DEBATE ON THE ADDRESS

HC Deb 04 November 1958 vol 594 cc776-909

[SIXTH DAY]

Order read for resuming adjourned debate on Amendment [3rd November] to 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.—[Mr. P. Thomas.]

Which Amendment was, 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 regret the omission from the Gracious Speech of any measures directed towards the expansion of production and employment while maintaining stable prices ".—[Mr. H. Wilson.]

Question again proposed, That those words be there added.

3.33 p.m.

The President of the Board of Trade (Sir David Eccles)

We expect a debate on economic policy to bring out some sharp differences between both sides of the House, but it is satisfactory that our basic aims remain the same. We both want expansion and we both want a high and stable level of employment, but we differ about how to achieve those objects. My hon. Friends believe that the right priority in employment policy for this country, with its dense population and its few raw materials, is to be outward-looking and export-minded. The other side believe that if only the Government were to behave as complete masters of the economy they need not pay so much attention to the outside world.

We have always known that those were deep differences in approach between us, but this debate has shown something new. That is a very remarkable divergence in the opinion upon the prospects for trade and employment, not between the two sides of the House, but between the Labour Party and the general public outside. Right hon. and hon. Members opposite who have spoken so far have been very gloomy. I hope the right hon. Member for Blyth (Mr. Robens), when he speaks, will be less gloomy and remember his prophecy about 1 million unemployed sometime ago.

Mr. Alfred Robens (Blyth)

Will the right hon. Gentleman give the direct quotation from HANSARD?

Sir D. Eccles

Certainly, if the right hon. Member will give me the column number.

Mr. Robens

Is the right hon. Gentleman telling me that he makes a statement in this House without checking it?

Sir D. Eccles

We all know about it.

Mr. Robens

Why does the right hon. Gentleman not quote it in full?

Sir D. Eccles

I have not got the quotation with me. One and all the right hon. and hon. Members opposite, if I may use the language of the stock market, have been "bears to a man" of British industry, but anyone who has read the newspapers during the last month or two must have observed the growing confidence in the outlook of trade. The Stock Exchange itself, which is not a bad guide because it reflects hundreds of thousands of independent judgments, takes the opposite view to the Labour Party. Both cannot be right. Either right hon. Members opposite or the general investing public will have to be proved wrong. Investors usually look some way ahead. They are less interested in what is happening this autumn than what they think is likely to happen next spring.

Those who study these matters tell us that the confidence shown in the future of British industry is a compound of relief that the American recession appears to be over and confidence that the Conservative Party will be re-elected for a third time. Be that as it may, in the Board of Trade we try to assess the state of the economy without taking Gallup Polls into our calculations and I should like to compare our view of production with that of the right hon. Member for Huyton (Mr. H. Wilson) and his hon. Friends.

They say the Government are responsible for the fall in output and that it could have been avoided. Well, it is true [HON. MEMBERS: "Hear, hear."]—that a modern Government have the means, for a time at least, to nourish continuing expansion within their own borders. However, it is well to remember that their ability to do that is in direct proportion to the dependence of the economy upon exports.

The right hon. Member was quite justified in saying that a year ago my right hon. Friends deliberately decided that it was against the national interest to keep the inflationary boom going in this country; but, supposing inflation had not been checked, what then would have happened to the balance of payments? Sterling was under severe pressure and, unless confidence had been quickly and completely restored, that attack would have succeeded and, as in 1949, the £ would have had to be devalued,

Hon. Members opposite may think that that forecast is a platform bogy. If so, I would ask them to look at what happened in the European country which disregarded the recession in world trade and continued its domestic expansion. France went on with the boom, and, in spite of help from lower import prices and credits from abroad, her gold reserves seeped away, import restrictions were multiplied and, finally, the franc had to be devalued by 20 per cent. Fortunately, France is now under new management.

Mr. Harold Wilson (Huyton)

In fact, the devaluation of the franc occurred, for all practical purposes, before the September crisis. The right hon. Gentleman missed out the whole cost of the Algerian war. Further, since he began this passage with reference to sterling and the balance of payments, will he agree that the Government's figures show that there was a surplus balance of payments at the very time when they took their restrictive measures?

Sir D. Eccles

The balance of payments is valuable in respect of the question whether the £ is healthy or weak. We have to have a confidence in sterling, and that means that we have to be sure that more people want to buy sterling than want to sell it. That was not the case at the time of that attack. In this country we chose to put first the maintenance of the value of our currency, and in our case we had external obligations to think about, because sterling is the money of the sterling area, and the sterling balances, whose purchasing value we have a duty to protect, are owned mainly by the poorer members of the Commonwealth. Therefore, stiff monetary discipline was the honourable course, and we say that events have shown that it was also the right course.

Hon. Members on this side of the House are familiar with the Labour Party's view that another policy would have served the country better. They say that no matter what was happening in the rest of the world, the expansion could have been continued here, provided the Government had reintroduced Socialist planning and controls. That is what the hon. Member for Hamilton (Mr. T. Fraser) said last night. The essence of his speech was that Scotland would be far better off if all its industry were controlled and planned by the Government —and that means controlled and planned by London, which some of his constituents may not like. [Interruption.] We ought to give the hon. Gentleman's argument the fullest weight, and his argument was that Scottish industry liked planning and ought to have planning. If we could get 5 per cent. or 10 per cent. more output it would be well worth doing some odd things.

But it seems inevitable that if expansion had not been checked exports would have been more difficult to sell and imports would have been stimulated. Then the Government of the day, against the background of difficult conditions in world trade, would have been faced with the choice either of letting the extra imports come in and see the balance of payments go wrong, or cutting the total of imports by controls and restraining the holders of sterling from exchanging their pounds into other currencies.

The second choice—manifestly the Socialist choice—takes no account of the effect of a return to controls upon British credit in the outside world. Confidence in sterling would have weakened in proportion as we resorted to restrictions upon imports and the transfer of sterling; experience has amply proved that if a Government cannot trust its own people with their money, foreigners will not trust that money either.

There would have been another serious consequence of trying to combine expansion with physical control. Such a policy would have destroyed British influence at the Commonwealth and Economic Conference, for this reason: At a time when commodity prices have fallen, and when international trade is declining, many members of the Commonwealth feel that they may have to take restrictive action to prevent their balance of payments from growing worse.

If the United Kingdom had appeared at Montreal as the leader of the retreat from freeing the channels of trade; if we, the bankers of the sterling area, had, for reasons of our own internal policy, put fresh restrictions on the transfer of sterling, what advice could we have offered to the other members of the Commonwealth? We could have given them no lead towards the new expansion in world trade, and very little help, if any, towards the development programmes of the under-developed countries.

Again, I invite the House to look at the example of France. Why is it that France finds it so difficult to join a Free Trade Area? It can hardly be doubted that the French hesitate because they feel that their economy is not in good shape to take the plunge into such a wide area of free trade. We ought to sympathise with our friends across the Channel, because if we had had an expansionat-any-cost Government some of our industries would not be fit to venture into this great market, with all its risks and all its prizes.

As my hon. Friend the Member for Weston-super-Mare (Mr. Webster) said in his admirable maiden speech, the Free Trade Area negotiations are being conducted with great patience and skill by my right hon. Friend the Paymaster-General. Time is running short, and Europe's need is urgent to see before the end of the year what will happen when the European Economic Community comes into operation. If the Six begin what will, in effect, be tariff discrimination against the rest of Europe serious divisions must occur, and outside Europe —as we learned at G.A.T.T., in Geneva last month—there will be strong misgivings, and strong pressure for counter action.

We in this country have always believed that a Free Trade Area would stimulate a strong expansion in Western Europe and be good for the rest of the world's trade, including the trade of the Commonwealth—and the Commonwealth also hold that view. We shall, therefore, continue to urge all our friends to bring these long and difficult negotiations to a successful conclusion.

Returning to the domestic affairs, British industry has used the past year to advantage and, partly as a result of previous heavy investment, is well prepared to share in any advance towards freer trade and world expansion. A healthy and new feature is the ease with which deliveries can now be made. This has been an essential help to our exports, and I do not see how we could have maintained our overseas sales last year if we had not had shorter deliveries, which were the result of reducing the internal pressure of demand. Another healthy feature is the changed attitude towards the level of stocks.

I take steel as an example, because it is so important a product. For twenty years steel has been scarce, and every move in price has been upwards. Twenty years is a long time, and half the men in the steel industry who buy steel have never known an easy market. As I expect the House will remember, rationing and rising prices always lead to hoarding, so it has happened in steel. Over these twenty years users have contrived to accumulate abnormal stocks.

Recently, however, when, almost for the first time since 1939, most steel products could be more or less bought off the peg, and the credit squeeze increased the cost of carrying materials, users very naturally dug into their stocks. It is not easy to get comprehensive figures for stocks in the hands of users, but it is generally accepted that at the beginning of this year the stocks of steel products, over and above what industry might be expected to carry in normal times, amounted to at least 14 million tons. Much of these stocks—in fact, I am informed, most of these excess stocks — have already been used up, and as prices do not look like coming down, before long buyers will be back in the market.

The end of destocking, which, of course, applies to some other products as well as steel, will have its effect quite soon on the level of production, but far the most important factor will be the demand for exports. My right hon. Friend the Chancellor dealt with exports yesterday, and I have only a little to add to what he said.

Some changes are likely inside the total of our exports. We must expect some further falls in deliveries to the countries that have been worst hit by the decline in their earnings from primary products. On the other hand, if the Motor Show' is any guide—and I believe that it is—our sales to the highly-industrialised countries should show an increase. We should, therefore, see only a small further fall in the total of exports. As a matter of fact, the outlook for exports in North America, and in countries like Germany is extremely good.

The return to better trade will, as the House knows, leave us with certain difficult problems in our economy, to which we are giving close attention. Last evening, my right hon. Friend the Minister of Labour dealt with the areas of local unemployment. The House has already shown, when the Distribution of Industry (Industrial Finance) Act was going through Parliament, that the Government have the support of all sides for action in these areas.

My right hon. Friend and I administer this Act together, and, while the Board of Trade is very sorry to have lost my hon. Friend the Member for Altrincham and Sale (Mr. Erroll), who was our general manager in this campaign, he is now, and I hope that he will remember, strategically placed to be kind to his old friends in the front line.

Yesterday, the hon. Member for Hamilton invited me to tell the House something more about how the distribution of industry policy works in areas like London. I hope that I have not got it wrong, but I thought that he had drawn a false conclusion from two facts. The first is that, of course, it is true that nearly all new development is an extension to old industry. Nobody has ever bothered to deny that.

Secondly, the Board of Trade allows Industrial Development Certificates in areas like London and the South-East only when the application is for an extension. It does not follow, however, that we grant all applications for all extensions of industry in the areas of high employment. British Nylon Spinners have not gone to Havant; Pressed Steel have gone to Swansea. Both schemes are extensions of industry.

On the other hand, when I get an application like this from Ford Motors, at Dagenham, for 180,000 square feet, which is an extension to its existing very large plant, I have to grant it, because it would be wholly inefficient to request that firm to separate this extension from the rest of its plant.

We have to strike a balance between social needs and economic efficiency, and as the social needs grow greater with the emergence of these local areas of unemployment so they are given a greater weight in the balance that we strike. I have the figures—which, I think, may interest the hon. Member for Hamilton—of Industrial Development Certificates for the last three months for the London and South-Eastern area.

In those three months—August, September and October—certificates were approved for 2,480,000 square feet, and they were refused for 1,219,000 square feet. It may seem that 2,000,000 square feet is a very large figure, but about 40 per cent. of all the applications are far service industries which one could not move elsewhere—depôts for tyres, laundries, and so on. Therefore, the present policy—as, I think those figures show—-bears quite hardly on people who would have liked to have come to London and the South-East.

Amongst the industries that are undergoing a difficult time, there are two, aircraft and cotton, that give us special concern. Hon. Members will recall that, in his Budget speech, the Chancellor said that if we found that other countries were providing credit for the export of goods on terms that left our manufacturers at a disadvantage, we should take action. This is now the case in respect of large civil aircraft produced in the United States and financed through the Export-Import Bank.

Accordingly, with the agreement of my right hon. Friend, I have given discretion to the Export Credits Guarantee Department to match the American terms by insuring up to seven years' credit on large British airliners, and on the engines used in such aircraft. These guarantees will be given under Section 2 of the Export Credits Guarantees Act. I should emphasise that it is an exceptional step, and that we are as unwilling as ever to start a credit race in respect of any particular exports—

Mr. Frank Beswick (Uxbridge)

Would the right hon. Gentleman clarify that? Does he refer to the rate at which the money is lent, or to the amount that is lent?

Sir D. Eccles

It is a complex matter of the rate and the amount for which one insures. I can assure the hon. Member that I have asked the Export Credits Guarantee Department to see, within its own capacity to act, that our manufacturers are no longer at a disadvantage.

I now turn to the cotton industry. Most interesting speeches on this industry were made by my hon. Friends the Members for Heywood and Royton (Mr. Leavey) and for Clitheroe (Mr. Fort), and by the hon. Members for Ince (Mr. T. Brown), Accrington (Mr. H. Hynd), Farnworth (Mr. Thornton), and Nelson and Colne (Mr. S. Silverman).

We have not yet had any news from Hong Kong about the Hong Kong industry's response to the offer made by Lancashire, about which the Prime Minister spoke last Tuesday, but I understand that the Hong Kong committee is due to meet today, and we are hopeful that at last we shall come to a settlement. The Government would like to be associated with the tribute paid by the hon. Member for Farnworth to Lord Rochdale, who has ably and devotedly led the Lancashire spokesmen through so many weary months of negotiation.

If agreement is reached with the three Asian industries it will be in the best interests of all concerned, and it will give a period of stability in which to take a new look at the cotton industry.

It might be of interest if I said a word or two about this new look in textiles. The difficulties, which beset the cotton industry throughout the world, are too deep to be ascribed to a temporary recession in demand. The addition in so many countries of so many new mills has raised the world's capacity to an unbalanced and uneconomic size, and it is this excess capacity that is the cause of the universal lack of confidence and of Lancashire's particular difficulties.

Times have changed. The United Kingdom was once the only significant exporter of cotton textiles. This near-monopoly, of course, could not last. We lost markets—we lost many of our best markets—through the setting up of mills inside those very markets. Then these new cotton industries themselves began to export. This second growth of cotton exporters is today challenged by a third growth, by Communist China. Thus, cotton is in real trouble all round the world. We have to ask ourselves what will be Lancashire's place in the future. What business will there be for Lancashire, and what will be the best structure of the industry to do that business?

My hon. Friend the Member for Clitheroe rightly drew our attention to a speech given at the recent Harrogate Conference by Mr. W. T. Winterbottom. That was a speech in which he gave his answers to those vital questions which I have just asked. It was a very brave speech, and, although one could hardly agree with all of it, I think that everyone must have admired the forthright approach of that Lancashire mill owner. If one has the courage, it is easier to do business with people who speak their minds, and certainly he spoke his mind.

Speaking of Lancashire, he said: There is no redundancy problem in the sense that there is no surplus of the type of machinery which is needed to meet the challenge of the future. But there is a considerable degree of obsolescence, and not only in the United Kingdom. Much pruning needs to be done, and until it is complete we shall have an untidy, unbalanced and unhealthy industry. There is a big job to be done there, and we on this side of the House think that the initiative in that job must come from the industry if a really successful solution is to be found.

But, having said that, the Government will be ready to discuss with Lancashire any proposals for bringing about a balanced and efficient structure. We need this period of stability which the Eastern negotiations are designed to bring about. We are also very well aware of the human problems that arise out of structural change. My right hon. Friend the Minister of Labour described last evening what his Ministry can do and has done so successfully in placing men and women in new jobs. The Board of Trade has also got a part to play; we will try to diversify industry in the cotton area, and we have one or two hopeful approaches from industry now.

I am not an expert in this industry, but I have seen enough of world trade to believe that there is a new lease of life coming for British textiles. As personal incomes rise throughout the industrialised nations, the demand is sure to expand for the kind of textiles which we make better than anybody. Whether one looks at fabrics for clothing—men's, women's or children's—or for household textiles, there is no doubt that standards are rising and, in spite of the competition of motor cars, refrigerators and washing machines, people will want to have better clothes and better textiles with which to equip their homes.

Any regular visitor—and I have tried to be a regular visitor—to textile exhibitions over the past year or two must have been struck with the steady improvement in the design and range of fabrics and with the outstanding success of the British exhibits. There is no doubt that the best we do is the best in the world. That was proved the other day in a very famous exhibition in the United States where we won more awards than any other country.

Therefore, I am convinced that for these high quality and well-designed fabrics our industry has an expanding market at home, and a splendid chance to sell more in the United States and in the Commonwealth. Some of the cities in the United States have hardly been touched yet. Of course, if we get a Free Trade Area, Europe will be a very large and competitive market, but I feed sure that we will hold our own there and in some lines we will do very well.

This new lease of life will come quicker if Lancashire uses well the period of stability which we hope will come as a reward of success in the negotiations with India, Pakistan and Hong Kong. These inter-industry agreements, if they are made, will have a very wide significance because the essence of a voluntary quota is that the exporter and the importer agree how to conduct orderly trade and the Government concerned are not compelled to resort to unilateral restrictions upon imports.

Many Governments, I regret to say, are now threatening to increase such restrictions on goods manufactured in underdeveloped countries and so the stand that we are taking is watched all the way round the world. We discovered that at the Commonwealth Conference. When we met at Montreal under the very able chairmanship of Mr. Donald Fleming, Canada's Finance Minister, we soon found that the essential problem in Commonwealth relations is the widely different rate of economic progress between the highly industrialised and the underdeveloped countries.

That a very large gap exists between, say, the standard of life in Asia and the standard of life in North America or Europe is well known, but what is not so well known, and what is extremely dangerous, is the fact that this gap is growing wider every year. It is this sense of falling further behind that threatens the stability of the poorer nations in the free world.

The comparisons are made not only with the Western democracies but with the Sino-Soviet bloc. At Montreal we asked what would happen if the living standards in China rose appreciably faster than the living standards in India and Pakistan. It is not an exaggeration to say that this is one of the most serious questions in the world today. The Commonwealth Conference was a success precisely because we accepted the challenge of the widening gap and we devoted our best endeavours to considering how the underdeveloped countries may be further helped to increase their rate of progress.

The essence of their problem is this. Even if they can count on us and on the other creditor countries in the free world to give them all the aid we can, there is little prospect that the total of those loans and gifts will be anything like sufficient to finance a tolerable rate of development. The underdeveloped countries must. therefore, look somewhere else also for increasing resources and they can only look to an increase in their export earnings.

All the experts told us that this expansion cannot be adequate in terms of primary products. The Haberler Report, for instance, a most remarkable document which has just been presented to G.A.T.T. at Geneva, dealing with this very problem, shows beyond any doubt that the exports of underdeveloped countries will have to contain an increasing quantity of manufactured goods if their development programmes are to be sufficient by any standards.

It is here that Lancashire's proposals for Asian textiles become so significant. The policy, of which these negotiations are a practical application, is not unregulated free trade. That would disrupt to an intolerable degree an old and established industry like our textile industry. The right course is to work towards orderly and voluntary adjustments that take account of the crying needs of the Commonwealth and of the established industries in the older countries.

Thus it was that our willingness to import an increased quantity of Asian textiles stood out as an example to the rest of the Western world. For unless the United States and Europe can be persuaded to buy more goods from the underdeveloped countries, it is hard to see how those countries can respect and adhere to the Western economic system.

This is one of the biggest issues today. At Montreal we took certain practical steps which prove the willingness of the Commonwealth countries to help each other and, in particular, the willingness of the United Kingdom to make the major contribution to Commonwealth development. We agreed to keep the British market open. We agreed to lend more money. We offered to convene meetings to discuss fluctuations in commodity prices. We strongly supported a new drive for Commonwealth aid for education.

But in every analysis we made, and in every constructive proposal we put forward, we were brought back to the fact that no group of nations in the free world can either resist the Communist challenge from without or achieve balanced progress within its own ranks unless the United States plays a major and consistent rôle in maintaining economic activity and in opening its markets to the goods of the free world. And not only the United States: Western Europe has a great responsibility likewise.

At Montreal we said this clearly and wholeheartedly for the first time in economic history. We declared that the old and the new nations of the Commonwealth understood each other's economic problems and were determined to seek common solutions to them, doing all we could to help each other and calling on the rest of the free world to reinforce and complete our tasks.

In all this, I venture to say, the United Kingdom delegation took a leading part. Why were our delegation able to be outward-looking and to offer concrete help in so many directions? Simply because sterling was strong and because our balance of payments was favourable. If we had followed the economic and financial policies recommended to us by the Labour Party, we know what would have happened. Sterling would have been weak, our balance of payments would have been in deficit and the results of the Montreal Conference would have been very different; and for the same reasons, because sterling is strong and because the business outlook is now good, the Socialist attack upon our policy is ill-judged and will command no support in the country.

4.13 p.m.

Mr. Alfred Robens (Blyth)

The speech to which we have just listened was probably the President of the Board of Trade at his scintillating best—as good as his famous speech in which he referred to a royal personage as his leading lady. He said that we had our eyes on the spring, presumably a reference to a General Election. I do not know whether he is advising us that a General Election will take place after the usual give-away Budget, but, certainly, what we have had to say and what we shall say today on the economic situation has no relation to an Election in the spring but has relation to the Government's conduct and to our own views on the way in which the economic situation should be handled.

The right hon. Gentleman is quite wrong when he says that there are no sharp differences between us. There are very many sharp differences, and it would be a great mistake if the public were to get the impression that there were not sharp differences between the parties, particularly on these matters of the economic control of the country.

After reviewing the position of the textile industry and the Montreal Conference—and we shall read what he said with great care—the right hon. Gentleman told the House that there will not be a slump in this country. He is a couple of weeks too late. Two weeks ago, at Cambridge, my right hon. Friend the Leader of the Opposition said that he himself did not expect that there would be a slump. Reference was made to that from the Government benches yesterday. Nothing that the right hon. Gentleman has said today, therefore, makes any difference to what my right hon. Friend said a fortnight ago.

The right hon. Gentleman talked about the European Free Trade Area. We all know that the difficulty here is with the French. As he seemed to think that France, under the new management, was better than France under the old management, it seems that most of his remarks might properly have been addressed to the French rather than to the United Kingdom House of Commons. That is where the problem lies—with the present French Government, and not with the other members of the European Community; and certainly not with Her Majesty's Opposition.

One of the points which the right hon. Gentleman made which interested us, and with which we heartily agree, was that for twenty years we have always been short of steel. That is exactly what we have been saying for a long time. Of course we have been short of steel. There has been a deliberate restrictionist policy on the part of those who have conducted the operations of the steel industry on the basis of monopolistic practices, and it was one of our great complaints that the steel industry had not played its part in the economic development of the country. It was not until about 1957 that the steel industry was in a position to supply the bulk of the needs of the nation. We always had to import steel because the steel industry had refused to carry out the sort of expansionist programme which was essential for a nation like ours. We therefore entirely agree with the right hon. Gentleman.

Sir Toby Low (Blackpool, North)

I am sorry that the right hon. Gentleman is incorrect about these things. I am sure that he does not want to be incorrect. If he will turn his mind back to the one period when there was a nationalised steel industry, and if he will look up the statements of requirements made at that time by the nationalised industry, he will realise that since then the privately-owned steel industry has exceeded both the capacity and the production figures forecast as necessary by the nationalised industry.

Mr. Robens

I think that what I said was a perfectly accurate description of the situation. For twenty years, as the right hon. Gentleman himself said, the steel industry bas never produced the amount of steel that the country needs. We agree with him. I repeat that it was not until 1957 that the industry was able to produce the steel that the country needed. Although it is working below capacity today, if, as a result of what the Government do, there is a sharp increase in productivity and production overall, we shall find that the steel industry will again be short of capacity. It is not the case that the steel industry has met the economic situation as the country required it to be met, and we are grateful to the right hon. Gentleman for confirming what we have been saying for so long.

At the Conservative Party Conference Lord Hailsham displayed the way in which he had improved his studies of campanology by a further bout of bell ringing. I understand that it is an extremely difficult musical instrument to play. He was, therefore, once again delighted to indulge in this childish practice in front of a very enthusiastic audience. But before he began that display he issued a very grave warning. He said that the Opposition, both in the House of Commons and in the country, would once again raise the unemployment scare. Presumably he meant that they would do so with a view to playing on the anxieties of the people in connection with a General Election, which may or may not be forthcoming in the spring.

Whether he thought that it was an Opposition scare about unemployment or not, if one reads the report of the Conservative Party Conference, it is clear that the Conference itself was very concerned about unemployment, and it is perfectly clear, by reason of the time taken up by the Minister of Labour, by the Prime Minister and by other Ministers on that occasion, that they, too, regarded unemployment as a matter of very great and serious concern.

Indeed, it was the hon. Member for Louth (Mr. Osborne) who was reported in the Manchester Guardian as saying that he warned the conference that it was impossible to guarantee full employment in a free society and he begged the Conservative Party not to go out at the next Election under the false pretence that the reverse was true. We have always taken the view that full employment is not possible in a free enterprise system. The hon. Member for Louth apparently took this view and told the Conservative Party Conference just that. It was not we, however, who were raising the scare, but the hon. Member for Louth.

What does an editorial of the Financial Times of 7th October say? The fact is that the decline in industrial production has not yet been fully reflected in the demand for labour. For example, in the manufacturing industry output is now running about 5 per cent. below last year. But the decline in the manufacturing labour force over the same period has been only a little over 2 per cent. The Prime Minister is quoted by the Manchester Guardian of 7th October as saying this: There was bound to be some increase in unemployment. There is now 2.2 per cent. and it may go a bit higher during the winter. The Economist of 18th October says: Ordinary seasonable influences alone would probably take the number of people unemployed up to 600,000 by January and the slow continued decline in activity envisaged above could bring the percentage close to 3 per cent. which would mean much higher figures. Yesterday, the Minister of Labour, with his customary frankness. told us that he thought the peak would be about 2.8 per cent., which is roughly 600,000 people unemployed. Neither the newspapers nor the people that I have quoted are members of the Labour Party. It is the party opposite which is concentrating the people's gaze upon unemployment. We should be completely neglecting our duty as an Opposition and as members of a very responsible political party if we pretended that the problem of unemployment does not now exist, and will become much larger in the immediate future.

We are not, therefore, dealing with a scare in discussing unemployment. We are not dealing with a bogey in our Amendment but with a grim reality. This reality is the Minister's estimate of 600,000 people unemployed. However, the Minister will agree with me that 600,000 is a deflated figure. For example, the latest figure of dock workers who are registered but for whom there is no work at 25th October is no less than 11,230 These 11,230 dock workers do not appear on the unemployment count. The figure should be deflated by that much because it is hidden unemployment.

If we consider the situation in the coal mines, there are about 60,000 people in employment who, if the mines were today under private ownership, would certainly he signing on at the right hon. Gentleman's employment exchanges. The facts to prove this are self-evident. Today, there are about 35½ million tons of distributed and undistributed stocks of coal. Of that amount, nearly 19 million tons were distributed and presumably paid for, but undistributed and lying on the ground, in wagons, in colliery yards and elsewhere there are nearly 17 million tons of coal at the cost of the National Coal Board. If one takes the rough average of the cost of production, that must represent about £60 million of capital invested in those stocks which has been the means of maintaining at the very least 60,000 miners in employment.

I ask the Minister: what privately-owned industry would invest £60 million in maintaining the employment of their workers? There is not one. The Government can be very pleased with the fact that they have inherited a number of nationalised industries which have, by their operations, saved them from the worst effects of their economic policy. I will go further and say that if the Coal Board had acted as a private enterprise company it would not have, as it has clone, supplied British industry throughout the years of nationalisation with the cheapest coal in the whole of Europe. The Coal Board has, in fact, provided to British industry, and quite properly, a hidden subsidy which it would never have received if the mines had been privately owned.

If the mines had been privately owned during the years when it was possible to get a £1 or £2 premium on coal sold abroad, it would have been possible to have built up enormous profits and enormous reserves, but, instead, the Board recognises, as it must, and as most other employers of labour one day will have to recognise, that, quite apart from being a business enterprise, social responsibilities lie on the shoulders of large employers of labour, whether privately or publicly owned. But the Coal Board, recognising its social responsibilities, has chosen this way, at some cost. That is something which private enterprise could not possibly have done the system would not have permitted it.

The Government have been saved from a considerable increase in unemployment because of the operations of the nationalised industries. The Coal Board will presumably, perhaps in the not too distant future, require additional borrowing powers from Parliament. This amount of stock has to be sustained presumably as long as it is physically possible to stock and until the upturn comes in production which would soon make these stocks disappear. We on this side would certainly support a Bill which permitted fresh borrowing for this and other purposes. However, I think that the Government will have more trouble with some of their supporters on the benches opposite.

The Government's policies overall have now brought us to a situation in which the Minister of Labour is able to tell us that we shall possibly have a peak of about 600,000 people unemployed. There will also be many thousands more people whose unemployment will be masked, like the dockers and others, who are on unemployment arrangements under which they do not sign on at the employment exchange. Is that figure excessively low, or extremely low? Is it the Government's view that this is the sort of level of unemployment, provided it is taken in comparison with other countries, that should be tolerated, or do they feel that they must make a substantial effort to reduce this figure? At what figure do the Government think unemployment should be?

This is not a country-wide problem of 600,000 people likely to be unemployed. We have the very difficult problem of the black spots of unemployment, which were mentioned yesterday. My hon. Friend the Member for Hamilton (Mr. T. Fraser) made a very telling point yesterday when he drew attention to the fact that it is not sufficient to apply remedies uniformly, as the Government did with devices such as the Bank Rate. Things like that do not assist the black spots, which must be treated separately and in detail.

The President of the Board of Trade said that under the new arrangements it was important not to underestimate the size of the problem. Those who live in the black spots know perfectly well what that size is and what it means. I shall not weary the House with too many figures, but there are many areas where unemployment is more than 5 per cent., and that is very serious. In the constituency of my right hon. Friend the Member for Llanelly (Mr. J. Griffiths), the Deputy Leader of the Opposition, there is about 9 per cent. unemployment. Any man in Llanelly who is out of a job has the same trouble in finding a job as if the total national unemployment were 1,900,000. That is the sort of problem facing every man who is unemployed in a black spot.

Measures must be based on the peculiarities of the areas themselves. The treatment for the textile area of Lancashire will have to be very different from that for areas of shipbuilding. Each area will have to be taken by itself and its unemployment position ascertained—whether it is short-term or long-term—and then into that area will have to be poured the kind of assistance required to remedy the situation.

Mr. Sydney Silverman (Nelson and Colne)

Does my right hon. Friend realise that under the steps so far taken under the latest distribution of industry legislation Lancashire was expressly excluded?

Mr. Robens

Yes. I intended to say a Good deal about textiles, but my hon. Friend the Member for Nelson and Colne expressed our feelings about the textile industry perfectly well when he spoke last night. My only point in referring to that industry was to show that its problems had to be tackled differently from those of the shipbuilding industry.

The figures given by the Shipbuilding Conference are disconcerting, to say the least. On 30th September, there were 167 ships totalling 638,684 gross tons on order, as compared with new orders of 350 ships of 2,708,147 gross tons a year ago. With new shipbuilding at that low level, it is clear that special arrangements will have to be made for the shipbuilding areas if the growth of unemployment is not to proceed at a much more rapid pace than any of us want to see.

Unemployment cannot be relegated to a mere figure, to the idea that 3 per cent. or 2 per cent. unemployment does not matter and is something which we have to accept. I admit at once that brim-full, or over-full, or even full employment brings great problems in its wake, but it is better to face the overall problems of full unemployment than to have some people suffer because we are prepared to accept some figure of unemployment.

Unemployment is both a human and an economic problem. It cannot be measured in human terms except by those unfortunate people who are out of work. They know what it means in terms of their domestic life, and all that goes with that. Employers have to recognise that in a modern society they must accept certain social responsibilities which go with the tremendous economic power which they wield.

The economic problem is simply stated. It is that it is a gross waste of human resources to have out of work people who can do a job. One of the sharp differences to which the right hon. Gentleman referred occur in this respect. We in the Labour Party do not regard employment merely as something for a man to do, something by which he can earn a living. We regard a job as an absolute necessity for every able-bodied man who wants work and who is able to do it. We also regard a job as a man's right. We do not regard the handing out of jobs, by anybody, as a generous gesture to workers.

We say that in modern industrial society, when the tools of work are no longer in the hands of the individual, the right of a worker to a job is a right to which he is entitled from the moment he enters industrial society. That is why, when we of the Labour Party talk about full employment, we are not merely paying lip-service to full employment. We mean what we say and we believe that it is impossible to make progress socially, in the proper treatment for the aged and for young people, in education and in the Welfare State, and so on, unless not only all material and physical, but all human resources are used.

Lip-service to full employment is not enough and I suspect that hon. Members opposite merely pay lip-service. That is like saying that one believes in marriage while one continues to live in sin. We also believe that we cannot have full employment without planning for it. We cannot have full employment on the hit-or-miss principles which the Government seem to be adopting.

Who would have believed that less than twelve months ago we were hell-bent on deflationary policies of a very drastic character, and that a Chancellor of the Exchequer resigned because a further £50 million of spending was not cut, and that only yesterday another Chancellor of the Exchequer was able to say that he was about to add to the spending of the nationalised industries between £125 million and £150 million to provide 150,000 jobs? What kind of planning is it when in a few months a Government can go from one extreme, a deflationary policy, to the other, when large sums of money have to be spent in the public and nationalised industries?

Another interesting feature is that the Government have turned not to private industry to get them out of this deflationary mess, but to public investment and to the nationalised industries. In fact, when the Chancellor said yesterday that £125 million to £150 million were to be spent to provide 150,000 jobs, he said that that would take up the slack created by the non-investment of the private enterprise sector of industry.

If the railways and the electricity industry had not been nationalised, which private companies would have been prepared to pay the money to maintain jobs in those industries and to give the British economy this new injection, this "shot in the arm"? This Government, whether they like it or not, are having to use the instruments of a Labour Government to save them from the mess of their own making into which they have got. The truth is that if steel had been left as a nationalised industry they would have been in a far stronger position than they are today to deal with the problem of unemployment in that industry.

I have said that the Labour Party believes in planning. When we embarked on a programme of public ownership one of the strongest reasons made out for it was that in such a situation as this it could be used as an instrument for maintaining the economy in a buoyant state. That was one of the reasons, among others; a reason which has never had much prominence because up to now the instrument has not been required; but since the need has arisen, even right hon. Gentlemen opposite see that here is a ready instrument which they can use —and I am glad that they have used it.

But we go further than that. We say that it is quite wrong, if we really believe in full employment, to accept that the private sector of our economy should escape scot free from its obligations to maintain the economy in a healthy state. It cannot be good for any country, it cannot be good for any business—which is, perhaps, something which right hon. and hon. Gentlemen opposite understand better—to have the sort of stops and starts which have happened over the past three years in the country's economy. A businessman cannot be successful unless he plans in continuity his production, knowing in advance what he is going to do about investment, about sales, about markets and everything else. What is good for good business is good for a well-managed country. Therefore, we would say that the private sector cannot escape its obligations.

I say this quite plainly: it would be part of the economic policy of a Labour Government that the largest firms in the country, the few hundred which dominate the field of investment upon which full employment depends, would be required to give us far more details than they do at present about their investment policy, the quality of it and the timing of it, so that we could take such measures over the private sector as the present Government are taking over the public sector, to maintain full employment within this country.

We ought to be in a position to time investment, to regulate its size, and so on. The Government have taken only these half measures, because they are only half measures—for example, the release of all restrictions on hire purchase, which is hound to stimulate the purchase of consumer goods. Of course it is bound to stimulate it. Refrigerators and things of that kind, motor cars, will be bought, I have no doubt, more extensively, and that will certainly stimulate the manufacturing industry. But that can go too far.

If, as a result of stimulation in one direction, there is tremendous factory expansion and demand for building we may find, unless we know what exactly is happening, that we have overloaded, say, the building industry, and if we overload the building industry, in which there are more projects planned, more orders given, than the building industry, either by reason of its human resources or materials, can take, we start merrily on another round of inflation. That will do it. As an hon. Member said the other day, the building industry is a barometer.

It is essential that there should be some control not only over the public sector of industry, but over the private sector as well. That is one of the things we mean when we talk about planning the economy. It means using the nation's resources in the very best possible way. By this method of planning it will be possible to maintain full employment, to get some stability into prices, and to increase wages by reason of increasing production and productivity in industry. The Chancellor issued a warning again yesterday about wages. He gave the impression that everything was going very well, but that if there were any increase in wages things might go badly again.

I think myself that the Government have started off now another race for increased wages, and that they have done it by taking off 100 per cent. the hire-purchase restrictions. I am not averse to that for the moment as a way of stimulating manufacturing industry, but something else must go with it.

Obviously, the relaxation of hire-purchase restrictions over, say, the purchase of motor cars, the reducing of the deposit to 5 per cent. or 10 per cent. with three years to pay the balance, is of advantage only to those with modest means, and not to people who can afford to pay cash at once, for paying in that other way is the most expensive way of buying a motor car one can possibly think of.

If a man or woman of modest means is impelled to buy more today, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) said yesterday, there is nothing more inflationary than to spend next year's wages this year. All sorts of things can happen in the two or three years of the hire purchase. There may be more babies in the house; there may be severe sickness. All sorts of things can happen which demand more money. If a man or woman has virtually spent or pledged all his or her earnings for the next two or three years and there is a real need for more money in that household, then, make no mistake about it, pressure for more wages will be there.

That does not matter if production is increased at the same time. Increased wages can be given from increased production—but the Government have not done that. They have not increased production. They have kept it stagnant. Therefore, they create a situation in which there will be pressure for more wages, but give no real evidence so far that they are doing anything to increase production on such a scale as to enable increased earnings to be paid out of increased production.

Believe me, it will not be long before the Government are again saying, "The whole trouble with the country is because the workers want more money. It has nothing to do with us as a Government. It is all because the workers want more money."

There sits the Lord Privy Seal, who made a promise to the workers that they could double the standard of living in twenty-five years. There is a long way to go before that happens, and they have not started on the job yet. If the right hon. Gentleman cares to interview the 600,000 unemployed, they will tell him how far the Government have gone along the road to doubling the standard of living.

One would have thought that as the Government are now stimulating the economy, as they are, with the instruments which the Labour Government left for them, they would see the problem about wages and that they would do everything that they could to obtain the sort of human relations in industry without which we shall never get increased productivity. Increased production overall is one thing; increased productivity is also highly important and is quite a different thing.

Increased productivity means new techniques. It means new machinery, and to get new techniques and new machinery into industry we have, first, to have very good relations, so that the workers understand what it is all about. Secondly, we must not have a large army of unemployed, for the workers will not help over the introduction of new machinery which leads to a number of their colleagues working themselves out of jobs. Therefore, it is important to reduce unemployment, and to get good relations in industry.

Just at the time when we want to do that, the Minister of Labour decides that he will get rid of the Industrial Disputes Order. Why? Because some employers do not like it. I regard this as the strangest thing that I have ever heard from the Minister. I do not quarrel at all with getting rid of the Defence Regulations under which it was made. What I do not understand is why the Minister did not enshrine what I think has been a very valuable addition to our arbitration machinery—I ought to think that, because introduced it—in an Act of Parliament. Why dispense with it altogether?

In the seven years in which this Order has been in operation, I think that there have been over 1,100 cases before the Industrial Disputes Tribunal, and in only four cases did the unions resist having their case taken before it. Therefore, there has been a settlement of what might conceivably have been about 1,100 disputes in factories or workshops. They may have been big ones or only small ones.

What is the complaint about the Order? The T.U.C. have said that they ought to have had much better consultation, and the Minister of Labour yesterday had second thoughts. He said that it is advisable not to permit employers to undercut other employers who observe decent wages and conditions. He ought to tell us where is this body of opinion from outside that wanted to be rid of this Order, which, he is bound to admit, has played some part in and made some contribution to the settlement of disputes in industry. I must say that I think it is a remarkable thing that the Minister of Labour should, at this stage, wipe out this piece of arbitration machinery at a time when I believe that he will want it more than ever before.

All I want to say in conclusion is this. Yesterday, the Chancellor of the Exchequer reeled off a whole series of what I think he called the Government's achievements. Personally, I do not think that the public at large will interest itself very much in the list of achievements which the right hon. Gentleman gave. There is another chronicle of the achievements of the Government, and, after all, this is a Government which was elected on a pledge to reduce the cost of living—I think that the phrase was "mending the hole in the housewife's purse." The other pledge was "Eden for peace." There, of course, they had the picture of Sir Anthony Eden in six-sheet posters posted throughout the country. These were the pledges upon which the Government were elected, and this is their record, as I see it.

Since the last General Election they have led us into an abortive war in Suez, which, apart from the loss of prestige, cost the country about £400 million. They succeeded in reducing the value of the £ from 20s. to 15s. 6d. They pushed up the prices of consumer goods in a falling world market, pushed up the price of food by 40 per cent., and the cost of living by 30 per cent., stagnating the economy and creating the largest army of unemployed in the post-war era. It is for these reasons that we ask the House to vote for the Amendment.

4.54 p.m.

Mr. Alan McKibbin (Belfast, East)

The right hon. Member for Blyth (Mr. Robens) dealt with the unemployment situation, as did my hon. Friend the Member for Belfast, South (Sir D. Campbell) yesterday, and there is nothing very much that I can add to what my hon. Friend said. There is, however, one point on which I should like to support him, and that concerns the safeguarding of the future of Messrs. Short and Harland's, the aircraft manufacturers. I do so not only because this firm's principal works are in my constituency, at Queen's Island, Belfast, but also because of its importance in the economy of Northern Ireland.

The layout of this factory is very up-to-date, and, with its skilled workers and its own designing team, this firm has facilities for manufacturing and repairing aero-planes and making guided missiles second to none in the United Kingdom. To my mind, it is absolutely essential that, for strategic reasons, it should be maintained as part of Britain's line of defence, since it is well away from the mainland. I hope that my right hon. Friend the Minister of Defence will bear this in mind.

There have been rumours in the Press and in various other places that Britain's air chiefs are trying to get the Government to buy a fleet of Lockheed or Douglas aircraft for Transport Command. I hope that they will never be anything else but rumours, for, whatever the superficial attractions of purchasing aircraft from the United States may be, I trust that the Government and the Ministries concerned will think very hard indeed before dealing such a blow below the belt to the British aircraft industry and to Messrs. Short and Harland's in particular, who are at present developing a freighter version of the Bristol Britannia. I hope that my right hon. Friend the Lord Privy Seal, who is to wind up the debate for the Government, will give us a definite assurance on this matter, because there is very real anxiety about it.

The recent successful proving flight of Short's S.C.1 vertical take-off and landing plane must have been heartening news to my right hon. Friend the Minister of Supply, who is sponsoring this research, and also to the British aircraft industry, which will benefit from the research. My right hon. Friend has been very helpful in the past in understanding our difficulties and our unemployment situation in Northern Ireland, for which I am very grateful. I hope he will do everything in his power to see that shortage of money does not prevent further progress in the development of this project, which may well make our airliners superior to any others in the world.

I also hope that something will come out of the project that will give increased employment to the workers at Short and Harland's and in Northern Ireland, because any redundancy there is a very serious matter. In Great Britain other doors are open, but in Northern Ireland, in the case of men leaving Short and Harland's, there is practically no alternative employment available for skilled aircraft workers and designers.

I have a great deal of sympathy with my right hon. Friend the Minister of Supply in the difficult position in which he finds himself in this matter in regard to this aircraft factory, but I would suggest to him that in the special circumstances that exist in Northern Ireland, which are not common to any other part of the United Kingdom, he would be fully justified in giving specially favourable treatment to Short and Harland's in the placing of orders for both civil and military aircraft.

4.59 p.m.

Mr. Herbert Morrison (Lewisham, South)

I am glad that one of the hon. Members from Northern Ireland has spoken. Undoubtedly, Northern Ireland is one of the most seriously affected areas in the United Kingdom in regard to unemployment, if, indeed, it is not the most seriously affected. That has been the case for some time, and my right hon. Friend the Member for Blyth (Mr. Robens), whom I congratulate upon his speech, says that the figure is 10 per cent. That is a very serious figure, and I hope very much that the appeal of the hon. Gentleman opposite will be given—

Mr. McKibbin

It is only 8 per cent. at the moment.

Mr. Morrison

The hon. Member for Belfast, East (Mr. McKibbin) says it is only 8 per cent., and, therefore, there is some dispute about the figure. I am not going to dispute what he says, except that I would not use the word "only" if I were him when speaking in Northern Ireland. However, I hope very much that something will be able to be done.

One of the things I have always regretted is that Northern Ireland does not elect to this House two or three Labour Members. I think that they would be doing Northern Ireland's economic position more good than any other single thing, because that would make a Government pay more attention to Northern Ireland than the Government pay at present. Therefore, if anything could be done in that direction, it would be a very good thing for Ulster.

My complaint about the Government's economic policy since 1951 is that it has been a sort of on-and-off evolution. There has been no systematic outlook about it and for the greater part of the period it has been dominated by electoral tactical considerations. Indeed, probably one of the biggest personal factors in the economic upsets through which we have been going was the period of office at the Treasury of the Lord Privy Seal. He deliberately preached a free-for-all. That was his philosophy and his outlook. He was such an all-out anti-planner that he went to extremes the other way and preached a free-for-all with everybody doing as they liked.

The food subsidies were slashed, in specific conflict with the promise which the right hon. Gentleman made at the election a few weeks earlier and which Lord Woolton made too. Price controls were withdrawn, bulk purchasing was stopped, and some controls which had relevance to the cost of living were also stopped. All this in one way or another had some effect upon the cost of living. Indeed, in some ways deliberately of their own action and with knowledge aforethought, the Government put up the cost of living. That must have been so. When they slashed the food subsidies they knew that they were putting up the cost of living, and they did it deliberately. The same was true when they removed a number of price controls.

The cost of living went up, but the present Lord Privy Seal, who was then the Chancellor, was not worried. He allowed it to go on, with a lightness of heart that was utterly irresponsible. The inevitable consequence was that there were claims by trade unions, pushed on by their members and, let me add, by the members' wives, for more wages. It was a great pity, because the Labour Party, the Labour leaders and the Labour Government had impressed upon the trade unions the desirability of restraint in applications for wages. It was not a freeze but a restraint, and that was in return for a genuine effort on the part of the Labour Government to keep the cost of living as steady as we could in more difficult circumstances than have been faced by the present Government.

The claims came. It is commonly assumed that the only people who claimed better incomes were trade unionists, but it must he faced that there were business and professional people who wanted more money and got it. The higher Civil Service received substantially increased incomes. Dividends went up and bonus shares were issued, and even Ministers and Members of Parliament and the judges received more money. We were all in it. That demand, at any rate in part, was deliberately created by Her Majesty's Government at that time.

This was the result of the anarchist philosophy and outlook of free-for-all. In comparison, I say that the Labour Government's record in economic affairs was very much superior to the record of the present Government. I am certainly not claiming that everything in the garden, or even out of the garden, was lovely. There were some troubles and we had some nasty surprises, but the House should remember that we were facing the transition from the economics of a great world war into those of a period of peace. We had to face that period of six years which inevitably was an exceedingly difficult period.

We planned and we controlled where controls were necessary and desirable, and not merely for the fun of the thing. We were faced with a substantial increase in the cost of imported commodities, including food, whereas this Government have faced a decreasing level of prices for imports. Notwithstanding that increase in import prices, the Labour Government really steadied the cost of living, although the cost did increase. When the record is compared with what has happened under the present Government, when import prices have been falling, and when we take into account the fact that import prices went up through no fault of the Labour Government's, just as they have been falling through no virtue of the present Government, I say that we made a better job of economic affairs than this Government have done.

Let us take another test of Labour and Conservative economic government. Let hon. Members recall the period of the First World War with a predominantly Conservative Government in power.

Mr. John Mackie (Galloway)

A Liberal Government.

Mr. Morrison

No it was not a Liberal Government. It was a predominantly Conservative Government. Let the hon. Member remember the advantage that was taken of the 1918 Election to get a predominantly Conservative Government.

Mr. Mackie

Lloyd George.

Mr. Morrison

Lloyd George was Prime Minister for a short time after, while it suited the Conservative Party. Directly he had done his part and had worked his passage, the Conservatives threw him overboard. Why people join the Conservative Party from another political party I do not know. The Conservatives treat their recruits very badly indeed. Out Lloyd George went. They dropped him. That Government announced their intention to do some economic control and planning. I believe that an announcement to that effect was made by the right hon. Gentleman the Member for Woodford (Sir W. Churchill) at that time, but within a matter of days they threw the plan over. The cry of "Business as usual," like "Conservative freedom pays," was taken up, and that predominantly Conservative Government, with a very big majority, made an absolute mess of the post-war economic situation after the First World War. Prices went up. Wages did their best to go up after them, but not with a great deal of success. In due course there was unemployment which we never got rid of until there was another war. It was a miserable transition from war to peace.

I say, therefore, that in a comparison of our record with that of a predominantly Conservative Government after the First World War, the Labour Government after the Second World War come out with flying colours. Indeed, there would not have been the degree of full employment that we have today if there had not been a Labour Government following the Second World War, because hon. and right hon. Members opposite would have gone in for a free-for-all earlier than they had the chance to do and they would have made a mess of it.

The Labour Government had a more difficult task but, nevertheless, they came through it pretty well. But the vicious circle which had been created by the present Lord Privy Seal when he was Chancellor of the Exchequer went on, and the Conservative Party played politics at the expense of the nation. It is doing it now. The Conservative Party now is subordinating the interests of the nation to what it thinks will be its electoral advantage. That, and nothing else, is what the Conservatives are doing.

They brought out their poster, "Conservative freedom pays"; and they issued other posters asserting or implying that they would reduce the cost of living, and they did not do so. They really are a shockingly untruthful lot of people, these Conservatives. They relied not upon economic planning and economic controls, but upon monetary controls. I do not know why, but I suppose they thought these were the least socialistic of the systems of control. There were monetary controls, although these were not proved to be sufficiently adequate for the work in hand. They neglected selective productivity. I want both sides of the House to give credit to prominent Labour Party people and prominent trade union people for two things we did in the post-war period in educating the nation. One was to show that wage increases alone were not enough, that the workpeople had to keep their eyes on the cost of living as well as on the level of wages; that if wages went up and took up the cost of living as well, they could be no better off and maybe they would be worse off at the end of the day; that what mattered to the housewife was not so much the actual amount of money but what the money would buy. We convinced millions of people that this was so, and it should be remembered that that was not an easy thing to do because the people had many years of experience of the employers trying to keep wages down and of efforts by the unions to get them to a reasonable level.

The other thing we taught the work-people was not to be afraid of production and productivity. That took a bit of doing. If hon. Members will take their minds back to the 1930s they will remember that what everybody was afraid of, whether workpeople or employers, was more production. They were both in a way trying to resist more production because of the fear of a consequent growth in unemployment. We had to break all this down at a time when it was tempting for working people to take another point of view, and I say, with all due modesty, that this country will owe a great debt to the really brave Labour Party and trade union leaders of that period for the efforts made to educate our fellow working people in the direction desired.

We did a lot to the good in that way, starting with the Margate Conference of the Labour Party in 1946, when I myself made a speech on economic affairs and similar things were said by Sir Stafford Cripps and others in the Labour Government. We taught the working people that production was not an enemy of working class well-being but a friend and an aid, and they have come to accept it. But do not let the House think it was an easy task to get this idea across in the light of experience.

The consequence of the lack of productivity, of this lack of efficiency in production and in keeping prices down, is that it has had a bad effect upon costs and upon exports. There are not enough priorities economically in the policy of the Government. There were cuts in capital investment in the socialised industries, for at that time the Government were tempted to cut the socialised industries more than anything else. There were cuts, and there are still cuts, in the local authority services. It is not much good Ministers making speeches on the importance of the development of technical education for the well-being of our industries and then refusing permission to local authorities to develop technical education.

So much for the period of the first Conservative Chancellor of the Exchequer after the war. We then come to the period of the right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft), who we are sorry to see is not taking part in this debate. He decided to take a much stiffer line. He reimposed a number of controls. He materially raised the Bank Rate. He imposed restrictions on 'hire purchase and upon bank advances. All of these actions were supported by the Cabinet of which he was a member and of which most of the right hon. Gentlemen on the Front Bench today were members too. Then the trouble came about he expenditure which the right hon. Gentleman was trying to hold, and as a result of the stand he made for Conservative policy, and for all the promises the party had made to keep public expenditure down, he had to resign from office.

Now we have another Chancellor of the Exchequer. Everybody feels he is a sort of uncle, and I gather he is not discouraging that feeling about himself. We heard the right hon. Gentleman yesterday in a speech which did not answer in the least the speech of my right hon. Friend the Member for Huyton (Mr. H. Wilson). It was a steady effort of exposition with no attempt to answer the very powerful speech made by my right hon. Friend.

What is happening under the right hon. Gentleman? We are now moving towards the election and the election experience comes in again. The Government are afraid of people being a bit controlled in their expenditure in the interests of the public economy and in the national interest. So now the Government, having condemned inflation, the right hon. Gentleman the Member for Monmouth having taken steps to check inflation, the Government having boasted that they have stopped inflation, are now letting things rip again. We are once more in the period of a free-for-all. The Midland Bank starts bank loans on the nod, so it is implied—and this is a respectable bank. Yet, after all, if the Midland Bank is doing a thing like this it must have an inflationary effect.

There is a reverse on hire purchase and everybody is almost encouraged to get things on the never-never principle. Indeed, the poor motor car people have almost had to lock their doors because too many people have been coming to order motor cars. The I.T.A. is making a lot of money and is now claiming another channel so that it can develop still further. This will mean more inflation. Incidentally, I hope the Government will be careful about swamping the country with commercial television. which is itself inflationary in its influence.

Although this loosening up of spending has taken place, although these deliberately inflationary policies in consumption have been adopted, in the meantime the amount of industrial investment has been slowed down. But now the Government think they should have some industrial investment—again keeping their eyes on the election and on the unemployment figures. They told us yesterday that, although they will sanction some, it will take one, two, or possibly three years before the investment can fructify. The Government ought to have been ready, and the industries for which they are responsible ought to have been ready, to press a button and get this capital expenditure going. The plans, the estimates and the schemes ought to have been there. They are not there. and they are not there precisely because the Government wobble all over the show, one minute being irresponsibly expansionist in consumption and another minute being irresponsibly restrictive in industrial development. The consequence is that they are late in being ready for capital expenditure and investment, and they are unprepared. That is a very serious and bad thing.

Yesterday the Chancellor dropped a phrase about which he will hear more. I do not want to be unjust to the right hon. Gentleman because I know it is possible innocently to use a false phrase, but a lot of people will take a bit of convincing that what he said did not really represent at any rate his subconscious, if not his conscious, mind. It fits in with the Conservative ideals and philosophy, and it fits in with a lot of what some papers who support the Government have said. The right hon. Gentleman said: 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. He said it, and it is on the record. Of course, hon. Members said "Excessively low?" and the right hon. Gentleman laid: Certainly, it is an extremely low figure". Then hon. Members said "Extremely low?" and the right hon. Gentleman went on to say: relatively to other industrial countries."—[OFFICIAL REPORT, 3rd November, 1958; Vol. 594, c. 634.] As I say, I do not want to be unjust, and I hope that it really was nothing more than a slip of the tongue, but I find it a little difficult not to feel that there was something of the subconscious about the matter which caused the words to slip out. I can assure the Chancellor that there will be a lot of working-class people who will feel that that is so.

There are—do not underestimate it—real and grave fears among the working people about unemployment. They have long memories and, even if they had not, their forebears, their mothers and fathers, have long memories about the period in the 1930s. It is very important to keep full employment a real factor. If it begins to go we shall have breaking out again the disease of restrictive practices and more than ever a desire that production shall not increase and a desire to go slow. I do not want that. I want a healthy working class that is proud of its country, and particularly of its publicly-owned industries, and one which is giving energetic service to the nation.

If unemployment arises and the people feel that the Government are indifferent to the growth of unemployment, then there will be difficulty so far as those things are concerned. I do not want that. I would say that perhaps the major trouble is that right through their life the Government have been electioneering. They were electioneering under the Lord Privy Seal who, I admit, is not exactly a fool

The Gracious Speech, for which, of course, the Government are responsible, is an electioneering document. The Blackpool Party Conference was an electioneering conference. As far as I can remember, it is about the first time that a Conservative Party Conference has been taken seriously by a Conservative Government. The Government are carrying out the decisions of that conference almost line by line, which is a most extraordinary thing for the Conservative Party to do. All of this is politics. [HON. MEMBERS: "Motor cars."] Yes, motor cars. Almost within a matter of days the Bill is ready to go through. As I say, all of this is politics.

I ask the Government, where does the nation come in? Are the Government thinking only of the Conservative Party? Is not it time that they thought of John Bull? Let me freely admit, before it is alleged against me, that I, too, have taken part in elections. If I may follow the Prime Minister—perhaps I am wrong —he said that he made a speech which was a very good one. I have taken part in elections not altogether unsuccessfully. Of course, it is better to take part in a successful election than in an unsuccessful one, even though one may gain a moral return.

I believe that in conducting its election campaign the Labour Party has always been predominantly concerned with the well-being of the country and of the world, just as I believe that the Conservative Party, historically, has been more concerned about the capitalists and land owners than about the well-being of the country, and that it is now more concerned with its political and electoral prospects and is subordinating national interests to electoral considerations. I say that a Government of that sort, a Government with such a low public spirit, is one that does not deserve the confidence of the House of Commons.

5.26 p.m.

Sir John Barlow (Middleton and Prestwich)

I am very pleased to have the opportunity of addressing the House after the right hon. Member for Lewis ham, South (Mr. H. Morrison) who, I am sure, will forgive me if I do not follow him very far in his arguments. [HON. MEMBERS: "Why not?"] If the Opposition want me to give one or two answers to the right hon. Gentleman's arguments, I will certainly devote a few minutes of my time to his speech.

The right hon. Gentleman began by deploring the fact that there were not two or three Labour Members representing Northern Ireland constituencies in this Parliament. The people of Northern Ireland know much too much to return Labour Members, and the right hon. Gentleman is not likely to see any in the near future.

The theme of the right hon. Gentleman's speech was the criticism of the abolition of controls by the present Government since it came to office in 1951. Does anyone mean to tell me that the people would wish to return to all the controls to which they were subjected under the Labour Government of that time, when they had ration books and pieces of paper and were 'flowed to buy only certain restricted amounts of clothes and food? I do not think so for a moment.

The right hon. Gentleman went on to make other criticisms of the work of the present Government. Among other things, he criticised the general increase not only in wages and salaries, but also in Members' salaries. I do not remember that the right hon. Gentleman or any other hon. Member opposite voted against the increase in Members' salaries. The right hon. Gentleman went on to say that the record of the Labour Government was far superior to our record. In fact, it seemed to me that what he was saying was the beginning of an election speech. I hope that when the General Election comes the right lion. Gentleman will improve somewhat on that speech.

The conditions prevailing at the time of the 1951 General Election—and I think that I remember them correctly—were those of rampant inflation and a serious shortage of houses. The shortage of houses was the gravest difficulty. The Labour Government had been unable to provide the houses which the people required. That, I think, was the greatest single election issue. That problem has since been substantially solved. We hear very little now about a shortage of houses. There may be pockets of such a shortage, but as a national issue it is dead and gone.

Similarly, at the General Election in 1951 there was the question of inflation. The Labour Party left us with a heritage of rapidly mounting inflation which might easily have been disastrous to the country. The votes at that General Election showed that the country did not want increased inflation, and the Conservative Party has, in the course of time, put that matter right.

On numerous occasions I have been critical of my own Government for not tackling the question of inflation sooner, and I am on record in HANSARD of 26th July, 1955, as saying that in my opinion the then Chancellor of the Exchequer was not sufficiently tough, that he should put up the Bank Rate very substantially and curb the tremendous scourge of inflation. As the House knows, that matter was not seriously and severely tackled until thirteen months ago. At that time the Government proposed a 2 per cent. increase in the Bank Rate which I would like to have seen imposed very much sooner. That was one of the Socialist remedies which the right hon. Member for Blyth (Mr. Robens) said we had adopted on the lines of what the Labour Party had done. I assure the House that the remedy of increasing and decreasing the Bank Rate was in existence long before the Labour Party and long before the right hon. Gentleman.

The right hon. Member for Lewisham, South seemed to criticise the Government for taking action to increase or decrease the cost of living and inflation and in regard to the stabilisation of prices. It would seem to me that he disliked using brakes or accelerators in any way. We like using them very much less than the Labour Party. The party opposite likes a policy of complete controls. We like to use the minimum of controls. The right hon. Gentleman talked about cars. I assure him that if he goes on a car ride and does not use either the brakes or the accelerator he will have a very poor run indeed. [An HON. MEMBER: "What about the steering?"] That must be used too.

The right hon. Gentleman repeatedly accused the Lord Privy Seal of electioneering, and said that the Lord Privy Seal was not exactly a fool at the game. I might return that to the right hon. Gentleman; he has a great reputation at elections and he is not exactly a fool at the game either. However, I would urge him to refurbish his speech a little before the General Election if he hopes to get substantial support at the polls.

As I come from Lancashire, I should, naturally, like to refer briefly to the all-important Lancashire cotton industry.

Mr. E. Fernyhough (Jarrow)

What are the Government doing about it?

Sir J. Barlow

I will tell the hon. Member in a moment. The Prime Minister paid considerable attention to this very important industry. We in Lancashire are delighted that the Prime Minister is taking such a personal part in this very important issue. It was only a fortnight ago that he came up to the cotton conference, at Harrogate, and made a very important speech in which he expounded the policy of the Government and showed the responsibility that we have as a great Commonwealth nation towards the smaller Commonwealth countries and colonial countries. The Prime Minister put it across to Lancashire far better than it has ever been done before. We in Lancashire welcomed very much indeed the fact that he came himself and that his mastery of the details of the matter was so evident.

As the Government and the country as a whole undoubtedly have a great responsibility towards the Commonwealth, and as the cotton industry is the first large industry to suffer from such competition as this—when we get a comparatively young Colony with cheap, efficient labour, competing against one of our greatest natural industries—I suggest that it is a new issue which we shall have to face. It is a difficult problem. There have been smaller examples. The glove and umbrella industries have had a bad time in the past, but those small industries suffered nothing compared with the knock which the textile industry has had from not only Hong Kong, but other countries as well. Because Lancashire cotton has to bear the brunt of the new issue, I think that the Government should try to be a little kinder and more sym- pathetic towards us in our troubles. I was delighted to hear the President of the Board of Trade today; I thought that he was much more forthcoming towards our industry than I have heard him before.

The House knows only too well the story of the diminution of the cotton textile industry, how it is less than one-fifth of what it was forty years ago, and its various recurring troubles. I was told during the last few days that even subsidised cloth is being offered from the East, not from Hong Kong, but from a country which is very short of sterling exchange. That country is definitely prepared to subsidise cloth to get exchange at any price. I hope that the Government will keep an eye on that and stop it immediately, because that is, in every sense of the term, very unfair competition.

Naturally, we are all watching the negotiations with Hong Kong with very anxious eyes. The negotiations have been going on all too long. The increase in imports of grey cloth from Hong Kong have been rapidly growing, and the figures which are suggested by them as a ceiling are very much larger than the present imports. In a matter of this kind it needs good will and understanding on both sides to arrive at a suitable conclusion. It would be no service to Lancashire if too large a ceiling were allowed in Hong Kong, and in the long run it would probably be a disservice to Hong Kong also.

Undoubtedly, understanding and good feeling are of the utmost necessity in this case. There are a number of very responsible European leaders in Hong Kong and I hope that they will use their influence to do what they can, because they have far greater experience than some of the newer mill owners there. If we are to play the Commonwealth game, to which I attach great importance, it is in such a case as this that a new country in a difficult position, obviously wanting to get all it can, must try to take a farsighted view and be reasonable.

There is no doubt that the textile industry in Lancashire must diminish even further. I do not know how much. But it is of the utmost importance that there should be an ordered reduction and that we should not let the weakest go to the wall, for that could do a tremendous amount of damage to the whole industry if it were allowed to happen. I should like to see each section of the cotton industry —the spinning, weaving and finishing sections—put forward proposals for redundancy schemes, and I should like the Government to approve them and give assistance.

In the past there have been redundancy schemes, some of which have been successful and others unsuccessful. In 1948, the printers put forward a redundancy scheme which had the approval of the Board of Trade at that time, but after a few years it was condemned by the Monopolies Commission as more or less antisocial and was abolished. That sort of thing is no good.

We shall have other industries in the future which for one reason or another through the general evolution of industry will grow and also diminish. If one has a declining industry, it is of the utmost importance for it to be reduced in an orderly way. It is most difficult for the industry to achieve this itself, especially a Lancashire industry which has so much traditional individualism. I think that most of the leaders in Lancashire recognise that a lot of waste will have to be cut out, but, again, it needs good will on both sides for a conclusion to be reached.

We do not want to waste vast sums of money modernising mills and then, in a few years' time, destroy them. It is infinitely better to decide quickly what should be cut out and what should be modernised and then get to work. It does not need control. It needs redundancy schemes which are agreed by both sides, which is not impossible. I hope that the Government will do all they can in that direction.

Lancashire has some of the most modern mills in the world, but they are not all modern. When we get the industry as a whole modernised, I hope that labour will play its part, too. Some very interesting figures emerged from the Harrogate conference, where it was shown that the average number of hours worked in Lancashire cotton mills was just over 2,000 per annum, whereas in Germany the figure was double this number, in the United States it was about 6,000 hours and in Hong Kong, it was over 8,000 hours a year. These figures should be changed.

Incidentally, concerning the Hong Kong figures. it was pointed out a few months ago by the hon. Member for Farnworth (Mr. Thornton) that female labour in Hong Kong was working 12 hours a day, some of the women working two shifts with only four or five days' holiday a year. I feel that the House would not tolerate such conditions continuing very long in a Colony like Hong Kong and I hope that my right hon. Friend the Lord Privy Seal will tell us what is being done in this direction.

I am delighted with the action that my right hon. Friend the Chancellor of the Exchequer has taken in remedying the difficulty of our economic position. The party opposite wants complete controls. We want the minimum of controls. I think that the Chancellor is doing a verb fine job of work.

5.43 p.m.

Mr. G. M. Thomson (Dundee, East)

I he hon. Member for Middleton and Prestwich (Sir J. Barlow) began his speech by asking, in tones of incredulity, whether it was possible that anyone would like to see the return of a Labour Government with their controls. It seemed a rather odd question for the hon. Member to ask in view of the rest of his speech.

Mr. John Hynd (Sheffield, Attercliffe)

What the hon. Member asked was whether the people really wanted the return of all the controls they had under the Labour Government just after the war.

Mr. Thomson

It seemed an odd question, because the hon. Member went on to discuss with some erudition the problems of the textile industry and to make a plea, as I understood him, for a controlled and planned decline in the cotton textile industry.

Sir J. Barlow

I hoped I had made it clear that it should be partially self-imposed with the help of Government

Mr. Thomson

Yes, with the help of the Government. I can only say that if the hon. Member cares to come to my constituency, and talk to some of the jute employers there, he will find that in the privacy of their offices they will confess to him that they, at least, are longing for the day when a Labour Government will return and give the jute industry some security. They may well go into the polling booths and cast their Conservative votes, as they have done traditionally, but in their hearts they hope that there will be a return of a Labour Government, for it is only in that way that there can be any security for the future of the jute industry.

It has been widely said in this debate that there is no question of anybody, on either side of the House, foreseeing a return to the mass unemployment of the 'thirties and I am sure that, taking the country as a whole, that is true. We ought, however, to be aware that the one thing that prevents mass unemployment on the scale of the 'thirties in Dundee today is the existence of State trading in imported jute goods. Recent unemployment from which we have been suffering in Dundee has been primarily due to the interference by the Government in that form of State trading. The best calculations that the non-political experts make is that if this State trading were to be removed—and the President of the Board of Trade has not tried to conceal his hostility to this State trading machinery—it would mean unemployment in Dundee of the order of 20 per cent.

I ask the Government once again whether, even at this stage, they will not at least give a definite assurance to the jute industry that there will be no further reduction in the level of protection provided by the State trading machinery. I ask this question with little hope of getting a favourable answer, but the Government ought to be given yet another chance to try to give the industry in Dundee some sort of certainty for the future.

I want particularly to refer briefly to the special problems that afflict an area like Dundee. I take Dundee as a typical example as one of the black spots of unemployment. It is not always realised that so-called black spots are not merely areas of higher than average unemployment. They are areas which, besides having been affected by the national level of unemployment due to Government policy, have a distinctive unemployment problem of their own. My right hon. Friend the Member for Blyth (Mr. Robens), who opened the debate from this side of the House, made some mention of this.

Dundee is a typical example of a traditional industry—jute—which dominates an area facing fundamental changes in the kind of markets with which it deals, facing fundamental changes in its technology and facing the problem that, as it modernises itself, as it has done effectively since the war, it creates more unemployment by employing fewer people. This is the same sort of situation that the hon. Member for Middleton and Prestwich finds in the cotton textile industry and as is to be found in certain parts of the steel industry and in mining and elsewhere. It must be appreciated that the only way in which the problems of that kind of industry can be tackled is by decisive Government intervention.

The basic decision has to be taken that the social cost of allowing that kind of community to be killed through the industry dying is much greater than the economic cost of attracting new industry to the area. I am sure that this would be true if it could be calculated in simple financial terms. I am certain that it is true if calculated in any kind of human terms and in terms of a decent and healthy distribution of industry and of urban conditions of life throughout the community. This requires fairly drastic Government intervention and real decisiveness on the part of the Government in adopting the kind of policies that flow from this decision.

I can only say that during the years of the present Government, we have had no kind of evidence that they are willing to take that kind of action either in intervening to control the decline of unemployment in the traditional industries, or to provide new jobs.

My second point about the special problems of the black spots is this. The choice that faces the country nationally is between the present cycle of inflation and recession as practised by the Government and the steady expansion through economic planning as advocated from this side of the House. This cycle of inflation and recession is catastrophically wasteful for the country as a whole, but for areas where the basic traditional industries are facing a decline, that kind of fluctuation is disastrous. The new industries can only be attracted into places like Dundee, Lanarkshire, or Wales if there is a national economic climate of steady expansion.

For example, during a period of credit squeeze, such as we have been experiencing, it is almost impossible to persuade new industries to take the plunge in order to find the finance to go to one of these black spots. Then, when the other side of the cycle comes, when we get the next Butler boom, the companies which are thinking about going to one of the black spots are bound to say to themselves that by the time they get their factories built and move into them, we will be back in a. recession again. It really is impossible to achieve a steady expansion with new industry unless one does it against that sort of national background.

I was much interested to notice certain comments made by the President of the Society of Motor Manufacturers at the Motor Show the other day. He is quoted in The Times of 27th October as saying that he is strongly opposed to a policy of expansion by fits and starts, that It must be steady expansion, not a surge followed by restraint. If that is true of the motor industry, how much more is it true of those industries which we are trying to attract into areas like Dundee and other places in Scotland which have high unemployment.

The third point I wish to make about unemployment is more general. There ought to be a greater awareness in the country of the kind of move which Her Majesty's Government are making. I am convinced that they are trying to go through a series of operations designed to bring about the end that public opinion in the country will be accustomed to a new higher level of unemployment and accept that as being the normal level of full employment. They want them to become used to the idea that full employment means a level of unemployment in the country substantially higher than what the nation was accustomed to during the period of the Labour Government.

I notice that it has been reported in the Press recently that the Leader of the House spent his Recess studying the ancient Greek political philosophers. I do not know what the Prime Minister studies. I rather suspect that he studies one of the Italian medieval political philosophers. I sometimes feel that he is not so much a spiritual descendant of Macmillan of Arran as of Machiavelli of Florence.

When one looks at Conservative policy on a number of matters during the last year or two, since the Prime Minister came to office, one finds a certain consistent pattern. I sometimes feel rather concerned for the ordinary, conscientious citizen who tries to follow what the Conservative Party is doing with regard to any particular subject. He is rather like somebody who plunges into a very thick wood and is so busy trying to find his way through the labyrinth of trees that it is not until he gets out the other side that he finds that his pockets have been picked.

We may take as an example the general grant legislation. This was an extremely complicated financial Measure, quite baffling to the ordinary layman, but the simple effect of it was to cut down the Government contribution share in educational expenditure. If we take the quite virtuoso performance we had from the Minister of Pensions and National Insurance earlier in this debate—somewhat shattered by my hon. Friend the Member for Coventry, East (Mr. Crossman)—there was an immensely complicated exposition of all the financial intricacies of superannuation, there was a facade of a national pension scheme, all designed to obscure the fact that the Government are trying to transfer from the Exchequer and the wealthy taxpayer ultimately about £400 million to the ordinary contributor.

The Government are going through these complicated manoeuvres and trying to do the same kind of thing in regard to unemployment. I take as my example the experience in my own constituency. In June this year. there was 7 per cent. unemployment in Dundee. At present, we are all very glad to see that unemployment is now running at 4.5 per cent. It is a good deal lower than it was in June, though it is still twice the national average. The point is that we are now being told by Conservatives in Dundee that, since it has dropped from 7 per cent. to 4.5 per cent., everything is really all right; that things are getting better. In fact, of course, unemployment today is about three times what it was when the Labour Government left office in 1951. It was then running at 1.6 per cent.

I believe that what has been happening in Dundee in the last few months is the sort of thing which the Government will try on the country in the next few months. Unemployment will go up during the winter and it will come down again in the spring. The Government will go to the people in an Election in the spring, asking them to notice how the unemployment figures have improved from the height they were in February, about which the Minister of Labour prophesied last night. They hope that people's memories will be sufficiently short not to compare the new Tory level of full employment with the old Labour level of full employment.

The Conservative Party consistently under-estimates the intelligence of ordinary people. When they put forward their hire-purchase relaxations, for instance, they greatly misjudge the kind of effect it has. I know the effect that it has on the people in my part of Scotland. They are not interested in five years' assurance of being able to pay for what they cannot afford anyway. What they want is five years' assurance of steady employment. I have heard of some Gilbertian Governments in my time, but I think that this Government ought to be called the Gulbenkian Government, with the Chancellor of the Exchequer cast in the rôle of "Mr. Five Per Cent."—a society in which anything can be had for 5 per cent. down with five years to pay at 5 per cent., the price of it being 5 per cent. unemployment.

5.56 p.m.

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

The hon. Member for Dundee, East (Mr. G. M. Thomson) has made—

Mr. John Diamond (Gloucester)

A very good speech.

Mr. Maclay

—a speech which the hon. Member for Gloucester (Mr. Diamond) might think is a very good speech, but which, I suggest, is in some respects rather unfair and not the sort of speech one would really expect from him. I will come to what he said point by point.

Mr. William Ross (Kilmarnock)

Can the right hon. Gentleman assure us that, when he does come to it, some Scottish Tory will join the assembled multitude on the benches opposite? I am sure that the hon. Lady the Member for Belfast, West (Mrs. McLaughlin) is very lonely sitting there by herself.

Mr. Maclay

The hon. Member for Kilmarnock (Mr. Ross) has been a Member of this House long enough to know that it is a very dangerous game to start pointing out a lack of people on the other side. I have seen it done by both sides of the House ever since I have been a Member, and I have always thought it a most unwise and foolish thing to do.

Mr. Ross

One Tory Member to listen to the Secretary of State for Scotland.

Mr. Maclay

As the hon. Gentleman knows, it is a little difficult, in looking at the business of the House, to guess exactly when certain things will happen, and a great deal of very important work goes on outside the Chamber, apart from the great deal of very important work which goes on inside the Chamber. Anyway, far be it from me to wish to occupy these few moments in arguing the subject too fiercely with the hon. Gentleman; I will devote another occasion to it, perhaps.

To return to the speech of the hon. Member for Dundee, East, where I began, he was trying to establish what I would at once suggest is a most unfair deduction from events which have happened in saying that what he believed this Government were trying to do was to get the country accustomed to higher figures of unemployment than it was accustomed to under the Labour Government. The hon. Gentleman chose a rather dangerous year for his comparison. I think, in speaking of 1951. He has forgotten the Korean War. That can work either way, I know, but he chose a bad year, and if he will look up the figures he will find that throughout the period during which the party on this side has been in power the figures compare very favourably indeed with those during the years of the Labour Government, until we run into the recent figures, to which I will come in due course.

What lurks behind the deduction which the hon. Member for Dundee, East attempted to draw is that the party opposite is in great difficulty in finding anything on which to attack the Government. [Laughter.] Of course that is so. Let us consider for a moment the speech of the right hon. Member for Lewisham, South (Mr. H. Morrison). In his speech a short time ago he seized on what was quite clearly a slip of the tongue, and explained as such by my right hon. Friend the Chancellor of the Exchequer. The right hon. Gentleman knows very well that the fact was stated correctly, that, relatively, compared with a great many other countries, our unemployment figure has remained low.

The right hon. Member for Lewisham. South was, however, very useful to us in serving notice of what the party opposite intends to do. With great candour, he explained that this is the thing which Transport House intends to run between now and the General Election. When the right hon. Gentleman reads what he said he will realise that he has given us, with some frankness, the line which the Labour Party will run. It is a poor line, but, as I say, hon. and right hon. Gentlemen opposite have to take it because they have great difficulty in finding any material on which they can either agree among themselves or on which they can possibly attack us.

Miss Margaret Herbison (Lanarkshire, North)

And this is the Secretary of State for Scotland, where unemployment is so high.

Mr. Maclay

I am coming to that in one moment. I hope that the hon. Lady will wait until then.

I do not propose to try to cover the full range of the Scottish points raised throughout the debate since it started last week. I think that it would be more appropriate if I tried to confine myself to the peculiarly Scottish points raised in the last two-days' debate. I should like, however, to finish with one narrow point raised by the hon. Member for Dundee, East before going slightly wider.

The hon. Member for Dundee, East gave a fact, which gives great satisfaction to all of us, that the unemployment figure in Dundee is down. In fact, the latest one is not 4.5 per cent., but 4:3 per cent. This is the very latest figure and it is a source of satisfaction to all of us. I am not pretending for one moment that this is ground for complacency of any kind whatsoever. I think that it was unfair of the hon. Member for Dundee, East to say that explicitly, without recognising the immense amount of work that has been done by the Scottish Office and by my right hon. Friend the President of the Board of Trade and the Ministry of Labour, who took action to find new jobs in Dundee during a difficult period.

I think that the hon. Gentleman's words were, "Failure to take action to provide new jobs." I think that eight new factories in the last fifteen months. which should produce when they are built between 2,500 and 3,000 new jobs, is not failure to take action. It is the inducement that is working. I am convinced myself that it is of great importance to continue our work, and I admit that the party opposite did work on this, too.

Mr. Thomas Fraser (Hamilton)

Good gracious, the work it did in Dundee.

Mr. Maclay

Why is the hon. Member saying "Good gracious"? I am stating a fact. We carried on that work.

Mr. T. Fraser

Stopped it.

Mr. Maclay

We have not stopped it. I have given figures for the last 15 months and I do not think that even the hon. Member for Dundee, East would say that that is taking no action, because these are Government-financed factories.

Mr. G. M. Thomson

I gladly accept what the Government have done in this way. That was one of the parts which I cut out of my speech to save time. But they are, of course, extensions, and I was, dealing with the problem of actually bringing new firms into the black spots of unemployment.

Mr. Maclay

I think I am right in saying that they are not all extensions we can look into that in due course. The hon. Gentleman has conceded my point. He loft in the attack, but he took out of his speech the part which stated what has actually happened, and that is of importance. I admit that we are in great difficulty in introducing industries and getting immediate results in Greenock. I wish that we could get them in Greenock. I must confess—I have a local interest—that if we could get some of the factories such as are coming to Dundee into Greenock, I should be a happier person.

The hon. Lady the Member for Lanark shire, North (Miss Herbison)—I think it was she—told the House on the question of the Scottish Industrial Estates that it was really the Labour Party which started this and that it was the Labour Party's policy. It may not have been the hon. Lady who said that; I think that, in fact, it was the hon. Member for Hamilton (Mr. T. Fraser).

Let us get this right about the Scottish Industrial Estates. They were not a Labour Party invention. They started before the war. Nor was the Distribution of Industry Act a Labour Party invention. It was prepared in the days of the Coalition Government and was actually passed through the House during the short period of the Caretaker Government. It was not passed by the Labour Party, but was worked out by the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), working with his colleagues in the Coalition Government.

Mr. T. Fraser

And weakened by Lord Chandos.

Mr. Maclay

No, not a bit. I do not want to go into that history. If the hon. Gentleman looks at my maiden speech in the House of Commons, he will learn a lot about that Bill, because I made my speech on it.

Mr. Fraser

The right hon. Gentleman made his speech five years after he was elected, and I was Parliamentary Private Secretary to the President of the Board of Trade when be made that speech.

Mr. Maclay

I think that the hon. Gentleman agreed with a good deal of it. If he agreed with what I said at that time, it was surely desirable not to confine the application of that Act only to the distressed areas, but to widen it so that it could be applied to some of the smaller industrial towns which could themselves build up very quickly. If he had listened to that then, the position would be happier in Scotland today.

Mr. Fraser

By not listening to the right hon. Gentleman and carrying on the policy that we had in mind at that time, Dundee was converted from a distressed town to a boom town in six years. It is under six years of Tory Government that Dundee is back again to a distressed area. These are the facts.

Mr. Maclay

I will go back to what I said about the Scottish Industrial Estates. It is a pity that we have to argue about this, but we cannot avoid it. The hon. Gentleman said it was started by hon. Members opposite, and I am not going to let it go by without an answer.

Of course, we all have the same objective in this matter. I am talking about Scottish Members at the moment. There is, as every one of us concedes, the need for further diversification of indsutry in Scotland. We are all worried by the fact—I think that I have made this clear myself time after time in public—that our unemployment level, no matter what the basic figure is for the United Kingdom, runs higher than the Great Britain figures, and I have myself expressed the view fairly often that I believe that the long-term cure for this—we cannot reach it overnight—is increased diversification of industry.

This point was raised by the hon. Gentleman the Member for Hamilton last night, and I think that I had better deal with it. In the OFFICIAL REPORT, col. 722, he referred to a meeting in January, when the present Economic Secretary to the Treasury met the Scottish T.U.C. I am informed that what was said at that time was this, as distinct from the words that were used by the Nan. Member for Hamilton. His words were these: 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. I am advised that what was said was this. My hon. Friend the Economic Secretary is not here, but I have discussed with him what happened. He sent his apologies if he could not be here before I spoke. The Parliamentary Secretary, I understand, pointed out that the experience of the ten year period since 1945 showed that the new light industries which were much in demand after the depression in the heavy industries between the wars had fluctuated much more than the heavy and medium industries. which had proved to be very stable. That was at that time, because there was a heavy recession in the Midlands, which did not extend to Scotland. What the Parliamentary Secretary said was that some new thinking was required on the relative need for light industries. He suggested, generally speaking, that it would be to Scotland's advantage not to neglect the heavy and medium industries in which her workers were already skilled. That is the version which I have been given of what happened.

He went on to say that there was also much to be said for not attempting to develop too wide a range of light industries. There may be sense in that. He was discussing a grave problem with responsible people. His point was that in our search for light industries it would be folly to kill the heavy industries. No one is suggesting that we should do that, or would dream of doing it. The interpretation which the hon. Member for Hamilton put on that last night is not correct, particularly as it is not borne out by what the Government have done since they came to power, or in recent months. If the hon. Member for Hamilton wants to intervene—

Mr. T. Fraser

But I saw the typescript of the meeting. The Parliamentary Secretary to the Board of Trade called the attention of the T.U.C. General Council to unemployment in the motor car industry during January, 1957, and asked, "Is that what you want for Scotland? If so, you had better forget about light industries." The Scottish T.U.C. never said it would neglect the heavy industries, and it was advised that it should continue to rest on the basic, traditional industries, mentioning coal, steel and shipbuilding. It was because of what it said at that time that I went on last night to show what had happened in coal, steel and shipbuilding since it was given that advice.

Mr. Maclay

I have a version of what happened. I do not know to what typescript the hon. Member for Hamilton was referring. but there was no typescript available to me and to him. This version is the only one available to me of what was said, and that it is reliable is borne out completely by what our policy has been. I will develop that as I go on.

I make no apology for concentrating my remarks upon Scottish industrial and economic problems. That is what I am here for. If other hon. Members are not interested in what is happening it is nevertheless very important to Scotland. Further, what is important to Scotland is very important to the whole United Kingdom. I have to follow up some of the things that have been said in the debate. I would remind the hon. Member for Hamilton that figures are dangerous, because they can be wrong and can be used selectively. He made a fair point in the middle of his speech in regard to the 1–25 proportion. He said that for every twenty-five new jobs in England there was only one in Scotland. Is that not right? He also reached the point of one in a hundred.

These are selected years. I can select a year in which the proportion was one to fourteen, and that quite recently. There must always be a proportion adverse to Scotland in the short run and even in the medium run. The figures that the hon. Gentleman worked on are total figures. The development of employment of all kinds must be very closely affected by the volume of industrial building in an area. Compared with existing building, the amount of new building is very small and its influence upon the growth of unemployment will be slow to take effect. It would take half a century to move, on the figures to which the hon. Member for Hamilton referred. and it might take more.

Let me put an extreme example. It we have a steady inflow of people working in hotels in Brighton, Bournemouth and other South coast towns, we cannot suddenly transfer them to Scotland. It is thus most misleading to talk of what is happening in the whole of the country.

Mr. T. Fraser

Has not the ratio of jobs in Scotland to those in England got worse every year since the Tories took over in 1951?

Mr. Maclay

I have not the figures against which to check that statement, and I am not proposing to go into a statistical argument without having the same figures in front of both of us. I am pointing out the fallacy of the 1–25 proportion, or 1–100, which was used in the country and in this House. [HON. MEMBERS: "No."] Hon. Members must not shy off now that this point is being put to them. [Interruption.] They are trying to make me shy off. I put emphasis on this 1–25 and 1–100 argument because it is a fallacious way of stating the matter. I shall put figures to hon. Gentlemen opposite. and I shall need to do it very slowly if they are to understand them. Before they use that argument in the country I commend them to read very carefully the points which I shall produce this evening. I do not normally commend my speeches to a wider audience, but on this occasion I would appreciate some wider consideration. I will deal with factory buildings.

We can approach the matter from a great many different statistical angles. If, after I have spoken, the hon. Member for Hamilton wants to inquire into the precise series of calculations to arrive at the figures I shall be only too glad to give it to him. It would be very boring for me to give it to the House. I take the years from 1952 to 1957, and the test must be of building by organisations, whatever they may be, where the Government are involved. [Interruption.]

Miss Herbison

No.

Mr. Maclay

Wait a minute. There are two points here, refusal of I.D.C.s, and private building. I will deal with the point which interests the hon. Lady the Member for Lanarkshire, North (Miss Herbison) in due course, if she will wait. I want to deal with a point which hon. Gentlemen opposite do not like, the cases in which direct Government action is possible in the scheme of things and in which there is inducement.

Direction of industry is not possible in this country or in any other free democratic country, and so we come to inducement. How do the figures stand for the results of the inducement policy in those years? On the basis on which these figures have been worked out, which is primarily on the capital cost of construction translated into jobs, Scotland had nearly 11 per cent. of the jobs created in all new factories between 1951 and 1957, and more than 40 per cent. of those created in Government factories. That answers both points. It is 11 per cent. of all new jobs, in spite of the point I was making a short time ago about the 1–25 argument.

I have a few more figures. We ought to get this matter as clear as we can. I have before me the percentage figures of capital expenditure. I assure hon. Members that there is no cheating in that switchover, because it is the simplest way of seeing the matter. We go right back to 1946–47 to see how, during that period when the party opposite was in power, this test applied to their organisation. I admit that 1946–47 was very early after the war. The percentage of factories built in Scotland in one form or another under the Distribution of Industries Act in that year was 27. In 1947–48 it was 38, their best year, and in 1948–49, the percentage was 36. In 1951–52 it was 39 per cent., in 1952–53, 42 per cent., in 1955–56, 30 per cent. and in 1956–57, 41 per cent. The figures for 1957–58 are not complete and cannot be quoted.

A spot check is not a fair check on either side. On any test, the performance of the present Government, where inducement is practicable and possible for Scotland, shows that we stand up very well indeed compared to anything that happened during the time when hon. Gentlemen opposite were in power.

Dr. J. Dickson Mabon (Greenock)

Since the right hon. Gentleman is in this constructive frame of mind, will he tell us the basis of this argument? I am trying not to take sides but to get the facts. The percentages which the right hon. Gentleman has given relate to Government work, but the fact is that we can contract the area of Government work in Britain and still the balance of percentage can run in favour of Scotland. Surely the point is, how many jobs have been provided on the basis of how many are needed? That surely is the test.

Mr. Maclay

The hon. Member is now getting into trouble with an argument produced last night that there ought to be selective and not comprehensive use —I am not sure that it was not the hon. Member's own argument—

Dr. Dickson Mabon

If it was my argument, it was a good one.

Mr. Maclay

He is now contradicting that.

One must admit that recently there has been cause for anxiety, but when there is a period of booming trade and good employment figures, during a period when the figures are pretty good it is the more necessary to try to get industries to areas which really need it.

Mr. T. Fraser

That is what has not been happening.

Mr. Maclay

It has, and the figures I have given have proved it. One of the interesting things that one learns during a debate of this kind is that the same set of facts means something completely different to hon. Members on opposite sides of the House.

I repeat that in saying all this I am not being complacent in any way. I am making clear my belief that this process of the diversification of industry should go on in the best possible way. My right hon. Friend the President of the Board of Trade is extremely understanding about the Scottish problem, as is my right hon. Friend the Minister of Labour and National Service. We work closely together and we agree about the solution to be applied to what is both a long-term and a short-term problem of great importance in Scotland.

Mr. George Lawson (Motherwell)

To put this matter into summary form, would the right hon. Gentleman say whether Scotland has maintained its industrial position vis-à-vis the rest of Great Britain, or has that position declined?

Mr. Maclay

One would have to go into all sorts of selective tests to prove that.

I come now to the point at which the hon. Member for Hamilton regretted that I disliked his talking "woe, woe, woe." I do not believe that Scotland is going downhill. I commend to the attention of hon. Members opposite what has happened at Grangemouth; the chemical industry developments; the new factories which we have in Scotland and the new American factories which have come to Scotland —

Mr. Lawson

What is happening south of the Border?

Mr. Maclay

—and the happenings on the Clyde—

Mr. Lawson

The lack of steel—

Mr. Maclay

—and—

Mr. Lawson

Ten per cent.—

Mr. Speaker

Order.

Mr. Maclay

The position regarding steel in Scotland is a matter of particular concern. The hon. Member for Motherwell (Mr. Lawson) must realise that Scotland cannot expect to avoid the effects on the steel industry which are apparent all over the world in every steelmaking country. It would be remarkable if, at a time when there is a recession in all the steel producing countries. the same thing did not occur in Scotland.

Mr. Lawson

It is always worse in Scotland than in the rest of the country.

Mr. Maclay

I have said that if one is worried about the fact that we are over-concentrating on heavy industries, as am, one should endeavour to explain how we are trying to balance the position and that we are meeting with a certain amount of success.

Last night the hon. Member for Hamilton complained that areas where unemployment is high are dealt with in the same way as areas where it is low. I have tried to explain what we are doing by means of the Distribution of Industry Act and the Distribution of Industry (Industrial Finance) Act, which was passed before the House rose for the Summer Recess. I have figures here which would support my argument, but I have taken longer with my speech than I intended to, and so I will not go into details about the application of this legislation percentagewise to the population throughout the country. I hope that this legislation will produce effective results. It is too early to say what those results may be, but a lot of work has been done in preparing ideas for the D.A.T.A.C. Committee. The Committee is studying such proposals as have come forward. There are only about fifty so far, and a lot of work has been done in deciding what is the best practicable solution.

There is another side of the selective work which I ought to mention, and the quickest and easiest way to do so is to refer back to what the Chancellor of the Exchequer said when he spoke about the decision of the Government to …put into operation a series of specific but limited relaxations designed to stimulate employment during this coming winter…—[OFFICIAL REPORT. 3rd November, 1958: Vol. 594, c. 641.] There are several different stages in this operation. We have been able to bring forward projects which will benefit such places as Greenock, Dundee, Airdrie, Coatbridge and Motherwell. This includes the provision of new community halls and other useful things which, in a period of inflation, have to be deferred. We have been bringing them forward selectively in areas where they are needed.

Mr. John Rankin (Glasgow, Govan)

Before the right hon. Gentleman sits down—

Mr. Ross

He has not started yet, he has not told us anything.

Mr. Rankin

—will he reply to a point which I raised during the debate last Tuesday? In view of the need for teachers in Scottish schools—

Mr. Maclay

I have not yet finished my speech and I shall come to that. [HON. MEMBERS: "Take you time."] We who represent Scotland take our full share of time, as well as of other things, but I must not occupy the time of the House too long on Scottish affairs.

I wish to clear up two points of detail relating particularly to Greenock. A question was asked by the hon. Member for Hamilton, but I am sure that the hon. Member for Greenock (Dr. Dickson Mabon) had it in mind as well. The hon. Member for Hamilton referred to the proposal for a graving dock on the Clyde, and suggested that there might have been some obstruction from the shipbuilding interests. My information is that there is no question of obstruction. The shipbuilding interests concerned are giving intense study to the details of such a project. It is a big undertaking and involves much consideration. I cannot forecast the outcome, but there is no question of obstruction. I can assure the hon. Member for Hamilton and the hon. Member for Greenock that the Government will give careful consideration to any proposals which may be made in this connection. I wanted to clear up that point because the hon. Member for Hamilton made a grave charge against Scottish industrial interests.

One other point, about which the hon. Member for Greenock was anxious, should also be cleared up. It refers to certain factories in Greenock. Regarding the I.B.M. factory there has been considerable amount of negotiation with the Scottish Industrial Estates. Agreement has been reached on the proposed development. Some planning work remains to be done, but it is expected that building will start in the next few months as the weather permits. The hon. Member knows the position with regard to the Playtex factory, which is much the same.

The hon. Member for Govan (Mr. Rankin) wished me to deal with the question of—

Mr. T. Fraser

I want the right hon. Gentleman to deal with the question of Lanark.

Mr. Maclay

I can never remember how many counties there are in Scotland—

Mr. Fraser

But Lanarkshire happens to be the industrial heart of Scotland where last month there was 7.2 per cent. of unemployment. What is the position now?

Mr. Ross

The right hon. Gentleman should forget his rabble-rousing tactics.

Mr. Maclay

When the hon. Member for Kilmarnock (Mr. Ross) interrupts me, I am convinced that I am making a good speech. I admit that I do not think that normally, but an interruption from the hon. Gentleman leads me to believe it.

Mr. Ross

May I assure the right hon. Gentleman that this is one of his best speeches?

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

The Minister has made a well-prepared statement and has provided us with many statistics. In order that we may get those statistics into correct perspective, will he be good enough to tell us approximately the population figure for the whole of Scotland?

Mr. Maclay

The hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith), for whom I have great respect and whom I have known a long time, has probably heard all the speeches made in this debate which I am now trying to answer. We Scots go into detail when we are engaged in an argument That may be a deplorable thing, but it is true, and I am bound to deal with the questions which I have been asked—

Mr. Ellis Smith

Give us the approximate figure.

Mr. Maclay

I am not going into those sort of details—

Mr. Ellis Smith

Is it about 10 million?

Mr. Maclay

I really cannot be draw n aside in that way.

I turn for a moment, before I conclude, to the question about teachers' pay. I am very anxious to deal with that because the hon. Member for Govan raised it last week. Those who have followed this matter will know that, after a failure to reach agreement between the representatives of the local authorities and the teachers in the National Joint Council, the question was remitted, in accordance with the constitution of the Council, to a panel of three arbiters. The arbiters found that in view of the material change of circumstances brought about by the rise in the cost of living since the existing salaries came into force, on 1st November, 1956, there should be an increase of 5 per cent. in the basic salary of teachers.

That finding came to me and I received it on 7th August. I have now made provisional Regulations giving effect to it as from 1st November. In terms of the Statute I have to have regard to the Council's recommendations. In this case hon. Members, including the hon. Member for Govan, will, I am sure, realise that although the arbiters had to pronounce on a relatively narrow issue —namely. what salary increase should be awarded as a result of an increase in the cost of living—it was necessary for me to consider much wider issues. In particular. the recommendation had to be viewed in the context of the general rise in wages and salaries. I am sorry if the teachers received the impression that there was unjustifiable delay, but I can assure the hon. Member and them that that was not the case.

The hon. Member raised the question of retrospection. As he knows, and as the House is aware, I am prevented by Statute from making any award retrospective.

Mr. Rankin

Would the right hon. Gentleman deal briefly with the other point I raised? Why was he able to introduce retrospective legislation in the case of policemen in Scotland, but not in the case of teachers?

Mr. Maclay

I think it would be quite wrong to try to widen the debate. I have already widened it sufficiently. This is not an education debate, but the point was so important that I felt I should deal with it.

We have been argumentative in this debate. I think that is inevitable and proper, but I feel it must be realised, in spite of what has been implied by hon. Members opposite, that this Government have done a great deal towards what we all want—the improving diversification of industry throughout Scotland. If the figures I have given are studied—they were obtained from various documents —hon. Members will realise that what I have said is correct.

6.34 p.m.

Mr. Ernest Davies (Enfield, East)

We have had a very lively Scottish interlude; in fact, we have had a capital bonus from the Front Bench this afternoon. That is understandable and was necessary. The Secretary of State for Scotland said that what was important for Scotland was important to the United Kingdom. I think that the reverse holds true, that what is important to the United Kingdom is equally of importance to Scotland. What I have to say this evening, which mainly concerns the transport industry, applies very considerably to Scotland—more so than to England—but equally to Wales.

I rise to draw attention to the critical condition of the transport industry, and particularly to the financial crisis that faces the British Transport Commission. I do so during this debate on the Opposition Amendment because I consider that the parlous state of the transport industry is due to Government economic policy; and this is a debate on economic policy. I consider that the Government's economic policy has aggravated the difficult position of the transport industry which has been developing over recent years and which now has reached crisis point. The fall in production has affected the Transport Commission to a very serious degree and for this economic stagnation the Government must take the blame.

It is no exaggeration to say that the public transport industry today, in certain sections, is fighting for survival and that the Commission is fighting against bankruptcy. For this, Government policy is responsible. The consequence is that the maintenance of adequate public services is becoming increasingly difficult. As costs rose during the period of inflation, fares and charges went up and the traffics of the public transport services diminished so that their position became worse. Consequently, there has been a widespread curtailment of the public services which again worsened the position for the public. Both the passenger and worker in the industry suffered as a consequence.

The main cause of these difficulties has been Government policy, which has aggravated the situation which was already developing. The result is that private transport has increased to a great extent. The increased numbers of private motorists driving their own cars and industrialists carrying goods in their own vehicles have taken traffic away from the public services. This great increase in private transport has been stimulated. first, by the large increase in cost by higher fares and charges, and, secondly, by the natural growth of private transport—which no one wishes to retard, but which means that today the public is getting worse public services at higher cost. I fear that this situation is likely to deteriorate further because there will be a further increase in private transport.

With the relaxation of hire-purchase restrictions I do not think there is any doubt that we shall have a private car boom. Where all those cars are to be parked and how they are to travel along the roads at any speed, I do not know. Already there is one car for every 12 persons in the country, which is roughly one for every five families. I see that the Home Secretary, when opening the Motor Show, said he saw no reason why there should not be one car for every two families. If that is to be so, I cannot comprehend what is to happen on the roads unless the road system is revolutionised. It may be that this is what happens when we travel "Onward in freedom" in a "Property-owning democracy."

My concern is not at the increase in private transport—which must be welcomed as a sign of an increasing standard of living in the country—but at the effect on public transport which results and the need to provide for it, particularly roads. Some protection must be given to the public services to ensure that the essential services are provided and that is not the case at present. So far, rural services have suffered most.

My hon. Friend the Member for Morpeth (Mr. Owen) recently pointed out that certain services in his constituency had been entirely withdrawn, and that no transport facilities were available in certain rural areas. That is true in other parts of the country. Unfortunately, public deprivation of essential services is now spreading to the urban areas, and its latest manifestation is to be found in London Transport.

The London Area Transport Users' Consultative Committee, which has been inquiring into the proposed cuts in the bus services and curtailment of the Underground services, has recommended that the proposals in the case of the Underground should be withdrawn. It has stated that it considers that if the services were withdrawn it would have "very serious repercussions on the industrial and social life of London as a capital city." In my view, that is an indication that the Committee considers that if these services were withdrawn London Transport would not be fulfilling-its obligation to provide adequate services in the London area.

It seems to me that certain transport operators are taking advantage of the rise in costs to cut out the unremunerative services to an unnecessary degree. The road passenger transport industry is protected by a licensing system, either through monopolies granted to operators in certain urban cases, or through the restriction of competition in other cases. If that is so, since they receive this measure of protection and have certain privileges, there is an implication that they have a responsibility to provide adequate essential services.

Up till now the remunerative services have paid for the unremunerative ones, and that should continue to be the case so long as these operators receive protection. Unfortunately, however, they have seized upon the present situation to reduce their unremunerative services and to maintain all their remunerative ones. They are shirking their responsibilities to some extent.

Under the 1947 Act the British Transport Commission, among its many other duties, had an obligation to provide adequate public transport services. The Conservative Government repealed the relevant Section of the Act, and the Commission no longer has that responsibility. We are suffering today from that change in the law. The Commission has been compelled by the deterioration in its finances to cut its services considerably, largely as a result of Government policy. If the 1947 Act had stood as it was passed by this House the Commission would be under an obligation to continue some of those services which are now being cut out.

The recession—for which the Government must take responsibility owing to their policy of stagnation—the retardation of industry, or whatever one calls it, coming on top of the growth of private 'transport, following the earlier wrecking policy of the Government, has had, as far as the Commission was concerned, disastrous effects. It is only necessary to turn to the figures of freight traffics of British Railways to see what a startling fall has taken place, both in traffics and in revenue. This fall is directly traceable to the fall in production, especially of steel, and the fact that coal is being stocked to a much larger extent than normally—and that the coal which is stocked is not transported.

I will take merely the minerals traffic, which reflects the fall in the production of steel, because it is iron ore, scrap and the other raw materials used in the production of steel which largely comprise this minerals traffic. During the first 36 weeks of this year, to 7th September, the minerals traffic fell from 45 million tons in 1957 to 37 million tons in 1958. That is a fall of 8 million tons, or 17½ per cent. During the same period the production of steel fell by 16 per cent. The fall of 16 per cent in the production of steel is related to the fall of 17½ per cent. in the carriage of minerals traffic. The Government must take the blame for the fall in production and for the consequent fall in the traffics of the Commission.

If one takes the most recent period—the last four weeks published—the position is even worse. Minerals traffic is down by 25 per cent., with steel production down by about 16 per cent., and all freight carried is down also by 16 per cent. This fall in production is well shown by the fall in general merchandise, which was about 15 per cent. As a consequence, the financial outlook of the Commission is appalling. In the first 40 weeks of this year freight revenue alone fell by about £20 million and total revenue by about £28 million.

This means that the Commission may make a loss of between £80 million and £100 million this year—a tremendous figure to contemplate. It means that the £250 million which the House voted for deficit financing for the period 1956–62 will be more than exhausted by next year. Already, £140 million of that £250 million has been drawn upon for 1956–57, and if between £80 million and £100 million is drawn on for 1958 only £20 million or £30 million will be left for the deficit for the whole of 1959. That indicates that before next year is up the Commission will have no funds to draw upon to finance its deficit, which is certain to be higher than that.

In these circumstances I should have thought that the Government would seek additional finance to tide the Commission over this period. This money was supposed to last until 1962, when it was estimated that the Commission would break even. Those estimates, which appeared in the White Paper proposals for the railways, were based upon conditions that were far better than those existing today, and they were also based upon far better prospects. There is no question but that the estimates of that White Paper cannot now be fulfilled, and the Commission is, therefore, very unlikely to be in a position to pay its way during the period estimated by the White Paper, notwithstanding the optimism displayed by the Minister earlier this year. So far, the Government have adopted a negative and inactive attitude to the current position of the Commission, and. in the face of that, we are entitled to ask what their policy really is.

It is necessary for the Government to review, with the Commission, the estimates that were put forward in the White Paper; to consider what additional finance is required, and in the next few months to ask the House, quite frankly, for further assistance. It is due to the House that the Minister should inform us of the changed position of the Commission, and take us into his confidence. We voted this money on estimates that no longer hold good.

Yesterday, the Chancellor announced that there was to be an increase in the public capital investment programme of £170 million. He did not, however, tell us how much of that sum is to be available to the Commission, and how much to British Railways, but we may be able to elicit those figures through Questions. Meanwhile, vie are in the dark, and as the increase in the total figure for public investment is not very great, I cannot feel that it will make a great deal of difference to the Commission.

Essential as it is, capital investment for modernisation is long-term investment. It takes several years for the fruits of that investment to be fully reaped. The Corn-mission's passenger traffic is already benefiting from modernisation, but there ought to be a review of the whole programme. That programme, excellent as it is, was drawn up on certain assumptions. Several of those assumptions have not been fulfilled, and some of the traffics that were anticipated have, of course, been irrevocably lost in the changed circumstances. While maximum capital investment is necessary, there may be certain conditions in which it would be desirable to switch its direction from that originally shown in the White Paper.

Why cannot the Commission now be left free as regards the amount of its capital investment? Today, the private sector of industry is permitted to spend at will. Why is it that this nationalised transport industry, which is in such dire need of modernisation, and whose expenditure helps our employment situation, cannot now have the restriction lifted from it, and be allowed to go full steam ahead with its modernisation programme as far as it can within the resources of material and manpower?

Though I should have liked to have talked somewhat about the road programme, I shall only say that here, again, the Chancellor stated yesterday that there was to be increased expenditure on the roads. He did not say how much, but, again, it is important, in view of the great increases in traffic and the large loss of life on the roads, that that expenditure should be as great as possible.

If the road system is to continue to develop it is important that the pipeline should remain full. At present in the pipeline there is a programme of £240 million, but unless more money is poured in to keep construction going there will be a run-down, and in a few years' time we shall suffer as a result.

The Government lack a co-ordinated road and rail capital investment policy. They seem to be proceeding on an ad hoc basis, with the railways on the one hand and the roads on the other. On the roads much has been done in bits and pieces. Instead of there being a large number of overall schemes, such as the London-Birmingham motorway—the construction of which, at speed, shows what can be done on a grand scale—the Government are proceeding with a little here and a little there—very often in marginal constituencies.

The Government's economic policy is, to a large extent, responsible for the present very serious position of the transport industry. As a direct consequence of their policy, the public services will deteriorate still further, and their costs and charges rise higher, unless the Government's negative transport policy is replaced by a constructive policy aimed at establishing a planned transport system. Such a constructive policy remains the policy of the Labour Party, and it will not be long before we are in a position to carry it out.

6.57 p.m.

Mrs. Patricia McLaughlin (Belfast, West)

The Secretary of State for Scotland said a few minutes ago that what was important to Scotland was important to the United Kingdom. I believe that what is important to Northern Ireland is also of importance to the United Kingdom, and I want to draw attention to some statistics and factors that are of vital importance to us.

This afternoon, the right hon. Member for Lewisham, South (Mr. H. Morrison) spoke about Northern Ireland. I am sorry that he is not now in his place, because his figures and facts about Northern Ireland and our unemployment situation were not entirely accurate. With us, as with many other parts of Great Britain, this is a long-term problem. My hon. Friend the Member for Bodmin (Mr. D. Marshall) has stated that even during the war there had been as much as 8 per cent. unemployment in his area, and that it was very much higher today. The same thing has occurred, and is even now occurring, in Northern Ireland. In 1942, it reached 5.7 per cent. It was the same in 1945. In 1946, it was 8.4 per cent., and in 1951 it was 8.5 per cent. Even today, our unemployment level, about which we are by no means proud, is 8 per cent.

Much has been said in this debate about what should or should not be done. Hon. Members opposite have today made tremendous play of the fact that only by means of the projects in which 'they believe, only by nationalisation of big concerns, only by general controls, is it possible to maintain a very low level of unemployment. That being so, I merely draw their attention to the figures I have quoted. We are very anxious that our unemployment percentage should be firmly and steadily reduced—it must be done.

Since the new Distribution of Industry Act became law, all other parts of the United Kingdom similarly affected are in the same position as Northern Ireland in regard to attracting new industries. Indeed, we are now at a slight disadvantage, because our geographical position puts us further from the rest of the United Kingdom than even the remotest part of Scotland or Wales—or any other part of what we often refer to as "the mainland."

It is for that reason that I hope that the Government will energetically look for some way to promote special interest in and give special help to Northern Ireland in order to make up for the slight disadvantage from which we are now suffering, because we are not now able to offer some particular and special inducement to industry. We have already achieved much, and I think that today we have been almost too negative about it. We have talked about what has not been done, but much has been done all over the United Kingdom, and it is bad if we, in this House, give the impression that we are not interested in what has been done, and in the good that has resulted. Certainly in Northern Ireland we have had a very wide variety of new industries. There have been British and American industries, overseas firms and local ones. We have been proud and happy to welcome them all, and they are settling down happily and making a useful contribution not only to employment in our part of the world, but also to the output of the United Kingdom as a whole.

We are now faced with this problem of where we are to look further. Our own Government in Northern Ireland are very anxious and determined to leave no stone unturned, but it is to Her Majesty's Government here that we must finally look for measures to meet the situation. The Free Trade Area brings all sorts of new possibilities. In the textile industry alone in Northern Ireland it brings both advantages and disadvantages. By and large, I believe that the advantages will outweigh the disadvantages.

The linen indsutry, in particular, feels that on balance it will be a help. The industry is certain that a quality article such as it produces will always find a good market and that it will be able to compete in Europe without the restrictions which have existed heretofore, hoping anxiously that the negotiations which are now going on will soon come to fruition.

Quality goods are important. I was interested to hear my right hon. Friend the President of the Board of Trade say that he thought there was plenty of room yet in the United States for more of our goods. Indeed, there are large areas as yet untouched. In the short time that I was in the United States I had an opportunity of discovering that there were many areas where, as yet, our linen industry had not been able to send its salesmen to make more connections and to make more output possible. This is not always easy for a small industry, and there must be many other small industries in the United Kingdom in the same position. It is not always easy to send people out all the time, to pay their expenses and the cost of travelling throughout countries for possible orders for an industry which is working on a small margin and which, because of past difficulties, is not in a very healthy state financially.

There has been much criticism of our linen industry. It has spent a long time trying to modernise its ideas and designs and, indeed, the industry in general. Today, in design, colour and texture and all the other modern requirements. it is in the forefront. I hope that the President of the Board of Trade will say whether he can help to publicise the textile industry of Great Britain as a whole, and the linen industry in particular, so that it is possible for some small firms and small industries to get their goods known throughout all the free markets of the world.

There has been a change of demand in world trade, and the decline in trade in some markets has affected us in Northern Ireland very badly. The search for new markets is expensive, as anyone engaged in business will confirm. It is difficult to get new markets when one is unable to use one's money as widely as possible and compete against the big firms which can spend vast sums of money. This is particularly applicable in the United States of America where the cost of advertising is almost prohibitive

Northern Ireland has often been mentioned on both sides of the House, and I must say that we in Northern Ireland have always felt that the measure of sympathy we get is extremely good. We feel that hon. Members from Scotland and Wales join with us in appreciating that we are all out to tackle a common problem. I refer to the problem of unemployment. I very much dislike hearing expressions indicating that things are being dealt with in an overall way. Even the expression "taking up the slack" is not very pleasant when we are dealing with men's hearts and lives. One cannot take up the slack in a person's life. One cannot just use some term to express what is a person's entire attitude and way of living.

When we discuss these matters—and the House is always sympathetic—we in Northern Ireland realise that our problems cannot be solved only by us. The remedies that we can put forward are only local suggestions, because Her Majesty's Government have to look at the picture as a whole.

I am prepared for the Treasury representative to smile rather cynically at my next suggestion. I believe that one of the main difficulties in Northern Ireland is that we are short of capital. We are a community of people in small family firms. The bulk of the large concerns come to Ireland from outside. We need more of our own capital in Northern Ireland. If it were possible somehow to give help to the smaller firms which are Northern Ireland owned and directed, to enable them to make a reasonable trading profit, if those firms could be given encouragement and help through being able to get together and share their profits tax-free so that those profits could be put into developing other small industries in Northern Ireland, perhaps where there are pockets of unemployment, we would feel that was a worthwhile effort to help to increase our capital gains.

I know that this will produce great criticism, but all measures must be considered and we have reached the stage where we feel that we must ask for every possible suggestion to be investigated in this battle to obtain work for those who need it so badly.

We have a large development plan. Time and again it is only our problems that are heard of in this country. We are in many senses a thriving community, by no means sitting and waiting for other people to help us all the time. There are road developments. We are pushing ahead with slum clearance, and those projects are now coming to fruition. The local authorities and the Government are doing all they can to use as many hands as possible.

But all these are merely temporary measures. We must all surely realise that unemployment has not just happened in the last few years. Whatever Government has been in control, conditions do not reflect anything of which we can be particularly proud. This certainly applies to the period since the war. It is not true to say that at any particular time any given circumstance has caused a job to disappear. We in this island are tied to what happens in world affairs.

Only recently, there has been a great deal of talk about members of the Commonwealth coming to this country and taking work from our people. A great deal of controversy arose. It is widely known that our responsibility is to help the Commonwealth countries to grow and improve their standards, and to enable their people to learn and then return to their countries to become leaders in the development of those countries. But we also have a responsibility to help our own people at home, particularly in the areas of unemployment of which we have heard so much. This has been an economic debate which has concentrated mainly on this one particularly human factor.

I know my own city very well, having been brought up there. The people there know that the problem is not going to be easy to solve. They do not expect us to produce a miracle. What they do look for is an economic background which makes it possible for firms to wish to come to our part of the world, to expand there, to thrive there and to make a profit there. They look to the British Government to create that economic expansion and that background which is so essential for a thriving economy.

This is surely what is being done at the present time, and what must be done. Unless we adapt ourselves freely and quickly as the financial needs arise, we shall stagnate. I cannot see how the present Government's policy is failing to do that very thing. As demand has increased and as more goods are required, both at home and abroad, work for these idle hands will surely become more easily available.

Our debates will pass on to other subjects in the months ahead, but I hope sincerely that, throughout the country, there will be no pressure put on people to feel insecure. We are here to see that something practical is done. Northern Ireland has always respected and appreciated what is done by Her Majesty's Government, and Her Majesty's Government have a great and abiding interest in Northern Ireland. They have taken practical steps to prove that interest. I ask that, in the months ahead, the Government prove this interest in an active fashion and, in every Department concerned, look anxiously and with real concern at every proposition put forward, doing everything possible to help us. We hope that we shall receive that help, just as we are anxious to see the Government help every other part of the United Kingdom, for, in Ulster, we believe that this is our country and we know that this is a national problem.

7.12 p.m.

Mr. John Diamond (Gloucester)

I hope that the hon. Lady the Member for Belfast, West (Mrs. McLaughlin) will not feel embarrassed if I congratulate her on her speech. After all, it is much more agreeable for a male Member for the House to take that attitude, and I think that every one of us on this side must recognise that the hon. Lady was speaking with real understanding of the impact of unemployment, the human impact of unemployment, and that she tried very hard to steer between the Scylla of complaining on behalf of her constituents and the Charybdis of, at the same time, criticising her own Front Bench. I understand, of course, that she is in a special difficulty, which few others of us suffer from, in that she lives under not one but two Tory Governments. This, indeed, must be a burden.

If I may add one further word of praise, the hon. Lady is the third or, perhaps, the fourth Member to speak during the last two days and fight for his or her constituents in Northern Ireland. I, who have listened to most of the debate, have been astounded, as an ordinary Sassenach, at the lack of interest taken in the debate by Scottish Members opposite, having regard to the very sorry state of Scotland today. I apologise for saying it, but the comparison has been most marked, and it is a further tribute to the gallantry of the hon. Lady the Member for Belfast, West.

The President of the Board of Trade, this afternoon, started by calling us on this side bears. With his great ability in choosing just the right word to make an impact on every working class family in the country, he called us "bears" for criticising the Government's policy and their lack of success. I think I am right in saying that a "bear" is. in Stock Exchange parlance, a person who contributes very practically and productively to the wealth of the country by selling what he has not got and then buying it back at a profit—selling "short". No doubt the right hon. Gentleman will correct me if I am wrong.

When he said that, I wondered to which Socialist Member of Parliament he could be referring. To make quite sure, I refreshed my memory by turning up a letter which I thought might possibly be in his mind. It is a quite famous letter, date 16th September, 1957. It begins: My dear Hugh "— This obviously was an appellation which might have misled the President of the Board of Trade into thinking that it was a Socialist Member of Parliament addressing his leader in familiar terms. I have just returned from Scotland, where we had a wonderful time, record shooting and good fun all round…It seems a heads-I-win-tails-you-lose bet for the sellers of Sterling short". That, I take it, is a "bear". I am giving extracts from the letter. I must say I can see no reason why Gilts should go up. My advice, therefore, all round is to sell…This is anti-British and derogatory to Sterling, but, on balance, if one is free to do so, it makes sense to me". This letter, of course, we referred to many times during the debate on the Bank Rate Tribunal. It illustrates, no doubt, what the right hon. Gentleman the President of the Board of Trade had in mind when talking about "bears". It was very appropriate for him to mention it, of course, because we are discussing unemployment in relation to the difficulties which have resulted from the actions the Government took, or refrained from taking, at the time of the Tribunal referred to—the increase in Bank Rate to 7 per cent. a year ago, and all the other things done by the Government at that time.

The President of the Board of Trade asked us to bear in mind what the Stock Exchange was thinking. The Stock Exchange, he said, was a better guide to the opinion of most people as to the welfare of our countrymen than the views of Labour Members of Parliament. The President of the Board of Trade was quite right in taking some credit for the increase in values on the Stock Exchange. It is this Government which, by their action on Profits Tax, have encouraged the enormous increase in the payment of dividends. It is this Government which, by their removal of all restraint on bank advances, have enabled companies, which would otherwise have to retain their dividends and plough them back, to distribute them, knowing that they could replenish their resources from the bank. It is for these reasons, as has been wisely pointed out by that wild revolutionary, the City Editor of The Times, among other subsidiary reasons across the waters, that the Stock Exchange valuations have risen so substantially.

I wonder whether the President of the Board of Trade really thought, in saying that, that he was helping the Chancellor of the Exchequer in his appeal for restraint on wages. The Chancellor made a long speech yesterday, carefully excluding from his appeal for restraint anyone other than wage earners. He referred to the problem of wages and any increase in wages. We could not afford increased wages under this Government because production was not going up. could never go up, and would probably continue to go down. He referred to the lack of ability to pay increased wages and said that, if there was a 4 per cent. increase in wages next year, as there has been this year, we should be in great trouble.

The Chancellor appealed for restraint in wages, but, as his right hon. Friend has pointed out, we have, at the same time, a vast increase in dividends and in share values as a result of what the Government have done. How do the Government think that the 4,000 aircraft workers in Gloucester, who are facing the sack, will be encouraged to feel that they have the sympathy of a Government which draws attention to the fact that, while they, the workers, are about to be sacked, the shareholders in the very factory which employs them have their share values increased by £8 million in this one year as a result of what the President of the Board of Trade referred to?

There has been that increase of £8 million in this one year resulting, in large measure, from the very actions which the Government have deliberately taken in the last Finance Act and more recently. This is no way to encourage wage earners to exercise the restraint which the Government are asking for. I appeal to the Chancellor to think again. Can he not say something about restraint in other directions, apart from restraint purely in wages?

To put the matter simply, I like increased production because it brings down prices and stabilises the cost of living The real way to bring down prices is to increase production. I like increased production because it produces the strong economy which we need to have a strong £. I like increased production because it enables us to play our part in the world, in maintaining peace, in helping the underdeveloped countries, and what is possibly of even greater importance at this time, in putting before those countries which are looking with hungry eyes at the great economic development in the Communist countries, an alternative of prosperity and plenty with freedom through democracy.

Let us compare the increase in Russian production at 10 per cent. per annum with our decrease of 4 per cent. and, at the same time consider the figures in Communist China, where it is not easy to be precise but it is probably true to say that the increase in production is about four or five times as great as the increase in the Russian economy at the same stage of development. If one looks at either of those two figures and then at the increase in production in this country, is it surprising that countries which can look either way, such as India and Burma, make their comparison? Is not the best contribution that can be made to the fight for liberty and democracy in the world to increase our production here so as to demonstrate to the countries which are undecided and on the borderline which way their real interests lie?

I like increased production because it raises the standard of living in the widest sense. I refer not only to physical wellbeing, but to the possibility, also, of increased money becoming available for the arts, not excluding opera. I like increased production because it solves the problem of wage increases. There is no problem of wage increases if production is increasing. This is a problem which arises only through the Government's deliberate policy of holding down production. It is impossible to expect the average wage earner to look forward to no increase in remuneration over the years, irrespective of the cost of living. When the cost of living rises the Government ask him to accept a reduction in his standard of living. But it is impossible to do that, and it is such an unsatisfactory attitude to adopt to say, "We, the Government who are responsible for the holding back of production, say to you, the wage earners, ' You shall not have an increase in wages because production has not gone up and the country cannot afford it.'"

That being the case, increased production being what is required—and although it was, I should have thought, implicit in everything that the Chancellor said yesterday that he is not expecting or looking forward to increased production —why did the Government take steps a year ago which admittedly have had the result, and it was known at the time would have the result, of holding back production? They will claim that the reason they took the steps was for the wider purpose of increasing the reserves and having a satisfactory balance of payments. They claim, of course, that they have succeeded in their efforts.

These claims are as reasonable as the claim that I now make, that it was the Labour Government which won the war in the Far East. One has only to look at the dates to see that the Labour Government came to power before the war in the Far East was won. We have only to look at the dates to see the same claim here. The argument post hoc propter hoc that that is the case is an argument which should be denied time and again. There is no justification whatsoever in the Government's claim that they maintained and improved the well-being of this country by taking the action that they took last November.

Certainly, it is true that action had to be taken. It is true that we were in what the Economic Secretary then described as the worst crisis ever, when reserves were running at such a rate that they would have disappeared completely in five months. In the worst crisis ever, after six years of Conservative Government, the Government felt disposed to take some action. But they took the wrong action, they fought the wrong battle and, as we now know, they sent the troops in approximately two weeks after the speculative forces had withdrawn. Of course, we never caught up.

It is the sheerest nonsense to try to pretend that merely because "Joe Doakes" has been refused a small overdraft by his bank manager to help him in his small business or because the local authorities have had to pay through the nose for money that they need for vital community services, the Government have succeeded in achieving a record current account balance —a record balance of payments figure. Obviously, the very size of it demonstrates to anybody that one cannot pretend a few weeks after one takes action of this kind to achieve a for-all-time record surplus.

Sir Robert Cary (Withington)

With a bit of luck.

Mr. Diamond

Of course. That is what I am saying. But, of course, there is a more serious point underneath. The fact that the current account surplus was so large demonstrates that it could not have been, as indeed it was not, because of our difficulties at the time. The cause of our difficulties at the time was the speculative selling.

It is not for me to repeat what has been said many times and a good deal better by my own Front Bench as to how the situation should have been handled. The Government will, naturally, say, "We are Conservatives, not Socialists. and we do not govern in that way." What I would criticise the Government for is not governing according to their own philosophy, for their negligence and complacency. Under their own philosophy it was right at that time to protect the Government by an increase in Bank Rate as we had no safeguards at that time.

Viscount Hinchingbrooke (Dorset. South)

Hear, hear.

Mr. Diamond

The noble Lord says, "Hear, hear." May I refresh his memory as to the way in which the Government tackled this problem? I think that the House will agree that it arose in its acute form in the middle of August, when the French took action to devalue the franc. That is what started off the wave of speculative selling. What happened from the middle of August onwards? We must not forget that the increase in the Bank Rate took place on 19th September, a date which is not too difficult to remember, being exactly seven days after the Gloucester by-election.

During that period continual pressure was put upon the Deputy Governor of the Bank of England—it could not be put on the Governor because he was on holiday—by, among others, Lord Kindersley—who came back especially from Canada to demonstrate his anxiety about the feeling of businessmen in Canada in relation to the £—to consider the matter. We know from the Bank Tribunal's Report that it was considered by the Court of the Bank of England and we know that there was no lack of access to the Chancellor. En fact, we know that during this period the Deputy Governor went to see the Chancellor twice.

The first time he went to see him, it is stated in the evidence, the question of Bank Rate was not discussed at all. The second time he came to see him, it was made clear that it was discussed merely to be postponed and that any definite discussions on Bank Rate should await the Governor's return. This second interview was as late as 13th September. Then, on 14th September—the Saturday —the Governor returned and things started to move. He saw the Chancellor over the weekend. The Chancellor saw the Prime Minister and during the course of the short few days between that Saturday, when he returned, and the following Thursday, the Bank Rate was increased by the extraordinary and most unprecedented figure of 2 per cent.

In short, there was that enormous delay between the middle of August and the middle of September, a delay of practically one month, in taking any action about the Bank Rate. I say this in terms of the Conservatives' own philosophy and that their view must have been that this was the one direction in which they were entitled to take action.

The country was bleeding to death, but the Chancellor had to wait for the Bank of England and the Bank had to wait for the end of the holiday season. That is a valid and serious criticism. Had action been taken much earlier, there would have been no need for anything like the 2 per cent. One-half of 1 per cent. might have been adequate if it had been taken at the time. As we know, when the action was taken it was too late. Therefore, all that we have suffered has been suffered unnecessarily. As a result of what was suffered and what was deliberately planned, production has fallen and unemployment has risen.

Unemployment has risen to a figure which I put at around one million. I gather that my right hon. Friend the Member for Blyth (Mr. Robens) must have referred to this figure on some other occasion-1 do not know the circumstances—and he was being twitted with it by the Government Front Bench today. I would call the figure at least 1 million, half of whom are drawing the dole and the other half are drawing wages and salaries. The only way of accounting for the low production figures and, at the same time, the figures of unemployment, together with the problem of this concealment, is to put down a figure of at least half a million for concealed unemployment and, therefore, a total of about one million.

Viscount Hinchingbrooke

Does the hon. Member recall that his right hon. Friend the Member for Blyth (Mr. Robens), in his speech only this afternoon, gloried in the fact that the Coal Board was keeping on its books a substantial number of miners who were doing virtually no work?

Mr. Diamond

I heard exactly what my right hon. Friend said. I was watching the noble Lord while he said it and I could see that the noble Lord was uncomfortable and anxious about it. Of course, it is possible to have it both ways and that is what is happening. The noble Lord is criticising the Coal Board. Implicit in everything he is saying is a criticism of the Coal Board. I am not criticising the Coal Board. I am making the simple statement of fact that there are about half a million people who are on the salary and wage rolls, but who are not producing fully or producing at all.

Mr. H. Wilson

Would my hon. Friend not agree that the difference is that the miners who are working for the Coal Board and are producing something are producing for stock, whereas a large part of the half million to whom my hon. Friend is referring are not being fully employed because many factories are producing at about 80 per cent. of capacity?

Mr. Diamond

I am grateful to my right hon. Friend. My point is that when looking at the total production figures, one inevitably must come to the conclusion that there is a large figure of concealed unemployment as well as the open unemployment and that by adding these two figures together, we reach a figure of about 1 million.

There is no need for me to repeat how we on this side feel about the unemployed. I know that I shall be excused in referring to my own constituency, where there is a serious problem in relation to the aircraft industry, which affects not only my constituency but those who work in these aircraft factories and who are drawn from the neighbouring constituencies of Stroud, Cheltenham and Cirencester. Indeed, there is a similar problem at Bristol.

The problem in Gloucester has clarified itself considerably. As a result of the coincidence of the lack of foresight by the Government in running down the defence programme at the same time as they run down economic activity as a whole, it is quite impossible for those employed in the aircraft industry at Gloucester—they account for one in three of the male workers and about one in four all told—to be maintained in full employment.

It is quite imposible for the firms concerned, mainly the Hawker Siddeley Group, to maintain all their factories fully occupied. The Group has, therefore, given notice to determine its lease of the Ministry of Supply factory which is known as Armstrong Siddeley Motors and which makes the engines for a number of aircraft. As a result, 4,000 men will be thrown out of work between now and June unless the Government find a new tenant for the factory.

This is a matter of specific, and not general, Government responsibility. It is specifically the Government's responsibility to ensure that this factory, which occupies 1 million sq. ft. and is capable of employing more than 5,000 workers, is tenanted by somebody who is capable of providing employment on that scale. I hope that the Government will take immediate action to ensure that that is done, because there is likely to be the added difficulty of the closing down of the factory in stages and its occupation by a new tenant. It will be no satisfaction to all of us in Gloucester, who depend entirely on the welfare of the aircraft industry, that 4,000 or 5,000 people should be thrown out of work with the knowledge that when the new tenant comes in, after the old one has left and after a period of building up, they will in the course of four or five years be reemployed.

Some arrangement must be made whereby the factory is vacated and the incoming tenant takes over in stages. This is a matter about which we are anxious, not only for my constituency, but for neighbouring constituencies. It is a specific Government responsibility. I expect them to pay me the courtesy, during the later stages of this debate, of saying what they propose to do about it.

7.37 p.m.

Mr. Maurice Macmillan (Halifax)

The hon. Member for Gloucester (Mr. Diamond) will, I hope, forgive me if I do not follow him, especially down some of the Stock Exchange and financial by-paths with which his familiarity is greater than mine. I did not intend to intervene in this debate since, unfortunately, I was not able to be present yesterday and, therefore, missed a great deal of some of the more important things that were said. I am, however, grateful for this opportunity to make two points.

The right hon. Member for Blyth (Mr. Robens) seemed rather surprised that the Conservative Party, at its Conference at Blackpool, expressed concern over the unemployment situation. Later, he reproached the previous Conservative Government for their frivolity in dealing with this subject in earlier years. It seems that if we try to deal with matters before they become too serious, we are wrong, and that we are equally wrong it we wait until the crisis is almost incurable. Had the right hon. Member followed the Blackpool proceedings closely, he would have been impressed by the practical suggestions that were made and which contrasted favourably with some of his somewhat vague notions about finding out the special problems of different areas and pouring in suitable resources.

I am fortunate enough to represent a constituency where unemployment is falling. There are several reasons for this, the chief one being the diversity of the work that is done there. I am glad that the Government are taking steps to make this situation arise more easily in other parts of the country.

Halifax is a very flexible place. It reacts very quickly to situations and to measures which are taken. It is a town of apparently small businesses. Despite what has been said from the benches opposite, I can assure the House that the credit squeeze was indeed effective in preventing some of the unnecessary and uneconomic production which was taking place there, and now I am glad that the situation is returning to normal.

Now I should say how much I and, I am sure, all of us on these benches agree with the right hon. Member for Blyth in what he said about the right of people to work, but I hope he was not implying that it is the responsibility of the Government to provide a specific job in a specific place for a specific number of people for an indefinite amount of time, because if he was implying that he was committing his colleagues—at some distant date, possibly—to an impossible programme.

The Government have done a considerable amount, but there are one or two more things which I should like them to do. There is one extra measure which they could take which I think would help that part of the West Riding, and Halifax too, which is still in difficulties, and that part is the textile industry as a whole. In the Gracious Speech the provision of finances for colonial development and welfare was mentioned, and I hope that the welfare side will not be neglected.

Of course, it is right that we should devote sums to developing the backward countries' own industries. Of course, it is necessary that we should accept the fact that this will involve their production of manufactured goods and that we shall have to face competition from them, but these are long-term projects. I am sure that welfare projects could be a method of helping some industries in this country immediately, in so far as such projects could help backward people to procure consumer goods, which, particularly if the goods were textiles, could and should be of great assistance in the North. The sum involved in any such scheme is tiny compared with the amount which would be involved in development.

Of course, development will make it harder to keep the balance between inflation and deflation and to maintain full employment in some ways, and I am only sorry that the negotiations for a Free Trade Area show such unfortunate developments, because I am sure, as many of us on both sides of the House have said, that there is there a great opportunity which we can with profit exploit; but I am equally certain that we cannot exploit this or any other field for the benefit of the country if we are to operate under the sort of controls which hon. and right hon. Gentlemen opposite appear to want and appear to feel absolutely necessary to help us to deal with our economic problems.

I do not altogether agree with some of my colleagues on this side of the House about controls. They are in some ways very agreeable, particularly to industrialists. In some cases it is a great deal easier when one's competitors cannot obtain any more raw material than one can oneself, when one can sell everything one can produce, when there is no risk in one's business, and one's profits are assured by Government controls and Government action. Unfortunately, agreeable though it may be to individual firms, it protects the country from the harsh reality of the world.

I think that one of the answers to the hon. Gentleman the Member for Gloucester in his post hoc propter hoc argument is that it is a pity that he could not convince his own Front Bench of that in 1951, because however ineffective he may think the measures taken by the Conservative Government were, surely he must agree that it is better to take measures of some sort than to go away and leave the problem to somebody else.

I must say that I think there is one more thing where, not so much in the short term as in the long term, the Government can help, and that is in investment. I believe we could do a great deal more, to encourage the stability of industry and against inflation, by encouraging small investors to hold equity capital in industry. I think the point about the difficulties and dangers of hire purchase is relevant here. I should like to see measures developed which would, so to speak, compete with regard to the small savers' money, with the more attractive hire-purchase terms for consumer goods.

The Government are already taking steps to make the purchase of homes more attractive, but expenditure on homes, although capital expenditure, is not expenditure of productive capital, and there are still some things that could be done about that.

Perhaps the House will forgive my saying that I mentioned this at Blackpool. I refer to that fact only in case the hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) and his friends accuse me of having pinched the clothes of their Amendment to the Motion.

I think there is a strong case for considering fiscal policy in regard to helping the ordinary man and woman to become shareholders in industry. It is a non inflationary method of giving tax concessions, if tax concessions are necessary, for all the money so left in the hands of the spender would be by definition saved. A small saver who has invested in ordinary industrial shares is to some extent protected against inflation, because a rise in the price of those shares would normally match the fall in the value of money, and, as I said before, it is a method of providing not only capital but productive capital.

Perhaps, if such a scheme could be brought into effective action, not the least of its importance would be in allaying the fears of Members opposite. They always seem most concerned that industry is owned by so few people. I feel it is more effective to encourage more individuals to share personally in the ownership of industry than to increase their scope for becoming the neglected beneficiaries of even more nationalised concerns. Although it is not mentioned in the Gracious Speech, I hope that it is not being neglected by the Government, and I once more express the hope that when the Government consider practical schemes for colonial development and welfare they will not neglect the opportunity which such schemes may give to help not only industry in the Colonies but some of our industries at home.

7.50 p.m.

Lady Megan Lloyd George (Carmarthen)

I am very glad to have the opportunity of following the hon. Member for Halifax (Mr. Maurice Macmillan). If I may say so, he and I have at any rate rate one thing in common. We have been in this House under the parental eye. though for my part I have never been quite sure whether it was more difficult to be in the House as my father's daughter or as my brother's sister. At any rate, the hon. Gentleman has so far been denied that particular dilemma.

I am also very glad, after a day and a half of debate, to be the first Welsh Member who has been able to say a word for Wales, where the rate of unemployment is twice the national average, and where unemployment is still rising. The speeches which we have had from the Front Bench opposite have done absolutely nothing to dispel the feeling that the Government are dangerously complacent about the present situation. A few weeks ago, the Prime Minister said that we were at the beginning of a new period of expansion, and today the President of the Board of Trade has spoken of growing confidence among industrialists. This is hardly borne out by the facts. May I quote one piece of evidence which may carry some conviction with hon. Members opposite?

A short time ago, the Federation of British Industries started making inquiries among its members, and, four months ago, it reported that there was a marked decline in trade conditions. Only a few weeks ago, it reported a further decline in trade conditions measured in terms of unemployment, hours of work, output and deliveries. Out of 500 firms consulted, just over three-quarters reported that they were working below capacity. That does not look to me like the beginning of a new period of expansion.

There are other disturbing new features. For the first time for nearly twenty years we are beginning to hear two ominous words again—coal and unemployment. For years, the National Coal Board has been urged to produce coal at any price, and miners have been urged to increase production. Now we have millions of tons of coal in stock, due mainly to the fall in production, but due partly also to the competition of fuel oil. No one is ready today to prophesy the proportions of light, heat and power that this country will get from coal, oil or atomic energy in fifteen, twenty or twenty-five years' time. The only thing that is absolutely certain is that the proportion of coal will be progressively on the decline.

In face of this, and many other facts which have been raised by hon. Members on both sides of the House, we have had complacency—smug complacency—in speeches from the Government Front Bench, and I would not exclude from that description the speech of the Minister of Labour last night. The right hon. Gentleman was not wholly free from it, but I do say that in all these debates, when we are discussing unemployment, there is an air of far greater reality about him than there is about any of his colleagues on the Front Bench.

What did the right hon. Gentleman say? The one thing he was confident about was that there was not going to be any catastrophic decline; those were his words. The figure of 600,000 unemployed was his estimate for the peak at the beginning of the new year. I have no doubt that the Chancellor would call that not excessive when compared with other countries, but I should like to say that there are areas in this country today where unemployment is excessive, I hope, even by the standard of the Chancellor of the Exchequer.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon)

I am sure that the hon. Lady would not wish to be unfair to the Chancellor, who made it quite plain that that was a slip of the tongue, and that what he was doing was comparing the rate of unemployment in this country with the rates of unemployment in many industrial countries abroad. He made it quite plain that what he was saying was that it was extremely low in that comparison.

Lady Megan Lloyd George

I think that, unfortunately, colour has been given to that slip of the tongue by many of the declarations made at various times by hon. Members opposite, and by their general philosophy, of which at times we are more than suspicious, and of which we have grounds for suspicion today.

I was saying that there are areas where unemployment is certainly excessive by any standard. They are areas where the unemployment is not temporary in character, areas where the level of unemployment has remained high and stable, such as Lancashire, Scotland, Wales, Cornwall and Northern Ireland. These are what the Government call "pockets of unemployment", places where the rate is as high as 8, 9, 10 or 11 per cent., and where these high percentages do not by any means tell the whole of the story. There is also hidden unemployment, there is migration and, in addition, the whole of the school leavers have to be taken into account. A neighbour of mine said to a schoolboy the other day in South-West Wales, "What work are you going to do when you leave school?" His answer was, "There will not be any work when I leave school."

In these areas, many of the old signs, all too well known in the valleys, are coming back—all those signs that were so dreaded in the old days—anxious, drawn faces, queues at the employment exchanges, groups of people at the street corners. We have had little information about these areas in speeches from the Government Front Bench. We have heard from the hon. Member for Halifax about practical proposals put forward at the Conservative Party Conference. But during the whole course of this debate, in the speech of the Minister of Labour last night and that of the President of the Board of Trade today, only a small proportion of time was devoted to telling us what action the Government propose to take in these areas. We have been told today and in successive debates in this House that the Government will do all they can to assist new industries going into these areas of chronic unemployment. The progress is hardly perceptible.

I want to give one example, that of Llanelly, one of the blackest towns in the whole of Great Britain in regard to unemployment. In the past eighteen months, five tinplate and steel mills have closed down there, involving 1,700 people. Only one new industry is actually working in Llanelly now, and the employment which it is giving is for twenty-four men and seven women. That is so far the actual practical result in the provision of employment in one of the blackest towns in the whole country. There is another industry to come, and which, we are told, in five years' time will give employment to 500 men, but what is to happen in the meantime?

I want to ask the Lord Privy Seal, who is, I understand, to reply to the debate, what has happened to the two Distribution of Industry Acts. Last night, the hon. Member for Hamilton (Mr. T. Fraser) pointed out that while the President of the Board of Trade was saying in this House that he would not issue development certificates to applicants in the London area, there was two-and-a-half times as much factory building going on in London as there was in Scotland.

This afternoon that was qualified. The President of the Board of Trade gave us some figures for the last three months and said that the trends were reversed. I hope that trend will continue, but we have not seen the results of it yet. The right hon. Gentleman also reminded us this afternoon of the fact that he has refused an industrial development certificate to British Nylon Spinners to build a factory in Portsmouth because, and I use the Prime Minister's words in reply to a deputation, Their problems were not as serious as in some other parts of the country…In these circumstances it was right that permission should be refused to this project. I hope that the Government will continue to carry out that policy.

In this context I should like to ask about another important project. British Nylon Spinners is a large concern. It involves a capital of about £10 million, but I want to ask the Government about the largest industrial project which is planned at this moment for the whole country, namely, the new integrated steel mill of Richard Thomas and Baldwins which will cost about £200 million. Will the Government apply the principle enunciated by the President of the Board of Trade and the Prime Minister to this project, or will they throw the principle overboard and send the project to an area of low unemployment?

If they decide to do the latter, they will have to produce overwhelming economic evidence for that decision. It will not be enough to say to the House that Richard Thomas and Baldwins think that a particular site is a good one or that the Steel Federation thinks it is a good site or that the Steel Board in its wisdom thinks so. The workers in these areas, who have served Richard Thomas and Baldwins well for years and have given of their skill and labour and who may now as far as steel is concerned be thrown on the scrap-heap are entitled to know precisely the extent of the economic margin as between one competitor and another. They will not be satisfied with vague generalisations. To give a very kindly word of warning, if the Government are unable or unwilling to do this, and if they come to the wrong decision they will be providing the best reason yet for the renationalisation of steel.

Wales, of course, does not want to be dependent in the main, or for the production of raw materials. The lack of factories engaged in finishing processes is a very dangerous weakness in the Welsh as it is in the Scottish economy. Therefore, we agree that diversification of industries is absolutely vital in this important area. The Government are committed to that and to the report of the four-man panel. and we hope very shortly that they will be able to announce in the House new projects of a diversified kind that they intend to introduce into South-West Wales.

Ministers continually tell us of the difficulty of bringing new industries not only into West Wales but into North Wales as well. They say that one of the main reasons is bad communications. Yet when we ask the Government to go in for a substantial programme of road improvement we have Ministers saying to us, as one Minister said the other day, "Of course it is a great mistake to advocate road improvement as a sort of relief work just to absorb the unemployed." And this is in a country where less is spent per head of population on the roads than in any other great industrial country in Western Europe, and where the congestion of traffic is costing industry millions in delays.

This argument, like so many that we have heard in this debate, is to me terrifyingly reminiscent of arguments advanced from that side of the House and from Tory benches in the years before the war. In those days many of us supported policies for great programmes of national development, for the re-equipment of the country, for the building of great roads, for the electrifying of railways, for improving transport, building docks, building houses and clearing the slums. If that great policy had been carried out then, how much better equipped this country would have been to compete in the markets of the world today.

I remember that in those days the father of the hon. Member for Halifax, the present Prime Minister, played a respected part in prodding—though not over-strenuously—the Government of his day. We all respected him for doing it. I hope very much that the poacher has not turned gamekeeper. Then the right hon. Gentleman was on the back benches. Then he was complaining that he did not find the ringing lead for which the nation was asking. Now he is in authority; now he is the master. I beg him to give the ringing lead for which he was asking in those days.

8.7 p.m.

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

It is a very rare pleasure for me to be able to congratulate with absolutely complete sincerity the hon. Lady the Member for Carmarthen (Lady Megan Lloyd George). This famous hereditary virtue which inspires her, as it does my hon. Friend the Member for Halifax (Mr. Maurice Macmillan), is something of which we in the House may well be proud.

I have spent a little time this summer reading accounts of events in the House fifty years ago in which the hon. Lady's famous father played a famous part. I understand that in the Session of 1909 the House did not adjourn until the beginning of October, and I believe that it was treated to a very large number of speeches from the hon. Lady's famous father. Heaven forbid that such a fate should come to us and that we should have to sit here until October, but if it should I hope that our lives will be enlivened, as indeed this debate has been enlivened today, by a great many speeches from the hon. Lady.

I cannot follow the hon. Lady, in her remarks, to the hills of Wales with which she is more familiar than I am, but I should like to refer to the speech of the hon. and "learned" Member for Gloucester (Mr. Diamond), for he is indeed a learned Member. He is not naïve or ignorant of financial matters, but I feel that somehow or other in his speech he took credit for an unawareness of which I am sure his many clients would not accuse him.

The hon. Member took advantage of his speech to read again to the House a letter which has had very liberal circulation and of which great use has been made by his party. It has been printed in White Papers and has had the fullest circulation. It was written more than a year ago by somebody who is not a Member of the House to his business partner. I cannot feel in my heart of hearts that such a letter is particularly germane to arguments between political parties, such as have taken place in this debate. Whatever blame attaches to the writer of that letter, it has been amply ventilated in open court and in the proceedings of the Bank Rate Tribunal. I cannot see that at this late stage there is any particular use in bringing it up again, since it makes no additional point.

The hon. Gentleman made considerable play over the increase in Stock Exchange values. This increase is due to only one thing, and that is to the general view of the investing public that the party to which the hon. Gentleman belongs is not likely to be returned at the next General Election. Whether that is satisfactory or not, I can assure him that the explanation is as simple as that.

Mr. Austen Albu (Edmonton)

May I remind the hon. Gentleman that when our party was in office Stock Exchange values went up continuously.

Sir H. d'Avigdor-Goldsmid

I cannot embark on that argument, but I am sure I can convince the hon. Gentleman, when I can get hold of the statistics, that his statement is not 100 per cent. correct. However, if he takes credit for the rises in Stock Exchange values which occurred when his party was in office, it is not a reproach to our party that a similar event should have taken place.

Mr. Albu

I was not taking credit for it. I was simply denying the validity of the argument.

Sir H. d'Avigdor-Goldsmid

Hon. Gentlemen opposite cannot have it both ways. They are always accusing us of not increasing production to the same extent as two kinds of countries. The first are countries where freedom is tremendously curtailed, such as Russia and China. The second are the countries with the most laissez faire economies of any in the Western world, the United States and Germany.

In the people's democracies of Russia and China production can be increased by the simplest methods. I do not think it is necessary for me to go into those now. In Western Germany and in the United States the population is wedded to a very tough philosophy. It is one which I do not think we share entirely. t remember very well being in Germany in 1950 and being horrified by the conditions under which the great mass of the people were then living. The interesting thing was that at that time the German Government had drawn on credit to its fullest extent. Germany had the maximum permissible debit balance at the E.P.U., and a casual observer might have said that its Government was heading for bankruptcy and ruin. In fact the economic policy of the German Government on that occasion paid off in terms of considerable sacrifice by the people of that country.

Last year in America we saw the remarkable fact that at one stage there were 7 million unemployed. Seven million unemployed in the American population represents an unemployment figure here of over 2 million. That is a figure which we could not tolerate and which the population would not tolerate. I am mentioning this fact because it hears out my argument that we are being asked to have our cake and eat it. In other words, we are being asked to avoid unemployment entirely and at the same lime to produce a dynamic economy, a combination which simply cannot be achieved.

Mr. Diamond

Yes, it can.

Sir H. d'Avigdor-Goldsmid

As the hon. Gentleman very well knows, there is a level of unemployment which represents those people who, because of physical defects or for some other reason, are not capable of full employment. I think 1 represent an average industrial constituency. In Walsall there is an insured population of 56,000 and a normal unemployment figure of about 500. Before I was elected I made a study of those 500 people. I found that, although all the factories were wanting more workmen, there was continually this 1 per cent. of the population who could not keep a job. I should not like that to be interpreted as a reflection on them, because no doubt they had physical difficulties which made it impossible for them to keep a job. My point is that this makes nonsense of the argument that 100 per cent, employment is possible in a free society.

Unemployment occurs in phases. In my constituency the unemployment figures did not rise appreciably last year. This was because labour has always been in short supply in the Midlands and labour was hoarded; so last year. although industrial activity was rather dull, there was no increase in unemployment. There was first a stoppage of overtime working. Then there was the point where there was also a certain amount of paid idleness; that is to say, good workers were kept on without much to do and they were encouraged not to work too hard. After this we get to the positive stage of redundancy, and redundancy has been unknown In the industrial Midlands since before the war. That is the point we have now reached.

Here again, we learn from America. America hit this sharp industrial recession last year and accepted a large figure of unemployment. She has produced also a state of considerable industrial efficiency; that is to say, when business has been easy, expenses have piled up, so the first effort was made to cut expenses and the Americans were, in fact, extremely successful in doing this. We therefore got the extraordinary fact that the American steel industry as a whole was able to work profitably on only 60 per cent. of capacity, which is a tribute to the skill of industrial management.

During her speech the hon. Lady the Member for Carmarthen referred to the position in the steel industry in Llanelly. It is unfortunate in the steel industry that where there are great companies shaping, where there are these major developments, the smaller companies are in danger. I do not know of any system in which small and relatively inefficient companies can be kept going except by a subsidy at the expense of the more efficient producers. I am sure that even if the hon. Lady approves of such a thing, her distinguished father would not have approved of it.

Lady Megan Lloyd George

I am sorry to interrupt the hon. Gentleman, but that was not my point. I was simply saying that these old hand mills had closed down. I was not complaining of that; I was saying that if there was to be a new integrated steel mill, it should be put in the same area where there are the steel workers with skill.

Sir H. d'Avigdor-Goldsmid

I am obliged for that correction. The hon. Lady's speech was not altogether favourable to the Government. Most of the points she made were at the Government's expense. If this was one which was not at the expense of the Government, I am glad to have attention called to it.

The fact is—I see it, too, in Walsall—that the older firms of smaller capacity are finding competition very severe. There is, therefore, a constant movement of labour and we should not be surprised at this. If we live in a dynamic economy these situations are bound to continue, and unless we accept a state of having our affairs completely directed for us, we must accept this fact. In their heart of hearts I do not think that hon. Gentlemen opposite want all industrial and economic affairs directed officially and centrally, and so I will not labour that point. There has to be this change from one form of work to another.

The point I wish to make is that in the United States, now that there has been a recovery of the economy from the difficulties of last year, industry is working more efficiently. I have seen the same thing in Walsall. Although there has been an increase in unemployment, there has also been an increase in industrial efficiency. Industry has felt the upturn. It is closely connected with the motor trade, and, having felt the upturn, at the same time it has not found it necessary to increase the labour force. People having been kept in work longer than they were wanted, advantage is now being taken of the more efficient working methods which have been introduced without more people being taken on. I am quite sure, therefore, that we shall see the upturn in trade which is now taking place reflected in full in the unemployment figures, but we shall not see that for another three months or so.

The problem of unemployment is a huge one and there are many hon. Mem- bers on this side of the House—I can count myself among them—

Mr. Sidney Dye (Norfolk, South-West)

One cannot see them present now.

Sir H. d'Avigdor-Goldsmid

May I remind the hon. Member for Norfolk, South-West (Mr. Dye) that, particularly in agricultural debates, there are often not many hon. Members present on his side of the House.

Mr. Dye

But it is never like the present situation opposite. That is like a barren field.

Sir H. d'Avigdor-Goldsmid

To revert to what I was saying—

Mr. James Callaghan (Cardiff, South-East)

The hon. Gentleman was saying that there are not so many hon. Members present on his side of the House.

Sir H. d'Avigdor-Goldsmid

There are not many hon. Members on this side of the House who would fail to agree with me that they would not be in politics if they did not believe that unemployment was the greatest weakness of the industrial system; and if they did not feel also that they could make some contribution to mending its misery by their presence in Parliament. I feel that most deeply. My constituents would not keep me as their Member were I to say to them that it was proper that any large percentage of them should be permanently out of a job—

Mr. Percy Shurmer (Birmingham, Sparkbrook)

But, of course, the hon. Member would not say that.

Sir H. d'Avigdor-Goldsmid

—and they would be quite right. Unemployment is a national problem and the evil and misery it causes is also a national problem, so that I cannot see that any major advantage is obtained by bandying accusations which have no particular substance in fact.

Those of us who have read the Sunday Times recently may have noticed that there are always two ways of winning a battle. One wins a battle on the ground and then one has to win it afterwards in the newspapers and in debate. The substance of the complaint against the Government voiced by the hon. Member for Gloucester was that they won the battle, but that they won it in the wrong way. I advise the hon. Gentleman—I see that he is not present in the Chamber at the moment, but if be reads HANSARD tomorrow he will have the benefit of my advice —to make sure of his place in the Sunday Times. Then he will be able to prove that his way of winning battles would have been the best, if he had been in command at the time.

The battle last year may have been won in the worst way. But it was won, and, because of that, we are able today to enjoy the luxury of discussing in our debate on the Gracious Speech the measures we propose to take to increase the prosperity of this country; so that what was said a few years ago by my right bon. Friend the Lord Privy Seal may perfectly true. The investment in success which this country was asked to make in 1955 has proved a good investment, and no doubt we shall shortly he asked to renew it.

8.25 p.m.

Mr. Cledwyn Hughes (Anglesey)

My hon. Friend the Member for Carmarthen (Lady Megan Lloyd George) has drawn attention with eloquence and force to the acute and often intractable problems existing in Wales at the present time. It remains for me merely to underline and reinforce what she has said.

The position is that the average unemployment figure in Wales is 3.8 per cent. of the insured population. In my own constituency the figure is about 11.5 per cent., the highest for any county in Great Britain. The evil which is now causing general concern has, therefore, been with us for a very long time and during the last few years we have been drawing attention to it in this House by means of Questions and in debate after debate.

We have asked the Government to apply the Distribution of Industry Acts and to operate the industrial development certificates. We have asked for an expansion of public works in order to absorb our unemployed. We in Wales badly need new roads, piped water supplies, rural electrification and sewerage works. As hon. Members will know, progress in all these matters has been slowed down during the last two or three years as a result of Government policy.

I was glad to hear the Chancellor of the Exchequer say yesterday that public investment is to go up by £125 million to £150 million in 1959–60. He made it sound as if he was bringing something new out of the bag, whereas, in fact, he is really doing no more than relaxing restrictions the Government themselves imposed on the public sector two or three years ago. Nevertheless, this will help us and I suppose that we should be thankful for small mercies.

In his speech yesterday, the Minister of Labour spoke of the new Distribution of Industry (Industrial Finance) Act and said that 191 applications for grants or loans had been received by the Treasury. am glad that the Economic Secretary to the Treasury is in his place, because he was closely involved when that Act was going through its various stages in this House. As he knows, Anglesey is scheduled under the Act and we are anxious to derive the maximum benefit from it.

I should like to have some clarification of how the Act is to operate. The position in Anglesey and elsewhere before the Act came into force was that if we wished to induce industrialists to come to our area we could say we would apply for a factory to be built out of moneys from the Development Commissioners; an application would be made to the Development Commissioners, the factory built, and let to the industrialist concerned. But this no longer applies and a new situation arises.

I feel we should have been told of this when the Act was passing through the House, for now we are told that the Development Commissioners will no longer operate in areas scheduled under the 1958 Act. Consequently, we are no longer able to offer this inducement to potential industrialists. We are no longer able to offer factory premises to let and to that extent it seems that we are in a somewhat worse position than we were before the Act came into force. I should like to know whether it is the intention of the Government that that should be the position.

The Economic Secretary to the Treasury (Mr. F. J. Erroll)

indicated dissent.

Mr. Hughes

The hon. Gentleman shakes his head, but what should be our reply if a reputable industrialist comes along and asks, "Can I have a factory which is to let if I enter Anglesey?" or Caernarvonshire, Greenock or any other area scheduled under the Act? I am afraid that we are not now in a position to say that he will have a factory. That was a really substantial inducement we could offer before. Furthermore, does the grant or loan available under the new Act cover money for building factory premises if an industrialist prefers to build his own factory? Can he borrow money from D.A.T.A.C. to do so?

There is a second point about the new Act on which I should like to have clarification. An industrialist applying for a grant or loan is required to fill in a very detailed questionnaire. One question in that questionnaire, which I have seen, is starred as being of primary importance. It asks the applicant whether he can produce evidence that he has tried to obtain money from other sources—presumably banks or financial corporations —before coming to D.A.T.A.C. and has failed to obtain it. If he is an industrialist with a certain amount of financial backing he may say that he has applied to a bank or finance corporation and has been assured that the money is available to him. Will D.A.T.A.C. then say, "If you can get the money from a private source you will not be able to get it from us?"

If that is the position, it is very serious, because the only sort of industrialist we are likely get coming to our areas is the industrialist who lacks financial backing. I do not want to decry the industrialist who is starting out and has not got financial backing. We want them as well, but we also want to be in a position to invite the industrialist who has experience and is also an industrialist of substance. We all want this Act to be effective. I think that it will help us a great deal, but I should like the Government to look carefully at the points I have mentioned as they may prove to be serious limitations upon its effective operation.

My main fear on this general question of unemployment is that the Government do not really know where their own policies are taking them and, consequently, they have insufficient control over the serious situation which is now developing. I submit that there is ample evidence of this. For example, on 24th February the President of the Board of Trade said that there was no national unemployment and he could not see national unemployment arising as a result of the Government's internal measures.

On 30th April the Minister of Labour, speaking in the Second Reading debate on the Distribution of Industry (Industrial Finance) Act, said: I will say we feel that the major problem of unemployment today is not a lack of demand in the economy as a whole, but some areas of high persistent unemployment which cause a great deal of concern."—[OFFICIAL. REPORT. 30th April, 1958; Vol. 587, c. 391.] In his Budget statement, in April, the Chancellor of the Exchequer was a little obscure about the future. He did not seem to know what was going to happen, but one felt that he foresaw that unemployment would increase as a result of the Government's policy.

If the words of the President of the Board of Trade, in February, and the Minister of Labour, early in April, mean anything, they mean that those right hon. Gentlemen did not realise what lay ahead. My complaint against the Chancellor of the Exchequer is that he did not make the position abundantly clear. He should have said, "We can think of only one way to combat inflation, and that is to cut down production. This means that a large number of people will lose their jobs." I cannot believe that anyone really wants unemployment in this country; it is bad for the nation, it is demoralising to the individual, and it creates uncertainty and unhappiness in the community.

My great anxiety now is that the Government are neither able nor sufficiently determined to eradicate this evil.

8.40 p.m.

Mr. Douglas Glover (Ormskirk)

We have had an interesting debate on the Gracious Speech during the last week, and in particular the last two days, when we have been discussing the economic situation. I apologise to hon. Members for the fact that I have not been here during the last two or three hours, but I have been to the Albert Hall, to a great Commonwealth meeting, which I am sure everybody there must have found most inspiring and encouraging for the future of the Commonwealth.

I take this opportunity of congratulating my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) on his preferment to the Treasury. We now have a businessman connected with the economic affairs of the nation. That is a very good thing, and it is all to the good of our economy.

One thing that I have never been able to understand is that, according to all the graphs and figures, during recent years the nation has increased its productivity at a very low rate and yet, using the evidence of my own eyes, I can see plainly the increasing prosperity of the nation.

I shall deal in a moment with the unemployment problem, but I am now taking the picture as a whole. In 1951, the country was short of most of the benefits of civilised life—I am not blaming the present Opposition for that—but during the intervening years the production of all the appliances that make life easier, together with our exports, has been maintained in a most extraordinary manner, bearing in mind the fact that in the last seven years we have had to compete against a revived Germany and a revived Japan, neither of whom existed as a competitor in the years when the Socialist Party was in office. Therefore, I do not think that some of these statistics are very much to go on.

They remind me of the situation in relation to my own business. During the last few years we appear to have been very successful, yet all the statistics that come out show us at the bottom of the league. All our competitors would day that we were doing better than they. Somewhere along the line many of these figures become twisted, and they do not produce the correct result at the end of the day.

I want now to deal with the question of unemployment. All hon. Members are disturbed about it; none of us wants to see people out of work. The increase in unemployment that has occurred in the last twelve months has by no means been caused entirely by Government action, or by action taken in this country, and since both parties have to deal with the economy we should be very foolish if we closed our eyes to the fact that a considerable proportion of that unemployment has come from outside sources. I represent a Lancashire constituency, and the whole of my business life has been Tent in that county. I am very proud to be a Lancastrian. We are suffering from considerable unemployment in the textile industry. The facile answer is, That is because of Hong Kong imports." That is a contributory factor, but it is by no means the whole story.

The textile industry, throughout the world, is going through a recession, but we must remember all the new developments of modern science, and all the new fabrics that are produced. People do not increase their consumption of textiles at anything like the rate they increase their consumption of other goods, in a prosperous economy and with a rising standard of living. For instance, many people now wear nylon shirts. It takes no longer to weave the nylon yarn than to weave the cotton yarn, but the person wearing the nylon shirt requires fewer of them than he did of cotton shirts. The same thing applies in many other ways.

Again, let us take the coal industry. I am perfectly certain that it is not the slack in the economy that has caused the growth of stocks of coal in the last twelve months. What has happened is that there has been a gradual change-over to other forms of power, with the result that the demand for coal does not rise as fast as we should all like to see. This problem exists not only in this country. but in every other coal-producing country, and I am sure that it is right that this House should firmly face some of these issues. The issues are not so much concerned with the type of economic policy that one party or other has followed. They are world forces, and both sides of the House must recognise it.

Reference is often made to the recurrent crises in our economy. When we consider the amount of trade that is done in sterling, and the fact that we finance half the world's credit, the miracle, to me, is that our economy runs so smoothly. The miracle is not that we occasionally have a crisis, but that our management of our affairs is so good that, by and large, with very small reserves, we develop the Commonwealth, we develop the resources of the under-developed countries, and we finance a growing volume of trade.

Both parties might as well face the fact that if the international economic climate turns against us it will not be fiscal controls, physical controls or any other controls that will insulate this country from the effect of those economic forces. What we have to do all the time is to try to keep our economy tight, virile, prepared to accept change and, therefore, always to the forefront.

I should like to refer to a problem that arises in a lot of constituencies, and which exists in my constituency at present. Because of the changed pattern of our defence forces, the War Office has decided to close one of its Command workshops, situated in my constituency. Of course, unless we are very careful, this will create some redundancy. Although everyone in the constituency intends to fight for the retention of that Command workshop—make no mistake about that; everyone in the House would do the same—if, at the end of the day, we lose the fight, we do accept that if we are to change the pattern of our defence forces some of these places will be bound to close down.

The result of that may be some decline in employment in the district, but we have an old naval station. The local authority wants to develop it as an industrial site, but it is in the green belt. What I should like my right hon. Friend to consider is that when these problems crop up in particular areas each Department must not stand on its own rights. I believe that in normal circumstances the Ministry of Housing and Local Government is quite right to protect the countryside, and the green belt. But when there is a site already half prepared for industrial development, it seems to me to be standing on the letter of the law to say that at vast expense it should be converted back to agricultural land. Surely it is better, in those circumstances, to ensure that the area is allowed to be used for industrial development.

I want to refer to the speech of the right hon. Member for Huyton (Mr. H. Wilson) yesterday. When the dust and heat of the debate have died down, I think that right hon. and hon. Gentlemen opposite will be very sorry that the right hon. Member for Huyton spoke as he did. Whether he intended it or not, it will appear throughout the length and breadth of Britain as though he was treating the problem of Britain's economy with levity and irrelevance and was turning what is, in fact, the problem of every man's livelihood, the level of prosperity and standard of living of this country, into something about which one should make cheap and nasty jokes. That speech will be far more valuable to us on this side of the House than to hon. Members opposite.

I am sure that the sound and statesmanlike speech made by my right hon. Friend the Chancellor of the Exchequer is much more in accordance with the way in which people expect the problems of our future and our economy to be dealt with. Even I had a lot of fun; I laughed a lot at the right hon. Gentleman's speech, but I do not think that it was the right speech for the day. It was not the right speech for the subject, and I do not think that history will think that it was very clever.

I wish to refer to the Bill that the Government propose to introduce to help the small farmer. I welcome it warmly. That Bill is definitely necessary to help the small farmers to become viable, efficient and to have the machinery that they require to do a good job in this modern age. I am sure that the Minister is right to exclude those farms which are not viable, and I hope that some provision might be made to help such farmers off the land altogether.

The average small farm comprises an area of land which a team of horses could manage in the horse age. It is what one man with a team of horses could plough himself. With the introduction of machinery, such farm units today need to be bigger if they are to be efficient. Therefore, where we have one unit which can be made viable, and a smaller unit alongside it which cannot be made viable, in the national interest we should encourage the one that can be made viable and try to persuade the other farmer to remove himself from the land so that we should have a slightly bigger unit which is right for the economy at the present time.

This is the closing stage of the debate on the Gracious Speech. During these last few days, I have listened to what I think have been some first-class, thoughtful speeches from both sides of the House. I believe that, although there has been some criticism, the programme put forward in the Gracious Speech is a programme which will do the nation a great deal of good. It is a programme which I have no difficulty in supporting with enthusiasm, and I shall watch with interest the passage of the various Measures to which the Speech referred.

I should like to take this opportunity, if I may, to congratulate my right hon. Friend and his colleagues in the Cabinet for, at this time, producing such a forward-looking programme for us to deal with in the months ahead. I am quite certain that we on this side of the House have shown that we are far more prepared to face the future and look ahead, without turning our minds back to the past, than is the party opposite. As our Measures are brought to fruition we shall gain the increasing support of the electorate for the efforts that we have made. I look forward to the future with confidence.

8.52 p.m.

Mr. Hugh Gaitskell (Leeds, South)

The President of the Board of Trade, in the not very felicitous opening passages of his speech today, complained about the gloom of speakers on this side of the House. He said that hon. Members on this side were out of touch with opinion in the country. He described us, indeed, as "bears to a man." The only evidence which he produced in support of this contention that the country was cheerful was, as one might expect from him, evidence from the Stock Exchange.

The right hon. Gentleman is often out of touch with sentiment in this House and in the country, but I am bound to say that I thought that he was unusually insensitive to the general tone of the debate. The fact is that the speeches during the course of the debate have not been gloomy in the sense that many gloomy prophecies have been made. What has happened has been that a great many hon. Members have been gravely concerned at the present employment situation in their constituencies.

This concern has not manifested itself on this side of the House alone. To my mind, the interesting feature of the debate is that, when we have not been arguing out, as we are bound to do, issues of general policy, when hon. Members have been describing the facts as they see them, there has been a remarkable degree of agreement. Almost every hon. Member who spoke about the situation in his constituency complained of the difficulties.

It is true that on our side of the House there have been many speeches about the position in Scotland and in Lancashire, but, on the Government side, there was. for instance, the hon. Member for Clitheroe (Mr. Fort), who spoke about the situation in the cotton industry. The hon. Member for Bodmin (Mr. D. Marshall) expressed concern about unemployment in his area. The hon. Member for St. Ives (Mr. G. R. Howard) asked that the Government should do something about employment in West Cornwall. The hon. Member for Sunderland, South (Mr. P. Williams) described the plight and worries of the shipping and shipbuilding industry. He spoke of the troubled times ahead for British ship owners and shipbuilders.

Mr. Paul Williams (Sunderland, South)

I should like to apologise to the right hon. Gentleman for interrupting him, but, having painted one side of the picture, I think he will agree that I painted the other side, which was that in some cases there are five years' orders on the books.

Mr. Gaitskell

The hon. Member put both sides very fairly, but the phrase that I quoted from him, I think he will agree, was his summing-up phrase—that there were troubled times ahead for British ship owners and builders.

There is no need for us to get excited about this matter. It is a good thing that hon. Members should honestly say what they find in their constituencies. I am drawing no conclusions, except to say that there is a good deal of concern in the country, as there is bound to be, about the present employment situation. That does not mean that everybody is frightfully gloomy, but the people do have anxieties which they want allayed.

It is not surprising that so many speeches have been made about the position in Scotland and in Lancashire. I myself have recently had the opportunity of visiting both these parts of Britain and it is impossible to go to them without encountering a degree of anxiety and gloom which certainly far exceeds, let me say at once, any that I feel myself. It is possible to go from one part of Lancashire to another, from one cotton town to another, and find it hard to meet any manufacturer or trade union leader who takes anything but the gloomiest view of the situation. One can travel about Scotland, particularly in the area on both sides of Glasgow, in the Clyde area and in Lanarkshire, and again one will find that people are extremely gloomy.

I had a talk with the members of the Scottish Board for Industry. Both sides were represented. It was a private conversation and, of course, I cannot disclose the content of it. But, there again, I found a great deal more gloom than i felt. I think that we must admit, and it is well that we should, the degree of concern that exists. On short tours of this kind one cannot hope to assimilate the amount of information which I know many hon. Members have. I should, however, like to make three comments on my impression of the position in Scotland.

First, there can be no doubt whatever that in Scotland the recession, which, of course, is a great deal worse than it is in England, is chiefly the result of the investment cuts and the credit squeeze applied a year ago. It is not, in my experience, nearly so much the result of a fall in exports. The reason for that has been implied in a number of speeches, which is, of course, that Scotland is peculiarly dependent on heavy industry which has been so greatly affected by the Government's policies.

Illustrations of this are not difficult to find. There is the steel position in Scotland. I believe that over the country as a whole the steel industry is working at somewhere between 20 and 25 per cent. below full capacity. When I was in Scotland it was working at 60 per cent. of full capacity. Even the most modern steel works in the country, the Ravenscraig works—a wonderful factory which was only recently completed—was working at two-thirds of its capacity. In the neighbouring districts in Lanarkshire, where there are, unfortunately, a great many old steel mills, virtually all of them were on short time, and the general feeling was that they simply could not survive in existing circumstances.

I visited a firm in the Clyde area which produces mining machinery. I had rather an interest in it, because it so happens that I opened the factory when I was Chancellor of the Exchequer some years ago. It is a firm of first-class reputation. It has an American subsidiary and it is well known to many hon. Members. It is producing a wide range of different mechanical units. The situation I found was that, for the most part, this firm was simply making to stock. The fall in its orders, almost all of which came from the National Coal Board, was, frankly, catastrophic. It was running, I suppose, at about 20 per cent. of the orders that it has normally expected and received in previous years. I was told, "We can go on like this for about six months. We will try to develop other lines, but unless the position improves we shall have to close down." That fairly broad hint was frankly given. This was in one of the worst areas in Scotland.

Again, I draw attention to the fact that that was the direct result of Government policy. Either it was because the Coal Board had been obliged, as it was, to cut back its investment programme, or it was because, owing to the glut in coal and the large amount of stocks that are accumulating—itself the result of the industrial recession—the Coal Board had, naturally, held back further orders for mining machinery.

My second point is perhaps an obvious one, but it is worth making. Let us not overlook the local repercussions which inevitably follow when this sort of thing gets under way. I am not thinking so much of the fact that if one talks to the managers of employment exchanges one finds unemployment in distribution or in building, or that, as I was told in the Glasgow area, about one clothing factory is closing down every month.

I came across what was, in a way, a more interesting case. I went to see a large factory in Glasgow—it will be known to my hon. Friends from Scotland —which is owned by British Railways and is concerned with the maintenance of locomotives. One would have supposed that the job of keeping locomotives in proper condition, of stripping and rebuilding them, and so on, was a fairly steady affair. About 2,000 people are employed at the works, but it was facing redundancy. The reason for this is the fall in the amount of traffic carried on the railways, which means that the locomotives were coming in less frequently for repair and maintenance. That is the kind of consequence which, perhaps, we do not often think about, but the workers in that workshop were thinking about it.

Mr. Geoffrey Wilson (Truro)

Is the right hon. Gentleman satisfied that the diminution in work in the maintenance of locomotives has nothing to do with dieselisation?

Mr. Gaitskell

I was quite satisfied about that. I discussed it with the manager of the works. There is not the slightest doubt that, although the point made by the hon. Member may arise later, the railways are carrying less freight because of the decline in the heavy industries; and because of this, the mileage which each locomotive has to cover before coming in for repair takes longer. It was not a very serious redundancy problem, but everywhere I went in that factory people came up to me and said, "What are you going to do"—they all seemed to think that I was able to do something about it—"about the redundancy here?" All I can do is to pass this on to the Government and make them aware of it.

Another point, which has not been mentioned in the course of the debate, is the repercussion on the finances of the Transport Commission. There has been a good deal of criticism of the Commission from the Government and we are extremely critical of the way in which the Government have handled their relations with the Commission over the last few years. It is inevitable that the Commission's financial position is greatly affected by the fall in freight. We are not taking it from the Government that this is in any way the responsibility of the Commission. The responsibility for this financial situation rests fairly and squarely on the Government benches.

The third and more obvious point is that although, I believe, local action is desirable and certainly should be taken on a much larger scale by way of bringing lighter industries into Scotland, nevertheless I am convinced that the solution for Scotland, as, indeed, for other similar areas, must be dependent upon general recovery and general expansion. We can induce firms, by giving them special terms, by building factories for them, to go into the special areas. That has been done under, let me say at once, both Governments. There was an argument earlier today as to who had done the most. However, if we want to carry out that policy effectively we have also to apply the policy of steering firms into those areas, which means saying to them, "You must not stop here, or there, but you must go somewhere else," and for that to be said effectively firms must want to set up somewhere else, and that means that there must be industrial expansion.

As to the Lancashire situation, a great deal has been said on that, and I should like only briefly to comment on it. The thing which impressed me most, touring those Lancashire towns, was the speed of the decline of the industry. One felt that the people themselves were simply amazed by this. Once again, of course, general recovery is related to the problem, because as the President of the Board of Trade quite rightly said, as expansion takes place there will be greater demand for clothing, and so on, but, as he himself rightly admitted today, matters really cannot be left like that. Unless we are prepared to sit back and see this industry virtually disappear Government action is essential.

I was glad to hear the President of the Board of Trade declare that he was against unregulated free trade. That is something of an advance, but I notice that he relies wholly on voluntary agreement. That is all right for a start, but suppose we cannot get voluntary agreement. Do we sit back and let the industry decay? Or are the Government then prepared, as we are, to use Government action to give it the necessary breathing space? It is the same in regard to the organisation of the industry. [An HON. MEMBER: "What action?"] Our policy has been made clear, and I do not want to spend too much time on it now. That is the only reason why I will not repeat it.

The President of the Board of Trade referred to the need for pruning in the industry, the need for rationalisation. We do not disagree, but once again he says the Government will not do anything but must wait for the industry to proceed. The experience we have had of the cotton industry does not make us very hopeful about that. I do not believe it is good enough to leave it to the industry. Government initiative is essential, too.

I return to the general situation, and the first question is: how seriously should we take it? It is partly a matter of standards, and here I must refer to my own statement in 1951, which has again been brought up in this debate, to clear up the matter. I hope once for all. In announcing what was called the "3 per cent. full employment standard" I said this: It must he stressed that the choice of this standard does not mean that the Government would allow unemployment to reach 3 per cent, before taking vigorous counter-action. It will be a continuing objective of the Government's policy to counter any unfavourable trend in employment and to take special measures to deal with those areas in which unemployment has persisted at a comparatively high level."—[OFFICIAL REPORT, 22nd March, 1951; Vol. 485, c. 320.]

Mr. Cyril Osborne (Louth)

That is true today.

Mr. Gaitskell

I am dealing with the allegation constantly flung across the Floor of the House, and put out in all the Tory propaganda papers, that I am content with 3 per cent. unemployment. It is simply not true. The figure of 3 per cent. Was chosen—remember it well—because we were anxious at that time to try to get internationally agreed action against unemployment if it came, and we knew perfectly well that if we put too low a figure, the figure of 2 per cent., which would have been more appropriate, or even less than that, in the light of our experience, there would have been no hope of getting any co-operation from the American Government. I hope that we shall hear no more about that, and I will leave it at that.

What about the prospects? The Minister of Labour referred last night to what I said recently in a speech at Cambridge, and I repeat it. I have never supposed that there was going to be a major slump, and, in my opinion, there is no likelihood of that. Such a major slump is likely only if it is on a world scale, and there is really no sign of that at present. Secondly, I have said that I think there will be some recovery in the course of the next year, and I adhere to that as well. I am not going to prophesy exactly, but, nevertheless, I will make these comments on the speech of the Minister of Labour.

Despite, in a way, the relatively optimistic flavour that he gave it, we cannot ignore the fact that, except for July and August, for a long time now the gap between last year's unemployment figures and this year's unemployment figures has become larger by 30,000 more unemployed each month. In other words, quite apart from the seasonal factors, unemployment is increasing at that rate, and exactly the same applies to the October figures which he gave. There is, therefore, no change, as far as we can see, in the general trend as yet.

Secondly, I would say that there is undoubtedly a very great deal of underemployment in this country. This is clear from the fact that production has, in fact, fallen more than employment, and that means that it is much more likely that we shall get a recovery in production before we get any recovery in employment. Thirdly, I would underline what my right hon. Friend the Member for Blyth (Mr. Robens) said this afternoon. I beg the House not to overlook the human and psychological consequences of unemployment, even on this scale. It can be extremely bad for industrial relations, it can hamper considerably the efforts which have been made by so many people to try to get people more productivity-minded, it can lead to monopolistic tendencies, and, therefore, in all these ways, can hamper our recovery if it goes on much longer.

Finally, I would say that, however we may judge the present situation, the fact is undeniable that we are now in the middle of the most severe industrial recession in employment and production since the war. That cannot be denied. It cannot be denied, either, that this recession follows a period of industrial stagnation running over about two and a half years. This is a matter to which I will return later.

The second question, a more controversial one, is: was this unemployment necessary? The Government's case is that they had to apply restrictions because they could not allow the inflationary boom to go on, because, otherwise, there would either have been what the Minister of Labour calls a major slump, or, as the President of the Board of Trade says, there would have been a devaluation.

My first point about that is this. If, indeed, this allegation is correct, and we had to have a recession because we were in an inflationary boom which could not be allowed to continue, who was responsible for that? There they are, two of them sitting there, two previous Chancellors, while another one who usually sits on a back bench is not there—the "right hon. unmentionable," as my right hon. Friend the Member for Huyton (Mr. H. Wilson) called him yesterday. The guilty men might, perhaps, have been calling themselves to repentance, but there has not been much sign of that.

I must say that it is very tempting for us in the Opposition to leave it at that, and to say, "You have a recession, and you were responsible for it, because of the inflationary boom which you encouraged." But I cannot do that, because I do not believe that the evidence supports the view expressed by the Minister of Labour, the President of the Board of Trade and the present Chancellor of the Exchequer. Yes, the right hon. Gentlemen were guilty all right, but they were guilty of other crimes. They have accused themselves of the wrong ones, that is all. The crimes of which they are guilty were holding the country back from expansion, not creating inflation, arid if hon. Members doubt my words on this let them consider, for instance, the balance of payments position. It was quite favourable last summer. Was there any sign of a boom as far as production was concerned? None whatever.

If hon. Members doubt my views on this, I would refer them to that eminent Conservative economist, Mr. Harrod, who has, I think, very recently been trying to secure a seat in the House to sit on the benches opposite, and who, indeed, I am bound to say, would be a great reinforcement to the benches opposite on economic affairs. [An HON. MEMBER: "Who is he?"] He is a member of the hon. Member's party. Let me just recall what he has recently said about this matter: It ought not to have been possible, for instance, for anyone supposed to be knowledgeable and sensible, to have said in September, 1957, that inflation was rampant in England. He described the policy as an utterly untimely one of restriction far more severe than anything adopted, when it was really needed, in 1955. As to the action of authorities now praised to the skies by hon. Members opposite he describes that as "an appalling shemozzle", and the verbiage which accompanied it as an outburst of gloom and nonsense". Right hon. Gentlemen opposite can choose what they like, either accept their own allegations against their past or admit that the policy in 1957 was totally unnecessary.

There is, of course, another possibility and that is to accept what seems to be implied in the speech of the President of the Board of Trade, and that is that whether or not the balance of payments was favourable there was speculative movement against sterling and in those circumstances we had to take action. Are we to accept that whenever the Zurich bankers, the new-found friends of the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) take a gloomy view of sterling, for what may be quite irrelevant reasons, we in this country are obliged to cut back our production and employment for a year? I should be surprised that any party in this country would really adopt an attitude of that kind. Yet it was what, fundamentally, the President of the Board of Trade was saying this afternoon.

It may be said, "Never mind about exactly what happened in 1957. Look at the results." Well, was the deflationary policy responsible for an improvement in the balance of payments? I would not deny for a moment that, if one wishes, one can apply the most stringent deflationary policies, one can create hundreds of thousands, even millions, of unemployed and, very probably, having done all this and screwed down production and employment here, we should have a record surplus on the balance of payments. Of course, it is true that we can cut down imports and push up exports if we want to deflate that way. It is fine for everybody except the unemployed. But it means cutting down imports and pushing up exports, and that is not what happened in 1957–58.

We all know perfectly well why the balance of payments has been so favourable. It is overwhelmingly due to the fall in import prices. Whatever the Chancellor may say, that is nine-tenths of the explanation, and it would have happened in any case whatever we would have done here. But I say to the House that it should remember that this fall in commodity prices, which has been such a help to the country, was at the expense of a good many millions of extremely poor people in Asia and in Africa.

The President of the Board of Trade referred today to the growing gap between the richer and the poorer nations. I am glad that he has made that discovery. We made it some time ago, but what happened last year has increased that gap. The right hon. Gentleman referred also to the race in living standards between the Communist countries and the free countries in Asia and Africa. Let us face it. What has happened has certainly meant that in that race the free countries have fallen behind. So please let us have a little less boasting about the "little bit of luck." To secure some rise in. consumption despite lower production, for that certainly has happened, at the expense of the unemployed here and at the cost of millions of people much poorer than ourselves, is not a policy which anybody should recommend.

Therefore, we do not believe that the unemployment which we are now suffering from was in the least necessary. We do not believe that a credit squeeze was called for. We think that it should have been called off long ago, and when the Chancellor says that measures of the kind he announced took time to operate our comment is, "Why on earth did he not operate them earlier?"

This needless loss is not only for last year. It is not, I repeat, just a reaction from a boom. Hon. Members must not forget the salient fact about the present situation, which is that British industry is today producing less—2 or 3 per cent. less—than it was three years ago, in 1955. I repeat something which I said the other day. The record since 1951 is this: an average expansion of industrial production up to 1955 of about 3 per cent.; since 1955 to the beginning of this year, no increase at all; since the beginning of this year, a decline in production. That is the record of the Tory Government since they came into power in 1951.

It is all very well to speak in general terms—[HON. MEMBERS: "Oh."] All right, then hon. Members would like to be reminded perhaps that we are now producing less china, less glass, fewer bricks, fewer non-ferrous metals, fewer commercial vehicles, fewer metal goods, fewer precision instruments, fewer textiles, fewer leather goods than we were in June, 1955.

Mr. Osborne

rose—

Mr. Gaitskell

If the hon. Gentleman wants to have it in concrete terms, he can have it.

Mr. Osborne

What about 1951?

Mr. Gaitskell

Now we hear that we are poised for expansion. We have heard a good deal about being poised for expansion in the course of the last three years. Almost every Chancellor —and there have been several of them—who has spoken, has talked about being poised for expansion. The right hon. Gentleman the Member for Monmouth (Mr. P. Thorneycroft) talked about 1956 when he made his Budget Speech in 1957. He described 1956 in these terms: A picture not of industrial apathy but of a nation girding itself for renewed and greater effort. Well, did we get the greater effort? No, indeed we did not. We had a further period of stagnation and then a downturn.

We are told that thanks to what was done last year we can now expand. Does this mean that, having gone down the hill, we simply march up again? Does it mean that we stop production at the level at which it was in 1957? Why should it be supposed that unless the Chancellor takes special steps to stop them, the very evils of which he is so frightened will not recur as soon as he lets up?

The Chancellor speaks of aiming at "the highest level compatible with price stability." Supposing the Government fail to prevent a rise in retail prices in the next few months, do we have another credit squeeze? [An HON. MEMBER: "A General Election."] We will come to that later. After all, such stability as there has been is, as the Chancellor himself admits, solely due to falling import prices. Will import prices go on falling? Almost certainly not. Supposing world prices rise. Does the Chancellor mean by this phrase that we are to have more unemployment here?

No doubt, as an hon. Gentleman has said, the nearness of the Election will decide. We shall go on until the next crisis. The tactics of 1955 will be applied again. But I do not myself believe that the electors will be deceived twice.

Our opposition to the Government is not against the fact that very belatedly they are now pursuing expansionist policies. It is that they have no plan, except a further damping down of production, to prevent this expansion from developing into inflation. Apart from a vague appeal for wage restraint, nothing said from the Government benches has any bearing on this vital problem. All we hear today is further talk about more decontrol, and convertibility, and freedom to residents here to export their own capital. All we hear from the President of the Board of Trade is a boast about allowing in more dollar imports.

Our view is quite plain. We believe that the country should aim at the most rapid expansion which is technically feasible, given the limits placed on our resources. We believe that industrial production should continually he rising and could continually be rising at, say, 4 per cent. a year, and not be lower than three years ago as it is now. Of course, we must have a level of demand which is not positively driving up prices. But we believe it is possible to have this expansion without inflation, given two conditions.

The first condition is that we are not afraid to use controls to check inflation. We say, for instance, that it is more important that we have expansion and full employment than to give freedom to British residents to send their money abroad. We say that there is no fundamental reason why, if it be necessary, we should not check imports which are less essential so that we can go on buying the materials we need to sustain the expansion. The vast majority of the Commonwealth countries have such controls today and there is really no reason in principle why, if it be necessary, we should not use them ourselves.

We believe it better to keep some control over industrial building rather than to have either the slack in the building industry which we have, or a raging, tearing inflation in that industry. We believe that instead of trying to hold down wages and cutting back production and employment, it is wiser to encourage such a rise in productivity as will balance a rise in wages. We are far more likely to get stable labour costs—about which the Chancellor said nothing at all, and which is the heart of this problem—if we expand industry than if we go in for a policy of restriction. But we know, and I fully agree, that a successful anti inflation policy also involves, and must involve, close co-operation between the Government and the unions. It must further involve policies of social justice and measures taken by the Government which make that co-operation possible.

During these last few days we have been discussing what is, I believe, the greatest issue of economic and social policy confronting not only our nation, but the whole of the Western world. It is the fact, whether we like it or not, that the Soviet and Communist bloc, Russia and China, are marching ahead, that their industries are expanding rapidly year by year. They may have occasional checks, but of the speed of that expansion there really can he no doubt. We abhor their political systems, but we have to see that here in our democracy we can go ahead just as fast. Because, if we cannot do this. we have lost the cold war—it is as serious as that.

We say that we shall never win this race, we shall never keep up with the speed of expansion in the Communist dictatorships, if production is continually checked, as it has been in this country in the last few years and, to some extent. in other Western countries. This means that we must have a Government who will use the powers at their disposal to check any tendency to inflation while stimulating expansion, and who will, by their social policies, secure the necessary co-operation in the community.

The plain fact is—the facts are undeniable on the basis of the last three years—that we have now had a period of stagnation—we have not even had stable prices—and we have a Government with a policy which is completely unfitted to deal with the problem of inflation which will come next upon us. In the circumstances there is only one thing to be done. That is to get rid of a Government which base themselves on a policy of laissez faire and to put into office a Government which can carry out the only policy which can guarantee expansion without inflation.

9.30 p.m.

The Secretary of State for the Home Department and Lord Privy Seal (Mr. R. A. Butler)

It is customary for the Leader of the House to wind up, as it is called, the debate on the Address. It is usual on this occasion to make some reference to the general debate which has taken place over six days. If I may be excused, I shall concentrate chiefly upon the issues to which the right hon. Member the Leader of the Opposition devoted his speech, as not only do I think that would be courteous but I think that would interest the House this evening. There are, however, one or two other matters to which I must make reference before coming to that main issue.

First, I should like to refer to two notable maiden speeches made by my hon. Friends the hon. Member for Argyll (Mr. M. Noble) and the hon. Member for Weston-super-Mare (Mr. Webster). I should like to congratulate them on their speeches and upon their brevity, which will endear them in future to the House. We hope that on many occasions we shall hear them in speeches so short and sweet.

The right hon. Member the Leader of the Opposition referred to tours he has made in Scotland and Lancashire and, if I may, in the short scope of the speech I have before me I shall make some reference to some of the points he has made. I should like to refer in particular to the situation in Northern Ireland, to which the right hon. Member did not refer, but which I feel sure he has also had in mind and which was referred to by the right hon. Member for Blyth (Mr. Robens). I think we should pay attention to the speeches made by my hon. Friend the hon. Member for Belfast, West (Mrs. McLaughlin) and my hon. Friend the hon. Member for Belfast, East (Mr. McKibbin). I know, from my responsibility as Home Secretary and my recent visit to Northern Ireland, how very severe the incidence of unemployment is in that area.

This is a particularly difficult problem. The area depends upon Government orders. I feel that in a small respect the statement made by the President of the Board of Trade today about extra Export Credits Guarantee Department credits for the Britannias in particular will do something to help one of the industries in Northern Ireland. If it does, I am sure all will be well satisfied. It is a subject which occupied my mind as Chancellor of the Exchequer and now, as Home Secretary, I should like to tell the hon. Members from Northern Ireland that their problem, a very intractable and difficult one, is always very much present in our minds and the mind of the whole House.

A variety of subjects have been discussed in the debate on the Address. On Friday I had to make what I am sure the House must have found a very long speech on crime. When I turn again to my old love, economics, I wonder which is the more difficult, morals and ethics or the sphere of economics. I find it very hard to say. I saw a letter in The Times today which suggested that by legislation the Government could bring in a better moral and religious situation. That I very much doubt. I think there are other agencies besides the Government and the House of Commons which could improve morals and the religious life of the public. Similarly, in economics we do not depend on legislation but on such actions as I shall describe shortly to the House.

This is an occasion when we have had a Gracious Speech to both Houses of Parliament, delivered on Tuesday, 28th October, and televised for the first time. I do not wish to make any final observations on that at this moment, but I should like to say, not only on behalf of those on this side of the House but I hope on behalf of those on the other, that we shall want to consider very carefully the various reactions to this event and to consider its future. I hope that in doing so we may have the collaboration and co-operation of the right hon. Member the Leader of the Opposition and his hon. and right hon. Friends. I do not think we can draw any further conclusions at this moment.

We can be very well satisfied that the Socialist fears—which are typical of the many fears and apprehensions they have put forward over the years, and on which they were so vocal four years ago—that the American, J. Fred Muggs, the chimpanzee, or one of his relatives, would be appearing during the televising of State ceremonies, have proved unfounded. That fear seems strange today. We have avoided such terrible dangers, and the problems that we shall have to discuss are rather different from that.

I shall be dealing with the speeches of the Leader of the Opposition and of the right hon. Member for Blyth, but I want, first, to gay a word about the speech of the right hon. Member for Huyton (Mr. H. Wilson). His speech has been criticised, and it was very well described by my right hon. Friend the Chancellor of the Exchequer as "a comedy of errors". I do not object to a little bit of 19th century invective—in fact, I enjoy it very much and I think that it is very valuable to our debates—but I am wondering where the right hon. Gentleman's "fighting policy for Labour" is. There was no reference to a positive policy on the part of the Labour Party in any speeches that we heard from hon. Members opposite. The right hon. Gentleman kept off this because he has nothing constructive to state.

It would appear as a result of our debate that right hon. and hon. Members opposite are waiting for something — and I have discovered what it is. I have discovered that the Daily Mirror, and what it refers to so felicitously as the "Left Wing weekly", Tribune, are issuing a £500 prize for an essay in a competition for precisely this subject "A Fighting Policy for Labour". I have searched all back versions of this newspaper, of which I am a daily reader, and I find that Members of Parliament are prohibited from applying or sending in contributions.

That is perhaps not surprising, judging by the speeches that we have heard from hon. Members opposite. It is also the case that practising journalists—and this affects the hon. Member for Coventry, East (Mr. Crossman)—will not be allowed to go in for the competition. The judges are to be Mr. Frank Cousins, Mr. Michael Foot, Mr. Malcolm Muggeridge, and Mr. Sydney Jacobson. I hope that as a result of this competition, when we next have a debate upon the affairs of the nation, such as used to grace the affairs of Parliament in the 19th and the early part of the 20th centuries, we shall have something more constructive from this source than we had from the right hon. Gentleman.

The Opposition have raised many of the old hares, but there is no old hare which can be taken—if I may mix my metaphors —more seriously than the one of destroying the social services and bringing back unemployment. The right hon. Member for Blyth said that the Conservative Government did not believe in full employment; he said that we believed in living in sin, and not in honourable marriage. I think he intended to convey by those observations that we had never had a low and reasonable level of unemployment, or a high or stable level of employment, and that we had in fact been living in sin. What is the truth of the matter? Taking the average over our seven years of Government, the level of unemployment has been universally low—much lower than at any time in the period of office of hon. Members opposite. There is no doubt that our policy in this respect is absolutely respectable.

Looking back over past Amendments, I find one in 1952 which refers to our policies as being those which threaten a return to the social conditions of the inter-war years. That reminded me of the speech of the right hon. Member for Llanelly (Mr. J. Griffiths) in the course of our debate. I remember the right hon. Gentleman's speeches when things were really bad, in the 1930s, and I do him the justice of saying that no hon. Member was more sincere in putting before the House the views of Wales in those hard and stricken years. I was Parliamentary Secretary to the Ministry of Labour at the time. My job was to go round the labour exchanges, whether in South Wales, in West Cumberland. on the East Coast or anywhere else, and there is deeply imprinted on my mind, as there must be on the mind of any sane and humane Member of this House, the determination that we must not again return to such conditions. That is the determination of the Government.

The right hon. Gentleman the Member for Llanelly, referring to the constituency of the hon. Member for Nelson and Colne (Mr. S. Silverman)—who has an Amendment on the Paper, to which I, therefore, wish to pay attention—spoke of the position in Lancashire, to which the Leader of the Opposition also referred. He referred to this position in the most moving terms. He said that whole communities were destroyed. He was harking back to the language he used in the 'thirties.

Nevertheless, while I believe that the position in Nelson and Colne is particularly difficult, the position in Lancashire has been supplemented by the change of industry, and alleviated. That, of course, does not mean that it is not still serious. Cotton, despite the fact that it represents a very small percentage of the total labour force in Lancashire, still remains the most important single industry in Lancashire, and it is the Government's intention, as was said by my right hon. Friend the President of the Board of Trade, to do the utmost they can to achieve agreement with those nations which are dumping their produce in Lancashire.

We believe that that is the first step We believe that we should take that step successfully before contemplating any other, and on behalf of Her Majesty's Government I say to hon. and right hon. Members that directly we have any news about the Hong Kong negotiations we shall give it to the House. We are sorry that that news is not available this evening.

Coming to this claim that we are attacking the social services, I noticed that the right hon. Gentleman the Member for Blyth was particularly sensitive, earlier in this debate, about a quotation from a speech he made on 10th November, 1952, about the possibility of there being a million extra unemployed. For the purpose of greater accuracy, I obtained a copy of HANSARD, and I have the statement here.

I do not wish to pursue that—it is history—but I remember that, in the same debate, he used an expression which seems to me still to be prevalent in the minds of the Labour Opposition, and is one reason why the country think that they are totally and absolutely out of date.

The right hon. Gentleman said: …the back-benchers on the Government side…have taken off the sheep's clothing which they donned during the General Election and they now stand as the wolves with their teeth bared and with the axe in their hands ready to cry out… I was not surprised that when I examined this report in HANSARD I found in that familiar bracket—as I find in so many of my speeches— especially when I am winding up—the word "Interruption"—which means that there was total chaos. After that, the right hon. Gentleman was heard to say, as recorded in the OFFICIAL REPORT: I should have thought it was possible for them to have their teeth bared and to carry an axe at the same time."—[OFFICIAL REPORT, 10th November, 1952; Vol. 507, c. 706.] If that is the description of my right hon. and hon. Friends, I should imagine that we have new aspects of crimes of violence to which I, as Home Secretary. should turn my attention at once.

When we turn to the realities of the social services, what do we find? We find the right hon. Gentleman the Member for Huyton writing in his Election address in 1951: The Tory Party, representing the financial interests of profiteers, high finance and big business "— this is the old-fashioned stuff upon which the party opposite is still living: would destroy the social services in order to reduce taxation on the rich. What, in fact, is our record? It is that we have not only reduced taxation to the tune of some £900 million a year—about which I, in all modesty, may say that in my five Budgets I managed to reduce it by £800 million—but we have also managed to improve the social services. We have raised pensions three times, and we now propose to develop a substantive and, I hope, a humane scheme as a result of the publication of our White Paper. I should like to say, in answer to requests made during the debate, that it is our intention to provide a very early day for a debate on the White Paper on Pensions. It is our intention to pay attention to the criticisms made by the House before we finally draft legislation on this vital subject.

Not only have we had success with that, but we have also made headway with the first hospital building programme since the war. We now propose a major Bill, which I think I can honestly say we have no possibility of producing before Christmas owing to its size and the extent of consultations with local authorities, in the field of mental health, a subject which I do not think will be politically controversial, but it will represent a major move forward in the social field.

We have already built five times as many schools as right hon. Members opposite have, and we now propose in a White Paper to indicate further developments in the scope and quality of secondary education. I always said that it would take a generation to bring in an education Bill in full, and I hope that in our generation we may make a great deal more progress on reorganisation and making secondary education for all a reality.

There was no mention of housing in the debate on the Address, and that was the subject of intense discussion last year on the basis of an Amendment moved by the hon. and learned Member for Kettering (Mr. Mitchison). I would refer only to two matters—to house purchase and the question of further expansion. On both these we shall be issuing a White Paper tomorrow and, therefore, I will not refer to it further now, but I would say, in answer to questions asked during the course of the six days' debate, that it is proposed that advances should be made not only by building societies of 100 per cent. but also by the local authorities to the tune of 100 per cent. to those who propose to purchase houses.

Mr. H. Morrison

I am glad to hear that, but can the right hon. Gentleman say whether, as finances are being made available to the building societies, similar facilities will be made available to the local authorities?

Mr. Butler

The important thing is to await the White Paper which will be ready tomorrow.

The right hon. Member for Huyton referred to my right hon. Friend the Prime Minister, and I would only say this in connection with this subject of housing. The right hon. Gentleman referred to him as having an amnesia about the years 1951 to 1957. Those were the years in which my right hon. Friend made a unique contribution to social investment by building 300,000 houses and more. That is something which I think indicates not only his belief in social expansion but also his contribution to this vital subject.

Mr. A. Blenkinsop (Newcastle-upon-Tyne, East)

rose—

Mr. Butler

We must await the White Paper which is being published tomorrow.

There has been very little reference to agriculture in this debate, but while we are referring to production I should like to say that in agriculture the value of gross output from farms has increased from £1,159 million in 1952–53 to £1,472 million in 1957–58. We are now 63 per cent. above pre-war production, and I hope that when we get the Bills on the small farmer and on the Agricultural Mortgage Corporation we shall be able, through them, to pay some tribute to the work of farmers and farm workers in this exceptionally bad and disastrous harvest year.

The Amendment calls attention to measures directed towards the expansion of production and employment… and stability of prices. I think the right hon. Gentleman did less than justice to the question of stability of prices. They have been virtually stable for the best part of ten months since last September.

The measures which the right hon. Gentleman asked about in his speech and which he mentioned in a recent party political broadcast—very much the same as he mentioned in his party political broadcast—were brought in, in fact, before he made the broadcast. There has been, for example, the reduction in interest rates. There is now the relaxation on hire purchase. There has been the removal of the credit squeeze. There has been the speeding up of investment in the publicly-owned industries. There has been hospital building and house building. Road building has advanced by 30 per cent. more than we anticipated during the course of the past year. There have been relaxations on restrictions of investment. We have steered industry to areas where it is most needed, and we propose to continue to do so.

Moreover, in reply to the right hon. Gentleman the Member for Blyth who spoke about investment, I can say that fixed investment, which is the true source of wealth, is at a record figure today. In the first half of this year, it was still growing, and was then 3 per cent. above last year. This represents double the rate in 1951, and is 60 per cent. above it in real terms.

The right hon. Gentleman the Leader of the Opposition referred to private investment. The Chancellor of the Exchequer in his speech in this debate said: I must say I have been impressed by the resilience which it has shown so far "— that is, private investment— 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, of initiative and invention are dying out."—[OFFICIAL REPORT, 3rd November, 1958; Vol. 594, c. 642.] My right hon. Friend said in the same speech that he had been warned that private investment might go down, but that is by no means certain. In view of the uncertainty, he has looked ahead.

The right hon. Gentleman asked me specifically why we had not taken steps earlier. I can reply to him, as my right hon. Friend did in general terms in his speech, that, during the summer, in early August, the Chancellor of the Exchequer thought that further short-term measures were essential. He therefore authorised the spending of about £30 million in high unemployment areas. I had to deal with the depression in 1952, which we survived, the unemployment in which we conquered. I had only £20 million to spend voted by this House, for the purpose of housing allocations, the maintenance of hospitals, the maintenance of Government buildings, telephones. and many other expenses, chiefly in areas of high unemployment.

These things were foreseen as early as August last, and those measures have been followed up with the undertaking by my right hon. Friend that investment in 1959–60 will be at a level between £125 million and £150 million additional to the total in 1957–58. This, I think, indicates that we have foreseen in time the necessity to take the right steps to deal with a possible deflation in the economy.

It would be wrong to imagine that we have stagnation. Electricity generation, for example, is up by 10 per cent. between 1957 and 1958. Petroleum deliveries on the home market are up between 1957 and 1958 by no less than 20 per cent. If we take the example of motor cars, for the first eight months of this year they are up by 26 per cent. as compared with the same months of 1957.

I believe that, if we take the figure of consumption, which is now running, for the first half of 1958, 2½ per cent. above the level for the first half of 1957, we see that we are not approaching anything like a major slump. In fact, if we proceed at an annual rate of increase in consumption of 2½ per cent., we shall double our standard of living before twenty-five years have passed, instead of in twenty-five years, as I have suggested.

I have not time tonight to develop the overseas opportunities which have been arranged by the skill of my right hon. Friend the Chancellor of the Exchequer. The fact is, that, with increased liquidity and the ending of the American recession —in 1949, it was less severe, yet, as the right hon. Member for Huyton said, it knocked away the whole of our prosperity and led to devaluation—there is genuine hope for our exports combined with this expansion at home.

We have, therefore, to decide which policy is best for us—that of Her Majesty's Government or that of the Opposition. The Labour Party is very prone to tell us about the increase in production whilst it was in office. It tells us, and this was repeated in the debate, how many schemes, both overseas and at home, it could have financed if that rate of progress had been maintained.

It does not, however, tell us what happened. How many schemes could a Labour Government have financed if the gold and dollar reserves had continued to fall, as they were falling in 1951, at the rate of 200 million dollars a month? What would have been the result if prices had continued to rise, as they were doing in 1951, at the rate of 12 per cent., or even, taking an average of the Labour Party's whole period of office, at the rate of 6½ per cent. per annum? What would have happened if the £ had been devalued every three years by 30 per cent. —as it was in 1949? Finally, what would be the result if, in the words of the right hon. Member for Huyton, the party opposite adds to these uncertainties a programme which might well cost, in its entirety, £1,000 million of public indebtedness per year, which is the Labour programme? This I give as a conservative estimate, conservative in every way.

I will, with permission, circulate in the OFFICIAL REPORT the companies, 512 of them, which evidently are to be either taken over, messed about or in some way interfered with by the Socialist Party, as appears from its pamphlets entitled "Industry and Society" and "Plan for Progress". Does the House, and do right hon. Gentlemen opposite, really think that that sort of programme, imposed on a record such as hon. Members opposite have, would be likely to create confidence or increase production? It would be quite disastrous for our economy at the present time, and it is because hon. Members and the country as a whole feel that we have the only—

Mr. Frank Bowles (Nuneaton)

May I ask whether it is in order for the right hon. Gentleman to seek to circulate in the OFFICIAL REPORT a list of companies to which he has not referred in his speech?

Mr. Speaker

Perhaps the hon. Member can arrange to table a Question.

Mr. Butler

I would say, in conclusion, that when the country has to choose between the threats and dangers—

Mr. Roy Mason (Barnsley)

rose —

Mr. Butler

—that it sees in the Socialist Party it will undoubtedly choose in favour of the policy that we recommend.

Question put, That those words be there added: —

The House divided: Ayes 255. Noes 324.

Division No. 1]	AYES	[9.59 p.m.
Ainsley, J. W.	Gaitskell, Rt. Hon. H. T. N.	Mellish, R. J.
Albu, A. H.	George, Lady Megan Lloyd(Car'then)	Messer, Sir F.
Allaun, Frank (Salford, E.)	Gooch, E. G.	Mikardo, Ian
Allen, Arthur (Bosworth)	Gordon Walker, Rt. Hon. P. C.	Mitchison, G. R.
Allen, Scholefield (Crewe)	Greenwood, Anthony	Monslow, W.
Awbery, S. S.	Grenfell, At. Hon. D. R.	Moody, A. S.
Bacon, Miss Alice	Grey, C. F.	Morris, Percy (Swansea, W.)
Baird, J.	Griffiths, David (Rother Valley)	Morrison, Rt.Hn.Herbert(Lewis'm,S.)
Balfour, A.	Griffiths, Rt. Hon. James (Llanelly)	Mort, D. L.
Bellenger, Rt. Hon. F. J.	Griffiths, William (Exchange)	Moss, R.
Bence, C. R. (Dunbartonshire, E.)	Hale, Leslie	Moyle, A.
Benn Hn. Wedgwood (Bristol, S.E.)	Hall, At. Hn. Glenvil (Colne Valley)	Mulley, F. W.
Benson, Sir George	Hamilton, W. W.	Neal, Harold (Bolsover)
Beswick, Frank	Hannan, W.	Noel-Baker, Francis (Swindon)
Bevan, Rt. Hon. A. (Ebbw Vale)	Harrison, J. (Nottingham, N.)	Noel-Baker, At. Hon. P. (Derby, S.)
Blackburn, F.	Hastings, S.	O'Brien, Sir Thomas
Blenkinsop, A.	Hayman, F. H.	Oliver, G. H.
Blyton, W. R.	Healey, Denis	Oram, A. E.
Boardman, H.	Henderson, Rt. Hn. A. (Rwly Regis)	Orbach, M.
Bottomley, At. Hon. A. G	Herbison, Miss M.	Oswald, T.
Bowles, F. G.	Hewitson, Capt. M.	Owen, W. J.
Boyd, T. C.	Holman, P.	Padley, W. E.
Braddock, Mrs. Elizabeth	Holmes, Horace	Paget, R. T.
Brockway, A. F.	Howell, Charles (Perry Barr)	Paling, Rt. Hon. W. (Dearne Valley)
Broughton, Dr. A. D. D.	Howell, Denis (All Saints)	Paling, Will T. (Dewsbury)
Brown, Rt. Hon. George (Belper)	Hoy, J. H.	Palmer, A. M. F.
Brown, Thomas (Ince.)	Hughes, Cledwyn (Anglesey)	Pannell, Charles (Leeds, W.)
Burke, W. A.	Hughes, Emrys (S. Ayrshire)	Pargiter, G. A.
Burton, Miss F. E.	Hunter, A. E.	Parker, J.
Butler, Herbert (Hackney, C.)	Hynd, J. B. (Attercllffe)	Parkin, B. T.
Butler, Mrs. Joyce (Wood Green)	Irvine, A. J. (Edge Hill)	Paton, John
Callaghan, L. J.	Isaacs, Rt. Hon. G. A.	Peart, T. F.
Carmichael, J.	Janner, B.	Pentland, N.
Castle, Mrs. B. A.	Jay, Rt. Hon. D. P. T.	Popplewell, E.
Champion, A. J.	Jeger, George (Goole)	Prentice, R. E.
Chapman, W. D.	Jeger, Mrs. Lena(Holbn & St.Pncs,S.)	price, J. T. (Westhoughton)
Chetwynd, G. R.	Jenkins, Roy (Stechford)	Price, Philips (Gloucestershire, W.)
Clunie, J.	Johnson, James (Rugby)	Probert, A. R.
Coldrick, W.	Jones, Rt. Hon. A. Creech (Wakefield)	proctor. W. T.
Collick, P. H. (Birkenhead)	Jones, David (The Hartlepools)	Pursey, Cmdr. H.
Corbet, Mrs. Freda	Jones, Jack (Rotherham)	Randall, H. E.
Cove, W. G.	Jones, J. Idwal (Wrexham)	Rankin, John
Craddock, George (Bradford, S.)	Jones, T. W. (Merioneth)	Redhead, E. C.
Cronin, J. D.	Kenyon, C.	Reeves, J.
Crossman, R. H. S.	Key, Rt. Hon. C. W.	Reid, William
Cullen, Mr. A.	King, Dr. H. M.	Robens, At. Hon. A.
Dalton, Rt. Hon. H.	Lawson, G. M.	Roberts, Albert (Normanton)
Darling, George (Hillsborough)	Ledger, R. J.	Roberts, Goronwy (Caernarvon)
Davies, Ernest (Enfield, E.)	Lee, Frederick (Newton)	Robinson, Kenneth (St. Pancras, N.)
Davies, Harold (Leek)	Lee, Miss Jennie (Cannock)	Rogers, George (Kensington, N.)
Davies, Stephen (Merthyr)	Lever, Harold (Cheetham)	Ross, William
Deer, G.	Lever, Leslie (Ardwick)	Royle, C.
de Freitas, Geoffrey	Lewis, Arthur	Shinwell, Rt. Hon. E.
Delargy, H. J.	Lindgren, G. S.	Short, E. W.
Diamond, John	Lipton, Marcus	Shurmer, P. L. E.
Dodds, N. N.	Logan, D. G.	Silverman, Julius (Aston)
Donnelly, D. L.	Mabon, Dr. J. Dickson	Silverman, Sydney (Nelson)
Dugdale, Rt. Hn. John (W. Brmwch)	McAlister, Mrs. Mary	Simmons, C. J. (Brierley Hill)
Dye, S.	MacColl, J. E.	Skeffington, A. M.
Ede, Rt. Hon. J. C.	MacDermot, Niall	Slater, Mrs. H. (Stoke, N.)
Edelman, M.	McGhee, H. G.	Slater, J. (Sedgefield)
Edwards, Rt. Hon. John (Brighouse)	McInnes, J.	Smith, Ellis (Stoke, S.)
Edwards, Rt. Hon. Ness (Caerphilly)	McKay, John (Wallsend)	Snow, J. W.
Edwards, Robert (Bilston)	McLeavy, Frank	Sorensen, R. W.
Edwards, W. J. (Stepney)	MacMillan, M. K. (Western Isles)	Soskice, Rt. Hon. Sir Frank
Evans, Albert (Islington, S.W.)	MacPherson, Malcolm (Stirling)	Sparks, J. A.
Evans, Edward (Lowestoft)	Mahon, Simon	Spriggs, Leslie
Fernyhough, E.	Mainwaring, W. H.	Stewart, Michael (Fulham)
Finch, H. J.	Mallalieu, E. L. (Brigg)	Stonehouse, John
Fitch, Alan	Mallalieu, J. P. W. (Huddersfd, E.)	Stones, W. (Consett)
Fletcher, Eric	Mann, Mrs. Jean	Strachey, Rt. Hon. J.
Foot, D. M.	Marquand, Rt. Hon. H. A.	Strauss, Rt. Hon. George (Vauxhall)
Forman, J. C.	Mason, Roy	Stross,Dr.Barnett(Stoke-on-Trent, C.)
Fraser, Thomas (Hamilton)	Mayhew, C. P.	Summerskill, Rt. Hon. E.
Swingler, S. T.	Watkins, T. E.	Williams, W. R. (Openshaw)
Sylvester, G. O.	Weitzman, D.	Williams, W. T. (Barons Court)
Taylor, Bernard (Mansfield)	Wells, Percy (Faversham)	Wilson, Rt. Hon. Harold (Huyton)
Taylor, John (West Lothian)	Wells, William (Walsall, N.)	Winterbottom, Richard
Thomas, lorwerth (Rhondda, W.)	Wheeldon, W. E.	Woodburn, Rt. Hon. A.
Thomson, George (Dundee, E.)	White, Henry (Derbyshire, N.E.)	Woof, R. E.
Timmons, J.	Wigg, George	Yates, V. (Ladywood)
Tomney, F.	Wilcock, Group Capt. C. A. B.	Younger, Rt. Hon. K.
Ungoed-Thomas, Sir Lynn	Wilkins, W. A.	Zilliacus, K.
Usborne, H. C.	Willey, Frederick
Viant, S. P.	Williams, David (Neath)	TELLERS FOR THE AYES:
Warbey, W. N.	Williams, Rt. Hon. T. (Don Valley)	Mr. Bowden and Mr. Pearson
NOES
Agnew, Sir Peter	D'Avigdor-Goldsmid, Sir Henry	Hope, Lord John
Aitken, W. T.	Deedes, W. F.	Hornby, R. P.
Allan, R. A. (Paddington, S.)	Digby, Simon Wingfield	Horobin, Sir Ian
Alport, C. J. M.	Dodds-Parker, A. D.	Horsbrugh, Rt. Hon. Dame Florence
Amery, Julian (Preston, N.)	Donaldson, Cmdr. C. E. McA.	Howards, Gerald (Cambridgeshire)
Amory, Rt. Hn. Heathcoat (Tiverton)	Doughty, C. J. A.	Howard, Hon. Greville (St. Ives)
Anstruther-Gray, Major Sir William	Drayson, G. B.	Hudson, W. R. A. (Hull, N.)
Arbuthnot, John	du Cann, E. D. L.	Hughes Hallett, Vice-Admiral J.
Armstrong, C. W.	Dugdale, Rt. Hn. Sir T. (Richmond)	Hughes-Young, M. H. C.
Ashton, H.	Duncan, Sir James	Hulbert, Sir Norman
Astor, Hon. J. J.	Duthie, W. S.	Hurd, A. R.
Atkins, H. E.	Eccles, Rt. Hon. Sir David	Hutchison, Michael Clark(E'b'gh, S.)
Baldock, Lt.-Cmdr, J. M.	Eden, J. B. (Bournemouth, West)	Hutchison, Sir Ian Clark(E'b'gh, W.)
Baldwin, Sir Archer	Elliott,R.W.(Ne'castle-upon-Tyne,N.)	Hutchison, Sir James (Scotstoun)
Balniel, Lord	Emmet, Hon. Mrs. Evelyn	Hyde, Montgomery
Barber, Anthony	Errington, Sir Eric	Hylton-Foster, Rt. Hon. Sir Harry
Barlow, Sir John	Erroll, F. J.	Iremonger, T. L.
Barter, John	Farey-Jones, F. W.	Irvine, Bryant Godman (Rye)
Batsford, Brian	Fell, A.	Jenkins, Robert (Dulwich)
Baxter, Sir Beverley	Finlay, Graeme	Jennings, J. C. (Burton)
Beamish, Col. Tufton	Fisher, Nigel	Jennings, Sir Roland (Hallam)
Bell, Philip (Bolton, E.)	Fletcher-Cooke, C.	Johnson, Dr. Donald (Carlisle)
Bell, Ronald (Bucks, S.)	Forrest, G.	Johnson, Eric (Blackley)
Bennett, F. M. (Torquay)	Fort, R.	Johnson, Howard (Kemptown)
Bennett, Dr. Reginald	Foster, John	Jones, Rt. Hon. Aubrey (Hall Green)
Bevins, J. R. (Toxteth)	Fraser, Hon. Hugh (Stone)	Joseph, Sir Keith
Bidgood, J. C.	Freeth, Denzil	Kaberry, D.
Biggs-Davison, J. A.	Galbraith, Hon. T. G. D.	Keegan, D.
Bingham, R. M.	Gammons, Lady	Kerby, Capt. H. B.
Birch, Rt. Hon. Nigel	Garner-Evans, E. H.	Kerr, Sir Hamilton
Bishop, F. P.	George, J. C. (Pollok)	Kershaw, J. A.
Black, C. W.	Gibson-Watt, D.	Kimball, M.
Body, R. F.	Glover, D.	Kirk, P. M.
Bonham Carter, Mark	Glyn, Col. Richard H.	Lagden, G. W.
Bossom, Sir Alfred	Godber, J. B.	Lambton, Viscount
Bowen, E. R. (Cardigan)	Goodhart, Philip	Lancaster, Col. C. G.
Boyd-Carpenter, Rt. Hon. J. A.	Gough, C. F. H.	Langford-Holt, J. A.
Boyle, Sir Edward	Gower, H. R.	Leavey, J. A.
Braine, B. R.	Graham, Sir Fergus	Leburn, W. G.
Braithwaite, Sir Albert (Harrow, W.)	Grant, Rt. Hon. W. (Woodside)	Legge-Bourke, Maj. E. A. H.
Bromley-Davenport, Lt.-Col. W. H.	Grant-Ferris, Wg Cdr. R. (Nantwich)	Legh, Hon. Peter (Petersfield)
Brooke, Rt. Hon. Henry	Gresham Cooke, R.	Lennox-Boyd, Rt. Hon. A. T.
Brooman-White, R. C.	Grimond, J.	Lindsay, Hon. James (Devon, N.)
Browne, J. Nixon (Craigton)	Grimston, Hon. John (St. Albans)	Lindsay, Martin (Solihull)
Bryan, P.	Grimston, Sir Robert (Westbury)	Linstead, Sir H. N.
Bullus, Wing Commander E. E.	Grosvenor, Lt.-Col. R. G.	Llewellyn, D. T.
Burden, F. F. A.	Gurden, Harold	Lloyd, Rt. Hon. G. (Sutton Coldfield)
Butcher, Sir Herbert	Hall, John (Wycombe)	Lloyd, Maj. Sir Guy (Renfrew, E.)
Butler, Rt. Hn. R.A.(Saffron Walden)	Hare, Rt. Hon. J. H.	Lloyd, Rt. Hon. Selwyn (Wirral)
Campbell, Sir David	Harris, Frederic (Croydon, N.W.)	Low, Rt. Hon. Sir Toby
Carr, Robert	Harris, Reader (Heston)	Lucas, Sir Jocelyn (Portsmouth, S.)
Cary, Sir Robert	Harrison, A. B. C. (Maldon)	Lucas, P. B. (Brentford & Chiswick)
Chichester-Clark, R.	Harrison, Col. J. H. (Eye)	Lucas-Tooth, Sir Hugh
Clarke, Brig. Terence (Portsmth, W.)	Harvey, Sir Arthur Vere (Macclesf'd)	McAdden, S. J.
Cole, Norman	Harvey, Ian (Harrow, E.)	Macdonald, Sir Peter
Conant, Maj. Sir Roger	Harvey, John (Walthamstow, E.)	Mackeson, Brig. Sir Harry
Cooke, Robert	Harvie-Watt, Sir George	McKibbin, Alan
Cooper, A. E.	Hay, John	Mackie, J. H. (Galloway)
Cooper-Key, E. M.	Head, Rt. Hon. A. H.	McLaughlin, Mrs. P.
Cordeaux, Lt.-Col. J. K.	Heald, Rt. Hon. Sir Lionel	Maclay, Rt. Hon. John
Corfield, Capt. F. V.	Henderson, John (Cathcart)	Maclean, Sir Fitzroy (Lancaster)
Craddock, Beresford (Spelthorne)	Hesketh, R. F.	McLean, Neil (Inverness)
Crosthwaite-Eyre, Col. O. E.	Hicks-Beach, Maj. W. W.	Macleod, Rt. Hn. Iain (Enfield, W.)
Crowder, Sir John (Finchley)	Hill, Mrs. E. (Wythenshawe)	MacLeod, John (Ross & Cromarty)
Crowder, Petre (Ruislip—Northwood)	Hill, John (S. Norfolk)	Macmillan,Rt.Hn.Harold(Bromley)
Cunningham, Knox	Hinchingbrooke, Viscount	Macmillan, Maurice (Halifax)
Currie, G. B. H.	Hirst, Geoffrey	Macpherson, Niall (Dumfries)
Dance, J. C. G.	Hobson, John(Warwick & Leam'gt'n)	Maddan, Martin
Davidson, Viscountess	Holland-Martin, C. J.	Maitland, Cdr. J. F. W. (Horncastle)
Davies,Rt.Hon.Clement(Montgomery)	Holt, A. F.	Maitland, Hon. Patrick (Lanark)

Manningham-Buller, Rt. Hn. Sir R.	Price, David (Eastleigh)	Sumner, W. D. M. (Orpington)
Markham, Major Sir Frank	Price, Henry (Lewisham, W.)	Taylor, Sir Charles (Eastbourne)
Marlowe, A. A. H.	Prior-Palmer, Brig. O. L.	Taylor, William (Bradford, N.)
Marples, Rt. Hon. A. E.	Profumo, J. D.	Teeling, W.
Marshall, Douglas	Ramsden, J. E.	Temple, John M.
Mathew, R.	Rawlinson, Peter	Thomas, Leslie (Canterbury)
Maudling, Rt. Hon. R.	Redmayne, M.	Thomas, P. J. M. (Conway)
Mawby, R. L.	Rees-Davies, W. R.	Thompson, Kenneth (Walton)
Maydon, Lt.-Comdr. S. L. C.	Renton, D. L. M.	Thompson, R. (Croydon, S.)
Medlicott, Sir Frank	Ridsdale, J. E.	Thornton-Kemsley, Sir Colin
Milligan, Rt. Hon. W. R.	Rippon, A. G. F.	Tiley, A. (Bradford, W.)
Molson, Rt. Hon. Hugh	Roberts, Sir Peter (Heeley)	Tilney, John (Wavertree)
Moore, Sir Thomas	Robertson, Sir David	Turner, H. F. L.
Morrison, John (Salisbury)	Robinson, Sir Roland (Blackpool, S.)	Tweedsmuir, Lady
Mott-Radclyffe, Sir Charles	Robson Brown, Sir William	Vane, W. M. F.
Nabarro, G. D. N.	Rodgers, John (Sevenoaks)	Vaughan-Morgan, J. K.
Nairn, D. L. S.	Roper, Sir Harold	Vickers, Miss Joan
Neave, Airey	Ropner, Col. Sir Leonard	Vosper, Rt. Hon. D. F.
Nicholls, Harmar	Russell, R. S.	Wade, D. W.
Nicholson, Sir Godfrey (Farnham)	Sandys, Rt. Hon. D.	Wakefield, Edward (Derbyshire, W.)
Nicolson, N. (B'n'm'th, E. & Chr'ch)	Scott-Miller, Cmdr. R.	Wakefield, Sir Wavell (St. M'lebone)
Noble, Michael (Argyll)	Sharples, R. C.	Walker-Smith, Rt. Hon. Derek
Nugent, G. R. H.	Shepherd, William	Wall, Patrick
O'Neill, Hn. Phelim (Co. Antrim, N.)	Simon, J. E. S. (Middlesbrough, W.)	Ward, Rt. Hon. G. R. (Worcester)
Orr, Capt. L. P. S.	Smyth, Brig. Sir John (Norwood)	Ward, Dame Irene (Tynemouth)
Orr-Ewing, Charles Ian (Hendon, N.)	Soames, Rt. Hon. Christopher	Watkinson, Rt. Hon. Harold
Osborne, C.	Spearman, Sir Alexander	Webbe, Sir H.
Page, R. G.	Speir, R. M.	Webster, David
Pannell, N. A. (Kirkdale)	Spence, H. R. (Aberdeen, W.)	Whitelaw, W. S. I.
Partridge, E.	Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)	Williams, Paul (Sunderland, S.)
Peel, W. J.	Stanley, Capt. Hon. Richard	Williams, R. Dudley (Exeter)
Peyton, J. W. W.	Stevens, Geoffrey	Wills, Sir Gerald (Bridgwater)
Pickthorn, K. W. M.	Steward, Harold (Stockport, S.)	Wilson, Geoffrey (Truro)
Pike, Miss Mervyn	Steward, Sir William(Woolwich, W.)	Wood, Hon. R.
Pilkington, Capt. R. A.	Stoddart-Scott, Col. Sir Malcolm	Woollam, John Victor
Pitman, I. J.	Storey, S.	Yates, William (The Wrekin)
Pitt, Miss E. M.	Stuart, Rt. Hon. James (Moray)
Pott, H. P.	Studholme, Sir Henry	TELLERS FOR THE NOES:
Powell, J. Enoch	Summers, Sir Spencer	Mr. Heath and Mr. Oakshott

Main Question put and agreed to.

Resolved 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.

To be presented by Privy Councillors op Members of Her Majesty's Household.