DEBATE ON THE ADDRESS [SECOND DAY]

HC Deb 02 November 1960 vol 629 cc185-317

Order read for resuming adjourned debate on Question [1st November]: That an humble Address be presented to Her Majesty as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Maurice Macmillan.]

Question again proposed.

Mr. Speaker

Before we proceed with the debate, perhaps it would be for the convenience of the House if I were to announce, with reference to our debate today, tomorrow and on Friday, what I understand it would be convenient to have as the central theme on each of those days: today, a debate on trade and industry; tomorrow, Thursday, a debate on the Central African Federation, and Friday, a debate on foreign affairs.

Hon. Members know, of course, that, though that may be the convenient arrangement from the point of view of the House, it does not mean that any hon. Member who has the good fortune to catch my eye is not entitled, within the rules of order, to raise any topic which he desires.

Mr. E. Shinwell (Easington)

On a point of order, Mr. Speaker. Am I to understand from what you have said that we are to be precluded from raising the subject to which the Prime Minister referred specifically in his speech yesterday afternoon, namely, the Government's decision to ally themselves with the United States of America in the establishment of a Polaris submarine base in Scotland? Am I to understand that we are not to have the opportunity to debate that subject? Is that the position?

Mr. Speaker

The right hon. Gentleman, I think, must by now know the position. It is that any subject within the rules of order may be raised in the course of the debate on the Address. It is merely that it has lately been the practice to group topics and to make some announcement such as I have made.

Mr. Shinwell

In spite of the applause and the jeers of the claque to which we have just listened, perhaps I may be permitted to inform you, Mr. Speaker, that I have had long enough experience of the House to know exactly what takes place in a debate on the Gracious Speech; I want no information on that. But it is not altogether seemly that in the course of a debate on education, housing or, for that matter, foreign affairs, what might be regarded as an extraneous or irrelevant subject—at least in relation to the theme of the debate then proceeding—should be injected. As this matter was referred to yesterday by the Prime Minister so specifically and emphatically—almost as a fait accompli—I want to know whether facilities will be afforded to debate the subject.

Mr. Speaker

The question of facilities for debate is not for me. I cannot go further to help the right hon. Gentleman than I have done, which is to state the strict position.

3.22 p.m.

Mr. Harold Wilson (Huyton)

In the very short period since the House reassembled I have been interested to note the attitudes of hon. Members opposite. They are as anxious as we are about the state of the country and of Britain's position in the world, but they disguise their anxiety from themselves by their reflections upon what I can assure them is a purely temporary situation in the Labour Party. Their position rather reminds me of the story which the late George Tomlinson used to tell, of the Baptist Sunday school superintendent who was bemoaning the very poor attendance at his anniversary services, but consoled himself with the thought that perhaps the Methodists were doing worse.

Hon. Members opposite need all the comfort they can get, because they have been treated very badly by the Prime Minister this week. Once again, the ablest of their back benchers—and there are some very able back benchers among them—have failed to get into the family business. Once again they are asked to welcome into their ranks yet another recruit to the noble army of back bench baronets. If there were any justice in these things there would be another new viscount, as well—Lord Sandys of Spadeadam Waste. Yesterday my right hon. Friend referred to the new Ministerial appointments, and historians will agree that there has been nothing like it in this country for sixty years, when a former Marquess of Salisbury's Government was so packed with kinsmen and in-laws that it was known in the Press of the time as the "Hotel Cecil." Now, on the very eve of the new Session, the Prime Minister taunts his well-whipped supporters with a record of nepotism which would have brought a blush to the cheek of a Borgia Pope.

These appointments have followed, after only three months, the biggest humiliation any Government party has ever suffered. In July the Prime Minister took one look round his supporters—the chosen champions of 350 constituency parties—and decided that not one was good enough for Foreign Secretary—not even on the debased standards set by the departing incumbent, the present Chancellor of the Exchequer. There was no one there fitted to speak for Britain—no voice vibrant or resonant enough. So he sought it in the ranks of the hereditary aristocracy, who alone, in the view of the right hon. Gentleman, could provide the type of dynamic twentieth century, neo-Elizabethan appeal to inspire and lead the uncommitted emergent nations of Africa. This was the wind of change at work, and hon. Members opposite took it without a murmur.

Having said that, I turn to the Gracious Speech, of which, for greater accuracy, I have obtained a copy of last week's Sunday Times. Like my right hon. Friend, I will not go into all the minutia of which it is composed, but because it is impossible to discuss the economic situation—which I propose shortly to do—without taking account of defence, I will now say a word on that subject—a subject on which the Prime Minister spent so much time yesterday. I was amazed at his effrontery. Hon. Members opposite jibe at us and say that we have two defence policies. Of course, they have not got one at all. It has cost the country nearly £15,000 million to find it out.

A few weeks ago the Sunday Express said: In their nine years of office, at ruinous cost, the Tories have reduced Britain to a state of utter defencelessness. The wonder is that they should be so hostile to Frank Cousins, for they have carried out his policies almost to the letter. We all know what they have done. To produce an independent missile they have poured money out like water. We debated Blue Streak not long ago. I recommend hon. Members who are concerned at Government expenditure to study the evidence given last year before the Public Accounts Committee with reference to Seaslug, at Question 3046 onwards. It was estimated that this missile would cost £1 million, but its cost is now officially said to be £70 million—seventy times the original estimate. After all this waste on these missiles where are they left? They are left sitting like the tramps in the Godot play of two years ago, waiting for Skybolt and wondering if it will ever come, and if it will be any good when it does.

On Friday the House will debate these matters more fully in their world setting, and I would say only this to hon. Members opposite now: "Do not be deluded by the great debate in the Labour Party into thinking that you can go on wallowing in your extravagant complacency on this question." In the Labour Party is the heart searching and agony that tears the hearts of all thinking people in this country in connection with defence matters. This debate should be going on with equal intensity in the Conservative Party. It was the breakdown of their policy which sparked it off. As a party they are so frivolous that at their conference they spent just fifty minutes discussing it, half of which was taken up by the Minister of Defence.

As many of my hon. Friends said yesterday, we do not apologise for the fact that this debate should be going on; it should be going on in all the great parties of this country, and I devoutly wish it could be going on as openly as it is with us in the Soviet Union and the United States. Let not hon. Members opposite be deluded into thinking that because of this difference—which I do not minimise and for which I certainly do not apologise—they will find us anything but united and utterly resolute in attacking them on the whole wide range of Government policies that are crying out for condemnation and censure, or on their mismanagement, complacency and downright lack of humanity.

To some of these subjects I now turn. We have had a statement on retirement pensions, grudgingly and belatedly given. My hon. Friends have referred to it as being financed by a poll tax. We do not forget that two years ago in the Budget there was an enormous hand-out to richer taxpayers and to big business and public companies. Now, to finance this belated and grudging concession to the old-age pensioners, the Government have to put up the contribution of the lowest-paid workers in the country. Obviously we shall have a debate on this very soon.

But why cannot hon. Members opposite and the Government show a little common humanity in other directions towards the pensioners? There are the prescription charges, for instance. In my constituency, too, there are thousands of old-age pensioners—and this must be true all over the country—who, because of the restrictive conditions which this Government wrote into the Public Service Vehicles (Travel Concessions) Act, 1955, are denied the privilege of free travel on municipal transport, a privilege which most of them previously enjoyed.

Think what it means when pensioners want to visit their relatives on a Sunday afternoon or to visit the city to see an optician or the National Assistance Board or to do some necessary jobs. They cannot afford the fares, which may run into 2s. or 3s. a time. Despite all our pleas, the Government have refused to legislate, and they stand condemned for that refusal. Worse still, when my hon. Friend the Member for Newcastle-upon-Tyne. Central (Mr. Short) introduced a Bill to remove all these arbitrary anomalies, it was systematically blocked Friday after Friday by Tory backbenchers. We shall introduce this Bill again, and I say to hon. Members opposite, "In the name of humanity, this time let it pass".

I turn to another subject, which is not mentioned in the Gracious Speech; and I suspect that this may be a sinister omission lurking behind the phrase about the "Other measures" which will be laid before us. I refer to the Government's intentions about the National Health Service. We on this side of the House have the right to know what the Government intend. In the very month this summer when we mourned the loss of the great architect of the greatest act of Socialist legislation ever introduced, the Prime Minister appointed to the Ministry of Health an hon. Member who, whatever his personal and public qualities—and they are great—is, for all that, a sworn enemy of the principle of a free and comprehensive health service—a sophisticated debater, as we all know him to be, capable of rationalising the crude and ignorant prejudices of so many Tory supporters in the country. At the Conservative Party conference he seemed to commit himself to legislation to bar aliens from using the Health Service, and that proposition was passed by a unanimous majority by the conference.

As we all know—even hon. Members opposite who voted against it—the National Health Service has done more than anything in our history to bring healing and security to millions of working-class and middle-class families to whom, in the past, serious illness often meant utter domestic ruin. I warn them. If the Tories lay their sacrilegious hands on the National Health Service, which we regard as the very temple of our social security system, I promise them that the Labour Party will fight them with the same determination as we have brought, and are bringing, to the fight against the Tory Rent Act.

In this matter, legislation is not all, and we indict the Government for the administration of the Health Service which we bequeathed to them—an administration which I fear can only be harsher and more inhumane under the new Minister. Lot me give one example—cars for disabled persons. When we introduced ihe scheme for cars for disabled persons, many hon. Members opposite thought that it was an extravagance in war-ravaged Britain. It was a start. We intended it to be liberalised as the national income of the country grew and as we moved further and further away from the war.

But the national income rose last year by £2,000 million, and yet every hon. Member has met the kind of case which I met recently in my constituency; it was the case of a war-disabled man, with both legs amputated just below the knee—what Ministers call a below-knee amputee—who has been refused a car and who, on icy mornings, in order to get to work, must manoeuvre himself on two sticks to join the rush-hour bus queue. Or take the number of cases of men disabled, not in the war but nevertheless in the service of their country, in factory or mine. My hon. Friends will remember what I thought was the heartless attitude of the Minister when we debated the problem of paraplegic miners on 30th June.

To us as Socialists the test would be the need of the individual, and the affluent society should will the means to see that that need is met. How can hon. Members justify a scale of moral values in which disabled men are denied these means to a fuller life while every morning the roads around London are blocked by expensive chauffeur-driven cars, provided in many oases for unproductive financial spivs who contribute nothing to our national well-being? All this at the expense of the Chancellor of the Exchequer—and at a cost to the nation of £120 million a year. From each according to his means; to each according to his expense account.

I will pass over housing, because that is to be debated next week, and I will turn to the economic position. My right hon. Friend gave the facts yesterday. Industrial production has flattened out; it has not moved up or down since last March. The election is over and we are back again to stagnation. Productivity, which for a time was stable, is now falling. Wages are up. Profits are up a great deal more and have now reached an all-time record. While the Stock Exchange, after gorging itself to the limit last autumn, has had to pause for breath, we have had the spectacle of the normally sedate gold bullion market operating like a Klondyke gambling saloon. Let us look, too, at our industries. The motor industry, the main prop of last year's election boom, the main hope of unemployment areas in Scotland, Merseyside and elsewhere, is now spiralling into depression, and twice in the past four years this industry has been the whipping boy of Government policy.

Our balance of payments this year is the worst since the outbreak of the Korean war. In the first half of this year our surplus on current account was just £35 million in six months, £81 million worse than the first half of last year, partly due to the widening of the export-import gap, partly due to a fall in oil earnings and partly due to a £28 million increase in net Government military expenditure abroad, which I think ought to be the subject of an explanation.

As the second half of the year usually unfavourable from the balance of payments point of view, we shall be lucky, for 1960 as a whole, if we break even on current account, at a time when our commitments on capital account, as my right hon. Friend said yesterday, not all of them wisely planned, are growing so fast. Three years ago the Treasury told the Radcliffe Committee that because of these capital commitments we needed an annual surplus of £450 million. In January to June of this year we achieved just £35 million.

This is why we have had the Bank Rate at 6 per cent. There is not even the pretence now that this high Bank Rate is needed for reasons of internal economic policy. The 6 per cent. Bank Rate—after last week's pussy-footing alteration reduced to 5½ per cent.—is not put forward, as was the 7 per cent. Bank Rate in 1957, as a bitter salutary medicine to cure an internal inflation. It is now simply a defence, a mask, to cover the unpleasant reality of our external economic situation. We cannot pay our way by exports so we attract "hot" money at high rates of interest—funk money from frightened American Republicans or from Belgian financiers, at panic rates of interest.

Let me tell the House what it means. As the Government White Paper admits, it places a big burden on our balance of payments in increased interest charges paid across the exchanges. Internally, too, the Exchequer returns show that after only half the current financial year has passed, the taxpayer has had to find £28 million more in National Debt interest—say £40 million to £45 million over the whole year. This would be enough for hon. Members opposite to abolish Schedule A. It would certainly be enough to restore at the full rate the general housing subsidy for the next eight or ten years. Hon. Members who are so concerned about Government expenditure should note, as I imagine few of them have noted, that this fantastic rate of interest has added between £40 million and £45 million to this year's expenditure.

This is the economics of bedlam. Straws in their hair, the Chancellor and his colleagues are defending a rate of interest which places penal burdens on local authorities, increases the mortgage payments of the property-owning democrats, adds millions to overseas payments and tens of millions to our National Debt charge, and artificially restricts the growth of our economy. All this for the sake of attracting hundreds of millions of "hot" money that we do not want, that we cannot use and cannot afford and—worst of all—that we cannot hold on to in an emergency. I say to the Chancellor, remember 1957. Already the Bank Rate and other measures, combined of course with the collapse of the North American export market, have put an end to the rise in production. Once again, the brake goes on when we are still so far behind our trading rivals.

With this miserable record in production and exports over the past few months, what have Ministers done? They have not been idle. They have worked hard. They have sold off two steel companies to their friends, two companies, Llanelly and Stavely, which were doing a good job under public ownership. They have sold them off at a loss to the taxpayer so that a privileged section of equity holders can get the pickings. I challenge the Government. Section 18 of the 1953 Act requires the Agency to secure that the consideration obtained is financially adequate.

I challenge the Government to set up a Select Committee, or an impartial inquiry, to see whether that provision of the Act has been fulfilled in these two cases before they go on to the biggest act of pillage of the lot, Richard Thomas and Baldwins. I challenge them also to justify the fact that, by removing the element of public competition and selling Stavely to Stewarts and Lloyds, they have created a private monopoly in essential products, cast iron pipes and so on, for local authority use. Not that it is any good appealing to the President of the Board of Trade to curb the private monopolists. The Times on Monday reported him as saying: 'We are a party of private enterprise and we must be a party of competition. You may find that the number of competitors is reduced from six or seven to two or three, but as long as there are competitors there is competition.' Amalgamations produced economies and more balanced outlook. I welcome these big amalgamations because I think they will, in the long run, strengthen British industry and be an advantage to the consumer.' Does he really believe this nonsense? Let him study the record of the heavy electrical plant manufacturers in tendering for overseas contracts, or the story of British Oxygen, or the fertiliser industry, or cement. He has to be told that he is moving in shark-infested waters here, not at a Primrose League tea party.

We have before us a Gracious Speech with a string of minor, moderately reformist Measures to give an illusion of government, but the real decisions affecting the well-being of Her Majesty's subjects are being taken outside this House; not only outside this House, but outside what the Government regard as their own sphere of concern. The elected representatives of the people are urged to get excited about a levy on horse-racing or art underground car park, but the real decisions are taken by the Clores, the Cottons, the Lazards and the Warburgs. The Government do not even hold the ring for these industrial giants; they abdicate.

Last year they stood aside and watched the property deals, not intervening until one group of financiers found that they could not pay for the chips with which they had gambled. Now, this year, we see monopoly capitalism in all its ruthlessness, tooth, claw and all, but the President of the Board of Trade tells us that when two mammoths fight, the lesser beasts are safe. What happens when the mammoths merge? What happens when the Clores and the Cottons get together?

We have just had the £65 million deal. This has been condemned even by the Daily Mail. No doubt it was a protest from the still undigested morsel of News Chronicle radicalism which lies so heavy on the satiated stomach of Northcliffe House. The Daily Mail asked in an article last week: "Should big money shape Britain?" It was a very fine article.

While I am on the subject of take-overs, and with the moralisings of the Daily Mail still fresh in the minds of hon. Members, I must refer, as my right hon. Friend the Leader of the Opposition did yesterday, to the merger of the News Chronicle and Star. Did this produce "a more balanced outlook"? Was this "an advantage to the consumer"? We have had the Prime Minister's crocodile tears at Cambridge and the shiftless evasions of Board of Trade Ministers at Question Time last week, but the fact is that the consumer, 'the newspaper reader, was totally ignored. The workers, distinguished journalists and craftsmen were fobbed off with a bar of chocolate, and a further blow was dealt to the freedom of the Press.

The News Chronicle, the Prime Minister said, was losing money. But the Star could easily have been viable. It was taken over for one reason, to close it down and steal its readership. This action was as indefensible as murdering a man to steal his purse. This is the morality of Naboth's vineyard. The London area, with a newspaper-reading public of 10 million or more, has two evening newspapers—no more than they have in Manchester or, I understand, in Birmingham—and both those newspapers are owned by big Press Lords.

Mr. Cyril Osborne (Louth)

If the right hon. Member and his friends had loyally supported the News Chronicle and bought it in sufficient numbers it would not have needed to close down.

Mr. Wilson

I am afraid that the hon. Member rather exaggerates the purchasing power of my hon. Friends.

I think that this is an issue on which this House ought to have an opinion, but where are our executive instruments to carry out the opinion of this House? We cannot leave it to the President of the Board of Trade, the apologist of the monopolists. Although the former Parliamentary Secretary disappeared last week back to the advertising world, he has been replaced by a new Parliamentary Secretary who was formerly at the Scottish Office, the hon. Member for Dumfries (Mr. N. Macpherson), whose record in the matter of the freedom of the Press leaves some of us in a little doubt about his adequacy to deal with this problem.

So much for the problems of the Government and industry. I shall not go into the details of the Cunard loan at 4½ per cent., a great deal less than they charge the nationalised industries for essential capital development or the Coal Board for the cost of stockpiling which has been induced by Government policy, or lack of it. Nor is there time to deal with the blistering D.S.I.R. Report on inefficiency in the shipbuilding trade, nor even the fascinating problem of the Government split on agriculture.

I turn to the question of exports. In the first nine months of 1960, exports were 6½ per cent. up on last year, but imports were 14 per cent. up, and there has been a worsening. For instance, in the third quarter exports were 2½ per cent. down and imports were 2 per cent. up. These are seasonally corrected figures.

There has been a world boom and we have done worse than almost the whole of the rest of Europe. More generally, the fall in Britain's share of world trade in manufactured goods, which has been going on steadily year after year, has accelerated under this Government very sharply this year. We have lost ground relatively in Europe and lost ground, much more seriously, in sterling area markets. Our export drive to North America, not only in cars, but in most other manufactured goods, has slumped: our export trade to the United States, as we warned the Minister time and time again, has turned out to be built on sand.

I want to ask the President of the Board of Trade to answer two questions in his speech. First, can he tell us any more about the European trade negotiations? Has he anything more to report since the depressing debate in July? We know that the Prime Minister has intervened with Dr. Adenauer, and that fills us with foreboding. Can the right hon. Gentleman tell us anything about the consequences? Will he give us a full account of the Commonwealth Finance Ministers' Conference? Is it the fact, as was authoritatively reported at the time, that he and the Lord Privy Seal had a very rough time at the hands of their Commonwealth colleagues? To quote the Guardian: Warning after warning has been hurled at the British Government to the effect that any tampering with the Commonwealth preference system would dangerously, and perhaps fatally, injure the Commonwealth. In one form or another, this view was apparently expressed by the spokesmen of Canada, Australia, New Zealand, India, Malaya and Ceylon. If that story is true, this adds weight to our repeated attacks on the Government for systematically over the years weakening and destroying the links of Commonwealth trade. For years now, they have sacrificed the substance for the shadow.

With this lamentable export record, of which I have just given the figures, with the position in Europe, in the Commonwealth, and now the added threat of an American recession, what have the Government done about the export problem? They called a conference. The Prime Minister produced again the kind of frivolous speech with which we are only too familiar in this House. He told these serious leaders of industry, many of whom have worked their hearts out on export business for years, that they would find exporting fun.

Then, last week, as though he had all the time in the world, the President of the Board of Trade announced a cautious relaxation of restrictions which the Treasury place on the work of the Export Credits Guarantee Department. I will not weary the House by going back to it, but if the right hon. Gentleman will look up the debate on the Radcliffe Report on 26th November last year, he will find that we pressed for these and other relaxations then, nearly twelve months ago. He will find, too, our suggestion for a British Export-Import Bank, because the Export Credits Guarantee Department, with all its magnificent and devoted work, is not enough in the present situation.

Today, I expect we shall get from the right hon. Gentleman the same weary exhortations to industry to become export-minded, and, when we are told by the Board of Trade Journal that 40 firms account for 30 per cent. of our total exports, no doubt these exhortations are as necessary as ever they were. I do not complain about the right hon. Gentleman's speeches. It is the economic policy that is wrong. We have an election-winning consumption boom, we take off the controls and then complain when imports rise and exports suffer from the pull of the home market. Then, we lurch once again back into restrictionism. For three out of four years—election years are the exception—the policy is to keep production down and to starve industry into export-mindedness.

We had it in 1955–56 and now we are having it again. But this does not work. Even this summer, with Bank Rate at 6 per cent., manufacturers were making record profits and had little incentive to export. Whether we hold production down or venture in one year out of four on a rip-roaring consumption boom, we are still denying to the country the investment we need.

Let us tell the right hon. Gentleman what he should now do. He should reduce Bank Rate to 4 per cent., and ease the burden on the balance of payments, the National Debt charge, the local authorities and industry; at the same time, maintain the special deposits; provide tax incentives, such as more generous depreciation allowances to capital investment; and, if the result of these measures is an upsurge of investment beyond the immediate resources and capacity of the nation, hold back the less essential developments by building licensing. That is the advice we give, and, in addition, he should take the other measures I proposed to help exports.

The present critical economic situation shows that there are two laws of Tory economics which, as we have seen, have been at work in the last four years. First, when once in four years production is allowed to expand, we plunge within months into balance of payments difficulties. Secondly, in the remaining three years of the four-year cycle, the years of stagnation, holding down production does not improve our competitiveness. It does just the opposite. Our exports stagnate, and our production and productivity fall and costs rise. So we continue to lag behind our rivals, not only in production, not only in current exports, but also in the quantity and type of investment which we need to provide the means to higher production and higher exports in the future.

Surely, we all realise that in the long run Britain cannot survive as a world supplier of consumer goods. We shall not compete with Japan, America, Hong Kong or, in the long run, with China. We shall not meet the needs of world markets, and especially the underdeveloped areas, with the overspill from an affluent consumer economy. Nor is an industrial complex based on producing the machinery needed to produce consumer goods going to provide the industrial base which we need here to maintain our position in the industrial world.

A few years ago, we were promised a Britain strong and free, hardy and independent. Under the right hon. Gentleman, we are becoming a nation dedicated to striped toothpaste, soft-centred chocolates and fabulous pink Camay. This is the picture we are giving to the world. At home, this is producing a materialistic disregard of the needs of other people. The Prime Minister, when he reached his present office, pledged himself to make Great Britain great. He fails to realise that our greatness will be judged, not by the lyrical quality of our television advertising, but by the provision we make out of our affluence for the least privileged of our citizens—the sick, the old, the disabled.

In a wider sense, in the world setting, this country is becoming so devalued and corrupted by Tory materialism and Ministerial complacency that we are failing to give the lead for which a hungry world is waiting. World forces are shifting, and the new nations are becoming increasingly impatient with a complex of world politics based on two heavily-armed power blocs.

The hungry sheep look up and what do we offer them? The Earl of Home; some elegant platitudes from the Prime Minister which, at the end of the day, never turn out to have any gold backing; a sham strength, in which the ability of our conventional forces to maintain peace in the world—our Navy and our Army—are sacrificed and run down to provide the resources for the Government's prestige strategy; a Britain whose scientists and technologists could make us the pilot plant of the world, a Britain which is held back because our scientists are mis-employed on dead-end military research projects, or wasting their skill looking for new gimmicks or additives to hand to the sales directors and advertising agents.

It is because of this that Britain is not playing its part in the way we should have wished, and I remind the House that the voice of Britain was not silent in the years after 1945. In those years, the world heard the voices of men, not the silken whisperings of public relations counsellors. An Attlee giving freedom to India, so that the echoes would live through all the centuries that are to come; or, as in 1950, saving the peace of the world and doing it with far less publicity than the Prime Minister gets when he goes grouse shooting; a Bevin building a strong foreign policy out of the ruins of the war; or a Cripps giving a sense of moral purpose to our social and economic life.

Today, that voice is silent. The Prime Minister failed to protest when they deported the Anglican Bishop of Johannesburg for preaching the gospel he was sent to preach. He has welcomed to this country South African paratroopers for training, without recognising, after Sharpeville, against whom their arms will be turned. No British voice of protest has been heard at the record of torture of witnesses by our N.A.T.O. ally in Algeria, and no demand for a Charter of Human Rights in an alliance created to defend freedom. There was no protest from the Government when Pentagon chiefs boasted, as they did recently, to Congress that they have developed a Nazi nerve gas to the point where, to use their words, it can operate on human beings like a super insecticide. There has been a supine attitude about U.2 flights, and a failure to press on, as my right hon. Friend said yesterday, with our plans for disengagement and nuclear disarmament in Central Europe.

These make up the price which not only Britain but the world is paying for nine years of Tory government in this country. It is these policies and the men who have fostered them that throughout this new Session and the rest of this Parliament we shall be attacking.

4.1 p.m.

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

The right hon. Member for Huyton (Mr. H. Wilson) began and concluded his "Election Address" with some very offensive remarks about some of my right hon. Friends. I do not propose to follow him in that. De morituris nil nisi bonum. [HON. MEMBERS: "What does that ment?"] Crudely translated, "Don't hit a man on the way down."

I want to confine what I am going to say to the problems of trade and industry facing the country and the Government at the present moment. I want to start by talking about something to which the right hon. Gentleman made no reference at all, although at this time last year very much was said about it, and that is the question of local employment, which was a very active topic a year ago. The Government had then brought forward a new Act, and we were told that what mattered was not the Act but what we did, and we said that we should be happy to be judged by results. We were told that we would not be firm enough with industrialists and would not be prepared to spend enough money to make the policy a reality.

Let us look at the results achieved in the last twelve months, to which the right hon. Gentleman has not referred. We have been firm with people wanting to expand in the Midlands and the South. That is not an easy thing to do when at the same time one is asking businessmen to step up their exports. I am very grateful indeed for the co-operation which we have had from British industry as a whole in being prepared to support the policy of distribution of industry despite the additional costs very often involved.

This policy is not merely social sense, but economic sense. Though for an individual company it may create difficulties, for the country as a whole it cannot be sensible to have 7 per cent. unemployment in one area and 0.7 per cent. in another area. One cannot run the economy full out in those circumstances. So we certainly have been firm.

We have also been fairly substantial in the help that we have given. My right hon. and learned Friend the Chancellor of the Exchequer and his predecessor have allowed me to make considerable moves in this field. Already £11 million worth of expenditure on buildings has been approved and £4 million of building grants have been offered, and B.O.T.A.C. help, mainly in loans, already offered amounts to £12 million.

As a result—although this is only a very short-term, interim report—we are seeing new developments which, if fulfilled, will change the whole pattern of industrial location and may provide a lasting solu- tion to these problems in the case of England and Wales.

Mr. John Rankin (Glasgow, Govan)

What about Scotland?

Mr. Maudling

I shall, of course, come to that.

The jobs in sight in the development districts number 90,000—50,000 in England, 30,000 in Scotland and 10,000 in Wales. In Wales, the entire position has changed. South Wales is now a thriving industrial area, and in North Wales there have been 'very helpful recent developments. I am told that in Merseyside, if all goes well, the danger in future may be more of a shortage of labour than persistent and large-scale unemployment. In other districts, we have made progress which enables us to say that we will not accept any further applications for help from places like Plymouth, the Isle of Wight, Rhyl and Bathgate.

I think we can now say, six months after the Bill was passed, that, if things continue as we hope they will, the problem in England and Wales will be confined to a few scattered places, mainly coastal places, where there are particular seasonal problems, and the shipbuilding areas of the North-East. There are, of course, many difficulties remaining. Ulster presents a particularly difficult problem, Scotland is a particularly difficult problem and the North-East coast has the difficulty of the future of shipbuilding in that, as we must recognise, world shipbuilding capacity is a good deal greater than is necessary to provide for the replacement of the world merchant fleet over its normal obsolescence period. There are also some industries which are declining while others are coming in. We have the problem of the coal industry declining in certain areas. There is United Turkey Red in Dunbartonshire—

Mr. William Ainsley (Durham, North-West)

We also have the problem going inland in the North-East.

Mr. Maudling

I have been referring to the North-East and saying that the position gives rise to concern because of the shipbuilding situation and the coalmining situation. It was for that reason that a day or two ago I added two places in the North-East to the list of development districts. The difficulties persist in Scotland, Ulster and certain other scattered areas, and there are the problems of industries which are declining. But, generally, the progress which has been made in a relatively short time is considerable.

We always maintained that the problems of districts nearer to the Midlands and London would be solved first of all. That was bound to happen. If one makes people move their factories away from the crowded areas to areas where there is unemployment, they will, naturally, and rightly from the commercial point of view, go first of all to the nearest places, like Merseyside and South Wales.

Now that we have made progress in those areas, we are able to de-schedule them or refuse further applications in respect of a number of them in order to concentrate more assistance on the more remote and more difficult places such as Scotland and Ulster, and, if necessary, the North-East Coast.

Mr. Rankin

In view of what the right hon. Gentleman has said, will he explain why the unemployment figures for October have risen by 8,000 over the figures which existed in September?

Mr. Maudling

I have been talking about what jobs are being created in these areas by the Government policy, and no one can really expect factories to be built and jobs provided within six months of the passage of a Bill. What I am pointing out is that, despite the seasonal factors and despite certain labour disputes which affect the current figures, there are 30,000 jobs in prospect for Scotland, a good proportion of them due entirely to the Government's help.

We have been fortunate to have a period of substantial expansion in industrial investment. This is the only time when one can get real progress with this problem. Much depends on the motor industry, as the right hon. Gentleman rightly said. The industry is a very large section of the whole economy, and one would expect it to play a large part in this general progress. Many other industries are also expanding, and we can hope to look forward to other developments, possibly not so dramatic in scale as in the motor industry, but still extremely important, because the rate of investment in private industry remains very high.

I think it is worth while referring to the progress made on this extremely important social and economic issue since the last debate on the Address a year ago.

Mr. Frederick Lee (Newton)

This point about the motor industry is a very serious one. What is the right hon. Gentleman's considered view about the position of the industry? Does he take the view that it is purely a shallow type of recession? As he knows, a great amount of expansion of the industry is now to take place, and we should like to know the Government's opinion about that.

Mr. Maudling

I share the confidence of the motor industry about the long-term future. So far as I am aware, none of the motor firms intends to modify its expansion programme. This industry is bound always to be a fluctuating one. Much depends upon consumer demand, which will change a good deal, but the fluctuations take place on either side of a curve which, an average, rises. The particular current problems of the motor industry have arisen primarily from the sharp set-back in North America, coming at a time of seasonal decline in the United Kingdom, so that the market could not absorb the surplus vehicles. The credit restrictions have had some effect. They were intended to have some effect. But their effect is small compared with the effect of the setback in the North American market. Over the next few months, we shall have to watch very carefully to see to what extent the normal seasonal pattern of increase in the home demand in this industry reasserts itself in the winter.

I share the general confidence of the motor industry that these temporary fluctuations should not divert one's attention from the long term expansion of a highly important British industry.

Mr. Hugh Gaitskell (Leeds, South)

Is it the view of the Government that the maintenance of these credit restrictions, which admittedly curtail the home market at a time of difficulty in 'the industry, is still essential in order that the industry can expand exports? Can it do that in face of the North American recession?

Mr. Maudling

The right hon. Gentleman has misunderstood the purpose of the restrictions. They are part of the general policy of credit restriction, which is designed to assist our balance of payments position. We must look not only at the export position but at the import position One of the troubles in the early part of this year was that while we were exporting cars we were importing them just as fast. The effect on the balance of payments was great. This was true of other articles—for instance, refrigerators. As my right hon. Friend the Chancellor of the Exchequer has said on more than one occasion recently, the Government will relax these restrictions as soon as the general situation justifies us in doing so and we should not be taking an unjustifiable risk.

I turn to another feature of the Gracious Speech to which, rather surprisingly, no reference was made, and that is the Weights and Measures Bill. Most members of the party opposite have always taken a great interest in the protection of the consumer This, after all, is a very important Measure to protect the consumer.

We believe that the best protection for any consumer is competition and common sense—the right of the consumer to choose between different traders and different products. [Interruption.] I cannot understand how right hon. and hon. Gentlemen opposite can describe a situation in which two or three large firms are fighting tooth and nail for consumers as a "monopoly". It is a misuse of language to talk in that way.

The basis of the law in this field of consumer protection is to ensure that a consumer is in a position to exercise a choice. She must be able with reasonable care to know what she is buying. That is the basic point. The Molony Committee is doing substantial work on the general question of consumer protection. The Bill will deal solely with the question of quantity, which is a very important one. We are concerned in the Bill to ensure that the consumer knows how much she is getting for her money.

Under the Bill, it will be an offence, which generally speaking it is not at present, to give short weight or measure or to mislead the customer as to weight or measure given. This can be effective only if there is an obligation to make known the amount which is purported to be sold. It is already provided in the case of a number of foodstuffs that they must be sold by weight or measure and must be marked with the quantity when they are sold in packets. The time has come, with the big changes which are going on in retailing, for a wider extension of this provision. The Bill will cover such things as fish, cheese, fruit, vegetables, soaps, paints, detergents, and many other things. The object is to enable the customer to know what quantity she is buying at the time she buys it. I believe that it is a very important provision for the protection of the customer generally.

Mr. William Hamilton (Fife, West)

Will the Bill take account of the problem relating to the moisture content of fuels? When coke and coal are delivered wet they contain as much as 20 or 25 per cent. moisture.

Mr. Maudling

Fuels are certainly covered in the Bill, but I should like to reserve discussion of that point until the Bill is before the House.

Perhaps I should add, for the benefit of anyone interested, that the question of spirituous liquors is also dealt with in the Bill. I hope, if nothing else, to go down in history as the man who proposed to Parliament what should be the size of a double Scotch.

I come to the major economic questions to which the right hon. Gentleman referred. I shall attempt to show the other side of the rather gloomy picture he painted. We have seen recently a long period of price stability, general full employment, a record level of investment, and steadily rising consumption. Those facts cannot be disputed.

A little while ago my right hon. Friend the Home Secretary referred to doubling the standard of living in 25 years. We sometimes hear a few jeers from the other side about that. I have been looking up the figures. As Lord Amory said in April of this year when he was Chancellor of the Exchequer, the best statistical definition of the standard of living is the level of real personal disposable income per head—in other words, what we have to spend taking account of what has happened to prices in the meanwhile.

On that basis, my right hon. Friend said in April, that between 1954 and 1958 there was an increase of 2.7 per cent. per year, which is very nearly the level of 2.8 per cent. required to double the standard of living in 25 years. Since then we have done a good deal better than that. In fact, I can now tell the House that between 1954 and 1959 the average rate of increase was 2.9 per cent.—more than is needed to double the standard of living in 25 years.

As the right hon. Gentleman rightly said, two problems persist to which solutions are not yet in sight. The first is the way in which a wholly unrestrained home market seems to lead to an expansion of demand greater than our resources can bear. The second is the tendency of the percentage of our national output which is exported to fall.

In the last five years that part of our national output which has gone abroad to be sold has fallen from 19 to 17 per cent. That change alone is enough to cover the difference between the current surplus we have and what we should like to have.

We have been reminded that a vigorous home market is desirable, but an excessive home market detracts from exports, produces rising prices and costs, pulls exports into the home market, and increases imports. It is an interesting fact to observe that even at present, although there is short time in a number of the motor industries in the Midlands, a number of engineering companies with long export orders still cannot get the labour they need to fulfil those export orders. We must bear that in mind.

People often argue that without a strong home market they cannot export. A good home market is certainly a valuable basis for export, but in modern conditions unless we have an export market which is strong enough we cannot have a good home market. In other words, the priorities should be placed the other way round. Those people who say, "We can do very nicely in the home market. Why worry about exports?" are acting not only contrary to the national interest but also, in the long run, contrary to their own interests, because without an adequate percentage of exports no one can possibly expect a steady, developing home market in this country.

The trouble is that the need for maximum production at home means always running the economy at the margin—hence the need to make the fairly frequent adjustments in economic policy, which undoubtedly cause businessmen considerable difficulties in their forward planning. That is unavoidable in the circumstances in which this country finds itself. We must be prepared to adjust ourselves rapidly to changing conditions.

For example, yesterday the Leader of the Opposition mentioned the American recession. How deep will that be? How long will it last? It is extremely important for us. If the American economy turns downwards, we in this country must be ready to react. We are not in a position to say to our industrialists, "We can guarantee you a steady rising demand for two or three years ahead" If we tried to do that, we should certainly run into disaster. But we can cushion ourselves to some extent against the effect of international changes by having a larger export surplus and by exporting a larger proportion of what we produce.

To do this, everyone must accept that we should consume a smaller share than we do at present of what we produce, but it would be consuming a smaller share of a total output which could rise much faster. Therefore, in the long run all concerned would be better off. The importance of that for wage negotiations, profits and dividends should never in any way be overlooked.

One of the increasing responsibilities which our exporters have to carry is that of aid to the under-developed countries overseas. I am sure that as this Parliament progresses that will become more and more a pressing problem. We in this country are very much doing our share. We provide in grants and loans to underdeveloped countries, along with private investment, about one and a quarter per cent. of our national income, which bears comparison with anyone, including the United States of America, and which is much better than many. I hope that we shall be able to get some of those who are not doing so well to improve their performances.

That is a great burden for us to carry and, although we are doing our share, it will be a share of a programme which should in total increase. That will be a growing burden on our export trade. It seems to me that from almost every point of view—personal interests, domestic interests, the status of this country in the world and our ability to do our duty to other countries—how to increase our exports is the fundamental problem to be solved.

What are the reasons why our exports are not doing as well as they should? What is wrong? My impression is that on prices and delivery we can compete all over the world, although there are some countries with very low wage costs which can always undercut us on certain things. However, by and large, it is not about British prices and deliveries that one hears most of the criticism, although we must be very careful not to allow production costs to rise too much, or we shall soon be uncompetitive; nor must we allow industrial stoppages to hold up deliveries, or we shall soon be in trouble in overseas markets.

The quality of British goods is held in high regard and sometimes said to be too high. I think that that is linked with the feeling that we still have a tendency in this country to say that not only do we know what is best for ourselves, but that we know what is best for our customers, too. That is a rather dangerous tendency.

However, in my many overseas visits I have heard constant criticism not so much of British quality or prices, or delivery, but of design, of styling and of attention to the market, of the sales effort. Although, of course, it is dangerous to generalise, and there are immense differences between one firm and another, those criticisms are too frequent and widespread to be ignored. I am certain that we can sell many more British goods if we sell them harder and pay greater attention to the real requirements of the overseas customer.

If those are the problems, how can they be solved? They cannot be solved by instructions. One cannot command exports, and I do not think that one can plan exports. I do not think that the problem can be solved by special incentives or subsidies, or by having Income Tax or Profits Tax remission on export turnover, for example.

The problem with subsidies and incentives is that one must either do the whole thing or nothing, and if we start giving subsidies and tax incentives to our people, our competitors will do the same. In the long run, there will be a race and competition in these things which will be to no one's benefit and which may do us much harm.

For some years, the Government have been in touch with industry on these matters, and with industry as a whole we share the view that it is a better policy for this country to avoid a race in these matters and to try to promote international agreement to outlaw them. As a result, we have a European agreement, supplementary to the G.A.T.T., which bans the introduction of any new export subsidies or tax incentives, and I think that we would be very unwise if we were to break that agreement, because in the long run that would bring no benefit at all.

Nor can we solve the problem by import controls, and I am glad that the right hon. Member for Huyton did not suggest them. As far as we are concerned, import controls are largely self-defeating, because in the long run if we will not buy other people's goods we cannot expect them to buy ours. The only way this problem can be tackled is by the combined efforts of Government and industry, employers and work people alike.

Over the range of export promotion, there are some matters in which the Government must take prime responsibility, some matters which are mainly the responsibility of industry, and some in which responsibility is divided. Let us take first the question of trade relations. We have been pursuing a policy which, I believe, is supported by hon. Members opposite, of trying to reduce barriers to trade throughout the world, on the general principle that this country's interest is best served by the maximum freedom of international trade.

We hope very much that in the forthcoming G.A.T.T. session there will be agreed, on a proper reciprocal basis, substantial reductions in industrial tariffs all round, thereby creating greater opportunities to trade for all industrial nations.

We have a special responsibility, to which the right hon. Gentleman referred, in the question of European trade relations, the argument about the Six and the Seven. I will briefly answer the two questions which the right hon. Gentleman put to me. Our position in relation to the Six and the Seven was made perfectly clear by my right hon. and learned Friend the Chancellor of the Exchequer on 25th July. At that time, the Seven were still anxious to have negotiations with the Six on the long-term problem of a European settlement, but at that time the Six did not agree that it was timely to have such negotiations.

Since then, there has been the visit of my right hon. Friend the Prime Minister to Bonn, at the invitation of Dr. Adenauer, and there have been other discussions in Europe between the Germans and their partners in the Six and among ourselves, the Commonwealth and the members of E.F.T.A. What we are trying to do generally is to find an acceptable basis for further negotiations.

I am glad to have this opportunity to say that the reports which I have seen about the Commonwealth Finance Ministers' Conference were very misleading. My colleagues and I at that meeting felt that it went if anything better than we expected. There are Commonwealth difficulties and there have always been Commonwealth difficulties, and we have always said so. Sometimes, some people have pushed those difficulties on one side as if they did not exist. If anyone has been surprised when Commonwealth Finance Ministers have pointed to those difficulties, it has been the people who ignored them in the first place.

A great and encouraging feature of the Commonwealth Finance Ministers' Conference was that, although there was no disguising the difficulties, there was considerable unanimity about the size and importance of this problem, both from the point of view of the United Kingdom and from that of the unity of the Western World as a whole. I am very glad to have this opportunity to deny some of the rather gloomy reports wrongly spread about proceedings at that conference.

Mr. H. Wilson

The right hon. Gentleman says that it was not as bad as he expected, but we do not know how bad he expected it to be. Will he say whether there was any pressure on the question of the Common Market? Was there any change in the Commonwealth attitude compared with that of last year, or the year before, for instance? Will the right hon. Gentleman make it quite plain that he does not intend to make any change in the structure of Commonwealth trade without the agreement of the Commonwealth?

Mr. Maudling

Having been to quite a number of these conferences, I can say that what was said by the Commonwealth Finance Ministers was no different in any way, either in letter or sense, from what I have heard them say so many times in the past. Their assessment of their interests and their assessment of the needs and interests of Britain and Europe have always been the same. The fact remains that this is a difficult problem and we must not ignore the difficulties. Nor must we in any way ignore the vital importance of finding a solution, and I am sure that no one does.

I want now to say something about the activities of the Board of Trade and the Government generally in promoting the export trade. We have recently introduced a number of improvements in the activities of the Export Credits Guarantee Department, the special policy for shipbuilders, the expansion of the dollar drive facilities, the system of part period cover, the undertaking that we will support our people if they are faced with unfair competition.

In the case of export credits, as in the case of tax incentives, we feel that it would be entirely contrary to Britain's interests to start a race for giving credit which would mean everyone standing out for their money longer than necessary, no one being competitively better off in the long run. At the same time, we have introduced a certain flexibility into the system, because we are not prepared to see our people put at a disadvantage against their competitors.

Clearly, we must distinguish between the case where people are using credit institutions to provide aid to the underdeveloped countries and those where they are providing commercial support. Where they are providing commercial support, we are determined to provide our people with facilities at least matching those of their competitors. I take this opportunity to pay tribute to the work of the Exports Credits Guarantee Department and the Advisory Committee and all those concerned with it who provide a service to British exporters which is the envy of their competitors throughout the world.

There is much to be done about trade promotion by co-operation between the Government and private industry. We intend to spend more on international fairs and promotions of that kind. We intend to expand our activities in the way of inviting prominent overseas businessmen to come to this country as our guests to see something of British industry and British progress, and in that sort of work co-operation between Government and industry is vital.

The Board of Trade export services, which are manifold, are not either at home or abroad well enough known to British industry. If only more manufacturers were aware of the services that they could enjoy, in the way of commercial intelligence and so on, in the Board of Trade and in the country as a whole, from commercial officers abroad—Board of Trade officers in the Commonwealth, and foreign service officers in foreign countries—I am sure they would be able to export more and that our general export effort would be increased.

With that in mind we are doing all we can to expand the publicity on these services. We are writing to 30,000 firms explaining what is available and we are sending our officers round to talk to them. We are certain that manufacturers are losing opportunities to export because they are fearing difficulties which would not exist if they called upon our services to help solve their problems.

Then there are the efforts by industry itself. I was particularly glad that Sir William McFadzean was prepared to help, with the A.B.C.C., the F.B.I., the National Union of Manufacturers and the Trades Union Congress, to form a European Export Council. We believe that the Dollar Export Council has done excellent work in promoting British exports in the dollar area, and the time has now come for a combined effort of this character to expand our exports to Europe.

We are sometimes criticised as Ministers for exhorting people to export, but if we did not do that, we would be criticised for not doing so. The best way to get industrialists to expand their exports, or to try exporting for the first time, is to get another business man who has tried and succeeded to tell them how he has done it, to explain how to get over the difficulties and persuade them how necessary it is to do so. That is why we welcome the formation of the European Export Council and why we particularly welcome the efforts which these industrial organisations are making, subsequent to the Prime Minister's speech, to expand interest in the whole problem of exports, to provide inspiration to their members and particularly to tackle the problem of how to provide for the smaller and medium-sized firms, by co-operation or combination if necessary, the facilities for export overseas which from their own resources they may not be able to provide.

The general response to the export campaign laundhed by the Prime Minister has been extremely encouraging. The number of inquiries coming to the Board of Trade from would-be exporters and the number of requests for the names of overseas agents show a very great increase on a year ago. It will take time for this to be effective in the movements of goods through the ports. It may take months or years for a new exporter to establish his position and get his goods moving to his customers. But in general the response has been encouraging and there is a new awareness throughout British industry, by employers and employees alike, of the vital necessity of increasing our rate of exports.

The right hon. Member for Huyton made it clear that he, too, wanted to expand exports, but I am afraid I could not share his view as to how the problem could be solved. He wanted to reduce the Bank Rate, give tax incentives and higher depreciation allowances to promote a greater volume of investment, thereby stimulating home demand. This he would hold back by his old traditional solution of building licences. I thought we had blown that out of the water years ago. If we look at the volume of building work and subtract the number of houses, the amount of maintenance and factory building, we are left with a few offices, a couple of hotels and a garage. One only has to look at the figures to realise that this is complete nonsense. No solution lies that way because there is no easy solution at all to this problem. This is fundamentally a problem for industrial organisation, and even more for industrial psychology.

Unless we can all recognise—Government, employers and unions alike—that it is fundamental to our well being to expand the proportion of our national output that we sell abroad, we are going to meet great difficulties in maintaining the increased prosperity of this country which has been achieved under this Government.

4.34 p.m.

Mr. Cyril Bence (Dunbartonshire, East)

The President of the Board of Trade made one important point which has been made many times in this House and which I could never quite understand. We have been told today, as we have been told time and again in every economic debate, that what we must do if we are to prevent inflation is to turn more and more of what we import into a product which we can send out of the country and offer to overseas consumers, thereby absorbing the purchasing power of other countries.

As I see it, if all our workers are fully employed in producing goods and services, and if, with their wages, they go into the markets at home where the goods that they have manufactured are not for sale because they are exported abroad, there would appear to be too much money chasing too few goods. If a country has full employment and is using all its resources, and exports more goods abroad than it offers on the home market to meet the purchasing power, then it seems to me that inflation in the home market is inevitable unless there be some control of prices.

This is what happens in war time. All the workers are put to work producing a large quantity of articles which no one is asked to buy. They are exported abroad, even to the enemy. At the same time, wages are paid to people engaged on producing these articles, and we get a potential inflationary position in our own market. Therefore, in terms of real economics it is a completely "phoney" argument to say that we must export to keep down inflation. We must export to get the foreign currency to buy the raw materials and products that we cannot produce ourselves, in order to make a monetary profit on our trading with other countries, but this has nothing to do with inflation in our own country.

In fact, if we want to raise the purchasing power in our own country we want more goods on offer in the market than there is money to buy them. If we have too much money chasing too few goods we get inflation. Is that not true? Has that not been said time and again? If we import less and export more, while we pay the same wages, profits and dividends, we have a large amount of money chasing fewer goods than would be on the market if there had been an exchange of exports on an equal basis. This is a contradiction with which we are all faced, with every country trying to export more than it imports.

We get these periodic balance of payments problems. Here we get this statement again, which I feel has never been examined fully, except by Professor Keynes, to whom we should give full credit for his examination of this problem. A great deal of research still needs to be done, as well as a good deal of evolution in our monetary system, to solve this seemingly insoluble problem.

However, that is not the main theme on which I want to attack the Government. During the last five years in every Gracious Speech there has been some allusion to gambling in some form or another. Before coming on to that subject, however, I should say that I am sorry that the statement in the Gracious Speech that Legislation will be laid before you to amend the Weights and Measures Acts was not placed immediately after the paragraph stating: My Government will endeavour to improve the protection of the community against crime. If there is anything more criminal than what goes on in this country when the broker gets hold of the things that the technicians, engineers, scientists and workers have built, it is the way in which the community "fiddles" over the products of industry. It is well known that the whole range of income arising out of the production of products in the engineering industry is less than what is made by the various people financing the distribution of those products.

I can remember that in the company with which I served we tooled a product and costed it when it was finished at about £5. It was sold at £6 7s. 6d. The hire-purchase company made about £7 out of it. That is an example to show why there is today a hire-purchase debt for consumer durables rising to nearly £1,000 million to the finance companies. This is probably true of any industrial economy. The real producers, the people who produce the goods in the factories, the people who are doing the jobs, are receiving less reward than the people sitting in office blocks "fiddling" the books and manipulating the figures.

It is well known that Napiers, in Scotland, make more money out of a Hoover sweeper than the Hoover company has ever made in its history. There is no doubt that the rewards of our modern industrial economy are going not to the people who produce the goods, but to the people who control the monetary mechanisms, the mechanisms of credit and of finance. In my view, these people are criminals because, by the methods and principles they adopt, they rob the producer when they get his goods and they rob the consumer when they put the goods in his hands. The underlying principle, of course, is usury.

I am glad that we are to have legislation dealing with weights and measures. It is time we abolished the "major" pack and the "minor" pack in favour of knowing by the marking on the packet whether it contains 4 oz., 8 oz. or whatever it may be. One can go into a poultry shop nowadays and ask to see a chicken marked at 13s. 6d. or 12s., but when one asks what the weight is the bird is slapped back into the window and one is likely to be insulted. One cannot nowadays be sure of the weight of anything one buys, and it is high time that these practices were stopped.

Some years ago, when working on an engineering job, I saw some sides of green bacon being put into a large concrete bath. My father was a farmer and he had done bacon curing, but I had never seen him do anything like that with his sides of bacon. The next time I went home, I asked him about it and he told me that I would do well to watch carefully what bacon I bought. "They put a side of bacon", he told me, "weighing perhaps 1 cwt., into a gallon or so of water and leave it overnight. In the morning the water has gone. It is in the bacon". He told me that this could be done with green bacon, but not with smoked bacon, and he advised me always to buy smoked bacon. I hope that that will go on record for the housewife, so that she will know only to buy Wiltshire smoked bacon, because there is no water in it. People used to do the same thing with butter; butter was whipped up with water. I do not know what dodges are adopted now.

This is the way delinquency starts, the traditional way in which "fiddling" and cheating began in presenting to the consumer the products which the producer had made. This is the way the whole idea of getting something for nothing began, and the Government are encouraging it. Three or four years ago, Premium Bonds were introduced. Since then, we have had the Betting and Gaming Act. Now, we are to have a levy on horse racing. It is well known that the biggest betting shop and the biggest Tote organiser in the country today is the Treasury. In our newspapers and in every walk of life people are told that if they want the big rewards they should go in for speculation. Hon. Members opposite do not put their children into the building business. They put them into broking. A man makes more money by financing the distribution of the product than he could by producing it.

One has only to follow the workings of the share market to see that this is so. I have a friend who, in his old age, has done a bit of dabbling, and he finds that "Gussies" and the big distributors and stores give far bigger dividends and far more interest on shares than the industrial producers do. The way to make money today is by speculation. This is the guiding principle, a principle which the Government further encouraged by starting the Premium Bonds scheme. It is even suggested now that local authorities might raise money by lotteries.

I was brought up in an old Radical, Liberal family, puritanical to the extreme. When I was a youngster, before I went out into the world to work, I was told that I had no right at all to claim the labour and service of another man unless I gave service and labour comparable with the labour and service that he was prepared to give me. I was told to work hard, to be loyal to my employer. When I was sworn as a member of my old trade union, the Associated Society of Engineers, I was told the same. My hon. Friend the Member for Newton (Mr. Lee) knows very well that in the old A.S.E. that was one of the principles embodied in the clauses one subscribed to when joining, as I did when I became an apprentice member at 16. I was told to be a diligent workman and to give full value for the wages I received.

When I gained promotion in the company with which I worked I learned that this was a false philosophy. It was a wonderful philosophy to inculcate among the men going on to the shop floor. They were told to give as much as they could and take as little as possible. However, by the time I was 25 I learned that I had to scrap that philosophy and adopt a new one, "Get as much as you can for as little as you can give". It seems to me that this is the philosophy of Western civilisation.

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

The working man could not do that in industry; he had to give of his best.

Mr. Bence

As I say, as a young man on the shop floor, I was told—hon. Members opposite believe this—that the workman should give of his best, give as much as he could, and should not demand excessive rewards. However, as soon as one goes further up, one discovers that many people engaged not in the actual productive processes but in the processes of distributing the products have different ideas; they want to get as much as they can and provide as little as possible in return. This is what has happened in our society.

What contribution does Hugh Fraser make to the Scottish economy? He has written up tremendous profits and capital gains. I have no doubt that the enormous increase in dividends which has resulted from his financial operations is reflected in the national income. I have no doubt that the increased capital values and written-up dividends of Mr. Clore and Mr. Cotton will reflect themselves in an increase in the national income, but what, in any real sense, has been the increase in the national income as a result of their operations? The man who works in the factory as foreman or superintendent sees that he receives higher wages from the use of machinery. He produces more goods. But what in the name of fortune do these other people do?

Mr. Raymond Gower (Barry)

The hon. Gentleman has referred to distributive organisations such as "Gussies", among which, I assume, he would include Marks and Spencer and the like. Will he not agree that the large distributive organisations—I am thinking particularly of Marks and Spencer and similar shops—have ensured that the consumer is offered a rather higher quality product at a very modest cost, and that this has been something lacking in many continental countries and something for which they envy us? To that extent, have they not rendered a service?

Mr. Bence

That brings me to another point which was referred to by the President of the Board of Trade. In the days of fierce price competition the tendency was for the price to fall and for the quality of the product to fall with it. [Hon. Members "Oh".] Yes, definitely it did. Hon. Members would, perhaps, be surprised to know how the company with which I worked reduced the quality of products between 1921 and 1936. As the price went down, so did the quality of the product. That is inevitable; it cannot be avoided.

As a result of the activities of Woolworths between 1923 and 1930 we got a standardised product under almost monopoly control distribution. Between 1922 and 1926 contracts were made, and small manufacturers were tied up and committed to chain store distribution. I do not know whether my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) was in the Midlands during this period, but he and I know companies which lost small independent customers because they were tied to one chain distributor. I was one of the victims of this practice. The customer got, not a superior product, but a standardised product which by clever advertising became the ultimate standard product. What a lot of nonsense!

We have exactly the same thing today. Housewives everywhere go into certain chain stores and buy a product with a trade name which they are convinced is the best that can be produced. But it simply is not true. It is a standard product which has been accepted as a result of clever advertising, but no one has the right to say that it is the best. There are products today—I know some of them in the engineering sphere—which everyone accepts as first-class. I can think of one product which, if an hon. Member took it to pieces with a screwdriver and found the paper and cardboard in it, would shock him. Everyone looks upon it as the finest product in the country, but it is a universal standard which by clever advertising has been accepted.

We should not get the illusion that this almost monopoly distribution through the chain store system, giving a product which is universal, necessarily provides a first-class product for the money which one pays for it. This is well known in many spheres. It is well known in the motor industry, which depends on sub-contractors. A couple of manufacturers have almost monopoly production powers in the supply of components to the motor industry, but the motor industry employs very strong inspectorates over the product which flows from Hardy Spicers and other similar concerns.

We are to have a levy on horse racing. We are a nation of gamblers who are looking for easy money in a country that will starve unless it can market its products all over the world. I was brought up in two mass-producing industries. We were taught to look for a world market because new techniques were evolving so fast that we could not split the world into a series of little markets. That is why some of our mass producing industries have been so successful. We still have to do that, but our people are getting the idea that their individual standard of living, whether it is obtained by winning the football pools, by speculation or by gambling, is all right. But it is not so. There is a continual rise in monetary and capital values. People are chasing higher rewards as they see other people getting them, but, if they do not get those rewards by put- ting into the competitive markets of the world more of their own products art a price which justifies their production, then this country will go down fast.

We hear it said by one person or another, "He has a private income". But someone else's income is not a cost on production. People talk about on-cost and production costs, but if we look at our country as an industrial country with a production system, then all income—whether it be that of the lawyers, of Members of Parliament, or the £3 a day which peers get for attending the House of Lords—is a cost on the services and production of the community. If the landlord puts up the rent of a farm, the farmer has to get more for his products. All income derives from the production and distribution processes of the country. The more incomes which arise from no real contribution to the economy are pushed up, and the more the real producers are forced to chase after higher incomes, the more one defeats one's own ends.

I must refer, with great regret, to the last ten years of this Administration. I have seen the philosophy taught to me by my grandfather, my father and some uncles who were engineers—one was general manager of one of the biggest engineering firms in this country—go by the board. They believe in a fair day's pay for a fair day's work. There is an ever-increasing number of people getting unjust rewards. They are making unjust claims on the products of labour, and when I use the word "labour" I mean managers, technicians, engineers, and all those engaged in the physical transport and production of goods. There are far too many people getting tax-free capital gains and are using that money in the investment market and inflating the value of stocks and shares.

We want a Government which will give a lead, will use all their fiscal powers and will indulge in a gigantic effort to bring home not merely to those on the factory floor—it is traditional with us that we can live only by good work—but to those at the top level and every other level that we want more people in the creative processes and more people adding value to the product and fewer people "pinching" the value.

4.58 p.m.

Mr. John Harvey (Walthamstow, East)

I have listened, as I am sure we have all listened, with much interest to the speech of the hon. Member for Dunbartonshire, East (Mr. Bence). He would not expect me to agree with everything that he said, although I have come to know him reasonably well over the years, and to have some respect for his first-hand knowledge of the job of work which the man who creates things in the factory does. I know that that is the way he came up himself, like, I think, many of us on both sides of the House.

I do not think the hon. Gentleman, on looking back, especially at the post-war history of this country, can seriously argue that all sections of the community, especially the section for which he has been speaking this afternoon, have not shared enormously in the benefits which our expanding economy has made available to them.

When the hon. Gentleman, as he has this afternoon, attacks people who seem to be getting more out of it than he considers to be their fair share, I think that he sometimes forgets the tremendous equalising power of Surtax and all the other forms of taxation which really act positively—and I ask him to remember this point—as a disincentive to some of the very people whom we want to stay in this country and go on contributing their efforts and energies to our expanding economy. Today, all too often, they are attracted overseas for their livelihood because of the disincentives they see in staying in this country under a system of extraordinarily high taxation.

Mr. Bence

That is not true of the executives in industry. Some years ago I attacked the idea that we can go far when we use taxation, and very high taxation, for a redistribution of industry, because it is obvious from the trade associations and movements that are going on, and the accountants in industry, who are employed more than ever before, that any proposals by the Chancellor of the Exchequer in the form of taxation are immediately spread through the manufacturing unit and come out as a cost on the end-product, and the poor consumer pays again.

Mr. Harvey

I seem to have been less fortunate than some people in finding out how to redistribute some of the money that my right hon. Friend and the Treasury take from me in the course of the average year. I want to say on the question of salaries, and the hon. Gentleman has reminded me of the point, that if there is one omission which I certainly regret in the Gracious Speech it is the omission of any reference to an intention to reconsider Ministerial salaries.

Any of us who has looked at the recent reshuffle in Her Majesty's Government must have noted the fact that junior Ministers have found it necessary to return to private business, unwilling to continue in their very important jobs; and we cannot but be a little concerned, I think on both sides of the House, as to whether Ministers of the Crown and Parliamentary Secretaries are being anything like adequately rewarded for the tremendous burden of responsibility that in these days they have to bear. I hope that I shall take the whole House with me in saying that, if and when something positive can be done, and one hopes that it will be soon, to see that our Ministers and their juniors are more adequately rewarded than they are today, the House as a whole will welcome this as a good and necessary thing.

If any great difficulty is found in assessing just what sort of levels of pay one ought to make available, surely there is the indisputable fact that senior civil servants have their salaries fairly precisely laid down by negotiation, and if the Minister is, as indeed he is, head of his Department, it is not unreasonable to assume that his salary should be somewhat more than that of his top civil servants and his deputy's salary could similarly be fixed in some sort of relationship to the pay of senior civil servants. I see no insuperable problem in this. It is vitally important to the nation that our Ministers and junior Ministers should be more adequately rewarded for the jobs that they are doing than they are today.

I want to confine myself this afternoon mostly to the economic debate and particularly to the question of exports. At the same time, I propose to take advantage of the fact that it is apparently difficult, even for me, to get myself out of order in this debate, and to finish up by saying something which is not so closely connected with matters of trade or economics. I want first to refer to extracts from the Interim Report of the Committee on Education for Salesmanship, otherwise known as the Goodenough Report.

This Report, when it was presented, made a number of references to some of the things vitally necessary to our export trade. It referred to the constantly improving quality of foreign goads. It talked of the improvement in methods of design, methods of production, methods of marketing, and it made the point that there are too few Britons travelling abroad to sell British goods. During part of the Parliamentary Recess I have been doing just that, travelling quite a bit abroad to try to help to sell British goods. The point is made to me time and time again that people abroad see many Americans, many Germans and many Frenchmen but comparatively few Englishmen, even in these days, trying to sell our goods.

The Goodenough Committee's Report talked about the need to print commercial publications of one sort or another in the language of the country in which we were trying to sell, and also of the need for our salesmen to be able to speak foreign languages. It made the point that if we want to sell in Greece, for example, we are more likely to be able to do so if our representative can talk Greek to a Greek, even if the Greek can speak English. It makes a better impression The Goodenough Committee's Report talked about the need to consider the special requirements of our customers more than we do today. It emphasised particularly, for instance, that the German exporter is much more adept than we are in assessing What a country really wants, rather than telling the export market what we have to offer and trying to persuade it to buy it. The Report also spoke about delays in delivery so frequently associated with British goods and British exports. It states, among other things: Our evidence is invariably to the effect that British weights and measures are an intolerable nuisance to the Continental purchaser, and that the labour of calculating the equivalent in the metric system is a genuine obstacle to trade. The Report also said that: An intimate knowledge of local conditions (commercial, geographical and financial) is essential. Here British exporters frequently fall short, being apparently under the impression that in times when their regular markets fail them they have only to turn their attention in other directions in order to make up at once for a temporary slackness in their normal business. This is a very serious misapprehension. The Report went on to state: A United Kingdom manufacturer should make up his mind, by careful preliminary research work, as to whether the market is worth trying for. If not, he should refrain from wasting time and money and prejudicing opinion against British methods. I should like to quote the final paragraph of the Committee's Report. It said: We ask that everyone should realise that there is a critical situation to be faced; that in the national interest our evidence should be examined without prejudice and without delay; and that each individual reader should approach the subject with a fixed determination to apply to his own trading organisation any lessons which our evidence has to teach him, and to accept that evidence in the spirit in which it is tendered, that of a desire to be of service to British industry at home and British commerce abroad. The President of the Board of Trade this afternoon in some of his own remarks virtually suggested that some of these defects to which I have drawn attention are worrying him, but—and this is the point of what I want to say—the Goodenough Committee's Report was presented to Sir Charles Trevelyan, President of the Board of Trade, in 1929, on 12th November to be precise, almost exactly thirty-one years ago. Yet these are still very largely the defects from which the British export trade suffers today.

It is high time that we, all of us, faced the fact that this country must regard its export trade as the most vital aspect of all its trading. It is all very well making party political points, as one tends to do, between the two sides of the House about recurring crises, and about electioneering and everything else. The plain fact is that unless we can keep our export trade up, we have to cut the coat at home according to the cloth that we foresee being available. I must say for Her Majesty's Ministers that they are much less to be censured for applying the necessary sanctions in good time than they would be if they allowed full-scale trouble to develop before they took action.

In considering our export trade, it is necessary to be a little more far-seeing in the whole method that is applied. I want, therefore, to be specific for a moment or two. In this debate, as in the debate last week, we have heard a lot about the motor car industry, a great and important exporting industry. It has been obvious for some time that the American manufacturers were worried about the small continental cars that were coming into the United States. We have known for some time that they would produce a compact car of their own. Therefore, the danger signs in the American market have been clear to see for some time.

What worries me much more, however, is that if one travels today in Europe—and in the last few weeks I have been in Europe as far apart as Sweden and Spain—one sees the same story repeating itself in these countries, with German and French cars much in evidence. The Spanish economy has improved out of all measure in a matter of a relatively few months. A degree of freedom is present again in that economy which it has been denied for many years.

If one goes to Madrid today and compares it with the Madrid of six years ago, when I was last there, one realises that is a different city, and yet the foreign cars that one sees are either expensive Citroens or less expensive Renaults, or expensive Mercedes and less expensive Volkswagens. The only British car I saw while I was in Madrid was the Ambassador's Rolls-Royce. This disturbs our friends abroad as much as it disturbs me. We have got to ask ourselves whether we are doing all that we ought to be doing to look at the small markets and, perhaps, the difficult markets but, certainly, the "bread and butter" markets.

While I was in Zurich, I read of a British firm which was trying to sell wireless sets in Switzerland with three little press-buttons marked "Home", "Light" and "Third". We really cannot expect to succeed in the export world in this way.

Some imaginativeness and some rethinking by Government Departments is necessary. I have very much in mind, for instance, that in Europe, which, after all, is growing more prosperous, as we, too, have been growing more prosperous here, tastes, demands and markets are changing. I wonder whether it is not high time that we reconsidered—it may seem a relatively small matter to mention, but I think that it could be important—some of our attitudes, for instance, to the interchange of pets.

I have particularly in mind that British dogs could probably command an important export market on the Continent of Europe if one could take British dogs to dog shows as one can send British cars to motor shows. If one takes a British dog abroad, however, it has to be put in quarantine for six months when it returns, yet all over Europe dogs can wander across the frontiers as people wish to take them. These may be small details, but they need to be thought about.

In Rotterdam, I noticed that there was an excellent flower show called the Floriade. As I had an hour or so to spare, I went to see it. I found there a United States pavilion, a French pavilion and a Belgian pavilion, as well as Dutch, German and Italian pavilions. I looked in vain for a British pavilion. So when I got home, I wrote and asked the Foreign Office whether there was any good reason for not having a British pavilion there. I received a reply which said: Early last year the Netherlands Ambassador informed the Foreign Secretary of the exhibition and invited this country to take part. The Ministry of Agriculture then consulted the Royal Agricultural Society, which is very keen to see this country worthily represented at important international horticultural events. The British Committee for Overseas Flower Shows, which is very closely connected with the Royal Horticultural Society, then considered a proposal from the organisers of the Rotterdam Floriade that this country might plant and maintain for the six months of the show a large rock garden. Unfortunately, the finances of the Committee were very limited and largely committed already to other shows in 1960, including the old-established Quinquennial Show at Ghent. Moreover, the proposed exhibit would have been very expensive. They therefore came to the reluctant conclusion that it would not be possible to finance an official exhibition from the United Kingdom. But the French, the Belgians, the Germans, the Italians and our American friends did not find it too expensive to finance a show at the Floriade. If we leave the development of goodwill overseas to impecunious societies, I shudder for the future of our exports.

We have the same story repeating itself. I have read a number of criticisms of various shows in which British pavilions have been erected and sometimes it almost seems that to participate is more damaging than to stay out. This is a problem for the Government, and for the Board of Trade in particular, and it is a problem which we shall need to face.

While I am on the subject, I must make one more point. It really is not good enough to leave all this to the Government and to the Board of Trade and do nothing but criticise them if things do not work out quite as we would wish. When in Madrid recently, I discovered that there was to be—this very week, I believe—a Munich week in Madrid organised by the Export Club of Munich. The German exporters from Munich were all going to Madrid to have, not a German week, but a Munich week. One might usefully ask whether British cities might not take this idea seriously and whether there should not be Birmingham, Coventry, Glasgow or Newcastle weeks in various cities abroad to help to bring home to people what we have to offer and what we can do. These things are all worth thinking about.

The thing one hears complaints about most frequently overseas is the delivery of British goods and, particularly during the past summer, the disorganisation of deliveries resulting from the dock strike and the tallymen's strike here in London. I am not this afternoon going into the merits of these things. I do say, however, that we have to consider all these things when we try to think about our export problems.

It is much more difficult for us to export than for a good many other countries. Earlier this year, I had the privilege of being included in a Parliamentary delegation which went to call on Professor Hallstein and representatives of the Common Market. One of the points we sought to make to Professor Hallstein was that it is much easier to look at the six countries of the Common Market as an entity and much easier to co-ordinate their trade. There are no frontiers except paper frontiers; there are roads, railway lines, canals and rivers across and along which the trade can flow all of the time. For us, however, everything has to go to a port and into a ship and to another port before we can trade with anyone.

When we consider the Common Market and the European Free Trade Area, it is not altogether without significance that we and Sweden and Norway, who share the problem in common of having to send our goods by sea, find it much more difficult to think of thoroughgoing integration with the Common Market than do the six countries which already comprise that Common Market.

While I am on the subject, I wish to say a word or two about the Common Market and E.F.T.A. I wish that I were one of those who could think of a simple solution to all this; I wish that I could stand here and say that we must dive into the Common Market right away, that it is viral; or, equally, that I could say that we must avoid getting into the Common Market at all costs, because then I would know that I had made up my mind and that it was all very simple. Instead, however, I find it all very complicated and believe that the enormous development of the Common Market will present a great challenge to this country in the future. It is really important that we should, as far as we can, align our own economy and economic development with the amazing developments going on over there. We should not ignore the fact that the Common Market today is attracting a great deal of the dollar investment which until fairly recently this country itself attracted in great measure.

Yet, of course, we cannot ignore, too, that we are an island—whether we like it or not—that our problems are different from those of the Six with their common frontiers and that we have obligations to the Commonwealth. The Six have their Treaty of Rome, but we have our Ottawa Agreements. We cannot go back on the Ottawa Agreements any more than they can go back on their Treaty of Rome. If, therefore, we are to achieve an understanding we have to seek accommodation as between one and the other.

We have now these new developments where, manifestly, various members of the Commonwealth partnership are somewhat uneasy about our full-scale integration with the Common Market. This, I have no doubt, presents new problems for my right hon. Friends.

I wish to make one observation. I do not see anything terribly incompatible between closer links with the Europe of which, whether we like it or not, we are essentially a part and our interests in the Commonwealth so long as we think these things out carefully and plan our future carefully. One of the things that worries me a little today is that whereas we have played our part in the Council of Europe—indeed, we have played a great part in the events which have led up to the formation of the Common Market—we do not seem, even now, to have thought of a council of Commonwealth.

I could not help wondering a little while ago, when during the Summer Recess I wandered into this building and there was no one here, whether there might not be a tremendous amount to be gained by allowing this Chamber to be used when we are not here by representatives from all parts of the Commonwealth coming to this country in which to talk over their problems as the countries do today at Strasbourg. I believe that some such development as this is more vital now that more nations are finding independence within the Commonwealth. I believe that the need for the Commonwealth to understand itself and for the nations of the Commonwealth to understand one another is a vital prerequisite to our being able with them to understand the association with Europe, which surely is vital. I think all would agree that the Six and the Seven in Europe must be made to equal thirteen, and even more than thirteen in due course, because there are other nations standing on the touchlines waiting for this problem of the Six and Seven to be resolved.

In the meantime, we have a great responsibility in grappling with the problems of Europe not to neglect the problems of Commonwealth. I believe that the opportunities there must be simply fantastic, that these are the developing markets of tomorrow—that they have so much to give and so much to take. There is so much that we can help them to achieve and ourselves gain in some measure in the process. It is certainly no less important that we should now move towards convening some sort of council of Commonwealth than it has been in the years since the war to have the Council of Europe. There must be a forum for Members of Parliament of Commonwealth countries if the Commonwealth is to go on meaning something to all the nations which it now comprises.

I now turn to the last point I wish to make. If one does a little travelling in order to help to sell British goods and Britain abroad one cannot but be involved at the same time in the discussions of foreign policy. If we want to find solutions to our trading problems, then, clearly, it is of the utmost importance that we should go on seeking solutions to the very great problems in international relationships. Despite the disappointments of the present year I feel that we must persevere in our efforts.

I, personally, subscribe to the view that it is illogical in today's world situation to go on seeking to exclude China from representation in the United Nations. I think that it is really time that we faced facts in that context. Whether we like the situation or not, it is there, and I believe that there is much more to be gained by facing the situation as it is than there is to be lost by not facing it.

But, that apart, when one looks at the problems of Europe and talks to one's European friends it becomes more abundantly clear than ever that it is in Germany—particularly over Berlin—that very great problems and misunderstandings could still arise, and not only between East and West, but between the Western partnership itself. I wish, therefore, to put forward one suggestion this afternoon just to see how it is received. It may be it is not a very good one, but it is something that has occurred to me during the last few weeks.

When in New York, Mr. Khrushchev suggested that there might be a case for moving the centre of U.N.O. to Europe. He offered certain hospitality for such a centre if anyone cared to accept the offer. I have wondered what would be the effect if we took him at his word and suggested that we might usefully regard as the centre of the United Nations Organisation the one city where, clearly, East and West do meet today, and meet uncomfortably at times. I have in mind Berlin. As I say, it is just a thought that occurred to me—that if we moved the United Nations Organisation to Berlin it might resolve a lot of problems at one and the same time.

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

Why not London?

Mr. Harvey

No, move it to Berlin because if it were moved to Berlin it could enable some face-saving to be done over the problem of the Eastern and Western zones by creating an international city in which neither Russia nor America nor we nor the French predominated but which the United Nations would take over as U.N.O. City. It might be possible to persuade East and West Germany, in the interests of resolving their own rivalries, that the best thing that could happen to Berlin—in which two world wars have been plotted—would be to turn it into the city out of which the world might hope for the organisation of peace. That, at least, is a suggestion which the House might turn over in its mind and which my noble Friend the Foreign Secretary might usefully turn over in his mind.

I am sorry if for these last few moments I have diverted a little from this afternoon's debate, but I believe that, unless one can move towards solving some of the real problems which cause international difficulties, the problems of international trade will never be resolved. I thank the House for listening to me so patiently, and I really do commend to the House that at least we should all think a little bit more about whether Berlin might play some important new rôle for good in the developments which lie ahead.

5.30 p.m.

Mr. Julian Snow (Lichfield and Tamworth)

I do not think many hon. Members will disagree substantially with the amiable observations of the hon. Member for Walthamstow, East (Mr. J. Harvey). For myself, I should like to refer later to one or two points he made, especially that concerning China.

Like him, I have tried to draw on experiences during the Recess, not only because of the national interest but because there is a constituency interest here. Like many other hon. Members, I have in my constituency dozens of small companies which could be exporters but are not exporters. I make no apology for continuing the debate on the subject of export which, to my way of thinking, is the most important single item we have to discuss in this general debate.

The fact is that, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) mentioned, a negligible percent- age of manufacturers in this country participate in export. Two out of three potential exporters are frightened out of their lives by the complexities of indulging in the export trade. What I can describe, I suppose, as the bureaucracy of the export trade frightens so many people who have much to contribute.

I want to carry the debate somewhat against the President of the Board of Trade now, because he made some rather hurried remarks—I do not blame him for that because he had a long speech to make—about efforts which are being made by his Department to stimulate exporters. I thought that in his remarks he appeared to be thinking in terms solely of the effort which is being made in this country and his Department to increase our export trade, and I think that that is only half the matter.

What I think has got to be done is to re-examine the machinery which in its more modern form was established in our overseas embassies and high commissioners' offices in the matter of trade and commerce and which was originally designed by Sir Stafford Cripps. I think that the development of these offices overseas has not kept pace with the need for stimulating the export trade.

In the days of Sir Stafford Cripps the whole country was aware of the fact that it was really a question of "export or bust". Nowadays, with this affluent society, people have forgotten that lesson, and they think in terms such as this, "In this easy domestic market let the boys who have money to spend and large reserves of capital to expend on exports get on with the job. We are all right." I think that that is an attitude of mind which the President of the Board of Trade has got to take into very serious consideration.

I personally believe that the staff structure of what I would describe as our embassies, though I really mean by that all our overseas diplomatic organisations, is out of date. One sees hordes of impeccable young men floating around the embassies, going from one cocktail party to another, all working desperately hard at work which I think now consists in many cases of unnecessary functions which are being carried out in our embassies, and which now in many cases are being controlled from London and do not have to go through our embassies abroad, work which, I should have thought, could have been doubled up into one single functionary, but which is now being done by two or three people. I believe that the trade and commerce sections of our organisations abroad are under-staffed and under-serviced from London.

I can well remember, as many other hon. Members will, during the war the supply of a certain type of map to the Services which enabled the reader of the map to visualise the geographical position from some point other than London or England. I mention this because I now draw on my experience in the recent Recess, when I went to Japan.

For me, never having been to the Far East before, it was completely new to see the economic situation of Japan relative to the surrounding countries and the Pacific region. It seemed to me that there is a far too much localised attitude in London to the work which should be done in our overseas organisations. Let me exemplify what I am saying by reference to what the hon. Member for Walthamstow, East said just now about China.

When I was in Tokyo a few weeks ago I was interested to read that a substantial and important delegation of Japanese industrialists was going to China at the invitation of the Chinese Government. The Japanese Government said, "We do not mind this delegation going. As far as we are concerned, it is a good thing for them and may be very interesting, but officially we take no part in this." Presumably, that was as a sop to American sentiment. Nevertheless, that delegation went from Japan to China.

Where I slightly disagree with the hon. Member for Walthamstow, East is in this. I think that if tomorrow we came to some satisfactory agreement about the admission of China to U.N.O. and full diplomatic relationship, and so forth, we should not find the Chinese standing hungrily at the edge waiting to buy our exports. I do not think so at all. I think that when that situation does arise we shall have a hard job selling goods to China.

I do not think that the Board of Trade sufficiently understands the changing pattern of demand in the modern world. We are still thinking of the situation as it was in 1945 to 1955, a period when the big overseas demand was for consumer goods. I do not think that that position pertains now; or, if it does, it is changing rapidly. Demand now in exports is for heavy goods, and for new designs and better designs for consumer goods, as the President of the Board of Trade himself said. In Tokyo the other day I saw a transistor portable television, a thing not on the British market. There are still many consumer goods perfectly capable of being produced for the overseas market. We still have many things which can still be profitable if only we understand the changing pattern.

I do not want in any way to underemphasise the rôle, historical and actual, of the great British mercantile companies which serve our interests overseas. They have done a remarkable job, and I have no reason to believe that their relationship with our embassies is not perfectly satisfactory, but I do not believe for one moment that they are in sufficient number or of sufficient influence fully to represent the potential exporting capacity of this country, and for that reason I think what the President of the Board of Trade has to think about is redesigning the sort of services which our embassies can give. I do not think it is just a question of commercial intelligence. I think we have to change our ideas of our overseas organisations, in terms of governmental organisations fulfilling a quasi-commercial rôle.

I can see that the President of the Board of Trade is not liking that very much. I tell him that it is a question of all the complexities of credit, the difficulties of documentation, the under-comprehension by our own exporters and the mentality of buyers abroad in the matter of haggling and higgling in the market, which are matters far better dealt with at local level than by correspondence from England to export markets.

Hence, of course, the establishment and the profitability of our great mercantile houses, but they can absorb only a certain number of agencies, although I think they have far too many agencies—far too many. In the great offices of some of the mercantile houses abroad one can see whole walls covered with the names of the agencies that they represent. It is a matter of serious importance to this country that somehow or other we should make available to our potential exporters in a simple way those straightforward commercial facilities which are conventionally provided by mercantile houses established abroad, and for that we must increase our local staffs.

Mr. J. Harvey

Does the hon. Member really believe that this should be undertaken by embassies? I am not necessarily arguing with the hon. Member on it, but it seems to me that this would be more appropriately a job for the British chambers of commerce overseas. Wherever one goes there is a chamber of commerce. It worries me that at present more often than not these chambers are ineffective while the German chambers of commerce are most effective and their training is usually better than ours.

Mr. Snow

The chambers of commerce abroad serve the mercantile houses. To some extent they help and correspond with potential exporters in this country, but in the event they are in direct relationship with the existing local mercantile houses.

I want to talk about German competition. I cannot bring myself to adopt a soft attitude towards Germany either politically or economically and I do not agree with some hon. Members, including, according to today's paper, one of my right hon. Friends, who feel that Germany is our normal ally and that there is no anti-German prejudice in this country. If there is not, there ought to be. In any event, German commercial policy is working at present to the strong disadvantage of this country. I am told, for instance, that in certain countries where there are still forms of currency control the German governmental attitude towards their own exporters is a good deal more flexible than our own.

This is not a question of the functioning of the Export Credits Guarantee Department. Where, for instance, there is a country, and I am thinking of Japan, where there is an element of blocked yen, the German Government say to a company, "All right. Sell your goods to Japan. We will support you and we will find ways and means of using the blocked yen." I was told authoritatively by local mercantile companies that our own Government do not adopt that flexibility of policy. Perhaps the President of the Board of Trade could look into this.

It is a fact that we import from Israel substantially more than any other country, yet we are only third on the list of exporters to Israel. The reason is very simple. Israel is importing from Germany a vast amount of goods in the shape of reparations, but I am not sure that we should accept that as the one and only reason. I believe that there is a strong case for giving substantial investment support in Israel if for no better reasons than on straightforward political grounds. The economy of Israel is likely to strengthen the whole economic structure of the Middle East in the near future and we might well examine investment possibilities there.

Many of our exporters work on outmoded ideas and with outdated "intelligence". They believe that income levels in other countries tend to give unfair competition. I do not think that they have their facts right. We are in a world where incomes in the manufacturing industrial countries are tending to even up. In the under-developed territories, where there is still a big demand for consumer goods, our future nevertheless lies in the efficient marketing of heavy machinery, plant, industrial know-how and design. Unless we examine the machinery by means of which we can sell these ideas locally on behalf of the small man in this country we shall waste the potential which lies within our economy and which would stimulate our exports as well very considerably.

5.45 p.m.

Mr. Denys Bullard (King's Lynn)

I have listened to all the speeches in tie debate and I find that there is a widespread feeling on both sides of the House that we are engaged on the nub of the problem and that all the advances and improvements in our society that we would like to see depend on this whole business of the production and sale of our goods. We are engaged on a very big programme in the coming year in Parliament, and there are many things in the Gracious Speech which I, and I am sure all hon. Members, welcome wholeheartedly. I will not go into detail about them all now.

The increases in war and retirement pensions are things which we all wanted to see come about, and the improvements which we hope to see forthcoming in the Youth Service, in the schools and in the recruitment of teachers are matters which we all regard as highly desirable. So also is the reference in the Gracious Speech to the strengthening of the Police Force, and we hope that the police will be better paid in the near future. But all these things must depend upon our success in the efforts which the hon. Member for Lichfield and Tamworth (Mr. Snow) and others have stressed in the course of the debate.

I want to talk mainly about the economic aspect, in line with the general tenor of today's debate, but first I should like to mention the reference to land drainage in the Gracious Speech. It is a coincidence that this reference comes at a time when the country is experiencing serious flooding. It is a coincidence because work has been going on in the Departments on this land drainage question for a long time. I have lived at, or a foot or two above, sea level all my life.

Mr. A. C. Manuel (Central Ayrshire)

Always above water?

Mr. Bullard

Yes, I have kept my head above water.

We hear a great deal of talk about flooding and drainage when there is heavy rain, but as soon as the sun shines again we all forget about these subjects and we go on as before until there is serious flooding once more. This happened after the flooding in 1947 and 1953, but I hope that it will not happen again. The Government have a very good record in dealing with flood problems. It would be a serious mistake to suppose that nothing has been going on in official circles even if in the public mind there is an impression that nothing much has been done. In Norfolk a very large sum of public money has been spent on strengthening river banks and on other flood precautions which undoubtedly have been of tremendous value. I hope that work of that kind will go on throughout the country and that we shall now implement the lessons that we have to learn in times of flood and which hitherto we have forgotten so soon afterwards.

I return to the question which is before us of how we can stimulate both the production and the sale of goods, especially their sale abroad. I see this problem from perhaps an unusual angle, for I represent a constituency, King's Lynn, which contains relatively small manufacturing industries—although they are not small in our eyes—and a sea port surrounded by a large area of agricultural land. The town of King's Lynn looks both ways. It looks to the agricultural land lying behind it for a great deal of its trade, and it looks down the river and across the sea to Europe, where it is hoping to expand, and very largely succeeding in expanding, its markets not only for goods produced in the town but also for goods produced in areas behind the town and exported through the port.

I have a great belief that this expansion of trade with Europe is a vital factor to us all, and I was therefore very pleased to see the reference in the Gracious Speech to the fact that Ministers intend to give special attention to this subject. I do not think that agriculture is at all a bar to our entering into negotiations with the European countries for an expansion of mutual trade. It is sometimes thought that Commonwealth and agricultural considerations, both of them highly important, are the main bars to our entry into an arrangement with Europe, but I do not think that that is the case. Although we have a very complicated system of agricultural support, so have the European countries. In my visits overseas to agricultural countries in Europe I have not seen very much, except perhaps in Holland and Denmark, with which we need to be afraid of competing. I do not think that agricultural considerations are a bar to such negotiations.

But they are a bar to our entry into the European Common Market. I am surprised that no one is present on the Liberal benches this afternoon, because we have heard a great deal from the Liberals about the need for us to enter the Common Market. Although I believe that an arrangement is possible with the Six, I am in no doubt that we could not enter the Common Market when it was first set up and that we could not enter it now.

As I understand it, if we entered the Common Market we should have to surrender control of our agricultural policies absolutely to the Commission of the Six, and that would be a fatal commitment to undertake. It would involve changes in our agricultural industry which it would be impossible for the industry to meet. On that ground—and on many others—I think that it would be impossible for us to join the Common Market.

Mr. Ellis Smith

Then why put the blame on the Liberals because they are not here?

Mr. Bullard

I am not putting all the blame on the Liberals. I was merely commenting that they have said that we should join the Common Market, and I thought it extraordinary that there was no Liberal present to enter into this important debate.

I believe that negotiations with the European countries on trade matters are essential, for I do not think that we can stand aside and merely watch the Common Market go ahead and flourish as it is flourishing. We cannot stand aside and watch it be, as my hon. Friend the Member for Walthamstow, East (Mr. J. Harvey) said, such a dynamic force in Europe, and do nothing about it. But in all the arrangements which are made I hope—and I believe that this will be the case—that the importance of our home agriculture in our general trading position will be fully recognised.

In this respect, I very much welcome the appointment of my hon. Friend the Member for Grantham (Mr. Godber) to the Foreign Office, because he has been a very great friend to the agricultural community during his service as Joint Parliamentary Secretary to the Ministry of Agriculture, and I believe that his knowledge will be of very great assistance to the Government in these important negotiations.

Many people see the country in this important matter of the production and sale of our goods as if it were divided into areas whose interests may be partly antagonistic. I think that that is a great mistake. We speak of industrial areas and agricultural areas. We speak of agriculture and of industry as though there were some mutual incompatibility between the two.

My experience, as far as it goes, leads me in the opposite direction to this belief. I find the two things knit very closely together. Agriculture is an industry, and the people who work in it are no longer in a different category from those working in other industries. Their wages and conditions are becoming assimilated. Industrial workers often live in country districts, side by side and in the same sort of houses as those occupied by their agricultural neighbours. The fortunes of the one go up and down in step with the fortunes of the other. Those people who assume that if we had an industrial setback, then the home production of food would rise and agriculture would become more prosperous, are gravely mistaken.

The interests of agriculture and of industry are linked. Not enough account has been taken of the enormous help to industrial output and to trade given by the requirements of agriculture. The fact that agriculture has been expanding has led to an enormously increased market for tractors, implements and supplies of every kind.

I feel that there is a notion abroad in this country that we do not need any further agricultural expansion and that we must allow food production to remain at its present level and seek expansion elsewhere. In my opinion, agricultural expansion must go side by side with industrial expansion, and the fact that there is a feeling abroad in country disstricts—it may be mistaken—that we have reached the limit to agricultural expansion is leading to a slackening in the demand for the supplies which other industries can provide to agriculture. It does not help the general economic situation.

My final plea to the Government is this: by all means go ahead with the extremely complex and difficult task of seeking an arrangement with Europe; recognise that agriculture and horticulture are no bar in the way of such an arrangement; but all the time recognise that those two industries are vital, not only to our food supplies and our balance of payments, but also to tie prosperity of the many towns which supply agriculture with its needs. I ask the Government, in all these negotiatiors, to take full account of the very great importance of agriculture to our general economy.

6.0 p.m.

Mr. Maurice Edelman (Coventry, North)

An hon. Member opposite earlier in the debate referred to the way in Which he had seen the decline of our exports to Sweden and Spain, but no Member need go so far in order to see the consequences of decline in our exports; he need go only to the Central Lobby, or Westminster Hall, or Parliament Square in order to see at least 500 shop Stewards, representatives of the motor workers in Coventry and the Midlands generally, who have come to Westminster to protest against the decline not only in the industry but in their own standards of living.

They are men threatened with redundancy, already working on short time. They are the representatives of 60,000 men in Coventry alone who are working on short time, men who, a little while ago, were working a full week, and, indeed, overtime, and now, on the average, are doing a nineteen hour week, with many of them bringing home at the end only £5. If it were not for the fact that they are working on short time there would be a massive redundancy which would deepen the crisis which has already been felt inside Coventry and in the older established areas of the motor industry.

This crisis in the motor industry is a pilot crisis which will affect the whole of our economy unless something is done to arrest it rapidly. In Coventry there are men who have hire-purchase commitments based on the buoyant optimism, reflected today in the President of the Board of Trade's speech, which I believe to have been fundamentally misleading, on the prospects of the industry. They entered into hire-purchase commitments with their families, and the result is that today they are facing the future with anxiety, distress and anguish because they will not be able to fulfil those commitments.

The immediate reason for the decline in the condition of the industry has been the falling-off of exports. The American market has contracted. The home market has remained fairly static, but, having visited the Motor Show and having seen something of the industry's prospects there, I doubt very much whether the situation will improve, particularly in view of the fact that only the other day the Chancellor of the Exchequer declined to give a positive statement about Purchase Tax between now and the Budget, with the result that uncertainty has deepened, buyers will hold off, and the dangers to the home market will consequently increase.

The reasons for the difficulties in the industry are not simply local but are part of the general difficulties that the motor industry is facing all over the world. I therefore opened my eyes wide when I heard the President of the Board of Trade talk so glibly—and, I thought, smugly—about seasonal fluctuations and changes in the industry, which somehow or other would automatically produce a restoration of its former prosperity.

It is true that in the past, and certainly before the war, the motor industry was a seasonal one in which men tended to be kept on for the summer season and stood off when winter came. The pattern of employment was seasonal. One of the reasons for strikes in the industry—reasons which sometimes bewilder many commentators—is that workers accustomed to seasonal fluctuations before the war have constantly since 1945, when employment was stabilised, looked for danger signs and have become anxious in case seasonal fluctuations return.

The President of the Board of Trade talks as if these fluctuations are part of the normal condition of the motor industry, but since 1945 the industry has not been a fluctuating one but a stable one. Ever since the Labour Government introduced full employment into it and stimulated the export market by Sir Stafford Cripp's physical controls on steel—which sent manufacturers screaming, against their will, into the export market—there has been stable employment, with the home market being used as a cushion whenever there were difficulties in the export market.

Today, the difficulties of the industry have been aggravated by the state of the American market. I felt that the President of the Board of Trade—I am sorry that he is not present—was being extraordinarily unrealistic when he failed to speak not only of likely competition through the further contraction of the American market but of the actual competition from the United States itself.

It is not generally known in this country that the American motor industry today is working at about 70 per cent. of potential capacity. If anyone doubts that, I refer him to the Stock Exchange Gazette. The other day, when I asked a Question about future prospects of the British motor industry in connection with extension plans, the Parliamentary Secretary to the Board of Trade, in reply to what he regarded as my pessimistic forecast, said that he thought that the motor manufacturers knew far better what prospects were likely to be than I did—who, incidentally, have been occupied with the motor industry only for fifteen years. But whatever my own shortcomings as a prophet, the motor manufacturers themselves have proved to be even more fallacious in their forecasts in the past of what the industry can do.

There is a saying in America—it applies to the American motor industry but can also be applied to ours—that there are two estimates of next year's car sales. First is the one which the president of the corporation announces publicly and confidently. The other is the one which he studies behind locked doors alone with his ulcers. There is great anxiety in the United States about the prospects of the American motor industry.

Perhaps I should say, when I talk about the British motor industry, that the term is becoming more and more of a misnomer because more and more it is falling into American hands and being controlled not from Coventry, Dagenham or even Whitehall, but from Detroit. I can say that today more that 50 per cent. of the British motor industry is in American hands. Consequently, we have to consider that if there are to be difficulties in the United States, if General Motors or Fords or someone else find that an American recession, to which my right hon. Friend the Leader of the Opposition referred yesterday, is creeping up on them, then no one can imagine that they will give priority to employment to workers in Luton or Dagenham or Coventry over their own workers in Detroit.

It is obvious that if there is to be a recession in the motor industry it will be in the peripheral activities of the American industry that there will be the first unemployment and the drawing in of horns. It is in that context that we must look at the expansion plans for our own industry. I have from time to time voiced certain criticisms of projected expansion plans of the British motor industry. I would certainly not wish to do or appear to do, or say or even appear to say, anything which might in any way be thought to be critical of an attempt to create employment in formerly depressed areas or areas where there is today a high level of unemployment.

If we can have expansion and prosperity, I am all in favour of extending the motor industry to Scotland, Liverpool and South Wales, but if expansion is to take place in conditions that involve the export of employment from, say, Coventry and the Midlands to those new areas and the import of unemployment from those areas to Coventry and the Midlands, that is not expansion in the true sense. It is not creating employment but merely diluting it; spreading it thin to give the illusion of spreading the area of employment.

Therefore, we must consider very carefully those plans which, as the Parliamentary Secretary said the other day, it is hoped will create 41,000 new jobs by 1962. According to the project of expansion, the capacity of the motor indusay to produce cars will have changed by 1962. By then, potentially three times as many cars will be produced as are being produced now. Has the industry considered where the cars are to be marketed? I doubt it very much. The expansion is enormous, and I think that I ought to recall it very briefly to hon. Members so that they can see that this is a projected expansion which will take place in the next two years, at a time when we already see the dark signs of unemployment and redundancy in places like Coventry.

The B.M.C. will expand to the tune of £49 million, of which £10 million will be spent in Scotland, Merseyside and South Wales. Ford will have £140 million worth of expansion at Dagenham; Rootes, £22 million at Linwood, in Scotland; Standard, £11 million at Speke; Vauxhall, £30 million and Pressed Steel £20 million. A reasonable person might say that this is a kind of megalomania inside the industry, and that if we are contemplating the whole question of national investment it might be thought that the national investment could be more successfully and productively applied, as my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) has said, to heavy engineering rather than to increasing the number of motor cars on the roads—cars which we hope to sell at a time when the French, German and American motor industries all either have surplus capacity or are preparing to expand.

I said that it might be thought to be megalomania, but for the motor manufacturers there are very great advantages to be obtained from this expansion. Under the Local Employment Act they are receiving loans. Does anyone know at what rate of interest those loans are made? I think they are being made at a rate of 2½ per cent. Perhaps the Government spokesman will correct me if that is not so.

The rate of interest is certainly low, and the advantage to the manufacturers is quite clear. They, at the end of a short period of years, will have acquired great capital assets which will increase the equity value of their businesses. On the other hand, while that is going on, while there are these accumulated profits, plus the advantage to the Government, the workers at Coventry and elsewhere are in fear. They are afraid that what might happen to them is what we have already seen happening, in the ordinary process of capitalistic economics, to the workers of the News Chronicle. In other words, men who in some cases have served a whole lifetime in the industry may suddenly find themselves redundant, given derisory compensation—a few weeks' notice—at a time when the manufacturers have accumulated really vast profits. While on that topic, I forecast that when the B.M.C. dividend is declared it will be an all-time record.

I believe that two acute problems face this industry today. The first is the very short-term problem of how it can cope with the immediate emergency and the immediate crisis. I do not want to see the workers in Coventry, the Midlands or in the industry generally fall into a condition of redundancy and unemployment this coming winter. Earlier in the year I proposed a cut in Purchase Tax, believing that, as I have said, the home market should be a cushion for the industry. I hope that (the Chancellor will reconsider the whole case, will agree to cut Purchase Tax and will make an announcement promptly in order to avoid a long period of uncertainty between now and the next Budget.

I am not so happy about the project for making hire-purchase terms rather easier. It may, perhaps, be necessary as a short-term measure, but I consider that to bolster the home market by hire purchase is merely to discount the credit of the future. If we do that we shall merely be postponing the crisis, and I am quite convinced that if to this hire-purchase State that has been created by the present Government we are to add a large home market that is purchasing oars on the hire-purchase system, it will mean that the acute crisis will merely be postponed until the coming spring. Therefore, I certainly have hesitations about that.

I conclude by saying this of the industry as a whole. In the past, during the reign of the motor manufacturers, the industry has been in a state of happy anarchy. The manufacturers have gone on (pretty well in a booming market and have always been prepared to enjoy the benefits of inflation. They have done very well in the past few years, but if this industry is to compete in the increasingly difficult competitive conditions of today it is absolutely essential that there should be structural alterations inside the industry as such. I must say that I welcome the fact that the trade unions are now beginning to take an interest not only in wages but in the operation of the industry as well, and have set up committees to consider the question.

What is required is perfectly clear. It is quite obvious that if those in charge want to cheapen the unit product they must cut down the number of models, which have been multiplied as a bait to tempt reluctant purchasers on the home market in the past; they must create long lines of production; they must have standardisation, and they must do away with the electrical monopoly—and that is the responsibility of the President of the Board of Trade—

Mr. Ellis Smith

Too many types.

Mr. Edelman

Exactly—too many types, too many models. They must also cut down the present cost of distribution, which is certainly far too high.

Above all, it is necessary that the Government should take action to try to create and promote new markets, primarily in Africa and Asia, by providing subventions and subsidies for roads, so that we may take a proper share of the great new markets that are coming into being. To paraphrase an old remark, the motor industry is too important to be left in the hands of the motor manufacturers. A president of General Motors in America is alleged once to have said: "What is good for General Motors is good for the United States of America."

I believe that what is good for the motor industry here is good for Britain as a whole, but I believe that the industry can remove its recurring crises only by being nationalised and put under proper control. The quality of the industry, its good health, should not be measured in terms of profits in times of inflation but by the stability of employment that it provides for those who take part in creating its prosperity. Because that is so, I believe that now is the time, not only for the short-time emergency measures that I strongly recommend and support but for consideration to be given to a complete structural alteration of the industry so that we can confront our competitors in the changing conditions of the second half of the century.

6.20 p.m.

Sir David Campbell (Belfast, South)

I am glad to have this opportunity of joining my colleagues in welcoming the Gracious Speech. In particular, I warmly welcome the proposed legislation to increase pensions. Yesterday my hon. Friend the Member for Belfast, East (Mr. McMaster) drew special attention to the case of the older retired teachers and other pensioners who retired at a time when the salaries on which their pensions were calculated were very much less than the salaries of the present holders of comparable posts. I earnestly hope that the Government will give special consideration to those categories of pensioners.

There is no mention in the Gracious Speech of the grave problem of unemployment in Northern Ireland. I appreciate that the Constitution of Northern Ireland throws on the Govern- ment of Northern Ireland the responsibility for dealing with that problem, but, as I shall endeavour to show, there are many aspects of the problem which require positive action by the Imperial Government.

I am glad that my right hon. Friend the Prime Minister included Northern Ireland when he said yesterday: … it is our firm intention to grapple with this problem of localised unemployment."—[OFFICIAL REPORT, 1st November, 1960; Vol. 629, c. 29.] Before dealing with those aspects of our problem which lie within the scope of the Government here, I would like to pay a tribute to the work of our Stormont Government in helping to induce new industries to come to Ulster and in assisting existing industries to expand. At the same time I would like to pay a tribute to the President of the Board of Trade and his staff for the great help they have been to the Northern Ireland Government in their efforts to solve this problem. I was glad to hear my right hon. Friend the President of the Board of Trade say today that after the Government had dealt with pockets of severe unemployment near the existing centres of industry where naturally manufacturers and industrialists would wish to go if they were not allowed to expand in the areas where they are now, he hoped that they would be able to do more for Scotland and Ulster.

Our latest unemployment figure in Ulster is 5.9 per cent. That is the lowest since 1956. The industrial labour force in employment is 453,000, which is 18 per cent. higher than ten years ago. In August, industrial output in Ulster stood at 122 per cent. That is 5 per cent. higher than last year. I think that our Stormont Government, with the help of the Government here and with the help of the Board of Trade, can be proud of that record. Nevertheless, 5.9 per cent. is still a deplorable figure, and I regret that there are black clouds on the horizon.

There is the threat of grave redundancy in Messrs. Harland & Wolff, and many men have recently been paid off by Messrs. Short Brothers & Harland. We are grievously affected by the recent increase in cross-channel freight rates and by the increase in the price of coal, which is already cripplingly high. I shall endeavour to set out some of the ways in which I believe that the Government can help.

My hon. Friend the Member for Belfast, East yesterday described some of the ways in which the Government can and should assist the shipping and shipbuilding industries. He also spoke of the duty of the Government to encourage the further development of the vertical take-off plane by Messrs. Short Brothers & Harland. The Government have announced that the contract for the new Queen liner will be put out to open tender. This is welcome news, and I trust that the able management of Messrs. Harland & Wolff, and the firm's first-class body of artisans, will ensure that the company's tender is successful. I know that my Scottish friends do not agree with me about that, but it is to be put out to open tender and may the best man win.

The Government can and must help by placing contracts for Admiralty work with Messrs. Harland & Wolff. I appreciate that redundancy in other yards is a serious problem, but, unlike the position in Belfast, other work is or can be made available for those yards.

Dealing with the aircraft industry, the Government must take immediate steps to finalise the contract for the Britannic freighters. There can be no possible excuse for the long delay. Plans for the future development of the vertical take-off plane and its construction in Belfast should be published at the earliest possible date.

I now deal with freight charges. The Government should at once institute an inquiry into the finances of the shipping services run by the British Transport Commission between Great Britain and Northern Ireland. Because of the form in which the accounts are presented, it is not possible to arrive at any definite figure. I have endeavoured to persuade the Transport Commission to get out real costing charges and a profit and loss account for its steamer services, but I have failed to do so. It appears, however, that these services are run at a considerable profit, and that this profit is set off against the losses on the railways in Great Britain. It is unfair that the consumer and the industrialist in Northern Ireland should pay charges to enable the Transport Commission to set off some of its losses on the railways here.

Mr. Manuel

Would the hon. Gentleman not agree that, as there is no indigenous coal in Ireland, it would be of material help if industrial and, indeed, household coal were shipped from Ayr Dock instead of being taken to Northern Ireland from the Midlands? If the hon. Gentleman could interest the Government in that proposal, it would be of considerable help.

Sir D. Campbell

I am obliged to the hon. Gentleman. I was coming to that point.

The Commission should be made to justify the recent increase of 7½ per cent. in freight charges. It should also be made to justify the arrangement come to at the Irish Shipping Conference which controls freight charges and thus turns the shipping services to Northern Ireland into what amounts to a monopoly.

Dealing with the price of coal, the Government should see to it that consumers in Northern Ireland get their coal from pits involving the shortest journey from the pithead to Northern Ireland. It has been reckoned that this would mean a reduction of 18s. per ton. The hon. Member for Central Ayrshire (Mr. Manuel) raised the question of obtaining the coal from Ayrshire pits. I have made inquiries about that, and I understand that domestic fuel is not available at the moment, although I have been told that there are great hopes that new pits will be opened up and that Ayrshire will then be able to supply us direct.

Mr. Manuel

Some have already opened up.

Sir D. Campbell

Finally, I would ask my right hon. Friend the Home Secretary, in consultation with the Prime Minister of Northern Ireland, to consider, as a matter of urgency, setting up a special round-table conference, with himself in the chair, comprising the Minister of Aviation, the Minister of Transport, the Minister of Power, the President of the Board of Trade, the Prime Minister of Northern Ireland and Ministers of the Northern Ireland Government, to deal with the matters I have mentioned and, on any question of control, in part, by this Government, to devise long-term plans to solve our unemployment situation.

6.31 p.m.

Mr. David Ginsburg (Dewsbury)

I am sure that many hon. Members will share the anxiety expressed by the hon. Member for Belfast, South (Sir D. Campbell) about the long-term economic outlook in Northern Ireland. We all hope that the Government will take action to deal with its unemployment problem.

I shall return to the question of the general economic strategy which the Government are now pursuing, but before doing so I want to make a brief reference to the Gracious Speech and to express my surprise that it contains no reference to any proposed action by the Government in connection with science in this country. It is surprising that in the first Loyal Address of the 1960s such an omission should be found. I hope that the Parliamentary Secretary to the Board of Trade will have something to say on this important subject.

This debate gives us an opportunity of doing three things: first, of seeing what Government spokesmen have said on the important question of economic policy in recent years; secondly, of seeing what has happened; and, thirdly, of accepting the challenge which the President of the Board of Trade is fond of throwing out to the Labour Party when he asks what we would do in present circumstances. My first task is to draw the attention of the House to the Government's complacency about the economic situation, as shown in the debate on the Gracious Speech last year. It is fair to say that the Chancellor of the Exchequer was perhaps not quite so complacent as his colleagues. He saw ahead and appreciated some of the difficulties we were going to run into. But he is no longer with us.

The President of the Board of Trade, on the other hand—and I am sorry that he is not with us at the moment—was revelling in the results of the last General Election and, in the course of his revelling, he let out a number of hostages to fortune—although he is usually a very cautious man. He was anxious to show that everything in the economy was much more buoyant and very much better than hon. Members on this side of the House were claiming. He went to great lengths to say that all components of the economy—production, consumption, investments and ex- ports—were thriving under the administration of the present Government.

One quotation from his speech in the debate on the Address bears repetition in the light of the news we are hearing from the economic front. On 28th October, 1959, he said: Surely, all these figures are clear proof that so far from being stagnant the country's economy is showing a new and unprecedented strength and capacity to expand. I wonder whether the President of the Board of Trade would subscribe to that view if he were here at this moment. He then turned to the future and emphasised what was said in the Gracious Speech of 1959 about the economic situation. He quoted it with approval: My Ministers will strive to maintain full employment, together with steady prices, a favourable balance of payments and a continuing improvement in standards of living, based on increasing production and a rising rate of investment."—[OFFICIAL REPORT, 28th October, 1960; Vol. 612, c. 268–270.] I wonder whether recent events have justified his expectations.

He then looked into the future and prophesied that demand would increase and that investment would rise very rapidly indeed. He considered the argument of hon. Members on this side of the House, that investment might not rise as much as it should, having regard to the health of the economy, and he challenged us to state whether, in such circumstances, we should be prepared to impose controls on the economy and to squeeze in order to ensure that investment rose. Again, it is worth asking who has squeezed the economy in the intervening year.

The best rebuttal of the President's speech is not the words he used but what has happened in recent months. Government spokesmen have stated very forcibly that they want increased production. They recognise that everything depends upon the ability of our economy to expand in a balanced way, but we must remember that on three successive occasions in recent memory—in 1955, 1957 and 1960—the Government deliberately took action which had the effect of restraining any rise in production. Yesterday my right hon. Friend the Leader of the Opposition referred to the plateau which the latest Treasury figures show we have reached in the important area of industrial production, and I want to dwell on these for a moment, because people do not sufficiently appreciate how serious they are.

From January, 1959, until April, 1960, our industrial production rose by 3 per cent. every quarter, but since April, 1960—since the Government's squeeze has begun to bite—industrial production has risen by only 1 per cent. We can say that it has now reached a plateau, and that it might well begin to fall.

The main cause of this halt in production has been a decline in demand for motor cars, as my hon. Friend the Member for Coventry, North (Ms. Edelman) has said, and for consumer durable goods. When the Government took action to restrict the demand for these goods they were warned that it would take many months to reverse the trend that would then be created. I would plead with the Government now and remind them that the longer they delay action to relax the squeeze the more serious the effects will be on our economy.

Government spokesmen have said that so far they are happy about the employment position. They deny that the squeeze has had any serious effect upon it. Every hon. Member is glad that full employment is being maintained and that the Local Employment Act is having effects in the areas intended. Nevertheless, one is also bound to warn Government spokesmen that the labour position is very much easier than it was. Although we have a high level of employment at present, we are already witnessing a substantial decline in productivity, which is a very serious matter indeed, because, as Government spokesmen know, the output per man is already declining.

I wish here to interpose a few observations about the wool textile industry and its prospects, which is the principal industry of my constituency. Despite buoyancy in certain parts of the industry—and we are happy that it has had a much easier time in the last year or two—there is at present acute anxiety in other sections, in particular in what is called the shoddy and mungo section which reclaims wool for use by the industry. Now the wool industry as a whole has a very bright export record; in fact, it has a record which is second to none among the industries of this country. But there is grave anxiety about the position of the industry in the export field, particularly with regard to our exports to the United States and the negotiations about the American quota.

It is all very well for Government spokesmen to say that negotiations are proceeding and that a fixed procedure has to be followed. But it is significant that in the latest issue of the Wool Textile Bulletin, which I hope Ministers have studied, our exports of woollen and worsted tissues to the United States over the last published quarter have fallen by something like 60 per cent. This is a very serious state of affairs, and I hope we shall hear the views of the Government on the British woollen industry and how they see trade with America developing.

I wish to take advantage of this occasion to convey to the Board of Trade the hope that the President has not closed his mind to the issue of diversification of industry for the heavy woollen district. I know that under the present employment level that district does not fall within the purview of the local employment legislation, but I would remind the right hon. Gentleman of the report of the wool textile working party which reported when my right hon. Friend the Member for Huyton (Mr. H. Wilson) was President of the Board of Trade, which recommended that diversification of industry was required specifically for the heavy woollen districts. We should like an assurance that this recommendation and report is not just lying in a file at the Board of Trade, but that the matter will be attended to.

I have examined the effect of the Government squeeze on production, and I wish also to say something about the effect of it on investment, which is equally serious. In so far as the Government are able to say that we have full employment at the moment and production at least has not fallen off, it is due—let us face it—to the fact that the capital goods industries have been much mare buoyant than the consumer goods industries. Fortunately, there has been a lag in the ending of the boom in the investment goods industries, but one is bound to ask what is to happen if, under the present squeeze, the capital goods boom peters out, as there are signs that it may.

It is also important that our investment should go up, not merely because we want production to go up, but because our level of investment is at present far too low. I do not wish to burden the House with figures, but there is one statistic which I consider of overwhelming importance. According to the Government's journal Economic Trends, what is described as gross fixed capital formation at 1954 prices seasonally adjusted for plant and machinery—which is the key component of capital investment—stood, in the second quarter of 1957, at £257 million. It is significant that in the second quarter of 1960 the figure should still stand aft £257 million. In fact, we can see that as a result of three years of Government economic policy chopping and changing the amount of capital investment in plant and machinery has not risen at all. If we wish to see higher productivity in British industry, it is absolutely vital that this matter should receive urgent attention.

In a memorable speech on the Address last year, Aneurin Bevan stated that the crucial problem for democracy was how to reconcile current demand with provision for the future. On the basis of the Government's performance so far, I think we can conclude that they have neither met current demand nor, so far as investment is concerned, have they made provision for the future. Is it surprising, in the light of all these developments in the domestic economy, that we should be having all these difficulties about the balance of payments and acute difficulties regarding exports?

It has already been stated that we are losing ground in Europe, in the overseas sterling area and in the United States. It has been argued that to some extent we are losing ground because of difficulties in those markets and because there has been a declining demand in the primary producing areas and in the United States. But I believe—I think many people would agree—that the principal reason why exports are suffering at present—I ask the Minister to read the latest issue of the Economic Review of the National Institute of Economic and Social Research, because it has some powerful information on the subject—and the main reason why we are losing ground is that our exports are not competitive. We lack the investment and technical resources to sell our exports effectively in overseas markets.

So serious is this becoming that I wish to add one more figure to the catalogue. For the last three years, Britain's share of the world export trade has been declining at the rate of ½ per cent. per annum. That is a very serious decline. On the other hand, it may be argued that because other countries are beginning to export we may lose a little ground. But in this last year our share of the world export trade declined by 1⅓per cent. This means that this last year we have been losing ground in the export field at two-and-a-half times the rate we have been losing ground before. This is exceptionally dangerous.

I would go further and warn the Government that that is not the end of the matter. The Government are committed to negotiations to reduce tariff protection and all sorts of discriminatory agreements in international trade. The faster the Government succeed in removing these barriers the greater will become the obstacles and difficulties which our export trade will have to face. If at present our balance of payments position is being shored up by "hot" money, what will be the position in a few months time if the "hot" money goes and the exports fail to recover?

We have been challenged already this afternoon by the President of the Board of Trade to give some indication of how we would tackle this problem. At this stage, I simply ask the Government, do they really imagine that periodic squeezes of the economy will solve our problems? Is it not the case that our problems stem from our lack of productivity, from the need to speed up productivity and the need to invest far more than we are investing at the moment? Does not this demand from the Government a far higher priority than is given at present to expansion and a far lower priority to deflation? If we were to follow a policy of this kind, I concede that it would involve us in risks, but I say that it should be followed.

My right hon. Friend the Member for Huyton indicated some of the things which should be done at home if we are to press forward with a policy of expansion. There are many other things which can be done in our overseas economic relations if we are to press on with a policy of expansion. One, to express an heretical view, is that we have gold reserves which may be tenuous, but nevertheless it would be a mistake in the short period not to use those reserves if by so doing we can get the economy to expand and get adequate investment.

Secondly, there is the possibility of scrutinising very much more carefully our overseas expenditure, visible and invisible overseas expenditure. I am quite sure that if we examined both those accounts we should find areas where we could save the balance of payments very considerable sums of money.

Finally, I suggest to the Government that there is the possibility of holding talks with other nations on currency readjustments. If those talks were undertaken and agreements reached, I think we should find our situation very much easier.

The Government might reply that this would involve very great risks, but there are risks either way whatever one does. What is clear is that if we do not take any risks at the moment we shall go on stagnating and enduring a loss which economically the British people cannot afford to endure.

6.52 p.m.

Mr. R. H. Turton (Thirsk and Malton)

Some of my hon. Friends and I have placed on the Order Paper an Amendment to the Motion for an Address which deals with fiscal policy. As I understand that the Opposition are choosing for their Amendments matters dealing with home affairs, it would appear likely—although we do not know your mind, Mr. Speaker—that our best opportunity for discussing this problem of trade is in this debate this evening. It has also been a help because both the right hon. Member for Huyton (Mr. H. Wilson) and the hon. Member for Dewsbury (Mr. Ginsburg) have been dealing with this subject. The right hon. Member for Huyton was in a peculiar difficulty today. I suppose he could be described as the shadowed leader of the shadow, shadow cabinet.

Mr. Manuel

I think you are one of the less substantial shadows yourself. You were nearer the real shadow, but lost that position.

Mr. Speaker

The hon. Member must address his observations to the Chair.

Mr. Manuel

I am very sorry, Mr. Speaker.

Mr. Turton

I am sure that the hon. Member for Central Ayshire (Mr. Manuel) did not regard you, Mr. Speaker, as a shadowy figure in any respect.

Although the right hon. Member for Huyton made today what he himself described as a frivolous speech that we are well accustomed to in this House, when dealing with the economic situation, his speech, as also the speech of the hon. Member for Dewsbury, analysed the situation in very much the same way as my hon. Friends and I analyse it. We are worried about the present situation, but the remedies proposed by the right hon. Member for Huyton and the hon. Member for Dewsbury seem completely ineffective to deal with this great problem.

The right hon. Member said that all could be solved if we lowered the Bank Rate to 4 per cent. and issued building licences. The hon. Member thought that the cure was to cut down some of our overseas expenditure and to squander our gold reserves. To me, this is a much bigger problem. It deals with the whole question of Commonwealth trade. I regret that in the Gracious Speech there was no specific reference to Commonwealth trade. It is quite true that the Speech expressed the hope that there will be more free trade, and to that is added an undertaking that we should work towards the economic unity of Europe, but unless steps are taken in this country by this Government to arrest the decline in intra-Commonwealth trade I see every indication that the economic policy of Her Majesty's Government will be frustrated.

The difficulty, which was touched on by the right hon. Gentleman, is that since 1952 both our trade with the Commonwealth and the Commonwealth share of world trade have declined substantially. Why is that? In this country and in the Commonwealth we are labouring under the restrictions of the General Agreement on Tariffs and Trade, which prevent either us or the Commonwealth from granting new preferences or increasing the existing preferential margins. Other countries are more fortunate, or more unscrupulous.

The G.A.T.T. does not prevent the formation of new common markets, and both the European Economic Community and the Central American Common Market could have been formed perfectly well without infringing any of the provisions of the G.A.T.T. In fact, both have chosen a method of helping each other that infringes the provisions of the G.A.T.T. The G.A.T.T. also prohibits reciprocal agreements. Yet, as my hon. Friend the Member for Wembley, South (Mr. Russell) reminded the House in July, in the first six months of last year there were 100 reciprocal agreements made or renewed by countries which are members of the G.A.T.T. in contravention of the Articles that they had signed.

At present, there is a conference of the G.A.T.T. Powers. I ask my right hon. Friend the President of the Board of Trade what steps he is taking to go to that conference and to ask it for a revision of Article 1, which deals with preferences to enable us to bring our trading arrangements up to date.

In the Amendment put down by my hon. Friends and myself we: express the hope that Your Majesty's advisers will recast fiscal policy in order to give full freedom of opportunity for reciprocal agreements with Commonwealth and other countries or groups of countries. In my view, the position is very serious. In the first nine months of this year there was an adverse visible balance of trade of £640 million. We cannot continue on that course. I think one of the best small illustrations of what we are facing, which, curiously enough, was dealt with by my right hon. Friend in his speech, was given in an Answer to a Quesion by the hon. Member for Dewsbury on 17th May this year.

In the Answer to that Question, which is given at column 1082 of the OFFICIAL REPORT for 17th May, 1960, the President of the Board of Trade told the House that in 1954 the United Kingdom imported domestic refrigerators to the value of £184,000, and exported domestic refrigerators to the value of £7,806,000. Last year, the imports were increased to £3,169,000 and the exports declined to £4,000,000. In other words, in this period between 1954 and 1959, on this one item of refrigerators alone, instead of being a large exporting country, we find we are importing very nearly as much as we are exporting.

In his speech this afternoon, the right hon. Gentleman said that in his view the policy of the credit squeeze has had its effect or the sale of refrigerators. It was a very curious way, in my opinion, of trying to deal with this problem; thinking that a credit squeeze would have an effect on imports. It is a very blunt weapon, but has it worked? I have the recently published figures for the first nine months of this year, and I find that in that period—I hope I shall be corrected by my right hon. Friend or the Parliamentary Secretary if I am wrong—the figures show that exports of refrigerators have kept fairly steady, while imports have increased to a value of £5,043,000. So that the blunt weapon has not worked, and I do not believe that the blunt weapon was ever designed for that sort of policy. We cannot control imports by a form of credit squeeze, and there I and the hon. Member for Dewsbury are in the same camp.

The real problem of these trading figures is that a great change has come over our economy in the last few years, and it is shown if we analyse our trading figures into raw materials and manufactured goods. In 1948, 31 per cent. of our imports were raw materials and 18 per cent. were manufactured goods. By 1959, the proportion of our imports of raw materials had dropped from 31 per cent. to 23 per cent., but the proportion of manufactured goods had gone up to 28 per cent. That was last year, but the position this year is even worse. In the first nine months of 1960 the proportion of raw materials was still 23 per cent., but the proportion of manufactured goods had gone up to 30 per cent.

At one time this country had a great reputation for importing vast quantities of raw materials from the Commonwealth and refashioning them into manufactured goods for export. Now, we have become a country which is importing far more manufactured goods than raw materials. That is the point which I wish to emphasise this afternoon. Our economy is rapidly changing for the worse under the present fiscal policy. Is it not time to recast it? We should use reciprocal agreements to encourage industrial development in the emerging Commonwealth and we must restrain the flood of manufactured goods from our European competitors so long as they are unwilling to increase their purchases from us.

The real reason why our trading figures have become so adverse is that the primary producing countries of the Commonwealth have, with us, been losing under this policy of nondiscrimination imposed by the G.A.T.T. That is the whole secret of our decline. They are our markets, and even today, after the decline of eight years in inter-Commonwealth trade, 41 per cent. of our trade is still with the Commonwealth.

Therefore, I suggest that we should now demand freedom to negotiate reciprocal agreements. If we had that freedom, half of our difficulties with the European Economic Community would disappear, because these countries would not willingly forgo a market which, in the first nine months of this year, enabled them to sell to us £500 million worth of goods. We have suffered a disadvantage from the fact that they took goods £82 million less in value, leaving an adverse trade balance with the six Common Market countries of £82 million.

So many people in this House and outside talk as if all our trading endeavours and hopes were linked with these six countries, but let us take the six leading Commonwealth countries. What do we find? We find that our trade with those six countries amounted in value to 60 per cent. more than the value of our trade with the six European countries. It is quite true that in the case of Canada, which is in the grip of America, our trading figures show a very large adverse balance, which it should be the endeavour of Her Majesty's Government and Mr. Diefenbaker and his Government to correct as soon as possible. However, excluding Canada and taking the other five Commonwealth countries, we have a favourable balance with them of £30 million in these first nine months.

Our home agriculture requires protection from Continental food imports which come in at well below the cost of production in this country. They are coming in this year in greater quantities than in previous years. In my view, we should formulate a Commonwealth agricultural policy that will enable us to feed this country from the products of the Commonwealth and British farms.

We must expand Commonwealth trade if we are to make our contribution in the world in the next few years. I feel convinced that this problem of exports does not depend on exhortation or instruction. It depends upon a new fiscal policy.

7.9 p.m.

Mr. Dan Jones (Burnley)

Like most hon. Members of the House, I have read the Gracious Speech, and I must say that I am dismayed that there is no reference in it to the new crisis in the automobile industry. I am of opinion that this crisis should be practically recognised by the Government, and I say that for four major reasons—the vicious impact on thousands of families, on the businesses as concerned in the area, on the areas of prospective development that are awaiting the expansion of the automobile industry, and upon industry and the nation.

Dealing with first with the families, looking at the B.B.C.'s "Panorama" programme on Monday, I saw certain families who had come from Scotland to the Midlands being interviewed. They had—I quite understand their plight—taken on hire-purchase commitments of upwards of £5 per week, and now, there being short-time working, were in a very parlous state. It reminded me of some of my experiences during the 'thirties, which people are now so anxious to forget.

Lest it be thought that I am putting too much emphasis on the human part of the programme—though I do not believe that is possible—I would add that I was very dismally impressed by the remark of the businessman who was interviewed when he said, "We are in a position where we cannot take cars back. We simply have not got the room for them. We are using our agencies to go round to these people and inveigle them into paying perhaps only a bob or so off the account in order to keep them." The businessman concluded his observations by saying that the position was tragic. I have no doubt that those words are true.

I need not say very much about the areas which are expecting expansion, and I shall come in a moment to industry and the impact on the nation.

The turn of events in the automobile industry is no surprise to me, for on 4th April of this year, speaking in the Budget debate, I said: I do not share the new and optimistic attitude towards the automobile industry."—[OFFICIAL REPORT, 4th April, 1960; Vol. 621, c. 100] I said that because during the debate many hon. Members opposite asked us to believe that the industry was buoyant and likely to remain so. Indeed, I suppose they could have been forgiven for so speaking, because the Chancellor of the Exchequer himself said: For more than a year now world production and trade have been expanding strongly, and they seem likely to continue doing so. In the great industrial nations of Europe and North America expansion continues."—[OFFICIAL REPORT, 4th April. 1960: Vol. 621. c. 40.] That had reference, undoubtedly, to the automobile industry and what this country was doing.

It is very interesting to look at the comparative figures for January-September, 1959 and 1960, the precise period when the Chancellor and many hon. Members opposite were asking the House and the country to believe that the industry would continue buoyant. I have the figures here, but it would take a long time to read them all out. I merely say that the difference in our trade with these countries amounts to £12,442,518. In any language, that is a very formidable total.

I believe that one of the greatest factors for the automobile industry would be a massive and imaginative attack on our road problem. No one can deny that. Without any partisan approach, all economists believe that the industry depends upon a buoyant home market. New roads throughout the country would be a factor contributing to its buoyancy. I read in the Queen's Speech about the underground car parks proposed for London. I have previously said that if we were in earnest about our road problems and encouraging people to participate in this vital industry, every major town should be by-passed and should have an underground car park. Why only London?

I have had certain experiences with the Ministry of Transport with regard to the Lancashire area. In reply to me, the Minister has agreed that the area which was brought to his notice needed immediate attention. His words were: I recognise the importance of this route to the North-East Lancashire Development Area. But, as I explained at our meeting, I have to decide priorities on the needs of the country as a whole, and there are, I am afraid, other industrial routes which are more seriously overloaded. The Minister does not say that the route does not need attention; he simply says that he has to have a list of priorities, and apparently those priorities are based upon the need for money.

The Treasury derives a revenue of more than £200 million per year from Purchase Tax, fuel tax, motor tax and oil tax. The expenditure on roads is £60 to £70 million per annum. I am not advocating that all the taxes collected from motorists should be spent on the roads any more than I would advocate that all the tobacco tax should be spent for smokers, but, in view of the transport problems and the needs of this industry, I suggest that a considerably greater sum should be spent in this direction than is the case now. One might put it at at least £150 million per year. I am certain that the buoyancy of the industry would then receive an impetus.

Looking at the industry as dispassionately as one can, I believe we ought also to ask whether the employers themselves have been as imaginative as the nation has a right to expect them to be. Between May, 1959, and May, 1960, there was a 25 per cent. increase in production. During the same period there was a 9 per cent. increase in earnings. Where such a margin had been obtained, was it not reasonable to expect that 5 or 10 per cent. might have been taken off the price of vehicles, thus giving the export market an impetus and maintaining the buoyancy of the home market? I am convinced that it is fair to ask that question.

This is a very great industry. Yet one looks in vain for any evidence in the Gracious Speech that such is the case. The responsibility for that must obviously rest upon Her Majesty's advisers.

I suggest three factors which would bring about a major improvement in this vital industry. The first is a massive and imaginative road-building programme. Why not? I feel that it is fair to say—I do not speak in an unkindly way—that some of the blood which is regularly spilt on our roads could justifiably trickle under the doors of the Ministry of Transport or the Treasury, or both.

It does not seem to me that we should deal with these matters in the urgency which undoubtedly will come about during the summer months. I repeat my question: why not a massive imaginative attack on this vital problem? If that were done, it would be a powerful stimulation to this vital industry.

Secondly, I am certain that the industry must take upon itself the responsibility for sharing with consumers the increased benefits which flow from increased mechanisation. Employers cannot feel any too happy about these ups and downs. For a long period this vital industry has been suffering from a good deal of industrial unrest. How do we know that the ups and downs and the unrest are not correlated factors?

For many years I have been a shop steward in engineering. I know what it is when workers are afraid that industrial insecurity might lie round the corner. The danger is—we must recognise it—that they might well say, "We intend to make hay while the sun shines"—in short, to put on a pedestal the very mercenary cliché, "I'm all right, Jack". How do we know that the periods of up and down are not related to the factors I have mentioned? As a consequence, the industry should take practical cognisance of the fact and slice its dividends and profits to the narrowest margin possible.

Thirdly, the Chancellor of the Exchequer should realise that this vital industry has a tremendous influence upon our whole national economy. He should recognise that in a practical way. I will not suggest the measures he should undertake. He knows much more about them than I do, but he could help these people in a very practical way.

If these three measures were taken together, they would be of tremendous assistance to this very vital industry.

7.22 p.m.

Mr. Philip N. Hocking (Coventry, South)

I am pleased to have this opportunity to speak in the debate on the Gracious Speech. The motor industry has been mentioned in the debate, certainly in recent speeches, and hon. Mem- bers have suggested that it is to a considerable extent in difficulty. I have the honour to represent one of the mainsprings of the motor industry—a part of the City of Coventry, where the motor industry grew up. I was particularly perturbed this afternoon to hear the speech of the hon. Member for Coventry, North (Mr. Edelman). To my astonishment, he painted a picture of a great deal of gloom and despondency.

The hon. Member for Burnley (Mr. D. Jones) mentioned the television programme "Panorama" on the B.B.C. on Monday evening, in which certain people were interviewed. I know Coventry extremely well, having lived there for thirty-six years. I did not detect in that television broadcast the amount of gloom and despondency which has been suggested. I noted in the television interviews that the lady was going out to a part-time job driving a motor car. That is typical of some parts of my home city.

At the end of the programme a gentleman, who was supposed to be a motorcar salesman—I have no doubt that he is—said that he was going round gathering a few shillings here and there to cover repayments. I have not seen anything of that nature during the last three or four months.

Mr. D. Jones

The hon. Member can be corrected on two points. First, the lady interviewed in "Panorama" had three children by her side and was not going out to work. That is very clear. I speak with the authority of the B.B.C., because it is on the film. Secondly, the businessman was an owner and, when asked what he thought of the position, he said, "It is indeed tragic". The film can be seen.

Mr. Hocking

I am obliged to the hon. Gentleman. I still maintain that one of the ladies interviewed was going to a part-time job, driving, I believe, a Ford Anglia. I accept that there were many interviews. Also, a gentleman was interviewed at the end of the programme who said that he was a salesman and was having to go out to collect a few shiling here and there to cover repayments.

I spent practically the whole of the Recess within the City of Coventry, going about my normal business. I 'have friends in the hire-purchase world, people who have grown up with me. I know of one person, in particular, who said to me during the last week that he has had to take back only a few vehicles from people Who could not afford to make their payments.

I must refer again to the speech of the hon. Member for Coventry. North. He said that about 60,000 workers were on short time. Unfortunately, earlier in the debate I had to go outside to meet some of my constituents who came here to discuss the motor-car industry. I was told the figure which the hon. Gentleman used. I asked my constituents to tell me where they thought these people work and we got up to a figure of about 30,000 on short time. They were hard pressed to find many more.

This morning I took the trouble to ring the Ministry of Labour in Coventry. I was told that the last available figure gave an unemployed position of 1.5 per cent., and 3,950 people were registered as being on short time. One must accept official figures as reliable. From those figures it would appear that there are not anything like as many on short time as some people would have us believe.

Mr. Laurence Pavitt (Willesden, West)

Is the hon. Gentleman taking into account in his figures the terrific amount of work put out in constituencies like mine on component parts, and so on, which should be added to the figures of workers on short time in the main industry?

Mr. Hocking

I was taking the figure I was told that the hon. Member for Coventry, North used. I have written it down. He said that 60,000 people within the City of Coventry were on short time. I am trying to find whether there is any substance in that figure.

I believe very passionately that, unless we are careful, we can talk ourselves into a very serious depression by persuading people that the industry is in trouble and that possibly, as a result of that trouble, prices will be reduced.

The hon. Member for Coventry, North said that he had had some interest in this industry for about fifteen years. I mentioned earlier that I grew up in Coventry. I went to school there, and many of the people in the industry today were school friends of mine. Therefore, I can appreciate many of their problems. I appreciate the problems which were caused between 1945 and 1950 in what was described earlier as the era of Crippsian planning. Many of the troubles within the industry in Coventry can be related to that period.

It was suggested, finally, that the industry needs a large measure of national control—nationalisation. I had hoped that that suggestion was dead and buried, not only as a result of the last General Election, but as a result of previous General Elections. As I have said, during the Recess I have been around and about the City of Coventry and have discussed this problem with a large number of people. I have called on executives. I have spoken to people whom I know who work on the shop floor; to those who sell these motor cars in the city's garages and motor depots, and to those who arrange the hire-purchase finance. They have mentioned a number of remedies, and have suggested various ways in which the industry could be given an immediate boost.

The executives told me that they needed a stable home market in order to expand the export market. I have been looking at some of the figures, and I notice that the registration of motor cars increased by 33 per cent. between 1955 and 1959. That is by no means a small percentage. I have further noticed that the present ratio is one car to every nine people, whereas in 1955 it was one car to fourteen people. One can therefore honestly say that during the last few years there has been an expanding home market upon which to base the export trade That has taken place whilst the home market has been affected by Purchase Tax. Many people suggested to me that that tax should be reduced almost at once in order to give a boost to the home market, but I cannot agree with that suggestion in the slightest. Much as I am against Purchase Tax—and, indeed, taxation as a whole—I do not believe that this is the time to reduce the tax. It is estimated that in order to sell a new car it is necessary to sell two-and-a-half used cars. Therefore, an immediate reduction in Purchase Tax would at once have the effect of deflating the price of the used car. That might lead to such a state of depression in the used-car market as to make it impossible to sell many new cars. If Purchase Tax on motor cars is to be reduced, I hope that it will be reduced at a time when the industry is selling large numbers of cars.

There are other causes of the industry's present difficulties. During the last fifteen years it has been exporting to many parts of the world, but as time has gone on many of the markets have become closed to us. India will not now take a finished motor car. She is prepared to take certain parts, which are assembled in Indian plants, but, even so, she will not take any parts manufactured in rubber. The tyres have to be made in India, and so has much of the trimmings. I understand that the Australian market is in the same sort of position, and that South Africa now has its own motor car plants. I recently read that Egypt is contemplating manufacturing some of its own vehicles. Looking at the markets generally, one cannot but appreciate that they have been depressed as a result of the international tension of the last six or seven months. I believe that the uneasiness in the world has contributed to some very considerable extent to that depression.

America is our largest market, and one in which, potentially, we can sell 7 million or 8 million cars a year. Last year, we sold 7½ million cars there, and half that number have been registered in the first six months of this year. The American market has been depressed to some extent by the Presidential election, while our home market has been depressed as a result of the Motor Show.

In the face of those facts, I still believe that the industry is on the verge of a new era. Hon. Members will remember that the motor car has evolved through a number of stages. The original vehicles were slow and open, but as time went on more comfort was added to them. In the immediate postwar period, suspension systems have changed very considerably. We have independent suspension at the front, and new developments such as disc brakes, air suspension and automatic transmission are spoken of in the more expensive models. Developments like that will, in the next few years, be seen in the ordinary, everyday vehicle, and I believe that with those developments we shall see some very considerable expansion in the industry.

Much has been said of new centres for motor-car manufacture where employment is not as high as it is in the industrial Midlands. I understand from those who lead the industry and those who are to take the factories to those other parts of the country that they intend to manufacture there a type of vehicle different from that manufactured in the Midlands.

As I say, I believe that the boost from the modern developments and new designs that are coming will lead to a tremendous expansion, but I would ask those hon. Members who represent those places where the new car factories are to be built to urge their constituents to look on the industry with a very open mind. In the Midlands, and particularly in Coventry, the industry has been built up by a great spirit of initiative and enterprise, and I hope that in these new centres the same enterprise and initiative will be shown by those taking part so that car manufacture can expand as it has expanded in the past.

7.37 p.m.

Mr. A. C. Manuel (Central Ayrshire)

I hope the House will forgive me if I do not follow the general trend of today's debate. Listening to the President of the Board of Trade introducing a so-called economic debate, it seemed passing strange to me that he made no reference at all to the vast defence expenditure and the repercussions that that has, particularly on his own Department. When one realises that our defence expenditure runs to £1,600 million a year; that it has cost the country £15,000 million since the Conservative Government came into power in 1951, and that we yet have no real defence in this nuclear age, the Government must recognise that we cannot compete with either Russia or America without killing ourselves economically.

Like other hon. Members, I am delighted to welcome the paragraph in the Gracious Speech which refers to increases in war pensions and in retirement pensions, and to other benefits connected thereto. At the same time, I hope that this will be a real increase, and not a mere playing about between old-age pension benefits, National Assistance benefits or supplementary benefits which will eventually show very little improvement in the lot of pensioners, or may even leave them worse off.

Am I correct in assuming—I should like an answer to this—that the old-age pensioner who is today receiving supplementation to the extent of 7s. 6d. a week will actually get an extra 3s. 6d. from this increase and that the old-age pensioner who is receiving 11s. National Assistance will receive no increase whatever? It seems that this will be the basic pension and that there will be a corresponding decrease in the amount of National Assistance. As I see it, if the amount received by a single pensioner is 11s., there will be no increase at all. I am sure that hon. Members generally who are interested in the present plight of old-age pensioners on National Assistance, of whom there are over one million, will be genuinely anxious about that poorer section of old-age pensioners being treated in this miserly fashion.

While on the subject of pensioners, I wish to make an appeal to the Government for the railway superannuitants who have been trying to get their case recognised for many years. They suffer from a manifold injustice, and the Government should now consider their case and afford them some material relief. As a railwayman—I will not call myself an ex-railwayman—I am naturally interested in the reference to the British Transport Commission in the Gracious Speech. The reference is as follows: My Government will submit to you proposals for reforming the structure and functions of the British Transport Commission. I am sure this must be of interest to Scottish Members, particularly to Scottish Highland Members and those living in other country districts.

Obviously, if we take the phrase reforming the structure and functions of the British Transport Commission in conjunction with the speech which the Minister of Transport made the other day, there is to be an attempt seriously to curtail the size of our railways as we know them at present. I hope it is not proposed that sections of our railways which are showing no profit are to be shut down while other sections which show a profit are to be kept open. Listening to the Minister of Transport the other day, it would appear that it is proposed to have this profit and loss account assessment of what lines are to be kept in being.

If we as Scottish Members were to accept that approach, we should be tacitly agreeing that everything in the north of Glasgow should be closed down. I heard one hon. Member opposite interject in the course of the transport debate. "Yes, and use the roads."

Mr. E. G. Willis (Edinburgh, East)

There are no roads to use.

Mr. Manuel

Anybody who knows Scotland and our Highland roads will be aware that it would be impossible to provide the social services and convey food and coal—because coal is not generally indigenous in the Highlands—by British Road Services. Whoever made that intervention should seriously think again. This factor must be taken into consideration by the Government when they propose to close sections of railway or branch lines. These social services in the Highlands and other country areas in Scotland must be kept alive.

There is another aspect of our railways which must be considered, quite apart from the profit and loss account aspect of dealing with the railway service section by section. It must be remembered that to knock out a railway could kill the industrial potential of a district and could create unemployment. I do not think that we should approach the railway problem in this way. If one examines the accounts of railways abroad, we find that they are practically all in the same position. They are not paying, but they are serving a need in enabling goods to be taken to the ports and the Government are making up the deficiency where necessary.

The Rev. Llywelyn Williams (Abertillery)

Surely that is what B.E.A. is doing at the moment in this country.

Mr. Manuel

Yes, I agree. That is quite a good analogy.

The Gracious Speech contains another paragraph which reads: My Government will persevere with measures to promote economic growth in the Highlands and Islands and to develop modern standards of living there; and they will put forward legislation to amend the Crofters (Scotland) Act. I hope that the Government do not intend to cut out sections of railway line which at present enable these crofting areas to keep alive by conveying materials which are produced in those areas and conveying in the other direction much of the food and coal which are used there. I hope it is not intended to look at the railways purely from the point of view of whether they are paying rather than in the light of the Government pledge regarding the Highlands in the Gracious Speech.

I am concerned about the omission from the Gracious Speech of a reference to a subject which is of serious concern to us in Scotland. I refer to drainage and land flooding problems. The Secretary of State for Scotland is well aware of these problems. He has received a deputation at which I was present. Indeed, he has received many deputations from local authorities. The deputation at which I was present was an all-party deputation. There are Scottish Members on the opposite side of the House who are as concerned with land drainage problems in their constituencies as I am in Central Ayrshire.

I have a recurring drainage problem in the Garnock valley, between Dalry and the village of Glengarnock, and so serious is the problem that insurance companies will no longer give cover for damage caused by this flooding. I have it in another locality in the Beith district in the Roughwood Road area, where a burn is completely silted up. We cannot get the landowners to do anything about it. Whenever there is flood water, floods come over the local authority road and bring two or three feet of water into the adjoining houses.

The present law does not allow the local authority to take 'the action that it should in cases of that kind, namely, to clear the burn and allow the water to flow away, charging the landowners for it or jointly with the landowners meeting the cost. In my view, we had a perfect right to expect to read in the Gracious Speech a reference to our special Scottish problem, but there is nothing of the kind, only a reference to amending the law relating to land drainage in England and Wales. The Secretary of State is letting us down very badly. Has he no more influence than that in the Cabinet on such a problem as this which has been brought so forcibly to his notice by hon. Members on both sides? He knows that the problem is a genuine one. He knows that the law is ineffective today and the local authorities have not enough power. He knows that minority land-owning interests can stop schemes going forward. It is time that he put an Act on the Statute Book to enable us in Scotland 'to deal effectively with our land drainage problems. I hope that someone will deal with these Scottish matters and will reply to the strong complaints we have about blatant omissions from the Gracious Speech.

I protest strongly against the omission of any reference to introducing legislation to deal with the law of succession in Scotland. As long ago as 1951, we had the Mackintosh Report. There was a Report at the same time relating to the law of succession in England and it was put into effect immediately. Scottish Members were fobbed off because my hon. Friend the Member for Glasgow, Govan (Mr. Rankin), in a Private Members' Bill, after he was lucky in the Ballot, brought in a minor Measure to deal with just one aspect of the law of succession. He had a very definite pledge from the Government that they would in the following year bring in a full Bill to deal with the matter in Scotland.

I am asked by many women's organisations in my constituency what the Government intend to do. I am asked to raise the matter in the House or to put down a Question to the Secretary of State for Scotland in order to find out what is to happen. It is very strange that we should have had a reference to it in the Gracious Speech last year, but this year there is no mention of it whatever. I am sorry to put the matter so bluntly to the young hon. Gentleman who has just jumped on to the Front Bench. He has had long experience as a Whip. He may well know something about whipping Tories, but he knows very little about Labour Members. I do not want to appear to be hard on him, but I hope that he will, in his new post with the responsibilities he has now gathered unto himself, make a statement about these omissions. Why have pledges which were given been broken? I hope that he will give us hope that we may reply to our constituents who are seriously affected and say that action will be taken on the basis of the Mackintosh Report which was lodged with the Government in 1951.

There are many other points I could raise. I should like, for instance, to speak about housing, but I understand that there are to be opportunities next week. There is a reference in the Gracious Speech to maintaining a "high rate of house-building." In regard to Scotland, this is a misnomer. A high rate of house building is not being maintained. Fewer houses are being built. Fewer houses are being built by the local authorities and by the Scottish Special Housing Association. The houses which are being built are smaller. There are far more smaller municipal houses being built than larger ones. I cannot speak for England, but, as regards Scotland, that reference to house building in the Gracious Speech is a complete misnomer.

I come now to the fifth paragraph of the Gracious Speech: Throughout the coming Session, My Government will continue to give resolute support to the work of the United Nations. The improvement of relations between East and West remains a primary object of their policy. In particular, they will go on working for the success of the Geneva Conference on the Discontinuance of Nuclear Weapons Tests and will do their utmost to achieve comprehensive disarmament under effective international control. In this connection, and having that paragraph very much in mind, I protest against the Government's decision to allow the American Government facilities in the Holy Loch in the Firth of Clyde for a Polaris missile submarine base. It is unfortunate that for such an unholy purpose the name should be Holy Loch.

I assure the House that I am not a pacifist, but I am convinced that bases of this kind lay this country and its people open to the greatest possible danger. The Polaris missile base is to be only thirty miles from Glasgow. We are quite convinced that there is very much hostile opinion against it. I could quote from the Scottish newspapers this morning expressions of the grave concern and hostility which is felt. The Glasgow Trades Council, representing 95,000 workers, is taking active measures to oppose this decision of the Government which has been arrived at, apparently, without any consultation with Scottish interests.

I believe that the conception of power bloc politics which requires a base of this kind, which is not a base like the others in this country but an American base under American control, is completely outmoded. It belongs to a conception of power bloc politics which is quite unreal today. I am against the idea of such a base or bases, over which we will have no control, in places like the Holy Loch without our being consulted. What the Prime Minister yesterday considered was an assurance that we would be consulted did not satisfy me. He said: Wherever these submarines may be, I am perfectly satisfied that no decision to use these missiles will ever be taken without the fullest possible previous consultation, and, of course, it is worth recalling that these mechanisms have a greater degree of flexibility than perhaps some of the present methods of launching the deterrent. We therefore felt it right to conclude this agreement. It is in the tradition of Anglo-American co-operation in joint defence established in peace time more than twelve years ago and carried on by successive British Governments."—[OFFICIAL REPORT, 1st November. 1960; Vol. 629, c. 38.] But surely that is not the main point. These submarines are not merely going on patrol. They are to go out from the Holy Loch to lie at selected points on the ocean bed, perhaps within British territorial waters—submarines to fire missiles from British territorial waters or other waters into the heart of Russia, if necessary. I am anything but pro-Russian, but we have already had the assurance from the Russians through Mr. Khrushchev that they also have a similar submarine powered in the same way. Therefore, if we are parties to what I might call aggravation off the shores of Russia, we cannot complain if Russia takes the same sort of measures and stations submarines of a like calibre on other ocean beds.

Again, this is an era of power politics. I hope that this is not too much of a laugh for other Members concerned with other things, but they should be concerned with this matter, too. In view of the fact that both America and Russia claim to have this submarine, Russian ones off Britain or America and American ones off Russia or Britain, we are aggravating the situation considerably. In view of the striking power of this submarine, we are nearly on the brink of what could be a final catastrophe.

That is why I think I am doing my duty to the people of Scotland by lodging my protest against this Polaris base being located in Scotland. I would protest wherever it was located because I think that bases of this kind in these islands are quite unreal. First, we have not the economic strength to compete with either Russia or America in this nuclear age, and Russia will be winning the diplomatic game very nicely if she gets us to try to compete in nuclear weapons on the scale of those being developed by herself and America. Secondly, and perhaps the most telling argument to the ordinary man and woman in the street, we have not in this Britain of ours—and I claim as great a pride in it as any hon. Member—the geographical hinterland which exists in Russia and America to enable us to hope that if a nuclear war started some remnant of civilisation would be saved. We have not the geographical elbow room to claim that if a nuclear war started we could save anything at all. Therefore, whatever the combination may be in this power bloc politics game, it is an unsafe one.

I throw my weight and any authority that I have in this House and outside it behind the claim that the road that we in Britain should be following—certainly the road that my hon. Friends should be following—is to advocate emphatic support for the principles of the United Nations Charter and to pledge ourselves to strengthen and develop the prestige of the United Nations itself. If we in the Opposition pledged ourselves to propagating these ideals and said that when we came into power we would make them a reality, with U.N.O. being the world authority to deter aggression no matter from where it arose, we should be doing a better job than bolstering up regional alliances and sheltering behind so-called power blow politics which at the end of the day are putting this Britain of ours and the people in it in dire danger if anything breaks out among the major Powers of the world.

8.7 p.m.

Mr. Basil de Ferranti (Morecambe and Lonsdale)

I would say to the hon. Member for Central Ayshire (Mr. Manuel) in all seriousness that I believe that we are all alive today thanks to the strength of the North Atlantic alliance, and I am sorry that he made proposals to undermine the strength of the alliance. I hope that he never gets his way.

Mr. Manuel

I did not say that.

Mr. de Ferranti

I also hope that the hon. Gentleman will forgive me if I call him the odd man out in relation to the rest of his speech. Today, the debate has related mainly to exports. The hon. Gentleman said that he could not talk for England. I certainly cannot talk for Scotland, and I shall not endeavour to do so.

I should like to follow other hon. Members who have spoken on the subject of exports. Many suggestions have been made from both sides of the House. We have had suggestions from Coventry for increased investment, for possible changes in tax or no changes in tax, and for harder work. We have had a delightful suggestion which would help us to increase the export of flowers and even the export of dogs. We have had suggestions from the right hon. Member for Huyton (Mr. H. Wilson). He suggested, among other things, the good old method of hon. Members opposite of reinstating building controls and reducing the Bank Rate. His suggestions were dismissed, very rightly and expertly, by the President of the Board of Trade.

The right hon. Member for Huyton touched on a subject—which he described as very difficult ground—which I believe is fundamental to our economic position. However, he got the wrong end of the stick. He attacked the President of the Board of Trade for saying in a speech last weekend that he expected that there would be a tendency to see perhaps two or three firms in any one industry rather than four or five. He went on with his usual phrases about Mr. Cotton and Mr. Clore. Then he said something which, I think, defeats his argument and supports that of the President of the Board of Trade. He said that forty firms do 30 per cent. of our entire export business. It seems to me that the lesson of this is perfectly simple. If forty firms are able to do 30 per cent. of the business, it means that probably those forty firms are large firms, and that large firms are better able to undertake the expensive task of exporting. Therefore, it seems to me that, because he said that, he should have welcomed what the President of the Board of Trade said in his speech last weekend.

Mrs. Harriet Slater (Stoke-on-Trent, North)

The hon. Member has recently visited north Staffordshire where we do a considerable and very valuable export trade in pottery. That is done not by very large firms but by small ones, so that rather defeats his argument.

Mr. de Ferranti

I think that, on the whole, it may strengthen it, because I believe—I speak with due deference, because I am not an expert on the pottery industry—that if there were larger units it would be possible for the export record of the pottery industry to be even better than the magnificent record which it has already.

I believe that we can really congratulate the Government on things that they have done by building up the standard of living, by the Local Employment Act, and by the provisions of protection for the consumer, stable prices and full employment, but I believe that in the last Session the Government did something that deserves special mention. It is this. They were able to achieve, quite undog-matically, alterations in the structure of the aircraft and textile industries. These alterations will, I think, enable those two industries to compete in world markets more satisfactorily. It is a pity that there is no legislation of that type in the Gracious Speech for this Session. Nonetheless, I think that much could be done without legislation.

I myself am an engineer. I have spent all my life in the enginering industry, and I hope that I can say, with due modesty, that I know a little of what I am talking about. I think that we must understand one basic fact of modern industrial life, if very heavy research and development expenditure, or highly capitalised production processes, or expensive sales and service set ups are needed especially for export, then the more produced of any one product by any one concern, the cheaper that product can be made and sold.

This is a sweeping statement but it is fundamentally true of mass production industries in this day and age. In the old days, the economists used to talk about the optimum size of a firm. They said that once a firm became too big, it was no longer able to achieve economies. It it sad, but I believe that this is no longer true today. We would all much prefer to see smaller firms, but it is just technically no longer valid, because the larger firms are able to produce more cheaply than the smaller ones. So the lesson, however distasteful it may be to us, seems to be clear, and we should mark and read it.

It is simply this. If we are to achieve any sort of increase in the rate of productivity which we should like to see, and achieve the level of exports which we must have to survive, we must have at least one company in each product as big or preferably bigger than any of its competitors overseas. There are, of course, exceptions to this rule; there must be. The hon. Member for Stoke-on-Trent, North (Mrs. Slater) has mentioned one, the pottery industry. There are industries like heavy engineering where there are not quite the same economies of scale that there are in mass-production business. In mass-production business we have seen the effect of the Restrictive Trade Practices Act in tending to bring about the normal reorganisation of the structure of an industry which arises from the operation of competition. This Act could do damage to our export trade in certain of these industries where there are no economies of scale. I think that this problem should be mentioned apropos of the general theme. Nonetheless, there is still a great range of products not yet manufactured in this country in sufficient volume, and I think that it is the urgent duty of the Government to see what can be done about them.

First, I believe that the Board of Trade itself should be strengthened so that it is able to know in more detail exactly what the structure of the industry is for each particular production line which we hope to manufacture for home or export. The Board of Trade has a great deal of information from which it could learn. There are all the findings of the Restrictive Trade Practices Court itself and various D.S.I.R. Reports which have made such interesting reading for a few people during the last couple of years. Perhaps, in the past, the Board of Trade has discussed this question, and it may well be that it has decided not to increase its strength in order to learn more about industry, because, even if it increased its strength, there might be nothing it could do after discovering something wrong with an industry.

I believe that there is something it could now do about it. The Government's action over the textile and aircraft industries proves that there are things that could indeed be done. I respectfully suggest that there are three methods that could be used. These three methods all have precedents. First—this is the most important single reason I want to mention tonight—the Government are by far the largest purchasers of goods and services in the United Kingdom. I should imagine that the central Government and the nationalised industries buy as much as 40 per cent. of all the goods and services in the country. I have not checked these figures, and they are very difficult to work out, but I believe that there is a need for a much greater awareness of the responsibility of the Government as a purchaser for the structure of the industries which supply the needs of Government.

Admittedly, much has been done, and frequently one hears of examples. The trouble is that one can see from the position which the country is in at the moment that just not quite enough has been done. I think that this is frequently the fault, quite frankly, of the Treasury. When one goes down Whitehall one sees that the Treasury are having their inside cleaned out thoroughly; perhaps in that respect they may clean themselves out a little as well. If we can have greater recognition of the importance of the part played by the purchases by the Government, I think that we might see our industrial picture in a much healthier state.

The second method that could possibly be used is one used in the case of the textile industry, which has the use of the taxpayers' money to achieve an end which is nationally desirable. It was not only nationally desirable but has been very successful in that production in the textile industry has increased by 9 per cent. This surely is helping to raise productivity and helping the industry's ability to export and must be a desirable way of spending the taxpayers' money.

Finally, there is the use of the very little known method generally described as civil development contracts. A certain amount of work in this direction has been done by the Department of Scientific and Industrial Research. I believe that, in conjunction with a stronger Board of Trade, even more could be done to find specific solutions to the problems of particular industries.

I am sure that I shall be criticised for these views which I am putting forward; they are by no means easy or palatable views to propose. I may be criticised by my hon. Friends on the ground that what I am proposing would represent too much interference by the Government in the affairs of the nation. But we are up against it. Something must be done. We must face the fact that our competitors overseas use these methods. They have far more streamlined industries in certain product lines in which we are trying to compete in world markets and unless we are prepared to use the methods of our competitors, we may well not have a country to govern at all.

I may also be criticised on the ground—and this is fair criticism—that what I am saying means the death of the small firm. I do not believe this to be true. These products are the mass-produced products, the basic products in the economy. Wherever there is a big company—Ford's of Dagenham is a typical example—which is manufacturing an adequate volume to achieve the sort of economies of which I am speaking, there is always around it a great number of small firms specialising in the particular needs and wants of that one large unit. I believe that the prospects for small firms would be that much better if we had a more rational structure of industry.

I agree, however, that all these methods are extraordinarily difficult to apply and that it might be said that it would be much better not to get involved even in attempting to do these things. But we must face the fact that our share of world trade is slipping and that we may not achieve the doubling of our standard of living, to which we all hope we will come, unless we are able to make use of the technical advances which we have been able to see in the world up till now and unless we are able to cash in on those practical advances so that we not only achieve an increase in productivity and exports, but exceed our competitors in achieving a rate of growth and a level of exports by which we become as prosperous as we could hope.

Another reason which makes the task more vitally urgent is that we are proposing tariff reductions within E.F.T.A. We propose to make tariff reductions under G.A.T.T. between E.F.T.A. and the E.E.C. Do we honestly suppose that British industry is in the best possible condition to meet the increased threat which will come from the more efficient producers in Germany, France, Sweden or elsewhere? We have a lot to do before we can face the full competition which the E.F.T.A. and E.E.C. agreements would open up to British manufacturers.

A great deal is being done every day in the ordinary course of commercial life. Mergers are announced in the papers almost every morning, and this is a good thing. The Government should be congratulated on what they have done. I have mentioned the Restrictive Trade Practices Act and the aircraft and textile industries and I am sure that my right hon. Friend the President of the Board of Trade appreciates this point, because of the speech he made at the weekend. But we still do not have the public awareness of this difficult problem which is necessary if we are to achieve the aims which I have enumerated. I hope that, if I have done nothing else this evening, I have made a few Members of the House of Commons aware that there are such things as economies of scale and that unless we take advantage of these economies, we will go bust.

Several Hon. Members

rose—

Mr. Charles Loughlin (Gloucestershire, West)

Before the hon. Member finishes, may I put this to him? The case he has outlined is a valid one. I think it is true, and I agree with him, that large-scale production is much cheaper in the long run than a multiplicity of small firms. If the Government take the action which the hon. Member has outlined—

Mr. John McKay (Wallsend)

On a point of order—

Mr. Loughlin

There is no point of order. This is an intervention.

Mr. McKay

The hon. Member for Morecambe and Lonsdale (Mr. de Ferranti) has finished his speech.

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray)

When the debate is drawing to a close and many hon. Members want to take part, it is better that only those who catch the eye of the Chair should make a speech. A short intervention would be different. I call Mr. McKay.

Mr. Loughlin

On a point of order, Mr. Deputy-Speaker. It is customary in this House to make an intervention. Events will prove that my intervention so far has been very short. I think I ought to be allowed to continue with the intervention. I will draw it to a close in two sentences. My point is that if the hon. Member's three proposals are put into effect, with the possibility of changing our export needs, does it not naturally follow that the Government must lake action in every industry, because every industry is an exporting industry?

Mr. de Ferranti

To reply briefly, all industries are different. This problem must be looked at undogmatically. We must have entirely empirical or pragmatic solutions to each problem, and dogmatism, particularly of the type proposed by lion. Members opposite, could be fatal.

8.25 p.m.

Mr. John McKay (Wallsend)

I take this opportunity to address the House on one subject—that is, the question of National Insurance and pensions in general. We started the great big scheme of National Insurance in 1946. We had great expectations at that time, and for fifteen years we have continued at the same old game—a little bit now and a little bit two or three years afterwards—right up to the present time.

What do we find with regard to those of our pensioners who rely upon the National Insurance pension? A million and a quarter of our insured population who have paid into this great insurance scheme for fifteen years find at the end that they do not have sufficient income to enable them to live and, despite their insurance, they have to apply for National Assistance. The result last year was that instead of the Exchequer putting into the Insurance Fund sufficient to meet the general social needs of the insured people, it has to pay £75 million in the form of National Assistance to insured people. That in itself is far from satisfactory from a national viewpoint.

The question arises that whilst we are getting modernisation here, there and everywhere else, we do not seem to make any effort in National Insurance to try to make a change whereby, in justice, we could improve the general position of our people and harm nobody. When one examines the finances of the Exchequer and National Insurance together, it is amazing to find that the Exchequer is paying far more in other ways solely because of the operation of the National Insurance scheme. Because of those activities and in conjunction with the tax regulations, the Exchequer has to pay more in tax relief and in helping other unfortunate cases which arise as a result of the existing conditions.

When we started the National Insurance Scheme we had no great experience of it; we had very little experience of the tremendous amounts involved for such purposes, and £100 million was clawed out of the Treasury through the operations of the National Insurance Scheme when it started. One would naturally have thought with confidence that the position would have been fully examined with the Treasury, but it could not have been, if we are to judge by the way it has worked out. It was instituted particularly to help the unfortunate people in the country, but could it have been examined fully by the Treasury so as to work out as it has?

The scheme and the taxation regulations have developed from one stage to another until the Minister of Pensions admitted on 28th March that employers had paid about £283 million in contributions—I think it was—which is a lot of money to pay, no doubt, and is certainly very helpful, so that most of the people had the idea that the employers were paying their share and that it was not so bad. But did the people of the country know that during the paying out of the £283 million the Revenue lost to the extent of £143 million? Has that matter really been considered?

The question arises because the tax regulations are such that the National Insurance Scheme resulted in a loss to the Revenue of £143 million last year, and, in addition to that, an extra £40 million to the insured contributors, making a total of £183 million.

In addition to that, because we are not paying sufficient income to our pensioners and others, the Exchequer had to pay another £75 million to the insured people who had to apply for National Assistance.

The question arises, what will this loss amount to if at this juncture there is no indication by anybody in the Government or elsewhere that the problem will be tackled? There seems to be no such indication that it will be tackled by the Government. The toll indirectly to the Exchequer under the regulations may amount to £200 million out of the Revenue.

Some say that as it will be met out of taxation and under taxation regulations it is nothing to worry about, but the point is that when we agitate to get bigger pensions paid to our insured people, when we try to get the Exchequer to do something, the Chancellor is very much against it. He says that if he increases the benefits under the present position, as he intends to do, he has to increase the contributions. If, say, he demands another shilling from the contributors, whatever that may mean to the employers, the Revenue will be worse off to the extent of 50 per cent. of the employers additional contribution and 10 per cent. of the insured contributors' payments.

That is what is happening at the moment. The whole question is, is it worth while? We can do something better without harming anybody particularly, except the mass of the employers who are making any amount of money. There was a report in the Economist that about 500 companies had increased their profits by about 18½ per cent. If one looks at the economic papers one finds that profits have risen by about 14 per cent. during the last six months compared with twelve months ago. One gets that information from Papers issued by the Government.

Whatever difficulties may be experienced in certain parts of the country because of unemployment, short time, or any other grievances, wages and profits are rising. The one section of the community which suffers more than any other, the one section which we ought to try to help more than any other, is not receiving anything like what it ought to receive because of the economic conditions which now exist.

Are we dealing with pensioners on the basis of the cost of living? We are not. That is a dead horse nowadays. It has gone with the wind. We could not make a case lased on the cost of living. We could not make a case based on percentage comparisons. The basis of comparing the increases granted to aged people with the rise in certain wages has ceased, and the Government's attitude today—and it is a good attitude because it shows the beginning of a new era—is that they have examined the whole economic position and have come to the conclusion that, despite the fact that the aged people are getting more than the cost of living, and that working on percentages they may be getting more than one section of the community, they are nevertheless now prepared to raise pensions without linking the rise to the general economic position of others.

The average wage in the country was £14 0s. 2d. We are told that the average wage has risen by 6 per cent. during the last six months. When that 6 per cent. is added, the average wage will be £15. It may be argued: "We are giving married people an extra 12s. 6d. What about that? Is that not helping them?"

Does that argument help when making comparisons? Not a bit. That is why we should emphasise and compare not percentages but the question of money. It is money that matters. What matters is the amount of money that has been received by way of profits or wages. If one considers that, what does one find? In 1954 the average wage was about £10. It is now £14 0s. 2d. If by the end of 1960 there is an increase of 6 per cent. in the average wage, the difference between that figure and the pension which we are to pay old people, which has now been raised from £4 to £4 12s. 6d., will amount to about £10 12s. 6d. because the average wage will then be £15.

That is the new aspect which must be borne in mind when we are considering what old people should get in the future. If we go on in the old "Easy go, Tom" way the pensioners will never get anything like what they ought to. We are giving an extra 12s. 6d. to the married couple, making their total income £4 12s. 6d., while the average worker is receiving £15 a week. Even allowing for the £1 or £2 that he has to pay in taxation there is still a great deal of difference between what the average worker is receiving and what the old people are getting.

The terms of the new Bill show that there has been no honest and humane examination of the situation to discover what the country can afford to give to the pensioners. There should be a change. The question is: How shall we make it? Shall we just carry on, year after year, bringing in tax reliefs and paying out extra money from the Exchequer? That course is bound to be influenced by the Chancellor of the Exchequer in his consideration of what can be done for old-age pensioners or anybody else. Very shortly the liability of the taxpayers in respect of National Insurance will rise almost to £200 million, as tax relief, but the ordinary man, receiving a low wage, has to pay his contribution and receive no tax relief at all. National Insurance Tax reliefs vary from 4d. to 2s. 6d. in the £.

This may be the last time that I shall speak upon this subject, but I feel that I should put the point forward even if it has no chance of being accepted. It might cause some important people in the Conservative Party or the Labour Party to consider whether there is not some new method which we can adopt to help the aged people and at the same time reduce instead of increasing National Insurance contributions. I may be asked how I would increase the benefits. I suggest that it could be done by the payment of a 4 per cent. contribution by employers and workmen and a 3 per cent. contribution by the Exchequer. The payment of tax relief and National Assistance could all be dealt with as one operation, by way of an addition to the supplementary Exchequer payment of a 3 per cent. Exchequer contribution. That would cost the Exchequer nothing more, and it would clear the ground for the future. When we wanted to consider whether there should be a change we would not have to consider the question of penalties—one penalty put upon contributors in return for greater benefits, and the second which has now been endured for fifteen years, and which has accumulated to a greater extent than people realised—I do not think that any of the officials that deal with National Insurance are aware of all this—is that we shall be worse off to the extent of £200 million through tax relief payments. But by changing the financial machinery, which is all that would be necessary, and without creating any additional burden on the Exchequer we could reduce the contribution, and the only people who would suffer would be the employers. They would get no great tax reliefs arising from National Insurance business. It may be argued that they get that revenue in the normal way as does any other body, but can that be justified? When we are introducing a great social scheme—which is not a voluntary scheme but one to which people are compelled to contribute—is it sensible to have an arrangement whereby employers are charged so much and then given back 50 per cent.?

My proposals would mean the abolition of tax reliefs on National Insurance, but would have nothing to do with the industrial arrangements or with individual insurance. The financial basis of this scheme is that simple basis which was introduced in 1956 by the Labour Party when new pension proposals were made. The result would be, to take the figures from Government returns on salaries and wages and pay to the Forces—I am allowing for a rise of 6 per cent. in wages—that on those wages and salaries would be paid a 4 per cent. contribution. The employers would pay 4 per cent. as well, and the total, after allowing for a 6 per cent. increase in wages would be £13,653 million. Four per cent. on that figure would bring in £546 million from the employer, also £546 million from the workers. Then we have the self-employed people whom the Labour Party proposed to charge 8 per cent. But I have put down 7 per cent. on the money that they would make. That makes £141 million as the contribution from the self-employed. There would be a total income of £15,674 million on which the Exchequer would pay 3 per cent.; the Exchequer would pay £470 million. It is costing the Exchequer that amount and more:at the present time. I do not wish to go into the figures because that would take time, but it costs that amount of money now and by just taking the same contribution in 1961, namely 7s. 2d. for a woman and 8s. 4d. for a man we should find that the level rate section would be paying actually more than 4 per cent., allowing for this over-plus of £60 million and £52 million from the investment money. We thus get a total income of £1,815 million and a total expenditure of £1,648 million, leaving a balance of £167 millon. That makes £1,815 million income.

I have gone into this for a long time and find from calculations that the money paid above the standard benefits of £2 10s. for a single person and that all the amount of money paid for other purposes comes to 25 per cent. of the total paid in benefits. I suggest that if we raised the pension by £2 a week, making the single person's pension £4 10s. and married couples' pensions £6, and not raising any of the other benefits, we should find that the cost of benefits, which at the moment for industrial injury and National Insurance is £929 million, taking the 25 per cent. at £232 million and the balance of standard benefits up to £2, would be left at £697 million on which 80 per cent. extra would be paid.

All the other benefits would be left as they are. That would be a rise worth considering and something for which some degree of credit could be claimed. We could then reach the position of the £977 million for total 'benefits and £557 million for the increase of £2 a week, with £114 million for the Health Service contributions, leaving a balance of £167 million. That may be 'thought either amusing or worth considering. We would continue with Government graded pensions as they are now and raise the standard pension benefits, paying the graded pensions as the Government propose but the graded pension expenditure ten years after it begins according to the actuary's figures amounts to about £6 million. So that does not come into the situation at the beginning and there is the £167 million balance on which to work for eight or ten years without incurring a debt. Then the position could be considered with the graded pension becoming greater and greater.

That allows for 130,000 extra applicants coming into the insurance scheme every year. We should still have those benefits, which would gradually get less and work themselves out in about ten years. That is a system worth considering. The results would be that contributors would pay less and employers would pay less than they are paying under the present scheme. In the case of the man who receives £15 a week, at the moment the employer pays 12s. 1d. under the 1959 Act, but under the new Bill another 1s. is to be put on to that, making it 13s. 1d. Contributions at 4 per cent. would work out at at least 1s. 3d. less for most of the contributors and the cost to the employers would be just about 4 per Dent., slightly less.

That can be laughed at, or it can be given consideration. There is no doubt at all that as time goes on, if we allow the present system to continue we shall find that it is a peculiar system whereby, whenever a move is made to increase the benefit, the Chancellor has big penalties to consider. This change, which is not much of a change in reality, would stop that. There would be lower contributions from the employees and much more benefit in the extra £2 a week on the basic payment for sickness, unemployment or otherwise.

This is what is needed in the country at the moment. No Government can guarantee that there will be no unemployment, and we shall get situations like that in Coventry and elsewhere, and unless we make the change, the pensioners will suffer in the meantime, although they will be getting their 7s. 6d. or 12s. 6d. extra, as the case may be, for two or three years. We should try to look at the position existing at the moment in present economic conditions of wages and profits, and enable this change to put the National Insurance Fund in a far better position so as to be able to give the extra £2.

I am satisfied that it can be done. There is no question of that. The graded Government pension does not pay anything for ten years. It may well be that the Government have never thought about it and have never considered it. Let them go into it minutely on the figures which they have produced, and I am sure that they could pay that £2 a week extra for ten years without getting into debt, and do something for those in need, and particularly for the men who deserve much more help and more advantages out of the economic conditions now existing.

8.57 p.m.

Mr. Ian MacArthur (Perth and East Perthshire)

I hope that the hon. Member for Wallsend (Mr. W. McKay) will forgive me if I do not follow him on the most interesting question of pensions, but there is very little time left and there is one aspect of the Gracious Speech which has been touched on very little today to which I should like to refer for a moment.

The Gracious Speech refers to legislation to provide financial assistance towards the construction of a new Atlantic liner to replace the "Queen Mary". Hon. Members will agree that this proposal has a wide significance which goes far beyond the immediate issue of the replacement of the "Queen Mary". Hon. Members opposite may well argue that a Government loan, if that is to be the nature of the help, is not the right way to tackle this and similar problems, and that if the State is to have any function of this kind in industry it should be the result of complete and outright nationalisation, as the hon. Member for Coventry, North (Mr. Edelman) mentioned in connection with the motor car industry. On the other hand, some hon. Members on this side of the House may feel that private enterprise should go its own way and that industry should find its natural level in the commercial order of things without any influence or interference by the State.

The shipbuilding proposal demonstrates a form of selective help for industry which I welcome as a feature of modern Conservative thinking. However flourishing our economy may be over the years, there must be times when one industry or another runs into a period of depression. It would be wrong if the State were to intervene on every occasion and provide a financial bolster to protect the industry from the harsh realities of the constant change that must be a feature of a progressive economy. But if no State influence is to be exercised in certain cases, I find it difficult to see how our country can maintain the full employment, stable prices and balanced growth of production to which the Gracious Speech refers. There are bound to be occasions when some large enterprise is desirable in the national interest but difficult to justify in normal commercial terms.

The steel strip mill in Scotland, for example, would not be under construction today but for the loan which the Government is providing. This development has already had a profound effect in speeding the diversification of industry in Scotland, and if, as we hope, the problem of unemployment in Scotland, which has been such a sad, depressing feature of Scottish life for so long, is finally broken, it will be very largely due to the building of the mill.

Whether the building of the new ship takes place on Clydeside, upon Tyneside or in Northern Ireland, where there is also a heavy unemployment problem, it will bring great help to the shipbuilding industry. Obviously, I hope the ship will be built on the Clyde. Nevertheless, the help will be widespread. The building of the ship will help to ease unemployment in one or other of the hard hit areas. The shipyards have been modernised, and their competitive position today is strong. The building of the new Queen liner will help the industry to tide over the next few difficult years, and her completion will bring renewed prestige to our shipping lines. I hope that this and any other similar Measures will have warm support from all sides of the House.

9.2 p.m.

Mr. Frederick Lee (Newton)

rose—

Mrs. Patricia McLaughlin (Belfast, West)

On a point of order, Mr. Deputy-Speaker. Might I have your guidance? Is this to be the only opportunity on which hon. Members can raise points of very great and urgent importance? Many of us have been waiting. While we do not grudge time given to any hon. Members, there have been many speeches about Scotland and many speeches about other areas, but only one today about Northern Ireland. Are we to have an opportunity to raise urgent matters which must be brought before the House?

Mr. Deputy-Speaker

I am sure the hon. Lady has the sympathy of the House in finding that there is not sufficient time to make a speech tonight. That is the experience of other hon. Members on both sides of the House. For today's debate the understanding was that the wind-up speeches would commence at 9 p.m., and I therefore called the hon. Member for Newton (Mr. Lee) to make the wind-up speech for the Opposition. However, there will be other opportunities on other days during the Session.

Mr. Lee

I am sorry that the hon. Lady the Member for Belfast, West (Mrs. McLaughlin) has not had an opportunity to address us on the serious unemployment problems of Northern Ireland. I will try to assist her in the course of what I have to say, because I intend to say a word on that important subject.

The hon. Member for Perth and East Perthshire (Mr. MacArthur) and the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti) took us into new theories of Tory politics. Again, I should like in the course of what I have to say to follow their reasoning and logic as to where it all ends.

I think that during the debate, from the moment when my right hon. Friend the Member for Huyton (Mr. H. Wilson) demolished in advance the arguments of the President of the Board of Trade, we have highlighted a number of very vital issues which are troubling hon. Members on both sides of the House. The failure of the export drive was perhaps the outstanding feature. I thought that my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow), for instance, in a most constructive speech, outlined a number of new ideas as to how assistance can be rendered by our people abroad. I hope that the President of the Board of Trade took particular notice of what he said and that on some subsequent occasion will either answer my hon. Friend's ideas—I should love to hear what the answer is if he does not propose to accept them—or announce that he is prepared to look at them sympathetically.

The second point about which great pertubation has been displayed on both sides is the failure of Government policy to ensure any really consistent increases in production. We are in the period of a scientific industrial revolution. We see it going rapidly ahead in most industrial nations. We are being invited to congratulate the Government on economic policies which accept that transfer machinery, feedback machinery, electronic computers, and so on, are now necessary if we are to ensure a static rate of production. This is the complete negation of the type of economic policy of which the nation stands in very great need.

Comcomitant with the Tory approach to economic problems—a high Bank Rate, credit squeezes, and so on—is the inevitable argument that this is no time for wage claims to be pressed by trade unions. It is interesting to note that in the first two quarters of 1960 wage rates were only 1.8 per cent. and 2.5 per cent. above the corresponding quarters of 1959. Therefore, that does not provide any ground for arguing that the fears of inflation, which I take it are the reason for the high Bank Rate and the credit squeeze, have come about as a result of any increases in wage rates.

On the other hand, gross company profits during the same period were up by 8 per cent. and 15 per cent. and dividends were up by 29 per cent. and 30 per cent. Therefore, I hope the House has in correct perspective where the additional increases are going. I hope that we shall not hear any more nonsense about the need for trade unions to exercise restraint, because the figures I have quoted prove that they have been doing precisely that.

The right hon. Gentleman told us of the very great success of the Local Employment Act. All he was saying was that this year, for the first time, the Government are using the Distribution of Industry Acts. They have discovered that the distribution of industry policy, as used extensively by the Labour Government, can achieve the results which we have always claimed it can achieve. There was no point which the right hon. Gentleman mentioned as having brought about full employment or proper distribution which was not in the Distribution of Industry Acts before they were transformed into the Local Employment Act.

The right hon. Gentleman told us that unemployment is now very low. We do not disupte that. However, we invite him to remember that there is now an accepted technique as between employers and trade unionists that, wherever it is possible to avoid unemployment by short-time working, that is preferable to a number of people being left unemployed. There is now a large amount of short-time working. I do not know how to express it in terms of unemployment, if it can be expressed in that way. I hope that the right hon. Gentleman will not become complacent about the figures of unemployment.

The right hon. Gentleman should remember the large number of workers now working short-time in a number of industries. This applies particularly to the motor-car industry, and my hon. Friend the Member for Coventry, North (Mr. Edelman) brought this great problem to our attention. I am not too happy about the reply given me by the President of the Board of Trade to a question I asked him while he was speaking. The fact now is that our exports to the North American continent are dropping rapidly, and I do not know whether the right hon. Gentleman believes this to be purely seasonal—he spoke of seasonal unemployment in the motor industry.

My conception of what is happening is that the motor industry in the States is adapting itself to the technique of producing the new small car. It is also the case, as my hon. Friend the Member for Coventry, North pointed out, that over 50 per cent. of the British industry is American-owned. I can well imagine what Walter Reuther and the rest over there would say if American-owned car companies here were to produce at a rapid pace while automobile engineers in America were unemployed. I therefore hope that the right hon. Gentleman will again examine this matter.

My right hon. Friend and I represent constituencies in or near Merseyside. We are happy at the prospect of new industry there, where it is needed so badly, but we should be very distressed if industry were brought to Merseyside which, in the event, proved to be merely something to attract more and more people to the area only for Them to find that they were seasonally unemployed. I do not think that the Government have looked at this as closely and as expertly as we should like, and I ask the right hon. Gentleman once more to consider expert advice on the subject.

My hon. Friend the Member for Coventry, North pointed out that already in Coventry some 60,000 people are working short time—

Mr. Hocking

When I spoke earlier, I proved to some extent that that was wrong. I said that in discussions I have had with shop stewards who came here I found that the highest figure they could reach was 30,000 on short time. The hon. Member for Newton (Mr. Lee) should also bear in mind that many people are on short time as a direct result of strikes, not of shortage of orders.

Mr. Lee

The hon. Member had better argue with my hon. Friend, who mentioned 60,000. I say that that is the equivalent of quite a lot of people unemployed.

I remember arguing some time ago, when we were talking about hire purchase, that, under conditions as we now see them, with the best part of £1,000 million of hire-purchase debt, if ever again we were to get unemployment or short-time working on an extensive scale the problems would indeed be serious. We now have a new generation which does not understand the facts of the old unemployment that we knew, and will, therefore, go heavily into hire-purchase commitments. The Government having started encouraging increased hire-purchase debts and so on, I hope that that kind of consideration will bear heavily on them.

The hon. Members for Perth and East Perthshire and for Morecambe and Lonsdale made very interesting speeches. The hon. Member for Morecambe and Lonsdale said that as far as possible we must now have one big firm technically equipped to produce whatever the commodity is at cheap rates because of its monopoly position. He did not use the word "monopoly", but I do. He said that, because such firms are technically equipped, they are able to go in for tong runs, massive numbers and so produce at cheap rates.

The hon. Member for Perth and East Perthshire said that the shipbuilding industry was now reaching the point where it was right to expect public money to be expended on it. For the moment, I am not arguing that either hon. Gentleman is wrong, but I do say that that argument makes complete and utter nonsense of the whole conception of competitive private industry—the whole Tory argument, that has never been disowned. During the General Election they argued the superiority of competitive private enterprise over the dull, grey, monopoly position of public ownership Now we have a situation in which two hon. Members opposite are tacitly accepting that the kind of policies upon which the party opposite was elected are merely pipe dreams of the nineteenth century and can be completely forgotten.

I am not putting on a mortar board, but hon. Members must learn. I want to teach them where they are going. Neither I nor any of my hon. Friends have said that we disagree with this analysis of the state of our industrial development. What we are saying is that, as long as it is now agreed on both sides of the House that private competitive enterprise in the old sense is as dead as the dodo and that the insertion of public money is the condition of efficiency in our enterprise, it is making out the case completely for public ownership of industries of all types. The hon. Member for Morecambe and Lonsdale said that we must get the people to understand this. I hope he manages to do so. We have not the facilities possessed by the hon. Member, and we wish him God speed and good luck in getting this understanding across to the people.

Mr. de Ferranti

Surely there are two points which the hon. Member is overlooking. Competition is now international. Private enterprise is working as effectively as it has ever worked, but it is now working in a much bigger context than before. Secondly, hon. Members opposite have never understood the difference between control and ownership. The hon. Gentleman is apparently advocating ownership, and this has nothing to do with the problem at all.

Mr. Lee

If the Monopolies Commission accepts as the basis of its work that if there is competition abroad that alters the concept of monopoly, then the Monopolies Commission is not working on the basis which we believed.

The Gracious Speech contains the phrase: … a well-balanced growth of production … The only well-balanced growth of production that I can see in British industry is in the increased efficiency of advertising material. We have reached a point in British industry where far more capital is expended on advertising a product than in scientific development to make it a better product. What kind of a spiv industry is it which has got to this stage where £400 million a year is spent on advertising and £300 million a year is spent on scientific development?

This is one of the real problems that the Government will not face. The Prime Minister has told us that we are living in the "You've never had it so good" society. We have a type of society in which it is deemed more appropriate to advertise our products than to try to get a proper analysis of the means of improving the quality of our products. In only three industries in Britain is there any real research being done—in aircraft, chemicals and electrical engineering. Of the £300 million which has been spent, more than 50 per cent. comes from public money. This is the kind of economy which we believe is responsible for the fact that we are lagging behind in the productive race.

I suppose that we can take it that the basis of the living standard of any nation can be judged by the amount of horsepower per head in industry. On this basis, we have 2½ horsepower per head. The United States has 8 to 8½ horsepower per head. Therefore, I put it to the Government that two of the things upon which they must embark are, first, a proper national fuel policy to ensure that we can get the energy, and secondly, an efficient machine tool industry which can produce the modern tools. At the moment we have neither, and I see no signs that the Government are in the least concerned to produce them.

Indeed, in Britain we pride ourselves now on our ability to cut back the production of coal. Coal is our basic resource, the only indigenous material we have, yet our success is judged by what we do not produce rather than by what we do. I shall have more to say about this next week when we discuss the nationalised industries. In 1960, we are producing 5 per cent. less than in 1959. Manpower is down from 687,000 in January, 1959, to 580,000 now.

We must remember that coal will be the main basis of our energy resources for as long ahead as any of us can see. What we are doing even now is to produce a situation in which there is a very great shortage of manpower in many of the coalfields of Britain. I prophesy that, if this process goes on, far from people like the hon. Member for Kidderminster (Mr. Nabarro) being able to sneer about great quantities of coal on the surface, we shall, before the 'sixties are out, have another coal crisis.

In the meantime, fuel oil is being imported at an increasing rate. Imports are up from 604 million gallons a week in 1957 to 963 million gallons a week in the first eight months of 1960. Our consumption of fuel oil has doubled between 1957 and 1959 and is still rising. These things do not form the basis of an economy upon which we can rely. I do not wish to remind hon. and right hon. Members opposite of Suez; perhaps it brings back painful memories.

I promised to say a word about Northern Ireland. I have great sympathy with the people of Northern Ireland. I was over there last week. They treated me very well. I took part in a debate at Queen's University. The other side moved that, in the social and economic conditions of today, the strike weapon is out-moded. In that home of reaction, we defeated them and it was decided that the strike weapon is not out-moded. It looks as if the young people of Belfast are far more enlightened than those still infesting Stormont.

I was very sad to see the failure of both the Government at Stormont and this Government to do anything for unemployed people. Harland and Wolff has indicated that by Christmas 1,000 workers will be paid off and by the summer 8,000 will be paid off. If subcontractors are included, it is thought that the total will be 10,000. There seem to be no prospects for the future. For the first time since the war, there are no passenger liners and no aircraft carriers being fitted out there.

The demand for the dry dock, which the Northern Ireland Labour Party has been pressing for a long time, has at least reached the ears of the Government at Stormont and they are, I believe, willing to help if they can get assistance from over here.

Mrs. McLaughlin

The facts which the hon. Gentleman has given about the dry dock are not quite correct. The Stormont Government have said that, were Harland and Wolff willing and were the Harbour Board willing, they would see that the money was available. That is not the big issue.

Mr. Lee

My information is that the creation of the dry dock is a very big issue indeed in Northern Ireland.

Mrs. McLaughlin

The money is not in issue.

Mr. Lee

It is very encouraging to know that the Unionists in Northern Ireland are now agreed that it would be a good thing. It is a pity that they did not realise it a few years ago.

I really must ask the Government to improve their attitude about Shorts. I remember being there two years ago, when I was told by the then Minister of Supply that the order for the Britannic would be signed at any time. Any time has not arrived yet. In Shorts, there is now the greatest apprehension. No one knows whether the order will be for 10 or for 20 when it is eventually signed, and no one knows even whether it is to be signed. A suspicion is now arising that Shorts will be used merely as the research organisation to perfect the prototype and that then the Government will hand over the actual production to companies on this side of the water. The SC.1 was developed over there but Hawker produced it. The Argosy was developed there and then produced here by Armstrong-Whitworth.

Looking beyond Belfast, in Londonderry a few days ago a thousand jobs went at ten minutes' notice. A thousand people were sent off at Birmingham Sound Reproducers. In Larne 1,000 jobs are now at stake in the Pye factory, and Pye, we know, is linking up with Ekco.

These concerns are hit by high interest rates and the credit squeeze. I do not agree with the policy over here, but surely in an area like Northern Ireland, where there has been very heavy unemployment for so long, how high interest rates and credit squeezes can be defended heaven only knows. I am sure that the right hon. Gentleman cannot tell us.

Mr. McMaster

rose—

Mr. Lee

I cannot give way.

This is not confined to Northern Ireland. I am worried about the Clyde, the North-East Coast and my own area, Merseyside. The Government have not given any indication what the future is for these industries, nor is any real effort being made to produce new industries. Older industries can never again employ the same numbers which they once employed.

I wanted to discuss the position of the steel industry, which my right hon. Friend the Member for Huyton briefly mentioned. Since the House went into recess two steel firms have been sold to private enterprise—the Llanelly Steel Company and the Staveley Iron and Chemical Company. The Economic Secretary agrees that we lost £1½ million as a result of the Llanelly Steel Company deal. He also agrees with a letter which I sent to him arguing that this deal could have been announced before the House went into recess. He agreed that the Iron and Steel Realisation Holding Agency applied to the Treasury for consent to the sale on 6th July and pointed out that it would be better from the point of view of the firm if it did not have to announce it until after 31st July, which was very convenient because the House would not be sitting. Was it a coincidence that S. G. Brown Ltd. happened to be in the same position—that the transaction had to be announced when the House was not sitting? That was so with regard to the Llanelly Steel Company.

When I wrote asking what the criterion was, the answer which I received was this: As for the price realised on sale, I confirm that the Agency's investment in the Company amounted to £3,240,206. The test of what a company is worth, over and above its breakup value, is, however, what it can earn and in this respect the Company's recent experience has been unfortunate The letter went on to tell me that in certain years losses were made as against profits in other years, and therefore, on balance, we could not expect more than £1¾ million for the firm.

Taking that criterion that over and above its break-up value one can expect only a small return if the profits are low, I should like the Government to tell me how they can apply the same criterion to the Staveley concern? The Staveley concern, an asset worth £8,200,000 on book value, was sold by the Agency, with the consent of the Treasury, for £6 million. In every year since nationalisation, profits have been made in this enterprise. They varied from £1,800,000 to £680,000. In every year high profits have been made in the Staveley firm. It has been sold to Stewarts and Lloyds for £6 million. As a matter of fact, I think that I can prove that the asset was worth £10½ million because not only was there the £8.2 million in the case of Staveley, but the Sheepbridge Company, for which £2 million compensation was paid, had been attached to it. Therefore, Stewarts and Lloyds got an asset worth £10½ million for £6 million.

As I have said, every year since nationalisation large profits have been made.

Mr. Cyril Osborne (Louth)

Were they gross or net profits?

Mr. Lee

I cannot say offhand. They were net profits, yes. In addition, there is the fact that, by annexing this asset, Stewarts and Lloyds has a virtual monopoly in iron pipes in Britain.

Are the Government thinking of referring this case to the Monopolies Commission? May we know how they propose to deal with this matter? It is well known to all of us that during the General Election campaign Stewarts and Lloyds paid very heavily towards the denationalisation propaganda of the Tory Party. In fact, it spent £269,000 on denationalisation propaganda—quite a big amount. If it is possible to clear a profit of some £4½ million immediately afterwards, it is not altogether a bad investment, when one comes to think about it.

I am very keen that we should quite clearly understand where we are going. I am charging the Government with deliberating contravening the basis of their Iron and Steel Act, 1953. Section 18 of that Act states: Provided that the Agency may discharge their duty under this Section in such manner, and by such stages, and with such postponements of the sale of securities or other assets, as they may with the approval of the Treasury determine, and shall so discharge the said duty as to secure, without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate … I challenge any member of the Government to show me how this can possibly be financially adequate, given the conditions which I have outlined. My belief is, therefore, that they have to answer this point. If they say, as the Economic Secretary said in his first answer, that the times that we are living in are such that we cannot hope to get a proper return, the answer I give is that that is a very good reason for not selling it. If they do sell it, then they are selling it in contravention, as I believe, of Section 18 of the 1953 Act.

I do not think that a political party can take out an injunction against the Government. I should love to see this case go into the courts. If there is some way in which we can arrange it, I should like to test it in the courts. In any event, we are now witnessing in this respect the kind of chicanery which I doubt that this country has ever seen since the passing of the Reform Acts.

I believe implicity that Stewarts and Lloyds are now getting the pay-off for what they paid out to help the Government. I believe that unless the nation is made aware of this, an even bigger plum in the form of Richard Thomas and Baldwins awaits the people who looked after them in the period before the General Election. These are enormous moral and political issues which the people of this nation have to look at. If we can have an answer from the Government which satisfies and answers the points that I have made, we would reconsider our attitude to it. I have looked as carefully as I can at the legislation, at the replies of the Economic Secretary and at the financial facts behind the sale of Staveley.

I have said that it establishes Stewarts and Lloyds in practically a monopoly in iron pipes, that they have an asset worth £10.2 million for £6 million and they are now getting what is in fact an asset making very considerable profits indeed. This is the kind of thing which some of us expect when the Tory Party is in power. It seems to me that in these days when we have never had it so good that others can have it even better.

Today we have heard that there is to be an increase in pension of 12s. 6d., and I hope that the people of Britain will look at the profit rate I have given today as distinct from wages, look at the fact that for over twelve months the old-age pensioners have waited for the miserly pittance that they are to have and look at the fact that in order that they should have it it is not so much an Exchequer grant but contributions from the employees that will bear the full weight. Those are the basic issues of policy and I ask the country to take not merely the word of both sides of the House here but to examine the facts and decide which side of the House is in reality trying to give the people of Britain a squarer deal than they are getting today.

9.35 p.m.

Mr. Geoffrey Stevens (Portsmouth, Langstone)

Mr. Speaker—

Mr. Ginsburg

On a point of order. May I ask, Mr. Speaker, whether the hon. Member is rising to speak on behalf of himself or on behalf of the Government?

Mr. Speaker

The hon. Member is rising and I called him. No more can I say.

Mr. Stevens

Towards the end of his agreeable speech, the hon. Member for Newton (Mr. Lee) referred sarcastically to a phrase of my right hon. Friend the Prime Minister that under the Tories, the people had never had it so good. That was a kind of echo of an earlier phrase in the hon. Member's speech when he said that under a Tory Government appeared to be no time for increases in wage rates. I was surprised to hear the hon. Member say that in the early part of his speech. [Interruption.] I noted it at the time. The hon. Member said that under the Tories, it always appeared to be no time for increases in wage rates. That is what I heard him say. If he did not say it, I will willingly give way, but I took note of his words.

Mr. Lee

I am not saying that when the Tory Government are in power, the trade unions do not try to get wage advances—of course they do. They will get them in spite of the Tories, who take the credit for giving them.

Mr. Stevens

The hon. Member will be within the recollection of the House, but I have a good idea of what he tried to say.

Of course, money wages have not increased per cent. as much in the last two years as they did under Socialist Governments—that is true—because they have had no need to do so, for the simple reason that any increase in money wages in the last two years has been an increase in real wages, whereas under the Socialists it was very much like "Alice in Wonderland". Money wages had to increase very fast to keep pace with the increase in the cost of living—in order to stay in the same place.

Mr. Manuel

Will the hon. Member give way?

Mr. Stevens

Yes, presently, if I can go on for a few moments. I am still dealing with the hon. Member for Newton. I will deal later with the hon. Member for Central Ayrshire (Mr. Manuel).

The hon. Member for Newton also said that he thought the United States of America had adapted itself to the technique of the small car, the compact car. I could not agree more with him and I shall have more to say about that presently. Harping back to an old theme of the party opposite, the hon. Member also said that a contribution to the solution of our problems would be made if we were to cut advertising. It seemed to me that that was an insular and "wee free" outlook. In face of the international competition that we meet in markets all over the world, in view of the sort of advertising that the United States of America goes in for and in face of the greatest advertising expert in the world—Mr. Khrushchev—how we, as one of the greatest exporting nations, can afford to cut down on our advertising, I do not know.

Mr. Lee

Is this an indictment of the Minister of Transport?

Mr. Stevens

I was trying to deal with a point which I thought the hon. Member had made seriously. If we are to treat his speech as a joke, he might have started his remarks by saying so. I have been trying to take him seriously, as, indeed, I tried to take the right hon. Member for Huyton (Mr. H. Wilson) seriously.

I listened with unusual interest, as we all did, to the right hon. Member's speech this afternoon. It seemed to me that he shot a bootee into the air and it came to earth, I do not know where. It may be that we shall all know, I understand, on Thursday. The right hon. Gentleman definitely overplayed his hand and was guilty of half-truths. I will immediately half-withdraw. A few months ago, I accused an hon. Member opposite of being guilty of half-truths and I was asked to half-withdraw them, so if I say that I thought for most of his speech the right hon. Gentleman was guilty of giving only half the facts instead of all the facts, I shall be within the rules of order.

Mr. Manuel

Will the hon. Member inform the House whether, in winding up this debate on economic affairs, which ends today, he is empowered by the Government to give pledges in connection with the important and strong points made by Members on this side of the House in the course of their speeches?

Mr. Stevens

The hon. Gentleman has been a Member of the House as long as I have. He must be as well aware as I am of the rules of order and the manner in which Mr. Speaker selects speakers. There is, therefore, no need for him to raise the point or for me to deal with it. The fact that I have been fortunate enough to catch your eye, Sir, is a matter for you, not for me.

I say again that I would have thought that the right hon. Gentleman was indeed below his usual form in giving, in so many instances, only half the facts and not all the facts. He referred to stagnating production. That, indeed, is perfectly true. He referred to the fact that our balance of payments situation is not as good as it should be. That, again, is perfectly true.

However, I should have thought that, as a one-time "shadow" Chancellor, as a future—who knows what?—he might have completed the picture in considering, for example, short time in the motor car industry, the falling off in our exports to the United States. He might have made some reference, perhaps, to the standing off of 3,000 workers at the Renault factory in Paris; he might have made some reference to the short time now being worked in the automobile industry in the United States of America. He might, in a word, have referred to the fact that world trade as a whole has slowed down in these last weeks and months, and we ourselves are merely feeling, to a very large extent, the current trend. But for reasons best known to himself he saw fit to dwell only on half the picture and not the whole of it.

He accused the Tories of being complacent. I thought that was a most remarkable thing to say. I thought it fitted in extraordinarily well with the remark of his hon. Friend the Member for Newton talking about competition. I should have thought that if there is one thing on earth which would prevent the Tory Government from being complacent it would be competition from the other side of the House; and in the absence of competition, of coherent competition, can it be wondered at if there is some feeling not only in this House but in the country as a whole that there is some serious risk of Ministers on this Tory Front Bench becoming complacent?

I should have thought that there was a lesson in that, that there was a moral in that both for the right hon. Gentleman the Member for Huyton and also for his hon. Friend the Member for Newton, his supporter who sits by his side. Would it not be a good idea to see if competition in this House would not keep the Tories up to scratch, as competition in industry keeps private industry up to scratch also?

The right hon. Gentleman the Member for Huyton had some criticisms to make, many of diem founded on fact, many of them, as I would suggest, founded on only half the facts, which he gave, about the state of the economy at the present moment. He did not in fact do what I think he might well have done, quote verbatim from the Gracious Speech in which reference is made to the intention of the Government to maintain a sound economy but much of what he said tended towards that effect. Well, later on in the same Gracious Speech I see that A high rate of house-building will be maintained, and the slum clearance drive will continue.

Mr. H. Wilson

Does the hon. Gentleman really say that it is a sound economy when in the first half of this year our balance of payments on current services was only £35 million, which, he knows perfectly well, has nothing to do with the deterioration in world markets, but is in fact a reflection of the mismanagement of this country?

Mr. Stevens

I absolutely and entirely disagree. The falling off in the very advantageous balance of trade and payments which we have been enjoying is due in large measure to a general falling off in world trade, as the right hon. Gentleman knows perfectly well. The main figures are there to see, and the figures are available to the right hon. Gentleman, and he, as an ex-Shadow Chancellor, should know that perfectly well. He did, as I say, criticise the economy.

Again I refer to that paragraph in the Gracious Speech dealing with the maintenance of a high rate of house building. When I read that paragraph my mind went back to the Blackpool Conference of the Tory Party in 1950. That was no complacent conference at all.

I shall not forget for a long time the way in which my hon. Friend the Member for Peterborough (Sir H. Nicholls)—and I am glad to have this opportunity of saying that in my view very rarely has Her Majesty more suitably bestowed an honour on an hon. Member of this House—went to the microphone and nailed the number of 300,000 houses a year to the Tory mast. I had two sensations at that moment. I was glad to hear the conference accept that figure because I thought that we ought to, and could, do better than the Socialists, but at the same time I was conscious of the heavy financial burden in the way of investment which a programme of 300,000 houses a year would mean to the country's economy.

We have done that. We have carried out that programme for nine years. The nation's economy has taken it in its stride thanks to the Conservative financial policies which have been followed in the last nine years. There is no doubt about that. As my right hon. Friend the President of the Board of Trade said when he followed the right hon. Member for Huyton, there are many bull points in the British economy at the present time.

Much of the debate has been devoted to the need for increasing the export trade. My hon. Friend the Member for Walthamstow, East (Mr. J. Harvey) made what I thought was an original suggestion, although I see practical difficulties in it. He suggested that during the Summer Recess this Chamber should be given over to meetings of the Common- wealth Finance Ministers. I am not certain how they would react to that, but when my hon. Friend made that suggestion I wondered whether the Economic Consultative Committee, which I understand was formed in Montreal two years ago, had met as often as was intended, and had been as effective as it might have been. I should have thought that that Consultative Committee might indeed be the instrument which my hon. Friend had in mind.

A very much bigger point was made by my right hon. Friend the Member for Thirsk and Malton (Mr. Turton) and his hon. Friends who have tabled an interesting Amendment to the Address. That Amendment calls for a complete recasting of fiscal policy. It calls for such a recasting that this country would be entitled to make reciprocal agreements not only with other member nations of the Commonwealth, but with any other country as well, reciprocal arrangements which I should have thought would inevitably involve some kind of tariff discrimination in favour of this country or that.

It is an interesting thought, but I wonder how it fits into the present picture which is one of endeavour by the Government to bridge the gap—a narrow one as I hope and believe—between the six nations of the Common Market and the seven of the European Free Trade Area. I wonder whether this proposal for reciprocal tariff preferences would help to bridge that gap, or whether it would make the situation between the Six and the Seven more difficult than it is now.

Mr. Turton

Would my hon. Friend bear in mind that the E.F.T.A. Agreement conflicts with the provisions of G.A.T.T.?

Mr. Maudling

indicated dissent.

Mr. Turton

Yes, because it excludes agricultural products. Any negotiations between E.F.T.A. and the Commonwealth and the Common Market which provided for the retention of Commonwealth free entry would require an additional provision in G.A.T.T.

Mr. Stevens

Yes. As I understand it, the Amendment goes further than the Commonwealth, which I should have thought was right outside G.A.T.T. I should not have thought that it would be helpful in bridging the gap which exists at the moment between the Six and the Seven. It may be that my right hon. Friend would rather see a halt in the negotiations taking place at the moment to bridge that gap, and would like to see a complete recasting not merely of this country's tariff arrangements but the tariff arrangements of the Commonwealth as a whole. I think that it is an interesting suggestion and one which requires considerable thought before we give full support to it.

Hon. Members on both sides of the House, and in particular the hon. Member for Dewsbury (Mr. Ginsburg) in the early part of his speech, referred to technical and scientific education. There is definitely something that requires investigation there.

I should not have thought there was any doubt that we are traditionally a conservative country. A fortnight ago I was very struck by an advertisement of Vauxhall Motors, which said, in effect, that for the first time in this country there was a medium-priced British car available with fully automatic transmission. I believe it went on to say that it was "tried and proven". Of course it is tried and proven; it has been adopted as standard in medium-priced American cars for the last five or six years. This country is too conservative. We originate some good ideas but we are so anxious to maintain the British reputation for quality that we are inclined to test them for too long. We are inclined to forget that the wind of change blows even more freshly today than it did fifteen years ago.

Hydromatic transmission consists of two British inventions—the hydraulic coupling, which has been used in industry for fifteen years, and the epicyclic gearbox, which was designed for the first British tanks in the First World War, in 1915, but only now, in October, 1960, does Vauxhall Motors—the subsidiary of an American company—introduce it here, when American cars have already had it fitted for five years.

My right hon. Friend the Prime Minister got into trouble with certain businessmen when, not long ago, he said that "exporting is fun." It was interesting to read The Times in the next week or two and to see letters from businessmen complaining of the fearful hardships and difficulties under which exporting is carried out today. They complained about the number of forms which had to be filled up, the absences from home, and travelling over great distances. I feel no great sympathy for them. I recently spent a short time in Canada and saw some of the stations of the Hudson's Bay Company. I have referred to that company before in the House. Its full name is The Company of Adventurers of England Trading into Hudson's Bay. They were the originators of our dollar export trade. They had some hardships to contend with. They sailed across the Atlantic in all kinds of weather in square-rigged ships, and when they got to Canada they did not stay in luxury hotels. The first thing they had to do was to clear the forest in order to build log cabins to live in.

Mr. Douglas Houghton (Sowerby)

Where did the hon. Member stay when he went to Canada?

Mr. Stevens

"The hon. Member" unfortunately went on pleasure and not on business, on an expense account—thanks to a Tory Government. But that is by the way.

That is the sort of hardship which our originators of the export trade had to undergo, and I should have thought that the filling up of eight sets of forms and crossing the Atlantic in the "Queen Mary" or in a jet aircraft, and so forth, were not to be compared with the hardships which those people had to undergo.

There is a natural tendency to sell in the easy home market. The Labour Government dealt with that tendency in a very firm way, which they thought was efficient. The late Sir Stafford Cripps refused to give an allocation of steel to a motor company unless it sold 75 per cent. of its products overseas. We do not do that in the Conservative Party. We prefer persuasion, and such things as the credit squeeze. We prefer to give help by way of the E.C.G.D.

Mr. John Mackie (Enfield, East)

The hon. Member must know what has happened to the motor car company to which he referred.

Mr. Stevens

The restriction applied to every motor car company in the industry.

The Government could do more in 1960 than contemplate tax concessions to exporters. It is a fact that for fourteen years we have been trying to persuade European countries to abandon tax concessions and other subsidies to exporters, and, apart from the practical difficulties, I do not think that we can now turn round and do it ourselves. But the Government could assist in the matter of credit facilities. My right hon. Friend said that we must not start a credit race. We should not be starting a credit race; that race started a good many years ago. It was started by Soviet Russia, and it has been continued with much enthusiasm by the United States. Credit terms, such as we cannot contemplate in a private fashion in this country, are granted by the Governments of both those eountries and I think that we must do something in that way.

Of course, the finest of all ways to help not only the export trade but every other trade would be to reduce direct taxation. The burden of direct taxation has been too high for too long in peace time. I have often said that before. That would help industry not only in this country but in Northern Ireland as well. It would help saving, thrift, and enterprise. In the May issue of the Westminster Bank Review there was an interesting article by Sir Oscar Hobson, a man for whose opinion I think many of us have a very high regard indeed. He said two things which seem to me of great importance. First, where there is a will there is a way. It must be policy to reduce taxation and once it is policy to reduce taxation then reduced taxation will follow. Secondly, so far as means are concerned, he made or repeated the suggestion that the capital financing of nationalised industries should be taken away from below the line in the Budget and that the nationalised industries should be required to go to the market.

Sir Oscar Hobson is a realist and he did not suggest that the Coal Board or the British Transport Commission should do that because at present they are not creditworthy, although they may become so in due course. But he suggested that a start should be made with electricity and gas, and I see no reason why something of that sort should not be done. My right hon. and learned Friend the Chancellor of the Exchequer, who has recently come to this different but equally high office, said not only at the Conservative Party conference at Scarborough but at other meetings since then, that too high taxation discourages hard work and thrift, and I could not agree with him more. Anything I can do to help my right hon. and learned Friend to implement what appears to be his resolve I shall certainly do. I should have thought that to be the greatest possible fillip not only to hard work and enterprise but also the greatest possible incentive to people to save more and to export more as well.

I have very little more to say. I should like to turn to one or two other points in the Gracious Speech. The one dealing with education I have referred to briefly, and one is glad to see that there is to be some variation of the means test for parents regarding university grants. I should like to see the means test abolished altogether and, even more than that, I should like to see the boy or girl who has earned a State scholarship worth £40, £60, £80—whatever the amount may be—retain the money value of that grant. There is nothing of the money grabber about that. It is the highest possible motive for a boy or girl to feel that by their own action and their work and enterprise they have saved their parents something. I think that a great thing and something we should encourage.

I agree with the hon. Member for Dewsbury about the point which he touched on briefly—and which his hon. Friend the Member for Edmonton (Mr. Albu) has touched on many times with great force and ability—the need for more Government assistance for technical and scientific education. I know that in the last four years the Government have done a great deal, but I still think that there is room for more to be done. The difference between the amount which we in this country spend in that direction and the amount which is spent in Soviet Russia is startling and alarming. If we are to maintain the technical lead in the world which we still have at the present time, we have to do something of that kind.

In conclusion, I would say that it is all very well to talk about the Tories being complacent, but I think it quite astonishing that after nine years of Tory Government there should be a Gracious Speech so full of good things. It augurs well for the next fifteen years of Conservative Government.

Debate adjourned.—[Mr. Sharples.]

Debate to be resumed Tomorrow.