MOTOR INDUSTRY

HC Deb 06 December 1960 vol 631 cc1077-204

3.48 p.m.

Mr. Frederick Lee (Newton)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House, gravely concerned at the present situation in the motor industry, deplores the Government policies which have materially contributed to these difficulties; and calls upon Her Majesty's Government to take immediate emergency action to relieve the unemployment and short-time working in the industry and to set up a national working party to consider the future of the industry. The House will note that in our Amendment we try to look at the position of the motor car industry both in the short term and in the long term. We do not believe that with the position as it now is we can hope to get back to a healthy industry merely by what can only be short-term palliatives. We therefore suggest certain methods, by which, first, we deal with the short-term issue, and then, in discussing the setting up of a national working party, we look more to the long-term future of the industry.

Our idea of such a national working party would be one on which both employers and trade unions in the motor industry would be represented, plus a number of Government sponsored nominees acceptable to both sides who would, perhaps, be able to look both at and beyond the industry itself. I believe that, for this purpose, we should require people who could view the industry as an important component of our economy and of our general industrial effort.

It is difficult to define the projects with which such a working party would grapple, but, in the main, one would think that it could review such vital matters as productive levels, the effect of the rate of expansion on the capital programmes of others, export possibilities, with suggestions for methods of co-operation within the industry in export markets, with, perhaps, special reference to standardisation and the type of model most suitable for certain markets, and it would do what it could to eliminate the boom and slump conditions which we have seen in the industry during the past few years.

These, we suggest, are some of the vital problems which now face the car industry and those who work in it. Our suggestion would be that those who have a direct interest in the matter, and others who can survey the things, perhaps, more from the standpoint of the national interest itself, should have the opportunity of advising the industry and the country on its future.

This may well be the first of several debates about industries the performance of which the House may wish to examine. One has in mind such industries as aircraft construction, shipbuilding, machine tool manufacture—industries of that kind which at the moment are certainly not doing well and might profit from discussion in public about their affairs.

Perhaps the first thing we should remember when considering the motor car industry is that it is no longer a secondary or marginal industry at all. Its performance is important as a key to our balance of payments, our reserves and matters of that kind. I was looking recently at the Motor Industry Bulletin of July, 1960, and the quotation of a few facts from it will, I think, give an idea on the importance of the industry. It is there reported as follows: Since the war a spectacular rise has taken place in the volume of the industry's exports. Whereas, in 1938, 84,000 cars and commercial vehicles valued at £11 million were exported, the figures for 1959 stood at 697,000 units, valued at £310 million. The total value of all products exported by the industry in 1938 amounted to £19 million, whereas in 1959 the industry achieved the all-time record figure of almost £550 million, representing 16 per cent. of Britain's total visible export earnings for that year. It is, therefore, a vital industry, especially when we are in trouble with our balance of payments.

In the industry at present roughly one-quarter, or 100,000, of the labour force are on short-time working, and a a few thousand people have been dismissed. In addition to the car industry itself, there are at least 1,000 firms in ancillary industries which are now slackening off, the workers in which are losing jobs or going on short-time, as a consequence of the slack now present in the car industry.

In those areas in which an appreciable proportion of industry is connected in any way with the car industry, we see the old familiar vicious circle of lack of purchasing power affecting retail trades. Indeed, it may well go beyond that shortly. I recall pointing out during the debate on Richard Thomas and Baldwins on 27th June this year that the failure of the Steel Board to carry the private steel owners in accepting the need to produce a new strip mill had resulted in a huge rise in imports of sheet steel mainly for the car industry. I know that because of the slack in the car industry now, sheet steel imports are tapering off and the balance of payments is that much better; but I suggest that if the tendency continues much longer there may well be an effect, a recession, as it were, in some parts of our own steel industry.

We will not try to dispute that there are times when, for reasons completely outside the control of any particular industry or, indeed, of the Government themselves, there is a falling away in trade and, consequently, in employment. That kind of thing can happen in any industry. But we submit that this is not the case in regard to the car industry. World demand for cars now is probably greater than ever. At home, demand has been artificially restricted by Government policy. We suggest that it is thy job of the House to decide whether or not that policy is right.

The main lines of Government economic policy are high interest rates, a squeeze on credit, and restrictions on hire purchase. The reasons given include the necessity to divert products from the home market to export markets. If those policies, which my right hon. and hon. Friends have opposed for a long time, are, indeed, the key to increased exports from this country, why is our export performance as a whole so very disappointing? The monthly figures show that exporting seems to be becoming less fun with every day that passes. Two weeks ago, we discussed the unsatisfactory investment record in both the private and the public sectors of our industry. We suggested then, and we repeat now, that until the Government pay far more attention to the need for modernisation and efficiency, policies such as those in which they insist upon indulging are really quite irrelevant to the problems facing the nation.

In any event, what is the criterion which the Government apply in deciding the timing of the policies of restriction which we have witnessed on and off during their period of office? I shall be quite blunt about it. I believe that their policies are based far more on the dates of General Elections than on economic situations at any given time. We had hoped that, following the recession of 1956, which, as we all remember, came about as a result of preparation for the 1955 General Election and during which 50,000 jobs were lost in the car industry, circumstances would have evoked from the Government a more responsible attitude. But we again found that the desire to promote the "Never had it so good" atmosphere for the 1959 election proved too strong for them. From September, 1958, when the restrictions were relaxed, until April, 1960, when they were reimposed, the total hire-purchase debt in this country rose from £480 million to £920 million. It is now about £945 million. Of course, a very large proportion of that was in respect of deals in motor cars.

It is no exaggeration to assert that the modern hire-purchase system in Britain has grown to its present proportions on car purchase deals, with other consumer durable industries adapting themselves to it.

It follows that, without the hire-purchase system, the motor car industry would not have grown to anything like its present wide dimensions. It certainly could not possibly have grown so rapidly. Therefore, movements to restrict hire purchase must inevitably affect the car industry more drastically than any other major industry. Hire purchase in the car industry is by no means a delicate instrument. It is more in the nature of a particularly heavy sledge hammer.

I have very mixed feelings about the advisability of basing any of our vital industries on this form of purchase. I do not advocate that we should base industry on it. I merely state as a fact that the car industry is based on the hire-purchase system. It follows, therefore, that stimulation of the home market depends in a very large measure on the relaxation of hire-purchase restrictions. It has been suggested that the two-year period for repayment should be extended to three years. It may well be that that would be of assistance to the industry.

What I want to ask the Government is: what is the object of these restrictions? Does the President of the Board of Trade really believe that the lifting of restrictions now would drag more cars on to the home market from the export trade? Surely the fact is that the industry cannot sell those which it already has on offer in the home market. Could it he that the Government are afraid that the result of these cars being let loose on what the Minister of Transport is pleased to call the British road system would be disastrous and that it would not be safe to take off the restrictions because of the casualties that may cause on the roads? If so, it is an indictment of the Minister of Transport, who has failed dismally to give us a decent road system. The result is that cars are now rotting in the fields of the Midlands and men are losing their jobs.

In the Economist of 3rd December there was this passage: It is not really likely now that a relaxation of the H.P restrictions would divert many British motor cars from export markets to home consumption. Its larger effect would be to divert some motor car workers from sitting at home on Fridays and Mondays to doing productive work in the factories. I should have thought that that should be the object of the exorcise.

I said that I am not enamoured of the prospect of basing great industries on hire purchase, but it is a fact that millions of people who are able to enjoy family cars, television sets, refrigerators, and that kind of thing, to brighten their lives, would have had to do without them if hire purchase had not been possible. I believe that the great principle, above all others, which is essential to the needs of people with large hire-purchase debts is security. Without security the system becomes a nightmare to those who borrow and to those who lend.

To rely entirely, as the Government do, on the turning on and off of the hire-purchase credit tap is to convert the car industry and similar industries into seasonal ones, with boom and depression for those employed in them and had debts for those who take their products. Perhaps the greatest measure of the Government's failure is best exemplified by the announcement that seven of our leading finance houses are proposing to set up a nation-wide credit rating system, including a black list of bad risks. I shall be surprised if the Government are not at the top of the black list.

I understand that in Manchester cars bought on hire purchase are being abandoned because the owners cannot meet their payments. I read that one finance company in the area has recovered 150 cars during the last three weeks. If that is going on in Manchester it must be going on elsewhere. What Manchester thinks of today probably London and other cities will think of very shortly.

I now turn to the question of Purchase Tax. A tax of 50 per cent. on motor cars places them in the heaviest rate of tax. I am told that it is 20 per cent. higher than the average tax imposed on the Continent. It is believed by the trade that a reduction to 40 per cent. would probably increase sales of cars by perhaps 100,000 a year.

I ask the Government to examine this matter for another reason. There is a feeling that there is bound to be a reduction in Purchase Tax in the Budget.

Mr. Gerald Nabarro (Kidderminster)

Hear, hear.

Mr. Lee

That being so, one cannot very well blame potential buyers if they wait for the Budget and, in so doing, aggravate the already very difficult position in the industry. The very great success of the commercial section of the industry, for whose products there are still very long waiting lists and which is free of Purchase Tax, suggests that with a diminution of Purchase Tax in the car section we may well see, not a performance as successful as that of the commercial side perhaps, but certainly an improvement in the present position.

I read that the British Motor Corporation is threatening to increase prices. We on this side have for long argued that to restrict production increases unit costs. Surely firms which have been making huge profits over the years—and no one can deny that the motor car industry has been very profitable—should be thinking, not of increasing their prices, but of reducing them to stimulate their market.

Not long ago, when the National Coal Board increased its prices, hon. Members opposite argued that it was crazy to do so at a time when the Board had huge stocks on its hands. Let us remember, however, that the Board was never allowed to function as a commercial concern. The Government stopped that at a time when it could have demanded increased prices. The Board therefore had no alternative. In an industry such as the motor car industry which has made fantastic profits over the years, and in view of the stocks which there are practically all over the Midlands, surely it is completely suicidal for manufacturers to think of increasing prices. I should have thought that the opposite was the right thing for them to do.

So far, I have discussed methods of stimulating the home market. I accept that these are purely emergency measures. I suggest that what is required is a long-term overall plan to secure stability in the industry. The Government have never shown the slightest interest in such a plan. Each motor car company has made its own plans for expansion with a view to obtaining a bigger share of the existing market. I wish to ask the right hon. Gentleman whether he has ever tried to get the car companies to co-operate together more in considering ways to ensure that we get a far better product for export. It seems to me that the Government are merely opting out of what is an extremely difficult situation for which their policies are in very large measure responsible.

The result of this lack of interest by the Government has been a completely unplanned sprawl, unrelated, for instance, to the road programme and matters of that sort over which the Government have complete control. What is the right hon. Gentleman's opinion about the number of models coming from British firms? Are there too many? Is there sufficient standardisation? These and similar unanswered questions can be answered only by a thorough investigation into the present and future requirements. We therefore ask the Government to set up a working party to do that job.

There is no doubt that Government inaction in face of this worsening situation is now causing the employees in the industry, through their trade unions, to believe that the Government are quite satisfied with the present position. I read that Mr. Jones, the Midland region secretary of the Transport and General Workers' Union, recently said that he wondered whether this was part of the artificial slump which the Government wants to see, and whether it was the working out of a plan to relieve economic pressures and damp down wage demands.

The Government have announced agreement with a number of car firms to expand into development districts; indeed, they have given financial assistance to companies which have indicated their willingness to develop there. But, having done that, the Government have introduced credit restrictions as part of their general damping down of the economy and have maintained those restrictions while the industry has been suffering from export difficulties.

Reviewing the matter, it would appear that the main reason why 100,000 people are now on short-time work and many thousands more are unemployed is that the Government clamped on their restrictions at home at the very time when the success of the American compact car in the United States was causing a considerable fall in our exports to that country. I should think that the timing was brilliant if the object of the exercise was to ensure a build-up of unsold cars in Britain.

Can the right hon. Gentleman say what the Government have in mind as to the size of car industry at which we should aim? During the last five years car production has increased three times as fast as industrial production as a whole. Gross new fixed investment in the industry doubled between 1951 and 1959, compared with a rise of 60 per cent. in the rest of the manufacturing industries, and a large construction programme is again in progress. Of itself, this is a very fine performance, and I am glad to pay my tribute to the industry in this respect. But I was his P.P.S. at the time when the late Sir Stafford Cripps brought the members of the car industry together and laid down that as a condition of his agreeing to the importation of large quantities of sheet steel they had to agree to export a fixed quota of their products. They told him how impossible the whole thing was, but they did even better than he asked of them.

The basis of our great success in exporting cars was laid by the late Sir Stafford Cripps and this points to the fact that, given proper direction and encouragement by the Government, these things can be accomplished. But who, in heaven's name, has ever heard this Government trying to give any sort of help or direction to an industry in order to secure progress in exports?

We have now reached the state in which the existing capacity of the industry is far more than the 1.3 million cars which it expects to produce this year and next year. Indeed, in the first half of this year production was running at the rate of 1.6 million cars. Plans for expansion have already been announced in Scotland, South Wales and Merseyside, and this will increase capacity during the next three or four years to a level of about 2½ million cars a year—excluding commercial vehicles—at a cost estimated to be about £300 million. This presupposes the need to export about 1½ million cars, and in those circumstances we had better look at the prospects in the export market.

When sales to North America were at their highest, in the first quarter of this year, the United States and Canada took about 50 per cent. of our exports, in value. For the rest, 26 per cent. went into the sterling countries where, as in the case of Canada, British cars generally enjoy some tariff preferences. In the second quarter the upward trend of sales to North America was reversed, and between the second quarter and the seasonally unfavourable third quarter there was a further drop of nearly a half.

I would advise the House to consider that in the United States car production in 1960 will be 6¾ million, which is 1 million more than it was in 1959. I do not know whether hon. Members opposite have read two very good articles on the car industry which appeared in the Financial Times on 2nd and 5th December. The article published on 5th December says: British manufacturers were able to secure their rapid expansion in a static market by concentrating on a range of smaller models where American manufacturers were deficient. With the coming of the 'compacts' this gap has been largely plugged. Indeed one British car executive who has driven both his own product and the equivalent U.S. compact told me he had no doubt that the American model gave better value for money. Dealing with the Canadian position, the article went on to say: Nor does consideration of the Canadian market, where conditions have a certain similarity to the U.S. (and where new duty valuations have added 150–180 dollars to the price of some British models) do more than brighten the picture faintly. Any major expansion of U.K. car exports will have to be sought outside North America.

Mr. Frank Tomney (Hammersmith, North)

It is not possible.

Mr. Lee

My hon. Friend says that it is not possible, and he may be shown to be right. My point is that it is fairly obvious that we cannot expect, from now on, with the compact car making great inroads into the small car market there, to be able to have a free ride in our exports to the United States.

Mr. Nabarro

The hon. Member is over-simplifying things when he suggests that we ever had a free ride in the sale of motor cars in. North America. We have sold increasing numbers of cars in North America in the teeth of the fiercest competition, notably from the Volkswagen and French cars. The present decrease in our sales is due to the fact that United States dealers are temporarily largely over-stocked. That is what the Financial Times says.

Mr. Lee

It is the hon. Member for Kidderminster (Mr. Nabarro) who is over-simplifying it. He is forgetting that the sales of the compact car are a considerable item in minimising our ability to get our exports into the United States. In the future there is sure to be an increase in the number of small cars produced by the Americans. I agree with the hon. Member in the sense that we have had great success in the North American market. About 50 per cent. of our car exports have been going there, and that is a very good thing, but it brings me back to the fact that when we have this kind of new development in a market upon which we have been relying above all others, we are getting into rather serious difficulties.

Mr. Nabarro

The hon. Member stopped short in his quotation from the Financial Times of 5th December. I had the prescience to know that he would quote from that article. He omitted to add that the article went on to say: Part of the present glut of British cars in the U.S. is, it is true, due to the over-stocked position of individual dealers.

Mr. Lee

I do not see that that in any way contradicts what I am saying.

Mr. Nabarro

The hon. Member ought to have quoted it. That is the point.

Mr. Lee

Not in the least. As usual, the hon. Member is looking at the past. The past has resulted in over-stocking. I am trying to project his mind into the future, which is a very difficult thing to accomplish. Nevertheless, I do not despair. I live in hope.

I was saying that the position in the United States or in the North American market as a whole is nothing like so favourable as it has been for the past few years. In the sterling area, however, in the third quarter of 1960 we improved our position. Exports totalled £15 million, compared with £10 million in the corresponding quarter of 1959. Exports to the Common Market countries also rose—which is remarkable—from £3 million to £5 million over the same period, while exports to the European Free Trade Association countries were down from £3½ million to £2½ million, the main reason being that in the Swedish market, which has been our biggest single market in this respect, we are now facing fierce competition from Sweden's own products, and it would not appear that we have a great deal of hope in that direction.

I would remind the House that we are now coming to the phase in which the Common Market is about to create its first tariffs against us. I understand that on 1st January next the first external tariffs will be clamped on. The effect of this at a time when we are already losing markets in other parts of the world may well be quite serious to our hopes of expanding exports at all. I could mention other parts of the world where we are having some degree of success in selling our cars, such as in the Middle East, but the purchasing power in those areas for a long time will be deficient if we are thinking in terms of a really large expansion of our exports.

Mention has been made of our success in the United States. This is not only a question of the production of cars in the United States itself. One of the outstanding features of the market out there is the continuing success of the Volkswagen. There registrations this year are up by 41 per cent., while the average decline for British cars, which is a fall of 20 per cent., was much the same for all foreign cars, excluding the Volkswagen. Therefore, we are not holding our position in a contracting market. Apart from Volkswagen, there is no other car enjoying a success in America.

Mr. Tomney

There is the Sunbeam Alpine.

Mr. Lee

The sports car section is a very small section indeed.

Mr. Philip N. Hocking (Coventry, South)

To what extent does the hon. Member think Jaguars have a share in the success in America?

Mr. Lee

Again, we are discussing a highly specialised car and this is not going there in numbers. [HON. MEMBERS: "Oh"] I am thinking, of course, of percentages of our product and of our exports.

Mr. Tomney

It is generally 1 per cent.

Mr. Walter Monslow (Barrow-in-Furness)

Is not the salient point that we are exporting only one-fifth of what we exported to America a year ago?

Mr. Lee

I am saying that the prospects in the North American market are not good, and hon. Members would not deny that. I am saying that in the Common Market countries, which are our greatest alternative market to North America, we again face a severe restriction. In fact, the first tariffs go on against us on 1st January.

I should like to illustrate how this will work. On our exports to Germany we have to face a tariff of 14.8 per cent. whereas exports from the Common Market to Germany face a tariff of 11.9 per cent. Our exports to the Benelux countries face a tariff of 24 per cent., whereas exports from the Common Market face a tariff of 16.8 per cent. The comparable percentages for France are 29 per cent. on exports from Britain and 21 Der cent. on exports from the Common Market, and for Italy 38.5 per cent. on exports from Britain and 31.5 per cent. on exports from the Common Market. This is merely the first instalment. As we visualise the more distant future, it will be increasingly difficult for our people to get their products into these markets.

If the export effort from this country is to match anything like the increase in production to which I have referred after the further expansion has taken place, there must be a large increase not only in the market into which we are now getting them but in a market which as yet is practically untouched. I am told that in some parts of Africa, such as Kenya, our cars are not taken because of their performance. I was talking to people who had recently been in Kenya, where the Volkswagen is in great demand. They tell me that the suspension of our cars is nothing like good enough for the road conditions in those parts of the world. This again gives point to what we on this side of the House were saying about the need for a working party which can analyse these various components and make decisions upon them.

While we welcome new investment in industries and have pressed for it for a long time, we must make the reservation that to have an extremely large expansion in this industry which may not be justified by events, with Government action limiting industries with small resources, would impede the growth of the economy in general. I am quite sure that the President of the Board of Trade would agree that at this time, when our exports are going very badly, that would be damaging to the community.

We would welcome some more information on the proposed Ford deal. I do not see the Chancellor of the Exchequer present, but perhaps he will be coming in later. Since the House last discussed the matter of Mr. Henry Ford's offer for the minority shares in Fords, of Dagenham, 18,000 of the company's employees have been placed on a four-day week. It would appear that the interests of those who invest money in Fords and of those who invest their lives are moving rapidly in opposite directions.

The disclosure of the views of the United States Government, as expressed by Mr. Anderson, make necessary more detailed information about the position of Her Majesty's Government. I should like to ask the President of the Board of Trade whether, when the Chancellor took his decision to agree to the Ford deal, he was aware of the attitude of the United States Government. We know that Mr. Anderson was over here a few days ago and we take it that he discussed the matter with the Chancellor at that time. Perhaps I can have confirmation or denial of that.

We should like to know whether the full payment of 358 million dollars will be made in American currency or, if not in dollars, in what form of currency it will be made. We should like to know whether the Chancellor is insisting on dollars and whether his decision to go ahead in this matter depends upon that form of payment.

We know that the American Treasury has asked Mr. Ford … to consider the impact of the deal on America's worsening balance of payments. It would appear that Mr. Ford has returned the sort of answer which we remember on another occasion, the appropriate interpretation of which would be, "It may be anti-American and derogatory to the dollar but, on balance, it makes sense to me".

Mr. Frederic Harris (Croydon, North-West)

On a point of order. Is this reference to the Ford deal in order?

Mr. Lee

Further to that point o' order, Mr. Speaker.

Mr. Speaker

The hon. Member for Croydon, North-West had better make his point of order before the hon. Member for Newton (Mr. Lee) makes his.

Mr. Harris

According to the Amendment before us, one would not have thought that it was in order to make a reference to the Ford deal at all, as it could not possibly have an effect on employment in the industry.

Mr. Speaker

I am not sure that I follow the hon. Member's point.

Mr. Lee

We are discussing motor car workers who are on short time. I have mentioned that 18,000 of Ford's employees at Dagenham are now on short time, and the question of the ownership of the Ford factory there is very relevant indeed to their future employment.

Mr. Harris

I was referring to the fact that the Ford deal has not yet gone through and, therefore, it cannot possibly affect the situation.

Mr. Speaker

One of the things involved in the Amendment is the setting up of a working party to consider the future of the industry. It is very difficult to think of what one cannot get in under that.

Mr. Lee

That only confirms that our drafting has been successful, Sir.

I was asking whether the Chancellor of the Exchequer knew of the attitude of the United States Government before the decision was made and I was asking about the question of payment in dollars or otherwise. But now the matter assumes proportions of a kind different from that which it possessed when the House discussed it last, because this is now a difference between two Governments. The Government are well aware of the difficulties which the United States is having with its balance-of-payments problem. The American Government have announced a programme to save 1,000 million dollars in foreign spending. We know that that programme has not got off to too good a start.

The fact is that the American Government have no power to stop this transaction themselves and may well decide to take other steps to stem the outflow of gold. We see in this morning's newspapers Mr. Anderson's comment about dollar convertibility, which should be studied very carefully. He said that there is a 1960 payments deficit of nearly 4,000 million dollars, and that this deficit would create a problem if it were cashed or claimed as a credit against the nation's gold reserves. It seems to me to be getting precious near to the case that Mr. Anderson is arguing Her Majesty's Government are now condoning. It may be that our very inadequate reserves, bolstered as they are by a large proportion of "hot money", might well suffer more in consequence of United States Government actions, if driven too hard, than anything that we hope to get out of this particular deal.

Therefore, I should like the President of the Board of Trade to give us the answers to these questions when he addresses us. It would appear from the results to hand of the Moscow conference of the Communist countries that we can expect some intensification of the economic struggle with the West. Our people will be well advised to ponder about the relevance to this struggle of policies of high level stagnation and unplanned industrial sprawl, bringing lurches between boom and "bust".

I believe that many enlightened employers now accept that only by careful planning and a balanced economy, with the priorities given due weight, can we hope to maintain our position. This party—

Mr. Nabarro

Which part of the party?

Mr. Lee

This party and only this party, among the political parties in this country, believes in and would produce such an economy. Within it, we would enshrine a far higher concept of the freedom and the dignity of the individual than either Communism or capitalism can ever bring.

In this vital issue, time is not on the side of the West. "You have never had it so good" is a sinister influence on a nation fighting for its existence. It is for my party—if that suits the hon. Member, for Kidderminster better—and not that of right hon. and hon. Members opposite, to shake the nation out of its apathy and offer the only worth-while alternative, which is democratic Socialism.

4.33 p.m.

The President of the Board of Trade (Mr. Reginald Maudling)

At the end of his speech, the hon. Member for Newton (Mr. Lee) asked me questions about the Ford deal. I think that he will find that my right hon. and learned Friend the Chancellor of the Exchequer answered them this afternoon in reply to Questions from the hon. Member for Dewsbury (Mr. Ginsburg), so I do not think that I ought to repeat what he said.

I should like to turn to the subject of the debate, which is the state of the motor industry. I am sure that we would all start by agreeing as to the immense importance of this industry, not merely the assembly plants, but the component manufacture, the dispatch, servicing and maintenance—all these facets of the industry employ a very large proportion of the labour force of this country, and, as the hon. Gentleman rightly said, the export record of the industry has been and remains extremely good. It is exporting nearly 50 per cent. of its output, and those engaged in the industry tell me that they aim at a 50 per cent. export record. Therefore, there can be no doubt that the problems of this industry fully deserve the attention of the House, and the Government certainly welcome this debate.

At the same time, perhaps, I may also point out that just because the industry is of such a far-reaching character, any measures we take to assist it or otherwise have very far-reaching effects upon the whole of the economy. Equally, though this is strictly entirely a debate on the motor car industry, there are other industries that have their problems—domestic appliances, television and radio—and I do not think one could contemplate taking action solely for the motor industry while doing nothing for other people who can claim that they are facing similar difficulties. It is only reasonable, while we examine the motor industry, which deserves close attention, to recognise that any measures proposed or advanced in this field will have ramifications outside the motor industry itself.

On the need for restrictions generally, to which the hon. Member referred, perhaps I might again state very briefly the Government's reasons for our general policy of credit restrictions at present, of which the hire-purchase restrictions are a single but an integral part. It is clear that while a strong home market is a good base for exporting, an excessive home market is a thoroughly bad thing for our balance of payments and the strength of sterling. If home demand is too strong, it certainly diverts effort and goods from the export market. With motor cars, there is possibly a rather different development.

In the early part of this year, when export demand was very strong indeed, if motor car manufacturers had exported even more than 50 per cent. of their output it would merely have meant longer waiting lists and bigger imports of foreign cars, and, therefore, the benefit to the balance of payments of such a strong home market would be negligible. But a strong home market means increased imports, both for consumption and stock, for if people see demand growing and shortages occurring, they buy more stock more strongly than they would otherwise do. One can see the effect of stock-building in the very heavy import bill at the moment.

Finally, any fear of a return to inflation in this country is bound to affect confidence in sterling throughout the world. For all these reasons, restrictions are necessary both in the interests of the balance of payments and the strength of the currency. In conditions in which all Governments aim at a policy of full employment, this country must always be working on narrow margins, and our dependence on world trade means that we must be ready to react very quickly to any shifts and changes in world trading conditions. We must be prepared rapidly, if necessary, to adjust our situation to changes in world trading circumstances. We must be ready whenever necessary to impose restrictions on the home market if that is essential to maintain our balance of payments, though, obviously, no one will impose restrictions merely for the sake of restricting.

Looking at the position of the motor industry, what has been said so far has been confined to the passenger car section, because the commercial vehicle people, we are all glad to see, are doing very well. So far as passenger cars are concerned, there has been in recent years a vary vigorous expansion indeed in the output of this industry. It is traditionally and, I think, inevitably an industry which is subject to fluctuations in demand. When one is selling a thing like a motor car for which unit costs are high, and where people can postpone their purchase for weeks or even months at a time, there are bound to be substantial fluctuations, and the history of the industry has been that of a fluctuating demand with fluctuations taking place on either side of a production curve, which on average is rising strongly.

Between 1953 and 1958, production rose by an average of 11½ per cent. per year, more than three times the average of industrial production generally. Between 1958 and 1959, output went up by 13 per cent. In the first half of this year, there was an astonishing increase of no less than 34 per cent. At the same time, the labour force in the motor vehicle industry rose between October, 1959, and September, 1960, by nearly 10 per cent.—from 405,000 to 445,000. Any experience and analysis will show that a curve rising as steeply as that cannot continue at that rate. If there is this very rapid rate of expansion, there is bound to be a slackening off.

The difficulties first arose in the export market, particularly in North America. In the first quarter we shipped 55,000 cars to America, but in the third quarter we shipped only 21,000. We shipped 30,000 to Canada in the first quarter, but only 14,000 in the third quarter. That was the first and biggest setback that the industry experienced in 1960, and it is a combination of the competition of the American compact car, to which much reference has been made, coming at a time when dealers' stocks in the United States were high. The combined effect was a steep drop in the rate of shipments from this country to North America.

Home demand, in fact, has held up very well. Although the hire-purchase restrictions, about which we hear a great deal, were introduced in April, registrations of new cars in this country remained well above the figure for last year, up to September-October. It was only in September-October that the curve turned down. The home market remained strong throughout the summer, but not strong enough, of course, to absorb the very large number of cars destined for export but which could not be sold in the changed conditions of the American market.

Of course, when we see the out-turn in sales and new registrations in September-October we must take some account of the psychological condition which has been created by the stories about the industry which have been put around. Many of the stories about the difficulties in the industry have been exaggerated, but the effect of that exaggerated gloom and of the constant claims for tax reductions, and so on, are, naturally, to cause the customer to wait before he buys his motor car. It is important to bear that in mind. It was for that reason that when my right hon. and learned Friend saw a deputation recently on the subject of Purchase Tax he said quite firmly that he did not believe that a change in Purchase Tax should be made. He said that because persistence of doubt in these matters is bound to make trading conditions more difficult.

In October, production was 8,600 cars a week below the peak reached in the second quarter and of that shortfall of 8,600, 7,000 was in respect of exports and only 1,600 in respect of the home market. It is, therefore, quite clear from any analysis of the figures that the major problem which the industry has been facing has arisen from the setback in the export markets, particularly North America.

Mr. Douglas Jay (Battersea, North)

Can the right hon. Gentleman tell us, if he deplores and regrets the fall in home sales, what is the purpose of continuing the Government's restrictions?

Mr. Maudling

If the right hon. Gentleman will allow me time, I will come to that. Obviously, the restrictions are designed to restrict something, or we would not have them in force. I thought that I had made it clear that the shortfall in production arose far more from the fall in exports than the fallback in the home market. I am not saying that there has been no effect on the home market, but the export position is the major factor.

There are two problems, long term and short term, and it is most important to keep the two separate. All the manufacturers have expressed their confidence in the future and I know of no manufacturer intending to withdraw from his expansion plans.

Mr. Maurice Edelman (Coventry, North)

The right hon. Gentleman was good enough to communicate with me and to tell me that he had no information that Standards intended closing its factory at Speke No. 2. Is he aware that it is the general impression that the Speke No. 2 expansion has been suspended? Will he confirm or deny that?

Mr. Maudling

General impressions are often very dangerous in this industry and I confirm that I have no information to suggest that there has been any change in Standard's plans. If I had information, I would certainly make it known, but, in fact, I have received none.

No one in the motor industry expects the rate of expansion which we saw between 1953 and 1959 to continue, Plans for expansion of the industry are based on a production curve which approximates from now onwards much more nearly to the general rate of expansion in industry. No one is expecting to see in the 1960s the 11, 12 or 13 per cent. annual output increase which we saw in the late 1950s. Only in the first half of 1960 did production soar far above the point that would have been reached with a consistent expansion of the industry.

Therefore, if there is great expansion in the first half of the year and a temporary setback afterwards, that does not affect the long-term average rate of expansion, and that is why the industry as a whole expected and anticipated some slackening in the phenomenal expansion rate of the first half of the year and why it sees no reason to change its long-term estimates.

In this long-term picture, it is very important to pay attention to the export problem. Certainly, the American market has become and will grow more difficult. The actual shipments to America in recent months rather exaggerate the problem, because the rate of shipping to America has been well below the rate of sales of British cars in America where there has been a substantial running down of stocks. That position is bound to right itself automatically, but, in general, export markets are getting more difficult and the Government and the industry have a responsibility to try to face the export problem.

My right hon. Friend the Minister of State will later be dealing more extensively with the question of export markets, but it will be generally accepted that the Government's responsibility is to provide opportunities and industry's responsibility to take those opportunities once they are provided. The short-term fluctuations cannot be avoided. The hon. Member for Newton talked about planning and long-term planning, and so on, but no one has yet explained how demand is planned. How can one plan how many cars people in Birmingham want to buy next year?

Mr. Nabarro

Or Timbuctoo.

Mr. Maudling

Timbuctoo even more, although that figure has less relevance in terms of absolute size. Whether it is Birmingham, England, or Birmingham, Alabama, demand is unplannable and there are bound to be substantial fluctuations in the demand for the products of this industry.

Mr. Frank Bowles (Nuneaton)

Could not the Government stimulate demand by easing credit restrictions, and so on, as they did in 1955 and 1959, when production was definitely stimulated?

Mr. Maudling

Did the hon. Gentleman object to that at the time?

Mr. Bowles

No, that is how to stimulate production.

Mr. Maudling

If the hon. Gentleman looks at the facts, he will see that although hire-purchase restrictions were removed in October, 1958, the big upsurge in the buying of motor cars did not come until a year after that, and the proportion sold on hire purchase varied very little between 1958 and 1959. If hon. Gentlemen opposite had objected to that increase in demand, I would have been more prepared to listen to that argument, but they did not.

Although the fluctuations have caused considerable difficulties for people working in the industry, they should not be exaggerated, and we should study them against the general background of industry and employment in the areas concerned. I believe that the latest figure of people redundant in the industry is 7,000, which has to be compared with the figure of 40,000 people who entered the industry in the last twelve months. At the end of October, Vauxhalls declared 950 people redundant, but I am happy to say that fewer than half a dozen of them remain registered unemployed.

There is undoubtedly a considerable and persisting shortage of labour in those same areas and firms with substantial export orders very often cannot get the labour they want. It is important to remember that when considering these problems. I agree that they are problems for the people employed in the motor industry.

Mr. Julius Silverman (Birmingham, Aston)

Will the right hon. Gentleman deal with the problem of part-time or short-time working, which is a form of concealed unemployment?

Mr. Maudling

That was the next point I intended to make.

Mr. Francis Noel-Baker (Swindon)

My constituency is very badly hit because there are not only difficulties with the Pressed Steel factory, which is just outside Swindon, but great difficulties with the radio components and domestic appliance industries which the right hon. Gentlemen mentioned. What he has just said does not apply to my area, even if it applies to others.

Mr. Maudling

I am sorry that I do not carry in my mind the details of the hon. Member's constituency, but I am sure that what I have said is generally true of the engineering districts of the Midlands.

Short time certainly means less earnings and that is a serious matter, but, even on a three or four-day week, both skilled and semi-skilled men in the motor industry can earn money which compares well with the general rates of people working full time in other industries. Hence, obviously, the reluctance of many people to move out of the motor industry into other industries. It is not unreasonable to say that in an industry which fluctuates very much and where profits and wages can be high, and, indeed, very high when the swing is going upwards, people must expect some reduction of both when the swing is going down. That is a perfectly reasonable proposition so long as the general average remains sound, as I believe it does.

Mr. Victor Yates (Birmingham, Ladywood)

I am trying to follow the right hon. Gentleman's argument about fluctuation. I wonder whether that process will, in fact, go on. In Birmingham, for example, the number of men on short time is increasing every week and in November it rose from 30,000 to more than 70,000. There is no fluctuation the other way. I do not understand the basis of the right hon. Gentleman's argument that this is mere fluctuation.

Mr. Maudling

It is based on experience in the history of the industry. There was a similar cry two years ago which was followed, after a demand from the party opposite for emergency measures, by the biggest expansion in the industry's history. After three years of this unexampled expansion, which was three times bigger than in industry as a whole, it is not surprising that there is a falling off in the pressure of demand.

I was coming to the question of fluctuating demands. While we cannot plan or determine a steady rate of growth in sales, we should do all we can to try to reduce the amount of fluctuation that take place. I hoped to hear today some ideas from the party opposite, but we have had none. The party opposite puts down what amounts to an Amendment of censure, saying that we should do this, that or the other, without explaining what we ought to do.

The hon. Member for Newton was very careful not to commit himself about Purchase Tax. He said that we should examine it. That is not the sort of thing that a censure Amendment is generally meant for. Does he suggest that we should reduce it now and put it up in a few months time when the demand for cars has risen, or do away with it altogether? Where will my right hon. and learned Friend find the £50 million or £100 million for his Budget to offset this reduction? The party opposite should suggest a serious alternative.

I was astonished that the hon. Gentleman talked about a working party. Apparently he has forgotten the existence of a useful body called the National Advisory Council, set up by the Labour Government. I think that it was a good move. It contains, as he suggested that a working party should contain, representatives of the Board of Trade, the manufacturers, component makers, and trade unions, and an independent member. I see no difference between the Council and a working party. It is a very effective body. My impression is that the unions think the same. They co-operate with it fully. I have heard from them no complaint or suggestion that the Council should be scrapped and something else put in its place.

There is no limitation on what is discussed by the Council—apart from wages, and I think that the party opposite would agree that it should not do that. Everything that has been mentioned can be discussed by that body, and is discussed.

The hon. Gentleman also mentioned standardisation. We have had a study of that made in the Council.

Mr. Lee

What happened?

Mr. Maudling

A great deal has happened. The standardisation of axles, gear boxes and other components is very much more advanced now than a few years ago. The Council has made great progress in these matters, and the manufacturers are constantly studying these problems. At the last meeting of the Council we started a new study with the manufacturers, helped by the unions, into all export markets of the world.

I agree that these things should be done, but they are being done already by precisely the body which the hon. Member's own Government set up and which has been working for several years. What is the point of getting rid of the Council and having a working party instead? If such a working party were to be an advisory body it would not improve on the present Council. If it were to be an executive body, then that is a different matter. Whether the hon. Member is still hankering after some form of nationalisation, I do not know. [HON. MEMBERS: "Hear, hear."] Some of his hon. Friends are, I know. The only thing which lies behind this idea is some form of nationalisation under another name. There is no other reason for putting this forward.

Export credits have been referred to. I doubt whether much can be done. The normal custom in this industry is to sell for cash or on short-term credit. I doubt whether it would be worth while on commercial grounds to make an extension of this as a long-term policy in order to gain a short-term advantage. The Export Credits Guarantee Department is anxious to help, and there are special provisions for helping in such operations as stockholding overseas, which should be of considerable help.

The main point which has been raised in the debate—and this is in the minds of many hon. Members—is the question of hire-purchase restrictions. As I have argued, they are undoubtedly having some effect on the level of home demand. But they are part of the general pattern of credit restrictions, the purpose of which is to reduce the import bill, to free more goods for export, to prevent diversions from exports to the home market, and to contribute to the strength of sterling.

As my right hon. and learned Friend has said more than once, he is determined to relax hire-purchase restrictions as soon as possible, but not to relax them until, in his opinion, it is safe to do so in the general national interest. It will be the desire of the House as a whole that he should continue to follow that policy.

Mr. F. Harris

Does not that very doubt cause a slackening of home demand at present? People are holding up buying on the home market, thinking that they will be able to get three years in which to repay instead of two years. Is that not causing part of the present trouble in a large sector?

Mr. Maudling

There is a lot in that point. But I do not see how it can be avoided. It is clear that some relaxation will be made as soon as possible, for powers to restrict hire purchase are limited to using them in cases where we need to restrict excessive credit. Once we see the excessive credit situation disappearing, we no longer have the legal power to restrict at all. At some stage these restrictions must be relaxed and the uncertainty cannot wholly be avoided. There is uncertainty here of the same kind, but not on the same scale, as when people propose a reduction in Purchase Tax.

Mr. Harris

Could not my right hon. Friend go a little further than this and say that perhaps for the next six months the position will remain the same? That would relieve people of uncertainty.

Mr. Maudling

I wish that I could, but it would be very difficult to do, because the position depends so much on international trade, and because it is impossible to predict what will happen, for instance, in the American market—how long and how far the American recession will extend. It would be giving a hostage to fortune in many sectors of credit policy if I made a forecast of that kind.

Mr. Monslow

The stimulating of the American market at the moment is due to increased credit facilities not only for cars, but for all consumer goods. Would it not be possible to do that here and stimulate demand?

Mr. Maudling

I understood that the trouble there was that, on the whole, demand was declining rather than expanding.

Mr. Monslow

Credit facilities have been given more generously in recent months for cars and consumer goods. If that policy is paying in America in stimulating home demand, would not a similar policy be beneficial for this country?

Mr. Maudling

Yes, if applied at the right time, I agree. But the question is: what is the right time? My right hon. and learned Friend the Chancellor of the Exchequer is of the opinion that the right time is not now. [An HON. MEMBER: "What is your opinion?"] That is my opinion, too.

My general conclusion is that the future of this industry can obviously be very bright. On the whole, it would be brighter if it were not made a matter of party controversy and censure debates, but of co-operative effort to try to solve its problems.

In this country, we can make any type of car on a competitive basis with anyone. The problem is to ensure that we do so. That involves both sides of industry, as well as the Government. Competition is getting fiercer, but in some senses more limited. Most cars made in the Western world now have reasonable standards of performance, comfort and safety. The differences between the products of the different countries are being narrowed. That means the greater importance of original design and technical innovations, with greater attention to price and delivery, and, particularly, to reliability and servicing.

Obviously, it is upon all these things, that, fundamentally, the future depends. Bad management, lack of enterprise, stoppages of work, or slipshod methods of working are dangerous and damaging to everyone involved in the industry.

I think that the industry is entitled to look to the Government and to the country for help in its difficulties, just as are other industries which are similarly placed. In so far as it is consistent with national policies and the need to preserve the balance of payments and the position of sterling, the Government will certainly give help to the industry. In exchange, the country is entitled to look to the industry, both management and people employed in the industry, to keep costs down, to keep technical advance proceeding, and to ensure that the standard of workmanship remains high enough to win and retain in the world's competitive markets the sort of place to which we have been accustomed, and to which the skill and enterprise of our people can accustom us in the future if they are prepared to use them fully.

5.1 p.m.

Mr. Edward J. Milne (Blyth)

May I crave the indulgence of the House in what every hon. Member regards as a major ordeal. If the tolerance of hon. Members matches the kindness which I have been shown since I arrived last Tuesday, there is no doubt about my ultimate emergence from this test.

One of my illustrious predecessors who represented the same area of the country, that widely respected and well-loved miners' leader Bob Smillie, began his maiden speech with the quotation: Ill fares the land to hastening ills a prey Where wealth accumulates and men decay. To some extent, in looking round my constituency, the setting in its modern context seems very much the same. Coal, railways and shipbuilding are very much in decline, and, despite the magnificent efforts of the local authorities in the area, who have made supreme efforts to bring new industries into the district, unemployment continues to rise. The real issue on the basis of rising unemployment is, of course, the failure to attract some of the industries from the areas that have been discussed this afternoon.

The length of the unemployment period is increasing. School-leavers, who in the past two years have generally been offered jobs, training and apprenticeships in the Midlands, Luton, Slough, and other car-producing areas of Britain, are finding that this supply is drying up. While I am not happy about youngsters leaving their homes during their formative years, the car industry and its related trades nevertheless cushioned the full impact of unemployment in the north-east of England.

However, as we have heard this afternoon, that avenue is closing. Although we have no car industry in Blyth or in the north-east of England, nowhere will this debate be followed more closely than in that corner of the north-east of England which I am now proud and privileged to represent. In the expansion of the car industry and its ancillary industries lies much of the hope of bringing new industry to the area and staving off the effect of pit closures, railway redundancies and the lack of orders in the local shipyards.

I am grateful to my Conservative opponent in the by-election for accurately summing up the Government's policy in relation to the area when he said that the affluent society had stopped short at the borders of Northumberland. The impression is being created in the country—and I think that I can claim to have a closer contact with it than many hon. Members at the moment—that we are creating a Britain for some people to profit in, and a Britain in which it is held in higher regard to work with two telephones than with two hands.

There are two factors in the car industry which must receive the closest possible examination. We all deplore the decline in the industry, but its impact is being felt elsewhere. New techniques of production, and new metals, for example the use of aluminium in place of strip steel, are bound to create uncertainty of employment in many areas. If these industrial problems are not tackled by the Government, they will be increased and aggravated by the monopolistic tendencies we are seeing at the moment in the motor industry which is dominated by four major firms, two of them British and two of them American. While that is the situation tonight, no one knows precisely what will be the position when we open our morning papers tomorrow.

My constituents depend for their livelihood mainly on mining. There have been attacks on miners from time to time, but we in the Blyth constituency know the value of the contribution made by the mining communities of Britain to the magnificent recovery of the country's economy following the most destructive war in history. Having spent the first six of the post-war years in the car-producing area of Birmingham, I know how dependent and appreciative the industrial workers of that car city were of the miners' efforts, efforts which were made in the face of superhuman difficulties.

In supporting the Amendment, may I be permitted to call upon the Government to take immediate action to consider the future of the motor industry, and also to remember that in any examination or inquiry which may be made we should like consideration to be given to the spread of the motor industry throughout the country. It is obvious, from what has been said that the economy of the country will for a long time depend on the industry we are discussing.

If, under the present Government, we get round to the question of expansion, we must consider the siting of plant and factories in the north-east of England, and in particular in my constituency, where we have the docking and transport facilities to handle, not only the import of raw materials needed for the trade, but the export of the finished article as well. We have within our ranks in that area the industrial workers who have the skill and craftsmanship which can readily adapt itself to any new task. The workers there have a skill and craftsmanship which goes back to the dawn of the Industrial Revolution. The rails on which Stephenson's Rocket ran were made in Bedlington in the constituency of Blyth, and what we were able to do at the dawn of the Industrial Revolution we can repeat in the second half of the twentieth century.

By tackling the immense problems that have been presented by the challenge of a new age the Government may have to turn their backs on some of their traditional policies, but turn their backs on them they must if we are to prevent the situation to which I referred earlier, and if we are to check the unhappy accumulation of wealth and the decay of men in our industrial areas.

5.9 p.m.

Mr. Philip N. Hocking (Coventry, South)

I am pleased to follow the hon. Member for Blyth (Mr. Milne), having myself not very long ago made my maiden speech. I congratulate him on the way in which he delivered it. It is an ordeal to which new hon. Members do not look forward, but I am sure that, having passed through the ordeal, he will feel happier, and we shall look forward to hearing him again.

My mind goes back to almost a year ago when it seemed that every hon. Member was asking for a slice of the motor car industry to be put in his constituency. Hon. Members for Scottish constituencies were asking for a portion of the industry to be moved there. Hon. Members for Welsh constituencies were asking for the expansion of the motor industry to take place in South Wales. The same can be said for hon. Members from the north-eastern and north-western parts of the country. Representing as I do a motor car city—the City of Coventry has been connected with the motor car for almost as long as it has been in being in this country—I wondered at that time whether I was to see a rundown of the industry within my city.

The industry was urged by all to expand. I do not think that a year ago anyone would have suggested that the industry should contract in any way. No one suggested then that there were dangers to be seen in this expansion. It is worth noting that in the first ten months of this year production has increased by slightly more than 10,000 vehicles as compared with the same period in 1959. In 1959, 1,200,000 motor cars were produced. Of that figure slightly more than half were registered on the home market. It would appear from today's figures that the same number of vehicles are being registered in this country in the present year. Therefore, it would seem that the home market, as my right hon. Friend said in his speech, is holding its own. That left 540,000 motor cars to be exported during 1959.

As I see it, we are today discussing an Amendment which has been set down by the opposition concerning short-time working in and the difficulties of the motor industry. I note that in this very cleverly worded Amendment all these difficulties have been laid at the feet of the Government. I submit that that is not so. If we look around we find that there are difficulties in the world market. If one has bothered to go through the Trade and Navigation Accounts month by month during the year one sees that these difficulties are widespread throughout the world.

I submit that these difficulties have been caused very largely through the uneasiness and the tension that is to be found throughout the world. I believe that the failure of the Summit Conference earlier this year contributed to a falling off of import inquiries by people in various parts of the world. Some of them have felt uneasy about purchasing various goods, and I think all hon. Members would agree that the Presidential election in the United States has contributed to a considerable extent to the falling off of the market in that country.

Mr. Dan Jones (Burnley)

Will the hon. Gentleman give way for a moment? He is attempting to say that these difficulties are not connected either with the industry or with the Government. He also mentioned that no one would have said twelve months ago that these difficulties were even anticipated. May I point out to the hon. Gentleman that in April this year I warned the Government that the situation in the industry would deteriorate in the autmun? I made specific references to the fact that the American automobile industry was tooling up for the manufacture of a small car. It was obvious that they would produce one and that, having produced it, they would not allow our cars to enter the market. I do not think it is possible to skate over that difficulty. I suggest to the hon. Gentleman very sincerely that this is a very serious matter and that the Government and the industry ought to have been prepared for what has happened. It is no use trying to skate over that.

Mr. Hocking

Had the hon. Gentleman been less impatient and had he waited a few moments to hear something which I have to say about the compact car in America, he would not have had to make that intervention. I am sorry that I do not recall him warning the Government, but I accept that he did so.

Mr. Jones

It is on record.

Mr. Hocking

As I say, I accept that. I think I can satisfy the hon. Gentleman in a few moments with regard to the question of the compact car in America.

I am pointing out that all these factors have contributed to the falling off of car sales. One has only to compare the figures this year with the figures for the same month last year to see that whereas nearly 15,000 cars were exported to the United States in October 1959, the number has dropped to almost 2,500 this year. While accepting that situation for the United States, if we look at, say, Denmark, which has not had a Presidential election but which could well be influenced by world tensions, we find that our car exports to that country have been reduced from 1,244 last year to 794 this year.

The figure of cars exported to New Zealand has dropped from 3,086 last year to 1,547 this year. We find that in South Africa the figure has dropped from 2,152 last year to 1,674 this year. While we are discussing the figures for South Africa, I would like to point out that not so very long ago it was put to me very forcibly by a motor manufacturer in Coventry that the difficulties in the South African market could to a considerable extent be attributed to the boycott policy suggested by the Labour Party earlier this year in connection with apartheid. He showed me letters from his agent in South Africa which suggested that some of the difficulties were a direct result of that suggested boycott policy.

I notice it has been suggested on a number of occasions that we should attempt to cultivate other markets, particularly those in the under-developed countries. I know that the African market is not a very big one, but in Ghana and Nigeria we have managed to maintain our level of exports this year in much the same order as last year. We exported 530 cars to Nigeria last year and have exported just over that number this year.

It would seem to me that the problem facing the motor car industry today is how to increase exports to other parts of the world. I believe that our manufacturers must concentrate to an even greater extent on the question of motor car design. It has been suggested that British cars are not satisfactory in some markets in Central Africa. I believe that that is something which can be over come. I believe, too, that one of the benefits to be obtained from the new M.1 motorway is the fact that cars can now be driven in this country at very high speed over a distance of some 60 miles. All would agree that that is a tremendous test for any car, and I believe that in years to come it will have some effect on the design of vehicles.

We must pay more attention to the export market when considering the design of cars. It has been said that the Americans have now tooled up for the production of a compact car which will increase our difficulties in the American market. I do not accept that the American compact car is going to drive the British car from the American market. The Americans have considerable difficulties to overcome in the manufacture of small cars in the United States. They pay very high rates of wages—considerably higher than those paid in this country.

We must accept the fact that the labour content in the production of a motor car is by far the highest component. The material content is comparatively small. It stands to reason that to reduce only slightly the material content to manufacture a compact car as opposed to the large American cars would not greatly reduce the cost. I was told only the other day that the Americans do not think that they can bring down the cost of their compact cars to any considerable extent. It would appear, therefore, that we shall still have a chance to sell our vehicles in the North American market.

To sell those vehicles, however, we must considerably improve the sales organisations of our motor manufacturers in those markets. We must also ensure that there are better service and spares facilities. It is significant that the Jaguar motor company, which is not in my constituency but is in the constituency of the hon. Member for Coventry, North (Mr. Edelman), has not been on short-time working. It produces, as we all know, a very high-grade motor car. At the same time, however, it has a well-established sales network in the United States, operated by a company known as Jaguar Cars Incorporated (U.S.A.). That company has a large spares organisation and a big spares depot, I understand, on Long Island, New York. I understand that it also works in co-operation with Leyland Motors, the company which has just announced some form of amalgamation with the Standard Motor Company, of Coventry. I hope that this amalgamation will go through, because I believe that it will strengthen the position both of the Leyland Company and of the Standard Motor Company in enabling them to export to the North American market.

We also should expect from the manufacturers more standardisation and more rationalisation of parts. This could well contribute to the sales of vehicles in the North American market. I know how difficult it is sometimes to obtain a spare part in this country. One Friday afternoon not so long ago, I was driving to the West Country. The vehicle ahead of me threw up a small stone, which shattered my windscreen. This happened when I was 35 miles from Coventry. I pushed the broken glass out of the windscreen and wondered whether I should return home and get a new one or continue on to Bristol and get one fitted from the distributors there. I decided to go on to the next telephone box and to make a call to find out. I telephoned home and was assured that there would be a windscreen in the distributors' garage at Bristol. When I got there, however, to my dismay I found that there was not a windscreen that could be fitted to my car, which was only two years old. If some of these components could be rationalised from one vehicle to another it would make it particularly easy for these things to be obtained in the export markets.

Mr. J. Silverman

The hon. Member has raised an interesting point about standardisation. Does he not think that that involves co-operation between the companies and that this is where the suggested working party might be most effective?

Mr. Hocking

I do not subscribe to the proposal for a working party. The National Advisory Committee, which has been working for so long, is doing the type of work which a working party would do. It has considerable experience. As my right hon. Friend the President of the Board of Trade said earlier, there has been a considerable measure of rationalisation. For example, although the Rootes Group produces a large number of vehicles, the Hillman Minx, the Singer Gazelle, the Sunbeam Rapier and vehicles of that range, all have exactly the same body and, basically, the same engine. It is interesting to note from time to time that different vehicles have identical headlamps. They are made by one firm and sold to many manufacturers. There have been strides in rationalisation, but I should like to see it developed to an even greater extent, because this would considerably help us in overseas markets.

The Government should assist in the export of vehicles. I was pleased to hear my right hon. Friend say that the export guarantee schemes would help and that special facilities exist. I hope that these will be brought to the attention of the manufacturers to an even greater extent and publicised more than in the past.

It is, however, true that a strong home market can be the only basis for a good export market. Attention must be paid to the home market, although it has been bouyant so far. I hope that in the not too distant future attention will be given to enabling hire-purchase facilities to be operated over three years instead of two years. This would have a real effect and would help the industry to maintain production and to keep up sales in the home market.

In the long term, however, attention must be paid to Purchase Tax. I fully understand that my right hon. and learned Friend the Chancellor of the Exchequer cannot, in the near future, abolish Purchase Tax on motor cars. In present circumstances, it would probably be wrong to do so. [HON. MEMBERS: "Why? "] I explained in the debate on the Queen's Speech that I did not consider it a good idea to abolish Purchase Tax now or even to reduce it. [HON. MEMBERS: "Why?]

Mr. Cyril Osborne (Louth)

Somebody has to pay for the Welfare State.

Mr. Hocking

The Welfare State was not my argument. If Purchase Tax were reduced now it would at the same time deflate the second-hand market to such an extent that car sales might well be brought to a halt. Instead of helping, that would hinder the sales of vehicles.

Mr. Edelman

Is the hon. Member not concerned that today in Coventry approximately 60,000 workers are on short time, which is the equivalent of concealed unemployment totalling 30,000? Does he not agree that the only way to put those men back into productive employment is to promote the selling of motor cars through the winter months, and that the most urgent shot in the arm which could do that is immediately to cut the Purchase Tax?

Mr. Hocking

I was not sure whether the hon. Member gave a figure of 16,000 or 60,000.

Mr. Edelman

Sixty thousand.

Mr. Hocking

I can only assure the hon. Member that, as in the previous debate on the motor industry, he has the wrong figure. I have in my hand a letter from the manager of the Coventry Employment Exchange, dated 5th December, concerning the number of persons working short time and stating that the figure for the week ending 3rd December was something in excess of 16,000. From that, I would presume that the figure was not as high as 17,000. The manager of the Coventry Employment Exchange goes on to state that a large number of vacancies are to be found in the Coventry area.

Mr. Edelman

Is the hon. Member not aware that the figure of short-time working is always taken on Mondays and for this reason pays no attention to short-time working in the course of the week? The latter is the relevant figure to determine the amount of short-time working. Surely the hon. Member is aware that in Standard's and Rootes' alone the short-time working is probably in excess of the figure he has quoted.

Mr. Hocking

I am fully aware that the hon. Member for Coventry, North has much more experience than I in these matters. He has represented Coventry, North since 1945. Nevertheless, I stand by my figures. I also know that during the last few weeks the figures in Coventry have been reduced. To suggest that Coventry is on short time to the extent that the hon. Member alleged does the city no service. Only this last week, Massey-Ferguson's have returned to full time and, indeed, to overtime. Last Saturday, that factory was working overtime in the production of tractors.

I wish to return to the point about Purchase Tax. I do not subscribe to the idea that it would be a good thing to reduce Purchase Tax now. I believe that ultimately it would be a drag on the industry and stop production of vehicles, or stop the sales of vehicles rather than promote them. But I hope that the Chancellor will pay attention to the reduction and the eventual abolition of Purchase Tax on motor cars over the years. I can well understand that there has been concern over short-time working in the industry. It is a natural concern on the part of management, distributors and constituents of mine who find themselves working short time.

I think true to say that we have not reached the saturation point in the production of motor cars in this country. There are still tremendous markets to be found in various parts of the world, and I am equally sure that unless we in this country expand our motor car industry in order that we may take our full share of these markets, when we can cultivate them sufficiently and when these people in various parts of the world can afford to buy vehicles, we shall lose a considerable part of the markets to our European competitors. I do not think that hon. Members opposite would be pleased if they found that the majority of the markets which are to be found in various parts of the world went to our European competitors.

In the past, the motor car industry has developed and expanded through its own enterprise and largely through its own initiative. I hope that we shall see the industry continue to flourish on those lines with the minimum amount of Government interference, and, I hope, with the minimum amount of political interference. It has frequently been suggested in the past that it would be a good thing to nationalise the industry. I am convinced that those who advocate the nationalisation of the motor car industry do it its greatest disservice.

5.32 p.m.

Mr. Frank Tomney (Hammersmith, North)

I am sorry that the Minister has now left the Chamber. He put his finger on a vital point when he said that we are dealing with an industry which has in its content an unplannable demand. That leads us to look at the factors in a planned expansion of no less than £250 million. These are the factors with which we are concerned, and that is why this debate seems to have lost a sense of direction.

This industry has thousands of millions of £s of fixed assets behind it, and it employs on its boards very distinguished and powerful financiers. It has at its disposal the services of scientists, engineers, forecasters, economists, accountants, actuaries, technicians and skilled men by the hundred. It is in a position to say to Members of Parliament that it knows its own business best and who are we to interfere with the industry at this juncture because of what could be termed a small recession. We interfere for the good reason that big business is big politics and that is why we are debating the motor car industry today; to find out what is affecting it at the moment and how best we can seek to provide some remedies.

It is true judging from the disclosures we have had from the Government Front Bench, that the Government appear to know few of the answers and, indeed, few of the questions. That is not surprising, because earlier this year we were debating the Radcliffe Committee's Report on the monetary system of this country. I have read that Report five times and, frankly, I do not understand it even now. It passes my comprehension. There are, I think, few hon. Members who understand it. The Treasury did not understand it—and this is the financial system of the country. I sometimes think that the people who operate this system must have been born ten years old. The Treasury did not understand it, nor all the interlocking ramifications of the finance and industrial institutions in the country connected with the industry. This was not understood by the politicians, or, I should think, by less than a dozen of them. I sat through that debate absolutely fascinated, trying to work out exactly what was happening and where we were going.

I pose the same question in this debate, with the same humility. I have been delving into a document known as the National Institute Economic Review. It is a very responsible document which I consult from time to time because its articles seem to afford the balance necessary to political thinking. This time my eye caught the objects of the Review which are listed on the inside of the cover: The Review is intended to be of service to those in business and elsewhere who need to take a view of the general economic situation and prospects. The workings of the economy are not fully understood; and even if they were economic prediction would remain hazardous because of the impact of political events and technological development. What a wealth is contained in those words as applied to this debate. In the motor car industry there is a £250 million expansion and reputable economists cannot say for certain what the future will be, and neither can the industry.

Many hon. Members in this House, including myself and my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), have said that this industry has been over-capitalised. I still think it is over-capitalised, and what is certain now is that whether we like it or not the industry is facing some new thinking which could mean rationalisation. What does that mean? Rationalisation involves jobs, men and unemployment. Most certainly the industry has staggered the country by its achievements, but those achievements have been based chiefly on the hire-purchase credit of the finance houses, which is not a very wholesome thing when viewed from the long term. Whether it is a good thing that people should purchase goods beyond their capacity to pay is an issue upon which future historians and sociologists will report. But since the start of the boom period in 1957 when we first heard the phrase, "You have never had it so good", one thing is certain and that is that we have never parted with it so quick. The hire-purchase debt soared from £200 million to £1,400 million in less than nine years.

What does this mean? It means that the industry is living on "tick" when it cannot forecast what political events will happen in other parts of the world. When I was a little boy in Lancashire and a member of a family living on a strict weekly budget we found it necessary to go weekly to the grocer's shop on the corner and ask for credit from Wednesday to Friday in every week. In a little frame in that shop was a sign which had a salutary effect on every body who walked into the shop. It said, "Do not ask for credit as a refusal often offends". Such a notice is no longer to be seen in any shop. Now shopkeepers are shoving credit at people and are disgusted if they are offered ready cash. What kind of situation is this on which industry is based? It is over-capitalised, with demand in excess of future prospects. I do not believe that the future expansion of the industry will be justified.

I do not think it can be denied that no Government have the right deliberately to encourage their people to live beyond their means. It is the creation of false prosperity caused by creating artificial demand which brings in its train alternate depressions and booms, inflation and deflation, coupled with rising costs and fluctuating Bank Rate which should be avoided. It is also on record in various debates which we have had on economics and industry that other industries have suffered in foreign competition because they are not able to fulfil orders on time as a result of lack of labour while the motor industry has been hogging the available labour.

Out of this one thing becomes patently clear that, whether the Government like it or not, there has got to be a proper planning of the country's industry and resources. We are faced with a challenge—that cannot be denied—from behind the Iron Curtain. The Soviet Government have no gold and dollar problems. They can dig gold out of the ground. They have no problem of strikes by workers, for strikes are not permitted. They have a tremendous advantage in offering shorter or longer terms of credit. It is obvious that if that challenge materialises it will have to be met. In this country we have an ever-growing concentration of monopoly capitalists working in a patchwork structure of industry without a sound basis.

Imperial Preference is not the benefit to this country that some of us thought it would be. Our market is elsewhere. It is in the most populated areas. I mean the civilised populated areas in terms of social living. I do not mean the populated areas of South America, Malaya, India or China where, in the main, there is a peasant population. Certainly in future there will be industrial buyers and consumers there, but that is not so now. Between now and then we have to live in very difficult circumstances of intense and growing competition. We have an embarkation problem of £250 million partly paid by the taxpayer.

Is the optimism of the industry really justified? I say categorically here and now that it would be wrong for us in this House to give the impression that the 1 million employed in this industry are merely suffering from the difficulties of Purchase Tax or credit costs.

Mr. Hocking

Is the hon. Member advocating a reduction in the size of the industry?

Mr. Tomney

If the hon. Member will listen to my speech he will hear what I am advocating.

We should not lead these people up the garden In my union association I have responsibility for many people employed in industry. In my opinion, this nation has as much hire purchase as it can digest, dependent as we are upon the economy of the United States. We should bear in mind, as the Minister pointed out, that that economy is in a period of recession which has been operating for three years. Even today, the United States steel capacity, the largest in the world, is using only 58 per cent. of its total output.

The United States has been our biggest market, but now, because of lack of demand for steel, its manufacturing industries are changing their processes and the models of their motor cars. That poses a special problem for us because they are manufacturing a small car—small by their standards, but as big as our Consuls, Zephyrs and Vauxhalls. That means that we have a smaller share of that market than we have a right to expect from past performances.

Every motor car company, with few exceptions, has felt this pressure. I shall compare the first half of 1959 with the first half of 1960. This did not happen in October or November, but in January to June. These are remarkable figures. The German figures are plus 14,000 on the previous target of 112,000 cars exported to the United States. The French are down 11 per cent., the Italians are down 31 per cent. and the British are down 21 per cent. The Japanese are up 3 per cent., the Czechs are up 72 per cent. and other makes are up 36 per cent. Czech and other makes started from a very low basis. In this vital market B.M.C. in the first half of 1960 had a plus figure of only 1 per cent. and M.G. was minus 11 per cent. It had a production of seventy models a week as against a net output of 1,000 two years ago. Austin-Healey had a plus of 13 per cent. and Metropolitan a plus of 4 per cent. It has special arrangements with finance houses and motor car companies in the United States.

Ford was down 31 per cent., Hillman was down 39 per cent. and Sunbeam was up 167 per cent. Triumph was down 20 per cent., Vauxhall was down 39 per cent. and Jaguar was up by 1 per cent. There is a remarkable comparison when we consider the Common Market countries of Europe. Their percentage figures for exports to the United States are: Volkswagen, in the first half of 1959, 54,600, in the second half, 65,300, and, in the first half of 1960, 77,000, a plus of 41 per cent. Mercedes had a plus of 12 per cent. and Peugeot had a plus of 27 per cent. The figure for the Italian and Swedish cars was down in both cases by about 30 per cent.

We have a real challenge on two fronts. We are not in the Common Market and obviously shall not be allowed to enter. There is a potential market of £400 million. The Germans are in, but they are not exporting in great measure to the Common Market countries. Some 72 per cent. of German production is going overseas. There are lessons to be learned by both sides of the industry in this, and they have to start learning them quickly.

It is remarkable to see that the production of Volkswagen increased from 54,000 in the first half of 1959 to 65,000 in the second half. The number employed in the industry in 1949 was 150,000 and in 1959 it was 335,000. A small degree of increase in the manpower force shows a remarkable degree of rationalisation in the German car industry. In comparison with the number of man-hours spent on total production in 1953, 417.2, the figure for 1958 was 555. Whilst the capital turnover figures—and this is important—for the industry, according to the same source, the Federal Government's statistics, were in 1953 630 million Deutschmarks and in 1958, 11,639 million Deutschmarks. Therefore, the turnover had more than doubled while the number of man-hours had risen by only 35 per cent. and salaries and wages had risen in the same proportion—1,020 million Deutschmarks in 1953 and 1,970 million Deutschmarks in 1958.

This gives a picture of what British industry will have to face not only in intense competition from behind the Iron Curtain but in intense competition from Europe. The motor car industry and the men employed in it must realise that all the assembly is not done in this country. There is a system in the motor car industry known as C.K.D. general knockdown, the uncompleted assembly of cars which are assembled overseas. Those employed in the industry must realise that not all cars leave the dockside fully assembled. Most of the revenue earned is earned from C.K.D. In France, the car output is in the hands of four manufacturers—Renault, Citroen, Simca and Peugeot. One thing which they have in common with each other is a joint pooling arrangement with other European manufacturers and in two cases with the United States, Chrysler and Fords, Fiat and Alfa Romeo.

Car exports were running at about 150 million cars last year. What is important in the Common Market economy structure, which is now going to work in an ever-increasing degree, is the amount of interchangeability between country and country that is being done to make cars more exportable to the importing country, for instance, Citroen cut the price of its two CV models from 4,500 to 3,650 Deutschmarks by using its Belgian assembly lines. The same picture is applicable to Italy. But it is when we come to the Commonwealth market, where we would expect by association of kinship or fellowship or trade that they would favour the United Kingdom producers, that we find that it is not at all so. As more countries become independent, they look round for new industries and the enlargement of existing industries, and this has led leading British producers to produce vehicles overseas at an ever-increasing rate. Commonwealth countries are now nearly self-sufficient in domestic production and the Imperial benefits to this country are declining.

All European and American manufactures, for example, are establishing in Australia. General Motors have an arrangement with the holding company in Australia, which started in 1925, and it is now the greatest profit earner in Australian industry, whilst the United Kingdom's share of the available market fell from 80 per cent. in 1954 to 55 per cent. in 1959. West Germany's figure has risen from 10 per cent. to 25 per cent. So there is no guaranteed future for us on Imperial Preference in Commonwealth trade. It would not be so bad if, as the Minister said, it were a question of straight competition in achieving exports to the Commonwealth, but it is not. All these people are firmly entrenched now everywhere in the world on C.K.D. principles.

The Rootes Group has 13 assembly plants overseas, Vauxhall has 13 assembly plants and Ford assembles in nearly 20 countries. British vehicles are assembled in 30 foreign countries. Each of the big five has plants in Australia, South Africa and Eire. Four have plants in New Zealand, Belgium, the Philippines and Argentina. Two have plants in Denmark, Holland, Italy and Japan. There is one assembly plant for British vehicles in each of the following countries—Cuba, Egypt, Finland, Germany, Ghana, Hong Kong, Nigeria, Pakistan, Portugal, Singapore, Spain and Sweden. Then we talk about the participation of American capital in our industry! If we are to live at all against Iron Curtain competition we can only do so by the interlocking of the economic structure of the free world, one country with another, otherwise we shall never live. We must have a little reality about these things in the future. It does not matter where a man earns his living as long as he earns it.

We have very few markets in Switzerland, but we have an assembly plant in Thailand, while B.M.C. have an agreement with Hindustan Motors and Nissen Motors of Japan. In Japan, the Rootes Group has Hillmans manufactured entirely by the Isuze Motor Company under licence. The reason is that freight charges make it cheaper for a European manufacturer to build overseas, while cars exported in C.K.D. form attract less import duty. The value of British cars assembled overseas has fluctuated between £180 million and £210 million since 1955, other than in the United States and Canada.

What does all this mean? We cannot divorce the problems of industry from the population of the world and the people who want to buy our cars. Where are we to sell them? Shall we sell them in America against the American compact cars? If the Americans have to rationalise, they will. If they have to be more efficient, they will become more efficient. Or do we sell in South America to a largely peasant population? Or do we sell to India when the Indian Finance Minister has just put a further embargo on import credits? Or do we sell them in Russia? China will be an enormous market in the years to come and this needs looking at.

Sweden is self-sufficient. Canada is now grumbling about British cars being given preferential terms, because Canadian workers are unemployed. Is this £250 million expansion in the British motor car industry justified on what the Minister calls an "unplannable" market? If we cannot have a plannable market, how can we plan? We cannot sell cars to the Eskimos, because they have no roads. Let us look at the available market and decide to concentrate upon those things which will sell.

Many British manufacturers have been crying out for labour and capital for years and have been denied it because of the over-capitalisation of the motor car industry. The goods which we are skilled in producing—primary capital goods—are the goods which we ought to be producing in considering long-term economic prospects throughout the world. But they have been disregarded.

Let us consider commercial vehicle production. Some of our makes—Leyland in partioular—taze possibly the best in the world. There are long order books and long delivery dates. If any expansion is to be undertaken at this is where it should be undertaken—in commercial vehicle production. If a country is developing it does not need minicars running around; it needs lorries and tractors. Those are what we ought to be providing. We ought to tell the manufacturers their business and we ought to say that Government money will be spend only in those avenues of production which will bring the best long-term results to us. That means selling to countries which are not now consumer countries but will become consumer countries.

Mr. C. Osborne

I entirely agree with the hon. Member in the very gloomy but realistic picture which he has put before the House. It is our duty on this side of the House to put these facts in front of what he would call management. What hope has the hon. Gentleman that the unions, who have to place these unpleasant facts before their members, will accept the conclusions of his argument?

Mr. Tomney

The unions have always been prepared to accept facts, pleasant or unpleasant. If the economic future of the workers is at stake and the rewards are balanced between the shareholders and the workers in equal proportions, there will be no lack of union good will throughout, but the rewards from the industry have to be shown to be equal and not flowing on one side. What has been happening is that vast profits have been made by the manufacturers, but even vaster profits have been made by the hire-purchase companies after a false, stimulated demand. Some economists have given a figure of £750 net income which a family must have before it can afford a car, although the number of cars on the roads of England suggests that many people are affording cars who have a lower income than that. Frankly, I do not know how some people do it, but it is done.

The industry must look at the problem realistically and on a world basis. It must decide to go for those things which other nations require. These will not be luxury motor cars and, in the main, they will not be passenger cars; they will be trucks, buses, diesels, tractors, caterpillar tractors, earth-moving machinery and equipment of that type. If we go for that market and get it on a basis of specialisation and quality, it will remain with us. The late Richard Stokes, formerly the right hon. Member for Ipswich, used to say that any damned fool can make a motor car, but that it takes a good mechanic and a good firm to make bigger, lasting capital goods for the world. It is the capital goods which we should be producing. If the Minister is prepared to go into further talks with industry on a basis of expansion without developing this other side of the industry or giving it priority, we shall run into trouble.

We are committed as far as possible to the maintenance of full employment for the trade unions and the workers. It is no fun when men become unemployed. We ought to make sure in our deliberations to offer the best help and advice we can to industry, and that should be the foremost platform of any policy. The British working man is not antagonistic to changes. He will go along with industry, as he did between 1945 and 1950 to a remarkable degree. He will do so again. But he must be taken into the confidence of industry and his leaders must be taken into the confidence of industry. The problem must be fully explained. There must not be an expansion of the production of luxury cars merely for the sake of expansion. This industry is a vital part of the nation's economy, providing 25 per cent. of our exports. If industry adopts the policy which I suggest, then, whatever the problems, both industry and those in the Ministry will find that the British working man is not lacking in co-operation when it concerns his own stake in his own future.

6.5 p.m.

Mr. Leslie Seymour (Birmingham, Sparkbrook)

I come from the Spark-brook division of Birmingham and I followed, as its Member of Parliament, an hon. Member who was a great friend of mine. We lived adjacent to each other, we worked in the same area and we spent many years together on the Birmingham City Council. He was a grand little man who regarded it as his first duty to help other people. I very much miss him and regret the passing of my friend, Percy Shurmer.

As so many people are living in my constituency who work for and in the motor trade, and as I have been engaged in the motor trade for nearly forty years, it is appropriate that I should first address the House on matters concerning the motor trade. I have been warned that my statements ought to be short, concise and factual in a maiden speech.

There is no doubt that the present position is serious for the motor and motor cycle trade, particularly at this time of the year, and also for the workers who make such various components as tyres, batteries, electrical equipment, bumpers, window and door handles and radiators. All these workers are dependent on the motor trade, and they feel the pinch when there is a slump in the car trade. But to get a true picture of the present position one must reflect on the immediate post-war years when people, not only in this country but in most countries of the world, were eager to own a British-made car. As a result, there was a great demand for workers, both skilled and unskilled.

Coventry manufacturers and other firms did not hesitate to induce workers, by the offer of very high wages, to leave their present occupations and to go to work for them making cars. Toolmakers, sheet metal workers, polishers, platers, painters, electricians and fitters were all drawn away from other industries by this offer of such high wages. Even the increase in the price of a car by Purchase Tax did not stem the demand in the home market, and people all over the world wanted British cars. The demand far exceeded the supply, but the time had to come when this position would adjust itself.

The workers stopped at Coventry because of the high wages. I have read in the Press that the average wage in the car trade is £18 a week, but a considerable proportion of them average approximately £5 a day. Even on short time they are earning over £12 on a two-and-a-half day week, and about £20 on a four-day week, which is more than workers in other industries receive for a 42-hour week. No section of workers in industry has enjoyed higher wages or more overtime than workers in motor car factories.

I met a deputation of car workers in the House a short time ago. One of them complained that he was on short time. I said to him, "There are plenty of jobs vacant in Birmingham. Many industries are crying out for employees." To that, he replied, "Yes, I know all about that, but I cannot earn as much money there as I can in my present job." There are plenty of vacancies in Birmingham. For example, the city is short of 300 full-time postmen. Workers in the motor industry are not interested in such jobs, because the basic rate for postmen is at present £10 a week, with a maximum of £10 13s. for a six-day week, not a five-day week of 42 hours.

As I said, I am in the industry. I am a toolmaker by profession. I work in the stamped and pressed metal industry where wages are controlled by a wages council. Many of the parts made in my industry go to motor firms. It is interesting to see the last schedule of minimum rates, which is dated 29th July and fixes wages for a 42-hour week for various workers.

According to the schedule of the Stamped or Pressed Metal-Wares Wages Council, the highest-paid employee is a metal polisher. The salary of a Grade II man, who has had not less than six years' experience, is 177s. 6d., with a minimum for a pieceworker of 188s. The salary of a Grade III man, which means a worker who, in addition to having had six years' experience, is also an expert in all processes of both common and best work, or is a chargehand responsible for all work and order in the shop, is 188s. 8d.

Compared with workers in other industries, car workers have had a very good time. We must not forget that they have fixed their standard of living at an inflated wage level and just cannot afford to take jobs at lower rates.

The Chancellor of the Exchequer and the President of the Board of Trade, both of whom I have seen, have given much consideration to the present difficulties. I sincerely hope that they can give immediate help—particularly now just before Christmas—in this present crisis, but this help can be only of short duration. The salvation and the future of the motor industry will depend, not on Ministers, not on this Government or any other Government, but on the car trade itself. The car trade cannot exist on the home market alone. It must rely on the export market, where the industry now faces severe competition.

During the last five years the percentage of British cars has slumped from 38 per cent. to 25 per cent. of the world's car exports. In the early days we had the markets practically to ourselves, but other car manufacturing countries have increased their production. In the last nine years Germany's yearly output has increased by 1¼ million. In the same period, France has increased its output by just under 1 million. Italy has increased its output by 370,000. Italy also reduced prices.

No Government can guarantee full-time and overseas orders in the motor trade. They cannot compel the British manufacturer to sell his goods abroad, nor can they instruct the foreign buyer to purchase British cars in preference to those of our competitors. The people who determine the sale of British cars are the British makers, the British workmen and the British salesmen. The manufacturers of cars have shown by their vast building plans that they have confidence in the future, as I have.

This recession is only temporary. However, they must search for better methods of production in order to reduce prices if we are to sell against world competition and produce the type of cars that overseas buyers demand. As the hon. Member for Hammersmith, North (Mr. Tomney) said, it may be wiser to concentrate on vehicles other than cars. Efforts must be made to provide better service and delivery periods. The salesmen in the industry should embark on a more vigorous campaign to sell British cars in the export markets and particularly in underdeveloped countries.

The British workman can play his part by the various interests in the trade agreeing to agree amongst themselves; by the suppression of all unauthorised stoppages which do so much damage in industry; by accepting new and improved methods of production as a means of gaining more orders by decreasing prices and not by creating redundancy; and last but not least by seeing that a first-class product is produced.

To sum up, the future of the car industry can be secured by complete co-operation of all interests giving to each complete confidence. There will be a constant demand at home and British cars will be competitive in world markets if all sections in production null together.

6.20 p.m.

Mr. Frank Bowles (Nuneaton)

Those hon. Members who have sat through the debate so far have had the pleasure of hearing two maiden speeches. My hon. Friend the Member for Blyth (Mr. Milne) spoke as I thought most delightfully, and was duly complimented by the hon. Member for Coventry, South (Mr. Hocking). It is now my immediate pleasure to congratulate the hon. Member for Birmingham, Sparkbrook (Mr. Seymour) on a speech to which we all listened with very great interest. He started by saying that he had been told that he should not be controversial. As he thought that he was being uncontroversial on this occasion, I am sure that we are all looking forward to hearing him on a later occasion when he is not so inhibited. Nevertheless, on behalf of hon. and right hon. Members, I have very much pleasure in congratulating the hon. Member on his maiden speech.

The hon. Member spoke of having received deputations at this House from his constituents. Since the depression in the motor industry started a few months ago, there have been a number of quite large deputations, from such places as Nuneaton, Coventry, Birmingham and Oxford, from the motor industry—and in one case from a colliery, but that has not become quite so important at the moment. Those deputations have put their worries in the present emergency to hon. Members, and it is important to realise how the ordinary men and women in the industry, their trade union leaders and their shop stewards, have confidence in us as their Members, and are using Parliamentary methods in the best constitutional way to try to rectify their grievances, which are great.

It may be that the hon. Member for Sparkbrook thinks that a drop of £5 or £10 a week is not all that serious if the worker only drops down, as a result, to, say, £15 a week. It may be that my imagination is clearer and more vivid than his, but if I had to drop my standard of living by that proportion it would be a most terrible experience. The hon. Member has been in industry since he was 14 years of age. He has now risen to the eminent position of managing director of a well-known firm, so he must have had some experience of working-class conditions and life and I hope that he will sympathise with the point that I am putting.

In their distress, these people came to Parliament. They believe that we can help them, and it is our duty to do everything possible to make sure that they are helped, not scorned, because it is very well worth remembering that there are always other methods open to angry workmen. Nevertheless, these people in England, Scotland and Wales believe in our British Parliamentary institutions.

On the occasion of two of these deputations I had the honour to be elected to take the chair. The meetings took place in the Grand Committee Room off Westminster Hall and, as my hon. Friend the Member for Coventry, North (Mr. Edelman) knows, because he was present throughout both, they were very well attended. The hall was as full as the police would allow it to be, bearing in mind security, comfort and order. They were very good meetings, and one of them lasted for more than two hours.

Those people demanded of the hon. Members who were present that the Government should ease the credit squeeze and the hire-purchase conditions, and should reduce Purchase Tax on cars which, at 50 per cent., is a good deal higher than it is on other things—and is, I believe, 20 per cent. higher than the Purchase Tax in those European countries that have it.

People do not forget the boom conditions that were alleged to exist in 1955, just before the General Election of that year. They remember the great cries about prosperity and peace and the like. The present Government won the election then, but it was not very long afterwards—in 1956—that what many of us who have watched this system work prophesied actually came about. Restrictions were put on, the Bank Rate was raised, interest rates were raised, and in that year in the Coventry area we had no less than 50,000 men and women unemployed.

Those things are not forgotten, and there is a real suspicion in the Midlands, and possibly in other parts of the country, that the car industry, more than any other, is the shuttlecock of Tory political tactics. They play about with it whenever they think that it is time to have another General Election. The President of the Board of Trade has spoken about cycles or curves of depression followed by booms. In the old days it was alleged that we had the cycle every seven years, but in the early years of the century that was not a thing that concerned the Tories at all.

In the time of Liberal Governments the cycle was said to take seven years, but under the gentlemen who are now In office things have been hurried up and we now have it every four years. It is quite clear that it is done for the purpose of breeding what I believe to be a false sense of security in our economic conditions at the particular time.

People do not forget the alleged prosperity at the end of 1958 and the beginning of 1959, followed by the General Election in October, 1959. There was no credit squeeze then. There were easy hire-purchase terms. What is more, I came across something that would have shocked my grandfather. We had bank managers running after workers in the car industry, telling them, "Don't go to the car-hire-purchase people, come to our bank. We will arrange an overdraft. I'll come to see you at your home at six o'clock this evening." I have known overdrafts to be arranged by bank managers canvassing on the doorstep.

I do not know that there is anything wrong in that but, as I say, it is a different outlook from that in which I was brought up. A bank manager in the old days would have said that it was naughty to have an overdraft, and that the sooner it was paid off the better. Bank managers put the wind up people in general even if they were only slightly overdrawn.

In those days it was not considered respectable to buy things on hire purchase. I remember, as will many, or most, hon. Members, a famous firm called "Mr. Drage", his great selling point was that his hire-purchase goods—mainly furniture—were delivered in plain vans. Now, of course, hire purchase is not frowned upon at all. I am not going into the morals of it—I do not know that I am entitled to do so—but I have always felt that it flows from a capitalist system.

About thirty years ago, there was Major Douglas and his Social Credit. Those Greenshirts, as they were known, saw even in those days that to enable the workers to pay for the goods they produced—because the workers were always paid less than the value of the work produced—they must continuously have injected into their pockets the wherewithal to buy the products of their labours.

That is elementary capitalism, and it has always been one of our criticisms of that system. Indeed, I have always said that we shall never solve these problems as long as we have capitalism. I believe that in this industry, as in a great many others, the solution lies in proper socialisation. I have always said that—I do not trim on such matters—

Mr. C. Osborne

Does the hon. Member mean nationalisation?

Mr. Bowles

I mean whatever the hon. Gentleman likes to call it—socialisation, nationalisation, public ownership. I do not mind at all. What does the hon. Member like to call it? I am sure that he likes to use the word "nationalisation" because his Government have made such a dirty word of "nationalisation" that it suits him to use it. They are making a dirty word also of capitalism by the way they have been carrying on in the last nine years, but I think that this is the last period of office for them.

During the last election campaign, in 1959, I repeatedly warned anyone who cared to listen to me speaking on the street corners—it was such a lovely summer that we did not have to go inside—that the glorious situation that people were enjoying in those months before the election would soon disappear if the Conservative Party won. The Conservatives did win, partly, I think because they fooled some people who were, perhaps, doing very well.

It is interesting that some of the worst election results from the point of view of the Labour Party were in the West Midlands. I think that we lost seven seats in all. The hon. Member for Spark-brook represents one of them now, I think. We lost Meriden. We lost Yardley. We lost Coventry, South, and we lost Rugby. I think that, to some extent, it may have been a false sense of prosperity which lulled the people into voting Tory. I am sure that the Tory Party meant it to happen, and I think that it succeeded. It will not happen again.

I do not carry the figures in my head, but the motor companies are making tremendous profits. The shareholders are all doing very well. The workers, on the other hand, the people who actually make the motor cars and the profits, are, apparently, quite easily discarded when any sort of depression comes along. I have a practical suggestion to make about profits. I do not know exactly what they are, but they seem to run into millions whenever the balance sheets are published. I should like to know what are the profits made per car, if it is possible to work the figures out.

I should like to know, also, what are the wholesalers' profits and what are the retailers' profits. In June or July of this year, I think it was, Vauxhall Motors officially allowed the company's retailers to cut the price of Vauxhall cars, and the price was cut quite a lot—£40 to £70, I think—but the retailers still had plenty to play about with in their pockets.

This is really rather interesting. If it is the general desire of the industry, the shareholders, the directors, the wholesalers and the retailers, to sell more cars, there is one thing that they might do. They might consider chopping off a good deal of their profit margins.

Mr. C. Osborne

indicated assent.

Mr. Bowles

I am very grateful to the hon. Gentleman for his agreement there. I find him very much more impressive when he agrees with me than when he interrupts me on other occasions.

As I was saying, the workers are very quickly discarded when a depression comes. It is surely quite out of date, a complete anachronism today, that workers in important industries such as this should be employed on a week's notice. I read a year or so ago that Walter Reuther, the leader of the American automobile workers, fixed up with the motor manufacturers in the United States for a yearly contract. I think I am right about that. This is very important. We are talking about trying to stop fluctuations in this industry and, I suppose, in others as well. Why not have a yearly contract? In other words, why should not there have to be a year's notice before a worker can be sacked?

If there were yearly contracts, there would be a good deal more planning and consultation between management and the workers and their trade unions, shop stewards, and so on, than there is now, when a man can be pushed off with a week's notice or a week's wages in lieu of notice. Probably this is not a new idea to our leaders in the motor trade unions, but I put it forward again because repetition sometimes does some good. If boom conditions again arise in the industry, perhaps the workers' representatives will use the opportunity to say, "All right. You want to produce 1,000 cars a week from Standard"—or whatever it may be—"We want our men and women to have yearly contracts. Then we will come back and work for you." I am quite certain that we should find that that had a more stabilising influence in the industry than is produced by the present basis of a week's notice to sack a man.

There does not seem to me to be anything like enough planning by the Government. About a fortnight ago, I asked the President of the Board of Trade whether he would stop Rootes building another car factory in Scotland, having regard to the serious situation in the motor industry in the Midlands. I gather that my hon. Friends, quite naturally, have taken another view, and that they have been successful in persuading the President of the Board of Trade to place industries of this very kind on Merseyside, in Scotland and elsewhere.

But it does strike everyone else, apart from hon. Members who have a great deal of unemployment to worry about in their areas—sand Ministers, of course—as idiotic, that, when we have this great depression in the motor industry, we should be planning for a further £300 million—I think that was the figure mentioned by one of my hon. Friends—more investment in the motor industry outside the Midlands, in the North, on Merseyside, and so on. It really is not planning. It seems just idiotic. Possibly, the Government are a little concerned about the political situation in Scotland and on Merseyside, but, quite frankly, I say that it does not make sense, when there is such a recession in the Midlands, to go on spending like that.

I gather that the Government are to pay for some of this capital investment, even for some of Fords, even though that company is, or very soon will be, 100 per cent. owned by America. The Government are subsidising the motor industry to open up in other parts of the country in spite of the position left behind in Birmingham, Coventry and places round about. There is no sense in it at all. Of course, the answer really is that the Government do not believe in planning. They believe in as much laissez-faire as they can get away with. They believe in capitalism. The result is unemployment and short-time working, and the workers are the victims. As I said before, I believe that the industry should be socialised.

In my constituency, we have an organisation known as "M.I.R.A.", the Motor Industry Research Association. I once had the honour of visiting this organisation and I know that other hon. Members here have visited it. It is doing wonderful research. I shall not go into the details now, but the effort is a co-operative one by the motor manufacturers and the Department of Scientific and Industrial Research. I was told the other day that the D.S.I.R. is the biggest contributor. I congratulate the Government on that, because it shows that they do appreciate the importance of research in the industry. The M.I.R.A. is working very hard. I do not know the details, but I am quite certain that, as the motor industry is all connected with it, those in the industry will be able to have assistance in overcoming the problems which face them here and abroad.

Yesterday, I took up for the first time a paper called the Weekly Post. I suppose that we all had a copy yesterday. I did. There was an article in it by Mr. Courtenay Edwards, in which he says: … to my mind commentators in the industry itself are too ready to blame the recent set-backs on the hardening of the American market and credit restrictions. I would put forward these equally powerful reasons for the trouble:

1. 1. The industry as a whole is too self-satisfied. It has become mesmerised by its past achievements.
2. 2. It has concentrated too strenuously on the American market and neglected to do all it might to push sales in other parts of the world, notably Western Europe.
3. 3. The Government has often, in trade negotiations with other countries"—

perhaps the Minister will deny this later, if he can— let the motor industry down badly by its failure to insist on reasonable terms for British cars. 4. The motor firms still refuse to adopt really aggressive sales tactics of the kind which have enabled Volkswagen and Renault"— which are nationalised, I think; at any rate, they were— to build up their present strong position in world markets Later in the article, it is said: When you go abroad and meet motorists in countries like Switzerland, Rhodesia, France and Sweden, they always seem to have perfectly sound evidence of the way British car salesmanship often falls down on the job. It ranges from inept publicity to infuriating delays in the supply of vital replacement parts; from the snooty apathetic salesman in his glittering showroom to the industry's refusal to fall into line with universal engineering practice in such matters as the metric system and the kind of threads we use. The article concludes: If the industry made a mistake about small cars, is it not feasible that it may also be wrong about some of its other strongly held views? I think so, and it is partly because of its over-rigid policy outlook that I accuse it of being a bit complacent. I support the Amendment. I read that article because what we want is a working party which will see whether what is said in it is well advised. I cannot judge. I can only speak of the unhappiness among my constituents. I am grateful for this opportunity of addressing the House, and I hope that the Minister will say something about research and the possibility of an inquiry.

6.40 p.m.

Mr. Martin Lindsay (Solihull)

I cannot be sure about these matters, but I suspect that, with the exception of the hon. Member for Dagenham (Mr. Parker), I have more workers in the car industry in my constituency than any other Member. Not only have I the Rover Company in my constituency, but workers go to Coventry on one side and Longbridge on the other, or across to Birmingham to body builders such as Fisher and Ludlow Ltd., or Mulliners or component makers such as Lucas or S.U. Carburettors. I am, therefore, naturally exceedingly anxious about the position of the motor industry. I can fully understand the anxieties of those who work in the industry and their families. I take the view, however, that we must look at the economy as a whole, particularly the balance of payments. Above all, the one thing which we must not do is anything which would make it more difficult for the export trade, because it is the drop in exports which has got us into our present difficulties.

The trend of exports in the motor industry is discouraging. In each of three of the last four months for which we have figures—and they go back as far as June—the industry exported fewer cars than in the corresponding month last year. The same trend is beginning to occur in the export figures of commercial vehicles. What is more alarming is that this trend is reflected in the national export position. It may not have been palatable but I think that it was realistic when the President of the Board of Trade said today that, in his judgment, an industry such as this, which is geared to export 50 per cent. of its products when in full production, is bound to have upsets from time to time because it is so dependent on foreign trade.

However, what the hon. Member for Newton (Mr. Lee) said about booms and slumps and booms and "busts" in the industry was nonsense. The fact is that ever since the war the industry has had not more than three months on short time, and the hon. Gentleman admitted that the short time now is only 25 per cent. That is not a very high proportion of busts in the last fifteen years of this industry's activities.

I also think that it is fair to point out that, in an industry in which the average earnings on full time are £18 17s. 4d., which is just double what they were ten years ago—and no one can possibly suggest that the cost of living has doubled in the last ten years—such high earnings are some compensation for fluctuations which, on the downward side leading to short time and redundancies, led to more than three months short-time working in fifteen years up to the present. I accept that to ease—

Mr. Lee

In 1956, 50,000 people lost their jobs, let alone being on short time.

Mr. Lindsay

They were back in their jobs again in just over a month. I remember the situation very well. I am glad to say that they were back again in a very short time.

I was about to say that it is true that to ease the hire-purchase restrictions would help the industry, because it would get the secondhand market moving again. Few people are prepared to place an order for a new car until they can get what they consider to be a reasonable price for their old one. However, to ease the hire-purchase restriction would, as my right hon. Friend said, have a wide effect on the economy as a whole. Much as I should like to see special measures taken to help the motor industry, I think that one is bound to take the view that at present it would be wrong to show a green light to encourage another spending spree which would have only one effect, namely, demands for more wages.

If the A.E.U. had not tabled its present wage demands, it might have been very much easier to make some H.P. concessions.

Mr. Cyril Bence (Dunbartonshire, East)

rose—

Mr. Lindsay

I hope that the hon. Member will not be long, because I have promised not to speak at too great a length.

Mr. Bence

But what the hon. Gentleman is saying is important. Does not he appreciate that, if the present situation goes on for very long, the resultant fall in the output of units from the motor industry will inevitably force the motor companies to put up their prices, which would make the position worse?

Mr. Lindsay

I appreciate that, but it is not nearly so big a factor as it is sometimes thought to be. It is, however, a factor.

I am deeply anxious about continual wage demands in the motor industry. It is possible that some branches of the engineering industry—perhaps the machine tool side—can afford an increase in engineers' wages. But if we are to revive and sustain the motor car export trade, our prices must be competitive. The plain fact is that we have already priced ourselves out of a number of markets, particularly in Western Europe.

Mr. Bence

indicated dissent.

Mr. Lindsay

The hon. Gentleman shakes his head, but this is the view of people whose livelihood depends on selling British cars abroad.

It is easy for the Opposition to press for reductions in Purchase Tax and easement of the hire-purchase restrictions, and so on. I make no complaint about that, but they have not the responsibility for these matters. I recognise their sincerity and deep anxiety about the industry, which I share. In my view, there is one way in which hon. Members opposite can give tremendous help to the motor car industry, and that is to condemn in the most forthright terms unofficial stoppages, which are doing the industry so much harm.

Mr. Bence

How many are there? How many hours are lost?

Mr. Lindsay

It is not possible to get overall figures for unofficial stoppages for the industry as a whole—at least, I have not succeeded in getting them—from the Ministry of Labour or from the Society of Motor Manufacturers and Traders. I can, however, give the figures relating to the Rover Company, in my constituency. This is a very well managed company—

Mr. Bence

indicated assent.

Mr. Lindsay

I am glad that the hon. Gentleman supports this—in which the greatest possible care is taken over the welfare of the workers. Every attempt is made to keep labour relations as sweet as possible and to meet all reasonable demands from the shop floor.

I think that the figures for the Rover Company will stagger the House. Since the beginning of this year, it has lost 250,000 man-hours in unofficial stoppages. That is equivalent to 2,500 men losing 100 hours' production, which is two-and-a-half weeks' work. To my mind, these are appalling figures.

Let me give the House an example of one of these types of unofficial stoppage. The other day, 124 men, earning over £23 a week each, were held up in production through no fault of their own. They were paid for this lost production at the rate normally paid by the Company. However, they asked for a special make-up and this was refused by their superintendent. Without even waiting to see the production manager, these men walked out. As a result, 1,500 of their fellow workers had to be laid off. The Company lost the production of 1,100 vehicles, 75 per cent. of which were for export, and the actual difference to these men would have been 1s. 7d.

All I can say is that such feckless, reckless behaviour as this makes one despair of trying to help the industry. One would think that these men had no desire but to keep themselves permanently on short-time and have redundancies. I mention these examples because they come from the company which I know best, not because their record is any worse—in fact, I believe that it is much better—than that of some of the bigger companies such as B.M.C., Rootes and Ford.

Mr. Bence

It is better than most.

Mr. Lindsay

I am obliged to the hon. Member.

Mr. Bence

The three big American companies are the worst in the world.

Mr. Lindsay

The greatest help that hon. Members, and particularly hon. Members opposite, can give the industry is to condemn such feckless behaviour in the strongest way they can. All these types of stoppage put up the cost of production and make it infinitely more difficult to lower export prices and to keep the men in work.

The men who run this great industry are full of confidence that their plants will all be back an full-time work within two or three months. They are backing their judgment with many millions in their development programmes, none of which is being cut back. When we look at our export difficulties in country after country around the world, one is bound to wonder whether this optimism is justified. All one can say is that this is a matter of commercial judgment, not of political judgment. Therefore, one must trust the leaders of the industry and hope that their judgment will be fulfilled.

My view is that, much as I should like to see special measures taken to help the industry, I believe that the Government are right in the view that they are taking. I believe that, with the confidence in the industry itself, and, above all, of the necessity of not encouraging wage demands by encouraging more spending, which would make the export position much worse, the Government are taking the right view in giving no special help for the industry at the present time. This, I believe, is, above all, a time when the national interest must be put before party considerations.

6.54 p.m.

Mr. Maurice Edelman (Coventry, North)

I welcome the opportunity of following the hon. Member for Solihull (Mr. Lindsay), whose sincerity and, generally speaking, non-partisan approach to the problems of the motor industry are such that I admire. I dissent wholly, however, from the hon. Member's conclusions, and I will endeavour to show why. In the first place, although with the hon. Member I deplore unofficial strikes of the kind he has described, I am certain that he has exaggerated the problem and its extent.

Only today I was talking to a responsible person in the trade union movement—I would quote his name had I his permission to do so, but I assure the House that he is a most responsible person—who told me that the average figure in the motor industry for loss of time through both unofficial and official strikes was six hours per man per annum. That figure contrasts strangely with the figure, which I accept, given by the hon. Member. I can only assume that the small local difficulties which are experienced in Birmingham do not illustrate the picture of the problem of the industry throughout the country.

Mr. Bence

I assure my hon. Friend that for years in the motor industry, the biggest factor in hold-ups was not strikes or even sickness but men waiting for materials to deal with faulty batch deliveries.

Mr. Edelman

I am obliged to my hon. Friend.

I should like to move on to wider considerations. The most important of these is the urgent problem which today faces the industry. When I heard my hon. Friend the Member for Nuneaton (Mr. Bowles) speak about our constituents who came to lobby us, I felt that he was introducing into the debate a breath of reality. What is going on in the Midlands, in Coventry, Nuneaton and Birmingham is something which has not been experienced since 1945. Despite the brief setback in 1956, today's recession is of a totally different character.

Today, there is mounting redundancy and a steady increase in short-time working. We must face the fact that the prospects of the industry and of the workers through the winter, at least, are extremely bad. Although I will not go into details of the numbers on short time, it is obvious that thousands of men are today working short time. There are thousands of men whose unemployment is concealed. Consequently, if we look at the broad picture of short-time working and of unemployment and, what is more in the present period of recession, of workers in the industry being bought and sold by take-over bidders as if they were plantation workers in the deep South in the eighteenth century, we must accept that there is something radically wrong with the industry.

Our debate falls naturally into two parts. There is the question of what the Government are doing about the immediate problems of the workers who are unemployed or on short-time. Various suggestions have be put forward. From time to time, in common with a number of my hon. Friends who have expressed the opinions of the trade unions concerned in this matter, I have urged that there should be a cut in Purchase Tax. The reply from the Chancellor of the Exchequer has always been that this would undermine confidence until the next Budget and that our claim that there should be a cut in Purchase Tax merely means that people would refrain from buying. That danger is inherent in the claim at any time that there should be a cut in Purchase Tax.

The situation today is that unless cars are sold on the home market, which is the only market immediately available, short-time working and unemployment will continue. Unless dramatic action of the kind we suggest is taken, which would encourage people, not in three months' time but immediately, to start buying cars, redundancy and short-time working will be progressive.

I asked the Chancellor of the Exchequer the other day whether he had done some arithmetic and made any kind of comparison between the prospective loss to the Revenue, which the President of the Board of Trade mentioned again today, if there were a cut in Purchase Tax and the amount which he certainly will have to pay in unemployment benefit between now and the Budget unless he cuts the Purchase Tax. The Chancellor's reply was that it was irrelevant.

Even if we accept that a cut in Purchase Tax would, in effect, be a concealed subsidy to the motor industry and to employment, the question remains whether it is not better to give a concealed subsidy to maintain employment rather than to give an overt subsidy in the form of unemployment benefit to those who have been made unemployed or are working on short time as a result of Government policy. That is the immediate question. I would join with my hon. Friends in urging most strongly that now, before the next Budget, in order to prevent ever-lengthening queues of unemployed and men working on short time, action should be taken. It can and should be taken now, otherwise the figures will grow unnecessarily.

Comparisons have been made with the brief recession in 1956, but we all know that the present recession is of a totally different kind. I agree with the hon. Member for Solihull that since 1945, thanks to the planning of the Labour Government, the motor industry has done through a period of spectacular affluence. Thanks to the pressure exercised by the late Sir Stafford Cripps, the motor manufacturers were directed—and I use the word "directed" advisedly, because they were very reluctant—to go into the export market. Because they went into that market it was possible to have flourishing exports, especially to North America, and there was always the cushion of the home market on which to fall back.

I suggest that now is precisely the moment when the home market should be used as a cushion for employment. Although it may be said that any fiscal measures taken will single out the motor industry for help, surely it is right to single out for help the industry which today is suffering most. Although I listened with the greatest interest to the long-term diagnosis of what is wrong with the industry and what prescription should be applied to cure it, I could not help thinking that when a man is bleeding to death one does not put him through a long routine of X-ray examination and so on but one applies a tourniquet to stop the bleeding. I hope that I shall not be accused of exaggerating when I say that the state of the industry is steadily deteriorating.

From time to time Front Bench speakers opposite, and I am thinking particularly of the late Parliamentary Secretary to the Board of Trade, make statements to suggest that motor manufacturers know best. Those statements, of course, find an immediate echo from the Government back benches. We have only to look at several statements put out by manufacturers in recent times. Last year, Lord Tedder forecast a production of 180,000 a year by the Standard motor company by the end of 1960. What is he reported as having said this morning in connection with the Leyland take-over bid? It is: A very sharp and adverse change has come over that section of the industry in which Standards is engaged. As for Mr. Alick Dick, the managing-director of the Standard company—

Mr. William Shepherd (Cheadle)

Is it not grossly unfair to this industry not to say that the hon. Member and I thought three years ago that these expansion programmes were not justified but that the industry has proved up to now that they have been justified? The hon. Member should give credit to the men who took the chance.

Mr. Edelman

I am testing the veracity now of what has been said by manufacturers by quoting these statements. I want to set off what was said by spokesmen on the Government Front Bench against what has been said by Mr. Alick Dick. He said: I believe that it will be two or three years before the motor industry becomes profitable again. The implications of that are very serious.

Mr. Hocking

The hon. Member is talking about the Standard motor company. He must be aware that at present Standards are selling as many cars as they were selling in the same period last year. They are working a two-and-a-half day week at present whereas last year they were working a full week, yet I am told that production and sales are precisely the same as they were last year.

Mr. Edelman

I am glad that the hon. Member has mentioned that point, because it is related to the attack made on workers in the industry. Perhaps I may quote some figures in that connection. In 1950 there were 300,000 workers engaged in the industry. By 1959 the output had doubled, to about 1 million units a year. The number of extra workers employed was only 50,000, which illustrates quite dramatically the contribution made by the workers, in conjunction, of course, with progressive automation of the industry. I would not wish to be critical of a maiden speaker, but when the hon. Member for Birmingham, Sparkbrook (Mr. Seymour) spoke about the high earnings of motor industry workers, it should have been said that we ought to be thankful to those engaged in the industry who, by their energies, techniques and skills were able to account for the tremendous drive into the export markets and to provide for that tremendous contribution made by the motor industry as a whole to the national economy.

I believe that we are now facing a crisis different from any that we have faced since 1945. The illustration of that fact is that home market sales are still pretty high, but the immediate cause of a falling off is the decline in exports to the North American market. I do not want to discourage optimism, except when it leads to false hopes and illusions, but, despite the optimism of the motor manufacturers, I do not believe that it will be possible under present arrangements to capture the North American market in the way it was captured before.

It has always been perfectly clear that at the moment when half a million motor cars were imported into the United States and as soon as that became a steady factor in the United States economy and American motor manufacturers themselves began to feel the pinch at home they realised that they would have to come out and fight against European exporters into the United States. They would be able to do it in two ways—either in the traditional way of raising the tariff or by going for what Mr. Ford called "intensive competition", which is clearly designed to drive European exporters out of the United States market. I believe that with the compact cars produced by the Americans we are only entering that stage and that by 1961, 1962 and 1963, when our full expansion plans come to fruition, the American expansion plans will also be driving at their maximum power.

One effect of this great outward pressure of the American motor industry has been the onrush of that industry into the British market, and the take-over of Fords is only one illustration. I was very glad this morning when I woke up to find that Leylands had taken over Standards—for only one reason, and that was that there had been rumours, and many of these rumours had certainly been based on fact, that American interests were angling to buy up the Standard company. At one time Chryslers were certainly interested. The general expectation was that in the complex of motor manufacturers, Standards, as the weakest of the big five, would certainly be taken over before long by American interests.

We already know that more than half of the British motor car industry is in American hands and Americanisation is progressing. Consequently, I find it strange when hon. Members, like the hon. Member for Louth (Mr. C. Osborne), deride the prospect of nationalisation of the British motor industry and speak of it as if that were really the ultimate disaster. I am surprised that hon. Members opposite who attack nationalisation so fiercely have not the same passion when it comes to the Americanisation, of the British motor industry and the take-over of the industry into control which operates not from Westminster or from the great centres of the motor industry in this country but from Detroit and New York and all those places where American capital acts in order to extend its influence.

I must say, therefore, that today, looking into the future and the future development of the motor industry, I most firmly endorse what my hon. Friend the Member for Newton (Mr. Lee) has proposed about a national working party. I think it is time that we in this House took steps to examine very carefully where the motor industry is going. Every one of the big five has its expansion plans which, as we have heard, add up to about £300 million, and each of them has gone in for that expansion on the assumption and with the hope that they are going to capture the whole of the cake for themselves. So they have planned these great investments in Scotland, in Wales and in Liverpool with the idea that, somehow or other, by some natural order of things, by some mystical process to which the President of the Board of Trade seems to be addicted in his thinking, by some sort of spontaneous combustion, the motor industry is going to enter into a period of natural and inevitable expansion.

I do not believe that to be the case at all. Indeed, the industry has expanded during the years in the same way as the telephone service has expanded or the television industry has expanded. We have developed new vehicles and new techniques, and that has inevitably brought more and more customers. I have no doubt that in future there will be a great and widespread demand for motor cars all over the world. But unless production is related to the demands of the consumer, or unless we take steps by means of credit, for example, to encourage those consumers with whom we are associated to take our products, then indeed we shall have a disorderly, distorted and chaotic expansion of the motor industry which will only lead to misery among those engaged in it.

May I put to the President of the Board of Trade one positive suggestion? It is quite clear that part of the prosperity of our society and part of this general affluence has been due to the fact that we have been selling manufactured goods dear and buying primary products cheap. That has been the basis of our affluent society. May I suggest to the President of the Board of Trade that in connection with the motor industry he might consider the possibility of making bilateral agreements with certain of the primary producing countries to pay more for their products in order to encourage them to make specific contracts to buy our motor cars? That seems to me to be a specific proposal worthy of consideration, and I believe that, despite that, it is something which could be done.

I will conclude by saying that we should have a national working party in order to examine the state of the industry and its future prospects. I believe that, looking ahead, we shall not solve any of the ills of the industry unless there is some sort of international agreement or international planning as to the type and size of the cars which are to be made. If we are entering a period of pure laissez faire expansion and competition, the situation will be disastrous, and the prophecy made by Mr. Dreyfus, of Renault, that in ten years' time there will be only five major producing companies in the whole world will be realised, and many of the companies, and more importantly their workers, will have suffered gravely in the meantime.

Mr. Dreyfus, in his most admirable speech, said that the only way in which the motor industry of the world could develop its potential capacity to satisfy the expanding market, was by initiating a division of labour. His proposal was that the West European countries should concentrate on producing the traditional small cars, while America should concentrate on medium-sized cars, and in that way we could have a division of labour which would, in a sense, be a cartel, but in which there was an association of Government and trade unions in order to make sure that a cartel of that kind would work to the general advantage.

That is to look ahead. What I say now and what I charge the Government with is that they have failed to take steps to prevent the growth of unemployment and short-time working in the motor industry. I believe that they have failed to carry out their pledge to maintain full employment, because they have had the fiscal means of control within their power which would have enabled them to stabilise unemployment and cut out short-time working, and carry the workers through the winter. Because of that, they stand condemned, and I hope and believe that they will be condemned by the whole country.

7.15 p.m.

Mr. C. M. Woodhouse (Oxford)

The depressing thing about this debate is that it seems to me virtually impossible to say anything entirely new about the motor industry, though the hon. Member for Coventry, North (Mr. Edelman) has certainly done his best. With a few exceptions, practically everything possible has been said already, and as practically all of it is true, it seems that practically nothing can be done about it.

I think it might still do some good, both to the industry and to the nation, if some of the truths that are uttered from the other side of the House found an echo on this side, and if some of the truths uttered from the Treasury Bench were recognised by the Opposition, who I feel sure would be saying very much the same thing if they were in power today.

Speaking for myself, and I do not believe that the motor industry generally would disagree, I would personally welcome the examination of the future prospects of the motor industry by a working party, although I feel somewhat uneasy about some of the implications which seem to lie behind that idea on the other side. I do not see how a working party of the kind that I could welcome would differ, either in composition or operation, from the bodies which already exist, and to which my right hon. Friend the President of the Board of Trade referred in his opening speech. I am certainly not going to urge the Government prematurely to take the action which we all know they are going to take sooner or later in relaxing the credit squeeze on the home market, because the Government must be, and alone can be, the judge of the right time to do that. But I feel that it is reasonable to suggest to the Government that in future they should be prepared to accept rather more responsibility for some of the consequences of the sort of action which they were obliged, for very good reasons, to take earlier this year.

Every hon. Member of this House who represents motor industry interests has seen these consequences. We have seen them in idle machines and in piled-up stocks, but most serious of all in short-time working and, sooner or later, in actual unemployment. The Government can, of course, and will and do point to other industries and other parts of the country, where people are crying out for more labour in order to fulfil important export contracts, and the implication is that the under-employed motor workers ought to go where they are wanted.

In a constituency like mine, dominated as it is very largely by a single industry and its ancillaries, I think that kind of argument might correspond to economic logic, but it does not correspond to human nature. A man who has recently established himself in Cowley, induced by the prospects in the motor industry, cannot just uproot himself and go work somewhere else, especially when he knows that if the industry picks up again, as we all hope and believe it will, in three or six months' time he will be wanted back again in Cowley. Nor will any alternative employer want to take on men on this sort of terms.

If, as we have been told this evening, in so vigorous, competitive and also volatile an industry as the motor industry, short-time working is from time to time inevitable from all sorts of automatic fluctuations—and I emphasise here that I am talking only about short-term setbacks of a few months' duration and not about a long-term recession, then in these circumstances it seems to me that it should not be impossible to devise some mutually agreed way of mitigating or insuring against the personal hardships which that brings about.

The motor industry may be bound to have its ups and downs—I do not doubt that it is—but surely there need not be such huge precipices between the peaks and troughs for the workers. It should not be impossible to find a way of ensuring that during these short-term setbacks—and I repeat that I am talking in terms of months—workers' wages should fluctuate less precipitously, between less extreme limits, not between £18 or £20 to £7 or £8, but from a rather lower maximum to a very much higher minimum.

Of course that would entail negotiations between employers and trade unions and it would not be easy—I do not imagine that it would—but the Government do not have the right to say that it is exclusively a matter for the employers and the unions to sort out on their own, because when the Government are themselves in part responsible—and I emphasise in part—by measures which the national interest makes necessary, then, just for that reason, they should accept responsibility for taking some initiative in bringing about a mitigation of the consequences. The trouble is that, although the Government are in part responsible, they are only in part responsible. Other factors are at work over which the Government have no control and which they cannot cure by the kind of measures to which the home market is susceptible.

What many of us fear, and it is a fear which has been expressed on both sides of the House, is that the roots of the industry's problem which lie overseas are deeper and more intractable than that. Everyone agrees that the future of the industry stands or falls on its success with exports. Everyone knows that we cannot compel foreigners to buy our motor cars and that the competition is getting severer all the time. Every exporter will say, as we have been told more than once tonight, that the surest condition of a strong export trade is, a strong and large home market behind it.

Yet the tragic paradox of our present economic situation is that when our exports are doing badly the first thing we have to do to rectify them is to punish the home market and, even then, we have found this time that our exports are not really doing any better even when we punish the home market.

Nor is it surprising that our export trade is no longer doing as well as we would like. Competition is severer. Countries to which we used to sell our motor cars are now manufacturing their own. Under-developed countries are certainly an important potential market, but they are mostly countries whose main potential lies fairly far off in the future. Probably, the only really important expanding market for our engineering industries at the moment is in Western Europe.

In our single-minded preoccupation ever since the war with the problem of exports, every successive Government has to some extent failed to take sufficient notice of the most important development in world trade which has happened since the war, which is that the biggest expansion has been not in the export trade but in domestic markets.

To take the biggest domestic market of all, the internal trade of the United States of America is now some three or four times as great as the whole international trade of the whole world put together. That is why the concern of the United States about exporting is no more than marginal, and the fact that the United States is at present facing a balance of payments crisis is irrelevant in this connection, because its balance of payments problem has nothing to do with an adverse balance of trade. Even our own trade in our own domestic market is at least three times as great as our foreign trade overseas, and it is from the United States that the inspiration of the European Economic Community has sprung.

In a very large domestic market, with no tariff barriers and no other internal economic obstructions, so the argument runs, one's economy is stronger, one's dependence on exports is less crucial, and, incidentally, one will probably get a more flourishing export trade into the bargain without having to worry so much about it. This argument should apply just as much to this country as to any country in Western Europe, and it points inexorably in the direction of our seeking to amalgamate our domestic market with the only other market in the world which would really suit us in present circumstances—the European Economic Community—so as to create for ourselves an internal domestic market of between 200 million and 300 million consumers instead of the mere 50 million which we now have.

I am well aware that this is an extremely controversial matter which has been canvassed many times before. I am well aware that someone will have a difficulty for every solution. I am aware of the objections from the point of view of agriculture and horticulture. I am aware of the objections from the point of view of social and welfare policy, from the point of view of Commonwealth relations and national sovereignty, and I am well aware of the fact that there is a good deal of reluctance in the European Economic Community to let us in. I am also aware that there are and must be innumerable practical difficulties of which no one who is not in Whitehall all day and every day can possibly be aware.

I will say only that I have never been convinced that all those difficulties are insuperable. I am not doctrinaire in these matters, and I have come to believe that in the long run such a merger of our markets is the only possible solution for our industries and that the longer it is postponed the harder it will be to bring about.

The only way to join a club is to start by declaring a wish to join it and not to go sniffing around the back trying to find a comfortable semi-detached annexe. If one joins early enough, one will have the opportunity of moulding its institutions and framing or reframing its rules, which have already been riddled with exceptions by existing members. But if one does not do so, or if one leaves it too late, I greatly fear that the outlook for our exporting industries and the motor industry in particular is a long slow decline from which there will be no return.

7.27 p.m.

Mr. Frank McLeavy (Bradford, East)

Whatever may be the differences of opinion between the two sides of the House about the short-term and long-term prospects of the motor car industry, I am sure that we are all deeply sympathetic towards the manufacturers and workers in the industry in their present situation. Whatever the difficulties of the moment, we all hope that the recession will soon pass away and that the industry will return to full employment.

The achievements of the industry have been mentioned, and it is only fair to pay tribute to it for having made such a substantial and welcome contribution to the volume of our export trade. The high standard of craftsmanship throughout the industry has become well known all over the world.

It is our duty in Parliament to try to get the Government to recognise the industry's tremendous importance in the economy and to persuade the Government to come temporarily to its rescue in this difficult period of recession. We must look at the size of the problem. I thought that the President of the Board of Trade made rather light-hearted references to the unemployment problem, as though it were of no great importance or magnitude. To get this on the record, one should give some figures about the various short-time workings so that hon. Members who listened to his unfortunate speech may have a better appreciation of the representations we are making that this unemployment and short time should be dealt with more urgently.

The Financial Times estimated recently that at least 108,000 out of 442,000 workers in the industry and ancillary industries—nearly one in four—are on short time. I am told by trade union officials that, if anything, this was an underestimate. The majority of the employees of the main manufacturers are on short time. In addition, firms outside the industry which supply it have also been affected.

The Dunlop Rubber Company has put 4,000 of its employees engaged on tyre production on a four-day week. The Triplex Safety Glass Company has put 800 workers at its Birmingham factory on a two-and-a-half-day week. Pilkington Bros., which has glass works at St. Helen's and Doncaster, has suspended overtime for thousands of workers and has put some on short time. British Timken, Ltd., maker of ball bearings, has put 330 workers on a four-day week at its Northampton factory.

In the motoring industry itself, during the last two weeks there have been startling and alarming developments. Fords has 18,000 men on a four-day week at seven plants, including Dagenham, Doncaster and Leamington. Lucas has between 10,000 and 20,000 on a four-day week, mainly in Birmingham. In addition, thousands of part-time workers, and nearly all those of pension age, have been dismissed.

Standard Motors has dismissed 2,000 men at Coventry and more than 1,000 at its Birmingham subsidiaries, and 100 at the new Liverpool factory. It has also discharged 250 staff employees, including 78 draughtsmen and seven scientific workers. That is significant from the point of view of future development. The remainder of the Standard employees are on a three-day week.

Thousands of workers at Rootes at Coventry are on a three-day week. Pressed Steel at Oxford has discharged about 1,000 men, and nearly 10,000 of its workers are on a one-and-a-half or two or three-day week. The same firm at Swindon has dismissed 1,100 and the remainder are on short-time.

I could go on citing more cases where the recession has caused serious unemployment and short-time working, but I have said sufficient to show that, despite the complacency of the Minister and the apparent indifference to all this short-time working and sacking, this problem is very serious. It is the Government's duty to realise that in the interests of our economy, of the industry itself and of the workers engaged in it something should be done speedily to give some assistance.

I want to pay tribute to the manufacturers. I and my union colleagues in the industry believe that they are trying not to engage in large-scale dismissals before Christmas, but my friends among trade union officials are concerned about what may happen in the New Year. It is suggested to me that the cut-back in production appears to be worse than in the crisis of 1956, with much less apparent prospects of a revival.

All these facts call for immediate investigation. Unions representing the workers in the industry believe that the serious impact that this recession will have upon the economy of the country and its serious effect on employment in other sections of industry are such that the Government, instead of merely allowing the position to ride, should take immediate action.

What are the long-term objectives? The first is to get a stable level of production. In my opinion, and that of many of my friends in the industry, the present plans to extend production in Scotland and other development areas require re-examination in the light of present circumstances. We must bear in mind that these new enterprises were based upon an estimated 10 per cent. annual increase in the output for the next five years. This does not appear realistic in the present situation. In some ways the motor car industry is like the coal industry. Faced with ever-increasing production, the problem is to find a steady and stable plan of production.

I have a few comments to make on the European market. The Government have done precious little to help the sale of cars in the European market. While many of us would object to any discrimination against the Commonwealth in order to achieve co-operation in the European market, we still feel that much could have been done by the Government to increase the sale of British cars on the Continent. The plain fact is that unless we substantially increase sales in Europe we cannot hope to maintain fult employment in this industry.

Whatever may be the future long-term plan, to deal with the short-term problem the Government must take immediate action to stimulate the home market. In spite of what the President of the Board of Trade said about the Government's refusal to deal with credit facilities and Purchase Tax, I consider that the circumstances prevailing today justify the Government taking immediate action.

There are many ways in which the Government could help. They could ease the hire-purchase term by spreading the payments over a longer period. The President of the Board of Trade said, "We are thinking about it"—or something to that effect—"but we are not going to do it now. We may do it later." Whether that means in three months, six months, or twelve months no one knows, but in our view the Government ought to do it now, because to do so would be of tremendous temporary help to the industry.

Sir John Barlow (Middleton and Prestwich)

The hon. Gentleman suggested that the Government ought to do a great deal more to help the sale of cars in the European market. He passed over that rather lightly. Would he be more explicit and suggest what the Government could usefully do?

Mr. McLeavy

I am sorry, but the hon. Gentleman has allowed me to pass from that point, and if I return to it now I shall cause considerable annoyance to the hon. Members who wish to follow me. I therefore propose to leave it. If the hon. Gentleman had asked his question at the time when I was dealing with the point I should have been very happy to deal with it.

The Government say that they are not prepared to do anything about reducing Purchase Tax. I do not know what is meant when they say that if they reduce Purchase Tax it will amount to a kind of undercover subsidy for the motor industry. I do not see the point. Purchase Tax, as it stands today at 50 per cent., is outrageous, even without taking into consideration the difficulties facing the industry because of the recession. It is probably the highest tax which any Chancellor of the Exchequer has put on any commodity. In any case, it is about 20 per cent. higher than the average Purchase Tax on the Continent.

There is not the slightest justification for such a penal tax on the motor industry. Prior to the recession I said that I believed that it was outrageous that people who wanted to run a car should have to pay 50 per cent. Purchase Tax. We talk about giving people opportunities to purchase cars, but then the Government come along and say, "All right, but we want 50 per cent. of the price in the form of a poll tax." It is monstrous, and the sooner Parliament has the courage to deal with this the better.

Further, I believe that the Government could do much more to give easier credit facilities to the motor industry so that it could more readily export its products.

I turn now to the workers in the industry. My trade union, the Transport and General Workers' Union, representing as it does a bigger proportion of workers than any other union, is, naturally, gravely concerned about the future of the industry and the welfare of its members. In fairness to the employers, I must say that my union has worked in close association with them, and relations have always been good. There has always been a real system of co-ordination, and discussions and arguments have always taken place in a friendly atmosphere. My union's relations with the employers has been an example to other sections of the industry. We therefore wholeheartedly join the employers in their request that the Government should give immediate relief to bring about some easement of this difficult position.

We have a tremendous regard for the motor industry. We appreciate the contribution that it has made—and which I hope it will continue to make—to the economy of the country. This recession which the industry is facing is far mare serious than the President of the Board of Trade was prepared to admit. It might well cause a great deal of unemployment in the supply industries. In recognition of the tremendous contribution which this industry has made to the economy of this country, the Government should feel duty-bound to give immediate assistance and thus show the industry, and the workers, that they appreciate what has been done and are saying "Thank you" in the most acceptable way.

7.49 p.m.

Mr. William Shepherd (Cheadle)

The House always listens carefully to the hon. Member for Bradford, East (Mr. McLeavy), not only because of his interest in the industry, but because of the reasonable way in which he presents his case. I thought that I detected some lack of enthusiasm for the remedies which he suggested, and I think that it would be fair to say that, apart from the abolition of Purchase Tax—in itself a highly questionable project—there is very little the Government can do directly to assist. I am therefore not going to pursue what the hon. Gentleman said, but will try to deal with one or two aspects of this industry where I think the position can be improved by the industry itself.

If I may presume to say so, I think in this respect the debate has been rather less satisfactory than the debate we had in 1957. Before I deal with the points that I am interested in, I wish to say a word about the Ford deal. I think that some of my right hon. and hon. Friends have materially underestimated the effect of this deal. I do not think for a moment that there is other than a tremendous difference between the Ford Motor Company having absolute ownership and having, shall we say, 70 per cent. ownership. There is a very material difference between these two circumstances. It is one thing to face a British annual general meeting and British shareholders; it is an entirely different proposition from being able to send orders direct to the board.

I am not at all happy about this change. If I knew less about the industry I might feel happier, but I am not unaware of what has happened at Luton. Those hon. Members who are aware of the inner circumstances of the motor industry will, I think, agree with me that had it not been for the fact that Vauxhall Motors were 100 per cent. controlled they would not have found themselves in the difficult circumstances in which they were some months ago. Because what happens when a company is 100 per cent. American-controlled is that American ideas are pushed very fast and very hard. I have no doubt that in urgent matters, such as styling and the failure to make a really small car, Vauxhall Motors were induced not by the circumstances or their executives but by the views of Detroit.

I must say to my right hon. and learned Friend the Chancellor and to my right hon. Friend the President of the Board of Trade that while I recognise the essential difficulties attaching to preventing a change of this kind, I am by no means convinced that this means simply a 25 per cent. ownership. It is critical, and when Mr. Ford tells us that this will encourage flexibility I am a little suspicious of what exactly flexibility means, because it can mean a great number of things. I join with the hon. Member for Bradford, East in praising the achievements of our industry. It has done a great job in the postwar years, not only in the time of Sir Stafford Cripps, but subsequently. I do not think, however, that we want to praise ourselves too much, because our achievements, despite the fact that they have been considerable, have not in recent years equalled the achievements of our competitors.

I am sorry to say that the fact that there has been a certain amount of protection at too high a level and a certain amount of ease in Commonwealth and domestic markets, and the way in which the Americans received our cars, has tended to direct our attention from the important European market. While I laud what we have done, I still feel that we could have done better. It is towards this attempt to do better that we ought to be addressing ourselves today instead of worrying about small items like hire purchase. I do not think for a moment that even if we had a relaxation of hire Purchase it would materially affect an issue of this kind.

No one need be too depressed about what is happening. The industry has expanded at what was, perhaps, too great a rate having regard to the overall circumstances. Until a short time ago we have been selling more cars than last year, but, as the Minister said, an expansion of about one-third in the first six months of this year takes some absorbing; and if one runs into a little heavy weather, obviously the situation is not going to be so good. So we have to recognise that this situation, however depressing for the manufacturers and the workers, is just a little hiatus on the upward road. Our main concern, as any hon. Member can see by looking at the figures—I will not requote them, they have been quoted enough—is how can we increase our export trade. Clearly, no amount of home consumption will absorb the increase in production which is projected by the industry. It is to this question of increasing the export trade that I wish to turn.

First, we have to try to direct our thoughts to the market where we stand to gain the most and clearly that is in the European market. The easy sales of the past ten years have, I think, had a bad effect in that direction, as indeed has the high tariff. I wish that we could have had a reduction in the tariff on foreign cars coming to this country six or seven years ago and then British manufacturers would have adjusted themselves to the competition that small European cars create for us in many markets of the world. This tremendous tariff and that degree of insulation has kept us from developing the kind of car which could be a very big seller in the European market.

It is true that we are doing something now, but it is rather belatedly. The Morris Minicar is a substantial achievement. Although it looks a bit odd to some people, it ought not to be underrated. It is a car with a tremendous future both in the home and foreign markets. It is true to say that the small car, in condition of high petrol cost due to taxation, has a tremendous market in Europe which represents 60 per cent. of the total market for small cars. We ought to be out for that market, producing a car smaller than the usual small car which would sell at a competitive price.

The second thing we have to do is pay much more attention to the styling, the quality and the finish of our cars. While I want to praise the industry, I also think that we ought not to be unmindful of its shortcomings. In design and styling we have greatly improved, but I am sorry that we have had to improve in many cases as a result of foreign intervention. I do not think that the Italianising of car styling is absolutely essential. We have people in this country who could do the job as well. We have improved our style but we are still defective in matters of finish and quality in certain respects. I should tremble, were I a manufacturer, to send some cars as they are now sent abroad.

In the past three years I have bought a number of motor cars, and I have never had a list of less than ten faults in those cars. They have not been substantial faults. I know that one can get a run of defective gearboxes or axles which are below standard. However undesirable and regrettable, it is one of those things which does happen. But cars go out from British factories in what I consider to be a most unsatisfactory state.

There are small defects like bad finish to the cars and chrome plating that disappears after three or four months. There are windscreen wipers which do not work and what to me is an amazing fault—I do not understand how it is—there are leaks. I do not understand how a body pressed by a finely made tool giving virtually the same pressing within reasonable limits should almost invariably leak. I could understand it if the whole lot leaked, but when we get about 10 per cent. leaking it seems almost inexplicable.

These defects are damaging to our export trade. Manufacturers should use the time they now have available to achieve a higher standard of finish a rid to give attention to detail, because it is in our attention to detail that we are failing. One forgets engines these days because they no longer give any bother. One hardly ever thinks of an engine breaking down, and they certainly wear for a long time, but if we are to succeed in the export market we must give more attention to the important matters of detail and finish.

We need more research in this industry. My noble Friend Lord Hailsham had a lot of complaints when he said that it is appalling that the industry spends only £250,000 on research, but when I went to the Research Association a year or so ago I heard that it was spending only £130,000. I said something which I cannot repeat in this House. It was fairly emphatic. It is unsatisfactory that in an industry of this size the research effort should be as low as £250,000, of which the Government find a substantial amount. The industry ought to be conducting more basic research into the problems confronting it.

The industry ought also to improve its labour relations. I have spent a great deal of time going round motor factories trying to get at the truth about labour relations in the industry. It is an exceedingly complicated business. Broadly, those who have good relations are those who have worked very hard to get them and those who have not got good relations are those who regard labour relations as rather an adjunct to production which can be hived off to some personnel officer and left at that. I think we ought to say in this House, what I think is true beyond any question, that labour relations in industry, particularly in a large expanding industry such as the motor industry, should be regarded as of such importance that the chairman or deputy chairman of a company ought to take a close personal interest in them. Obviously he has to employ personnel officers, but those personnel officers ought to report direct to a high functionary of the company so that, at the highest level in the administration of the business, this can become a reality.

I hope that those companies which have bad records will try to use the time now available to improve materially their labour relations, because it will pay very substantial dividends. Of course, it is true that shop stewards are often troublesome. It is also true that we cannot buy labour relations merely by paying higher wages. It is nevertheless the case that some manufacturers by dint of their energy and application have secured very fine labour relations in the motor industry, and if the industry were to make the effort I think that more could attain better relations in other firms. They cannot be attained merely by paying high wages or having a £5,000 a year personnel officer. It has to be done by the workers believing that management is sincere in its attitude towards them.

I very much regret that there is not that feeling in some of the motor oar firms. The result is that the men do not believe management wants to play the game. They have not the sense that the management has the highest level of integrity. Until that is achieved no amount of high wages and spending money will create good labour relations. Therefore, I hope that this industry will use the little more elbow room it may have in the next month or so to try to improve labour relations.

In this business in future we cannot look for the conditions which have existed in the past ten or twelve years. We shall face a situation in which in the summer time there will be peak periods of demand when everyone is working merrily and in the winter time demand will drop. We have been suffering from the effects of seasonal demand because of the great expansion in the demand for cars. Probably we shall do so again, but that will not be the natural order of things. I suggest that both employers and employees might start looking at some method by which the position of the industry in the new conditions might be safeguarded. Men do a lot of overtime when the demand is high and they are stood off for three days a week when demand is poor. That is not a satisfactory state of affairs for the workers.

I was interested in what the Italians have done. They have pursued an idea which I think has a great deal of merit. Recognising that in essence this is a seasonal business they have made arrangements whereby the workers do not get paid for working overtime during the peak periods but get the maintenance of their standard wage when they are working less than the normal length of time. That system has a great deal of advantage if we can get the unions to accept it, because it avoids a high rate of overtime payment which necessarily inflates wages and makes it difficult to compete and also avoids the difficulty of men taking home wages for only three days' work a week. I do not know whether that would be practicable in this country, but it is an interesting idea which I think ought to be studied, because in future the demand will go up and dawn seasonally more than it has in the past.

I began by saying that I do not think there is anything really practicable which the Government can do to give substantial help to the industry. I believe there are many things which both employers and workers can do to help themselves. I hope they will use the time they have available in the new conditions to improve their circumstances because we in this country can produce motor cars at least as well as any other nation. We are an inventive and industrious race. We are even now learning how to make things look nice, which is an achievement we lost for a number of years. With all these qualities we can compete with any nation in the world in making motor cars.

I hope no one will try to create the impression that this business is finished. A lot of damage has already been done by a too gloomy outlook. It is not a gloomy, desperate position. It does not do to go about talking as if the industry were on its last legs. If it were, that would be a bad thing to do, and when it is not so it is even worse to do that I believe the industry faces a more difficult future than the conditions it has faced in the past ten or twelve years. That future will not be so rosy, but we have a fund of ability in workers, designers and management. If we take to heart the lessons which are clear for us to see I believe the motor industry will enjoy a prosperous future.

8.10 p.m.

Mr. Victor Yates (Birmingham, Ladywood)

We have listened to a very interesting speech by the hon. Member for Cheadle (Mr. Shepherd). I thought that, by and large, all the items which he suggested that the industry ought to consider made a first-class case for the examination of the industry by a working party.

I am not looking at this matter entirely from a political angle. If we take labour relations in industry as an example, some of us feel very strongly that the worker ought to be the greatest shareholder. I have had something to do with labour relations. I was once chairman and a member of a works council for a number of years. The council found that it was difficult always to get agreement. It is not only a question of the workers. The management has a responsibility to take the workers into its confidence and that, of course, is not always done, either in the motor car industry or other industries.

The hon. Member leaves the question of design, and what the manufacturers ought to do, entirely to the industry. He says that the Government can do nothing at all. When there was an earlier recession in the motor car industry, the manufacturers were inclined to dismiss the workers. That created very considerable hardship. I know numbers of workers with the Austin Motor Works who were purchasing their own houses and who found themselves suddenly dismissed. Having lived up to a certain standard, they were finding it extremely difficult to know what could be done. I know that numbers of them were taken back later. Now the motor car manufacturers are more inclined to share work, which also brings very serious problems.

What has impressed me about this debate today is the lack of any sense of urgency in this matter. I am amazed at the attitude of hon. Members opposite, because the Government have very great responsibility. I know that in my own city of Birmingham a question which is affecting the workers there very considerably is that of short time. I thought that the Minister rather minimised its effect. In the week ended 5th November, in Birmingham, the numbers on short time were 44,000—a serious matter. A week later, on 12th November, the figure went up to 50,000. On 19th November it went up to 62,000 and on 26th November it rose to 72,000. What does that mean for Birmingham and its ancillary industries?

In my own constituency, the great firm of Lucas has decided to pension off their older workers in December next, earlier than they had intended. These men, who have given service to the industry, are now, in the evenings of their lives, to be suddenly put off. I could give a number of examples of Austin workers who are now faced with the fact that, suddenly, they are on three days' work a week. How do they meet their hire-purchase and other commitments? They are obliged to seek other work on two days. Many of them are serving behind counters in shops in Birmingham to supplement their incomes.

It is all very well for hon. Members opposite to say that wages in the motor industry have been high. The hon. Member for Birmingham, Sparkbrook (Mr. Seymour) told us how low wages were in other parts of the city. That is a reason for trying to increase wages rather than trying to depress them. If hon. Members believe that the solution to this problem is to reduce the cost of production by reducing wages, let them say so. We shall know then exactly where we stand. This problem is creating tremendous hardship. When will there be an end to it? Will it end by Christmas? Is it likely to be worse after Christmas, when, usually, unemployment and short time working is high? I cannot see the situation improving after Christmas, and that is what disturbs me.

The hon. Member for Cheadle said that the Government could do nothing except, perhaps, lower Purchase Tax or abolish it, and that that would make no material improvement at present. How does he know that? On what facts does he base that statement?

Mr. Shepherd

I think that the hon. Gentleman has misunderstood me. I said that I did not think that the elimination of hire-purchase restrictions would have much effect. I did not think that it was, in a broad sense, a wise thing to reduce Purchase Tax.

Mr. Yates

I gathered from the hon. Member's opening remarks that there was nothing that the Government could do except reduce Purchase Tax and that he was not enthusiastic about that.

The hon. Member went on to say that the industry was faced with foreign competition, but he did not associate that in any way with the fact that European countries have not the same burden. Germany is an example. We are worried about increasing the demand in the home market. Is Germany worried about that? Not at all. Germany has outstripped us.

Is Germany worried about the home market and increasing sales in the home market? Of couse it is not. The consumer tax there is nowhere near the 50 per cent. Purchase Tax which we have, If we adumbrate the reduction of Purchase Tax, we do it with very considerable enthusiasm from this side of the House. We have seen too many examples of the way in which this tax has affected the capacity of industries to compete.

When we discussed this matter earlier in the year during the Budget debates some of us made this case. Unless hon. Members opposite carefully examine the statements made by the motor car manufacturers they are blind to the facts of the situation. I am not especially partial to motor car manufacturers, but since I have been examining this problem I have been immensely impressed by the capacity of the British motor car industry and its efficiency.

The last speech made by the chairman of the Society of Motor Manufacturers and Traders, Mr. Geoffrey Rootes, at a dinner on 25th October, included the following comment: As you know, we are making the strongest representations to the Government concerning credit restrictions and Purchase Tax. He continued: After all, we are not asking for any kind of subsidy or preferential treatment. All we are asking for is a reasonable degree of stability and freedom to develop our businesses in line with the great potential demand for transport which exists in motor markets both at home and abroad. Nevertheless, we are fully aware that our ultimate success or failure will depend upon our efficiency and enterprise in the era of extremely fierce competition ahead. There will be some hard fighting, but I am confident that we can meet this challenge even if we do have to drag some heavy hardware in the form of taxation into battle with us. That is a very brave and courageous attitude, but why should we ask them to drag heavy hardware of taxation into the battle?

In its Bulletin of March, 1960, the Society of Motor Car Manufacturers and Traders gave much information which was very interesting. It said that the achievements of the United Kingdom motor industry tend to hide the fact that, despite maximum effort, it has been losing ground steadily against Continental competitors. It gives the figures. In the United Kingdom, in 1954, the production of cars was 769,000, and in Germany it was 561,000. In 1959, the United Kingdom figure had risen to 1,160,000, but in Germany there had been a 210 per cent. rise to 1,440,000. If we look at the export figures we see that exports from the United Kingdom increased between 1954 and 1959 from 374,000 to 550,000, or 47 per cent., whereas the increase in German exports was from 247,000 to 720,000.

Mr. J. Silverman

A nationalised industry.

Mr. Yates

That may be an argument, but I am not seeking to make a political point at the moment.

Neither the hon. Member for Cheadle nor anyone else can show that our motor manufacturers are failing. What is the reason for this decline? The manufacturers say that the prime factor in the United Kingdom's loss of competitiveness in recent years has been costs. Costs are not wholly wages. They say that we may be slightly at a disadvantage in that respect, but add: The industry has consistently pressed the importance of a sure, high level of demand at home as a basis on which it may confidently install the best equipment for large-scale manufacture with the consequent opportunities for cost reduction. I am bound to say that I think the Government are completely ignoring the representations made to them by the motor car manufacturers.

If Germany can do it, why cannot we? Germany was supposed to have lost the war, and she is being asked to pay more towards the cost of defence. Having escaped with fewer demands upon them, and there being fewer demands on their own market, the Germans have been able to go ahead with their industry.

Many workers are asking, "If we have to face increasing short time, what will happen when the industry has been expanded?" A sum of £250 million is to be spent on expansion. The workers ask what this will mean to them in Birmingham, Coventry and the Midlands generally. The question is not easy to answer.

So concerned are they about it that I received a letter a few days ago from one of the area organisers of the National Union of Vehicle Builders, Mr. George Evans. In it he informs me: The position that has now been reached is that the Mulliner Management have informed both the Midland Sheet Metal Workers' Society and our own union (the N.U.V.B.) officially that unless there is a very considerable reduction in earnings, and a substantial reduction in the rates and conditions, then inevitably the place will close down. He goes on to ask why the recession should be used as a means of lowering wages, and continues, referring to proposals made by Mulliners: These proposals are put forward on the grounds that the Company has to compete with people who it is alleged can do the job more cheaply. In this connection it should be borne in mind that the Standard Triumph International Company have acquired Hall's Engineering, of Liverpool, as a body-building shop, where the rates and conditions approximate to those which Mulliners desire to introduce here. He says that two points have to be borne in mind. First, that companies are taking advantage of the recession to reduce earnings. Secondly, that they are using in evidence against the workers these new factories which are being brought into operation as a result of the expansion programme. That is not the way to reduce costs. The Government can assist manufacturers to reduce costs, one of which is the 50 per cent. Purchase Tax which is a burden on the home market. I do not think that there would be an immediate improvement; as the Minister said this afternoon, it would take some time. But if the advice had been taken a year ago we should probably be facing a different situation now.

On behalf of the motor car workers in Birmingham and those working in industries associated with the motor car industry, I ask that something should be done for the industry. It is a matter of urgency. It is no use the Government saying that they can do nothing about it, for it is a responsibility which they must accept. They should agree to an examination of the industry. If they believe that they are right in their policy, then they can have no objection to an examination of the motor industry by a committee which can go into every aspect of it and establish what are the difficulties about increasing our export trade. It is certainly a matter of urgency, and the Government will have to answer very seriously in the near future for their lack of judgment and their lack of a policy for dealing with this difficult situation.

8.28 p.m.

Mr. John Page (Harrow, West)

In rising to speak to the Amendment I must disclose an interest, because I work for a company that supplies components for the motor car industry, amongst others.

It is only because I have practical experience of the industry that I am so brave as to challenge the hon. Member for Birmingham, Ladywood (Mr. V. Yates) and, even more so, the hon. Member for Newton (Mr. Lee) who opened the debate. They, in common with all the other speakers from the benches opposite—I have listened to every speaker today—failed to recognise the most important feature of the motor industry, one of the motor industry's facts of life, which one has to consider.

The industry always has been, and always will be, a fluctuating industry. The hon. Member for Newton said in answer to an interruption that the Government are turning the car industry into a seasonal industry. It is nothing to do with the Government. It is the industry itself. As they have not been mentioned so far, I will now state what I think are the chief reasons why the industry must, probably for the rest of its life, be a seasonal one.

It must be a seasonal industry, first, because it is so dependent on export markets. My hon. Friend the Member for Cheadle (Mr. Shepherd) made some extraordinarily sound suggestions for improving export business, which the industry should note. The second reason why the industry is seasonal is that people prefer to buy cars when the sun is shining. They do not want their new, glistening idol to arrive at their home covered with mud, rain and dust? They want to buy it in the spring or summer. The third reason is that if a car is bought in October, November or December it is a 1960 car, but if it is bought after 1st January next year it is a 1961 car. Unreasonable though that may seem, that will probably make a difference to its trade-in value.

Mr. A. E. Hunter (Feltham)

The sun in shining in New Zealand and Australia. There is a market in those countries.

Mr. Page

Exactly. That is why export markets are so important. The motor manufacturers are very eager to find a place where the sun is shining at Christmas. However, we have no control over those export markets, nor over the demand that comes from them.

The industry is becoming more and more a fashion industry and, rightly or wrongly, people buy their cars because of the fashion trends that may occur in the industry. It must be accepted that it is a fluctuating industry. We must try to avoid the worst effects of the fluctuations. There must be many more industries which are more seasonal than the motor industry. The fireworks industry seems to have most of its manufactures used on one day of the year, when the population rather unkindly celebrates a not too successful occasion.

Mr. J. Silverman

There is no seasonal unemployment in the fireworks industry.

Mr. Page

No. I am not an expert on pyrotechnics, but the industry has diversification. It also makes Very lights and signal lights for aircraft, etc. It is impossible for the motor industry to diversify to any extent, so what has to be decided is how the fluctuations can be mitigated.

It has been mentioned in the Press—but not in the House—that the orders of any manufacturer should be spread over a longer period and that he should not work overtime in one month in order to meet his orders in that month, but should try to spread the orders over two months. Unfortunately, it must be recognised that in this competitive market, unless a manufacturer can provide his customers with better delivery than his competitors, he loses the order. If manufacturers had reduced their overtime in the summer months to spread their orders they would not be working longer hours than they are today. Their business would have gone to overseas manufacturers or other manufacturers.

How can these fluctuations in this attractive and highly-paid industry best be tackled so that they do not hurt the people who work in it? I think it was my hon. Friend the Member for Cheadle who spoke of what is being done in an Italian factory, and such a plan was suggested in our industry after the 1957 recession. It was suggested that in one or two British factories the managements and the unions should agree that in times of peak demand—particularly in the spring—the team of workers in that firm should work as much overtime as was asked for, that in normal times they should work just the five-day week, and that in the slow times the work should be spread over the employees so as to make a three-day or four-day week.

If, as has been said about this Italian factory, during times of peak demand when overtime is being worked there could be a voluntary saving into the firm's bank, in some way—it could obviously be arranged—and then, in the slow times, the savings could be withdrawn to make up the four-day week pay to something like the pay of a normal week. The workers could then expect to have a standard normal wage throughout the year.

I do not know whether it is unfortunate or not that in the scheme that has been mentioned the peak times have gone on for almost twelve months in the year for the last three years. If the good times come consistently, it makes it more difficult for people then to realise that they should be making provision for the bad times that may be ahead.

The hon. Member for Coventry, North (Mr. Edelman) said that the industry is bleeding to death. My constituents are post office workers, bus drivers, bus conductors and people like that and, quite frankly, they think that that is an exaggeration. When workers in the motor industry can work a four-day or three-day week and still consistently earn more than my constituents they feel that it is bad luck but that they should not really need to feel the pinch of hardship as quickly as they have.

I think that it was in October that my right hon. Friend the Minister of Labour said that he had been in touch with the Confederation of Engineering and Shipbuilding Unions and with the Engineering and Allied Employers' National Federation to see whether they could get together at a high level to discuss the best way of fostering good relations and good working conditions in this industry. I hope that that meeting will take place and that when it does the employers' representatives will try to remember the words of Sir Charles Bartlett, who was chairman of Vauxhall Motors. In 1946, and on many occasions afterwards, he said that the prime idea behind Vauxhall Motors was to give regular employment to 10,000 people in Luton. I do not believe that the management side of the industry fries nearly hard enough to put over the ideas behind the company to the people who work for them. If they spent one-fifth of the time and one-fiftieth of the money which they now spend on selling their vehicles to their customers in trying to better relations between management and workpeople, conditions in the industry would be greatly improved.

I believe that if the trade unions could give to management just one assurance, management would concede every reasonable request from the unions about pay, working conditions, hours of work and so forth. I believe that any reasonable request would be granted if the unions could give that one assurance, that is to say, that agreements made between union and management officially would be honoured. There are many hon. Members in the House who know far more about this than I do, but I imagine that there is not at present a single union leader who could give an assurance to any management that the agreements entered into would be strictly honoured by all those on the shop floor.

Mr. Percy Wells (Faversham)

The hon. Member will agree that union leaders give an undertaking that they will use their best efforts to see that agreements reached are observed.

Mr. Page

I accept that, but best efforts are not the guarantee which is really needed. In the Report of the General Council of the Trades Union Congress for 1960 there is a reference to the unofficial strikes which are, I believe, the most damaging feature in all relations between management and employees in the industry. I do not know whether this applies to the motor industry, but I should think that it does. It is said in the Report: In about half the cases reported to the General Council where strikes began without official sanction, the unions paid dispute benefit. That means that the other half remained unofficial. There is then a reference to harmful arrangements made by joint shop stewards committees. The Report says: Some joint arrangements between stewards have been harmful. Where decisions about a programme of demands and priorities have been constitutionally taken in a union, it is wrong for stewards to set them aside. Again, it is said: No more than any other union representatives are stewards entitled to act contrary to union rules or agreements. My final quotation is this: Unions should be more vigilant and if, after a warning, a steward repeats actions which are contrary to rules or agreements his credentials (which are his opportunities to do good or, in a few cases, harm) should be withdrawn. The trouble with the motor industry is that it is a highly automatic industry and that the withdrawal of labour by just a few employees can put thousands out of work. There was a case recently where, I think, six drivers at the Austin Longbridge factory had an unofficial dispute and the whole factory had to be closed.

These are the conditions which are bedevilling good relationships between management and employees. The solution lies fairly and squarely in the hands of the trade unions themselves and the trade union leaders. No Government action and no action by the House collectively can bring about an improvement in discipline among the unions and their members in the factories. If the House can do nothing collectively, all that we can do as individual Members of Parliament is to try to put across the idea that agreements made between unions and management must be accepted. If hon. Members opposite will impress this on the trade union workers who voted Labour at the last election, we on this side will impress it on the millions who voted Conservative.

8.45 p.m.

Mr. Julius Silverman (Birmingham, Aston)

I think that every hon. Member condemns the irresponsible unofficial stoppage, especially when it puts other workers out of their jobs. It goes without saying that the other workers condemn them too. But do not let us exaggerate this phenomenon in British industrial life. Our labour relations are better than those of most other countries. The time lost by strikes in this country is less than that lost in most European countries and in America. I sometimes think that the newspapers especially play up unofficial stoppages to too great an extent.

We should also bear in mind that the trade unions are voluntary organisations. They cannot regiment their members. Many unofficial stoppages occur in factories where labour relations are bad. I agree that, if some firms spent a small percentage of what they spend in other respects on improving labour relations many unofficial strikes would disappear. In that respect I agree entirely with what the hon. Member for Cheadle (Mr. Shepherd) said, and, indeed, with what the Minister of Labour said at the Conservative Party conference.

The function of labour relationships is primarily the function of management. While there may occasionally be some troublesome workers, more often than not these troubles are to be found in factories which have always been bedevilled by bad labour relationships. As I have said, the main function is that of the management. For heaven's sake, do not let us overplay this complaint, however undesirable it may be.

I listened with some alarm to the speech of the President of the Board of Trade. He said that the trouble besetting the motor car industry is a mere fluctuation. First, the curve was going up steeply. Now it is flattening out. But this fluctuation, this curve in the chart, is affecting the lives of men, women and children in Birmingham and elsewhere. It is causing very real hardship. It is easy to say that the men in this industry have been earning very good money. Many but not all of them have been earning these good wages. Those who have a reduction of an average of 25 per cent., and in some cases very much more when they are working a three-day week, are suffering very serious hardship.

The hon. Member for Birmingham, Sparkbrook (Mr. Seymour) said that these people have been enjoying an inflated standard of living. In some cases it is a question not of an inflated standard of living but an inflated cost of living. For instance, rents have gone up in many cases. When there is prosperity in a city like Birmingham, it attracts people into the city, and this results in pressure on accommodation and rents increase. What may be called creeping decontrol is affecting thousands of houses in Birmingham. The rents of many houses in my constituency, which only three years ago were rented at 15s. or 16s. a week, have been decontrolled. Those houses are now being let at £4 a week. If a man is earning only £12 or £13 a week, or less, whether he is the tenant or the owner-occupier with a mortgage payment, £4 or £5 a week is a fairly large chunk of his wage. This is causing considerable hardship.

Then, there are the commitments which many of these people have entered into in hire purchase. I do not particularly like the hire-purchase arrangements. Many people in Birmingham call them the "glad and sorry" system—they are glad when they buy them and sorry when they have to pay for them. At the same time, a good deal of this "never had it so good" prosperity is based upon hire-purchase payments, not only on the products of the motor industry, but on the products of other industries.

The motor car worker finds that he cannot meet his payments and he has to pull things very tight to meet them, or in some cases he has to give them up. There is no doubt that in many cases the hardship is genuine. It is not good enough for the President of the Board of Trade to sit in the presidential armchair and say, "This is just an economic recession. I can sit in my armchair and observe the working out of this economic destiny and not bother about the lives and fortunes of these people."

What have the Government done about it? What are they doing? I expected to come here today and hear the Minister make an announcement about hire-purchase restrictions. That might be only an ambulance or temporary measure. I do not say that it would solve all the problems in the industry, but it would do something to alleviate the position of those whom I and many of my colleagues represent. But we have heard nothing whatever.

Why are these hire-purchase restrictions retained? I know that the country is generally in economic difficulties. If it was a question of forcing manufacturers to sell abroad the cars which these hire-purchase restrictions prevent them from selling here, there might be some sense in it. At present, however, they cannot sell them abroad. The export market is restricted. Therefore, what on earth is the sense of not selling them at home?

I waited to see what reason the President of the Board of Trade would give. He said that we must stop imports from coming in. What percentage of a motor car is imported? There may be a little imported steel and there is the rubber, which is generally imported from Commonwealth sources, which use their earnings from us to buy goods here. So it is as broad as it is long. The whole of the imported element in a motor car amounts only to a few pounds. Are people to be prevented from producing these cars because of this small imported element? The Minister did not give us the reason behind all this and we cannot see the sense in it.

When Labour was in office we had to restrict home purchases for the very purpose of developing trade abroad, but what is the sense in it now when we cannot sell motor cars abroad? Even from the long-term aspect, if the Government intend to develop and expand the home market for motor cars, the only way in which it can be done is by extending credits. We have reached the stage when only people below a certain income level—generally, the working class—represent the expansion possible in the market, the people who can buy the cars, but only if they have extended credit. They cannot buy on the basis of the existing deposit and two years' payments.

The Government must make up their minds whether they want to expand the home market. We do not know what they want to do. We want to know and we are entitled to ask. If the Government intend to rely solely upon the export market, and I agree that the main market for the future of the industry must depend upon exports, where does that future lie? What sort of motor car industry do the Government envisage? We do not know and the Government do not know.

We have been told today by the President of the Board of Trade that the rate of increase has slowed down and we can now expect a rate of increase roughly-speaking equivalent to the development of industry as a whole, which was 3 per cent. or 4 per cent. over the past few years. I know that at the moment there is none. We have heard that the motor car manufacturers have embarked on a £250 million expansion which will expand the industry by 1965 to twice its present level. There is the disparity. We hear of expansion in terms of 2 million, 2½ million and 3 million motor cars.

Somehow or other the Government and the motor car manufacturers must get their heads together and decide what is to happen to the industry. If we are to have in 1965 an industry with a capacity of about 100 per cent. more than at present and a market of only about 20 per cent. more, the consequences will be a very great deal more unemployment than there is now. We are entitled to ask the Government what they envisage. For this purpose we believe that there ought to be some high-powered organisation—and I am not talking about the present Advisory Council—which can go into the future of the industry. What is the rate of expansion that the industry can tolerate? What amount of the industry should be devoted to the private car and what amount to the commercial vehicle? Does the main field of exports lie with the commercial vehicle? If it does, obviously there ought to be a radical reorganisation of the industry, and the time for that is now.

Where are the markets to be? It is clear that the American market is bound to contract. There may be the possibility of some expansion in Europe. I am not talking now about the next two or three years, for we cannot solve the industry's problems in that time, but it appears to some of us that the future must lie in vast undeveloped or underdeveloped territories like Africa, India, and China. We may not be able to sell motor vehicles in any great quantity there today, but the time to think about this is now. We must think in terms of credit today. It may be difficult for a country like ours with balance of payments problems, to think of credits today, but if we are to think of the future those credits are essential. We are up against powerful competitors who are giving the credit today and getting into that market. If they are getting into it today, they will continue to get into them tomorrow.

These are the sort of things that should be investigated by a working party or some similar body which the Government should institute. It should go broadly into the future of the industry to see where the industry is going, where it can get to and what are its prospects at home and abroad. It should consider the degree of reorganisation that is necessary to make the industry successful against our competitors abroad. That is why I hope this matter should be pressed to a division unless we receive a satisfactory answer at the end of the debate.

9.0 p.m.

Mr. Douglas Jay (Battersea, North)

First, may I say how glad I am to congratulate my hon. Friend the Member for Blyth (Mr. Milne) and the hon. Member for Birmingham, Sparkbrook (Mr. Seymour), who made excellent, well-informed speeches. I only regret that they had to make their maiden speeches in such an extremely gloomy debate, one of the gloomiest that I have ever heard in the House. I hope that we shall hear them again on a rather gayer occasion.

I am rather astonished that the Chancellor of the Exchequer has not put in an appearance throughout the whole of the debate. He is, after all, responsible for the Purchase Tax, and it was the Chancellor's predecessor who announced the hire-purchase restrictions last summer. It is rather extraordinary that the present Chancellor, even if he no longer has any co-ordinating authority over Government economic policy, should be completely indifferent to the fate of 100,000 workers now on short time in various parts of the country.

I admit that I have a good deal of sympathy with the present Chancellor. He does not get a very good deal from his colleagues. They made him Foreign Secretary in 1956 and now they make him Chancellor of the Exchequer in 1960. I daresay that there is about as much trouble ahead of him now as there was then. Nevertheless, I think that the Chancellor's predecessor, Lord Amory, has shown a very intelligent sense of timing in drifting away at this period from the job in which he was previously occupied. I suppose that he is now sitting placidly contemplating the flooded Devon countryside and grumbling happily at the follies of the Government and the perversities of nature.

After all, this "phoney" electioneering boom of 1959, after barely twelve months, has now—just as happened in 1955—turned out to be completely unsound, and this time it was largely a hire-purchase motor car boom, and its collapse this year has left the country's economy completely unbalanced. This time the Government have made the aftermath even worse to the economy as a whole by having swept away practically all controls on imports last year and managed incidentally to make the £ convertible into the bargain at the same time.

The whole of this story is another proof that if we are not prepared to have any planning at all, we cannot have expansion in this country without getting into a balance of payments crisis. And so what do we find? We find that the Government fall back on the only two ideas they have—hire-purchase restrictions and a high Bank Rate. What this does in the motor car industry and in other industries is to hold down production and employment without assisting the balance of payments or exports in any way at all.

There has been no recovery in motor car exports since we had these restrictions put on this summer, and so I am not surprised to find the National Institute of Economic Research, which is a very respectable authority, now predicting—and this is gloomy again—that we are heading for a balance of payments deficit of at least £100 million a few months ahead. What is so astonishing is that we have got into this jam this time when not merely is there no dollar shortage in the world, but the situation is exactly the reverse.

How the late Sir Stafford Cripps or the present Home Secretary would have welcomed a situation in which there was no dollar problem for this country! I think that it is a marvellous achievement of Her Majesty's present Ministers to have created a large balance of payments deficit, with a 5 per cent. Bank Rate, with the most favourable terms of trade since the war and with no dollar shortage in the world. I am not at all surprised that in this situation the previous Chancellor has discreetly vanished away to another place.

It may be that it is the balance of payments situation which explains why the Government were in such an extraordinary hurry to snatch some foreign exchange out of the Ford transaction. The hurry was so great, we now discover, that the Chancellor gave his permission for this deal without even waiting to find out whether the American Government were in favour of it. We accused the Government a fortnight ago of acting hastily, and we now find that they had not even troubled to ascertain the American Government's view before they reached this decision. The Chancellor told us at Question Time today that he now had an assurance from the American Government that they would not stand in the way of the Ford deal, but will the Minister of State say whether Her Majesty's Government knew that before they gave their permission?

It is a curious story, because the United States Secretary of the Treasury saw the Chancellor in London on 25th November after permission had been given and then went home to the United States and tried to stop Mr. Henry Ford going forward with this transaction. It is a curious sequence of events that Mr. Henry Ford came to London in October and saw the President of the Board of Trade, but they did not discuss the issue at all, and then Mr. Anderson, the American Secretary of the Treasury, came here himself and saw the Chancellor and then both followed exactly opposite policies.

I do not know whether the Prime Minister would call that interdependence or Atlantic union, but the House is entitled to answers to two questions. First, is it certain that our gold and dollar reserves will benefit to the full extent from the Ford deal? The Chancellor gave an answer on this subject at Question Time today, but it was too brief and too involved for me to feel sure that that would be the case. I hope that the Minister of State, with the help of the President of the Board of Trade, who is now muttering to him, will be able to assure us tonight that if the deal goes through at least we will get that addition to our reserves.

Secondly, has there been any assurance from the American Government that, supposing the British Ford Company becomes wholly owned by the American company, American law will not be used to interfere with the British Ford Company selling motor vehicles to China, or any other country on the other side of the Iron Curtain?

I understand, and I think that it has not been denied, that it is possible under American law for the American Government to put pressure on a parent company in the United States to prevent it selling the products of a subsidiary in this country to countries to which the United States does not wish to export. We ought to have a precise answer to that question. Is that the case, and did the Government get an assurance about that issue before they gave permission for the deal to go through?

The main victims of all these shifts, changes and confusions of Government policy are the motor industry and other engineering industries which have thousands of people on short time. Because all other methods of steering the economy have been thrown away, those industries now have to be violently jolted about whenever the Government get into difficulties. First, when an election is coming they are encouraged to expand without limit and to take on new workers and to sell goods on hire purchase for only a nominal deposit; new factories are developed in new areas, and so on; the banks are launched into the hire-purchase business and all sorts of finance companies borrow from the public at 7 per cent. or 8 per cent. to encourage hire-purchase transactions almost without limit. The election posters, at this stage in the cycle, tell us that the secret of perpetual prosperity has been discovered by the Tory Party.

Then we get to the next stage, when the election is over and when demand is cut down—the Bank Rate goes up; hire-purchase restrictions are clamped on again, and, within a few months, overtime stops, production falls and new cars, T.V. sets, refrigerators, and all the other symbols of the windfall State pile up in the warehouses, and, as I am told at the moment, overflow into the rain outside in various parts of the Midlands. The finance companies find that their customers cannot repay their debts and we get financial troubles as well.

What a way to run the economy! It is grossly unfair to the motor industry and other industries which are singled out as guinea pigs for these political experiments. I do not blame the motor industry for the present fiasco. I blame the Government, for their only policy—and I do not know whether the Chancellor takes responsibility for this, because he will not even come to the House—is to create such a depression in the home market that they hope that the car firms will be forced to export. That, in effect, is what the President of the Board of Trade was saying. The Chancellor himself said, in a speech at Liverpool to some accountants the other day, that the only alternative to this policy was physical controls. He is quite right. So, of course, it is.

I believe that the motor industry, if it were given a chance of steady employment and planned growth could contribute very handsomely to an expansionist policy. After all, the industry and its workers have some considerable achievements to their credit since the war, both in production and in exports.

As many cars were produced in the second quarter of this year as in a whole year ten years before—that was before the guillotine came down, of course. Even exports in 1959 were double those in 1953, and in the earlier months of this year they were even higher than they were in 1959. The present slump has been sudden and sharp because the Government forced these restrictions on the home market just at the moment when exports were falling. That has been the source of the trouble.

I am not quite so pessimistic as my hon. Friend the Member for Hammersmith, North (Mr. Tomney), though he made a realistic and interesting speech. If we look rather further ahead, we find that the whole world wants motor vehicles—and not merely cars but lorries, tractors and all the other things which the industry produces.

I think it is true that the United States has about reached the saturation point with, I believe, one and a half cars per family—after which one cannot expect production to rise at the previous rate. This country has not come near to that level, and there are a great many countries in every continent which have not yet reached the point where the demand begins to rise.

I believe that it is true that there are more cars in Los Angeles than there are in Asia. If that is so, it is a solemn thought for the future of our industry. Surely over the next thirty years we shall see roads built all over Asia, Africa and South America, where there are no roads at the present time.

Mr. Lee

We could do with more.

Mr. Jay

My hon. Friend says that we could do with more roads here as well.

The motoring firms are probably right to plan on the assumption that this country must hold its share in the motor trade of the world. Certainly, the export market in future will be less in North America and more in Europe and other continents. Unhappily, in the next five years it will be largely in Western Europe, and the Government have not been notably successful in their European trade policy, in opening up avenues for increasing exports in the main markets in Western Europe.

For that reason, if for no other, the Government are under an obligation to take far more action than they have done to assist the motor industry to increase exports. Have we done, for instance, as much as we could do with export credits, not merely for cars but for commercial vehicles as well? I know that we have lately had a further concession and new facilities from the Export Credits Guarantee Department. The remarkable fact is that in every debate in which we discuss export credits the Government always question whether what is proposed from one side of the House or the other is practicable; yet twelve or eighteen months later they make a further concession, just as had been suggested.

Have we done everything possible on a sufficient scale in market research abroad for British motor vehicle exports? I know that the Board of Trade's information services have been greatly improved, but may there not be a case now for a major effort by the motor industry and the Government to find out what the future markets abroad will be? After all, enormous sums of money are at stake, and large sums of public money are at stake, in the present motor expansion scheme, and I would have thought that the Government had some responsibility for seeing that we got the best possible information about the future of markets.

Why, for instance, is it that British cars have been losing their share of export markets in the last few years? Do we really know? Is it design? Is it petrol consumption? Is it price? Is it because of services and spares, or any of these issues which have been so much discussed? Is it true, for instance, that German exporters get considerable tax concessions which British exporters do not? If it is true, why should not British exporters have the same concession? Could we be told?

I was struck by what my hon. Friend the Member for Hammersmith, North said about commercial vehicles as opposed to cars. Do we know what the balance will be, say five or ten years hence, or have we even got the best information as between cars, on the one hand, and lorries, on the other? Is it not possible, for instance, that China and the Soviet Union may have an enormous demand for motor vehicles if we look ten to fiften years ahead? These questions are at least worth pursuing as vigorously as possible.

If the Government have not the energy or the imagination to help exports in any of these ways, it is their duty to relax some of the restrictions on the home market. One policy, which it seems to me is indefensible, is to sit back and do nothing and watch the industry sinking into recession and see people losing their jobs.

That very staid commentator on the economic scene, the National Institute of Economic Research, declared only last week that there was a strong case for easing hire-purchase restrictions at the moment. The Institute pointed out that the effect of this would be temporary, and that a temporary stimulus is exactly what is needed at the present time. It seems to me at least the period of payment might now be lengthened, and that the Government might take this positive step here and now, before Christmas.

The President of the Board of Trade said today that he would not hear of any relaxation of Purchase Tax. If the industry was fully employed, as it was up to 1952, and export demand was brisk, I think that that would be perfectly justifiable. But here again, as with the hire-purchase restrictions, the Government seem to be following the wrong policy at the wrong time. The Chancellor of the Exchequer is clamping down on demand in all these ways when motor car capacity is grievously underemployed, and admittedly underemployed.

I remember that in 1951, on account of very heavy defence demands, the Labour Government raised the Purchase Tax on motor cars from 33⅓ per cent. to 66⅔ per cent. instead of the 50 per cent. today, despite all this unused capacity. As a matter of fact, in defending that increase during the Second Reading debate on the Finance Bill in 1951 I said that it would not be our intention to maintain this tax at the higher level at any time when the demands of defence, exports, and the home market together might fall seriously below the capacity of the Industry."—[OFFICIAL REPORT, 8th May, 1951; Vol. 487, c. 1772.] Can the Government really question today that total demands from all those sources have fallen below the capacity of the motor industry at present? I do not think the President of the Board of Trade can brush aside this whole question of Purchase Tax as summarily as he did this afternoon.

The National Institute also makes this very pointed comment on the present situation in these industries. It says: The Government should reassure industry"— I rather like these words— that official policy is still to promote long-term growth. Temporary checks are much less alarming if they are generally understood to be no more than temporary. But is this check temporary? The stagnation we had after the 1955 election lasted for about four years, right up to 1959. So I should like to ask the Government: how long is this new post-1959 stagnation in our industry going to go on? We call it stagnation, but it means redundancy and loss of overtime and jobs to ordinary people.

How are the Government expecting that this situation will come to an end? What will end it? Will it be by some action of the Government, or are they waiting for a piece of luck from the outside world—perhaps waiting for Mr. Kennedy, or Dr. Adenauer, or Sir Roy Welensky, I do not know—anybody to take some convenient action to get them out of their difficulties. I wish that the Minister of State would tell us how he sees this present situation ending, if he believes it to be temporary.

Any one who looks around at the industrial scene in this country today can see how utterly fraudulent was the Tory election propaganda eighteen months ago. We were told that life was better under the Conservatives; all those posters said, "Life is better under the Conservatives." What was it that made life better under the Conservatives? It was very largely a hire-purchase boom to enable people to buy motor cars which they could not afford. Now, of course, those very loans on which this boom was founded, and which bought votes for the Tory Party, are turning out to be bad debts. Who is it, after all, who has ruined this better life and this boom? It is not the Labour Party, as the posters foretold. It is the Chancellor of the Exchequer, who has ruined it with all the restrictions which are now in force.

There was one poster, in particular, which depicted a happy family expressing their enjoyment of this better life by standing round and polishing a newly acquired car. I very much wonder what has become of that family today.—[HON. MEMBERS: "They have two cars."] My guess is that the owner of the car has lost his overtime, if not his job; that the hire-purchse debt is not being repaid and that the car is now standing in a sodden Warwickshire field.

I hope, therefore, that in this situation the House will show that it recognises that a great deal of the plight of these industries, based on hire purchase which was stimulated in this way and then let down, has been due not just to the usual incompetence of the Government, but to the political manoeuvres which we always associate with the party opposite.

9.25 p.m.

The Minister of State, Board of Trade (Mr. F. J. Erroll)

I should like to add my congratulations to those which have already been offered to the two maiden speakers in this debate, the hon. Member for Blyth (Mr. Milne), who has surprised and delighted us with his very early appearance as a speaker in this Chamber, and, by way of contrast, my hon. Friend the Member for Birmingham, Sparkbrook (Mr. Seymour), who has taken considerably longer to make his first speech. We are very glad that we shall now be able to hear him more frequently than in his brief interventions at Question Time in the past.

The right hon. Member for Battersea, North (Mr. Jay) chose to end on a rather political note and to add a certain liveliness to a debate which at times had perhaps been cast in a rather lower key. I should like to remind him of some dates. He said that the election took place eighteen months ago, but he was actually implying that the election took place only this last October. The great upsurge in production in the motor vehicle industry occurred after the election, not before it. I think it will help the House if I give one or two of the facts about the increase in production to show that it was not the artificial stimulus, which he maintains took place before the election, which led to our election victory. It was the confidence which the country had in the effects of a further period of Conservative rule which led to the right and proper desire to acquire a motor car as soon as possible.

Production of cars was at a weekly rate of 22,800 in 1959, but the very substantial increase in production took place during the first half of this year, well after the election was over and won. The average weekly production rose to 30,200 in the first quarter and to a record of 31,200 in the second quarter. In the first ten months of this year output has exceeded that of the whole of 1959, with exports of half a million vehicles. Nor has this just been a hire-purchase boom as the right hon. Gentleman and certain others have suggested, because, in fact, only about one new car in five is bought on hire purchase. When I deal with hire purchase in more detail later I shall be able to show that although hire purchase sales have declined a little it is by nothing like enough to justify the strictures made of the present hire-purchase restrictions.

Mr. Jay

Is the right hon. Gentleman now denying that there has been a motor car recession at all in recent months?

Mr. Erroll

No. I think that if the right hon. Member will listen to the way in which I deploy my case he will benefit a great deal between now and 10 o'clock. I should like to make a little further progress. The decline occurred in the third quarter of 1960, but even so the average production has been almost 24,000 vehicles a week, which was higher than the weekly average in 1959 taken as a whole and above the average for the corresponding quarter of 1959. So, if it is recession that hon. Members call it, it is certainly a very mild recession because production is still running at a higher rate than last year.

Coming to the month of October, the production of cars was at the rate of 8,600 a week fewer than the peak weakly average of over 31,200 reached in the second quarter of this year. This fall of 8,600 is made up of a fall of about 7,000 in exports and about 1,600 in the home market. My right hon. Friend in leading for our side this afternoon said that he would leave to me the full reference to exports which this debate certainly deserves. As it is in exports that we have been doing less well, I thought the House might like me to refer particularly to some of the export problems which affect the motor industry at the present time. I shall, of course, refer to the other matters which have been raised, but I thought I might devote a few minutes now to the export situation.

I am sorry that I must burden the House with one or two more figures in order to put the matter into proper perspective. Car exports from Britain have shown a steady rise over the years and reached a total of almost 570,000 in 1959. In the first quarter of this year there was a very spectacular rise in exports which, for purposes of easy comparison, I would quote as a rise to an annual rate of 740,000 a year. Even in the second quarter of this year we were doing well because exports were at an annual rate of 720,000 a year. However, in the third quarter, exports fell to an annual rate of about 460,000, and for the month of October, the last month for which we have figures, exporting was at an annual rate of about 300,000, a very serious fall in the last couple of months. But altogether the export sales of cars for the first ten months of this year amount already to over 500,000.

The main cause of this decline is the decrease in deliveries to North America and, in particular, to the United States. We were doing very well in the United States at the beginning of this year. We exported 55,200 in the first quarter and 47,700 in the second quarter, but in the third quarter, our exports fell to 21,800 cars.

Mr. E. Fernyhough (Jarrow)

Can the Minister give us the value as well, because at the moment we are exporting many more small cars? They are getting smaller and smaller and the export value less and less.

Mr. Erroll

I shall be giving figures of value which, I hope, will satisfy the hon. Gentleman. In Canada, exports of 30,300 and 29,600 in the first two quarters fell to an export of only 14,800 in the third quarter.

These are the figures for which the hon. Gentleman asked. In 1959, British car exports to the United States reached a value of £87 million and this accounted for about 40 per cent. of all the United Kingdom exports of motor cars.

It would be easy for the House tonight to say that the motor industry made a mistake in becoming so dependent on the United States and the North American market, but I am sure that the car industry was absolutely right to go all out to capture the valuable prize of this vast potential market. If it had dissipated its efforts all over the world it would not have been able to achieve anything like the same success—and it was a great success—in the United States. This very success has made our industry all the more vulnerable to changes in the United States market, and it is a market which no body of planners in England can influence. If we are to export our cars, we have to take the markets of the world as we find them, and the opportunities as we find them, and I think that it is a fine thing that the motor car industry took this great opportunity while it was still there. It is still there. The United States market is still a good market for some of Britain's specialist motor cars, both for the large saloons and the sports cars.

Nevertheless, it is possibly unreasonable to expect an early return of the high overall level of the exports of a year ago, and there are two reasons for this. First of all, big shipments were made in the early part of this year to ensure that the United States' dealers had sufficient stocks to enable them to meet the expected demand without having a considerable waiting period. I am sure that those who have been loudest in their criticisms of the British motor car industry agree that it is very important to have stocks available when the customers want the goods. This is what the motor car industry set out to do in the United States.

Unfortunately, these stocks did not sell as quickly as was expected, partly because of the unexpectedly successful appearance of the new American compact cars. The dealers in the United States are now running down their stocks of British cars. In fact, between June and September of this year sales of British cars in the United States exceeded shipments on average by no fewer than 4,000 a month. That shows that the stocks are being run down, and when these stocks have been reduced to a level appropriate to the new rate of British car sales, then shipments to the United States can be expected to rise once more.

The second reason for the decline in exports to the United States is the compact car itself. As I have said, this car has been unexpectedly successful in the United States and must now be reckoned with as a permanent and strong competitor in a range which previously was not filled by American domestic production.

Mr. F. Noel-Baker

Why unexpected?

Mr. Erroll

Because it was not thought that the product would be as successful as it turned out to be, and I do not think that any working party sitting here in England could have foretold whether it would be successful or unsuccessful just a year ahead, let alone have foretold what might happen ten or fifteen years ahead, as suggested by the right hon. Gentleman.

The car makers fully realise how dependent their exports have been on a single large market, and they are exploring the full possibilities of other export markets. Indeed, at the last meeting of the National Advisory Council the motor car manufacturers agreed to my right hon. Friend's suggestion that they should make a full and fresh study of export markets. In this work all the facilities of the Board of Trade's Export Services Branch will be fully at their disposal—to the Council collectively, to the S.M.M.T. and to individual motor car manufacturers. These services have been greatly improved over the last few years and are widely appreciated by many exporters in different industries. I am confident that our services, with their reporting posts, numbering 200 all over the world, can give the British motor car exporter a useful service of up-to-date information. I mention that point particularly because the right hon. Gentleman asked whether we were doing anything about it.

Mr. Norman Cole (Bedfordshire. South)

Even allowing for the extra cost of transport across the Atlantic, if we bear in mind the very much higher cost of living in the United States we are bound to ask why the compact car can beat our cars for price.

Mr. Erroll

I cannot answer that question. I do not know the relative prices of comparable models nor to what extent the Americans may be cutting their present profit margins in order to make sure of a place for their compact cars in the United States market.

I have said a lot about the United States, but we in Britain must look to the whole world for our export markets, and I think that I should take a minute or two in looking at world prospects. World prospects vary from the fair to the hopeless. I do not wish to weary the House with a survey country by country, but I can make one or two generalisations which may help. In most of the main markets there are no difficulties arising from quantitative restrictions of imports. I have with me a long list of countries whose markets are freely accessble to our car exporters. Of course, some of the most important markets, particularly the European markets, offer the severe corn-petition of their own vigorous domestic car industries.

Miss Jennie Lee (Cannock)

Which are nationalised.

Mr. Erroll

The nationalised industry in France has suffered very much in the export markets. It has suffered equally with private enterprise firms.

The car industries in these other countries hold positions in their economies similar to that of the United Kingdom industry in the British economy. Their products are, therefore, directly competitive with those of the United Kingdom. We are competitive, and I see no reason why we should not get an increasing share of the expanding markets of Europe, despite the tariff difficulties which may have become an increasingly important factor with the passage of time.

Mr. Tomney

It is not only a question of the American markets. The British Motor Corporation has put about £60 million into Italy for the assembly of the Mini-Minor. Italian motor car producers are now cutting the price of their present models by as much as £70 below the price of the Mini-Minors.

Mr. Erroll

I agree that price changes can be made by different people. We have cut our prices in certain cases, but prices must be determined by those who are selling the vehicles. I do not think that we in the House can determine the price of privately produced vehicles.

I have here a long list of countries which impose restrictions of varying degrees of severity on the import of foreign cars. Some conditions are so severe as to make those markets virtually closed to us. Nevertheless, some important opportunities exist, and I am sure that our car exporters will take full advantage of them.

I will refer briefly to the Continents of Africa and Asia, which I know interest many hon. Members. Exports of all the principal car-producing countries to Africa in 1959 amounted to 216,000. Our share was 50,668, or nearly one-quarter of all the cars moved into Africa in 1959. The corresponding figures for Asia are even more favourable to us. A total of about 84,000 cars were shipped to Asia, of which our share was no less than 28,500.

There is one large potential market, or it is often regarded as a potential market, namely, China. The potentialities of China are often mentioned, but all foreign trade is controlled by the State Trading Corporations, and the import of cars from the West is negligible. The fact is that China has not so far been prepared to devote any appreciable part of her foreign currency to the import of cars from countries outside the Communist bloc. She is now producing her own cars on an increasing scale. From the experience of my own trade visit to China just over three years ago, I am sure that China does not represent at present any real market for British passenger cars.

The right hon. Member for Battersea, North referred to credits, and particularly to what he described loosely as "Government credits". Most export sales are still made on cash terms direct to distributors, through merchants, or through the subsidiary companies abroad of the manufacturers themselves. It is right to say that manufacturers have sound commercial reasons for being unwilling generally to concede long credit terms on passenger cars.

This is a matter for the individual car makers to decide, but I can assure the House that the facilities of the Export Credits Guarantee Department are fully available for car exporters. In fact, we are prepared to go further than the majority of car exporters wish at present, We are prepared to cover the sale and export of passenger cars on twelve-monthly credit. We are prepared to go even further when we know that other insurers are insuring for slightly longer periods. We are also prepared to go much further with the heavier types of vehicles—the lorries and the buses. We will provide up to three years' credit and, exceptionally, we will offer up to five years for very large contracts.

I have taken enough of the time of the House on the export side. I will now refer to some of the other important issues raised during the debate. Hon. Gentlemen on both sides referred to earnings and short time, particularly the hon. Members for Nuneaton (Mr. Bowles) and Bradford, East (Mr. McLeavy). Everyone in the House realises that full-time earnings in the motor industry are high. Indeed, they are amongst the highest in the country. What is important to remember is that, even when short-time working is necessary, earnings are still reasonably good when compared with whole-time earnings in many other trades.

As the degree of short-time working varies from firm to firm, I regret that I cannot give the House any useful figures for the workers in the industry as a whole, but I have tried to find an example which will give approximate figures which may be of use and interest to hon. Members. In one firm in the Midlands, a skilled production worker would obtain £20 12s. for a five-day week without overtime. He would obtain £16 4s. for a four-day week, and £12 for a three-day week. In the semiskilled trades in the same works he would get £20 for a five-day week; £14 10s. for a four-day week and £12 3s. for a three-day week.

While the earnings for a three-day week undoubtedly represent a substantial drop in the earnings for a full five-day week without overtime, nobody could suggest that earnings of £12 and over amount to real hardship, particularly as the overall average for full-time earnings in all manufacturing industry amounts to £14 16s. a week.

My hon. Friends the Members for Solihull (Mr. Lindsay) and for Harrow, West (Mr. John Page) made speeches that I would strongly commend to the House, and I would like in particular to stress parts of them. One feature was that the motor industry is one that is bound to experience certain changes in demand from time to time—

Mr. Edelman

Before he leaves the subject of wages, I am sure that the right hon. Gentleman would not wish to leave the wrong impression in the minds of hon. Members or of people outside. Is he aware that in a typical firm like Standard Motors the average take-home earnings of a man on a three-day week are £7, nothing like the £12 that the Minister quoted?

Mr. Erroll

I produced this example in a sincere attempt to help the House. I realise that it is only an example, because it is impossible to get a good average. I gave the figures for the skilled and semi-skilled trades. I will admit that, for the unskilled trade, the take-home pay on a three-day week is considerably less—but so it should be, because the man is unskilled. Nevertheless, I am prepared quite willingly to stand by the figures I have quoted.

To return to what I was saying, I want to stress that the motor industry is one that is bound to experience certain changes in demand from time to time, and it is surely quite reasonable to expect that when workers are receiving very large earnings they should make some provision by way of personal savings for those periods when earnings are lower. But earnings and short-time are only pin of the story—there is also the question of unemployment and redundancy, matters referred to in a most interesting way by the hon. Member for Nuneaton as well as by other hon. Members.

The motor car industry is one that has expanded very rapidly, and the numbers employed have increased with it. In October 1959, the numbers employed were 405,000, and by September of this year they had risen to 445,000. The October figure for this year shows a fall to 438,000, but that is still 30,000 more than a year previously. I understand that the redundancy figure is now about 9,000—that is the latest figure we have been able to obtain—but those redundancies are almost all taking place in areas of very high employment. Unemployment in all the motor industrial areas is well under 1 per cent—well under.

The hon. Member for Coventry, North (Mr. Edelman) referred to queues of unemployed workers, sacked and dismissed, but I would point out that the vacancies are still greater than the numbers unemployed in that town of his. In fact, it is sheer nonsense for the hon. Gentleman to talk about unemployment queues—sheer nonsense. Indeed, many of the other factories in these areas, including Coventry, have been complaining that they are unable to get all the labour they require—

Mr. Edelman

Is the Minister of State aware that quite recently, in Coventry alone, 2,200 men were dismised by Standards? If 2,200 men do not constitute a queue, what does?

Mr. Erroll

I will be the first to admit that it is inconvenient to have to change one's job, but the great majority of those made redundant have so far had little difficulty in obtaining other work.

I have brought to the House an example. I am sorry that it does not relate to Coventry, but I think it will serve its purpose well. It is the case of Vauxhall Motors, who dismissed about 950 employees in October. [HON. MEMBERS: "We have heard this."] There are several hon. Members here who were not present this afternoon and, therefore, I am repeating it and amplifying it for their benefit. Only about a dozen of these workers are now registered as unemployed with the Ministry of Labour. In mid-November there were only 500 men wholly unemployed in Luton and Dunstable together, and of these only 47 were last employed in the motor industry. I think that serves to show that a person becoming redundant in Luton has really nothing to fear in the way of prolonged unemployment today.

Mr. G. R. Mitchison (Kettering)

Does the right hon. Gentleman consider it better to lose one's job or be on a three-day week at £7?

Mr. Nabarro

I wish the hon. and learned Member for Kettering would lose his.

Mr. Erroll

I think that if one can get a better job at a better wage than £7 it pays to leave one job and go to another.

Mr. F. Noel-Baker

rose—

Mr. Erroll

I must get on as I have very little time and I have given way a great deal. I wish to ask hon. Members who did not hear the speeches of my hon. Friend the Member for Harrow. West and the hon. Member for Birmingham, Aston (Mr. J. Silverman) to read what they said about the unofficial strikes which occur from time to time. I hope the House will consider very carefully what was said by my hon. Friend the Member for Solihull. I should like to say more about this matter, but industrial relations are a matter for my right hon. Friend the Minister of Labour and I do not propose to trespass on his territory tonight.

Mr. F. Noel-Baker

The right hon. Gentleman will appreciate that my constituency of Swindon is one of the areas worst hit by present circumstances. I was astonished to hear the President of the Board of Trade say earlier that he had no idea of what was happening in Swindon. Will the Minister now give urgent consideration to the employment situation in Swindon and the difficulties we face there and tell us what is being done about it?

Mr. Erroll

The percentage rate for wholly unemployed men in mid-November in Swindon amounted to 0.7 per cent.

In the few minutes which remain I want to say something about hire purchase, because several hon. Members have said that we should ease hire-purchase restrictions. I think that criticism of the hire-purchase restrictions is implicit in the Opposition Amendment, although I was interested to listen to the excellent speech of the hon. Member for Hammersmith, North (Mr. Tomney), who pronounced himself as very much against hire-purchase.

Mr. Lee

Does the right hon. Gentleman intend to answer our questions about the Ford deal?

Mr. Erroll

I did not think that there was any need to answer questions about the Ford deal because the currency aspect of the matter was dealt with admirably by my right hon. and learned Friend the Chancellor of the Exchequer. I am reserving my remarks about exports to China for the hon. Lady the Member for Blackburn (Mrs. Castle), who has intimated that she will try to browbeat me in an Adjournment debate. I thought it much better not to deprive her of that pleasure by giving my answer in advance.

Perhaps the right hon. Member for Battersea, North would now like to hear a little of the real facts about hire purchase and not the fantasy to which he has exposed the House. In fact, hire-purchase transactions for new cars have remained very stable as a proportion of new car registrations during the last three years, and this in spite of the removal of the restrictions in 1958 and their re-imposition in April, 1960. They have been running during this period at between 20 and 23 per cent. of all new cars sold.

Mr. Mitchison

Do not the restrictions make any difference then?

Mr. Erroll

They make a difference but not in the way that hon. Members may think. They make a difference in that the purchaser has to put down rather more of his own money in order to acquire a car than he previously had to do. That is the purpose behind hire-purchase restrictions. It is part of the combined operation of the restriction of credit facilities.

Even though the restrictions were imposes in April, it was not until October of this year that the number of hire-purchase transactions for new cars fell to any significant extent below the corresponding level of 1959 when there were no restrictions in force. The point of restrictions, as I tried to explain to the right hon. Gentleman, is that they force people to put down a little more of their own money, thus helping to mop up money which would otherwise be used for the purchase of other things. [Interruption.] I am sorry that the right hon. Gentleman is so obtuse in this matter. He understands perfectly well the value of hire-purchase restrictions.

While these restrictions cannot be expected to be popular—we never intended that they should be—the fact is that they bear on only a relatively narrow section of industry. If we were to relieve the motor car industry of its share of these restrictions, we should, in order to maintain their effect on the economy, have to impose correspondingly more severe restrictions on other

products subject in hire-purchase control. I say to my hon. Friend the Member for Solihull, who thoroughly sees the need for these controls, that the timing of any general relaxation must depend on the outlook for the economy as a whole and not on the circumstances of individual industries.

The Opposition's Amendment calls on the Government to set up a working party to consider the future of the industry. But they have not said very much about their proposal in detail. It is, after all, the main feature of what they have let it be known to the Press as their Motion of censure, but the hon. Member for Newton referred to it only in very cursory terms. He has not told us anything about the working party, what it would hope to achieve, what it would do or what its functions should be. The plain fact is that there is no desire and no need for this piece of extraneous machinery.

Hon. Members opposite are only halfhearted in their support for this proposal. They put forward a similar suggestion in February, 1957. They did not think much of it because they did not even bother to vote in support of their own proposal 3½ years ago. We now have a very similar proposal which can do nothing to help the industry, and, indeed, can only hinder it in its work.

Mr. Lee

What about Fords?

Mr. Erroll

I have told the hon. Gentleman about Fords, but he displayed his usual courtesy by not listening to me.

I cannot believe that the Opposition take this proposal at all seriously. If they decide to divide the House, I am confident that they will be soundly and roundly beaten.

Question put, That the words proposed to be left out stand part of the Question:—

The House divided: Ayes 317, Noes 228.

Division No. 19.]	AYES	[9.59 p.m.
Agnew, Sir Peter	Balniel, Lord	Bennett, Dr. Reginald (Gos & Fhm)
Aitken, W. T.	Barber, Anthony	Berkeley, Humphry
Allan, Robert (Paddington, S.)	Barlow, Sir John	Bevins, Rt. Hon. Reginald (Toxteth)
Allason, James	Barter, John	Bidgood, John C.
Alport, Rt. Hon. C. J. M.	Batsford, Brian	Biggs-Davison, John
Amery, Rt. Hon. Julian (Preston, N.)	Baxter, Sir Beverley (Southgate)	Birch, Rt. Hon. Nigel
Arbuthnot, John	Beamish, Col. Tufton	Bishop, F. P.
Ashton, Sir Hubert	Bell, Ronald (S. Bucks.)	Black, Sir Cyril
Atkins, Humphrey	Bennett, F. M. (Torquay)	Bossom, Clive
Box, Donald	Harris, Reader (Heston)	Matthews, Gordon (Meriden)
Boyd-Carpenter, Rt. Hon. John	Harrison, Brian (Maldon)	Maudling, Rt. Hon. Reginald
Boyle, Sir Edward	Harrison, Col. J. H. (Eye)	Mawby, Ray
Braine, Bernard	Harvey, John (Walthamstow, E.)	Maxwell-Hyslop, R. J.
Brewis, John	Harvie Anderson, Miss	Maydon, Lt.-Cmdr. S. L. C.
Bromley-Davenport, Lt.-Col. W. H.	Hastings, Stephen	Molson, Rt. Hon. Hugh
Brooke, Rt. Hon. Henry	Hay, John	Montgomery, Fergus
Brooman-White, R.	Heald, Rt. Hon. Sir Lionel	More, Jasper (Ludlow)
Browne, Percy (Torrington)	Henderson, John (Cathcart)	Morgan, William
Bullard, Denys	Henderson-Stewart, Sir James	Mott-Radclyffe, Sir Charles
Bullus, Wing Commander Eric	Hendry, Forbes	Nabarro, Gerald
Burden, F. A.	Hicks Beaoh, Maj. W.	Neave, Airey
Butcher, Sir Herbert	Hiley, Joseph	Nicholls, Sir Harmar
Butler, Rt. Hn. R. A. (Saffron Walden)	Hill, Dr. Rt. Hon. Charles (Luton)	Noble, Michael
Campbell, Sir David (Belfast, S.)	Hill, Mrs. Eveline (Wythenshawe)	Nugent, Sir Richard
Campbell, Gordon (Moray & Nairn)	Hill, J. E. B. (S. Norfolk)	Oakshott, Sir Hendrle
Carr, Compton (Barons Court)	Hinohingbrooke, Viscount	Orr-Ewing, C. Ian
Carr, Robert (Mitcham)	Hirst, Geoffrey	Osborn, John (Hallam)
Cary, Sir Robert	Hobson, John	Osborne, Cyril (Louth)
Channon, H. P. G.	Hocking, Philip N.	Page, John (Harrow, West)
Chataway, Christopher	Holland, Philip	Pannell, Norman (Kirkdale)
Chichester-Clark, R.	Hollingworth, John	Partridge, E.
Clark, Henry (Antrim, N.)	Holt, Arthur	Pearson, Frank (Clitheroe)
Clark, William (Nottingham, S.)	Hope, Rt. Hon. Lord John	Peel, John
Clarke, Brig. Terence (Portsmth, W.)	Hopkins, Alan	Percival, Ian
	Hornby, R. P.	Peyton, John
Cleaver, Leonard	Hornsby-Smith, Rt. Hon. Patrloia	Pickthorn, Sir Kenneth
Cole, Norman	Howard, Gerald (Cambridgeshire)	Pike, Miss Mervyn
Collard, Richard	Howard, Hon. G. R. (St. Ives)	Pitt, Miss Edith
Cooper, A. E.	Howard, John (Southampton, Test)
Cooper-Key, Sir Neill	Hughes Hallett, Vice-Admiral John	Pott, Percivall
Cordle, John	Hughes-Young, Michael	Powell, Rt. Hon. J. Enoch
Costain, A. P.	Hulbert, Sir Norman	Price, David (Eastleigh)
Coulson, J. M.	Hurd, Sir Anthony	Price, H. A. (Lewisham, W.)
Courtney, Cdr. Anthony	Hutchison, Michael Clark	Prior, J. M. L.
Craddock, Sir Beresford	Iremonger, T. L.	Prior-Palmer, Brig. Sir Otho
Critchley, Julian	Irvine, Bryant Godman (Rye)	Profumo, Rt. Hon. John
Crosthwaite-Eyre, Col. O. E.	Jaokson, John	Proudfoot, Wilfred
Crowder, F. P.	Jenkins, Robert (Dulwich)	Quennell, Miss J. M.
Cunningham, Knox	Johnson, Dr. Donald (Carlisle)	Ramsden, James
Curran, Charles	Johnson, Eric (Blaokley)	Rawlinson, Peter
Currie, G. B. H.	Johnson Smith, Geoffrey	Redmayne, Rt. Hon. Martin
Dalkeith, Earl of	Jones, Rt. Hn. Aubrey (Hall Green)	Rees, Hugh
Dance, James	Joseph, Sir Keith	Rees-Davies, W. R.
d'Avigdor-Goldsmid, Sir Henry	Kaberry, Sir Donald	Renton, David
Deedes, W. F.	Kerans, Cdr. J. S.	Ridley, Hon. Nicholas
de Ferranti, Basil	Kerr, Sir Hamilton	Ridsdale, Julian
Digby, Simon Wingfield	Kershaw, Anthony	Rippon, Geoffrey
Donaldson, Cmdr. C. E. M.	Kimball, Marcus	Roberts, Sir Peter (Heeley)
Doughty, Charles	Kirk, Peter	Robertson, Sir David
Drayson, G. B.	Kitson, Timothy	Robinson, Sir Roland (Blackpool. S.)
du Cann, Edward	Lagden, Godfrey	Robson Brown, Sir William
Dunoan, Sir James	Lambton, Viscount	Rodgers, John (Sevenoaks)
Duthie, Sir William	Lancaster, Col. C. G.	Roots, William
Eden, John	Langford-Holt, J.	Ropner, Col. Sir Leonard
Elliot, Capt. Walter (Carshalton)	Leather, E. H. C.	Royle, Anthony (Richmond, Surrey)
Elliott, R. W. (Newcastle-on-Tyne, N.)	Leburn, Gilmour	Russell, Ronald
Emery, Peter	Legge-Bourke, Sir Harry	Sandys, Rt. Hon. Duncan
Errington, Sir Eric	Lewis, Kenneth (Rutland)	Scott-Hopkins, James
Erroll, Rt. Hon. F. J.	Lilley, F. J. P.	Seymour, Leslie
Farey-Jones, F. W.	Lindsay, Martin	Sharples, Richard
Farr, John	Linstead, Sir Hugh	Shaw, M.
Finlay, Graeme	Litchfield, Capt. John	Shepherd, William
Fisher, Nigel	Lloyd, Rt. Hn. Geoffrey (Sut'n C'dfield)	Simon, Sir Jocelyn
Forrest, George	Lloyd, Rt. Hon. Selwyn (Wirral)	Skeet, T. H. H.
Foster, John	Longbottom, Charles	Soames, Rt. Hon Christopher
Fraser, Ian (Plymouth, Sutton)	Loveys, Walter H.	Spearman, Sir Alexander
Freeth, Denzil	Low, Rt. Hon. Sir Toby	Speir, Rupert
Galbraith, Hon. T. G. D.	Lucas, Sir Jocelyn (Portsmouth, S.)	Stanley, Hon. Richard
Gammans, Lady	Luoas-Tooth, Sir Hugh	Stevens, Geoffrey
Gardner, Edward	McAdden, Stephen	Steward, Harold (Stockport, S.)
George, J. C. (Pollok)	MacArthur, Ian	Stoddart-Scott, Col. Sir Malcolm
Gibson-Watt, David	MoLaughlin, Mrs. Patricla	Storey, Sir Samuel
Glover, Sir Douglas	Maclean, Sir Fitzroy (Bute & N. Ayrs)	Studholme, Sir Henry
Glyn, Sir Richard (Dorset, N.)	MoLean, Neil (Inverness)	Summers, Sir Spencer (Aylesbury)
Goodhart, Philip	MaoLeod, John (Ross & Cromarty)	Sumner, Donald (Orpington)
Gough, Frederick	McMaster, Stanley R.	Talbot, John E.
Gower, Raymond	Macmillan, Rt. Hn. Harold (Bromley)	Tapsell, Peter
Grant, Rt. Hon. William (Woodside)	Maopherson, Niall (Dumfries)	Taylor, Sir Charles (Eastbourne)
Gram-Ferris, Wg Cdr. R. (Nantwich)	Maginnis, John E.	Taylor, Edwin (Botton, E.)
Green, Alan	Maitland, Sir John	Taylor, W. J. (Bradford, N.)
Gresham Cooke, R.	Manningham-Buller, Rt. Hn. Sir R.	Teeling, William
Grimond, J.	Markham, Major Sir Frank	Temple, John M.
Grimston, Sir Robert	Marlowe, Anthony	Thatcher, Mrs. Margaret
Gurden, Harold	Marples, Rt. Hon. Ernest	Thomas, Leslie (Canterbury)
Hamilton, Michael (Wellingborough)	Marten, Neil	Thomas, Peter (Conway)
Harris, Frederio (Croydon, N. W.)	Mathew, Robert (Honlton)	Thompson, Kenneth (Walton)

Thompson, Richard (Croydon, S.)	Wade, Donald	Wills, Sir Gerald (Bridgwater)
Thorneycroft, Rt. Hon. Peter	Wakefield, Sir Wavell (St. M'lebone)	Wilson, Geoffrey (Truro)
Thornton-Kemsley, Sir Colin	Walker-Smith, Rt. Hon. Sir Derek	Wolrige-Gordon, Patrick
Tiley, Arthur (Bradford, W.)	Ward, Dame Irene (Tynemouth)	Wood, Rt. Hon. Richard
Tilney, John (Wavertree)	Watkinson, Rt. Hon. Harold	Woodhouse, C. M.
Turner, Colin	Watts, James	Woodnutt, Mark
Turton, Rt. Hon. R. H.	Webster, David	Woollam, John
van Straubenzee, W. R.	Wells, John (Maidstone)	Worsley, Marcus
Vane, W. M. F.	Whitelaw, William	Yates, William (The Wrekin)
Vickers, Miss Joan	Williams, Dudley (Exeter)
Vosper, Rt. Hon. Dennis	Williams, Paul (Sunderland, S.)	TELLERS FOR THE AYES:
		Mr. E. Wakefield and Mr. Bryan.
NOES
Abse, Leo	Grey, Charles	Moyle, Arthur
Ainsley, William	Griffiths, David (Rother Valley)	Mulley, Frederick
Albu, Austen	Griffiths, Rt. Hon. James (Llanelly)	Neal, Harold
Allaun, Frank (Salford, E.)	Griffiths, W. (Exchange)	Noel-Baker, Francis (Swindon)
Allen, Scholefield (Crewe)	Gunter, Ray	Oliver, G. H.
Awbery, Stan	Hall, Rt. Hon. Clenvil (Colne valley)	Oram, A. E.
Bacon, Miss Alice	Hamilton, William (West Fife)	Oswald, Thomas
Baxter, William (Stirlingshire, W.)	Hannan, William	Owen, Will
Beaney, Alan	Hart, Mrs. Judith	Padley, W. E
Bellenger, Rt. Hon. F. J.	Hayman, F. H.	Pagat, R. T.
Bence, Cyril (Dunbartonshire, E.)	Henderson, Rt. Hn. Arthur (Rwly Regls)	Panned, Charles (Leeds, W.)
Benson, Sir George	Herbison, Miss Margaret	Pargiter, G. A.
Blackburn, F.	Hewitson, Capt. M.	Parker, John (Dagenham)
Blyton, William	Hill, J. (Midlothian)	Parkin, B. T. (Paddington, N.)
Bowden, Herbert W. (Leics, S. W.)	Hilton, A. V.	Pavitt, Laurence
Bowles, Frank	Holman, Percy	Pearson, Arthur (Pontypridd)
Boyden, James	Houghton, Douglas	Peart, Frederick
Braddock, Mrs. E. M.	Howell, Charles A.	Pentland, Norman
Brockway, A. Fenner	Hoy, James H.	Plummer, Sir Leslie
Broughton, Dr. A. D. D.	Hughes, Cledwyn (Anglesey)	Popplewell, Ernest
Brown, Alan (Tottenham)	Hughes, Emrys (S. Ayrshire)	Prentice, R. E.
Brown, Rt. Hon. George (Belper)	Hughes, Hector (Aberdeen, N.)	Price, J. T. (Westhoughton)
Brown, Thomas (Ince)	Hunter, A. E.	Probert, Arthur
Butler, Herbert (Hackney, C.)	Hynd, John (Attercliffe)	Proctor, W. T.
Butler, Mrs. Joyce (Wood Green)	Irvine, A. J. (Edge Hill)	Pursey, Cmdr. Harry
Callaghan, James	Irving, Sydney (Dartford)	Randall, Harry
Castle, Mrs. Barbara	Janner, Barnett	Rankin, John
Chetwynd, George	Jay, Rt. Hon. Douglas	Redhead, E. C.
Cliffe, Michael	Jeger, George	Reid, William
Collick, Percy	Jenkins, Roy (Stechford)	Reynolds, G. W
Corbet, Mrs. Freda	Johnson, Carol (Lewisham, S.)	Rhodes, H.
Craddock, George (Bradford, S.)	Jones, Rt. Hn. A. Creech (Wakefield)	Roberts, Goronwy (Caernarvon)
Cronin, John	Jones, Dan (Burnley)	Robinson, Kenneth (St. Pancras, N.)
Crosland, Anthony	Jones, Jack (Rotherham)	Ross, William
Crossman, R. H. S.	Jones, J. Idwal (Wrexham)	Shinwell, Rt. Hon. E.
Cullen, Mrs. Alice	Jones, T. W. (Merioneth)	Short, Edward
Darling, George	Kelley, Richard	Silverman, Julius (Aston)
Davies, G. Elfed (Rhondda, E.)	Kenyon, Clifford	Silverman, Sydney (Nelson)
Davies, Harold (Leek)	Key, Rt. Hon. C. W.	Skeffington, Arthur
Davies, Ifor (Gower)	King, Dr. Horace	Slater, Mrs. Harriet (Stoke, N.)
Davies, S. O. (Merthyr)	Lawson, George	Slater, Joseph (Sedgefield)
Deer, George	Ledger, Ron	Small, William
de Freitas, Ceoffrey	Lee, Frederick (Newton)	Smith, Ellis (Stoke, S.)
Delargy, Hugh	Lee, Miss Jennie (Cannock)	Snow, Julian
Dempsey, James	Lever, Harold (Cheetham)	Soskice, Rt. Hon. Sir Frank
Diamond, John	Lewis, Arthur (West Ham, N.)	Spriggs, Leslie
Dodds, Norman	Lipton, Marcus	Steele, Thomas
Donnelly, Desmond	Loughlin, Charles	Stewart, Michael (Fulham)
Driberg, Tom	Mabon, Dr. J. Dickson	Stonehouse, John
Dugdale, Rt. Hon. John	MaoColl, James	Stones, William
Ede, Rt. Hon. Chuter	McInnes, James	Strachey, Rt. Hon. John
Edelman, Maurice	McKay, John (Wallsend)	Strauss, Rt. Hn. G. R. (Vauxhall)
Edwards, Rt. Hon. Ness (Caerphilly)	McLeavy, Frank	Stross, Dr. Barnett (Stoke-on-Trent, C.)
Edwards, Robert (Bilston)	MacMillan, Malcolm (Western Isles)	Summerskill, Dr. Rt. Hon. Edith
Edwards, Walter (Stepney)	MacPherson, Malcolm (Stirling)	Swain, Thomas
Evans, Albert	Mallalieu, E. L. (Brigg)	Swingler, Stephen
Fernyhough, E.	Mallalieu, J. P. W. (Huddersfield, E.)	Syivester, George
Finch, Harold	Manuel, A. C.	Symonds, J. B.
Fitch, Alan	Mapp, Charles	Taylor, Bernard (Mansfield)
Fletcher, Eric	Marsh, Richard	Thomas, George (Cardiff, W.)
Foot, Dingle (Ipswich)	Mason, Roy	Thomas, Iorwerth (Rhondda, W.)
Foot, Michael (Ebbw Vale)	Mayhew, Christopher	Thomson, G. M. (Dundee, E.)
Forman, J. C.	Meillsh, R. J.	Thornton, Ernest
Fraser, Thomas (Hamilton)	Mendelson, J. J.	Timmons, John
Gaitskell, Rt. Hon. Hugh	Millan, Bruce	Tomney, Frank
Galpern, Sir Myer	Milne, E. J.	Ungoed-Thomas, Sir Lynn
George, Lady Megan Lloyd	Mitchison, G. R.	Wainwright, Edwin
Ginsburg, David	Monslow, Walter	Warbey, William
Gooch, E. G.	Moody, A. S.	Watkins, Tudor
Gordon Walker, Rt. Hon. P. C.	Morris, John	Weitzman, David
Gourlay, Harry	Mort, D. L.	Wells, Percy (Faversham)

Wells, William (Walsall, N.)	Willey, Frederick	Wyatt, Woodrow
White, Mrs. Elrene	Williams, D. J. (Neath)	Yates, Victor (Ladywood)
Whitlock, William	Williams, W. R. (Openshaw)	Zilliacus, K.
Wigg, George	Willis, E. G. (Edinburgh, E.)
Wilcock, Group Capt. C. A. B.	Wilson, Rt. Hon. Harold (Huyton)	TELLERS FOR THE NOES:
Wilkins, W. A.	Winterbottom, R. E.	Mr. J. Taylor and
		Mr. G. H. R. Rogers

Main Question again proposed.

Mr. Ray Mawby (Totnes) rose—

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

Committee Tomorrow.