government are much to be preferred to those of the Labour Government. I have read some of the statements of the foreign observers. I do not think they are people whose interests coincide with those of working people. Instead of gazing abroad so much, the Chancellor should take a look at the opinions of some home observers. Perhaps he could start by coming into the Lancashire cotton area or going among some of the unemployed in Wales and in Scotland. These people are now suffering as a result of the change of Government policy from that followed by the Labour Government. The Chancellor would soon discover whether or not they agree with the academic approval of the foreign observers which he quoted to us.

The right hon. Gentleman also said that wage advances this year have been at a rate which, if continued into the future, might well be more than the economy can stand. If that is so, he had better talk to the Minister of Labour, who is sitting near him at the moment, because wage increases this year have been amongst the lowest since the end of the war. Indeed, if we are now to have policies designed to back the statement we have just heard from the Chancellor, which means in plain English that the Government are to attempt even further to restrict any opportunity for increases in wages, then inevitably the future of industrial relationships may be disturbed.

The right hon. Gentleman went on to say that this kind of demand, if unchecked, could bring back inflation. This is the kernel of our opposition to Government policies. First they create a situation in which there is depression, in which there is unemployment, then they permit the kind of expansion which my right hon. Friend the Member for Huyton (Mr. H. Wilson) said is more like consumer inflation, then in consequence in a few months we are back again to the necessity for the repressive measures about which we have been complaining.

I come from the North-West region which, according to the 15th September figures, had almost 92,000 unemployed. That is the highest figure for unemployment in any part of Great Britain and Northern Ireland. We had only 19,000 vacancies. Because of Government policies we are also seeing a most disconcerting drift to the South of our people, a drift which the Lancashire and Merseyside Industrial Development Council has been trying to bring to our attention.

One has tried in past years to impress upon the Government the need to reorganise their policies so as to encourage new industries to go into the northern areas rather than proceed with the sort of policies we have seen, including getting rid of building licences, which have meant a drift to the South and which, in the end, will react to the detriment of the people in the southern areas just as it is reacting at the moment to those in the North.

As the whole House knows, the cotton industry in the North-West is in frightful trouble. Despite all the deputations we have had to Ministers and despite constructive suggestions made from this side of the House, not the slightest effort has been made to stop a vital British industry from bleeding to death, as, indeed, it is doing. Outside the cotton belt in the North-West we are also now recording high figures and percentages of unemployment.

One can find no sign of any effort by the Government to get new development or new types of industry into these areas which would yield the best possible result for the British economy. In pressing the Government for alterations in the distribution of industry policy, I suggested dis- crimination in types of industries which should be encouraged to go to Development Areas. I know that, following the last Measure which the Government put on the Statute Book, in some degree all areas with more than 4 per cent. unemployment are now Development Areas. I suggest that the next stage should be for the Government to advise industrialists as to the type of new ventures which offer the best prospects.

In the long run, we cannot solve our problems unless we encourage the growth of those industries which are best suited to an economy such as ours which is dependent on imported raw materials. One would like to see guidance given as to the type of product which we feel could maintain itself in foreign markets. The Swiss have tackled this issue very successfully. I hope that the Government will try to guide industrial development into these sort of industries.

This year, 1958, has indeed been a black year in our industrial calendar. As my right hon. Friend pointed out, production has fallen by 4 per cent. and unemployment has risen, until at 15th September it stood at 476.000 as against 266,000 at the end of August, 1957. The unemployment figure for Northern Ireland stood at 38,700. making a total of 514,000 unemployed for the United Kingdom. Vacancies at 10th September were 179,000, 24.000 less than in August. We have heard from the Prime Minister and the Minister of Labour that the unemployment figures may go even higher yet.

I remember that when we had the debate on unemployment in February the Minister of Labour suggested that January and February were the peak months for unemployment. Of course, we know that is so, but I would remind the House that at that time—that is, during the period when we should have been at the peak of unemployment—the figure was 1.8 per cent. At the height of the summer the figure went up to 2.2 per cent. Therefore, if the usual pattern emerges we must expect, as the Minister has said, that there will be rising figures of unemployment for a few months to come.

It was in the knowledge of all this that the Minister of Labour told the Tory Conference that Government policy is not the assassin but the guardian of full employment. He even suggested that the economy was sounder in consequence of these developments. Each of the half million unemployed is just as completely out of work as I was when I was one of 2 million unemployed. The enormity of the offence against this half million unemployed is not reduced qualitatively by arguing that one has refrained from doing the same thing to 2 or 3 million others.

It would also appear that this cockeyed approach to the problem has resulted in Government Members now believing that the soundness of the economy increases pro rata to the employment figures themselves. Indeed, I suggest that the same cockeyed approach is seen in the solution which the Government now offer. They first produce unemployment running at over half a million, and insecurity for even greater numbers, and then offer, as the cure-all for the troubles of people who do not know when or for how long they can expect to draw wages, increased hire-purchase facilities on everything from houses to toothbrushes.

Is this merely a new way of the Government reintroducing their pre-war philosophy of the submerged minority which aims at retaining economic health for some by inflicting suffering on others? All this is being done in pursuance of a policy which the Minister of Labour and the Prime Minister describe as promoting the highest level of employment that is consistent with the avoidance of inflation. As the cost of living is now higher than is was when the Government began to cure it by increasing the numbers of our unemployed, it is small wonder that the Chancellor of the Exchequer has suddenly become an expansionist.

Burke once argued that the tyranny of a multitude is but a multiplied tyranny. It is just as true that tyranny to a multitude does not lose any of its destructive properties because the number offended against is half a million and not three or four times as many. Therefore, we say to the Prime Minister that we are not interested in his emotional reflections on the immorality of condoning heavy unemployment. We are concerned about economic policies which produce, and are intended to produce, heavier unemployment than we have known for twenty years.

I am not arguing that it is not sometimes necessary to cut back on certain types of expenditure in order to reduce the load on the economy. The Labour Government did that when they cut back on certain capital developments; but we cut back from targets which had become quite unattainable to those which, given the full use of existing resources of men and materials, were within our compass. Such action of itself does not endanger jobs, but merely reduces theoretical targets to practical possibilities. The test of that policy should be whether it produced unemployment or caused a falling away in our advance towards higher productive levels.

I suggest that in both tests our record is as clean as the record of the present Government is black. In short, the problems to which I have referred have arisen, I am sorry to say, because of a greater concentration of industrial illiteracy than I had given even this Government credit for possessing. It seemed that the battle for higher annual productive levels had been won until these hawkers of the virtues of industrial paralysis reversed our fortunes and decided to bask in the temporary sunshine induced by a fall in import prices. Their success in contracting and frustrating our productive effort is seen in true perspective only when judged against the type of increases which modern machines and industrial methods now make commonplace.

Let me take a parallel from the position in the United States. Since April, when industrial production, which had fallen by 12 per cent. below the 1957 peak, began to pick up, we have been told that the recession in the United States is over. But the Federal Reserve Bank of New York stated: The advance in economic activity must go well beyond earlier peaks before the unemployment of both men and machines is reduced to pre-recession levels. So we now have a position in the United States in which recession is over for everyone except 4,110,000 unemployed people, or 7.2 per cent. of the working population. That figure is 1,559,000 more than in September, 1957, while the numbers of those now employed are down by 1,045,000 compared with a year ago. Prior to the recession in the United States, increased production was running at about 3 per cent. to 4 per cent. a year. I have read the opinions of various economists in the United States. They estimate that it is now running at something between 10 per cent. and 12 per cent, per year.

I know it can be said that we have not had the same kind of industrial development as they have had there, but the point is that we must not judge that, merely by going back to industrial levels of two years ago, we can automatically go back to employment levels of two years ago. In British industry the larger firms which were not affected to the same extent as the smaller ones by the credit squeeze must have made considerable advances in modernisation. Therefore, it is by no means right to assume that merely to get back to 1956 or 1957 levels of production would get us out of the problem of more than half a million unemployed. Even 1957 showed over the whole year an increase in unemployment of 56,000 against the 1956 figure, with January the highest month recording 383,000 unemployed. In the debate on unemployment on 24th February, I remember that when winding up for my party I said that, however we may differ in our views about the effects upon unemployment figures of the introduction of automation, unless the economy continues to expand, increased unemployment is inevitable.

I remember asking the Minister of Labour to use his Department as the medium through which, in collaboration with industry, retraining schemes could be planned for a far and away higher number than anything we have seen before, but apparently nothing of the sort has yet happened. We have reached a situation in which in my constituency there are now young tradesmen who have to accept labourer's jobs or become unemployed. I ask the Chancellor, is this the way to encourage parents to put their boys to learn a skilled job and try to give them the full extent of technical education which is now possible—so that at the end of it they may be sweeping the floor and getting wages which people have to accept when they are unskilled?

Looking ahead, it may well be that, if we are to contain unemployment within the new type of industrial machinery we are now to have, questions involving hours of work will no longer be matters only for discussion between employers and trade unions. If we are seriously to tie ourselves to policies of full employment, as my party has done and will continue to do, we must consider the effects of the new industrial productive methods and hasten the coming of shorter working weeks as a necessary social and political decision. One often hears the argument from various Ministers that it is a great pity there is a lack of stability in our industrial relationships. I can find no coherence at all in the policies the Government employ in their approach to industry in order to achieve stability. It seems to be entirely opportunist in character, at one time preaching the need to accept as compulsory the recommendations of voluntary arbitration bodies and at another breaking down the only form of arbitration whose decisions are legally binding—the Industrial Disputes Tribunal.

That Tribunal has done splendid work in preserving peace when negotiating machinery has been exhausted. We have a right to ask the. Minister of Labour how it has failed to do the things intended of it. I suggest to him that he cannot argue the morality of accepting impartial decisions while clapping chloroform gags over the star referee. Is he dissatisfied with the decisions of Lord Terrington and the members of the Tribunal? If so, why does not he say so instead of talking about the Tribunal suddenly becoming "out of keeping" with our industrial institutions? Why has it now become out of keeping? Can it be that the figures of unemployment determine the dates at which major alterations for which employers press can take place?

I have warned before that the Government were ceasing to hold the balance in industry and becoming something akin to the prosecution advocate against the trade unions. That is the dilemma we argued about early in the year. This action is the sequel to the failure of the Tribunal to interpret correctly the warnings given by the right hon. Member for Monmouth (Mr. P. Thorneycroft) when he was Chancellor and told us that those who arbitrate had better take note of the Government's policies. The Tribunal insisted on reviewing each case on its merits and not in conformity with the demands of Ministers. This action makes sense only if it has been decided that peaceful settlement of industrial disputes is not necessarily among the highest priorities of the Government. It has the same connotation as the statement of the Ministry of Labour that Government policy is to promote the highest level of employment that is consistent with the avoidance of inflation. It is a shabby surrender to employers who feel that the time and economic conditions are ripe for a blank refusal of wage claims and wish to ensure that control in this field shall be entirely in their own hands.

I feel that the results of Government policy reflect convulsions and unpredictable gyrations induced by economic anarchy. We see the Amory boom on the Stock Exchange accompanied by the Macmillan slump in industrial areas. Creation of unemployment and insecurity is accompanied by overtures to the victims to increase their commitments on hire-purchase contracts. The Government tell workers that to increase earnings they must increase the very levels of production which Government policy prevents them from increasing. In a period of scientific industrial revolution which brings spectacular increases in output, production falls.

In 1945 this nation looked into the abyss of economic bankruptcy. Then came the greatest, gravest struggle against disaster since the darkest days of the war —a greater response than perhaps any of us had any right to expect. No man can assess what this Government have cost the nation in the past. I feel that, with much more of the same sort of policy, even the British people will find it difficult to make a living for themselves. It is possible that in the next few months this is the major decision which has to be made. I ask that the real analysis I have tried to make of the contradictions in policy which have frustrated men and women throughout the whole of Britain should be the real basis on which the General Election is fought. If it is, I have no doubt of the result.

5.30 p.m.

Mr. David Webster (Weston-super-Mare)

It is with experience and appreciation of the kindness shown in all parts of the House to new Members that I ask the indulgence of the House which, by ancient tradition, is extended to Members when making their maiden speeches. I am aware that, in this contentious debate, it behoves me, like Agag, to walk warily and to keep off controversial subjects.

I welcomed the reference in the Gracious Speech to the continuance of negotiations for the creation of a European Free Trade Area, knowing as I do that if it is possible to bring that Free Trade Area about it will, in the long term, offer one of the surest guarantees of a continual high level of employment and prosperity for this country. In this respect I welcome and thank the trade unions who were concerned in researches upon this subject, for their very constructive and useful contributions.

It is said that the course of true love does not run smoothly, but I am sure that everyone will support my right hon. Friend the Paymaster-General in view of the determined and persevering way in which he has carried out his courtship. It is a paradox that arguments which have been used by the protagonists of this scheme to persuade the industries and interests of this country that the scheme is worthy of British consideration and participation, are now being used to exclude this country from the Six and from participation therein. There is reluctance on the part of France to lead the way. She is, by tradition, reluctant to undertake obligations of an international character, but she has a long record of being wedded to the desire for protection.

My right hon. Friend the Paymaster-General must have been depressed by the long talking. There has been a lot of talking but very little has been accomplished. Last week at one time there were high hopes that he had persuaded the six nations to get to grips with the subject. After I had written my speech for the sixth time this weekend to keep pace with the changing trend of events, I experienced a little of the frustration that my right hon. Friend must be experiencing at this moment. After this depressing and prolonged talking it is very serious that the nations have not succeeded in marrying the technical topics with the political issue.

If we are unable to reach the conclusion of a Free Trade Area by the beginning of next year, as seems likely, it will be all the more difficult. Barriers will have been built up and positions dug in by the various countries, who will be entrenched in trade rivalries in two differing groups, thus producing division in Europe when it should he unified. There will be increasing trade rivalry and increasing barriers between rival groups. My right hon. Friend has had to remind France and other countries that we cannot stand idle and see ourselves excluded from European trade without taking measures to protect our own industries and the industries of countries that are interested with us.

It is possibly a weakness of those who are interested in public affairs to look to the summit but there are times when intimations from higher authorities may do good. In this time, when, I am glad to say, General de Gaulle seems to be going from height to height in authority, I hope that it will be possible to bring pressure upon him not only to have a French Minister at the talks—I regret that no Minister represents France there at this time—but that the French attitude may become more flexible. If that can be brought about it will be a blow for freedom.

Europe is at the crossroads and is facing a challenge. It is not only a matter of trade rivalry; if we cannot bring harmony, unity and understanding to E trope through the proposed Free Trade Area we are running the grave risk of creating two mutually exclusive groups which will gradually become more hostile. Having read the prognostications of Karl Marx about the destruction of the non-Communist nations by trade wars, I have some anxiety on the matter. This is the hard business reality to be considered.

I hope that France and other countries involved can be persuaded to take the broad view. It is in their interests that they should do it, and it is certainly in our interests that we should join such an organisation. It is not against the interests of our trade union movement or of our farmers who would be able to compete effectively. Europe is to be divided, or is to develop harmoniously and go forward to greater prosperity.

5.36 p.m.

Mr. S. P. Viant (Willesden, West)

It is with considerable pleasure that I welcome the privilege of congratulating the hon. Member for Weston-super-Mare (Mr. Webster). He made a speech of an exceedingly interesting character, and I feel sure that hon. Members who heard his contribution to the debate will wish to have an opportunity of hearing him again on many occasions.

I am glad that the Chancellor of the Exchequer and the Minister of Labour are present, because I want them to understand what their policies are doing for the building industry. I listened attentively to the Chancellor of the Exchequer and noted that he said that unemployment in this country was only 2.2 per cent. He expressed his sympathy with those affected by unemployment. As a matter of fact, the building industry is being hard hit by the policy of the Government and is confronted with 4 per cent. unemployment. In Scotland and Wales, the figure is 10 per cent. At the end of September, 50,000 operatives in the building industry were unemployed. Forty thousand have gone out of the industry within the past two years. This is a matter of serious concern, and I hope that the Chancellor and the Minister of Labour will take steps to remedy the situation.

We cannot afford to have trained men who have served their apprenticeship turned into the streets unemployed, while we are still in need of houses. Employment in the industry is usually casual. A job may last a month or three months. A three-month run is considered to be good. The rules of the union have always made provision for the journeyman who goes from town to town.

I hope that the crippling effects of Government restrictions will not continue. There has been a cut in production and in manpower. A recent Board of Trade inquiry revealed that manufacturing industry's investment in buildings will be 25 per cent. lower during the next twelve months. The Chancellor of the Exchequer referred to this in his speech. I hope that, in the light of that figure, he will re-examine the statement he made a short time ago.

The building trade has always been regarded as a good barometer of commercial and industrial trends in the country. When we find that the demand for new building for manufacturing industry is going down by 25 per cent., we know that the position is serious. In addition, there is a cut of 20 per cent. in local authority housing programmes. This is due entirely to Government policy, because there is still an urgent need for houses The labour force employed on house building by private firms, that is, firms building houses for sale, has fallen by 9,000 since 1956. That again is a clear indication that the ability of people to purchase houses has decreased. The speculative builder is feeling the effects as well as the building operative.

Schools and other building work of an educational character which is under construction reveals a fall of over 8 per cent, compared with last year. After a slight rise in 1957, the number of projects approved for construction has fallen well below the 1956 level. Approved projects rose from £55,585,000 in 1956 to £58,144,000 in 1957. But the figure fell in 1958 to £45,511,000. Allowing for the rise in building costs, this represents a fall of about 28 per cent. compared with 1956, and it is a serious matter.

Further to reveal the trend of events, I will refer to the manufacture of bricks. July of this year, which should have been the busiest month of the year, saw brick production fall to 544 million. Demand fell to such an extent that stocks had risen by 100 per cent. The number of unemployed brickmakers—not bricklayers, but brickmakers, whose numbers are comparatively small—rose to 2,229, an increase of over 200 per cent. This indicates that the prospects for the building industry are very bad and are becoming worse.

There is only one way in which to deal with such a problem. I was pleased to hear the Chancellor of the Exchequer refer to the removal of some of the restrictions upon investment in the public sector of industry. More than half the building industry employees are engaged in work for the public sector. I was hoping to hear that the Chancellor proposed to remove the restrictions affecting local authority house building, because that is something which should be done immediately. Local authorities who are expected to pay interest at 6¼ per cent. on the money they borrow cannot possibly continue to erect houses. If the Chancellor is unable to go all the way in the removal of these restrictions, at least he should allow local housing authorities to borrow money at the ordinary Bank Rate. At present, they must borrow at what I consider exorbitant rates of interest. I hope that both the Chancellor of the Exchequer and the Minister of Labour and National Service will consider this matter, not in twelve months' time, but immediately.

I am a member of one of the oldest trade unions in the building industry, and last month I celebrated my fifty-eighth year of membership. For forty-five of those fifty-eight years I have had the pleasure of being an official of my union. I have seen the booms and the slumps. I came out of my apprenticeship as this country was engaged in the South African War. Then the building trade was practically shut down. When I heard the Chancellor expressing sympathy over unemployment, my mind went back to those days of hunger and agony of mind. Sympathy alone will not solve this problem.

The Government need to reverse their policy. It is an old saying, but a true one, that we are all sympathetic with the person who has toothache but that when we have toothache ourselves, by jingo, the sympathy is very much more real. That is the case with unemployment. Those of us who have known unemployment are terrified by what is taking place at the present moment. I have seen Tory Government after Tory Government—I came into this House in 1923—look upon the unemployment problem as though it were a law of nature and they could do nothing about it. From 1945 the policy of the Labour Government during their six years of office showed conclusively that unemployment need not be. There can be no excuse. The Government's own policy is responsible for what is occurring in the building industry.

I hope that the sympathy of the Chancellor of the Exchequer will be expressed in sincerity and sincere actions. As a fellow Devonian, I hope to see him reverse this pernicious policy which is so afflicting the building industry, and let us have full employment again at the earliest possible moment.

5.52 p.m.

Sir David Campbell (Belfast, South)

I should like to join with the hon. Gentleman the Member for Willesden, West (Mr. Viant) in paying tribute to the very fine maiden speech of my hon. Friend the Member for Weston-super-Mare (Mr. Webster). It was most informative and helpful and I think that I can speak for all hon. Members in the House when I say that I not only admired it, but enjoyed it.

I welcome the statement in the Gracious Speech that My Ministers are resolved to ensure the strength of sterling at home and abroad and a high and stable level of employment. They have proved their ability to maintain the strength of sterling and I have no doubt that the steps which they have taken, and will take, will ensure the continuance of an overall high and stable level of employment in Great Britain. But what I and my colleagues from Northern Ireland cannot but be deeply concerned about is the continued high level of unemployment in Northern Ireland.

In February last, when we debated unemployment in Northern Ireland, the figure of unemployment was 9.3 per cent., and in March it rose to 10 per cent. I am glad to state that the latest figure which I have available for 13th October was 8 per cent.—which is, of course, vastly in excess of the 2.2 per cent. average in Great Britain. In certain areas of Northern Ireland the rate is very much higher, especially in areas such as Londonderry and Newry.

The Northern Ireland Government, under the powers granted to them by the Government of Ireland Act, 1920, have done, and are doing, everything possible to deal with the problem, in particular to induce new industries to set up in Northern Ireland in the areas worst affected and to encourage established industries to expand. They have achieved much. One hundred and thirty new industries have been set up since the end of the war and there are 80,000 more employed in Northern Ireland than in 1939, but a great deal remains to be done. I should also like to pay tribute to the very fine work of the Northern Ireland Development Council, under the chairmanship of Lord Chandos. We are grateful for the assistance rendered to us by this Government, but still greater assistance must be forthcoming before the problem can be solved. I and my Northern Ireland colleagues fully supported the Government in the steps Which they took so successfully to restore and strengthen the value of sterling, although those steps temporarily affected, perhaps more severely in Northern Ireland than in other parts of the United Kingdom, our industrial expansion.

Another matter which has affected us recently has been the pockets of unemployment that occurred in other parts of the United Kingdom. The inducements now offered by the Government—and we fully appreciate that the Government were quite right to offer the inducements to deal with the problem in Great Britain—are broadly on the same lines as those that were offered, and are still being offered, by Northern Ireland to new industries to come into its area, and this has made the task of the Northern Ireland Government more difficult. I would ask for a very definite assurance from the Minister who is to reply to the debate that the Government will agree to any further measures which the Northern Ireland Government may have in mind to increase industrial expansion.

I would also ask my right hon. Friend the President of the Board of Trade to ensure that all who approach his Department with regard to obtaining advice or authority for the setting up of new industries will have their attention drawn to the facilities offered by the Government of Northern Ireland to people who wish to set up new industries.

I should like to draw attention to one particular industry. I refer to the aircraft company of Short and Harland. The main factory is sited in East Belfast and I trust that my hon. Friend the Member for Belfast, East (Mr. McKibbin) will have an opportunity, later in the debate, to develop and expand its problems more fully. My hon. and gallant Friend the Member for Gloucestershire, South (Captain Corfield), on 29th October, put very ably the urgent need for the building up of an adequate and efficient air freighter fleet and referred specifically to the freighter version of the Britannia which is being developed by Short and Harland of Belfast.

I hope that the Minister of Defence and the Government will deny rumours that they have in mind the purchase of freighter aircraft from America and will place orders, without delay, with Short and Harland. This firm is developing a first-class freighter which, I am informed, should adequately meet the Service requirements and which could also be developed into a first-class commercial freighter.

My hon. and gallant Friend the Member for Gloucestershire, South referred to the redundancy which had occurred at the Bristol works, in his constituency. He was, however, glad to report that almost all of the 2,000 men who had been laid off had found other employment. Most regrettably, there would be no such happy outcome if Short and Harland were to cease to function as a first-class aircraft factory, because there are no suitable vacancies available to absorb the highly skilled employees.

In conclusion, I pay tribute to the Government for the schemes which they are introducing to help small farmers. This is of vital interest to Northern Ireland, for the great majority of our farmers are small farmers. There will be disappointments, because we have still a large number of small farmers who will not benefit; they have farms of less than 20 acres. I fully appreciate that it is necessary that we should endeavour to have our farms, and indeed anything else we do, run at an economic level, and I believe that this new scheme will be of great benefit to us in Northern Ireland and to the prosperity of the country as a whole.

6.1 p.m.

Mr. Arthur Holt (Bolton, West)

I hope that the Government will continue in economic affairs to do what they appear recently to have set themselves out to do—to get their priorities right. While I agree that many of the criticisms levelled at the Government by the right hon. Member for Huyton (Mr. H. Wilson) may be justified, I think that the trouble which we have met since the war, whichever party has been in power, is that no Government set their priorities right on the economic front. Gradually people have come to realise that the first priority ought to be to stabilise the cost of living.

Once that is accepted, we can search—and there is still much searching to be done, because I think no one knows the quick answer—for ways and means of obtaining the highest production and the highest amount of employment. Whatever the past history, and whether the present situation has come about through the swingeing Bank Rate imposed by the former Chancellor of the Exchequer —I do not propose to waste the time of the House on that now—we are in a position in which a measure of stabilisation of the cost of living has been reached.

I should greatly regret it if, in trying to conduct the next part of this operation, the Government were to go back into the kind of troubles which we have had in the last few years. I do not pretend that it is anything but a very difficult operation, but if we keep our priorities right we shall avoid many of the troubles we have had in the past, such as balance of payments trouble, weak sterling, inefficient employment and bad production and the use of resources in the wrong direction. We shall avoid those things if we keep our one priority right, which is to keep the cost of living as stable as possible.

In this connection, I should like to ask one or two questions. I understood the Chancellor of the Exchequer to say that these new arrangements to increase the quotas in the International Monetary Fund and also to increase the capital of the World Bank would probably be approved by next autumn. Is this a technical or formal approval? Do I understand that nothing will happen until next autumn? The Financial Secretary shakes his head. I am glad of that assurance, because the expansion of world credit is required urgently and certainly cannot wait until next autumn.

Secondly, what useful purpose does even the Treasury think that the Capital Issues Committee is now serving? I have looked at the figures of the applications made to the Committee in the last few years and of the refusals, and I see that in the second quarter the number of refusals has already dropped considerably. I remind hon. Members that in 1954 and 1955, when the Capital Issues Committee was operating on the basis of the £50,000 limit, the refusals were less than 3 per cent. of the applications. If, as a result of the recent changes in the instructions to the Capital Issues Committee, we are to get back to about 3 per cent. refusals, is it necessary for everything to be put through this ridiculous process in order to weed out 3 per cent.? I still fail to understand how the body of people who will decide this matter have any qualifications for the job. All this for 3 per cent.! I should have thought that, entirely in line with the movement to remove many of these restrictions, we could see the end of this ridiculous Committee.

Thirdly, what about taxation in the process of both trying to keep the cost of living stable and trying to push up incentive and the production effort? I do not expect an answer to this today, and I merely wish to draw attention to the tact that even in their encouragement of house buying the Government propose to tackle the problem by giving some form of artificially cheap credit rather than by reducing taxation on those who wish to buy a house or by the complete removal of Stamp Duty and Schedule A taxation. If there is to be a move in this direction, I think it would be much wiser to do it through reductions in taxation rather than by giving some kind of new and cheap loans to private enterprise housing societies.

Mr. John Hall (Wycombe)

Would the hon. Member explain how he thinks that the lessening of the tax burden on the individual would enable him to raise money to purchase a house?

Mr. Holt

I think that is fairly self-evident, and I do not believe the hon. Member wants it explained in detail. If less money is taken from people in taxation, they will have more money left with which to buy a house.

Mr. Douglas Marshall (Bodmin)

If they are paying tax.

Mr. Holt

Is it suggested that the people who would most benefit from the Government's new scheme are those who pay no tax at all?

Mr. Marshall

For a considerable time the Government have so reduced taxation that a great number of people who are now in a position to wish to purchase their own houses are paying no direct taxation.

Mr. Holt

I understand that the hon. Member for Bodmin does not want taxation reduced. I do not wish to get involved in this matter in detail, because I mentioned this particular aspect of economic matters merely en passant. No doubt we can have further discussions about it when the Measure in question comes before the House.

Turning to employment generally, my constituency is rather above the national average of unemployment than below it. The troubles in Bolton have been made worse by the troubles in the cotton in- dustry. It is not so much a question of curing the cotton troubles, which is a problem which has defeated everyone so far—

Mr. Sydney Silverman (Nelson and Colne)

Nobody has yet tried.

Mr. Holt

I do not think the cotton industry can be saved in any practical or reasonable measure by any Government. I think it could probably be helped. The troubles in a place such as Bolton and other manufacturing towns would not be as great if there were a reasonable opportunity for alternative employment. I have been forced to that conclusion from my investigations in my own town.

At present, we have about 1,600 men unemployed in Bolton. I know that the cotton industry employs quite a number of men, but I also know that those who have been thrown out of employment in that industry have found it extremely difficult to find employment in the engineering industries and the like, merely because there has been a general tightening up. The best thing that can happen for Bolton and other places similarly affected is not quotas on foreign goods—which will create very little employment in Bolton—but a general lifting and expansion of the whole economy. There, again, I say that the object will be defeated if that is done at the expense of stability of prices—

Mr. John Diamond (Gloucester)

If the hon. Member's remark was not en passant, do I gather that the official Liberal Party attitude now is that nothing can possibly be done for the cotton industry?

Mr. Holt

I did not say that. I said that no Government could save it, but I said that some things could be done—

Mr. Diamond

What can industry do to save itself?

Mr. Holt

I doubt if it can do anything.

Mr. S. Silverman

That is what my hon. Friend the Member for Gloucester (Mr. Diamond) asked.

Mr. Holt

My words are being twisted. No Government can save cotton, and I do not believe that the Lancashire cotton industry can save itself.

Mr. Silverman

So it cannot be saved?

Mr. Holt

"Saved" is the relevant word. I did not say that the situation could not be slightly or marginally improved. This is nothing new for me—I have said it for about seven years. But the real thing that can help the general unemployment situation in the Lancashire cotton towns—and this applies to Nelson and Colne just as much as to others—is to expand general industry, and so take up some of those inevitably leaving the cotton industry. Putting on quotas really will not help—

Mr. Silverman

I can understand how, possibly, what the hon. Member for Bolton, West (Mr. Holt) says might apply to towns that already have other industries, but how is anybody to apply what is now being said to a constituency like Nelson and Colne—which has been specifically mentioned—in which nearly 70 per cent. of the whole working population is employed in the cotton industry?

Mr. Holt

I think that the hon. Member for Nelson and Colne (Mr. S. Silverman) should differentiate between Nelson and Colne.

Mr. Silverman

I am the Member for both.

Mr. Holt

But one town is in a considerably better position than the other. It is quite useless to make generalisations about Lancashire towns. If we really want to help the Lancashire area in general, the best thing to do is to improve the communications. There is often work, but it may be ten or fifteen miles away. For instance, apart from the part of East Lancashire which the hon. Member for Nelson and Colne represents, the roads there are entirely against us. In the area as a whole there has been until recently plenty of work, but we are faced with the difficulty of transport. I remember the hon. Member for Burnley (Mr. Burke) instancing the number of people who went out of Burnley each day because there was work outside the town. He said that he would rather have it in Burnley—

Mr. Silverman

He said nothing of the sort.

Mr. Holt

The fact remains that transport is one of the problems there.

Lastly, do not the Government intend to take any further initiative to get the very urgent matter of the Free Trade Area negotiations moving again? To me it seems so vitally important that we really should look round once more to see if there is anything we can do to help the French to get over their own difficulties and to come to an agreement. I know that the views of the French, or of many of the French, are such that it seems almost as if they do not want an agreement, whatever it be, but I really do not think that we can leave it there.

The one thing that is supposed to have stuck in their gullet a good deal is the imperial preference system. There are two aspects to this. One is that we allow all or nearly all Commonwealth goods to come into the United Kingdom duty-free. The other is that, in return, we obtain a preferential duty from the Dominions. There may be differences of opinion as to what this preferential duty is really worth to us, but apparently the Government set some store by it. Certainly, some manufacturers, though by no means all, who export to Australia and New Zealand and find that the tariff against them is about 7½ per cent.—sometimes 10 per cent.—lower than the tariff imposed on similar goods made by, say, a German or an American manufacturer feel that it is worth something, but it is a matter of some argument and controversy as to exactly how much it is worth.

As I say, that is one of the things that is supposed to be an obstacle to a successful conclusion to the Free Trade Area negotiations, and I suggest that this is something we can well forgo, and certainly ought to forgo if, by not doing so, the Free Trade Area negotiations are not successful. The Government could treat the matter as they liked. They could put it over—and I am sure that from their own point of view it would be perfectly genuine—as a great gesture made to bring about a Free Trade Area agreement. But I am sure that it would be quite disastrous, if a thing like this really would do the trick, not to do it, and then to be faced with no Free Trade Area, a Europe split in two, and a possible falling into the frightful economic war envisaged in the speech made by the hon. Member for Weston-super-Mare (Mr. Webster).

I should like to know from the Government whether they propose to take any further initiative. If it were an initiative of this type, then, of course, the House should know about it and should have an opportunity to discuss it, but it is one that I believe ought to be made in order to bring about the Free Trade Area, and I hope that later on we shall hear something from the Government.

Mr. S. T. Price (Westhoughton)

I want to be clear about this. Is the hon. Member for Bolton, West (Mr. Holt) asking the Government to give an undertaking to the Liberal Party—for whom, I take it, the hon. Member is speaking—that they will impose a tariff or duty on goods exported from the Dominions to this country, in breach or amendment of the Ottawa Agreement?

Mr. Holt

I am afraid that the hon. Member cannot have heard all that I said—

Mr. Price

I did.

Mr. Holt

I tried to make it perfectly clear that, of course, I was not suggesting any alteration in the arrangement by which Commonwealth goods come into the United Kingdom duty-free. What is within the province of the British Government today is for them to say that they are prepared to give up the preferential tariff that we get from the Dominions. That tariff is, at the moment, said to be worth an average of about 7½ per cent. to those manufacturers who get it.

In many cases, however, even with the preferential tariff, the duty is so high that the United Kingdom goods cannot get in. In many cases, the Australian tariff on textiles is as much as 25 per cent. or 30 per cent., but there is a preferential tariff. The Government could say to the Germans and the French: "We will forgo the preferential rates on our goods going into the Dominion markets"—

Mr. S. Silverman

That would do the cotton industry a lot of good.

Mr. Holt

Those countries on the Continent could then negotiate with the Dominions as to whether they obtained the tariff that we had, or still carry on with the tariff that was previously imposed on their goods. That is something which the Six can negotiate with our Commonwealth countries. We get this so-called benefit by which some people set great store, though personally I do not think it is of such great value. In any case, it is being reduced year by year. In the last agreement between this country and the New Zealand Government these preferences were cut down again. This is something that we can offer to Europe in order to give some extra reason for finally bringing these to a conclusion. I feel quite certain that if we did, it would certainly bring all the countries in Europe on our side, and I think that it is very likely that even the French would accept the Free Trade Area.

6.21 p.m.

Viscount Hinchingbrooke (Dorset, South)

The Radical Press, by which I mean that new coalition of the Daily Herald and the News Chronicle, the different periodicals belonging to the Labour and Liberal Parties, has been assiduously putting over the view since the summer that the policy of my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) has succeeded beyond the wildest dreams of the Government, that the Government have taken fright and are now putting on the brakes as hard as they can. We are now having a debate to deal with the consequences.

I believe that the Government have been a little at fault in the last six months in not anticipating this charge and dealing with it sooner. I think that the speech of my right hon. Friend the Chancellor of the Exchequer today was very timely indeed, because it came at a moment when the country has to be reassured that it has not become the policy of the Government entirely to apply the brakes and to reverse the policy initiated by my right hon. Friend the Member for Monmouth in September, 1957. It is quite clear that the Government are wholeheartedly behind the original concept of my right hon. Friend, now sitting on the back benches, and that there is not to be any substantial let-up in the policies which have been applied.

Has inflation been checked? My right hon. Friend the Chancellor of the Exchequer said that a return to inflation was the most dangerous thing of all in the present circumstances, and I thoroughly agree. There are three factors which influence that well-known figure and bellwether of all crises in this country, the Zurich banker. One of them is the course of import prices and volume; one is the course of export prices and volume; and the third is internal indicators of inflation. I do not want to anticipate any alarmist points of view on the part of these Zurich bankers, but of course nothing that is said in this House, unless it is backed up by the most reliable figures, has any influence on them because they are very acute, clever and able men and they are able to see these things for themselves.

I think it was the Chancellor of the Exchequer who said that the world decides what our export prices shall be. We are a little trading island. It is no use thinking, as so many speakers on the benches opposite seem to think, particularly the hon. Member for Newton (Mr. Lee), who spoke from a strictly industrial point of view, that everything can be comprehensively arranged by the central Government and that the opinions of other countries can be regulated to suit our convenience about over-full employment or whatever it may be. It is not so. It is the Zurich banker, the capitalist world playing this game which raises the standard of living of so many of the more enlightened civilised countries of the world. It is those aspects of public international life that really count. We cannot get away from it.

We have to observe what are the factors which influence these curious men. I have said mainly what they are. Our present gold and dollar reserves are standing at a very high level. Our exchange rate is satisfactory. In other words, our vital statistics are good, and may they long remain so. But to what are these excellent figures due? They are due to a steady fall in imports and in shipping debits over the last six months. I have the figures with me. From January to June, 1957, imports were £1,807 million; July to December, 1957, imports were £1,766 million; from January to June of this year imports were £1,616 million—a steady decline. The shipping debits are the same for the comparable period–4234 million, £210 million and £177 million.

Mr. J. T. Price

Is the noble Lord forgetting that these differences that he has quoted are differences in price levels, that they are not necessarily differences in the quantity of goods imported? It is because there has been a 10 per cent. fall in the price levels for overseas shippers that these figures have shown such a spectacular decline.

Viscount Hinchingbrooke

I realise that. I have looked up the volume figures; I have them with me and they are much the same. If it is the prices that have fallen, that is an indicator of what might go wrong to the economy if there were an explosion in the world, a sudden vast buying demand by the United States or any other country, and prices were to rise. The same applies to shipping debits.

On the export side, as the Chancellor of the Exchequer said, the situation is not very satisfactory. For the same periods that I have given, exports and invisible exports together totalled £2.486 million, £2,481 million and, in the last six months to June, £2,458 million. Exports and invisible exports have hardly contributed to stabilising the situation in the country. Indeed, they have shown this decline. In parenthesis, I am wondering whether the Government have been wise to abolish hire-purchase restrictions on so many articles, notably motor cars, that we need to stimulate our export trade. I hope that before the end of the debate we can have some justification, in strict economic terms, for the relaxation of controls on articles which are suitable for export.

There is another special factor in the situation, of which I do not want to make a great deal, but on which I should like some information. What is the expected gold payment to the European Payments Union in the last six months of this year? It was very substantial last year and in previous years. It was £70 million in 1955, £88 million in 1956 and £119 million in 1957. So far this year we have received from the E.P.U. gold amounting to £27 million. That has artificially helped to make these figures appear good. I should like to know how much we are at risk there.

I come to the indicators of internal inflation which influence these moguls overseas from time to time. The floating debt at the time of near crisis in August, 1957, was £5,022 million. Many people at the time thought that the very size of that figure indicated inflationary activities. It was £5,290 million in October of this year. The note issue, which some people think is an indicator of excessive internal purchasing power, was £2,055 million in August, 1957, before the autumn crisis, and it is now not quite so much, but relatively high at £2,008 million.

But it was Government expenditure, or rather the apparent and rather startling rise in Government expenditure, which was the reason why my right hon. Friend left the Government. Government expenditure between April and August of 1957 was £1,519 million, and this year it is £1,574 million. We may say that a matter of £75 million is not very important in the national economy, but we have quite clearly broken through the barrier, and Civil Estimates expenditure is way beyond what it was when my right hon. Friend resigned.

Finally, the most disquieting one of all is the level of bank advances, which, in August, 1957, just before the autumn crisis, were £2,054 million. As a result of the measures taken in the crisis, they rapidly went down in November, 1957, to £1,931 million, and since then have steadily risen. In February, £1,940 million in May, £2,031 million and in August of this year, £2,092 million, which is more than they were in the month before the economic crisis. There are many other considerations which must arise which weigh the other way, but the basic statistics of the country today give some cause for anxiety, and certainly do not give us an opportunity for playing fast and loose with public and private expenditure. I am very glad that the Government are not doing that, and I was very glad to hear from my right hon. Friend the Chancellor today that he does not intend to do so.

The view put over by the Radical Press is that the Government are hell-bent to bribe their way towards victory by loosening every factor on the economic front, by playing a fast and loose political game. I believe that that is what the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) virtually said in his speech. Therefore, a sudden international scare —and who knows that we have finished with crises in the Middle East and elsewhere?—might well shoot some of these international indices skywards and send us hurtling into another cost inflation at home. We are hovering on the edge of risk today, and a massive release of purchasing power, for any reason whatever, might well set up a new cycle of inflation. Therefore, when the Chancellor says that there is to be no opening of the flood gates, I was very pleased to hear him say that.

There is a short point on the public investment programme. I rather agree with the hon. Member for Bolton, West (Mr. Holt), as I have agreed with him in the past, that the Capital Issues Committee is no longer fulfilling a useful purpose. If it is to be abolished, or even if it is not to be abolished, why on earth cannot we have annually, by means of a White Paper, a published statement of the investment programme which we can discuss and consider?

My right hon. Friend the Chancellor has elevated the figures by £150 million, but we have not the slightest idea year by year how it is divided up between the railways, the roads, schools, hospitals and all the rest. We do not see it until we get one of these massive Blue Books at the end of the year, and then we have to wade through it page by page to discover what the facts are. I hope that the Government will at least agree to get over the extraordinary reluctance of the Treasury to publish the capital investment programme, and that they will do so by means of a White Paper.

On another short point on the convertibility of sterling—and I know that right hon. and hon. Gentlemen opposite do not like convertibility, because it releases the one and final control over the economy of the nation—I believe that we cannot successfully survive in the international capitalist order without working the international capitalist game, and that the sooner we release sterling and let it float, and the sooner we have convertibility, both for foreign sterling and resident sterling, the better. That is my view and a great many of my hon. Friends agree. I tell the Government that because some inquiries have been made about this.

I hope that the Chancellor, who seemed, at Delhi, to be riding very high towards this aim, will pursue his policy to the end now that the international figures justify our taking the risk.

Mr. H. Wilson

Will the noble Lord enlighten the House about these inquiries? Does he know whether there has been a public opinion poll among Tory back benchers to find out what we ought to do about sterling, or is it one of these public relations organisations which has been finding out what back benchers think?

Viscount Hinchingbrooke

The right hon. Gentleman repeatedly and ad nauseam lectures his economic and finance committee on his back benches. None of us on this side of the House do any such thing, but we do have such organisations so that discussions can take place.

Right hon. and hon. Gentlemen opposite have done their best to show that unemployment has now become a serious thing, and, no doubt, in some areas, it is serious. When it becomes serious, at a figure of 8 or 10 per cent., it is a calamitous state, for which something must be done. The Government are doing what they can in these areas and a new Bill passed during the last summer—the Distribution of Industry Act—should be of decisive value in itself.

We ought to know how serious it is, because, for party political reasons, the Labour Party has been dressing it up as one great Aunt Sally. [HON. MEMBERS: "No."] I can see no reason why the Government should not publish detailed analyses, making them more readily available. The right hon. Gentleman mentioned a publicity machine. We do not maintain a publicity machine, and I do not know what the right hon. Gentleman was referring to. But if there are any publicity machines, let them have a go at the unemployment figures. I do not believe that they are at all massive and permanent. There are people who are off work one day and on the next. Let us know how many people there are who are unemployed, what are the age groups, the sexes and the ranges of employment involved, when we shall be able to see that some of these things are properly dealt with.

However, the Labour Party is now back on its old stamping ground, and how pleased it is to be there. For years past, there has been over-employment, and very little to talk about it in this field, but now it has the chance to go before the country and really get down to it. The speech of the hon. Member for Newton was a characteristic example of many speeches which I have heard from distant corners of this House before the war. Hon. Members opposite are now back on their own stamping ground, and how happy they are and how they enjoy it.

There are various things which they should look up before they go very far. One is a footnote on page 7 of the Government White Paper on Provision For Old Age (Cmd. 538). There is an interesting little note there, which ought to be explored. In connection with a table showing the estimates of future income and expenditure of the National Insurance Fund, with contributions and benefits on the present basis, the footnote says: For the purpose of the above estimates, unemployment has been assumed at an average level of 3 per cent. Is that so terrible? The Leader of the Opposition not so long ago was talking about a tolerable limit of 4 per cent.

Mr. H. Wilson

I am sorry to interrupt the noble Lord again, but this suggestion is constantly being put about, although it is quite wrong. My right hon. Friend, as Chancellor of the Exchequer, was asked by an international organisation at what figure emergency action would have to be taken. He did not say that 3 per cent. was tolerable. He said that emergency action would have to be taken to prevent it going to 3 per cent.

Viscount Hinchingbrooke

If the right hon. Gentleman has chapter and verse for these things, of course I must accept what he says. I regret not having direct evidence of what the right hon. Gentleman the Leader of the Opposition said. However, it is passing into current understanding, and if the right hon. Gentleman and his hon. Friends say it is wrong and can put an end to it, so much the better.

The figure which the Socialist Government, in 1946, worked on in instructing the Government Actuary of that day to make his calculation for the purposes of unemployment assistance rates was 8½ per cent. That is given in the footnote to the document which I have just mentioned. Let us not, therefore, have too much high-mindedness and high thinking on this subject engendered from the other side, about it always having been the policy of the Labour Party to maintain unemployment at about 1 per cent. and that one should only really get angry when it rises to 2.2 per cent.

Here was a deliberate calculation, after the war, based on an expected, anticipated, if not positively welcomed policy —[HON. MEMBERS: "No."] I said "if not positively welcomed policy"—of 8½ per cent. unemployment.

Mr. James Griffiths (Llanelly)

The noble Lord must know that that was adopted actuarially for the insurance purposes of the Fund. It was not the policy at all.

Viscount Hinchingbrooke

I believe that the right hon. Gentleman the Member for Llanelly (Mr. J. Griffiths) was himself Minister of National Insurance at the time. He it was who must have told the Government Actuary at that time to work on those figures.

Mr. Griffiths

The noble Lord is mixing things up. The question was, what was the figure to be regarded as the figure upon which the insurance calculation should be based? Beveridge said 8 per cent. We accepted that at the time. It was not an acceptance of 8 per cent. unemployment at all, but a matter of providing for absolute security in the unemployment fund.

Viscount Hinchingbrooke

The words are here. …unemployment has been assumed…to be 3 per cent. (compared with 8½ per cent. assumed in 1946). That is what I am reading out from the Government White Paper. If the right hon. Gentleman does not like it, he must deal with it in a speech at the end of this debate.

Mr. Griffiths

I have dealt with it already.

Viscount Hinchingbrooke

The principal characteristic of this debate, in the contributions from the benches opposite, is an utter neglect in any speech of any reference to inflation. Hon. Gentlemen opposite do not appear to live among those who suffered so terribly from 1945 until quite recently, until the great engine of inflation was brought to a halt. They do not appear to know them.

The hon. Member for Newton was speaking for a sort of massed rank of Labour men working all together in a factory, isolated from the rest of the community, concerned only with full employment and massive industrial production. The more production there can be, the more conurbations can be sprawled across the countryside, the more pleased he obviously is. If, by any chance, the prices of food go up in the shops, what do they do, put in a wage claim and have it granted?

Mr. Percy Shurmer (Birmingham, Sparkbrook)

No.

Viscount Hinchingbrooke

And if an employer refuses to grant it, they go before a compulsory arbitration tribunal and have half of it granted. Of course, they are angry at the tribunals being abolished. Of course, they are angry at any sign of inflation being brought to an end. The isolation of the Labour Party from the fear and resentment and horror of millions of our subjects who suffered from inflation is one of the most extraordinary things I 'have witnessed in public life. I cannot understand how the leaders of a great and responsible party in this nation of ours, who hope to become the alternative Government of our country, can, within a matter of months, so neglect the consequences of their past acts.

6.45 p.m.

Mr. Sydney Silverman (Nelson and Colne)

The noble Lord the Member for Dorset, South (Viscount Hinchingbrooke), who has just made a most interesting speech, as he always does, deserves much more popularity in his party than, I understand, he in fact has. In a party which really recognises its democratic obligations, a Member who gave such frank and uninhibited utterance to the real feelings and policies of his party, as distinct from what the Front Bench spokesmen of the party say, ought to be held in very high honour. I suppose that it is part of the deterioration in our democratic ethos during the past ten or fifteen years which deprives the noble Lord of the rewards from his party to which he is so clearly entitled.

The longer I am in the House, and the more often I listen to economic debates, the more astonished I become at the variety, originality and lack of consistency in the economic analyses, forecasts and objectives which are put before us. But this afternoon we heard from the Government Front Bench what must be the most original economic ambitions or ideals ever uttered in the House.

If I understand the Chancellor of the Exchequer aright, it would seem that he is haunted, and the Government are haunted, by an almost unspoken terror. They fear that, some day or other, we may in this great country of ours have a community of adult men and women who are employed all the time, producing goods, doing constructive work, able to work and produce constantly, without intermission. In the opinion of the Government, if we understand rightly what the Chancellor says, that would be an unmitigated disaster.

The Queen's Speech talked of maintaining a high and stable level of employment". I am sure that the words were most carefully selected. It is not "full employment". That was our objective. I know about the risks of inflation, and I will come to that. Our objective was to keep employed people who wanted to be employed. We wanted to keep them employed productively. When we went round the country telling people that the only salvation for the economy of the country lay in more and more productivity, we meant just that. But not the Government. Apparently, one can produce too much. One can have too many people employed, and one can have them employed for too long. We must cut back. They must not be employed all the time. There must be a high level of employment, but not full employment. I hope that the country understands this, now that it has, at last, clearly been stated.

The Government speak of a high and stable level of employment". In other words, if it is not to fall below whatever they regard as a high but not full level, it is not to rise. There must always be some unemployment. That is what the Queen's Speech says, that is what the Prime Minister said, and that is what the Chancellor of the Exchequer said, though he did not say it quite so—I hope he will forgive the word—brazenly as the noble Lord. This is precisely what we on this side of the House have been saying ever since we came into existence as a political party.

I thought that my right hon. Friend the Member for Huyton (Mr. H. Wilson) was a little ungrateful to Lord Cohen and his Council. He said that Lord Cohen was speaking as of the nineteenth century. As I understood it, at any rate, the first Report of the Cohen Council confirmed what has always been the economic analysis offered by this party for diagnosis of the economic ills of capitalism. He said perfectly clearly that we cannot have full employment without inflation unless we are prepared centrally to control the economy.

The difference between the two parties on this issue is quite plain. Neither side wants inflation. The Government and their supporters, however, want to prevent inflation at the cost of many hundreds of thousands of unemployed workers, while we want to maintain them in work and prevent inflation by exercising proper control. The noble Lord must understand that he and a small number of his friends are in a class apart. Only a small number of the people of this country can live without working; there are some, but not many. The vast mass of the noble Lord's fellow citizens have to work, and a system which ensures to them the opportunity of earning their living by their labour is not regarded by them as slavery. The real slavery is the slavery of poverty, destitution and unemployment.

The noble Lord knows perfectly well that we cannot have an organised, civilised community unless we are prepared, as a community, to impose some limitation on the freedom of individuals to do exactly what they like. It is a condition of order and liberty to have some restraints. We say that those restraints in the economic field are very well worth while being applied if they result in the extended liberty and freedom to the mass of the community of being able to earn their living.

I should like to give an example of what I mean. Some of my hon. Friends and myself tabled an Amendment regretting the absence from the Gracious Speech of any reference to the problems of Lancashire. The Prime Minister, in his speech, made one reference to them. He said: I recognise, of course, that there are industries in this country which are currently facing special difficulties"— the implication there is that the difficulties are current but not permanent, that they are special but not insurmountable, although he did not say that— for special reasons, and the most striking, and certainly the best known, is the case of the cotton textile industry. I think that Lancashire will be grateful to him so far. Then he said: Here, we have a famous, long-established industry, with honourable traditions, both of skill and labour relations, which has made a great contribution to our national life, but which feels its existence threatened"— He is not talking now about "special difficulties for special reasons," or current difficulties as distinct from permanent difficulties, but he says in this sentence —and he is right— which feels its existence threatened by the continuing inflow of cotton goods, free of tariff or quota, from the Asian Commonwealth."—[OFFICIAL. REPORT, 28th October, 1958; Vol. 594, c. 31–2.] The right hon. Gentleman is quite right: the Lancashire cotton industry does feel that its existence is threatened.

My right hon. Friend the Leader of the Opposition devoted part of his time during the Recess to coming to Lancashire and having a look for himself, and we were all grateful to him for coming. I know that he knew a good deal about the problem before he came, but I am sure that he felt that, having come and having seen the human side of it, he understood it even better than when he was relying only on published figures and statistics.

I wish the Prime Minister would do the same. Let him come to Nelson or Colne, or, may I say, to the constituency of the hon. Member for Bolton, West (Mr. Holt). If he says no more than he said in his speech, the shadow that is over Lancashire will deepen. [Interruption.] I am dealing with the cotton textile industry. My hon. Friend the Member for Birmingham, Ladywood (Mr. V. Yates) will know that other industries are in the same condition. I am calling attention to this particular industry. I know that if my hon. Friend has the opportunity he will deal with others.

The hon. Member for Bolton, West has spoken for the Liberal Party. If anything, he is even more pessimistic than the Prime Minister. He says that nothing can be done for the industry at all and that the Government cannot help.

Mr. Holt

indicated dissent.

Mr. Silverman

I confess that I was not altogether able to follow the hon. Gentleman, but he spoke about giving some marginal assistance, which he granted could be done, but he said that it would not be enough to save the industry. If it is not enough to save the industry, I do not think he need quarrel with what I am saying. He said that nobody can save the industry. He says to the industry, "The Government cannot save you; you cannot save yourselves." Is that what he will tell Bolton at the next Election?

Mr. Holt

I have been telling them that ever since I have been in Parliament.

Mr. Silverman

Are we to be content with that? Is that the Government's view? All that the Prime Minister had to say was. "You will, perhaps, get a little breathing space if you can make an agreement with Hong Kong." I dare say that an agreement will be made with Hong Kong. I think that those who are negotiating and who have encountered such difficulties in negotiating may in the end be compelled to decide that some sort of agreement is better than no agreement at all. In that sense, therefore, I suppose that one may expect that an agreement will he made. But does anyone think that it will be a satisfactory or useful agreement?

The one thing that is admitted by everyone who takes part in these discussions is that the immediate problem to be faced in the cotton industry is the problem of the home market. No one believes that it is possible even to begin to stop the bleeding unless imports of these cotton goods are limited. I do not believe that even the hon. Member for Bolton. West would refuse an agreement limiting these imports if he could get it. The only question is whether it is possible to get it voluntarily.

No doubt it would be better to get an agreement voluntarily, but it has to be a satisfactory agreement. It must be something that makes a difference. Then, when agreement has been reached with Hong Kong, and if we can get it, perhaps, with less difficulty, with Pakistan and India, we are still only at the beginning of the problem.

The production of cotton goods in the Far East is growing. The Hong Kong cotton textile industry, which has been in the forefront of the discussions all this year, is of recent origin. It is only for six or seven years that there has been a Hong Kong textile industry. How did it come into being? The great industrialists were driven out of China and they came to Hong Kong. Refugees came from China and the textile industry was artificially built up in Hong Kong to provide these refugees with a livelihood. It may be asked, "Why not? What objections have you to that?" I have no objections. But having allowed the industry to be built up to provide these people with the opportunity to earn their livings, how stupid it was then to prevent them selling their goods in the Chinese market, which was on their doorstep.

During the past seven years, the Lancashire home trade has been deliberately sacrificed to maintain trade restrictions designed only for the political purposes of the cold war. The result of these inhibitions has been the result of what such inhibitions always is. Just as the blockade of the Soviet Union in the years after 1917 assisted the Russians to build up a great industrial capacity by compelling them, so the Chinese in these years have built up their own competitive textile industry, which means that India, Pakistan and Japan are losing rapidly what was their own natural market. Thus the pressure against our export trade increases and will go on increasing, and unless it is protected the difficulties of the home market will also go on increasing.

Right hon. Gentlemen on the Government side may say, as the Prime Minister said, that there are political reasons why we cannot give protection. They may be good political reasons; I do not stop to analyse them now. For my part, I should not have thought that membership in the Commonwealth entitled that Colony to a sweat-shop licence. Our duty to interfere and make sure that conditions of labour are comparable to ours is a duty which lies upon us. It may be part of our trusteeship as the Mother Country of the Commonwealth to see that industries grow and are encouraged and develop, but it is part of that very duty to see that there grow and develop labour conditions that are fair to the people themselves as well as producing fair competitive trading conditions outside.

Mr. Holt

Much as I, too, have advocated trade with China, does the hon. Member really believe that, had there been no embargo on trade to China, trade into China of cotton goods would, in fact, have relieved the pressure at all? Does the hon. Member really think that China would be buying cotton goods now, if she could, from the West?

Mr. Silverman

I do not think that the Chinese would be buying cotton goods now, because in the past six or seven years they have created their own. If I am asked whether they would not readily have taken cotton goods from 1950 and 1951 onwards, the answer is, "Yes". In giving that answer, I am guided not merely by theoretical considerations, which are obvious enough, but I happen to have been in China at the time and we did a good deal of discussing these very problems.

I do not for one moment say that that would have been a permanent salvation of the cotton industry—of course not; but if the hon. Member for Bolton, West troubles to look at the rapidly increasing figures of the importation of manufactured cotton goods from Hong Kong during those seven years, and if he can imagine their not being imported here because there was a market much nearer, and a more favourable one, I am sure he will appreciate, as those who have been paying some attention to the problem already appreciate, that the pressures on the home market would have been much less strenuous than they have been. If, in the end, however, there are overriding compelling reasons which prevent the Government from protecting the home market of Lancashire-produced cotton textile goods, and if as a result the hon. Member for Bolton, West should be even partially right, what do the Government expect Lancashire to do?

On the first day of the general debate on the Address, my right hon. Friend the Leader of the Opposition talked a little about this. There is a limit to the number of weeks for which an unemployed man can draw unemployed pay. What is he to do when that period comes to an end if the cotton industry cannot be preserved at its present level, much less restored to the higher levels of earlier years? Is he to remain unemployed? If so, is it to be on unemployment benefit? Are he and his family to look to nothing better than that? In Nelson, as I have said, the proportion of workpeople employed in the cotton textile industry is almost as high as 70 per cent. In Colne, it is a little less, but not very much less. If those people are not to be employed in cotton, is there not a duty on the Government to see that they are employed in something else?

For years, we pressed the Government to make this a Development Area. In the end, they made it a Development Area. I do not say that no benefit at all has followed from that, but it has been very minimal. There is very little more industry in the whole of this area now than there was before the Order was made. If this situation is to go on and if the Government really are powerless to do anything for the cotton industry, how are they to discharge the duty that would then rest upon them to provide the area with other industries to take its place?

Is it really enough to say, as I hear people saying sometimes, that the unemployed should be allowed to go elsewhere —that they could go down to the constituency of my hon. Friend the Member for Ladywood, in Birmingham, for example, and join the queues of discharged motor car workers outside the employment exchanges? Or supposing other parts of the country really had vacancies for workmen who could no longer carry on their own industries in their own towns. Is it really a practical proposition? Does this country really want to see all the social capital which has been built up in Lancashire for a hundred or a hundred and fifty years dissipated while we spend millions and millions on building vast conurbations up and down the country elsewhere?

Is that really the policy? Is that really what Lancashire has to look forward to? Is this what the Government have to offer these people in, to quote the Prime Minister's words again, a famous, long-established industry, with honourable traditions, both of skill and labour relations"? What is to become of the famous, long-established industry? What is to become of the honourable traditions? What is to become of the skill? It is not enough to say, "Oh, well, you can make some sort of agreement with Hong Kong, giving this country a breathing space for a couple of years"—or maybe four or five years, maybe two or three years. Is this a policy?

From this place for the past seven or eight years I have been repeatedly begging the Government, successive Presidents of the Board of Trade, to say what is their idea about the cotton industry. I have asked them to say, if it is to contract, to what level is it to contract. I have asked them to say what the level is to be and how they propose to maintain it, and what they propose to do with those who no longer will work in it.

In the days of the Labour Government employers, trade unions, public representatives were urged to go up and down the county to beg people to return to and to remain in the cotton industry. In those days, having lost our export trade almost entirely during the war, we were seeking to rebuild it as soon as we could. We depended on it. We did not depend on the motor car industry in my hon. Friend's constituency. Later we did, no doubt, but not at first. In the beginning we went back to the cotton trade, and we were told—and we did so—to assure the people that their young folk could live in the cotton industry again.

For it used to be said, after many years of depression and insecurity and fear and doubt, "No child of ours will ever go into the mill." We had to overcome all those inhibitions. We had to assure them that if their children went into the mills they need not fear insecurity again. We told them so. They believed us. They went, and it was the Tories as much as Labour people who joined in those production committees in Lancashire and got the industry going. We dare not look them in the face nowadays unless we are able to provide them either with security in their own trade or some other trade—not later on, not in seven, eight or ten years' time, but now.

When we have a Government, as the Chancellor of the Exchequer has told us today, who are committed to holding back production until some time or other, until we may be able to expand again, and who depend on increasing not production but consumption to keep themselves out of the "red", it is a very poor hope they offer to the people of Lancashire.

7.14 p.m.

Mr. Richard Fort (Clitheroe)

The hon. Member for Nelson and Colne (Mr. S. Silverman) started his speech, if I got his words aright, by criticising my hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke) for not being held in higher repute in his own party. After listening to the fluency of the hon. Member for Nelson and Colne and the extraordinary irrelevancy of so many of his arguments, I and all on these benches can well understand why he is held in so little repute and has so little influence in his Own party. [HON. MEMBERS: "Shocking."] Perhaps hon. Gentlemen will let me elaborate my argument without interruption.

The hon. Gentleman argues that the only cure for inflation is centralised, controlled planning; yet during the five years when right hon. Gentlemen opposite formed the Government and tried exactly these policies, inflation followed just as surely during those years as night follows day, which surely shows that the hon. Gentleman has learned nothing from the experience when his own party were in office and why foreigners look with apprehension on the return of a Labour Government.

Mr. S. Silverman

The hon. Member has made his point, but would he really have the same confidence in it if he were to remember that, although there was an increase of prices in those five or six years of the Labour Government, that was an increase in prices against a background of world prices which were increasing faster and higher, whereas this Government have achieved the miracle of rising prices in a falling world market?

Mr. Fort

It is clear that the Government formed by the hon. Gentleman's party were unable to control prices by centralised control in what we will agree were difficult conditions.

He referred, too, to the wish that the Prime Minister would go to the Lancashire textile industry. Well, he did go to the Lancashire textile trade and talked to what is often referred to as the "cotton Parliament", the Cotton Board conference at Harrogate, the other day. He probably influenced and stimulated the industry as much as anybody who has talked to it since the end of the war.

I so disagree with the hon. Gentleman in his constant equating of Lancashire with the textile industry. It was true fifty years ago, well before the First World War, but let us not forget that in Lanca- shire at the present time, taking the county as a whole, the textile industry counts for little more than 10 per cent. of the employed population. It is true that in the areas which he and I have the honour to represent, the areas stretching down through Rossendale, Rochdale and Oldham, the proportion is very much higher. In his own area, in Nelson, it is, perhaps the highest of any town except Royton; but to talk as though it were only the textile industry in Lancashire is merely misleading those who try to listen to his arguments.

Mr. Silverman

I did not do that.

Mr. Fort

The hon. Gentleman then asked the Government what their intentions were about the textile industry, prefacing it at one time or another with a quotation from my right hon. Friend's remarks at the beginning of this debate, that the textile industry feels its existence threatened. I think it is, perhaps, worth while looking at what the industry is like at present.

It was clearly put before us in a striking speech by Mr. Willie Winterbottom, one of the leaders of the industry, at the Harrogate Conference, with figures and deductions from those figures with which there is very wide agreement in the industry. The first point is that most of the production of the industry goes to meet the home demand, which is now what it has been for about the last twenty years, war years and peace years alike, between 2,200 million and 2.500 million sq. yds. a year. We have reached the position that imports during the last year or eighteen months, nearly two years, coming into this country almost exactly balance out the exports. My own assumption, when thinking about the future of the industry, is that that position will continue.

We are confronted, therefore, with having to produce between 2,200 million and 2,500 million yards a year, which leaves us still with the largest textile industry in Europe. But the fact which stands out from the figures which are now so easily available to us from the Cotton Board is that we still have left in the Lancashire textile areas much more machinery than would be required to produce the quantities I have mentioned, if that machinery were used to the maximum capacity. With the present method of single-shift working, about 10 million ring spindles would produce the yarn needed for the quantity of cloth I have mentioned. We have installed that number, plus 16 million mule spindles which are equal to about 12 million ring spindles. In fact, we have about twice as many spindles as we need if that equipment were being used to maximum.

One of the few hopeful factors in the situation on the spinning side is that the craftsmen, the men who work the mules, have now decreased so much in numbers, from about 12,000 to 3,000 in the last seven years. Therefore this great excess of spindles, which are mostly mule spindles, will cease to be a burden on the industry fairly soon because the people who can work them will no longer be there to exercise their craft. Similar figures can be quoted on the loom side. There s certainly an excess of 20 per cent. of looms, and if they were used more intensively than they are at present we should be able to produce what is required on 150,000 looms instead of over 200,000 as at present.

In looking at these figures and in asking for a greater usage of the machinery that we possess, it is as well to remember that on the spinning side we are working our machinery for only about half the number of hours that countries such as France and Germany, with a standard of living comparable to ours, are working theirs and at about one-third the hours run in the United States. I know that this arises from tradition. The cotton industry has a tradition of long hours and no shift working unlike other industries where hours per week have been shorter and shift-working has been acceptable. There should be greater readiness in the cotton industry to accept the fact that shift working should be followed if we are to make the best use of the machinery and have the size of industry required to meet the country's demands.

It is quite true that this calls for large changes. It is the Government's duty to ease that period of change. I know that an effort has been made to do that by setting up the Development Area which covers Nelson and Colne as well as parts of my own constituency and Burnley. This has had some effect. The numbers working in industries other than the textile industry have been increasing during the past seven years, and markedly since the Development Area was established in 1953. We want to see more of that kind of thing happening, and it is only right to ask the Government to give what help can be given under the 1946 and 1958 Acts to bring about the transition required to give us a textile industry of a size suitable to meet home demand.

In that connection, I should like to hear from the Government benches that the Government are taking into account something more than the crude unemployment figures when they are designating areas under the 1958 Act. There is a great deal of disguised unemployment in the textile areas. Women have left the industry and their disappearance has not been recorded because they were not insured. Therefore, we ask that the Government should take a more flexible view in this matter of designation.

Even if we have more factories, and while it is true that employment will undoubtedly help the people in these places, other factors are involved. I should have thought that it would have been well worth while the Ministry of Labour to have the Social Survey examine the problem so as to find out more about the reasons why people leave that part of the country even when there is employment there. I should like to hear from the Minister of Labour that there is recognition of the fact that the textile area, along with Ulster and other parts of the country with more unemployment than the average, is going through a period of change and should be helped by the Government, using the Acts which I have mentioned.

7.26 p.m.

Miss Margaret Herbison (Lanarkshire, North)

I have been present during the greater part of the debate up to now, and I have been extremely surprised to find that in a debate on the country's economic position, in which employment and unemployment have been discussed, not a single Scottish Tory back bencher has been in his place. Even more scandalous than that is the fact that not one of our galaxy of Scottish Ministers has spared a few moments to grace the Government Front Bench. One would imagine that Scotland was in a happy position in the matter of employment but, of course, the opposite is true.

The Scottish Trades Union Congress has been continually in touch with the Secretary of State for Scotland and it states in its latest bulletin that it has asked the right hon. Gentleman to meet a deputation. In making that request, the S.T.U.C. presented a statement to the Secretary of State. I hope that the Minister of Labour and other responsible Ministers will receive a copy of it and will study it. It is a long statement which, in part, says: Government declarations on 'full employment as principal aim of economic policy' and 'Government ready to take the necessary remedial action to stimulate purchasing power and to maintain employment' are meaningless without evidence of measures being taken to stop the present drift towards increasing unemployment. That is what is happening in Scotland. We see little or no evidence of the Government taking steps to cure the serious unemployment which exists in many areas of Scotland.

The statement by the S.T.U.C. adds: No radical improvement in the Scottish industrial situation can occur so long as the Government continues merely to tinker with or scratch at the problem…It is like the application of sticking plaster to a condition of spreading sores which can only be healed by effective treatment. That shows the very strong feeling of the Scottish Trades Union Congress. All of us in Scotland are concerned about this matter, and if that feeling could not bring Government back benchers to their places in this House Scottish Ministers should at least have come here to listen to the debate.

The Government have made a great claim that they have brought about stability in prices. The Chancellor of the Exchequer took great credit for it. I seem to remember the days before 1951 and the propaganda that the housewife had from the Tory propaganda machine saying, "Stability almost immediately, and then falling prices". We have had to wait seven years before we have approached anything like stability in prices, in a time when, if the Government had been really concerned about the cost of living, they had every chance, because of falling prices in world markets, to bring not only stability but reduction of prices to this country.

The Minister spoke today about the causes for the stability, and said that the Government had allowed merchants to buy freely in the cheapest markets. I take it that merchants have been doing that for nearly seven years What the British housewife would like to know is where the money that she should have been saving in lower retail prices has gone. There is no doubt in my mind where it has gone, in this great, free economy under a Tory Government. The British housewife has not benefited, nor have the poor people in the primary producing countries. The middlemen of this country always benefit from falling world prices when we have a Tory Government.

I took down the words of the Chancellor when he said that by allowing merchants to buy freely in the cheapest markets the Government had brought about stability. In the next breath he mentioned the fall in exports, particularly to primary producing countries. There is a very close link between those two facts, but the Chancellor did not appear to see it. He wanted to take credit from both directions, and never for a moment suggested that there was a close and very important link between them.

I listened to the noble Lord the Member for Dorset, South (Viscount Hinchinbrooke), who told us that the Distribution of Industry Act that was produced before the Summer Recess would bring decisive help to areas with serious unemployment. How I wish the noble Lord would examine this whole matter. As to the statistics for which he asked about unemployment, the length of time unemployed, etc., all he needs to do is to go to a corner of the Library in this House, where he can get from the Digest of Statistics all the statistics for which he is asking. I wish he know those statistics as well as he seemed to know the state of affairs that interests the bankers of Zurich. He knows little or nothing about statistics which are of interest to many thousands of our people.

The Tory Party has now published "Onward in Freedom", a pamphlet with a beautiful glossy cover. Inside, is page after page of platitudes in the very best tradition of our present Prime Minister and of the Tory Central Office. I would call attention to two parts of the pamphlet. We find in page 7 these words: We must…not…allow any group of people to be by-passed or neglected in the forward march of the economy. I wish there had been a forward march of the economy, and that this Government could honour the pledge which they are trying to put forward for the next General Election. On page 23 of the pamphlet we find, under a beautiful, red heading, "The Opportunity State", the words: Neither inflation nor deflation must be allowed to hold us back from realising the full possibilities of economic growth. What a farce those words are to people living in many parts of Scotland and suffering just because the Government did allow things to prevent the economic growth which, by wise policies, we could have had in this country over the last two years.

When the Chancellor was speaking about unemployment he gave the percentages for other countries. I was wondering whether the Chancellor had the word "excessively" in his notes, because he talked of an excessively low figure of unemployment in this country compared with other countries. I really believe the Government think that a measure of unemployment is good, apart from any economic considerations.

Mr. S. Silverman

They said so.

Miss Herbison

That the Chancellor let the word "excessively" slip out ought to make the people of Britain beware of the kind of platitude and promise being presented to them for the next General Election. The Chancellor told us that as a nation we were spending more, eating more, and buying more than we did last year. Well, the 7 per cent. unemployed in the greater part of Lancashire are not eating more than they did last year, and are not saving more. Where they have savings, they are eating them up. They are certainly not buying more. I emphasise the complacency of those words, which the Chancellor used without linking them up with the hardship that has been caused to many people in Britain who have felt the consequences of having a Tory Government ruling the country.

The latest unemployment figure for Scotland is 3.7 per cent. and it would have been very much greater but for emigration from our country to the Commonwealth, to the United States of America and to England. My hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) spoke about people having to leave their homes to find work. We have had examples of that since the end of the war. London has built about eight new towns to relieve the congestion of its population, but we have had the spectacle of Scottish men and women, because of heavy unemployment, moving to London where there is work, but where they have been adding to the very great congestion.

Between August of last year and August of this year unemployment in Scotland increased by 29,800. Today, for every available job in Scotland seven people are unemployed. That is the worst figure for any region in the whole of Britain. Comparing the position today with a year ago for the United Kingdom as a whole, we find that there are 18,700 more people who have been unemployed for more than eight weeks than there were at this time last year.

The figure for unemployment in London and the South-Eastern Region is 1.2 per cent. For Scotland it is 3.7 per cent. There are black areas in Scotland, including almost the whole of Lanarkshire as well as Dundee, Greenock and parts in the North, but the average is 3.7 per cent. This means that in Scotland there is more than three times more unemployment than in London and the South-East. Time and again hon. Members representing Scottish constituencies have warned the Government of what was happening, but according to the Digest of Statistics, the latest figure given for factory building under construction on 31st December, 1957, was 5,804,000 square feet for Scotland and 11,704,000 for London and the South-Eastern Region. In that part of England which has only one-third of the unemployment which exists in Scotland, there is double the amount of new factory building going on. That is a complete reversal of the Labour Government's policy.

My hon. Friend the Member for Willesden, West (Mr. Viant) made a most important speech about the building industry. He was right when he said that what happens in that industry is a barometer far almost every other industry. According to the Digest of Statistics, if we take the figures in the second quarter of the year relating to house building—I quote only figures relating to Scotland—we find that in the second quarter of last year the number of houses under construction was 36,196. In the second quarter of this year the figure had dropped to 31,155. Local authority building is very important for Scotland, but we find that the figure for the second quarter of last year, which was 31,928, had fallen to 27,481 for the second quarter of this year.

The Secretary of State for Scotland, who is now present on the Government Front Bench, has told us that next year house building in Scotland will be even less. My hon. Friend the Member for Willesden, West said that 10 per cent. of the building workers in Scotland are unemployed. We might compare that figure with the need for housing in Scotland. At present 500,000 houses are required, of which 250,000 are needed for slum clearance schemes. In my constituency there are shocking slums in which decent families have to live. Another 250,000 houses are needed to relieve overcrowding and to house sub-tenants. A Government who are content when 10 per cent. of the building workers are unemployed at the same time as our housing needs are so great should be severely criticised. I am not asking that the whole 10 per cent. should be employed on building houses. We desperately need more factories in Scotland and part of that labour force could be used to build them.

The steel industry in Lanarkshire has been badly hit, as it has been in other parts of Great Britain. In 1957 there were 35,900 unemployed. In August, 1958, the figure had increased to 75,200, an increase of 39,300. But that does not present the whole picture. In a steel works in my constituency where 200 men have lost their jobs, and where, only a week ago, another 150 were given notice, every other man is working a four-day week instead of a five-day week.

My hon. Friend the Member for Motherwell (Mr. Lawson) made a most important speech last week in which he dealt with the problem of unemployment among school leavers where the position in Scotland is much worse than that in the rest of the United Kingdom. I was formerly a school teacher, and I have often thought that when our boys and girls leave school at 15 years of age, they are faced with many problems even when they find work. But how much more serious is the position for youngsters leaving school at 15 who cannot find work. I do not wish to exaggerate, but in areas where the unemployment figure is so high there exist grave fears that we may return to the conditions which obtained between the wars. I recall that when I was teaching in the Maryhill School, a boy aged almost 14 had been absent the day before. I asked him where he had been and he told me that he had been looking for work. I was surprised when he said he had found a job. I asked where, and he told me, "You see. Pat is getting his book on Saturday. He is 16, and I am starting in his job on Monday." I do not think the present position is as bad as that, but fears exist and are very real among parents and children, who do not see any action being taken by this Government to allay their fears.

The Chancellor of the Exchequer spoke about the easing of restrictions on hire purchase and bank overdrafts. Will that solve our problem? Will that ensure full employment in the future without the Government doing anything else, or will it ultimately lead to greater chaos? If one examines the map of Britain, to find where unemployment is greatest, in almost every instance it will be found that the greatest amount of unemployment exists in what were described between the wars as the distressed areas.

Over the seven years, while we have had this Government, we have been urging the Government to bring a much greater diversity of industry to those old distressed areas, which are now called Development Areas. Not sufficient was done. We shall not get industry into those areas to any extent by the kind of tinkering that the Government have proposed. The only hope for these areas is an all-out expansion throughout the country, because it is only in an all-out expansion that work will come to the Development Areas—the old distressed areas.

To the Minister of Labour and National Service, who is listening, and to the Secretary of State for Scotland, I would say that these people who are unemployed, and the thousands more who are afraid that next week they will be unemployed, are asking this Government not to tinker piecemeal with the problem, but to come forward with an economic plan for Scotland and for the nation which will indeed give them security in the future.

7.51 p.m.

Mr. Douglas Marshall (Bodmin)

In following the speech of the hon. Lady the Member for Lanarkshire, North (Miss Herbison), it seems to me that she more or less followed in the tracks of a good many of her colleagues on the opposite side of the House. It was a pattern which, so far as I can see, was rather remote from the facts which at present confront us. The reason I say that is this. I personally would give her and other hon. Members on that side of the House credit for wanting to see stable prices, a stable and strong £ and full employment. It surprises me a little that right hon. and hon. Members opposite do not realise that we on this side of the House also have a similar objective. The question is how to get it.

The hon. Lady had the honour of coming to this House in 1945 at about the same time as I did. At no period during the six years from 1945 to 1951 were those three objectives reached. During that time there were no stable prices nor a strong £ and full employment. I am talking of these three objectives and not one objective. We cannot unrelate these three objectives for any length of time one from the other.

The reason for that is that although the hon. Lady rather scathingly referred to the speech which my hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke) made a short time ago. in particular directing her attention to the fact that he quoted figures that would be of interest to the bankers in Zurich, she seemed not to understand the reason for his quoting those figures is that we in this country have to take great notice of the world outside. We have to export, we have to buy and if the world outside thinks at any given time that the strength of our economy here at home is not stable then their attack occurs upon the £ and the objective, for which I give her credit and which she wants to obtain, fails miserably.

If the hon. Lady will now forgive me I want to make one or two particular points on the Gracious Speech.

Mr. S. Silverman

May I draw the attention of the hon. Member to the first Report of the Cohen Council, which he appears to have overlooked? That Report makes it perfectly clear that we can maintain full employment and stable prices if we are prepared to apply the necessary controls.

Mr. Marshall

I am sorry that I did not mention the Cohen Report, because I differ fundamentally from the approach of the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), who opened this debate, when he said that there was no interest whatsoever in looking at the Report of the Three Wise Men, as the whole of the Report was built up in a nineteenth century fashion. The hon. Gentleman has corrected him and said that it is of interest to look at it for the reason that he has given. Although, in my view, it is a valuable Report, and worthy of study, that does not necessarily mean that we have to agree with the whole of every Report and with every line and sentence it contains.

The object of the Government has been, as I have already said to maintain a strong £, stable prices and to produce an economic policy which will obtain those two things together with full employment. It is equally true that the Chancellor of the Exchequer has said this afternoon that in certain places in the United Kingdom there is some degree of slack—those are his own words—and that these places are causing considerable anxiety to Her Majesty's Government.

There are four particular things to which I wish to refer. The first is that it would be reasonable to say that if we could increase our own potential wealth then the position of any Chancellor in this country would be considerably eased. It appears to me strange that metalliferous mining of what lies in our own hills is not given more attention by this Government and by every Government which has held office since the war. We all know that the Governments of Canada, Australia and Eire have decided over the last ten years to promote to the best of their ability the mineral wealth of their own lands.

To promote this venture and with the realisation that metalliferous mining has special and peculiar angles attached to it, that from the very start it is a matter of adventure, they have sought a method by which they could promote the position whereby men would go out and seek for the metals concerned. What did they do? The Chancellors of the countries which I have named put before their Governments and their Parliaments the view that taxation in the winning metalliferous mining should be in a special category. It was pointed out that it would be necessary, to promote this result, for taxation not to have its full impact upon such an adventure until after three or perhaps five years of the mine coming into full production.

I have raised this subject with every Chancellor I have had the honour to know in the House, including the late Lord Waverley, the right hon. Member for Bishop Auckland (Mr. Dalton), the late Sir Stafford Cripps, the Prime Minister and the present Chancellor of the Exchequer. I have known one or two others, too, including the right hon. Gentleman the Leader of the Opposition, although he was Chancellor for only a very short time and gave it up quite rapidly. During the whole of that time the whole covey of these Chancellors, including the "red legged" ones, have refused to look at this problem from the angle of trying to help metalliferous mining.

I know that the present Chancellor has studied the problem. I thanked him last year for giving his time to it. Nevertheless, I suggest to him that now that these areas have been regarded as distressed areas, he should look at the matter again. If he did, he might well find himself in agreement with the Chancellors of the Exchequer of Canada, Australia and Eire. There is no reason that they should all be wrong. It seems to me that this would be a method of promoting greater wealth in this country.

On all sides of the House we have been talking about special areas of unemployment and I wish to draw the attention of the Ministry of Labour to one area which is suffering a very high peak of unemployment at present—the Gunnislake area of Cornwall. A week ago the figure was nearly 14.7 per cent. and I have every reason to believe that it is rising steeply.

Let us consider the problem of that area, without trying to exaggerate the point to make it. As one hon. Member has said, the areas in the United Kingdom which seem to suffer first from unemployment are those which suffered most during the dreadful periods of unemployment before the war. The area of which I am now speaking comes within that category. It is equally true that during the war, when we assume that every man in the United Kingdom was wanted and when the main labour anxiety of the Coalition Government was that manpower was insufficient, there were periods when the unemployment figure in this area, even then, was over 8 per cent.

That does not make the present position any the less tragic. If my principal objective tonight were simply to leave it at that and to ask the Government nebulously to do something about it somehow, I should not feel that I had done very much about it myself. Let us consider why that figure has risen over the course of the last year. Part is, of course, due to the fact that employment in Plymouth itself has fallen, especially among building operatives. It is equally true that Plymouth has arisen out of the ashes of a blitz; it has been rebuilt, and we cannot go on for ever rebuilding something.

But one thing is strange. Apart from the question of handling the tourist traffic and apart from many purely commercial reasons with which I will not weary the House, there is an urgent necessity for a bridge across the Tamar. Surely this of all times must be the moment for the Government to prod the authorities to get on with building that bridge. If the right hon. Member for Huyton is correct in stating that there has been a 20 per cent. fall in the production of steel in this country; if it is true—as I can prove—that the labour surplus exists; and if it is true, as my right hon. Friend is aware, that this is a toll bridge which will have no impact on inflation; then surely this is the very time, in a distressed area, to get on with that job. This is the moment when it should be done.

There is another strange thing which I cannot understand. Normally, taking maintenance and road improvements together, about £100,000 per annum is spent on improvement to the roads in the area, which involves a grant of about £75,000. Realising that this is a distressed area, the Government acted promptly and rightly and said, "If you start schemes now and finish them within a year, we will allow you another £100,000." That is very good. But what an extraordinary thing happened next. There was a sudden announcement by the Government, on behalf of the Ministry of Transport, that in 1959 there would be a cut of 75 per cent. It does not make sense. To give it in one hand and to take it away with the other looks as if the right hand does not know what the left hand is doing. I sincerely hope that the Chancellor will look into this matter.

While I am on the subject of bridges perhaps I might mention the bridge at Gunnislake, although it is a minor matter compared with the Tamar Bridge. Traffic is congested there and it would do no harm if an agreement were reached now, instead of in about a years' time, to enlarge that bridge. That would temporarily help to solve an employment problem in that area.

I sincerely trust that the Chancellor will not forget one of our most important industries, which, strangely, has not been mentioned in the debate. I do not know why it has not been mentioned. We have been told about export difficulties, about the fall in world prices, and about unemployment figures growing in all countries, but although I have been here practically the entire debate I have heard no mention made of the shipping industry.

The shipping industry is and always has been a direct mirror of our national life. It is not only a question of ships at sea, but it is a question of the building of them, the carrying of the freight, the insurance, the hulls—and here I have an interest to declare. All these are matters which affect this country. I believe sincerely from the bottom of my heart that what I have said about the method of dealing with metalliferous mining is equally true about shipping. I tell the Chancellor that it is only through fiscal methods that he can help the shipping industry. The British Mercantile Marine has always been able, and always will be able, to stand fair and square up to any shipping country in the world and to beat it—but not if the dice is loaded against Britain. That you cannot do and still maintain the fleets as we desire.

I know that the present Chancellor of the Exchequer hates praise. Though no words of mine could adequately express my admiration for him, that does not mean that the Chancellor does not like from time to time to hear when things are not quite right. It is for that reason that I put these points to him this evening.

8.10 p.m.

Mr. H. Boardman (Leigh)

I wish to confine myself to two points—the state of the Lancashire textile industry, and the general employment policy of the Government. I very much doubt whether, at this stage, anybody can tell the Government anything fresh about the plight of the textile industry. They have been under the most severe pressure from all quarters from employers, from trade unions, civic heads, local authorities, chambers of trade, and Uncle Tom Cobley and all. The story has been told and retold, but the fact remains that all these efforts have so far proved abortive.

As my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman) has said, there is growing disillusionment, and a very great deal of bitterness in the Lancashire towns as a result. People who had probably spent the whole of their working lives in the cotton industry, who had stuck loyally to it through booms and slumps, really thought that they had at last found security in it. Now, very many of them are giving up hope altogether. I can only sincerely hope that if it is possible for the Government to help in any way at all they will do whatever they can, and as quickly as they can. There is a very attractive incentive for them to do something. If they can intervene quickly and successfully in the Lancashire cotton crisis, they may yet have a 50–50 chance of holding the seats they otherwise will lose at the next Election.

Having said that, I must say that I very seriously doubt whether this House can do much to help cotton that cotton cannot do to help itself. I doubt very much whether any formula evolved in this House, or in the Cabinet could possibly solve Lancashire's problems. Some people connected with the cotton industry have done a very good job—Lord Rochdale and the members of his delegation, who have been to India, Pakistan and Hong Kong have done a very commendable job—but what strikes me as being very odd, and this is an indictment of our present capitalist system, is that one section of the cotton industry puts greater faith in making an agreement with the people of Hong Kong who export this cloth than they do in the people of this country who import it. It strikes me as being wrong that there is all this hullabaloo about imports from Hong Kong when, as any school child knows, before Hong Kong sells a yard of cloth, some one in the cotton trade here has bought it. That is one of the oddities, and it is an indictment.

As I have said, there is growing disillusionment and some bitterness in the industry because many of those in it—certainly the operatives—feel that the trade itself is incapable of doing anything about its future, and that the Government are unwilling to do anything. As a result, we are witnessing a decline in the number of school leavers prepared to go into cotton. Rather worse than that, we are seeing men with years of experience but young enough to get out of the industry into other jobs where their skills are completely lost, simply getting out of the industry.

The school children are not going in, and the middle-aged operatives are, as far as possible, getting out because, as they say: "I have seen the writing on the wall for the last time. I am getting out while I have time." We find them as bus drivers and the like. The industry will then he left with an aged population at a time when competition will be most fierce—and fierce competition it is that stems from these countries with a rice-bowl economy.

Some difficulties are absolutely insurmountable, but one thing is certain. We cannot even try to pretend to compete with a rice-bowl economy, because the logic of that is "Who shall survive on the smallest bowl?" It seems fantastically ironical that, with all this talk going on about these imports, and with all this talk going on, quite properly, about the terrible conditions in which so many of these people in the East are working, even today the cotton spinners are arguing to defend the price maintenance system; the maintenance of minimum prices; the maintenance of a completely artificial level. I sometimes wonder whether these people, although so very well versed in cotton, are really prepared to face the economics of the situation.

A great deal has been said from time to time about the future size of the cotton industry. In the last analysis, it may be that the most one can do is to make an intelligent guess, but I think that if the trade unions got together with the employers and, possibly, somebody representing the Board of Trade, a very intelligent guess could be made about the state of the cotton industry in, say, five or ten years' time—certainly in five years.

My own view is that it is just no use at all for anybody to look for any kind of formula that will maintain the industry at its present size. It just will not happen. Inevitably, there will be further contraction, but we do not want the kind of contraction that results from people voluntarily leaving the industry because they see no hope in it. If we have to face contraction, we should try to make an intelligent approach; such an approach as would again attract the school leavers and keep the middle-aged. To do that, we must have a smaller, possibly a more efficient industry, giving greater security to fewer people.

If, however, the Government cannot do anything for the Lancashire textile industry—and I express my doubts about that—there is a great deal that the Government can do for Lancashire—and it should be done pretty quickly. It is of no use talking about waiting until we have 4 per cent. unemployment. Do the Government realise that many of these mills have closed literally overnight, and that the whole purpose of the Distribution of Industry Act is, surely, to provide a cushion against emergency unemployment such as this?

The Government really can do something to avoid the present distress in Lancashire. What we need, above all else, is a new Distribution of Industry Act—an Act that will really give someone power to distribute it. The present Act is entirely dependent on building licences and building controls, and when those licences and controls were swept away the Act became almost worthless. I very much doubt whether the latest amendment to it will be very effective.

There has been a good deal of wildly exaggerated comment about the Government's attitude to unemployment. I have heard it said that the Government are determined to return to the unemployment levels of the pre-war years. I think that that is absolute nonsense. If they did anything like that then, quite obviously, it would mean not only the end of the Government but the end of the Conservative Party, and, as far as I know, the Conservative Party is not a candidate for suicide. I think that that underestimates the position.

What the Government have done, surely for the first time in history, is deliberately to have created unemployment. I do not know of any other Government who have done that. They say that they have done it because the economy must have elbow room, because we must have mobility of labour. So far as I can see, what the Government really want with this marginal unemployment is sufficient unemployment to give the economic system flexibility; they want sufficient employment to give the Government respectability.

This idea of marginal unemployment theoretically may have a lot to commend it from that angle. I think that the Government might have said, in addition to mobility and elbow room, that marginal unemployment will put discipline back into the factories and will reduce the power of the trade unions in negotiation. I believe those are the real reasons why it was introduced.

While we are talking about marginal unemployment—and I do not care whether we speak of it in terms of 3 per cent. or 4 per cent—it is really an immoral attitude. The only people who will support, and certainly the only people who will expound, that theory of marginal unemployment are those who feel pretty certain that they are not going to be pushed into the margin.

The employment of every able-bodied man is something for which we all ought to work. But if I am right in assuming that this unemployment has been engineered by the Government, does it not mean that the unemployed man now assumes a new rôle? If the Government are correct in saying that they had to bring about a certain amount of unemployment in order to give flexibility to the economy, surely the new rôle of the unemployed man is that he being unemployed is in the process of helping to maintain the economic stability of this country. If this argument is right, it moans that the rôle of the unemployed man has become as important as that of the man who is employed. It means, above everything else, a mark of failure on the part of the Tory Government.

If we are to have a policy of deliberately pushing men to the employment exchanges, not because there is no work but because we must have this mobility, the Government ought, in all fairness, to reconsider unemployment benefits and compensate the people whom they are deliberately pushing out of employment. They are not out because they want to be out. They are out because the Government need them to be out in order to keep their own system running as smoothly as possible.

I disagree violently with this theory of marginal unemployment. I can understand all the virtues which the Government claim for it, but I think it is an evil thing. I believe there are millions of people like me who think it is an evil thing and look forward anxiously to the end of Her Majesty's present Government who support this theory so enthusiastically.

8.24 p.m.

Mr. G. R. Howard (St. Ives)

The hon. Member for Leigh (Mr. Boardman) will, I hope, forgive me, if I do not follow him in his argument, as I wish to raise an economic matter which has not been mentioned before in a debate on the Queen's Speech.

Before doing so, however, I should like to say how glad I am of the help that the Government are promising to the special areas of unemployment, because West Cornwall is one of those areas. I should like to plead with the Government that they will ensure that the procedure is expedited where possible in cases where assistance has been sought and sanction has been given. I am glad that the Gracious Speech mentions the question of helping small farmers, about which there will be another time for debate.

The matter which I wish to raise tonight is one of vital importance to us. It is the present dangerous situation which is developing in the Icelandic dispute. The other day the Foreign Secretary mentioned in this House the subject of N.A.T.O. and turning the flank. What better example is there of the Russian effort to turn the flank than what they are doing in Iceland today?

This is really a grave international situation. We are being portrayed—and there was an excellent leading article in the Daily Mail today on the subject—as a kind of bully who is bullying the small men. This is not true. Many of our friends in Europe are behind us, but one only wishes that they would make their point of view more clear, because at the moment we in Britain are holding the baby. This matter is important to us economically not only from the fishing point of view but from other points of view as well. Exports of motor cars and such articles will suffer as a result of this very unpleasant atmosphere in Iceland today.

What is the situation? As the House knows—and I only hope that this will get through to Iceland—we have repeatedly tried to reach agreement in this matter with Iceland. We have tried over and over again. The hon. Member for Lowestoft (Mr. Edward Evans) and I went there some years ago. We spent a long time listening to the views of the Icelanders. We discussed the situation and tried to put our point of view to them. Although we were not successful, our recommendations for the summoning of a conference to deal with the matter were eventually adopted. That conference has failed. But we must try again, and we must go on trying.

We realise how important it is that this matter should be settled, but one wonders whether the Icelanders are allowed to realise its importance. It is obvious to us what the Communists are trying to do. They are trying to get Iceland out of N.A.T.O. so that they can make what they call a neutral zone, which, of course, is rubbish, as we all know, because it would be a so-called neutral zone under Communist influence to turn the flank of N.A.T.O. Therefore, it is of importance to the other members of N.A.T.O. to come in with us and try to reason with our Icelandic friends.

They are our friends. When I was there I found them very outspoken when discussing this matter, but they have a traditional friendship with this country. We are two nations of seamen. I view with great regret the growing difficult situation which is being brought about and pushed on by the Communists all the time.

Another point which we must realise is that this is putting a tremendous strain on the Royal Navy. As always throughout history, the Navy has done its job magnificently in safeguarding our trawlermen. It has done it with good humour, patience and efficiency; but we are now coming to a new stage, and a very dangerous one. We have seen in the newspapers recently that the Icelanders are talking of manning their ships with volunteers, who are prepared to sacrifice their lives for their country and all that sort of thing. This is serious talk, though it may be only second-hand, reported talk and not quite so serious as it sounds. But if it is true, it is a very serious thing to us.

Economically, it means a tremendous amount. As many hon. Members will know, the cost of a modern trawler is about £225,000, and I think I am right in saying that the size of the present fleet is 249 ships. Some people say 254, but if we call it 250 ships, it means that the crews number some 6,000 men. This is quite apart from all the allied industries which are dependent on this industry—the people in the fish trade, the transport industry, the people who make ice and so on. They are all threatened by this situation. I think that hon. Members on all sides know that the Government have done everything they can in this matter, but I think it would be helpful if they made it clear that they will go on doing everything they can. For these reasons, may I make a few suggestions towards a future solution which I think might help?

First of all, let us have one full day's debate in this House on the fishing industry. This is something for which we have asked over and over again; but we so often get a debate on the industry late at night, and an inadequate one at that. Could not the Government get some active support for the trawler fleet from European nations, so that it may be shown clearly that this is not just a case of the British alone wielding the big stick? Can we get them to help us in this matter, perhaps through N.A.T.O. by means of a regional conference? The Gracious Speech mentions the fact that we hope to convene another full conference, but that obviously cannot be done yet. Could we, therefore, through N.A.T.O. get some regional conference going to show the Icelanders that we really are doing everything we can to try to resolve this dispute?

Again, could we suggest a new approach, based on base lines? I know that we have done this before, and that there are many difficulties, but it would show that we accept the policy of base lines if we were to go into these negotiations on that basis. It would also show our own inshore fishermen—who personally take the point of view of the Icelanders and say, "Why should not they have this protection, and, come to that, why should not we have it ourselves?"—that we are prepared to provide protection for them as well.

Lastly, I would suggest—and it will not be a pleasant job—that at the right moment another deputation of Members of Parliament composed of members of both parties should go to Iceland, because, if anything, they are much more outspoken than Government spokesmen can be. As we did on a previous occasion, they would be able to learn far more by direct talks, very often late in the evening. They would probably be better able to do it, would probably learn a lot, and perhaps would be able to show that the people of this country are not against the people of Iceland, but that this is an unfortunate disagreement between friends.

I beg the Government to give every possible assurance to this country and to Iceland that they will take every possible step they can take to avoid a rift, which might create a very dangerous situation, and which is such a sad and unfortunate matter in the affairs of the world today.

8.34 p.m.

Dr. J. Dickson Mabon (Greenock)

I find it rather difficult to follow the hon. Member for St. Ives (Mr. G. R. Howard), because I have so few points of disagreement with him; but I very much appreciate the problem which he has put before the House tonight. This is a matter of importance in Scotland, quite naturally, because Scotland has a very large fishing industry, and there is this natural disagreement between the inshore fishermen and others about the attitude of the Icelanders.

I think that everyone will agree that the hon. Member has put forward a number of sensible suggestions, particularly the one about a joint deputation, which I think might do a lot of good to improve the public relations between the two countries, which have deteriorated so badly. I do not dissent from the argument that there is a political aspect to the matter, namely, the posi- tion of the Minister of Fisheries for Iceland himself who, I think, rejoices in the existence of the dispute and in exacerbating the difference between our two countries for his own political purposes. I must not, however, be tempted to speak about this matter for long. I have a problem of my own to raise, or rather it is a problem which Great Britain has and about which it is my unfortunate duty to speak.

In the days of inflation, we had between 6 per cent. and 8 per cent. unemployment in Greenock. In these days of deflation we still have 8 per cent., and a rising proportion of our people are going to be unemployed. I must insist that the Government take some action in the matter. During the time I have been making representations about it, we have heard all sorts of arguments, but the simple fact has remained that the men who have been unemployed are still unemployed. There are about 2,600 people, men, women and juveniles, now on our registers as unemployed.

Although there is a prospect of a factory opening nearby in Port Glasgow, an extension of Playtex, and although there is a possibility, which so far has not materialised, of there being an extension of the factory in Spango Valley, these are not sufficient in themselves to make an appreciable contribution towards solving the problem. The problem in my constituency is the ever-recurring one of a contraction in the defence programme, on which the Government have been engaged for some time, at least in terms of jobs, and, at the same time, a failure to find alternative work.

I saw it reported that at the Conservative Party Conference the Minister of Labour pointed out that the Government had released about 100,000 men from Royal Ordnance factories and from the Services. He suggested that, for our economy to absorb these numbers, was really remarkable. That is all very well, however, when it is spread over Great Britain. In my constituency, on the other hand, or, I should say, in the constitutency of the right hon. Gentleman the Member for Renfrew, West (Mr. Maclay), who is Secretary of State for Scotland, about 800 men from Bishopton Royal Ordnance Factory were discharged all within two months last year. Four hundred of them came to join the unemployment queues in Greenock, the rest going to Port Glasgow and elsewhere.

My contention is that the Labour Government, when they were in office and had to deal with a problem which was similar but of much more substantial proportions, made earnest efforts to find alternative jobs for men who were taken out of the war effort to return to peacetime work. No such attempt has been made in regard to this particular Ordnance factory or in respect of many other ordnance factories in the country. While other parts of the country have been able to absorb men made redundant, areas such as mine and the constituency of the right hon. Gentleman have no such ability.

Unemployment in Greenock stands at 8 per cent. for three reasons. First, there is still a lack of diversity of industry. This must apply to many places in the country. Secondly, the Government have failed to find alternative industry in time to take up the slack created by the redundancies in Government work which arise. Thirdly, there has been a general run down in trade. While I should like to spend some time discussing, so to speak, the odds and ends, the small points from the point of view of the Member representing a constituency in the south who does not know very much about Greenock, I much prefer to concentrate on the main issue in regard to which we have received so many rebuffs in the past, namely, the argument about advance factories.

In my own area, we have been given the same reply for fifteen months, and I can assure hon. Members who have a similar problem, or who will have a similar problem, that they will receive the same reply. We have been told that there is no reason for building advance factories, as the Labour Government did, because firms are not queuing up for premises. In other words, it is said, that at the end of the war there was such a tremendous rush on the part of people wanting to get into business that they were willing to take factories just anywhere.

This is not quite true, because many firms were compelled or obliged to go to certain places, and they went reluctantly. One company in my constituency arrived at Greenock most reluctantly, but, I am glad to say, it would not leave today. Those in charge have come so to respect the skill of the men there and to recognise that it is very good to build up their enterprise in a Scottish constituency, where the workmanship, in my opinion, is of a very high standard, that they would not now wish to go.

The fact is that in these years industry had to be, if one likes, negatively directed. There had to be a vigorous sense of urgency on the part of Government Ministers. That has become apparent in the Government's mind apparently only in the last few months, when the economy has clearly begun to run down. Industry is stagnating, or if the Government Ministers do not like that, industry is not as expansive as they would like it to be. Clearly, firms are not investing or wanting to expand and, therefore, do not wish to apply to other areas.

There is the great example of the factory of British Nylon Spinners Ltd. serving a growing consumers' market, obviously one of the very few types of firms anxious to expand at the present time. The firm wants to go to Portsmouth. The President of the Board of Trade—many of us who represent areas of unemployment are grateful to him for at last invoking the Distribution of Industry Act powers—has refused to allow the factory to be set up there. It is to go elsewhere and I have no doubt that there is a long queue of places urging the President of the Board of Trade to ask them to come to their various regions.

I must throw my hat in here as well. I would very much like to see the British Nylon Spinner's factory located in the constituency of the Secretary of State for Scotland. What could be better? It would be the one good thing that he has done for his constituency for a long time. Naturally, I most certainly want some of the people in my constituency to get jobs in that factory. It would take up the slack in Paisley and Glasgow. Most Glasgow Members would agree that, although it is not too bad, the situation in the city is beginning to show ominous signs, with vacancies arising and short time becoming more widespread.

My main point is that in October next year, in addition to having 8 per cent. unemployment, with very little likelihood of that total dropping—indeed, there is every possibility that it will rise—I shall find the unemployment queue in Greenock extended by another 400 men, occasioned this time by the Government's transfer—not cut or abolition—of the Admiralty torpedo establishment from a part of Scotland where employment is very difficult to find, to a part of England where employment is easy to find and where they are begging for workers, namely, Dorset. I am told that this soon-to-be-empty factory, which has been there for about thirty or forty years, is an advance factory in fact. The argument put forward by the President of the Board of Trade and the Secretary of State for Scotland is that there is no need to build other advance factories because here is one that will be lying empty next year. If by October, 1959, a Labour Government is in power, and the country once again marches forward on the road of economic expansion, it is possible that we might find a tenant for that factory.

I am convinced that the Labour Party will embark again on its programme of building advance factories, not merely large advance factories that we have known in the past but smaller factories which can accommodate the smaller firms which have not the capital to invest in stone and lime but which want to use their money for machines and equipment—the small men of this world who are anxious to embark on industrial enterprise and whom the Labour Party is so very anxious to see succeed. These are the kinds of firms who might give us the kind of balanced democracy that we should like to see. I am surprised that hon. Members opposite have not advocated this. This is part of the old concept of property-owning democracy in the Robert Blatchford sense if not in the Sir Anthony Eden sense.

That is the kind of small factory for which many places like Greenock are crying out. But the Government have set their face absolutely against the idea of building advance factories as long as the economy stagnates, and as long as there is no expansion throughout industry then their policy seems to be quite logical. It is the logic of stagnation not to build advance factories.

It is rather sad that the men in my constituency who have been unemployed for fifteen months will continue to be unemployed for a very long time until the momentum of the economy gathers speed and until a Government come in who have the good sense to put the Distribution of Industry Act actively into effect. That is the essential point.

The Government say in their propaganda that last year they passed the Distribution of Industry (Industrial Finance) Act, but that makes little difference to places, like my constituency, which have been under schedule for the Distribution of Industry Act, 1945, for thirteen years. To places like my constituency, Northern Ireland and many places in Lanarkshire and England, which have all been on the schedule, this makes very little difference. There can be additional grants for setting up hotels, but we do not have much need of hotels in constituencies like mine at the present time.

There is provision in the new Act for the setting up of offices and factories which are required to be dispersed, but neither Scotland nor Northern Ireland suffers from a desire to disperse existing native offices or factories but rather desires to attract others. This provision is possibly useful to places like Anglesey and I hope that my hon. Friend the Member for Anglesey (Mr. C. Hughes) will have an opportunity to speak, so that he may express his wish to see the Act implemented. It might be useful for a place like Anglesey, but for places like Greenock it is not good enough.

I have been having local meetings about unemployment for a long time. They are not all political meetings. I resent the kind of cheap gibes that we have heard tonight from hon. Members opposite who say that we are using this problem for party political purposes. Such remarks are unfair and untrue and are almost as unpatriotic as the gibe of the President of the Board of Trade that when a Labour Government come into office, there will be a Socialist £ which will be devalued and become hopeless and helpless in the face of world finance. It is wrong and un-British to speak in that way in an assembly of this kind.

I raise the question of unemployment because it exists in my constituency and I have to, no matter to which party I might belong. For over a year, I have been having meetings with the various firms and with the men concerned in an honest endeavour to try to improve the economy of the locality. I have also seen many young men whose unemployment benefit has been running out and who have to turn to National Assistance. They do not have to "ask their dads" about the dole.

It is true that we do not have the same poverty and distress that was associated with unemployment in earlier days, and to a certain extent that probably obscures the urgency of the situation. There is, however, a great deal of hardship, even with the National Assistance regulations as they are. It is quite wrong of the Government to allow 8 per cent. unemployment in my constituency or any other to run on for a considerable time.

I plead with Ministers, quite apart from their party wishes or politics or their desires for the next Election, to get a move on. They have to look again at the problem of rewinding the economy and of getting it to expand. All the palliatives that we can find to solve the problems of the Greenocks of Great Britain and of Northern Ireland are nothing more than palliatives and will not last unless the Government are willing to embark upon a programme of industrial expansion that will attract the firms which are anxious to invest and bring them to these areas, which anxiously want them.

I am certain that once these firms come to areas like mine, they will find grateful workers who are anxious to work and who possess great skill and ability, as the large firms which have come to my constituency since the war have discovered. To their pleasure, they find that the men are ready, anxious and willing to give a good day's work and to give a product which is valuable and useful. The firms will be proud of these men and glad that they came to the area. I urge the Government to act now and to give these men the chance they deserve.

8.50 p.m.

Mr. Paul Williams (Sunderland, South)

I want to make a lot of runs in a short time. Therefore, if I do not take up points made by the outgoing batsman, the hon. Member for Greenock (Dr. Dickson Mabon), I hope I shall be forgiven.

I think it is fairly natural—is it not?—that the Opposition should have paid the majority of their attention to the problem of employment and unemployment and rather ignored the solid achievements which have been effected by the Govern- ment in the last twelve months in defeating inflation. I do not criticise the Opposition for that, but merely remark on it as a fact of life. It is natural that they should exaggerate the dangers of unemployment and pass over the pleasant things that have happened, but for a great number of people in this country the defeating of inflation has been a release from the torment of increasing prices day in day out, week in week out, year in year out; and it would be wrong if this debate were to come to an end without some congratulation being expressed to the Government for some solid achievements which have been effected in this last twelve months in largely defeating rising prices, to which we got so used in all the years and under both Governments since the war.

However, while this battle has been fought to defeat inflation, there has been a change in the world trading picture and a decline in the movement of goods across the seas. This has resulted, as the whole House knows, in an almost catastrophic decline in the freight rates which can be obtained by the shipping companies for their vessels, and this fall in the level of the freight rates has led very obviously and very quickly to three immediate consequences.

First of all, considerable tonnage has been laid up. Secondly, there have been few orders for new ships in the last twelve months. Thirdly, there have been signs of the beginning of a series of cancellations.

If I quote the figures of vessels laid up for reasons other than repair, perhaps I shall be able to show rather quickly how the picture has changed in the last twelve months. On 1st October last year, 62 British vessels totalling 218,000 tons were laid up. By 1st May, there were 178 totalling 911,000 tons. In succeeding months, the figure has hovered around 1,033,000 and 1,035,000 tons. In the last twelve months just past, the figures have gone from 62 ships to 204, and from 218,000 tons to 1,035,000 tons for British vessels alone.

There has been a fall in relation to new orders coming to the shipyards. In the twelve months ending 30th September last year, there were orders placed for 350 ships totalling 2,708,000 tons. In the last twelve months, the figures were 167 ships and 638,000 tons.

Now for the cancellations, and this is where a serious note creeps in. In the twelve months to 30th September, 1957, there were 19 ships totalling 78,000 tons. In the last twelve months, there were 37 ships totalling 405,000 tons. This is a fairly dramatic change in twelve months. It is not connected with the policies being pursued by the Government. This is a consequence of the change in the trade pattern throughout the world. This is not something which applies just to Britain; it is something of world wide importance.

Opposite these figures of a declining list of new orders we must, to get a proper balance, place the present order book, the number of ships, the amount of tonnage and the value of the work, because there are today on the order hooks of British shipbuilding companies 670 ships totalling nearly 6 million tons, arid the value of that work is £860 million.

That is a considerable amount of work, and although for the last twelve months we have seen ships being laid up and a decline in the profits of the companies operating the ships, and although we have seen cancellations and an absence of new orders, there is still the other half of the picture, a brighter half, the half which shows that for a considerable number of yards certainly it is a rosy picture in the months to come.

Mr. James McInnes (Glasgow, Central)

Does not that cover a matter of four or five years?

Mr. Williams

This is the present order book in the British shipbuilding industry. It is impossible to develop a figure of how long it will take to get through it, but the significant point is that in the smaller yards gaps will probably begin to develop in the launching or laying down programme sometime in the second half of next year if not earlier.

I should like to refer briefly to three lines on which action can be taken to alleviate or reverse this trend; first by the Government; secondly, by management; and thirdly by the unions. If one of these three were to defect, the plan would fail. Government action can be divided into two quite simple parts. The first is to stimulate world trade. I should have thought that the conference at Montreal and the present very welcome visit of the Prime Minister of Canada are all part of the theme of restarting world trade expansion.

We have heard a good deal today about hire-purchase. Obviously, in a matter as large as shipping policy, hire-purchase has no effect, but those other decisions taken by the Government to start re-expansion of trade, policies coming from Montreal and New Delhi, are all-important to shipping and British shipbuilders. I ask my right hon. Friend the Chancellor of the Exchequer whether the Government can take further action in relation to the shipping industry itself. I know that he said something recently at the Chamber of Shipping dinner on how he will consider sympathetically any representations made to him. I believe that the shipping industry is in a very special position in our economy, and I hope that when the time comes, perhaps in the fourth month of next year, it will be possible to give special taxation consideration to it.

Unless we measure up to the problems confronting us through the use of flags of convenience, or flags of necessity as the Americans so insultingly call them, by the use of preferential taxation, our shipping industry will be faced with inevitable decline. I believe that management on its side must press on—and this will call for a considerable act of faith in the future—with schemes of modernisation and reorganisation of the yards. Unless this is done, when new orders come and there is a stimulus to trade we shall not get the orders. Therefore, it is vitally important that this act of faith and courage should be carried through by the management. Also, because of the new practices which will come into production, it is vital that management at the earliest possible stage should take the unions into full consultation over new practices and methods of operation which will be needed if new plants and yards are to be used efficiently and fully.

What can the unions do on their part? It is really vital that the unions should do whatsoever is possible to prevent the pinprick strikes that are damaging the reputation of this country and of our shipbuilding industry. Very often they are over local issues which are of considerable importance to the men concerned but which, in sum total over the whole range of strikes, do untold damage to British industry and not just the shipbuilding industry.

I tie up all this with the plea that we should face with a rather more twentieth century mind the problems involved in the word "demarcation". It seems to me absurd that we should still be arguing as to who bores holes or whose job should be done by whom. These are the sort of things which, although vitally important to the people concerned, do so much to damage the reputation of British industry and British shipbuilding. There is no doubt at all that a troubled time lies ahead for British shipowners and British shipbuilding, but if the Government, management and unions can take the sort of action which I have tried to recommend to the House, I think that there is hope that we shall see our way through this difficult period and be in a position to expand and take advantage of the opportunties which may come.

9.0 p.m.

Mr. Thomas Fraser (Hamilton)

We have had an interesting debate so far upon the Amendment. I thought that my right hon. Friend the Member for Huyton (Mr. H. Wilson) made an excellent speech in opening the debate. The Chancellor of the Exchequer made a good speech from the point of view of his supporters although, to my way of thinking, it was far too complacent in the circumstances of today. The debate was marked by an excellent speech by the hon. Member for Weston-super-Mare (Mr. Webster). It was typical of those from that side of the House and was on a subject upon which the hon. Member was clearly well-informed.

The hon. Member for Sunderland, South (Mr. P. Williams), who has just resumed his seat, began by saying that it was understandable that we on the Opposition benches should concentrate on unemployment and on the need for full employment for the workers. He is right, although I do not think that we have concentrated upon unemployment or the need for full employment to the exclusion of a great many other matters. I do not think that anyone can possibly say that about the speech of my right hon. Friend the Member for Huyton.

I would not disapprove of the hon. Gentleman's criticising me with being concerned with unemployment, or accusing this side of the House with being concerned with it, because I have always taken the view that Government supporters are concerned, first, with full employment for capital. They are always seeking to secure that there shall be the best possible return on capital. The effect upon the employment of labour is a secondary consideration for them. Those who now sit on the Government benches represent capital, while we represent labour. It is, therefore, understandable that we have different approaches to this problem.

Mr. P. Williams

Would the hon. Gentleman be kind enough to admit that a large part of my speech was aimed at finding a solution to the problems facing the shipbuilding industry, and therefore with finding employment as well as with a return on capital?

Mr. Fraser

I had conceded that hon. Gentlemen there are always seeking to get full employment for capital. The effect on employment of labour is a secondary consideration. I am sure that the hon. Gentleman was concerned to see that capital in the shipbuilding industry was properly employed so that there would be better employment for the workers in that industry. I had better get on with some other contribution to the discussion.

On this side of the House we regard unemployment as a very real social disease. I have had experience of unemployment, but I am not going to indulge in what some people regard as inverted snobbery and repeat once again my own personal experience of unemployment. I know something about it. It is an article of faith with us that every man and woman has the right to a job. We shall go on asserting that right, both now and when we are in power, as we shall surely be at not too distant a date.

One or two Government supporters made speeches that could not have been really acceptable to the Minister of Labour or to the Chancellor of the Exchequer. They did not make mention in set terms of supporting our Amendment, but the whole of their speeches supported the Amendment and were a condemnation of the Government. I refer to the speech of the hon. Member for Belfast, South (Sir D. Campbell) and to the very admirable speech made by the hon.

Member for Bodmin (Mr. D. Marshall), who lambasted the Government for keeping workers unemployed in his constituency while steelworkers were unemployed in other parts of the country. He alleged that the Government, in the interests of getting uniform economies all over the country to counter inflation, would not allow desirable projects to go on in his constituency. That is exactly what we have been saying, and are saying now.

The Chancellor of the Exchequer compared the rise in internal prices between 1945 and 1951 with the rise in recent years. I have seen the right hon. Gentleman described as an honest politician. Does he think it honest to make comparisons between this country and other countries in Western Europe when discussing such periods? He did not say a word about the increase in world prices when dealing with the rise in prices between 1945 and 1951. I should have thought that it would have been honest of him to have admitted that we were more successful in keeping down prices in the face of world price increases than any other country in Western Europe.

I ask him to say whether or not that is the fact. Is it true or untrue? It happens to be true, and surely in the circumstances it was quite dishonest of the right hon. Gentleman to say that the increase in prices in recent years, when world prices have been coming down, has not been as great as in the years after the war when world prices were rising steeply. For the right hon. Gentleman completely to ignore the Korean War was disgraceful.

The right hon. Gentleman described our present rate of unemployment as "excessively low unemployment". I had not the benefit of the same kind of education as the Chancellor, nor indeed as the Minister of Labour, but perhaps the Minister of Labour will expand on this a little and explain what the Chancellor meant. I interpret that phrase as meaning that unemployment is at present too low—

Mr. Amory

No.

Mr. Fraser

Does not "excessively low unemployment" mean that in the mind of the right hon. Gentleman unemployment is too low?

Mr. Amory

I am grateful to the hon. Gentleman for giving way to me because I am anxious to explain this. I thought I made clear that, by a slip of the tongue, I used the word "excessively" instead of the word "extremely", but earlier in my speech I made very clear that we wanted the highest level of employment we can possibly get consistent with stability in prices.

Mr. Fraser

The right hon. Gentleman thanks me for giving him the opportunity to explain what he really meant to say. But I think I have quoted him accurately. Even if he did mean that our present rate of unemployment was only extremely low, when taking into account what happened in other countries he did not explain why production had been coming down in this country recently while going up in these other countries. In fact, it has been going up in other countries in recent years when it has been stagnant in this country.

Mr. Amory

Not all of them.

Mr. Fraser

No, not all of them, but in a great many. In those countries with which the right hon. Gentleman was comparing this country, production has been going up, but not in all of them. Were there the time to do so, I could read out a list of the countries of Europe in which production has been rising.

It is not as though those countries had been enjoying our level of employment over the years. After seven years of Tory Government it is not much use to start comparing the unemployment rate in this country, when it is rising, with the unemployment rate in other countries where it has been consistently and persistently high, which, of course, was what the Chancellor of the Exchequer was seeking to do.

The Chancellor said that we had this 3 per cent. decline in production last year. He said that it was absurd to describe the present position as industrial stagnation. If we have had three years with no increase in production at all, and we start with a decline in our production figure, I do not know what it is if it is not stagnation. It might be something worse than stagnation.

Mr. Gordon Walker (Smethwick)

Excessively low.

Mr. Fraser

Perhaps the Opposition were being excessively generous to Her Majesty's Government in describing this situation as industrial stagnation.

The Chancellor said that if we expand too quickly we may find again that we have overloaded the production system. I want to speak chiefly about Scotland, and I want to say at the outset that I was not surprised that the Secretary of State for Scotland disappeared for a very long time after the Chancellor had made his speech. I thought that after he made his speech there would not have been any Scottish Ministers left and that there would have been wholesale resignations on the statement made by the Chancellor that everything in the garden was lovely and that if we expanded production we ran the risk of overloading the production system. Then he said, "We shall continue to take such action as the situation demands."

Has the situation in Scotland demanded only the kind of action taken in recent years? Have we ever had either excessively or extremely low unemployment in Scotland? Of course we have not. Is the Secretary of State for Scotland satisfied with what has been happening in Scotland in recent years? Is he satisfied that because the economy is overloaded in Great Britain as a whole, or in some parts of Great Britain, so that certain economies in public investment have to be made, economies of the same kind should be made in the Western Isles, where there is 30 per cent. unemployment, as in other parts of the country where unemployment is less than 1 per cent.?

Right hon. Gentlemen who adorn the Front Bench opposite are those people who sometimes accuse us on this side of the House of being tainted with uniformity. In point of fact, when we were in power and had to impose some restriction, particularly on capital investment, we were able to discriminate between area and area, industry and industry. But that is not so with this Government; not at all. They are putting restrictions uniformly upon the whole of the economy —the essential and the inessential, the areas with high unemployment are dealt with in the same way as the areas with low unemployment. That is why the speech of the hon. Member for Bodmin, which I was praising a moment or two ago, was so appropriate. I was saying that, although the hon. Member did not say in terms that he would support the Amendment, he was clearly speaking in support of it, and that we would look for him in the Division Lobby when the votes were counted.

In this period of industrial stagnation, industrial contraction, and during the period of these active anti-inflationary policies of Her Majesty's Government, those parts of the country which most need stimulation have, I suggest, suffered most. These are the areas which suffered heavy unemployment between the two wars, the areas called special areas, then distressed areas and then Development Areas. Special steps were taken by the Government of the day, particularly the Labour Government, to stimulate economic activity in those areas-These are the areas which have suffered most in recent years.

Scotland is an example of that. That was obviously bound t happen. The need for economic planning has been accepted in Scotland for more than twenty years by all sections of industry. It has not been accepted in Great Britain as a whole. In certain parts of the country—Scotland. Wales, North Lancashire and Cornwall—we need this stimulus from the Government to get our fair share of economic activity. When the Government set out deliberately to bring about restriction in the entire economy, those areas suffer most. It has happened again, and no one is surprised that it has happened. Since it has happened, let Ministers not go into some of those areas of heavy unemployment—they seldom do —and let them not send letters to those areas of heavy unemployment to say that the Government very much regret the high degree of unemployment in those areas. It is the Government who have caused the unemployment there.

I said that we needed stimulation in certain areas. Let me give some facts about Scotland. In Scotland, between 1945 and 1951 we had 12.2 per cent. of all the new industrial building in Great Britain. We had that because we needed it, and yet we still had more unemployment than any other part of Great Britain. Between 1951 and 1957 we had 9 per cent. of all the industrial building in Great Britain. What are we getting now? The figure is 6:7 per cent. of all the new industrial building in Great Britain. We have, 10 per cent. of the population, we have the highest percentage of unemployment among males and have had for the last six or seven years, we have the most long-term unemployed and the highest unemployment among youths under 18, we have the most long-term unemployment among youths under 18, we have fewer jobs per 100 school-leavers than any other region in Britain. But what do we get? We get 6.7 per cent. of all the industrial building taking place in Great Britain at the present time.

I have been told often in the debates that I must not paint too black a picture and that we should not be calling "Woe! Woe!" all the time. Lest I am accused of doing the same thing tonight—and no doubt I shall be accused of it—let me say at once that there are some bright patches here and there. The extent of the economic planning which the Labour Government undertook after the war worked wonders in Scotland. The Secretary of State for Scotland is laughing, but has he not been boasting about the work undertaken by Scottish Industrial Estates? Has he not been boasting that Scottish Industrial Estates put up 17 million sq. ft. of factory accommodation, providing employment in the factories for about 70,000 workers directly and perhaps as many again indirectly? Of course he has. It is because I have not been saying those things in my speeches that he has been stating that I have been playing down Scotland.

Today, I am mentioning what has been achieved by Scottish Industrial Estates. But does the right hon. Gentleman know any industrial estate in Scotland which in the last few months has not been declaring hundreds, if not thousands, of redundancies among workers? I do not know of any. I hear of redundancies all over the place in all these new manufacturing industries which have come into Scotland under the distribution of industry policy of the Labour Government, continued haltingly for a few years by the Government which succeeded us in 1951.

The Scottish T.U.C. has been expressing great concern about the employment position in Scotland for a number of years. It has been saying that we are too dependent still on heavy industries. The T.U.C. wants more diversification. I see the Economic Secretary to the Treasury present. He will remember that in J4nuary last year he met a deputation from the Scottish T.U.C. General Council, accompanied by Lord Strathclyde, at that time Minister of State for Scotland. Does he remember what he told them at the time? I see that he does. But hon. Members will not know, and I will tell them.

The Parliamentary Secretary to the Board of Trade at that time, now the Economic Secretary to the Treasury, disagreed with the T.U.C. that more diversification was needed and said that Scotland would be wise to continue to concentrate on the heavy and traditional industries. That has been the policy of the Government since January of last year. What has been the result? The result is 80.000 unemployed in Scotland today. That is No. 1 result.

Then there has been an ever decreasing share of the Great Britain production even in the basic industries of coal, steel, shipbuilding and the like, and, of course, far from a fair share of the increase in the general manufacturing industries. Last, but not least. there has been a net loss by migration in 1957, after this advice was given to the Scottish T.U.C., of 32.500. In fact, Scotland has suffered a loss by migration of 250,000 over the last ten years. What kind of unemployment situation would we have had if Scotland had not had that loss? I am not suggesting that they all went to Canada, Australia, New Zealand and the like. No more than 80,000 went overseas. The rest went over the Border into England's overcrowded cities because they believed that the prospects of employment were better there than they were in Scotland.

The Minister of Labour, in the Ministry of Labour Gazette, estimated the net loss of insurance cards as a result of workers transferring their cards across the Border—and, of course, there is also some movement from England into Scotland—at 8,000 last year, and the net gain in London, for the same reason and for the same period, was also 8,000. At the same time, the President of the Board of Trade was telling us that he was not issuing development certificates to applicants in the London area. Of course not —but the Gazette shows a different story. It still shows that there are two and a half times as much factory building in London as in the whole of Scotland.

The right hon. Gentleman has said, before now, that they are all extensions, but in the Welsh debate he promised to look more critically in future at applications for extensions. On the other hand, we all know, or we all ought to know—and, certainly, all my right hon. Friends who have had experience of this aspect of Government know—that almost all new factory buildings are extensions of existing industries. If the President of the Board of Trade would tell me—and I have previously begged him to do it—what kind of new industrial development in this country is not an extension of an existing industry, I should be very interested to hear him.

According to the Iron and Steel Board —and here I deal with the advice given by the then Parliamentary Secretary to the Board of Trade—steel production in Britain fell from 438,000 tons a week in September, 1957, to 368,000 tons a week in September of this year—a fall of 16 per cent. That, I suppose, was giving effect to Government policy, restricting our economy. That is what they expected, and that is what they got. But let us see how it affected Scotland. In Scotland, production fell from 55,600 tons a week in September, 1957, to 37,300 tons a week in September, 1958—a fall of 33 per cent. Twelve months after the Minister's advice to the Scottish T.U.C. that Scotland would be wise to continue to concentrate on the basic and traditional industries, Scotland's steel production fell by 33 per cent.

Understandably, of course, we shall not be so willing—if ever we were willing—to take the advice of Ministers in future. Incidentally, Scotland's share of Britain's steel production is the very low proportion of 10 per cent. I invite the Secretary of State, or the Minister of Labour to tell us when, before, Scotland ever produced so small a percentage of Britain's steel.

The Iron and Steel Board says that the decline in steel deliveries is due to a decline in export trade, steel for collieries, for rolling stock, for shipbuilding, constructional engineering and buildings and the extent of the decline is most certainly the measure of the success of Government policy. Should Scotland continue to depend on the heavy and traditional industries, as Lord Strathclyde and the present Economic Secretary told the Scottish T.U.C.? The Chancellor now says. "No."

In his statement to the National Production Advisory Council on 18th July, 1958, he said that the trouble in those areas of high unemployment—and this surely applies to Scotland and, most certainly, to Lanarkshire, which is the heart of Scotland's industrial unemployment, with 7.2 per cent.—is: They are deficient in the manufacturing industries which have been expanding nationally. There have not been enough new jobs to make good the falling off in those provided by older trades which have declined or have reduced their labour needs by modern techniques. The new Distribution of Industry Act is designed to help in this respect. Will it? This is the pretence. But what is the fact? What is the policy? Are we to rest on our older basic traditional industries, or are we to take the advice of the Chancellor of the Exchequer and look for the new jobs to replace the old jobs which are becoming redundant? We think that we should get new jobs to replace the old jobs which are becoming redundant, but we have had little help from the Government.

I mentioned Lanarkshire, with 7.2 per cent. unemployment, the home of our steel industry. There is in Lanarkshire, and there should be in this House, sympathy for the older men, 45, 50 and 55 years of age, who lose their jobs. I think I should tell the House that the sympathy for the older men in Lanarkshire is heavily overshadowed by the plight of the children and young people, the school leavers. School leavers cannot get apprenticeships. We have raised this matter year after year in our debates on employment in Scotland. This has been called to our attention year after year by the Youth Employment Committee in Lanarkshire.

Even the boys who spend a year at the pre-apprenticeship course at the School of Engineering in my own constituency leave that school with merit certificates and they cannot get into engineering at all to serve an apprenticeship. They go into blind alley jobs, or else they fail to find any kind of job at all. Surely this is the most dreadful waste of the most valuable raw material that we possess, the skill and enterprise of our citizens of tomorrow.

I should tell the Minister of Labour that to talk of improved technical education or even to talk of improved training for young apprentices, to prepare ourselves for world competition in the manufacturing industry, sounds hollow in Lanarkshire and indeed in other parts of industrial Scotland where it is impossible at present for our young people to find employment.

What has been the result of the Government's policy for the last year or two? I told the Minister of Labour in a debate last July that according to statistics that he was kind enough to produce, of every 25 jobs created in Britain since the Tories came to power, only one was in Scotland. I looked up some other figures for myself. These are for the period 1955–57. Of 312,000 more people in civil employment in Britain as a whole, only 3,000 were in Scotland. We got less than 1 per cent. of the additional jobs in civil employment in Britain between 1955 and 1957.

Yet the Secretary of State says that we ought not to play down Scotland; we ought not to shout "Woe, woe." We certainly ought to shout "Whoa, whoa" to the policy being pursued by Her Majesty's Government. What should the Government do now? They should clearly take the brake off capital investment in mines, railways, highways, hospital buildings and the like and create conditions in which steel production can expand again. They should tell us what stands in the way of a graving dock for the Clyde—surely the greatest shipbuilding centre in the world. I do not think that that has been disputed. From the point of view of output and tonnage, it most certainly is the greatest shipbuilding centre in the world, but it has not got a graving dock.

Are the shipbuilding industrialists obstructing? Are they standing in the way? I do not know. We should be told. Like so many others in Scotland, are the shipbuilding investors investing their gains outside Scotland? Many industrialists have been doing that over the years and that is why we have been in such great difficulties in the last thirty years or so. Whatever is standing in the way of a graving dock for the Clyde, I should have thought that the Government owe it to the Scottish Members to tell them what it is.

The Government should clearly plan to use more of the 9,000 unemployed building workers in Scotland. We have had repeated several times again today the fact that 10 per cent. of our building workers are on the dole. We, too, need hospitals, which cannot be built for some economic reason. We certainly need highway building, we need bridge building, and we need houses and schools. As my hon. Friend the Member for Lanarkshire, North (Miss Herbison) said, we most certainly need factories. What we do not want is to have 10 per cent. of the building workers signing on at the employment exchanges, and that is what we have at present.

We need to give some hope to the unemployed in the metal manufacturing industries—the steel foundries at Bath-gate and Armadale, the light castings industries at Falkirk, the nut and bolt works in Lanarkshire, and we should surely give some hope to the unemployed in the Harris tweed industry in the islands, with their 30 per cent. unemployed, and also to the unemployed in the fishing ports in the Shetlands where the rate is between 15 and 20 per cent., and elsewhere round our coasts. We should give hope to the victims of changes in defence policy at Rosyth and Burntisland in the east, at Invergordon in the north, and Stranraer in the southwest.

As our economy expands again, as surely it will, let Scotland and the other areas of high unemployment get their due share of that expansion. Let us have a real distribution of industry policy. Let us have in Scotland the advance factories such as Northern Ireland is now getting. If this cannot be done in Lanarkshire and in other parts of Scotland, where we have an employment figure of 10 per cent., how is it justified in other parts of the United Kingdom? Let us have advance factories in Scotland as they are having in Northern Ireland at the present time.

That would involve a marked change in the policies that have been pursued since 1951, and that is the justification and purpose of our Amendment. If the will of the people of Scotland could be reflected by the votes of Scottish Members when this Amendment is put to the test tomorrow night, I have no doubt that there will be an overwhelming majority of votes in its favour.

9.33 p.m.

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

I too should like to start by offering my congratulations to my hon. Friend the Member for Weston-super-Mare (Mr. Webster) on his admirable maiden speech. It was everything that a maiden speech ought to me. It was short, agreeable, well-informed and full of ideas, and I am delighted that he picked today to make it so that I am able to offer him my congratulations.

I am glad, too, to follow the hon. Member for Hamilton (Mr. T. Fraser) on the speech which he has just delivered to the House. I will try to pick up some of his points as I speak, but my right hon. Friend the Secretary of State for Scotland hopes to catch your eye, Mr. Speaker, tomorrow in the debate, and some of the more purely Scottish points I will, if I may, leave until then.

I have always tried to meet what I know is the wish of the House, that should give an analysis of the unemployment situation as I see it, and. if possible, try to forecast a little bit of the future as well, and, even if that is peculiarly difficult to do at the present time, I would still wish to try to do so. I must apologise to the House if that means that I will have to make a rather more solid and less of a debating speech than I would normally wish to try to make. There are, however, a number of points that have been made which I will try to take up as I go along.

I would say to the hon. Member for Newton (Mr. Lee) that I do not propose tonight to follow his reference to the proposed ending of the Industrial Disputes Tribunal. I do not doubt that the Opposition will give us an opportunity of debating that in due course. I have laid today an order effecting the ending of compulsory arbitration, and all I will say is that I have no doubt at all that the decision which I have taken is right, although I know that it will be called in dispute. I have said also, which is, I think, important, that, on the question of issues—I need not explain the technical difference between the two, particularly to the hon. Gentleman—there may be scope for further talks, and I have invited the parties concerned to those talks. I will say no more about that now, except to recommend to the hon.

Gentleman to look up, perhaps in the interval, some of the pledges made by the Minister of Labour when the hon. Gentleman was Parliamentary Secretary so that he will be furnished with them when we come to debate the matter.

The hon. Member for Newton mentioned the matter of training places and said that nothing had been done to expand them. In fact, we have increased training places from 2,100 to 2,500, an increase of 20 per cent. Experience shows, however, that the extra places have not been required, in spite of the increase in unemployment. It is common ground, I think, certainly between the two sides of industry—I think it is common ground between both sides of the House also—that the main effort, at least, in training must be made within industry itself, whatever supplements the Government may be able to give.

I will now give a quick review of the unemployment position over the last year, and then, if I may, give a forecast of how some of these trends may develop. When we debated unemployment last February, I told the House that the seasonal fall in unemployment in the spring and summer might not be as great as it has been in recent years. This was borne out by the facts. It fell by only 13,000 between February and July. In the normal way, we should expect a fall of something like 100,000, so that there was a big gap between the two. In July, I said that I thought that the usual seasonal increase in unemployment would probably begin to start then, as it did, but it was too early to say whether it was likely to be more than usual this year.

I will tell the House what has happened since July. Hon. Members will understand, of course, that it is always particularly difficult to try to interpret statistics which refer to employment, and even more difficult to project them into the future. I am bound to say that I made the prophecies I did make in July of this year with a good deal less confidence even than usual because one or two favourable signs had just appeared then, but they were not in themselves sufficient to justify predicting a genuine improvement.

Of course, everybody knows that the figures in the summer months are confused by the effects of holidays and the influx of school-leavers into employment. I will return to the points made on this factor by the hon. Member for Hamilton and others who touched upon it. Now that we can look at the figures in better perspective and make some allowance for seasonal factors, I think that we can say that, since July, there has been a slackening off in the upward trend in unemployment as compared with the earlier months of this year. It is quite true that the numbers rose between July and September, but if we take into account the fact that the seasonal factors then and now are against us, the position was better than in the spring when the season was on our side.

One interesting matter is that, in the different places in the country where employment has been particularly difficult—the places referred to in the list published in connection with the Distribution of Industry (Industrial Finance) Act—although, of course, they did not escape the increase in unemployment which has covered the whole country, the increase has been less than in the country as a whole. Indeed, it has been 40 per cent. in those areas, compared with 75 per cent. over the last year in the other parts of the country.

As regards the individual industries mentioned today, I should, perhaps, say that my right hon. Friend the President of the Board of Trade intends to deal in some detail with the speeches made and with the Amendment in the name of the hon. Member for Nelson and Colne (Mr. S. Silverman) and other hon. Members in regard to the cotton industry.

There is one industry, however, about which I should say a word. It was the subject of a notable speech by the hon. Member for Willesden, West (Mr. Viant), who knows a very great deal about this matter and who describes it fairly enough as a barometer of the situation. I think that my figures differ from his, but I believe that the explanation is that he was comparing 1956 with 1958, and, of course, 1956 was a year of exceptionally high level employment in the building industry. But, as the House will remember—and building is one of the industries that affects every constituency represented in the House—a great deal of pessimism was expressed last winter about the building and civil engineering industry because em- ployment had been falling and unemployment had been rising a good deal more than the usual seasonal pattern would show.

There has been since then a marked improvement in the industry. Between March and September, employment rose by 32,000, which was a little higher than the usual seasonal increase. By the end of September the numbers in work were only 11,000 less than a year earlier. The total reduction in unemployment since March has not been far short of the usual fall during the spring and summer months. That is certainly a good deal more cheerful picture than at one time looked likely, and the new measures which we announced before and which the Chancel/or of the Exchequer announced in relation to investment today are, one would hope, sure to help.

I should like to say a word about overtime and short-time working. In view of the general trends with which the House is familiar, it was natural that short-time working should increase and overtime should fall during the summer, although there has been some improvement in short-time working during the past three months. But the latest figures which I have—there is a little bit of time lag here —are for the end of August, and then 2.8 per cent. were on short time in the manufacturing industries and 21.1 per cent. were working overtime. The level of employment remained very high indeed. Even although the September figure was a good deal less than September, 1957, we must remember that September, 1957, was a record for that month. Employment in September this year was higher than in any year previous to 1956 and was only a fraction of 1 per cent. lower than it was in that year.

There is one encouraging matter which I know the House will be glad to hear. The movement of workers from defence production has continued without serious difficulties. During the last twelve months, employment in these industries has fallen by about 16,000, but the number of workers from those industries unemployed has risen by only 1,300. More striking still, manpower in the Forces dropped by 78,000 during last year, but the number of ex-Service men unemployed has increased by less than 2,500. I know that the House will join in the tributes that I should like to pay to all those concerned with the important work of resettlement of the Forces.

In outline, and inevitably rather quickly, that brings us to the position in October. It is very difficult and perhaps rather rash to try to forecast the future, but I feel that the House would like to know how I see these trends developing. I said at the Blackpool Conference that unemployment was bound to go somewhat higher with the winter months in front of us. It does so every year, as the opportunities for employment, for example, in the tourist trade, in agriculture, fishing and building, and in other occupations, decline with the shorter working days and with the more difficult out of door working conditions. Therefore the month from September to October, for which figures will be published in a few days' time, is, even in a normal year, a month that shows a substantial increase in unemployment. This year has been no exception. The figures that will be published in a few days will show a more than usual seasonal increase. The percentage unemployed in Great Britain will rise from 2.2 to 2.3 and the numbers unemployed to 514,000.

There is a very interesting point about the vacancies figures to which I wish to draw the attention of the House.

Mr. H. Wilson

Will the right hon. Gentleman first give the figure for October last year, so that we may see how the gap is changing?

Mr. Macleod

I do not have it with me, but no doubt it can be found in time for me to provide it.

There is an aspect concerning the vacancies figures to which I should draw special attention. In September, the vacancies figure showed a drop, but when ordinary allowances are made for seasonal factors, they represent, in fact, an increase. This was the first increase for 11 months. For the first time for nearly a year, the unemployment and the vacancies signposts were pointing in opposite directions.

Therefore, I have looked at the October vacancy figures with particular interest to see whether that trend, which might be an extremely interesting one, will continue. I find that the figures—again, with the same allowances—show a small increase. It is far too soon to say that two months constitute a trend, but we can, I think, say that the uninterrupted downward movement of vacancies which has gone on since autumn last year seems to have been brought to a halt. This is an encouraging sign, and it may well be one more indication of a return of business confidence.

Looking, then, into the future and giving the best guidance I can to the House, I would say, first, that I expect the seasonal peak of unemployment next year to be in January and in February. I am quite confident that there will not be any catastrophic decline in the level of employment or a great increase in the number of those unemployed.

I have often said that our aim should be the highest level of employment that is consistent with the avoidance of inflation. The House will recall—indeed, it was the subject of some discussion this afternoon in the speech of my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke)—the standard for the country laid down by the Leader of the Opposition when Chancellor of the Exchequer in 1951 and when he defined it although I wish to be quite fair about this—with considerable and important reservations on both sides of this figure, as 3 per cent. at the seasonal peak. The January figures, of course, always reflect the seasonal slackness that follows from the Christmas trade and almost every year January shows the largest increase in unemployment. I must, therefore, take that also into account.

Taking that into account, and even if I assume that the figures for the next few months will be rather worse than the normal seasonal decline—which I am assuming—on the evidence present before me I expect that the unemployment figure will not be as much as 3 per cent. in the early months of next year. Indeed, if today I had to forecast the figure. I would put it at 2.8 per cent. after the big increase in January has taken place. From then, we may hope that seasonal factors, accelerated by the results flowing from the vigorous action that the Government have taken, and are taking, should produce a welcome improvement. We may then see a better seasonal trend developing.

I have given my information exactly and with candour to the House, and the House would, I think, prefer me to do that. Full of uncertainties though forecasts must be, what I have said should help to counteract the wilder estimates which have been formulated. I would only add that if at any time I have firm reason to revise that forecast either upward or downward, I will seek an early opportunity of keeping the House fully informed.

The unemployment figure in Great Britain in October, 1957, I can say in answer to the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) was 275,000.

Mr. H. Wilson

What is the increase?

Mr. Macleod

239,000.

The essential problem remains for us that the present overall percentage of 2.3 conceals, of course, wide differences in unemployment. That is the problem we have. There are important towns in this country where unemployment even on the October figures is under 1 per cent. So we have for some time concentrated on the more difficult areas.

There are three ways in which we can try to help a man or woman who is out of a job to get another job. The first and obviously the best, if it can be done, is that they should be placed within daily travelling distance of their home, and my Employment Exchanges alone have placed something like 1½ million workers already this year, and many workers through trade unions or direct application have found work for themselves.

Where this is not possible there remain two possibilities, that of helping the worker to move to new work and that of bringing new work to the worker. I have been reviewing the part industrial transfer can play in the present situation. Industrial transfer, to my mind, is only a supplement—I make this clear—to the Government's plans for assisting the development of industry for areas of relatively high unemployment, for these plans take some time to work; but transfer has a part, if only a small part, to play. I am glad to say that rather more use is being made of these facilities. At the end of September just under 200 persons were in receipt of allowances under the transfer schemes, compared with only 40 at the end of last year.

I have made certain changes. I shall not detain the House with them, for I will, if I may, circulate them in the OFFICIAL REPORT in answer to a Written Question put down today, but the two most important ones are that I am abolishing the waiting period of four weeks' unemployment before a person can become eligible for assistance under the temporary transfer scheme; and secondly, I am giving assisted fares to those in receipt of lodging allowances so that from time to time they may be helped to visit their homes.

I should like to say a word about the working of the new Distribution of Industry (Finance) Act, under which the Treasury can help different concerns, and I should like to assure my hon. Friend the Member for Clitheroe (Mr. Fort) that we keep constantly under review the criteria for those areas which qualify.

These are the facts. The Act came into force at the end of July. So far we have received 191 approaches for amounts ranging from £500 to £250,000. In a large number of these cases we are waiting for the firms themselves to let us have detailed information which will enable us to examine their projects. I am afraid that inevitably it takes a little time because, of course, public money is involved in this operation, but we are going on as quickly as we can. We are already working in detail on 32 of these cases where full information has been received from the applicants. It is too early yet, but we will as soon as we can give the House a report on the results of the new arrangements, but I can say that the spread of cases that we have had is a very good one. It is not confined to the more industrial areas. The hold up at the moment is really in the obtaining of information from the firms who wish to claim Government assistance in their different enterprises.

I will say only one word briefly about Northern Ireland, in response to my hon. Friend the Member for Belfast, South (Sir D. Campbell), and that is that although the Northern Ireland Government have their own legislation and, therefore, the Distribution of Industry Act which I have mentioned does not apply to Northern Ireland, yet the Board of Trade regional controllers, whenever they can in their steering of industry, keep the needs of Northern Ireland in mind and urge all suitable firms to go there. That we will continue to do.

I should like to spend a minute or two talking about a matter which has come into a variety of speeches, all of them, I think, if I remember rightly, from Lanarkshire Members. There was one in the earlier part of the debate by the hon. Member for Motherwell (Mr. Lawson), there was one by the hon. Lady the Member for Lanarkshire, North (Miss Herbison), and there was the one to which we have just listened by the hon. Member for Hamilton.

This is about the employment of young persons. It is a subject of very great concern to us all. The measure of the problem is this. The number of children reaching school-leaving age this year was 712,000 or 33,000 more than a year ago. I have now the October figures which show that there were nearly 30,000 boys and girls unemployed, that is 10,000 better than the figure at the end of September and there are some 44,000 vacancies.

These figures are not in balance, partly because vacancies are concentrated among girls and also—which was a perfectly fair point made in the debate—because in certain areas of Great Britain, of which Lanarkshire is a fair example, it is more difficult to obtain work and, as a consequence, no doubt most employers have tended to raise standards. But my reports from the regions all agree in saying that it is the slackening of industrial activity that is responsible for the changed picture and not the relatively small increase in the numbers of school-leavers this year. In spite of the difficulties, present indications are that nearly all this summer term's school-leavers should have found employment before the Christmas-term leavers seek work.

I turn now to the question of apprentices. At the very first meeting of the N.J.A.C. which I held when I became Minister, I invited the council to study the position. I had an enthusiastic response from the T.U.C., employers and the nationalised industries. They worked under the chairmanship of my hon. Friend the Member for Mitcham (Mr. Carr), who was then my Parliamentary Secretary, and to whom I want to pay a warm tribute in this connection. The result was the Carr Report. It is not true, therefore, that we have not been working on this problem for a very long time.

It is true that the answer to the problem essentially lies with industry itself, and I would urge those industries which have not yet got any distance with the re-appraisal which they ought to have undertaken to make it as quickly as they possibly can, particularly now that the Industrial Training Council has been set up under the chairmanship of Lord McCorquodale and is already at work.

There is one thing which it is important to the House as a whole to emphasise. I can understand employers, because the economic situation is extremely difficult, being reluctant to engage as many apprentices as they would like, because an apprentice for some years does not become a fully productive worker. But if this develops to any extent, the shortage of skilled workers will be exacerbated when the economy begins to expand.

The right hon. Gentleman the Leader of the Opposition said at Cambridge that he was quite sure that there would be no major slump. I am glad that he said that. I welcome it, and I think that the analysis, which I am afraid I have had to offer the House with great speed, agrees with that. I wonder whether the right hon. Gentleman could have said that if it had not been for the actions which we took a year ago. I am quite aware that some people think that we have been fighting the wrong battle. I understand that the right hon. Gentleman the Member for Huyton and Mr. Roy Harrod, in a rather strange alliance, both hold that point of view.

The record over the past year stands. I find it hard to concede that any other action, still less any action in a contrary sense, could have led to such a swift and sustained return of confidence as we have seen in this country; and in the last analysis almost every economic crisis is a crisis of confidence. The truth is that both parties have sought earnestly since the end of the war for a continuation of stable prices with expansion. We believe that because we have secured our base first we are nearer full success than at any time since the war. That is why we believe that, whatever controversy they may arouse here, our policies have the support of the country and should have the support of this House.

Debate adjourned.—[Mr. Bryan.]

Debate to be resumed Tomorrow.