PUBLIC INVESTMENT

HC Deb 10 November 1960 vol 629 cc1227-357

Order read for resuming adjourned debate on Question [9th November]: That this House takes note of the White Paper on Public Investment in Great Britain (Command Paper No. 1203) and welcomes the opportunity to debate the financial and economic implications of the programmes set out therein.

Question again proposed.

3.46 p.m.

Mr. Douglas Jay (Battersea)

I beg to move, to leave out from "1203)" to the end of the Question and to add instead thereof: but regrets that the investment programme makes no adequate provision for the expansion of the economy, the relief of local unemployment or the improvement of social services. I, too, should like personally to welcome the Chancellor of the Exchequer to his new but not less controversial job and to express the hope that he gets on well with the Financial Secretary, with whom he had some difference of opinion four years ago.

The Chancellor's speech yesterday seemed to me to show an extraordinary, indeed an alarming, complacency. The right hon. and learned Gentleman never really asked himself the question with which I should have thought that the White Paper on Public Investment surely challenges the House today—why has this country for some years now been suffering an industrial decline relative to our main competitors in the world? Most of the facts, I think, are not in serious doubt. There could be no serious dispute, at any rate, about the first part of the Amendment, which says: … that the investment programme makes no adequate provision for the expansion of the economy … It cannot do that, for it is a standstill programme in what ought to be an expanding economy.

Let us, first, be quite clear about the figures. The Government are setting the total for capital investment by public authorities at £1,730 million. This figure was devised to carry out the decisions of the previous Chancellor last summer to hold back public investment at the then existing rate. Perhaps some hon. Members have been led into thinking that because we are now told that the rate is running at only £1,670 million this total represents an advance. But that is not so, because the White Paper tells us that the performance almost always lags about that amount behind the target.

So, in fact, what this White Paper establishes is a flat standstill on public investment in this country. It follows that unless the Government expect no further rise in the national output in the coming year, public investment as a share of the national income is actually expected to fall. To call that even a stagnation policy would, I think, be a little complimentary.

I should like the Chancellor to answer this simple question. Is it Government policy that there should be no rise in the national income and output at all throughout 1961–62? Or are they deliberately deciding that the share of public investment in the national income should fall still further? It must be one or the other, as I am sure the right hon. and learned Gentleman will agree.

I am sure the House also realises that all the figures in this White Paper of both private and public investment are for gross investment. As the Chancellor more or less made clear yesterday, they include depreciation and replacement and, therefore, they do not represent new investment at all.

It would be much more satisfactory if we could be told, for we do not know what proportion of this total actually represents new investment. I should guess—that is all one can do—that nearly half of the £3,673 million, the gross figure given in the White Paper for all investment in the past year, is merely for depreciation. That means, incidentally, that actual new investment by all private concerns, according to the figures in the White Paper, must be running at not much more than 4 per cent. or 5 per cent. of our gross national income. It is obvious from that that the development of our economy would have been fairly sluggish in these last few years if there had not been a large investment by public enterprise.

It also follows that when the Chancellor told us hopefully yesterday—and it was only a hope—that he expects investment in private manufacturing industry next year to rise by 20 per cent., that represents only a tiny increase in the actual proportion of the whole national income being invested. I am not surprised, in view of all this, that the Government's Motion only invites us to welcome the debate and does not ask us to welcome the Government's White Paper. What Ministers are doing, according to the White Paper, in the sphere where they have real control of public investment is to decide that the already excessively small share of the national income given to investment shall fall still further in the next year when the imperative need is that it should be increased.

If anyone doubts that that is the imperative need, I ask him to turn to the P.E.P. Report, which the Chancellor himself quoted yesterday without telling the House what it says. That Report on Growth in the British Economy, which was published last week, opportunely at the same time as the White Paper, is a far more penetrating survey than anything that the Government have yet published about the present state of our economy. Its main conclusion is that there is precious little growth in the British economy at present and certainly less than in any rival industrial country and that the reason is inadequate and misdirected investment.

The P.E.P. Report gives the percentage of gross national product devoted to investment, and the United Kingdom comes out absolutely last in this particular league table. In the figures for 1957, the Report puts Norway at the top with 27 per cent. as the proportion of national income devoted to investment, Holland with 25 per cent., Western Germany next with 22 per cent., Italy with 22 per cent., France, 18 per cent., the U.S., 17 per cent., Belgium, 16 per cent. and the United Kingdom 15 per cent.

Sir Alexander Spearman (Scarborough and Whitby)

Does that include investment abroad?

Mr. Jay

No. I was coming to that, if the hon. Member will allow me.

Those figures were for 1957. The White Paper makes clear in Appendix II that from 1956 to 1959 there was no increase in the proportion of national income invested; so that means that the share of oar income being invested at the moment is lowest among the major countries. It has not risen since 1956, and on the present policy of the Government it is probably now falling.

The only comment of the Chancellor on this yesterday was to make the point that has just been made by the hon. Member for Scarborough and Whitby (Sir A. Spearman). The hon. Member represents a place which we have all visited from time to time. The point which has been made is that these figures omit overseas investment, but I think that it was not very candid of the Chancellor to make that point without quoting the figures. I think he will agree that annual overseas investment could not possibly be more than £250 million or £300 million at the outside. The total, according to the White Paper, is £3,673 million. Therefore, if we add in overseas investment, it makes only a fractional difference. If a country persistently in vests less of its national income than its rivals invest, one expects it to lag behind and productivity and exports to rise more slowly, and that is exactly what has happened in the last five years.

Another table in the P.E.P. Report which is very illuminating shows the output per man-hour in the O.E.E.C. countries between 1953 and 1957. Again, it shows the United Kingdom last in the race with a 10 per cent. rise over those four years. In France, it was 32 per cent., in Germany 29 per cent., in Italy, 26 per cent. Incidentally, these figures seem to refute the argument we often hear that Germany's and Italy's recovery is due to being able to draw on their unemployed, for these figures make the comparison on output per man-hour and the result is almost exactly the same. Naturally, the effect has been a steady fall in our share of the world's exports ever since 1950 and a persistent lagging of production behind our rivals.

Mr. William Shepherd (Cheadle)

What the right hon. Member says is probably true, but is it not also true that if we compare the populations the gross national product of this country is considerably higher than that of Western Germany?

Mr. Jay

Yes, but it will not be so for much longer if present tendencies go on. That is what ought to concern us today.

I thought that the Chancellor was rather unwise yesterday to push airily aside the whole production "league table," as we have come to call it, with the remark that it all depends on which base year one takes. The whole point is that it does not depend on which base year one takes. My hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) took 1953 as the base year. Since the Chancellor used this argument, I shall take 1950. Since 1950, the rise in United Kingdom industrial production has been 29 per cent.; in the United States, 38 per cent.; in France, 71 per cent.; in Germany, 125 per cent. and in Japan and the Soviet Union certainly over 200 per cent.

If the Chancellor does not like taking 1950 as the base year, he could look at the P.E.P. Report, which will take him back to 1938. If we do that we discover a disturbing result, that since then the gross national product in Germany and the United States has more than doubled while that of the United Kingdom has increased by only 35 per cent. That justifies the considered comment of the P.E.P. Report: A continuation of this poor economic performance would leave Britain with a lower standard of living than several other European countries within a few years. Indeed, it would be the first time, I suppose, for a hundred years that the standard of living in this country had fallen behind that of any major European country. If these trends went on it would be less than twenty-five years before the Soviet Union might actually overtake us in our standard of living.

The hon. Member for Blackpool, North (Sir T. Low) yesterday said that this was not stagnation. If he thinks that, I think he ought to look at another part of the story, the performance of United Kingdom exports since 1945. In the first five years after the war the volume of exports more than doubled. From 1950 to 1959, the volume of United Kingdom exports has increased by only 11 per cent. That was in nine years, while those of France rose by 74 per cent., those of the United States by 36 per cent., and those of Japan by more than 100 per cent. Naturally, as a result, since 1950 our share of world exports of manufactured goods has gone down from 25.5 per cent. to 17.3 per cent. last year.

If we look at these figures dispassionately and not too complacently, we find it impossible to avoid the conclusion that our exports have been held back, not just by lack of selling effort but also because of sluggish investment at home. What is the real reason for our poor investment record, which, in turn, has slowed down everything else? I think that there is no mystery about this. It is the persistently deflationary policy which the Government have followed because they dislike all planning and controls and they know of no other method of getting the country's balance of payments under control.

Whenever production or investment begins to rise, the balance of payments gets out of hand in a few months, and we have all the familiar restrictions like this White Paper and the 5 or 6 or 7 per cent. Bank Rate clapped on. It is only now one year in every four that production is allowed to rise at all. We have had two such years in the last seven, 1955 and 1959, and, by a coincidence, they have both been General Election years.

Barely twelve months after the recovery began in the spring of 1959 it came to a stop in the spring of this year, and industrial production has stagnated—that is the only word one can use—for the last six months. Incidentally, the only way in which the President of the Board of Trade was able to argue last week that we are doubling our standard of living in twenty-five years was to omit to tell the House that the terms of trade had moved 12 per cent. in our favour since 1954, when this exercise was supposed to start, and, incidentally, 25 per cent. in our favour since 1951.

The P.E.P. Report, in a perfectly blunt statement of the cause of the trouble, says: Government measures to reduce the pressure of demand by restrictive credit policies in the past have slowed down the rate of growth. It is worth looking again at what has happened in the past year. When the Government a year ago, in a fit of optimism, swept away almost all remaining import controls even on manufactured goods like cars, refrigerators and television sets, we warned Ministers that they were acting prematurely, and that they were taking risks with the balance of payments, What has happened in the last twelve months? Imports of manufactured goods in the first nine months of this year are 44 per cent. above the first nine months of last year, whereas imports of food and raw materials have risen by only 7 per cent.

That is the real cause of the balance of payments difficulty this year—although I do not think the Chancellor of the Exchequer will disagree—and not any sharp fall in exports. What do the Government then do? They do not directly check the imports. They clap on general hire-purchase restrictions, credit restrictions, and a 6 per cent. Bank Rate. The President of the Board of Trade made a very revealing remark about this last week. He said that the purpose of hire-purchase restrictions was Ito restrain imports. We are not to be allowed to have imports, because we cannot afford them. But the Government choose the method of stopping them which inevitably brings stagnation to home production at the same time. That is precisely what has been happening on and off during the last five years.

Look, alternatively, at the effect of the high Bank Rate which is creeping ever higher if one considers it as a trend over the last five or six years. The Government, having abandoned all physical controls, are more or less bound to rely on this. I accept the Government's view that the high Bank Rate of last June has effectively stopped expansion during the last four months. What we have done is to suck in a lot of hot money and covered our long-term lending abroad by this expensive and short-term borrowing, which, I should have thought, was an example, if ever there was one, of borrowing short and lending long. The sum total effect is that we have concealed not cured, our balance of payments difficulties at the expense of slowing down investment in the home market.

The other reason—I am trying to analyse the Minister's motives—why the Government have slowed down the whole economy in the last few years is the fear of rising prices. Ministers keep on boasting that we have had stable prices for the last few years, but import prices have been stable, or, indeed, falling, in the last twelve months. Today, they are actually 10 per cent. below 1957, although the cost of living is 4 per cent. above it. That is why the cost of living has been stable in other countries in the last two years. But the remarkable thing is that in Germany for the last two years the cost of living has been stable and production has been rising by 10 per cent. per year at the same time.

I think that Ministers are getting a little out-of-date in continuing to utter these battle cries about fighting inflation. There is not a great deal of evidence of inflation in the world today. There may well be a wind of economic change blowing in the world today which smells much more like deflation. There is a world surplus of ships, of oil, of fuel, and of quite a few other things. Therefore, I wonder whether the Government should not be looking out to ensure that a deflationary influence does not hit this country in the next year. If it does, I am sure that the right hon. Gentleman realises that it will be our shipbuilding areas which will feel the effect of that first, and feel it very grievously.

The other cause of our flagging total investment is the Government's partisan, bias against all public enterprise, and, therefore, public investment. I do not believe that the right hon. Member for Sutton Coldfield (Mr. G. Lloyd) shares that view quite to the same extent as some of his colleagues, but public investment is 40 per cent. of the total, and if one keeps cutting it back, of course, one holds back the whole development of the nation.

The worst example of this is the Government's treatment of the railways. There is to be a cut of £25 million in the modernisation programme, unless the Chancellor of the Exchequer tells us today that this has again been cancelled. The P.E.P. Report agrees entirely with the Select Committee that the modernisation programme ought to go forward. Incidentally, it also agrees that the main trouble with nationally owned transport today has been continual interference by Ministers which has prevented charges and fares being raised. I hope to goodness that that lesson has been learned at last.

The Chancellor, quite rightly, said yesterday: … it is uneconomic and, indeed, inefficient to attempt either to accelerate or to retard a project once it has begun."—[OFFICIAL REPORT, Wednesday, 9th November, 1960; Vol. 629, c. 1056.] Does he apply that to the Euston-Manchester electrification project? May we have an assurance tonight that this scheme, on which millions of pounds of public money have already been spent, will not be either stopped or retarded? We on these benches want to see public money economically and productively spent. I should have thought that there could be no greater waste of money than to spend millions of pounds of electrifying a quarter of a main line and then giving up the whole scheme.

The truth is that public investment, and the social services, are both being starved of resources because general stagnation is the only method which the Government can think of to keep the economy in hand and under control. Do hon. Members realise that investment in housing and the social services today, in volume, is taking a smaller share of the national investment than they were taking even before the war? This is not total expenditure, but total investment expenditure on housing and social services. The proportion is down from 42 per cent. in 1938, to 29 per cent. in the years 1948 to 1958. That, I think, is clear evidence that there is political bias here which is being allowed to damage our social services—housing, education, and health, in particular.

I will say only this about housing, because we debated that very recently. I wonder whether hon. Members realise that the proportion of our national investment devoted to housing has dropped from 26 per cent., in 1953, to 17 per cent. last year? There has been a heavy drop in the proportion of our resources going into housing. Incidentally, it is a smaller proportion today than one finds in Italy, Belgium, Sweden, France, or Germany, and that explains the housing shortage which we encounter in London and some other areas. When we look at the White Paper we find that housing gets virtually no increase at all in the allocation, which means a drop in its share of the national income.

The authors of the P.E.P. Report argue that education and health have been the two worst neglected social services and the services most urgently needing bigger investment at present. Here they are speaking strictly of investment in those services rather than total expenditure. Many of us feel that a very large part of total expenditure on education and health is, in the truest sense, investment in manpower and human capacity for the future.

Ministers may boast that in the White Paper they are, for once, raising the investment programmes for education and health by £10 million each next year. That is something, but it was a rather ironic comment on Tory prosperity and the way it is developing that in the same week as the White Paper was published an article appeared in the Investors' Chronicle which revealed that Mr. Charles Clore's personal fortune has risen this year by £14 million. Therefore, there are £10 million more for health, £10 million more for education, but £14 million more for Mr. Clore. The Investor's Chronicle calls this a British record. I call it private opulence in the midst of public squalor, if ever there was such a case.

There is another form of public investment where I think there should be a little expansion. I am addressing these remarks to the President of the Board of Trade, but perhaps other hon. Gentlemen will listen. I refer to the Government's factory building programme and investment in new industries in areas of unemployment. The White Paper gives figures for capital investment on factory building, presumably Government-financed factory building, in areas of unemployment, but it does not give totals for loans to private firms, such as the motor car manufacturers, for the purpose of building factories. The House should have those figures, at any rate in totals, if not the individual figures for each firm.

The President of the Board of Trade has been boasting of his success with the Local Employment Act. I certainly congratulate him on having, after sustained pressure from these benches, entirely reversed the policy of his two predecessors—the present Ministers for Education and Aviation—who suspended the distribution of industry policy altogether from 1957 to 1959.

We also very much welcome the fact that the big motor car firms are, with a good deal of encouragement and help by way of financial assistance from the Government, going forward with their schemes for expansions in these areas, which will mean so much to Merseyside, South Wales, and Scotland in particular. Are the Government sure that the best way to encourage these firms to go ahead with their schemes is to provoke as deep a recession in the motor industry as they are doing at present?

The President of the Board of Trade is also a little self-satisfied about his efforts to date. He must not think that the whole job of combating local unemployment has yet been achieved. First, it is deplorable that fifteen years after the war there is still 6 per cent. unemployment in Northern Ireland and 3 per cent. in Scotland—and this at the most favourable time of the year. This means that even at the moment there are still 100,000 unemployed in Northern Ireland and Scotland. These are the areas where expansion ought to start first, and upon which the President of the Board of Trade ought now to concentrate his efforts, The Government, and the Board of Trade in particular, should be giving serious thought to what is to happen in the shipbuilding areas. If a shipbuilding slump does hit us next year, the situation in Belfast, on Clydeside, and on the North-East Coast might very quickly become serious. At present, world shipping and shipbuilding statistics are balanced on a knife edge. If world trade does not rise over the next three months, as it well may not, a deflationary effect could hit the shipbuilding areas very quickly.

Is there any reason why the Government should not go ahead now and build advance factories in the areas which, as we all know extremely well, would be the first hit by such circumstances as that? The Government should build not just one factory in Jarrow, which is very good, but more advance factories in all shipbuilding areas.

The Government still allow far too much commercial development in the London area. Even the figures of factory building, if the London region's percentage of total approvals this year is compared with recent years, are not very good. Perhaps this evening the Chancellor of the Exchequer will tell us the up-to-date figures showing what proportion of factory building the London and South-Eastern region has been getting. There is not enough restraint there, but with office building there is no restraint. This is the main reason for the housing, transport and other shortages which are becoming worse and worse in the London areas.

In one of the President of the Board of Trade's most airy and blithe moments last week he spoke of the office building boom as a few offices and regarded it as mere chicken feed. Mr. Clore and Mr. Cotton obviously do not regard it as chicken feed. It is worth noting that the shares of Mr. Cotton's main company have risen by 1,100 per cent. since 1955.

Mr. G. R. Mitchison (Kettering)

Cotton feed.

Mr. Jay

Cotton feed, as my hon. and learned Friend says.

That is perhaps why Mr. Clore has joined Mr. Cotton. Whatever it is called, it certainly should not be called chicken feed. It is snot surprising that the Home Secretary, in a moment of unusual Freudian candour for him, said the other night that the Rent Act was yielding high dividends. It certainly is, and it is yielding capital gains at the same time.

Mr. Shepherd

It is not right to make that statement, because neither Mr. Clore nor Mr. Cotton is concerned with residential property.

Mr. Jay

Surely the hon. Gentleman knows that one of the causes of the rise in the value of office property in London is the Rent Act, which has, at the same time, raised the value of land and residential property. Even if the hon. Gentleman does not realise that, Mr. Clore and Mr. Cotton realise it only too well.

Yesterday, the Chancellor of the Exchequer rather oddly tried to imply, when discussing wages and dividends, that, going back more than a year or two, wages and salaries have been rising just as fast as dividends. He said that in these rather vague words: … if we take a run on recent years the percentage rise in company profits comes out much the same as in wages and in salaries".[OFFICIAL REPORT, 9th November, 1960; 629, c. 1051.] The right hon. and learned Gentleman then said that that applied to dividends also.

However, the right hon. and learned Gentleman's predecessor, answering a Question of mine on 22nd March of this year, said that, going back seven years between 1952 and 1959, wage rates had risen by 42 per cent. and dividends by 78 per cent. Since 1959, as even the hon. Member for Cheadle will agree, dividends have risen by about a further 30 per cent. Therefore, taking the figures for six, seven, eight, nine or ten years past, there is no question that dividends have been rising faster than wages or salaries.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

My comparison was between wages and profits.

Mr. Jay

The right hon. and learned Gentleman knows full well that the relevant comparison is between dividends and wages, because that is what people actually receive and what those engaged in wage bargaining are always concerned about.

Mr. Lloyd

The right hon. Gentleman first referred to something I said yesterday, and then went on to allege that a comparison I had not made was wrong. My comparison was between profits and wages over a run of years.

Mr. Jay

If the right hon. and learned Gentleman looks at the OFFICIAL REPORT, as I did this morning, he will see that his next sentence was: To some extent the same considerations apply to dividends."—[OFFICIAL REPORT, 9th November, 1960; Vol. 629, c. 1051.] If the Chancellor is withdrawing those remarks, I shall be glad to accept it. The truth is that profits and dividends have risen much faster than wages and salaries in any recent period.

The Chancellor of the Exchequer also said that dividends and wages are only just coming back to the pre-war ratio, as if he thought that this defended the present trend. Is it the policy and purpose of the Government to restore the pre-war distribution of wealth? The right hon. and learned Gentleman is replying tonight to this debate, so he will be able to answer that question. If that is not the Government's purpose, what was the point of that remark?

We have often argued, in the House and elsewhere, whether economic expansion or social justice is the first priority, or whether perhaps one can contrive to have both at once. The Government are achieving neither. For that reason, they deserve the confidence neither of the House nor of the country.

4.21 p.m.

The Economic Secretary to the Treasury (Mr. Anthony Barber)

In view of the course of the discussion yesterday, I think that it might be helpful to the House if I were to say a word about the form of this two-day debate.

The House will remember that last July my right hon. Friend the Home Secretary made a statement about the procedure for the discussion by the House of public expenditure, and that at that time he dealt both with public investment, particularly in the nationalised industries, and also with public expenditure generally. Then, we announced our intention to publish in the autumn the White Paper that we are discussing today. In addition, it was also intended to have each autumn a debate on public expenditure generally, not merely on public investment.

The occasion for this was to be a report by the Estimates Committee on the variations in the Estimates compared with the previous year. It was not practicable to have such a report this year, so we are having only the first debate. The consequence is that these arrangements, for yesterday and today, are necessarily provisional and, indeed, to some extent an experiment. Next year, we would expect that there would be two debates on the two separate White Papers.

As my right hon. and learned Friend the Chancellor of the Exchequer pointed out yesterday, this White Paper is something quite new. It sets out in public for the first time, six months before the beginning of the financial period in question, the projected expenditure on all these public investment programmes for the next year. Although it is concerned primarily with the one year, the result is that Parliament will be able to follow the figures forward year by year, and, whatever view may be taken about the adequacy or inadequacy of the amounts which are involved, I think that it will be generally agreed that this new venture will represent a real contribution to public knowledge in a field which is basic to our economy, and is certainly a field which affects every individual in the country.

Mr. Jay

I agree with the hon. Gentleman about that, but would he consider specific steps whereby we could be told what proportion of these figures represent depreciation and new investment in future?

Mr. Barber

Certainly, I will see whether some approximate proportions can be obtained for the right hon. Gentleman.

For the purposes of this White Paper, public investment is defined as investment on public undertakings; that is to say, the central Government, local authorities and public corporations, such as the nationalised industries, and it represents the capital work done by these bodies. Those hon. Members who have looked at paragraphs 11 and 12 of the White Paper will have seen that this capital expenditure is controlled by the Government in a variety of ways, and this matter of control seems to me to be of crucial importance. In some cases, the control is of necessity on a somewhat loose rein, and in others, the expenditure is straight Supply expenditure and is, therefore, controlled in the ordinary way.

Mr. Jack Jones (Rotherham)

Can the hon. Gentleman tell the House why there is no reference whatever in the White Paper to public moneys now being expended on the steel industry, both the part which is privately owned and that which is publicly owned? Why is there no mention of one of the country's most important industries?

Mr. Barber

The short answer is that it does not fall within the category of public investment as defined for the purpose of this White Paper. If the hon. Gentleman really wishes to know the answer—and I think that he was not here yesterday—he will find that my right hon. and learned Friend dealt with this very point when he addressed the House.

Mr. Jones

Steel?

Mr. Barber

Yes, he mentioned steel, also. It would save the time of the rest of the House if the hon. Gentleman would look at the OFFICIAL REPORT. He will find that my right hon. and learned Friend explained why these were not included.

A large part of the expenditure to which I was referring is financed by the Exchequer—almost half—and it is financed both above and below the line. For much of the expenditure which is financed elsewhere, such as some of that which is financed by local authorities borrowing in the market, the service is aided by government grant, and, in any event, the Exchequer is the lender of last resort.

The Motion refers to the economic implications of the programmes which are set out. Public investment of about £1,700 million a year cannot be considered in isolation from the state of demand in the economy or from the resources available, and I, do not think that the right hon. Member for Battersea, North (Mr. Jay) would dispute that. It simply is not enough to conclude that investment in this project or that project is socially desirable. At the same time, we must recognise that once we have made a start on certain of these projects it is virtually impossible to make significant cuts, even if the state of the economy might seem to demand it.

Several hon. Members referred in yesterday's debate to the element of continuity in these great investment programmes, and they were certainly right to do so, because, although the White Paper is in terms concerned with only one year, the effect of agreeing to a level of public investment in any one year is to enter into broad commitments for the years that follow. It therefore follows that one of the essential features of the programmes that we are now discussing is that they are programmes extending over a long period in time and that this applies to all parts of the public sector.

Mr. Harold Lever (Manchester, Cheetham)

Does not that argument that we cannot readily interfere with long-term capital planning in publicly-owned industries reinforce the complaint that if we superimpose upon that a sudden stimulus to domestic consumption, because a General Election happens to be pending, it is particularly damaging to our economy, and particularly an object for contempt for those who undertake it?

Mr. Barber

It is for the hon. Gentleman to form his own view about the motives for doing this.

Mr. Lever

I have done.

Mr. Barber

I have not heard from my hon. Friends any complaints about excessive consumption, and certainly did not hear any in my own constituency at the time of the General Election.

If I may deal with what is, after all, the important matter of this debate—public investment—I was saying that we cannot simply turn the tap on or off, as we think fit, just because it may seem in the circumstances to be desirable in the interests of the economy. It seems to me to be essential to any realistic consideration of public investment to realise that from the time that a decision is taken to go ahead with a particular capital project, a period of months or, in many cases, of years, will elapse before substantial expenditure is incurred.

Therefore, it follows that to secure any effective control of public investment it is necessary to consider the implications for a very long way ahead. Of course, the need to look far ahead is even more apparent when we begin to note that much that is financed by public investment will, in the end, inevitably result in increased current expenditure.

The right hon. Gentleman, in his speech, referred to this question of varying the volume of public investment, and I certainly agree with him that it is a very important one. I suppose that most people, and certainly, I am sure, the right hon. Gentleman himself, who is better versed in these matters than most hon. Members, have thought about the question of regulating the level of economic activity, and have been attracted to what seems an obviously sensible idea. It was certainly the general experience in the pre-war recessions that the biggest fluctuations in the economies of advanced countries took place in the capital goods industries.

This was because orders to these industries depended so much on whether the expectations were for expansion or recession. Therefore, people asked, what could be more sensible, when the Government were directly or indirectly responsible for a large part of the total investment of the country, than to vary it up or down, so as to keep the total investment moving forward smoothly, and thus reduce the size of the whole problem.

It is probably true to say that this idea was generally accepted, and variations in public investment according to the state of business generally have been sought by both Labour and Conservative Governments since the last war. But, as the White Paper points out, experience since 1944 has led us to think that there are more difficulties in all this than at first seemed likely.

The main point is concerned with the time element. It used to be said that a trade cycle took about seven or eight years. Now, because Governments in all advanced countries have learned much more about the factors that control economic activity, the period has shortened, and I would think that today, from peak to peak, the typical cycle is more like four years or even less. At the same time, the extent of the swing—that is, the change of activity between the high points and the low points of production—is very much smaller. This is essentially the reason why it has become necessary to reconsider the contribution to economic stability that can be made by variations in public sector investment.

In the first place, it takes an appreciable time to identify with any degree of certainty the circumstances that point the need for a change of policy. Secondly, the plans that it is necessary to reconsider are often concerned with very large and complex undertakings. Finally, of course, there is the time needed to start up or slow down changes in the rate at which the work is being done. Hon. Members on both sides will probably agree that it is not so much that things cannot be stopped or started in a hurry—they can be. I have no doubt that, if we were determined to do so, it could be done.

The hon. Member for Newton (Mr. Lee) yesterday seemed to take quite a different view from some of his hon. Friends. He seemed to think that there was something inherently bad in seeking to vary the level of public investment according to the state of the economy. I can only say that, once again, he seemed to be out of line with his colleagues, who certainly subscribed to the policy of the 1944 White Paper. Indeed, I always understood that that had been part of the policy of the Labour Government. I would say that the idea of making compensatory changes in public investment is still a sound one, but that there are limits to what can be achieved by those changes.

Perhaps I may now turn for a few moments—

Mr. Bruce Millan (Glasgow, Craigton)

Before the hon. Gentleman leaves that point, this seems to be the end of the policy described in paragraph 10 of the White Paper of using short-term adjustments in the level of public investment. Is not what he now says a condemnation of the idea of attempting these short-term adjustments in which the Government indulged, for example, in 1957—to damp down the economy—and then, in 1958, just when the 1957 measures were taking effect, to stimulate the economy again? Is not this now an absurd policy? Is that what he is now saying?

Mr. Barber

I thought that almost the last words I uttered were that, while it is still sound to make these changes, there are limits to what can be done, and I would have thought that most people—except, perhaps, the hon. Member for Newton—had changed their views as a result of the experience over the last few years since the end of the war; in other words, that Members of the Government—and Members of the Opposition, too—would not now subscribe to the views contained in the 1944 White Paper on employment.

The first criticism in the Opposition's Amendment is that the investment programme … makes no adequate provision for the expansion of the economy … The right hon. Member for Battersea, North said, in effect, that the programme was too small. The hon. Member for Newton actually referred yesterday to public investment continuing to be cut … repeatedly …"—[OFFICIAL REPORT, 9th November, 1960; Vol. 629, c. 1067] Those hon. Members who heard the hon. Member for Newton will remember that he referred to White Papers and red eyes, but, on this occasion, I think that his eyesight must have failed him completely.

What are the facts? Ten years ago, the cost of the public investment programme was only half what the Government now propose. Even at constant prices, the present programme is up by 35 per cent. and, as a proportion of the gross national product, in every single year from 1951 to 1959 it has been higher than it was in 1950.

In any case, what is meant by … adequate provision for the expansion of the economy …"? The great bulk of public investment, so far as it affects our capacity to produce, is directed towards providing the basic services on which industry as a whole depends. The right hon. Gentleman seemed to me to suggest that we have only to increase public investment for it automatically to follow that there would be an increase in industrial expansion, but to provide enough of all these basic services does not, of itself, give a guarantee of expansion. I should have thought that if we were to provide too much of these things we would be checking expansion in another way, because we would be diverting resources that would have been better used in other forms of productive investment—

Mr. Jay

The Economic Secretary will agree—I am sure that the Financial Secretary would—that if we step up public investment in any year, and if other things are equal, there will be an expansionary effect on the rest of the economy.

Mr. Barber

Yes, but the point that I was making, which I thought was at variance with the right hon. Gentleman's view, was that it does not follow that if we increase public investment we are doing the best thing possible for the economy as a whole in order to increase production. In other words, one must have a balance.

It is simply not true to suggest that we are today in danger of throttling the expansion of the economy because of a shortage of these basic services. At least, I hope that the Opposition share our satisfaction in having moved some way from that painful period of fuel shortages and electricity cuts that we used to experience some years ago. [HON. MEMBERS: "Oh."] It is all very well for right hon. and hon. Members opposite to criticise. Their memories may be short, but other people's are not quite so short.

The hon. Member for Sunderland, North (Mr. Willey) last night stated quite baldly—

Mr. Austen Albu (Edmonton)

Are we not now in a period when, instead of fuel shortages and electricity cuts, we have bottlenecks on our roads, and a decaying railway system?

Mr. Barber

I think that everyone will agree that we are doing very much better than we did in the past. [HON. MEMBERS: "Oh."] Furthermore, I do not doubt that the trend will continue.

The hon. Member for Sunderland, North said that the job of the Government is to use the accelerator. I suppose that it is all very well to state that baldly if the intention is to drive immediately in the direction of Carey Street, but that is something that this Government certainly do not propose to do. In the end, the governing factor must be the total load on our resources.

I was a little surprised at the right hon. Gentleman who, if I understood him aright, brushed aside very airily the danger of inflation at present. I would have thought that practically all the present indications are to the effect that, to put it mildly, the economy is still running at considerable pressure. The size of the public investment programme has to be decided in the knowledge, not only that the aggregate has been rising very fast but also that it would be very easy indeed for such a head of momentum to develop that the total might sweep forward and seriously overload the economy.

Anyone who claims that the aggregate referred to in the While Paper is too small, really has to show which other part of the national economy should be contracted to make room for public investment. Should it be private investment? Should it be consumption? Should it be exports? The right hon. Gentleman has not told us where he would get the extra resources.

Mr. Jay

I get the extra resources by bringing into employment the people who are not working now, particularly in the areas I mentioned.

Mr. Barber

I think the right hon. Gentleman will certainly agree that in the light of what his right hon. Friend the Leader of the Opposition has said about full employment in the past, we have got full employment now to within 1.5 per cent. of the total of the working population of the country. It was my right hon. and learned Friend who mentioned yesterday that in the last twelve months alone we have absorbed another 400,000 people into our working population. That is not a bad record. One thing that can be said for certain is that, if the economy did become overloaded, the impact would immediately be felt at the most critical point, and that is the balance of payments. I think the right hon. Gentleman recognised that fact in his speech. He would be a rash man who would say that in present circumstances we can afford to increase the total, which has increased over the last two years by some £200 million.

The next point to be considered is that of balance. Is the aggregate of expenditure laid out in the right way? There was considerable discussion about this yesterday in connection with the nationalised industries. I should like to consider the rest of the investment programe. There can be no finality in a matter of this kind because there is an immense variety of circumstances surrounding each individual programme. There are basic physical factors which must be faced, such as the number of school children requiring school places, pressure upon housing resources, the long-term needs of the community such as water supplies and so on. All these require a balance of social policy. In other words, it is a question of priorities.

Judging by what was said in the debate yesterday, I do not doubt that for every item in the programme there will be somebody who will argue that the allocation should be greater, and there will perhaps be someone who will say that some of the items should be less. But if it is accepted that the aggregate is as much as we can prudently undertake, then those who want more under one heading must be prepared to say where they think less should be spent.

In drawing this balance, I want to emphasise once again that these are programmes many of which extend over a long period of years, and in which it takes a long time to transfer resources from one programme to another. It is certainly not the case, as the Opposition have suggested in their Amendment, that at the present time we are neglecting the social services. Indeed, one only has to look at the White Paper itself to find a catalogue of the most formidable expansions. Yesterday my right hon. and learned Friend referred to some of the main programmes in the expansion of the social services. He referred to hospitals, schools, universities, technical colleges and so on. I do not want to go over that ground again. I would remind hon. Members who may not have been in the Chamber yesterday that the figures he gave show that there are very large increases under each of these heads and, indeed, a rapid tempo of growth.

I should like to emphasise that when one looks through the White Paper, besides these very large and expanding programmes there are also very spectacular expansions in the relatively small programmes.

Mr. Mitchison

Before the hon. Gentleman leaves the major social services, perhaps he would deal with housing?

Mr. Barber

My right hon. and learned Friend yesterday dealt with housing. He said: … first, there is the massive programme of housing."—[OFFICIAL REPORT, 9th November, 1960; Vol. 629, c. 1055.] He gave details and then referred to the rest of the social services investment. I do not see much point in my repeating that. I was trying to save time. It is all there in the record.

Turning to some of the comparatively small programmes, if we take mental health services building in England and Wales, the figures are £1.3 million in 1959–60 and £4.2 million in 1961–62; welfare, which is mostly old people's homes, £3.1 million in 1958–59 and £7.8 million in 1961–62. There is £3 million worth of new work for investment in the Youth Services. In addition, there are prisons, police and fire services; I have the figures here. I cannot see how anyone can read this White Paper in detail, the big items and the small items alike, and fail to be impressed by the universal growth in the total services investment. On this aspect of the White Paper the Opposition Amendment simply does not make sense.

If I can refer to the third leg of the Opposition Amendment, which deals with local unemployment—a matter with which the right hon. Gentleman also dealt—I can only say that one must assume that those who drafted this Amendment were out of the Chamber when the President of the Board of Trade spoke about it at length last week in this House. I will not go over the whole ground again, but in view of the fact that this Amendment stands on the Order Paper I think that I should remind the House of the basic facts. There are now 90,000 additional jobs in sight in development districts—50,000 in England, 30,000 in Scotland and 10,000 in Wales.

The right hon. Gentleman referred a short time ago to factory building. Hon. Members will see in the White Paper that Government expenditure on factory building by the Board of Trade was £1.5 million in 1958–59; it had increased to £5.5 million in 1959–60 and £9 million in 1960–61. Next year the estimate is £14 million, The right hon. Gentleman asked about other finance, and I think he was probably referring to B.O.T.A.C. If he was, I can tell him that building grants of £4 million have been offered, and financial assistance offered by B.O.T.A.C. totals £12 million.

Mr. Jay

Does that include grants to all the motor car firms?

Mr. Barber

Yes, I think that is so. They come under B.O.T.A.C. At any rate, these policies, with which my right hon. Friend the President of the Board of Trade dealt in detail the other day, are already bearing fruit. For example, the level of unemployment in Scottish development districts fell from 5.1 per cent. in October, 1959, to 4.3 per cent. last month. In South Wales as a whole there was a similar fall from 3.3 per cent. in October, 1959, to 2.4 per cent., and on Merseyside from 4.3 per cent. to 3.6 per cent. The right hon. Gentleman said that we must not take the view that everything has already been achieved. We do not do that. We look upon this as only a beginning. We certainly hope that unemployment in these areas will continue to fall as the projects which have been approved get under way.

In following this policy of brinaing work to areas with relatively high unemployment, our aim must be to promote sound industrial development in the areas. Such a policy, from the point of view of the health of the economy and from the point of view of the public investment, is an economical one. In the first place, it ensures that social capital does not go to waste. In the second place, an even spread of prosperity throughout the country makes it easier to apply measures of economic policy which any Government would have to apply for maintaining a high level of employment uniformly all over the country, and consequently involves less hardship for the individuals concerned. Of course, it is true that there are limitations to this policy. It would be ridiculous and against the national interest to push it to the point where efficiency suffered or where a firm's capacity to export was prejudiced.

To sum up, there are in this White Paper a large number of capital expenditure programmes. Some are the direct responsibility of Government Departments, some of local authorities and some of public corporations. Most of them are in their very nature long-term programmes which will make an impact on the level of public investment in future years. Many represent a large number of individual projects, like building schools, houses and welfare centres, while others represent a few large projects such as the motorways. However, the White Paper sets them all out so that the House can judge them.

Yesterday, my right hon. and learned Friend considered the aggregate of public investment in the setting of the national economy. I do not believe that anyone who values the price stability which we have enjoyed over the last two or three years and who is alive to our overseas trade position can fairly say that we ought to do more at present. On the reference in the Amendment to local unemployment and social services, I can only say that the House is being asked to express a view which runs clean counter to the facts.

Mr. Jack Jones

I interrupted earlier to ask why it was that the White Paper did not refer to public and private investment in the steel industry and the hon. Gentleman categorically said that the Chancellor of the Exchequer referred to that matter yesterday. There are 22½ columns of their speeches in HANSARD, but neither the Chancellor nor the Minister of Power mentioned the word "steel". Was that a studied insult to the people who, this morning, published production figures which were an all-time record?

Mr. Barber

I must say that I thought that my right hon. and learned Friend mentioned it, and I am extremely sorry if I have been mistaken. Perhaps I can briefly explain what the position is. One of the great advantages of White Papers like this is that as we get them over the years we will be able to compare one year with another. The difficulty about the steel industry is that, because it is being denationalised, there is no reasonable comparison which one can make. However, if the hon. Member wants to have any more figures concerning the steel industry—and I should have thought that enough were already published to enable him to make his assessment—I will do my best to get them.

4.52 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

Just before the Economic Secretary began his speech, one of my hon. Friends asked me why I thought this debate was so peculiarly badly attended. I think that the Economic Secretary provided the answer to that, if not to many of the other questions which are troubling us. Yesterday, the Chancellor, in one part of his speech, applied himself slightly more to the problems which are really confronting us. The Chancellor has now made two speeches since it became generally known that he was to take over his present responsibility, one in July about Europe, when he was still nominally Foreign Secretary, and the other yesterday.

Although I have not been an unmitigated admirer of the Chancellor in the past, I thought that in both those speeches his attitude marked a small step forward, particularly from that shown by the President of the Board of Trade. At least, the right hon. and learned Gentleman sounded as if he were aware of the major problems facing us, even though, in neither speech, did he provide any indication that he knew how to solve them. However, at least he sounded as though he wished that he knew how to solve them and that was an advance on the President of the Board of Trade and the Economic Secretary, who sounded as though he had no idea that they existed.

Towards the end of his speech, yesterday, the Chancellor applied himself to the problem of the general level of industrial investment. I would have thought that it could have been agreed beyond question by both sides of the House that while one might produce figures to show that industrial investment had somewhat increased since 1954, as it should have done, there was no doubt that the level of industrial investment was markedly below that of almost all our competitors, certainly sufficiently so to be incapable of providing a basis for a comparable rate of growth.

I do not make comparisons with the Soviet Union, because I do not think that that is a relevant comparison, for a variety of reasons. The comparison is with the rate which has been achieved and which is still being achieved within the six countries of the European Economic Community. If both ourselves and the United States were growing at the rate of the Six in Europe, we need not worry about comparative rates of growth with the Soviet Union, but it is clear that we do not have a level of industrial investment sufficiently high to achieve that—not sufficiently high in proportion to the gross national product.

It is true, as the Chancellor pointed out yesterday, that, within the rather inadequate total level of industrial development, the return in recent years has been rather disappointing. The point which the Chancellor made, and from which I thought he was trying to argue, was that one should not place too much reliance on industrial investment, and that in the last few years the rate of industrial investment had increased substantially more than the gross national product. In fact, it has increased at about twice the rate. But what is the reason for that? The reason is that in the course of the past five years only in one year, broadly speaking, has industry been allowed to operate at anything like its full capacity.

I do not want particularly to make a party point out of this issue, or even necessarily, given their own assumptions, lay the blame on the Government. I am not particularly concerned this afternoon with making party points. Looking back, our economic controversies over the past five years have been fairly sterile and I am not even sure that one can make too much about there being a great divide in British economic policy in 1951—the difference between before 1951 and after 1951. I think that, on the whole, in international comparisons we were doing better before 1951 than we have done since 1951, but that was largely because the level of performance of other countries was much worse in the early post-war days than it is now.

I think that the ingrained national sluggishness from which we seem to be suffering dates not merely from 1951 or 1945, but from thirty or forty years ago, and it is extremely important that we should appreciate that. None the less, the fact remains that the Chancellor cannot merely argue that industrial investment in the past few years has not produced more beneficial results, because the reason is not that money has been poured into industry without effect, but that for five-sixths of the period industry has been operating well below maximum capacity.

On the Government's own assumptions, it may be that there is not much else that the Government could have done about the situation. I do not think that the Government imposed a credit squeeze in 1957 and again in 1960 out of malevolence, or because they wanted to do something which would be difficult for the British economy.

The Government have made three assumptions. The first is that one has to give absolute priority to stable prices at home. Undoubtedly, there is a great deal to be said for that, but I am bound to question whether, in the year 2000, people will be more concerned with the relative purchasing power of the £and the rouble, or with the respective rates of growth in the Russian and British economies in the past fifty years.

The second assumption has been that it is of overwhelming importance to maintain the international strength of sterling. Earlier this afternoon the hon. Member for Scarborough and Whitby (Sir A. Spearman) reiterated the case which the Chancellor made yesterday, that in considering the amount of investment, one must pay regard to the fact that over the past ten years we have invested £2,000 million abroad. Is it reasonable that we should count that as a major factor without any question about whether that investment, or much of it, would have been better directed at home? I am not saying that there is any automatic answer to that, but throughout the period the attitude of the Treasury Bench has been to regard investment abroad as a good thing, in the belief that anyone who challenged it was against the strength of sterling and undermining Britain's international position without facing up to a realistic appraisal of the relative advantage of foreign and domestic investment.

If, at the same time, one takes a highly complacent view, epitomised this afternoon by the Economic Secretary and only too frequently by the President of the Board of Trade, that everything is almost perfect in the British economy at the present time—if one operates on these assumptions—then, no doubt, what the Government have done is to a large extent inevitable.

What seems to me to be essential, if we are really concerned about what sort of performance we are to put up economically in the 1960s, is to ask ourselves why it is that the economy in Britain, apparently uniquely among the major Western European nations, can operate only at any reasonable level of expansion for one year or one-and-a-half years at a time without running into major balance of payments difficulties and having to be restricted, so that even the limited amount of investment that we have is not able to produce its full result. That is the major question which faces us, and I think that it undoubtedly suggests that there is some structural lack of balance in the British economy.

If we take the economies of two countries roughly comparable in size, standard of living and general background—France and Western Germany—both of which have gone ahead strikingly faster than we have in this country over the past ten years particularly, we find that one country has been able to ignore balance of payments difficulties, and the other has not had to face up to them.

Western Germany's economy has been able to expand on the whole almost continuously, without any balance of payment difficulties at all. It has been rather the reverse. It has been piling up surpluses and gold and embarrassing its neighbours by doing so. The French economy has had a different order of priorities from us and has been able to expand almost equally fast by ignoring balance of payments difficulties and not worrying so much about gold reserves and the strength of the franc. Both have bounded ahead, but we have done nothing of the sort.

Placed as we are from the balance of payments point of view, our position is more comparable with that of Western Germany than with that of France. But if we go on without changing anything, with one year's expansion in six, an average rate of increase in the gross national product of only 1 to 2 per cent. a year on the average, the certain prospect is that we shall grow much less fast than almost any other country and our standard of living will fall relatively.

We cannot approach it as the Economic Secretary does. We must challenge the assumptions on which we have been working, and we must be prepared to change our order of priorities. So far as our external difficulties are concerned, I think that we can learn more from Western Germany than from France. There is something wrong with the balance of the economy if, as we go ahead, instead of it getting a better and more competitive export position, we tend steadily towards a situation of balance of payment difficulties.

One of the reasons may be that a good deal of our investment has been misdirected. Whatever the total figure, it may be that a different direction ought to have been applied. But it would be extremely doubtful whether, as some hon. Members suggest, the public sector of investment has had too high a priority within the total. Certainly, to revert again to the French position, the growth in the French economy has been assisted by enormous concentration on the infrastructure which is, broadly speaking, the public sector and the determination to push ahead with investment programmes there, more or less independently of what other difficulties the economy was facing elsewhere.

I would have thought that it would have been sensible for the Government to take greater responsibility for the general shape of the investment programme. The motor industry has gone ahead very rapidly with investment and the Government are using the industry as almost their sole instrument of development area policy, but, at the same time, refusing to take any responsibility at all for looking ahead and seeing what is a sensible level of output for the industry. As the motor industry also, because of its position, is almost inevitably the main recipient of the Government's credit squeeze weapons, it is in a particularly unfortunate position.

One of the questions which I think we ought to face, looking in a fairly long-term way at our problems, is what sort of future we see for our economy and for this country as a whole. It would, I suppose, be possible to say that we did not want a highly competitive economic future—we wanted a rather quiet life. We could, I suppose, say that we have a standard of living which, while not all that exciting, is tolerable and that we do not much care whether Dusseldorf, Rouen or Milan are growing much faster than we are. We are satisfied with what is going on, even though, relatively, we do not go as fast ahead as other countries. This sort of Byzantine approach to world problems would be a terrible approach, but it is completely incompatible at present with the general foreign policy which the Government, and particularly the Prime Minister, are constantly frying to apply. It is one which is completely incompatible with a view of major British influence in the world.

Furthermore, I am extremely doubtful whether, in fact, a country placed as we are and so naturally dependent on exports can contract out to this extent, and whether one can accept a relatively non-competitive position and expect if to be a stable position. If one tries to accept this position, one sees, as the result of it, the situation that we have had in the last two or three years that our export performance is extremely bad and we slip gradually from a reasonable balance of payments surplus into a bare balance, and probably into deficit before very long.

If we reject the approach that we are willing to sink back, not be competitive, and take the cosy, inward-looking approach, even if it were possible, if we want to do something more, grow like other countries and maintain, let alone increase, our influence in the world, we must face the fact that the policies which we have been pursuing recently are not producing an economy which is remotely compatible with this and that whatever else we are doing we are not producing, and show no signs of producing, a dynamic economy.

This seems to me to be the main economic reason why we should go as quickly as we can into Europe at the present time. I believe that the political arguments are, if anything, even stronger than the economic arguments. But the main economic argument is not this or that degree of discrimination against our exports which will arise from the Six or any other organisation in Europe. It arises from the fact that if one looks round the whole of the non-Communist world today almost the only clearly dynamic unit right on our doorstep is the Six in Europe.

Scandinavia is not dynamic; it is rather like ourselves. The old Commonwealth is not. The new Commonwealth is in a completely different stage of development and is not comparable. The United States is clearly not, but if it has recorded a vote against anything it seems to me that it has recorded a vote against complacency and in favour of economic expansion.

The question that presents itself is whether we want to stand out as a bastion of sluggishness and misplaced national self-satisfaction. This is the major question that presents itself. It was admirably summed up in the title of a pamphlet by Mr. Middleton, which was published a few weeks ago, entitled, "The Chipped White Cups of Dover."

That title seems to me to express a great deal of what is wrong with our country at present. I cannot think of anything less desirable than to retire behind the rather squalid and insubstantial fortification of these "Chipped White Cups of Dover". On the contrary, let us realise that misplaced national complacency—which is marked by our social services, our attitude to design and innovation, our educational standards and the contribution of education to industry—is inextricably bound up with our insularity. Let us be against both complacency and insularity.

5.10 p.m.

Mr. J. A. Leavey (Heywood and Royton)

I was greatly interested in what the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) had to say. I thought that his speech was a penetrating analysis, and I very much welcomed the change in tone from some of the speeches which we have had from some of his hon. Friends and, indeed, from some of his right hon. Friends. In the course of the debate yesterday and, to some extent, today, right hon. and hon. Gentlemen opposite have been criticising the Government's economic policy, which we expect, but they did not take us very much further by saying that the Government were not doing what hon. Members opposite thought they ought to do, and that we should have more of everything without considering what might be the consequences of their dissatisfaction.

On the other hand, the hon. Member for Stechford made a very penetrating analysis, and I should like to take up one point which he made. He said—and I am bound to paraphrase it—that one of the problems which seemed to recur year by year was that when we sought to stimulate the economy there was growth and then after a period, which I think the hon. Member said was about a year or one-and-a-half years, we were in trouble. I think that that is a reasonable criticism. It has been revealed in the need by successive Chancellors of the Exchequer to encourage development and then to apply some steadying influences. However, I thought that the hon. Gentleman brushed off too readily and too easily the value of the achievements of the predecessor of my right hon. and learned Friend, Viscount Amory, in the contribution which he made to price stability with full employment. We should be making a great mistake if we overlooked the value of that achievement and, in the criticisms of right hon. and hon. Gentlemen opposite, it seemed to me that the dangers of inflationary increases were rather being overlooked.

It is appropriate to remind ourselves that until two years ago there was a generation—this applies to young men and women of 18 to 20 years of age—who did not know what it was to see the value of their earnings maintained for more than perhaps six months. For that generation it was something quite fresh that a pound which was earned at the beginning of the year had the same purchasing power at the end of the year. I should have thought that that was a great achievement, because over those years many of us on both sides of the House very much doubted whether it was in fact possible to have price stability, with all its benefits, and full employment.

My hon. Friend the Economic Secretary reminded us how the instruments available to the Government and to successive Chancellors of the Exchequer have been extended and expanded, but how, in the present complex situation with which we are concerned, their effect is bound to be limited. I want to dwell for a few moments upon that aspect of the problem. At the risk of tedious repetition, which I know is out of order, I must say that it seems to me vital that we should not overlook for one moment the fact that we have an economy which is most delicately balanced and which is permanently vulnerable, or at least appears to have been permanently vulnerable over the past 10 or 15 years. I am wondering whether—and in this I seek to follow to some extent the hon. Member for Stechford—the instruments, weapons or techniques at present available to my right hon. Friend are adequate and sensitive enough, because what we have available to control the economy—we are all agreed that some measure of control by the Government is necessary—has not greatly varied, although the circumstances, as my hon. Friend said this afternoon, have varied enormously.

We cannot leave this economy to operate by itself. We used to refer to the ship of State and the analogy was that it was being wisely steered to avoid the shoals. I should like to use a rather more up-to-date analogy and to speak of the aircraft of State. What we have found in the last 10 or 15 years is that, if left to itself, it will adopt an angle of climb which will quite soon become dangerous. An added embarrassment is that in that position the passengers seem to find the experience agreeable, at any rate to start with.

It seems to me that the problem is whether the four or five main instruments which we have for correcting the imbalance are adequate. First, let me deal with the main instrument—the Government's power to decide the price of money, the interest rates. That has been generally fairly effective. Admittedly it relies upon the classic price mechanism, and the effect which it has upon the economy is over the whole field, but whether it is sensitive enough or whether we should try to devise something which is more sensitive is a question which I should like to put to my right hon. and learned Friend.

The second instrument concerns the control or manipulation of the hire-purchase regulations. The field in which that operates is only too well known to all of us. The range of goods is relatively limited, but, as has happened quite recently in the motor-car industry, changes can bring quite convulsive results. If one applies an instrument which is intended to have results, it is likely that some of them at any rate will be disagreeable.

Then there is the instrument to which we have been devoting ourselves mainly in this debate, namely, Government investment and the extent to which it can or should influence the general state of the economy. As it is stated in the White Paper, there is a definite limit to the extent to which changes in the Government's investment programme can be applied in this sense. They have to be relatively limited if they are not to distort what is inevitably a fairly long-term programme, and therefore their impact is also limited. The search is the same as that which goes on in many other spheres, namely, the search for the painless drug or the stimulant which has not undesirable side effects.

In his Budget two or three years ago, the former Chancellor of the Exchequer, Viscount Amory, came to the House with thoughts about a general sales tax as possibly a new instrument, a new technique, which might be applied, but he discarded it as something which he felt would not meet the need. From time to time, we have suggestions of similar instruments. I recently read in the Economist the suggestion that National Insurance contributions should be varied. I reject that proposal. I do not think that it would be effective and I imagine that it would bring considerable social hardship.

In the past, we have had the more positive measures of physical controls, as we have come to call them, such as rationing and licensing. Here again, I very much doubt whether today the economy would respond or whether those methods would be effective, quite apart from whether the nation as a whole would accept them.

Therefore, it seems to me that all the time there should be a search, and I hope that this work is going on under the guidance of my right hon. and learned Friend, for some additional system, technique or set of instruments which are rather more sensitive and can be applied in more specialist fields than those which are in my right hon. and learned Friend's armoury today. I ask him to give thought to this matter.

As the hon. Member for Stechford suggested, it is no good carrying on with a changing economy and adopting merely the same principles year by year. From what has been said by my right hon. and learned Friend—or, indeed, by any of my right lion. Friends—I do not think that there is the sense of complacency to which the hon. Member referred. I see no evidence of it. I do, however, see concern, which I welcome, for the damaging effects upon the stability of prices which would come from investment policies such as were suggested, for example, by the right hon. Member for Battersea, North (Mr. Jay).

I wonder whether there is not another direction in which we might consider applying a quite new form of control. It seems to me that what we have to do in applying each of the existing measures is to stimulate or limit demand, or to stimulate or limit certain sectors of demand; but it is to demand as a whole that we turn our attention and we do it through the monetary system by making the borrowing of money more expensive or by making credit more or less readily available.

I have dared to have the thought that one stimulant to demand might be considered. I realise that the man who suggests a new tax is inevitably unpopular and almost certainly deserves to be. Today, however, we are spending something like £1 million a day on the specific purpose of stimulating demand in the field of advertising. As I have always understood it, the purpose of advertising is to stimulate demand. It is argued that sometimes it becomes simply a tit-for-tat process in which those who wish to sell goods and services do not ordinarily feel the need to stimulate demand but that their competitors have caught up with them. None the less, there is a considerable investment in stimulating overall demand over the whole field.

I therefore venture the thought, which I hope my right hon. and learned Friend might consider, whether in that field there is not scope for applying a new instrument of control or some new technique if it is at the point of demand that we feel that the Government can exercise proper control. I hope that my right hon. and learned Friend will not deduce from what I have said that I am positively suggesting a tax on advertising.

Mr. Frank Tomney (Hammersmith, North)

That is not a bad idea.

Mr. Leavey

The hon. Member says that it is not a bad idea. Perhaps my right hon. and learned Friend the Chancellor of the Exchequer will make an appropriate comment upon it. I feel that a search for more sensitive instruments, perhaps to be applied in a new field, is necessary and I would think it appropriate that in considering the influence upon the nation's economy of the Government's investment programme, we might also consider this rather wider prospect. I hope that my right hon. and learned Friend will be able to give thought to this.

Mr. Martin Maddan (Hitchin)

May I ask my hon. Friend a question concerning his suggestion about advertising? In any instrument that was devised, how could we effectively differentiate between advertising of the classic sort—newspapers, posters, and television, for example—and sales promotion generally, including house-to-house salesmanship, displays in shops and all the rest? Would not the tax which my hon. Friend suggests be likely to lead to merely a different kind of selling effort?

Mr. Leavey

I particularly did not want to go into details, but it had occurred to me that this was a field of expenditure all of which is itemised. It is something which appears in the expenditure or the outlay of most industrial organisations which advertise or of the service organisations. Therefore, it is a measurable sum of money and its point can be identified. I would say, therefore, that even if it were applied over the whole field, or even if it were done selectively, the point raised by my hon. Friend could be met.

5.26 p.m.

Mr. Joseph Slater (Sedgefield)

At the commencement of his speech, the hon. Member for Heywood and Royton (Mr. Leavey) referred to the speech of my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) and its moderate tone in comparison with various other speeches that we have had heard during these two days of debate. I may fall into the category of being critical of the Government because of their attitude in their approach to basic considerations upon which the country's economy depends.

It has been repeated time and time again that we are in the midst of a second industrial revolution. Changes have been asked for from both sides of industry and many have been conceded. It cannot be denied that, as a result of the great changes which have now taken place through the introduction of modern science and techniques in electronics and automation, it should be possible to grant to those within industry a higher standard of living, with shorter hours and better conditions.

Within the last few days, we have been reminded by the Minister of Labour that the unemployment percentage is a little over 1 per cent. for the whole country, with the inference that we should not at this stage be unduly alarmed at our unemployment position. I say in passing that the Minister of Labour, together with his colleagues in the Government, should know that when new techniques are being introduced into industry due to increased mechanical operations, workers become worried lest they may be replaced by them.

Therefore, as one who comes from a basic industry, I believe that it should be the cardinal principle that the first charge upon industry in this new age of industrial development should not be directed principally to profits, dividends or to the benefit of shareholders, but that the first charge should be the welfare and security of the worker who has made possible the advances from which the industry can hope to benefit.

I am fully aware that hon. Members opposite will not agree with that proposition. Therefore, I should like to state my reason for putting it forward. Whenever an innovation is introduced into industry, there is always the lurking fear that workers will be replaced by it and the prospects for the future become remote. If this fear is to be removed, it can be done only by greater consultation between the two sides of industry, with the object of determining positive measures to accommodate all those who have a share within their respective industry.

After all, let us remember that it is not only the management which has an interest in the progress of industrial production and development. The worker also has an interest, and we ought not to forget that. Does anyone believe for a moment that these people in industry are happy when they read reports stating that the balance of trade is going against us at the moment, that our exports are increasing at a much slower rate than those of other countries, or when they read in the Press that in the first three-quarters of this year there has been practically no change and no increase in productivity in this country? Of course they are concerned. They know the reason.

How can we expect to get industry to expand when it is never sure what, as it were, the policy of the Government is going to be over the next twelve months? What is happening to industry? Instruction or an appeal has been made to industry to go ahead with an expansion programme. In the next 48 hours, as it were, a fresh appeal has been made to industry to restrict the expansion which it had been asked to undertake. This sort of thing has been going on for a very long time under the present Administration and it is about time that the Government made up their mind which way they want the country to go.

Looking back over the post-war period, from 1945 up to the present time, we see that when the Labour Government appealed to industry to increase production that appeal received a ready response. Agricultural production increased by 50 per cent., and the workers in industry responded to the appeal. I often wonder what would have been the state of the country at that period if the appeal had not been made and if the workers had not done everything which they possibly could to achieve what they set out to do.

The result was that we commanded a high place in the export market. Today, however, our place in that market has now been taken by Germany and Japan. Therefore, we are forced to ask ourselves what has gone wrong. Are we to take it that our technique of salesmanship is now outdated or that industry is no longer interested in capturing world markets? Personally, I do not believe that such is the case. I still believe that we possess the technique and have the initiative. If the people of this country are given the opportunity they can get us out of the situation into which we have drifted as a result of the attitude of the Government.

I think it is also true to state that since the war a smaller proportion of the gross national product has been devoted to investment in this country than in the rest of Western Europe. It is important for us to remember that between 1955 and 1958 industrial production in this country was practically stationary. In 1958 it fell. The relaxation of the credit squeeze in the autumn of 1958 led to a partial recovery in the last quarter of that year. It should also be remembered that production in the first quarter of 1959 was less than 1 per cent. higher than in the fourth quarter of 1958.

I am sure that none of us can take any satisfaction from a position which we know is harmful to the nation. We built up a good export market for the nation, but other nations, particularly Germany., are cutting into that share of world exports which once was ours, and it ought to be Government policy to do everything they possibly can to halt this trend.

How can the Government escape the fact that after ten years of free enterprise investment had been insufficient and had not been directed into the channels making the best returns of productivity and exports? If ever a Government have been strictly partial to private industry as opposed to nationalised industries it is this Government. We have seen it in cotton and in the basic industry of steel. Now we have the example of the Cunard Company. We are supposed to have reached a position in which it is not easy for the national Exchequer to be so generous owing to our financial position. As a matter of fact, we were told by the Minister of Transport during the transport debate that the British Transport Commission should cut down its investment programme by approximately £20 million. The same applies to the National Coal Board. But here we have the Cunard Company coming along with an appeal for help and the Government saying to it, "We will make you a present of £3¼ million".

I remember the late Sir Herbert Williams saying in the House that we should take the mining industry out of politics. That has never happened among the supporters of this Government. Whenever during the last two or three years this nationalised industry has sought permission to borrow money from the Government there has been a wave of protest from hon. Members opposite.

Mr. Alan Hopkins (Bristol, North-East)

Will the hon. Gentleman allow me—

Mr. Slater

No. I promise to sit down in good time so as to give hon. Members opposite and hon. Members on this side of the House who wish to contribute to the debate a chance to do so. I was present yesterday when the hon. Gentleman made his speech.

It would appear from some of the speeches made by hon. Members opposite that the coal industry was being financed from the central Exchequer without making any returns. It ought to be definitely understood that no subsidy is paid by the Treasury to this industry and that none of the deficit falls upon the taxpayer. It should also be remembered that interest on money borrowed from the Government with which to finance part of the capital expenditure programme has also to be met each year and that the borrowings are progressively redeemed. It has been a good investment for the Government owing to the returns which they have received from the industry since nationalisation by way of interest repayments.

On 11th July this year I put down two Questions to the Minister of Power for Written Answer. I asked the Minister If he will set out in the OFFICIAL REPORT the amount of compensation paid to date to former coal owners in each district of the United Kingdom in accordance with the Nationalisation Act, 1946; if he will state the amount of compensation on valuation for each district payable to the former coal owners, and the amount of interest payments paid to the former coal owners to date. The figures which were given are very illuminating. The Minister replied: the National Coal Board has paid to the Exchequer £83,819,087 interest on compensation for transferred assets—excluding Coal Commission Stock. The compensation payable and paid to the former owners is … 291,997,000. On the same day my right lion. Friend the Member for Llanelly (Mr. J. Griffiths) asked another Question of the Minister of Power. He asked if he would set out in detail the cost to the National Coal Board of the new responsibilities borne by the Board". What did the Minister say? He said: In consequence it has undertaken a number of responsibilities such as providing all the coal required in the public interest, including importing coal at heavy cost when necessary, and building up abnormal stocks of coal and coke to avoid redundancy and unemployment. The Board's predecessors were not required by Statute to undertake these responsibilities. Additional responsibilities have been placed on the Board by legislation affecting subsidence damage, social Welfare and working conditions in the mines The Board's Accounts show the cost of these and similiar activities, but it would be highly speculative"— I ask hon. Members to take note of these words— to estimate how these costs compare with practice before nationalisation, or with what would have been the present practice if the industry had not been nationalised."—[OFFICIAL REPORT, 11th July, 1960; Vol. 626, c. 79–80.] I can tell hon. Gentlemen what would have happened. We should not have had the new Mines Act, because the old coal owners would have seen to that, and the responsibilities and the cost imposed by the Act nationalising this basic industry would not have been imposed upon them, and the new Measure would not have been brought to the Floor of this House if the coal owners had still owned the mining industry. Secondly, the welfare facilities which have come to our people within this basic industry would not have come to pass. We know from past experience what would have been the form of approach of those who were responsible for running the industry at that time.

Therefore, questions will be asked outside this House regarding the gift which has been given to the Cunard Company. Let us never forget that it was this House which imposed upon the National Coal Board commitments not only for subsidence damage but also for the importation of coal. These are the things which come within the accounts of this nationalised industry, which has got to face up to responsibilities imposed upon it by the authority of Parliament. I often think that one of the mistakes which the Labour Government made at the time they put through that nationalisation Act was that they did not set aside a certain amount of the money which was granted for compensation to meet commitments which the Board is now having to meet due to mining subsidence which is coming to pass because of the operations when the mines were worked under private enterprise. That is one of the things which the Board has got to bear.

Therefore, I say that if we have to have the continuation of generosity to certain sections of private industry in the form of subsidies of this nature, without any great protest from supporters of the Government, it equally should follow that when the nationalised sector is faced with difficulties not of its own making it ought to be granted the same facilities.

When we talk about the basic industries and hon. Gentlemen opposite seek to lodge their protest, I say to them that this is not a time when they should be mealy-mouthed about it. Nine years of Tory Government have in no way assisted to illuminate the problem of the nationalised sector. In consequence of this debate, I hope that there will be a change of heart, as it were, and I hope that we shall see in the future a more tolerant attitude displayed on the benches opposite towards those industries which are seeking and have sought to be run on behalf of the nation as a whole.

Mr. Hopkins

Before the hon. Mernber sits down, may I ask him whether he was making the point that a loan should not be made to the Cunard Company in spite of the subsidy paid to its competitor across the water?

Mr. Slater

I have already dealt with that.

5.45 p.m.

Sir Alexander Spearman (Scarborough and Whitby)

The hon. Member for Sedgefield (Mr. Slater) made a very gallant defence of the National Coal Board. As a member of the Select Committee which investigated that industry two years ago, I think I could on a more suitable occasion argue with him a lot of points with which I will not take up the time of the House today.

I think Chancellors of the Exchequer, and perhaps particularly the new Chancellor, must look rather wistfully at the jobs held by their pre-war predecessors, because those jobs were so much simpler to undertake. Today the country expects, and rightly expects, a very high level of employment not only to avoid the appalling hardships of unemployment but because the people want the country to be running at nearly full capacity and so avoid the waste which happened so often in the pre-war years; but they also expect stability of prices. And that combination is a very difficult task to achieve. It means that the Government have got to get a balance in the economy which, I think, is a post-war function. I do not believe that an attempt to any great degree to get that balance was the experience of pre-war Governments, That means that on the Chancellor there rests today an enormous responsibility.

I hope that he will not think it impertinent if I say that I sometimes wonder if it would not be possible for him to have a colleague in the Cabinet to assist him. I think that the Economic Secretary will know that this is not through any lack of admiration of him but because I believe that there are a lot of jobs which only a member of the Cabinet can undertake, and that if the Chancellor had that colleague he could be relieved of quite a lot of work which otherwise falls on his shoulders; that would liberate him for the vital part of his job, which is directing the economy of the country, and would, perhaps, enable him to do it with less strain than has happened to his predecessors.

I think everyone, particularly those who have not had the advantage of knowing my right hon. and learned Friend, must have been very interested indeed to see how he would shape and how he would get over his first hurdle, that is, his first speech as Chancellor. I think he came out of that triumphantly. He showed a clear grasp of the economic situation and, as I would think, a right sense of priorities. He has those qualities, and, as all who know him realise, he has courage, which is essential to a Chancellor of the Exchequer.

Perhaps I may for a moment digress to say that I believe his predecessor's great services to this country are appreciated in all quarters of the House. I think that while I am talking about him I should like to say what Lord Keynes said of a predecessor fifty years ago. He said: At this business of being Chancellor there is no man of our time who is by any means his equal. My right hon. and learned Friend's predecessor made a speech in another place two days ago, and in this he set out what he believed should be the order of priorities of Government aims in economic matters, and the first was defence of the currency. I am sure that that must be right because the currency is the basis of our trade and of our livelihood, and because solvency is, I believe, a vital contribution towards defence against Communist aggression.

Now, as all my right hon. and learned Friend's predecessors from both sides of the House have had ever since the war, we have balance-of-payments problems. As my right hon. and learned Friend said in his speech yesterday, this may be very largely due to stockpiling which has been going on at an enormous rate. I think that my right hon. and learned Friend may shortly have to make very difficult decisions and it was with these sort of decisions in mind that I was urging that he should be more free to devote his time to them.

If the stockpiling suddenly stops he may quickly have to stimulate the economy, for we may find that there is inadequate demand, but if the present stockpiling goes on the balance of payments will not stand the strain very long and my right hon. and learned Friend may have to promote a collapse of the stockpiling. He may have to take strenuous measures, such as making short-term money so dear and so difficult to borrow as to bring about the collapse of stockpiling. If the economy is going to be run, as I think most of us think it should, at very high speed, that is, at almost full employment, there must be frequent manipulations to keep demand in balance.

Businessmen often complain, and hon. Members opposite never hesitate to support and fortify those complaints, about how impossible it is for them to keep having to altar their plans because of Government restrictions. But what these men are really saying is either, "Let us run the economy much more slowly. Let us go back to running far below capacity as in pre-war years" or "Let us revert to boom and slump" and they would soon find that more harassing than any changes in Government action.

Mr. H. Lever

The complaints are not of changes because of Government action but because of the abrupt, illogical and unexplained changes which occur from time to time, which are not part of one coherent purpose and which disrupt the intentions of manufacturers.

Sir A. Spearman

That was the point which, perhaps badly, I was trying to make. If one drives a car at 20 m.p.h. one does not have to push on the brake very quickly but if one drives at 100 m.p.h. one must put it on very suddenly without any preconceived plan. If we are going to drive the economy as fast as it is going today the Government must make quick changes all the time. This may not be a very happy state of affairs but it is far better than the alternative, which is either slowing it down or having booms and slumps. What hon. Members opposite are really asking for, although they would not admit this, is a quite unplanned economy, and we must have a planned economy.

The right hon. Member for Battersea, North (Mr. Jay) talked about production and complained that it was not being pushed on fast enough. Under the right hon. Gentleman's Government we tried to run it flat out in 1950 and I think that it would not be much encouragement to repeat today what happened then. I firmly believe that it is the Government's job to see that production does not quite come up to capacity. Of course there must not be a lot of waste and we must be very near capacity, but if we have production pushed up as hard as it can go to full capacity there is no competition_ No doubt hon. Members opposite would think that prices can be kept down and efficiency kept up by physical controls, but they have never told us what those controls are. I believe that the only way of doing that in a non-totalitarian society is by competition. If every industrialist can sell everything he produces there is no competition. Therefore it is vital to have just a slight amount of spare capacity. I am sure that the right hon. Member for Battersea, North would say that we should push up capacity, and indeed every speaker in the debate so' far has been saying it. I quite agree, but that does not do away with the need to avoid production being pushed too far because it is impossible to suddenly increase capacity substantially by increasing investment.

If we doubled investment it would not make a great difference to capacity for years to come. Hon. Members opposite have made great play of inadequate investment. Is not the real thing that matters—and I am speaking about comparisons between this country and others—the rise in the quantity of capital per head of population? In this country the growth of population is a good deal slower than that in other countries to which reference has been made in the debate. I believe, therefore, that in real terms we come out of this far better than the right hon. Member for Battersea, North and his hon. Friends have suggested.

Mr. Jay

Did the hon. Member notice the figures I quoted which showed that output per man-hour had also been going up more slowly here than in European countries?

Sir A. Spearman

Yes, but the point I was stressing was the difference between the growth of population here and that in other countries. The point that the right hon. Member made was a quite different one.

Mr. Jay

I do not want to confuse the hon. Member or myself but surely it shows that the increase in production in those countries cannot be solely due to the increase in population.

Sir A. Spearman

Yes, but there are many other things which must be taken into account when we are comparing the statistics of different countries. What I said was one reason, but only one, why that comparison was not exact. I do not say that this is a perfect comparison, but I would prefer to compare the amount of investment that this country has made at different times. If we compared the amount in the last nine years with the previous six years we would naturally expect it to go up, and, at constant prices, as my right hon. and learned Friend said yesterday, it has gone up by 60 per cent. which I think is not an entirely unsatisfactory comparison between 1951–59 and 1945–51.

The bottleneck about capital investment must be savings. Unless we can obtain a huge loan from abroad, how much we can invest depends upon how much we save, and this is why I come back to what I said at the beginning of my speech. People will not save if they are nervous about the currency and about prices. People have been saving enormously more because of their confidence in those two 'things. That is why I hope that my right hon. and learned Friend, however unpopular it may be at times, will put among his aims first and foremost defence of the currency and the stability of prices.

5.59 p.m.

Mr. Frederick Mulley (Sheffield, Park)

I think that the hon. Member for Scarborough and Whitby (Sir A. Spearman) must have had in mind seeking a place in the column called "Sayings of the Week" when he went so far as to suggest that what we want is a planned economy and that the trouble was that we on this side of the House wanted one that was unplanned. I suggest that the real trouble is that any Government must direct the economy, as he said clearly and powerfully, but the Government, recognising that they must do that in practice, still want to stick to the philosophy of laissez-faire and free enterprise and all the rest of the clichés that they trot out from their platform and of which we have had examples from the Economic Secretary to the Treasury in this debate.

Sir A. Spearman

I did not say, or did not mean to say, that hon. Gentlemen, opposite did not want a planned economy. What I tried to say was that those who object to frequent manipulations to keep the economy in balance are, though they may not realise it, saying that they do not want a planned economy.

Mr. Mulley

When the hon. Gentleman looks at the OFFICIAL REPORT he will find that he did not say that the first time, but now he has had a second chance.

Another interesting point to me in the hon. Gentleman's speech was when he said that the Chancellor needed a Cabinet colleague. I was reflecting that since the Chancellor left the Foreign Office he has had a successor who needed a Cabinet colleague to help him, and perhaps when the Chancellor passes on in due course that may be an innovation which will then have to be considered.

The main point of the hon. Gentleman's theme, that we need a sound currency, is indisputable, but what a sound currency means is a sound economy in its widest aspects, and that, as I understand it, is the essence of today's debate.

Frankly, I was very disappointed with the speech of the Economic Secretary, because I believe he has the ability to do better. We must get one thing straight at least in the House of Commons, even if it is used on electoral platforms outside. We must stop talking about the "record", such as the "record" production, the "record" amount of national income, the "record "amount of this and the "record" amount of that. It is really no more significant than my telling the House that today I reached a "record" age. I am older today than I was yesterday or last year. In any dynamic economy, each year we should have more production—even if it is only a tiny amount—a higher national income and a higher standard of living. For goodness sake let us have, at least from Front Bench spokesmen, a more adult approach to these problems.

There is also the point about comparisons between the times when the Labour Party formed the Government and the last nine years. It is time that some members of the Government and other occupants of the Government benches realised—although they may have reasons for not wishing to accept responsibility for it—that the Conservative Party has formed the Government of this country for the last nine years. If we could get that point really accepted, I think there would be a more realistic approach to our problems.

On a different note, I should like to congratulate the Chancellor of the Exchequer upon his "maiden" speech. Also, I should like to congratulate him—I think this is a very real factor from the point of view of back bench speakers—upon his courtesy to the House in staying to listen to the back bench speakers. All too often in recent years—it has been more evident in the last two or three years—Ministers come and make a speech and then, after hearing the Opposition Front Bench reply, go away and appear again just in time to hear the Opposition Front Bench winding-up speech at night. The right hon. and learned Gentleman's action is a great courtesy to the House, and I appreciate it very much.

Mr. Shepherd

While the hon. Gentleman is castigating Ministers on that score, is it not also true to say that the practice of back benchers making speeches and then disappearing from the Chamber is very discreditable indeed?

Mr. Mulley

That is so, but, after all, the whole purpose of a debate is that it is an attempt to put a point of view on behalf of our constituents to the people who represent the Government. However, I agree with the hon. Gentleman it would be better if back bench Members stayed as well. Perhaps they are at present following the example set by the occupants of the Front Benches. I must now proceed with my speech because there are many other hon. Members who wish to take part in the debate.

There are two points that I wish to take up with the Chancellor arising from his speech. First, he said, very properly, that we must not be complacent. I know that this was not his Department last year when the General Election took place, but when the people of the country, who, after all, get most of their economic discussion at General Election time, are told blatently "You never had it so good", when the whole philosophy of approach is couched in terms of selfish appeal, when the doctrine of "I'm all right, Jack" is shouted at them from every hoarding and every television political programme by the Conservative Party, how can the right hon. and learned Gentleman wonder about the complacency which is spreading like a cancer through the economy?

Secondly, I wish to take up the point which the right hon. and learned Gentleman made about wages and profits restraint. He was absolutely right to make the points that he did about profits and dividends. However, I would ask him to appreciate, when he considers this sphere, one very important difference. When a wage earner gives up the possibility of a wage increase, he gives it up for ever. But when dividends are kept back, they are not lost for ever; the enjoyment of the dividends is only postponed, because they remain in the reserves of the company and accrue to the shareholders. Because of that the value of the shares of public companies on the Stock Exchange usually goes up, and the impatient shareholder can get his dividends in advance by selling a portion of his holding, thus getting the advantage of untaxed capital gains.

If the Chancellor wants to grapple with this problem and many others, he must act and not rely on exhortation. All too often the Government's attitude to these problems has been like the attitude of the waiter when he was asked by the customer for a cup of black coffee without cream. He came back about a quarter of an hour later and said, "I am terribly sorry. We have searched all round. We cannot get any cream. Would it be all right if you had the coffee without milk?" The Government so often do not appear to grasp the essential point of what is wanted.

The essential point about the economy, as I see it, is to get more expansion, more exports and more competition. We shall not attain any of these objectives by means of the clichés which so frequently appear in speeches and literature from the Conservative Party. Hon. Members opposite ought to be bold and follow the hon. Member for Scarborough and Whitby in saying that they believe in planning and in the direction of the economy by the Chancellor.

It is a very odd thing that we are debating this subject on a Motion which says, in effect, that a debate on economic affairs at this time is a good thing. The debate is, indeed, useful, but it is not really very meaningful if we confine it only to the field of public investment. We need to take account of private investment as well. Of course, very little is known about private investment, and I suggest that the Government do not know and do not influence it and do not direct it nearly enough.

We are not considering sufficiently not only the size and total of investment but the productivity that arises from that investment. I think that all of us would agree that the real economic debate today is not about the shares of the national "cake" that go to the respective factors of production but about what the size of that cake is. I am by no means satisfied that the proportions going to the different factors of production are right, and we should seek to readjust those proportions, but that is a minor and not a major issue today.

However, I was a little alarmed, as was my right hon. Friend the Member for Battersea, North (Mr. Jay), at the suggestion made by the Chancellor, when comparing current dividends with pre-war dividends, that there might be a determination or concern on the part of the Government to return to the pre-war ratio. If the Government intend to do that, they will not only cause a great deal of industrial strife but will turn back the clock on the very considerable advances to a better society which we have achieved since the war through the activities of both sides of the House.

If we really are to have more meaningful debates on this subject and if, in particular, it is the intention, as I think it was at one time, to try to look in November towards the Budget of the following April, we must have more information from the Government. I have spoken in the House previously about how difficult it is when one cannot distinguish between Government capital expenditure and Government revenue expenditure. If a particular project for spending on a hospital or a nationalised industry is made, we should be in a position to see how it affects the Revenue expenditure as a result of the capital investment.

If only one could buy a penny notebook today, one could say that the Government accounts are kept on the principle of a penny notebook, and, indeed, as I have said before, would be a disgrace to a back street grocer. When the Prime Minister was Chancellor of the Exchequer he referred to the difficulty of catching this year's trains with last year's Bradshaw. We all welcome any additional information that is available, but I am afraid that in a number of vital questions the Government are not even trying to catch the train at all.

We all accept the view that the economy must be regulated, but the Government still place far too much emphasis on financial and fiscal controls. The Bank Rate, as I think was evident when it was reduced by ½ per cent. recently, is only an effective instrument for the flow of short-term capital transactions. Nor are the other interest rates tied up with it by themselves a satisfactory way of dealing with the major problems in the economy. We must have some physical controls as well.

The importance of expansion in the economy is not fully realised by Members opposite when they frequently talk about the need for tax reductions. Expansion has a favourable influence not only upon the individual who produces the extra goods and gets an extra income but also, automatically, on Government finance and income, and, therefore, if desired, on Government expenditure. National income last year, in round figures, was about £20,000 million. If only we could get an average of about a 3 per cent. increase in the national income every year!

I realise that this is perhaps a rather high target, but it has been achieved, as my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) said, and, indeed, exceeded in the countries of the Common Market. If we could get this 3 per cent. increase, then, at the current rates of taxation, we should get about £200 million extra in the Treasury without increasing taxes at all, and about £400 million more in the pockets of the ordinary people. With that extra £200 million—gained without any increase in the rates of taxation—the activities of the Government in the social services would be much more beneficial than the prospect, as we have this year, of a fall or at least no increase in our national product.

The other aspect to which I wish to refer is the question of the Government's attitude to the Common Market. I know that the Chancellor of the Exchequer in his former capacity was extremely interested in this problem. Again, I believe that we have missed the train. One of the main reasons why I and a number of my hon. Friends are attracted to the idea of an association in some very close form with the Common Market is the great achievement in terms of expansion that the Common Market countries have made and are making.

I do not like the political complexion of any of the member Governments of the Six, but those Governments, aided and abetted, and perhaps a little directed, by the European Economic Community have a measure of planning which is not evident in this country. As a result of the competition that is arising from the Treaty of Rome, they are achieving very marked increases which, unless we emulate their example and come to terms with them on details of tariffs and the rest, will have a very adverse effect on our economy.

Mr. H. Lever

Why does my hon. Friend repeat this constant assertion that unless we get into it, the arrival of the Common Market is necessarily disadvantageous to us? We do not belong to the Common Market now existing in the United States. Would we be advantaged if that were broken up or had never been brought into being?

Mr. Mulley

It would take me some time to go into the full history of all this. I developed this theme for 25 minutes on 25th July. I want now to return to the problem of the balance of payments and exports.

We must realise how difficult our task is no matter what Government are in power. Basically, we are exporters of fancy goods, luxuries and capital goods. These are particularly sensitive to any fall in activity or any restrictionist policies in other countries. If one's income goes down, one does not buy so much whisky, or buy a new suit, or a Kidderminster carpet, or Sheffield cutlery, and one certainly does not buy a motor car. If a country is in recession it is less likely to buy additional capital goods.

On the other hand, our imports are almost wholly, or ought to be, basic essentials like food and raw materials. It is extremely difficult for us to cut our imports, though it is quite easy, if the world trend is adverse, for our exports to go down. We have been, and have become, too dependent on one or two lines like motor cars and whisky. We need more flexibility and variation.

There is a place in the export drive for smaller firms. This has been said often—including by me—but it is not sufficient merely to say it. I suggest that the Government should be doing something about it. It is extremely difficult for small firms to export, and I have suggested in Sheffield, for example, that the non-competing firms in different sections of the cutlery trade should get together in some kind of export co-operative

Individual industries and cities in other countries are running promotion fairs in foreign capitals where they are seeking a market. A great deal of this has been done by the Common Market countries, and I say to my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever) that this is one of the reasons why I am worried about the Common Market's activities as a competitor in markets of these countries. This activity is strengthened by lower production costs and the vitality that comes from the economy which the countries of the Common Market are developing. The Government should do very much more to get the smaller firms together and to encourage them to take part in co-operative enterprises of this kind. Also, the Government should take a more generous view about assisting and representing this country at trade fairs and so on. Very little is done with Government help, although all our exporters are meeting competition from firms which receive indirect assistance from their Governments of a very important and tangible kind.

The Government should try to ensure that there is real competition in industry, not just talk about it. The President of the Board of Trade does not seem to mind if, in several cases, what seem to me to be mergers which will reduce competition take place. One outcome of the work of the Committee now considering company law should be a recommendation that it should be compulsory for every public company, as is done in the United States, to disclose the amount of turnover in the year. Some of the better ones do it now, but, in my judgment, it should be compulsory.

In this country people seek a sheltered economy and they want to be protected from the buffetings of the export world. Because of that, they seek non-price competition. One hon. Member spoke about the need to tax advertising in some way. Why is it necessary for firms to spend millions of pounds on advertising and sales promotion when they can discover in any elementary economics primer that if they want to expand their sales the easiest and simplest way is to reduce the price of the products.

Mr. Jack Jones

Or improve the quality.

Mr. Mulley

Or improve the quality, as my hon. Friend says.

The other great worry about exports is how to persuade firms to export when they have a ready and easy home market in which to sell their goods. My tutor at Oxford, a very distinguished economist, told me fifteen years ago that this was the problem which kept him awake at night. How does one get exports when there is a buoyant home market? On the other hand, if the home market is depressed by deliberate Government action and the prospects in industry are bad, how does one persuade firms to take the risks of going into the export business? When production is going down and, inevitably, the unit cost is going up, how are firms then equipped to fight the export battle?

Of course, in the wider context of the balance of payments, there is the particular problem of the sterling area. When the terms of trade and world conditions favour our own United Kingdom economy, they are usually adverse to many other primary producing countries of the sterling area, and vice-versa. As far as I can see, we shall have a balance of payments and sterling crisis for the rest of my life, and probably much longer.

These are the matters which the Government and the party opposite should have put to the people of Britain at the last election, not the talk of our never having had it so good, and all the rest of it. As has been said, this was the interesting issue which emerged in the course of the American election. The one clear issue seemed to be a division about complacency in regard to economic achievement and the influence of the United States in world affairs. It is, of course, no part of the business of Members of this House to intervene in party battles in other countries, but I take a good deal of assurance from the result of the American election. I believe that, when the issue is clearly put in this country, as it will be, a similar result will emerge; in my judgment, the British people are much more mature politically than the Americans and they will come to a similar view but by a much more convincing margin.

Also, we should take a word of warning from the change of Government in the United States. If the American economy is to remove itself from the bottom of the league table of production, investment and so forth, where we have been competing with them for the wooden spoon, and if the American economy is to expand, matters will be made much more difficult for us in our export markets as we try to compete with American exports which come from an invigorated economy.

Anyone approaching these problems with an open mind, anyone who has read more about economic matters than is contained in Conservative Party literature, is bound to come to the conclusion expressed in the moderate words of the Amendment. I hope that some hon. Members opposite, who are ashamed of the economic record of their own side, will find it in their hearts to abstain from voting tonight.

6.25 p.m.

Mr. Julian Ridsdale (Harwich)

It is pleasant to be able to start one's speech by agreeing with something that an hon. Member opposite has said. I agree that in our economic policy we want more expansion, more exports and more competition. Then, however, the hon. Member for Sheffield, Park (Mr. Willey) went on to speak about the Common Market. I do not wish to follow him too far in that subject, but I must say that, while one wishes to extend one's home market one does not wish to enter into the Common Market at any price, not at the price of letting down agriculture or not bringing the Commonwealth with us.

Mr. Mulley

I do not want to waste the hon. Gentleman's time, but I must reply that I did not say we should go into the Common Market on any conditions. It is a favourite debating trick to try to knock down an Aunt Sally which no one has raised.

Mr. Ridsdale

I do not want to put words into the hon. Gentleman's mouth. I just wanted to make absolutely plain where I stand in that matter.

When I listened to the right hon. Member for Battersea, North (Mr. Jay), I wondered why he said that, because the Government do not increase public investment, there is likely to be no increase in investment in industry. The case which I wish to develop is that, because the Government have been taking a growing amount of the capital resources of the nation and have been taxing capital and likely sources of saving by Estate Duty, Surtax and Profits Tax, they are preventing the free flow of capital into productive industry and hampering industrial production.

I have just returned from a tour which took me to many countries in the Middle East, to India and to the Far East. I suppose that I should be speaking in a foreign affairs debate, but the fact is that, after such a long tour, I find it far more important to talk about trade than about political problems because, in reality, our whole position in the modem world depends upon our ability to trade.

It is very disturbing to report to the House on the efforts which have been made by our competitors, the Germans and the Japanese, in the many countries which I have visited and compare them with the rather half-hearted attitude which we are taking in these countries at present. "Why should we bother, when it is so much easier to trade at home?" seems to be the general attitude. One meets the English business man abroad who so often replies, "Why should I stay out here when I can make so much more money at home and, incidentally, have a vote and Parliamentary representation as well?"

Of course, I want to see the prosperous market at home continue, but I am convinced that it should bear some reflection of the competition we have to face abroad. As the hon. Member for Sheffield, Park said, we must make sure that we have a competitive home market—and, I hope, a widened one very soon, too. Yet how disturbing it is to see the increase of our import bill from the Six and the Seven and, indeed, from North America following the further moves to liberalise trade last year.

It seems that the public at home prefer many types of foreign manufactured goods rather than our own. I must admit that the prices are sometimes very tempting. When I was in Hong Kong I bought the suit which I am now wearing at half the price which I should pay in England, and it was tailor-made for me in two days. If our manufacturers cannot compete at home, what little chance they have of selling abroad. Unless we are getting a stable share of increasing world trade, surely we cannot afford an increasing investment in such projects as the Government have embarked on.

The sad facts are that, instead of getting even a stable share of increasing world trade, over the last few years that proportion has been going down. The right hon. Member for Battersea, North is right. In 1950, our share in world markets of manufactured goods was 25 per cent. Last year, it was only 17½ per cent. Yet how difficult it is to get over to the country the hard facts of our position in the modern world, that now that we have divested ourselves of our Imperial responsibility and so much of our Imperial Preference our whole position is dependent on our ability to trade; that other countries in the world either have not got the high standard of living that we have, or else are going without much more to make their industries more productive and to build up resources for themselves? As a consequence, they are more competitive than we are, and, except in certain fields such as chemicals and the metal using industries, we are finding it more and more difficult to compete.

I wish that the Chancellor of the Exchequer had been even more frank yesterday about telling the country the facts about our position and what is happening economically in the Middle East and Asia, and particularly in the Far East and Japan as well. I know, as the President of the Board of Trade said last week, that we are probably giving as high a proportion of our national income in help to most of these countries as anyone else, but nevertheless, because we have such high standards at home, it means that we are producing goods at prices which are in constant danger of becoming uncompetitive, and indeed which industrialised Asian countries can so easily undercut.

I want to give us credit for investing £2,000 million overseas between 1950 and 1959, which figure the Chancellor of the Exchequer mentioned yesterday, but how much of this is long-term investment, and how much does this mean to us in short-term to help us with out balance of payments? Unfortunately, like the capital investment programme, I believe that, in the main it is long-term and not going to help our balance of payments in the short-term.

I listened carefully 'to the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) when he asked where we should have put that investment. We must see that it gives returns which help us with our balance of payments, besides helping politically in the world outside. Whatever excuses we may try to make, the truth is that we cannot have our cake and eat it, too.

At the last General Election the Government embarked on a capital investment programme which, if the present trend of trade figures continues, is one which we could scarcely afford, though once having embarked on it I think it would be extremely difficult to alter it. It is £260 million above the figure which the Minister of Aviation, my right hon. Friend the Member for Monmouth (Mr. Thorneycroft), felt was the ceiling which should not be exceeded in 1958–59.

How disturbing it was to hear the Chancellor of the Exchequer say yesterday that it is often forgotten that this growth of public investment leads to more current Government expenditure. For my part, I am not surprised at the difficulties in our balance of payments, when one realises how much the Government have overloaded our economy, not only with high Government expenditure but with a programme of capital investment, so much of which is unproductive except over a very long period. Indeed, three-fifths of the present capital investment programme, necessary as it is from a social aspect, is completely unproductive in the short-term sense of earning capacity abroad.

Of course I want to press ahead with social programmes and improve the standard of living of our people, but it does not make sense to me, when we can hardly earn our way in the world, that we are demanding all that we are, when, only a few hours' flying time now from London, are the slums of Cairo and people living in mud huts in Baghdad and the poverty in India, not to mention the standards in the Far East, in China and Korea as well.

I want to see our country geared to facing the terrific challenges which face the free world. It is in our interests, and in the interests of all these people in the free world who are so near to poverty, that we should press ahead to make international credit available so that we can keep industry expanding to tackle this job.

We cannot do that alone. I welcome what the International Monetary Fund and the World Bank are doing. When I was in Tokyo I read with delight that the Chancellor of the Exchequer had been in Washington, pressing, I hope, for more credit to be made available to the under-developed parts of the world but I am convinced that we are not doing enough in the free world. We should have an economic free world Summit now to deal with this problem, otherwise it is quite on the cards that we may suffer deflation in the coming years which would have such disastrous effects not only economically but politically in the free world.

I hope that the new President of the United States will exert the drive and have the breadth of mind that is vital to deal with this problem. But until this happens, how imperative it is that we prepare ourselves for the worst and make sure that we can play our part by seeing that we deny ourselves some of the things for which we are asking, and show, by our example, that, even if we can no longer be great as an imperial Power, at least we can be great as a trading nation and in meeting the dire needs in the modern world.

To meet this challenge means that for the moment we must be prepared to alter investment policy as a whole and see that both on the side of Government and of private industry more savings towards new plant and machinery and not so much into non-productive long-term investment. But this alone is not enough. I do not advocate the giving of special export subsidies, that would be contrary to our obligations under G.A.T.T. But on my travels I often heard, of lost orders because of our inability to give credit for a sufficient period, which our competitors had done and which, for some reason, we were not able to do.

Mr. H. Lever

The Bank Rate, among other things.

Mr. Ridsdale

Is it not posible to set up a political insurance fund to cover political risks, to cover longer-term credit, over and above what the E.C.G.D. are doing, though in this, as at home, we must be careful to get the right balance between short-term and long-term capital requirements?

I hope that the Chancellor of the Exchequer will be realistic and make our economy move into a better position so that we can face the challenge before us. I hope that he will reshape the coming Budget to see that greater incentive will be given to saving that will go into industry. I am sure that it is possible to do this without recourse to controls. But for some time I have thought that too big a proportion of the nation's income has been spent by the Government, and that in the investment field the Government are investing far too big a share of the nation's savings, on the one hand, whilst, on the other, they are taxing capital and income which could go into capital, and are preventing the individual from fulfilling a prime economic function which he has in a free society, that of providing capital for industry. We must not only make it easier for the individual to save, but we must encourage far more investment which is productive and which should go into industry to help with our short-term problems.

May I remind the Chancellor of what I said in my Budget speech last April—that it is impossible for us, as back benchers, in the programme which we have before us, to advise about making savings in any item in particular in this capital investment programme, or, for that matter, in Government expenditure as a whole. But what it is possible for us to say is that Government policy has overloaded our economy to the extent of our facing balance of payments difficulties once again. It is putting us in the position of having to support increased taxation if present trends continue. If it is true that there is overspending in the country, then let the Government set an example of economy and frame a Budget which will enable us to face realistically the problems before us in the 1960s, so that we can give rewards to the individual effort which alone can help us in the problems ahead.

I want to see our country great, not as something which we cannot be—an imperial Power—but as a trading nation, and proud of it, as well; but to achieve this, our leaders must tell us the truth about our position in the modern world, of the competition which we have to face and of the challenge which is coming in Asia, and they must stop treating the country as though the only policy which it was prepared to take was one which dressed the country up in cotton wool.

I want to see the individual given more of an opportunity to save so that investment goes more into immediately productive industry and earning capacity and not so much into long-term unproductive projects. I hope that before it is too late the Government will be able to reshape our policies to this end. But let us be clear that if the present trend continues, and unless they act now, the only alternative will be increasing taxation in the very near future to pay for all these long-term immediately unproductive projects.

I feel that many of us are being put in danger of jeopardising our political beliefs and principles by the trend of present policies—if we are honest with ourselves and with our principles and think carefully where the present position is leading us. That is why I hope that the Chancellor will not be afraid to move along the lines which I have suggested to him.

6.42 p.m.

Mr. Harold Davies (Leek)

I hope that the hon. Member for Harwich (Mr. Ridsdale) will not think that I am being patronising if I say that, together with many of my hon. Friends, whose views generally are diametrically opposed to his, I agree with much of what he has said today. His was one of the few speeches which we have had from the Conservative benches in which the signs of the times can be read.

I apologise for not having been able to hear the Chancellor yesterday, but I have read his speech. The Chancellor has missed the signs of the times. He reminds me of a Welsh nurse I knew who worked in Peking. She was a good knitter, and she knitted beautiful clothes. She once went into the famous Mongolian restaurant in Peking, where she saw some beautiful Chinese calligraphy, which she thought was poetry.

Three weeks later she was walking down the sunny streets of Peking in a beautiful white sweater which was covered with Chinese calligraphy. When she reached the hospital a Chinese doctor, who spoke fluent English, burst into laughter and said, "Surely you have not walked through the streets of Peking in that sweater". She replied, "Yes. This is beautiful poetry" "Poetry be damned", he said. "Do you know what you have written across your sweater? It reads, 'This dish is cheap, but delicious'".

The signs of the times have been misread by the Conservative Party. Let us leave aside the party issue. Despite the way in which the propaganda was displayed on the hoardings of Britain, telling us that we had never had it so good, the fact is that our share of world trade today is less than it used to be. That is the basic point. It is no use talking about "isms"; that is the fact. The Government have given away some of their power to industry and to the private sector of the economy rather than have the courage to demand direction of investment.

It is all very well to talk about buoyant home markets not always leading to exports, but I should like to give an example to the contrary. In the pottery industry we need a buoyant home market. The north Staffordshire pottery industry is earning a good share of the dollar trade. The industry has been built up by generations of local craft and knowledge, and it needs a buoyant home market to give the manufacturer the courage for exploration in foreign markets. Here my thoughts are in parallel with those of the hon. Member for Harwich. That kind of modern pioneering, in which the manufacturers are the merchant adventurers of the mid-twentieth century, needs some encouragement and some insurance to help it to go into regions where we are not quite sure about future political stability.

I have had to make a study of the United States Mutual Security Programme. Last year, I was in the United States and recently I was in the Far East. I have been trying to study the effect of Mr. Eisenhower's Mutual Security Programme on the whole of Asia. I will not go too deeply into this because, Mr. Speaker, if I am fortunate enough to catch your eye, I shall discuss it on a future occasion, but if, out of £800 million, which is roughly this year's programme, which is being poured into Asia, nearly £700 million is on armaments aid, then aid to Asia means nothing.

I have made this point five or six times during the last six or seven years that I have been in the House, and I reiterate it: the world must understand that economic aid to the under-developed areas is of no use whatever if there is instability in the prices of raw materials and commodities on the world stock exchanges and commodity exchanges. For example, if we were to pour £5 million of economic aid into Malaya tomorrow, and if the next morning, on the stock exchanges of the world, the price of rubber had fallen by 1d. a 1b. or perhaps 2d. a 1b., that economic aid would have been partially, if not completely, wiped out.

We have been scoffed at, on this side of the House, for our bulk-buying policy. One hon. Member who formerly sat opposite, now in another place, used to support our bulk-buying policy. Part of the aim of the Labour Party's bulk-buying policy was to meet the problem of economic aid by giving a three-year period of price stability for such raw materials as rubber, tin and jute. I need not develop the argument, because it is crystal-clear, but the free world should be trying to give two-year or three-year contracts for bulk buying to the underprivileged and under-developed areas. If the free world does not do so, the writing will be on the wall for permanent security, as any hon. Member knows if he has considered the Cairo Conference or the Bandoeng Conference or the work of the Afro-Asian Powers in the search for markets.

The Achilles heel of the West is that our economy depends upon the oils, greases and fats of the backward tropical areas. Let me quote the example of a jet plane and give some figures off the cuff: 92 per cent. of the chrome in a jet plane, 70 per cent. to 80 per cent. of the bauxite and about 80 per cent. of the copper has to be imported from underdeveloped areas. The figures can be seen from the Mutual Security Programme; they are American figures from the State Department. They show that 70, 80 and 90 per cent. of the raw materials needed to build a jet plane are imported from such under-developed areas as Africa and Asia. That is the Achilles heel of the West. If these nations see that the so-called free world is not prepared to co-operate with them, they will one day transfer their trade to Communist areas like China and Russia.

The hon. Member for Harwich has been to Tokyo since I was there and he will know that what I am saying is true. The Japanese are struggling to secure a share in the great development taking place in Siberia and Eastern Russia. Japanese businessmen and tradesmen are denouncing the limitations on their trade by American policy. It may be that the result of the American Presidential election will change matters regarding the recognition of China as another avenue for trade. The markets in the Far East and in Russia have been a subject which some hon. Members on this side have been talking about for years, and all kinds of words have been hurled at us. Now the Institute of Directors says that East-West trade is of paramount importance.

My hon. Friend the Member for Nelson and Come (Mr. S. Silverman) and I went to Moscow in 1952 for the Economic Conference on East-West trade. We were called "Communist fellow-travellers", but now the Institute of Directors agrees that this trade is necessary.

Mr. Leslie Spriggs (St. Helens)

Then they must be "fellow travellers."

Mr. Davies

Exactly. We are all "fellow travellers."

The Chancellor and the President of the Board of Trade should be doing their best to break down many of these absolutely inessential controls on goods going to these areas of the world which represent only 2 per cent. of our market. I agree with the hon. Member for Harwich about the Common Market. I represent an agricultural area. During the last debate on the Budget an hon. Member on this side who represents a Scottish constituency asked the Chancellor whether he was prepared to make a tax concession on shale oil. The Chancellor answered that he would not because of our agreement with the European Free Trade Area. We could not remove any of the taxation on that oil because of that agreement.

In other words, the sovereignty of this Parliament is limited by that agreement. We have already limited the sovereignty of Britain by the presence of American bases in Britain and it would seem that we now have to listen, to agree, but not make any constructive criticism or expect any alterations, because someone in the Common Market or elsewhere overseas has made decisions for us.

Before 1938, the cargo in one ship in every five bringing goods to the United Kingdom was paid for by our overseas investments. I cannot see that state of affairs returning. We are losing our competitive power because the direction of our investments is not bringing us the productivity which we desire. The priming pump in industry is the very much decried public sector of our industry. That is so because the Government can control its direction. Unless we are prepared to exert some control over the direction of investment it is hopeless to expect that the aims for which the hon. Member for Harwich asked will be achieved. We must have some planned direction of investment and the Government are not prepared for that. They believe in the winds of competition which are blowing us to the bottom of the league of competitive capacity.

I hope that we in this House will once again have more of the levers of investment power in our own hands. The most important industry is the machine tool industry. For months there has been with the Board of Trade a report on that industry, but it has never been debated here. With the electronic industry it is the basis of automation and everything else. We import too much important machinery from dollar sources. About £8 million worth of essential machine tools come from America and about £5 million worth from West Germany. British "know-how" is capable of providing this if the necessary capital is forthcoming. In report after report there have been constructive criticisms of the machine tool industry, but hon. Members on both sides of the House may be blamed for not having the energy and enthusiasm to examine the industry, or to realise that if any industry needs help it is the machine tool industry.

There is no longer any hope that we shall again be an imperial Power in the world, but our political common sense, our "know-how" and our trading capacity are still needed. I hope that the changes in the Government of the United States may make it possible for Britain to open up avenues of investment on an intelligent basis. Otherwise, we face a sad and sorry slump.

6.57 p.m.

Mr. Alan Hopkins (Bristol, North-East)

I agree with the hon. Member for Leek (Mr. Harold Davies) about the importance of the uncommitted countries of Africa and Asia. I wish to return to a point made by my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) regarding the question of priorities. It is all very well to talk about industrial expansion, in which I strongly believe, but at the same time we must consider the importance to this country of our balance of payments position. Expansion at too rapid a rate will land us in a balance of payments crisis, and it is extremely difficult to escape from the resultant spiral.

A delicate balance has to be maintained in order that we may retain our standard of living in these islands. Undoubtedly, exports are the key to that balance. Without increasing exports it is idle to talk about expansion and pumping more credit into the economy for increasing our home production. Therefore, I welcome the moves and the exhortations made by my right hon. and learned Friend the Chancellor of the Exchequer's predecessor earlier this summer, and by other right hon. Friends to encourage manufacturers to export more.

I well remember, when I was somewhat younger, learning to ride a horse over jumps. It is all very well shouting and cheering on the horse when one comes up to a jump, but unless one does something the jump will not be negotiated. I confess that despite many attempts to do something I often fell off. But I am quite sure that my right hon. Friends who are in the saddle, and facing the hurdle of promoting exports, will not end up in the ditch as I so frequently did. It is not sufficient to exhort and encourage exporters and manufacturers in this country to export more goods if those exhortations are not matched by Government action.

Therefore, I am very glad that the President of the Board of Trade announced certain measures for the increase of credit and facilities offered by the Export Credits Guarantee Department about a month ago. They seem to be a step in the right direction. I also welcome the establishment of the Council for Exports in Europe on much the same lines as the most successful Dollar Export Council. I wonder, however, whether the Chancellor and the Economic Secretary will consider that those measures are sufficient.

My hon. Friend the Member for Harwich (Mr. Ridsdale), in his most interesting speech, suggested that we might have a Government political guarantee fund for British exporters who were exporting to under-developed countries where there might be some problems of immediate repayment for the capital goods exporters of this country. That might well be a solution. Whether it is the right solution or not, the attention of the Chancellor and of the Economic Secretary should be directed to this most important point of increasing our exports without which a large expansion at home seems idle.

I turn to the very important point made by the hon. Member for Leek, the question of our duty on humanitarian and economic as well as political grounds to do something to help investment in the under-developed countries. I want to make only a short point because I know that many other hon. Members wish to take part in the debate. According to the White Paper, we as a country are supposed to contribute £300 to £350 million a year. It is quite clear that we cannot increase that amount at the moment having regard to our balance of payments position. There is no doubt, also, that the overall position of Western investment in the under-developed countries can and should be increased substantially over the next five to ten years.

One of the troubles seems to be that in America there are ten or eleven agencies each of which has a responsibility for directing aid to one area of the world or another. I am not talking about military aid, but economic aid. We in this country have no fewer than three different funds and there are also those in Europe. There is the extremely effective World Bank under the very capable direction of Mr. Eugene Black. One possible solution is to increase the capital available to the World Bank, which is so highly regarded not only by the people in America and ourselves and in Europe but by the people that it seeks to help.

Another solution seems to be that a degree of co-ordination of these various agencies operating in America, here and in Europe might achieve a comprehensive and coherent plan for increasing and expanding investment in the underdeveloped countries. This would result in benefit for all parties concerned. I realise that these are very difficult questions, and I certainly would not suggest that the solutions I have put forward are necessarily the right ones, but I should like an assurance from the Economic Secretary that they are very much in the forefront of his mind, for without them I cannot see very much in the way of hope of expansion of investment here and abroad for this country.

7.5 p.m.

Mr. Harold Lever (Manchester, Cheetham)

The debate has been conducted in a spirit of great harmony and with very little acrimony. I hope I shall not say anything to disturb this atmosphere, but I must comment that it has emerged in the course of the debate that everyone, in all parts of the House, is in favour of more exports, more productivity, more capital investment, and more aid to backward countries and that, although all those are worthy objectives, the problem is, what steps ought to be taken to make achievement of those desirable objectives more probable?

The hon. Member for Bristol, North-East (Mr. Hopkins) said that it is no use going to leap a fence on a horse and just making very ebullient noises; one has to do something about it or one does not get over the fence. I should point out to him that that is not quite so, for very often the rider gets over the fence and the horse does not. That is what happened at the last election. Immensely ebullient noises were made when we were about to take our fences, but the horse—the unfortunate British economy—was left behind while the rider succeeded in getting over and going on for another five years.

I agree with all these worthy objectives except that I could not agree with my hon. Friend the Member for Sheffield, Park (Mr.Mulley), who said that his tutor had been kept awake at night only in trying to see how we could get a buoyant home market and a buoyant export market as well. I cannot go so far as that. I want to keep the burden of my speech on a theme which has not been touched upon. While we are all busy putting attractive finishes to the interior decoration of our economic home, we all seem oblivious of the world scene as it is. The greatest single danger seems to be the possibility of this country becoming involved yet again in a balance of payments crisis, this time by reason of happenings in the American economy.

My hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), I thought, put his finger on the matter when he asked, "What is the matter with us that as soon as production starts to get into its stride, after about a year or so, we develop a balance of payments crisis and have to start to cut back?" In the course of a brilliant speech, he analysed the illness, but I hope he will not think that I am cavilling when I say that I do not think he gave the answer to the problem. Nor has anyone who has spoken so far given the answer. What is wrong with our economy that every time when we look like getting into our stride we hit a balance of payment crisis and have to slow up?

I venture very humbly in dealing with the American situation—which is our own situation writ large—to point out what I think to be the great stumbling block preventing us leaping forward. It is quite useless to say that the Common Market is the solution, because that is rather irrelevant to this main problem. We are all in favour of going into an attractive market or combination of countries, but the only problem is on what terms we should go in. It is useless unless we are told in express terms all the political implications and the economic implications we are expected to accept and the terms on which we can go in, yet none of the enthusiasts for the Common Market has ventured to tell us that. Indeed, it is very doubtful whether a first-class lawyer applying to himself to the Rome Treaty could discern with any exactitude the economic requirements before we could enter the Common Market.

It is idle to say that we should go in unless we state the political and economic terms. I would not enter it on terms of taxing food or neglecting our responsibilities to the backward areas of the world, where we have the most intimate, personal, financial, and economic connections. I am not prepared to enter it on political terms which would ask us to underwrite the Algerian war. I am not prepared to enter it on political terms which might commit us to Dr. Adenauer's political ambitions in a geographical or military sense. I want to know in very great detail what we shall be sacrificing our sovereignty for. It is idle for these Common Market fans to jibe at us as obstinate, obtuse, backward little Englanders because, with all our political and economic heritage and that of our Commonwealth, we refuse to give a blank cheque before going into the Six.

As for their argument, in order to try to persuade us, that if we do not join we shall be ruined, it does not make sense in the modern world. If, as probably will be the case, the Common Market becomes of great advantage to the six countries which belong to it, that does not mean that it will be a menace to the rest of us. Have not we learned by now that the only prospect for us in the post-war period is the prosperity of the rest of the Western world, everywhere? Are we, simply because we are out of it, really to get into the ludicrous and paradoxical position of being frightened by an organisation on the Continent which will lead to immensely increased prosperity for it, or so we are told? Good luck to the Six. I hope that they will be tremendously successful. Their operations might create what the Prime Minister would call "little local difficulties" for us here and there, but if it is to Europe's advantage and benefit it must be to ours, too.

My hon. Friend the Member for Sheffield, Park, avoided the point that I put to him when I asked him whether he thought that because the United States of America is a common market it would somehow be to the advantage of this country if it were broken up. Of course it would not. America would be poorer, and so should we all, not only politically but economically. It would be the greatest disaster that could face our prospects of world trade if, for some lunatic reason, America split up into fifty stagnating States.

I welcome the Common Market. The European Six believe it to be in their interest. But I see no reason why I should be the victim of intellectual bulldozing by superior persons seeking to persuade us to enter the Common Market. My attitude is in no way altered by the speech of my hon. Friend the Member for Sheffield, Park, for whom I have the highest respect, admiration and affection. He showed, by one sentence in his speech, that he has fundamentally misunderstood the essential problem facing this country and the trade of the world. He told the House that if America, under the beneficent Presidential administration which will presumably now come into being, emerges from its stagnation and becomes extremely prosperous, it will cause us immense difficulties. Nothing more clearly shows the misconception of people's economic thinking than their idea that we have a vested interest in the ruin, depression, or stagnation of great areas of the world outside. To the contrary, the burden of my speech will be that it is only on the basis of the purposive, integrated, well-thought-out and planned prosperity of the entire Western world that this country has any future.

Not being a football pools addict, I shall not go into the question of league tables, and whether we do this or that faster or slower than anybody else. I leave that to the experts, except to make one comment. It behoves those who use these league tables to do so with the greatest care. The hon. Member for Scarborough and Whitby (Sir A. Spearman) rightly pointed out that the proof of the need for greater immediate capital investment—and I am not saying there is not such a need—is not made out when it is said that production per man-hour has risen faster elsewhere. Perhaps the people in other countries drink less, or like to work harder. Perhaps they are more ingenious, or more economical in the use of their resources. Perhaps they are concentrated in larger units.

The Common Market enthusiasm of my hon. Friend seems to be ill-attuned to his dislike of mergers and cartels. If anybody wants to see the place where cartels and mergers dominate the whole economic scene they should go to the Common Market. One of the consequences of the Common Market—and one of its intentions—is the promotion of an even further concentration of cartelisattion and rationalisation of the industries there on those lines. Our Monopolies Commission would have a thin time if it attempted to bring its activities to bear upon the countries whose economic life will be increasingly governed by the Rome Treaty.

I must not lose my theme, which is the threat to us of the very contrary to American prosperity, namely, American stagnation. I would ask the House to bear in mind the fact that the American situation has significant parallels—although not exact ones—with our own situation. I refer to the problem now arising in respect of the American balance of payments. Your predecessor, Mr. Speaker, more than once referred to my economic homilies as being in the nature of sermons. In view of his Scots associations, I took that remark as being intended as a compliment. I shall speak today in a sermonising manner because I shall refer to the religion which has more adherents than any other in the world. Hon. Members will realise that I am about to talk about the gold question.

The United States of America is suffering a huge loss of gold even from its renowned stock in Fort Knox. It is clear that America is running a substantial foreign account deficit. This is being settled in part by short-term borrowings and in part by a shifting of gold into other parts of the world. Although the economic pundits are trying to persuade us otherwise, there is nothing wrong with the parity of the dollar, because the Americans are now running quite a decent and useful trade surplus on trade account. What has put their payments account out of line is the fact that they are exporting capital on a substantial scale, partly in the form of private investment and partly through their foreign aid and defence obligations. Their problems arise substantially because of their huge investments of private capital in other parts of the world.

When a nation exports capital without matching it by goods—in other words, when it does not run a trade surplus large enough to cover its export of capital, two things happen—and they happen here as well as in America. First, the buying power of that capital is with-drawn from the country exporting the capital and there is a short-fall in the tension of demand. Here I must oversimplify the matter. If I were an American and I had 10 million dollars to invest and I decided not to invest them in my own country but in France, Germany or England, those 10 million dollars would no longer be buying things in the American market. That is the first thing that happens when I send money abroad.

If, when I give it to the French, Germans or Englishmen, they buy American goods, the effect is the same as if I had done so, but that means having an export surplus of goods to match one's export surplus of capital, and that is exactly what is not happening in America. America is exporting capital without a matching export of goods. The first consequence is a chronic withdrawal of buying power—both investment power and other buying power—from the American market. That means that the market will not have the tension required to keep it going in a dynamic and fully employed manned. That accounts largely for the American stagnation.

The second consequence occurs abroad. When a country has an export deficit of capital unmatched by goods there is a strain upon its foreign reserves, and, however powerful that country—and this applies even to mighty America—its currency comes under threat and strain if the situation is long kept up. But the remedy for the slackness at home because of the deprivation of buying power runs contrary to the solution of the problem of the pressure on that country's foreign balances.

So the reason why the export of capital unmatched by the export of goods is so dreadfully dangerous is that it creates a lack of demand at home, and a need for expansion. This can he remedied by modern methods of economic and financial planning, but the measures required to be taken to make good that shortage are themselves in conflict with the second consequence of export capital unmatched by goods, namely—simultaneously and pro tanto—a strain upon one's reserves.

This, basically, is the answer to my hon. Friend's analysis of why this country is not allowed to get under steam. As soon as she gets under steam, she runs into a balance of payments crisis, partly because £2,000 million of capital is exported not adequately matched by goods. At any rate, much of it is not matched by goods. Although it is worthily intended and has many advantages, it cannot be said too frequently that the export of capital unmatched by the export of goods is a menace to a country, not merely in its domestic policies, which are restricted because of the pressure generated upon her exchange, but because it itself creates the need for inflationary measures, unless the economy is to stagnate.

The Americans are being victimised on a much heavier scale than we are. It is suggested that the solution to their problems lies in the financial conjuring trick of doubling, trebling or quadrupling the price of gold, or even adding 50 per cent. to it. America is facing a crisis, and it is odd that it has not been mentioned in the debate, because the consequences to us can be enormous if the American Government are driven to unwise or almost inevitable measures because she has been pushed too hard in her gold reserves.

What has startled and dismayed me not a little is the number of financial advisers who are of a progressive bent who are, as it turns out, secret gold addicts and who see in the conjuring trick of doubling the price of gold, to which we are invited to give our assent and support, the solution to America's and the world's problem.

I shall state the objections to this. The first objection is that, unless the United States has a very vigorous change of heart and mind, there is not the smallest prospect of it agreeing to pay, for example, 70 dollars an ounce for the Russian gold production. The United States will quite rightly think that she should not be lunatic enough to finance Russia by paying it voluntarily twice the price for a commodity she produces, which is in this case not a particularly useful commodity. I imagine that the Government will have very strong advice from their strategic economic advisers that it would be the very mid-summer night of madness for America voluntarily to give Russia double the present price for her future production of gold and for any stocks she now has. That is a very substantial objection.

The second objection is that the suggestion does not solve anything. It merely puts off the solution. The economic set-up is the same. The pressure upon America could be temporarily relieved by notionally doubling the dollar value of her gold reserves. In two or three years' time we should be back where we are today and would have solved nothing.

Thirdly, if one doubles the value of gold stocks and future gold production one is giving a claim, in terms of buying power on the world's resources in the future, to the owners and prospective owners of those gold stocks. We must surely be agreed that what we want to do with world production is to ensure that the backward areas get an increased claim on any increase we have. We should try to ensure that the increased production redounds to the advantage of those areas needing it most. Who will benefit from doubling the gold price in America? The American gold holdings will double in value. West Germany's gold holdings will double in value. So will our own more modest gold holdings. The South African and Russian mine owners will receive a greater income from it.

There would be something to be said for this ridiculous charge or lien upon the world's future production—temporarily given by the United States, it is suggested—if, for example, the gold supplies of the world were located in India or in the backward areas which are sorely in need of an increased claim upon world production. There is, however, nothing to be said for it in the present context.

The final and greatest objection is this. When the United States Government fixed the price of gold in 1934 at 35 dollars an ounce and did not change it after the Second World War when everything had risen in value two or three times, we started the valuable and useful process of dethroning, for the first time in history, the great god, gold. Once one starts expressing the value of gold in terms of how many dollars can be bought with it, instead of the reverse situation where the value of the dollar is defined by saying how much gold can be bought with it, gold is on the way out. It becomes a commodity like any other commodity, but in this case a useless one, whose value is kept, for various reasons of convenience, fixed at 35 dollars an ounce by the United States Government.

If one once starts on the road back to the re-use of gold as a unit of value, if one once again makes world trade dependent upon the volume of gold available to finance it, if one is to indulge in this massive regression towards tribal finance, instead of the immense step we have taken towards purposeful and planned finance, we shall have the greatest difficulty in re-emancipating ourselves. From then on, the quantum of world trade will automatically be dependent upon gold and not, as at present, upon international agreements between the Western nations in their trading relations which are being developed and are gradually assuming greater importance year by year.

Let us not go back on the road to tribal fantasies in relation to gold. Let us not enslave ourselves once again in the manner suggested, to which there are so many powerful objections. Let us, on the contrary, go forward. The lesson we should learn is that there is not enough international co-operation. The World Bank and the International Monetary Fund, developed from the E.P.U. and the like, are the ways in which to solve the problems of short-fall in the balance of payments. Let us insist that those who have an export trade surplus without a matching export of capital shall do something about it so as to relieve the strain upon those countries which temporarily have current accounts deficits, partly because they are engaged in capital finance. Our aim there must be to go forward to the further measures which are required to protect a country temporarily out of balance.

It will be an utterly hopeless task, however, to achieve this further international co-operation if we go on setting ourselves objectives which we cannot all achieve in common. We are all out to get an export surplus. We cannot very well all co-operate so that we can all have an export surplus, because if everybody has an export surplus, this will require the discovery of the fourth dimension. It is rather like handing three turbulent youths a large cake and saying to them, "Do be good boys. Agree among yourselves as to how each of you can have half of this cake." It just is not on.

What we must achieve is a realistic common objective which we can all achieve. In other words, although we all like export surpluses, we must make arrangements so that, when we do not have that equilibrium or surplus, we help each other temporarily to bridge the gap. Therein lies the hope of again emancipating ourselves permanently from these cyclical crises and artificial restrictions upon our potential production.

I shall now try to relate this to our own country. It might be said that I am talking through my hat in suggesting that so modest a contribution as a couple of hundred million pounds a year by way of the export of capital could have any noticeable effect upon an economy which, after all, is producing about £15,000 million a year in goods and services. This would be wholly to under-estimate the power on financial policies of questions relating to foreign reserves.

America has about 18,000 million dollars worth of gold left; that is about £6,000 million or £7,000 million. That is chicken feed to the American economy. Let her lose 4,000 million dollars of that in the next three months or twelve months. Let her lose 4,000 million dollars, which is a mere flea bite compared to the total American production. Then we should see what drastic consequences there will be in the American economy, because the American Government would have to do something to stop it.

That has happened with us. If we are running a deficit of £200 million or £300 million—of relatively little consequence in relation to our total production—the Government proceed to take measures to get that £300 million back, which affects, not £300 million of home production, but more likely £3,000 million or in some degree even £10,000 million of home production. The attempts to gain balance in foreign exchange for relatively small sums involve economic endeavours by the Government affecting productivity in huge areas of industry out of all proportion, to the relatively small, imbalance involved in the foreign exchange trouble. That is what happened. Worse still happened when there was no economic reason, but only financial reasons, as in 1957, when we were exporting splendidly and having export surpluses, simply because—and I will not weary the House by explaining it all—certain speculative holders of sterling, hedging against the risk of a future recession, turned £500 or £600 million into dollars and Deutschemarks.

I feel that we can plan to ensure maximum growth of our economy, without, I hope, turning ourselves into Poffelheimers, or whatever it was said by the Economist we should become, like neurotic Germans or duodenally-ulcerated American businessmen. I dare say we could have done more but we must tell the whole story of the great achievements of our country since the war and in it. If we want to reach prosperity, we must recognise that it is only by world prosperity, and not by turning back to ill-thought-out and reactionary restrictions of the kind advanced from the benches opposite in the course of this debate, such as that we should cut long-term investment and the like or increase the price of gold. The road forward is the road of co-operation with all the other countries of the free world, because we have a vital interest in their prosperity, as indeed they have in ours.

7.32 p.m.

Mr. William Shepherd (Cheadle)

The hon. Member for Manchester, Cheetham (Mr. H. Lever) has made an appeal to my innate Conservatism which I do not find it difficult to accept. I have no very strong desire to rush into the arms of the signatories of the Rome Treaty; neither do I think that there is great wisdom in seeking a solution to all the problems of world trade by a fantastic effort to uplift the price of gold, but the hon. Gentleman may have been on less sound ground when he tried to persuade us that the American economy had so decisive an effect on world trade.

We have to recognise that, just in the same way as German military power in the year 1960 is nothing of the menace that it was in 1938, so today the American economy bears little relationship to world trade compared with the extent it did even fifteen years ago. It is one of the gratifying aspects of the last four or five years that in time of an American recession, the rest of Europe, in particular, has not only weathered the storm but has gone on improving its own position. I think we can dispose of the bogy that we shall be dogged by ill fate if the Americans have a very difficult time.

I want to deal primarily with the views that have been expressed by the right hon. Member for Battersea, North (Mr. Jay) and the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) on the question of the kind of economy we are going to have in the future and what steps we should take to secure it. Before I deal with that general question, however, I want to say a few words about investment in nationalised industries. I am not one of those who have supported in this House the attacks upon the nationalised industries; neither have I thought there was any wisdom in trying to make them the object of political controversy. I say without hesitation that one of the reasons why today we face the difficulties of financing the nationalised industries is that they do not raise sufficient of their capital from their own resources.

The reason why they do not do so is to be found in the attacks by the Conservative Party on the nationalised industries when the Socialists were in power, and, on the other hand, the attacks by the Socialists upon the Conservative Party, for more or less the same sort of thing, and objections to increases in price, when we have been in power. I hope that in the future we shall abandon this political approach to the question of the price structure of the nationalised industries and realise that in the context of what is generally accepted to be a shortage of capital the essential thing is for the nationalised industries to get more of their capital requirements from their own efforts and less from the public.

Miss Jennie Lee (Cannock)

May I ask the hon. Gentleman if he would advocate that the electricity industry, for instance, instead of being satisfied with a 6 per cent. profit, which is about half what would be the average in private enterprise, would be justified in doubling its rate of profit, which would mean that electricity would be more expensive both for industry and householders? But, of course, if it doubled its rate of profit, it might not be able to keep up the volume of its sales and would not be able to supply its own capital.

Mr. Shepherd

I think that is a very sound plan, and I want to see at least 50 per cent. of the capital of the nationalised industries coming from their own resources. After all, if we do otherwise, we are in a sense subsidising those industries, and when we start subsidising them a number of unpleasant things flow from it. I should like to see the electricity industry and others supply at least 50 per cent. of their capital requirements from their own resources.

I want to deal primarily with the question of the future of the British economy, and I must say that some of the remarks made today might lead us to the view that we are one of the decadent races in industrial terms. I do not want to cultivate that idea, because it is true to say that since the war we have done many things of which we can be proud, and that the record of this country in terms of production, of productivity and of exports, as well as assisting people overseas, is one of which we can be justifiably proud.

I think we ought to state and restate that, because the under-selling of Britain at home and overseas is not a very profitable occupation for people from this country. While we want to recognise what we have done, as I think most hon. Members of the House do, there nevertheless faces us today an entirely different situation. We are no longer in the same relationship industrially to the countries of Europe as we were twenty years ago. It is quite true to say, as I did when I interrupted the right hon. Member for Battersea, North, that we in this country with a smaller population have a considerably higher gross national product than Western Germany, but it is also true that every one of these countries in Europe is rapidly overhauling our lead. We have to decide what we are going to do about it, and I suggest to my right hon. Friends that they should decide on a more dynamic economic policy.

I think we suffer from some difficulties in getting the rate of expansion which we require. The obvious one is that we are limited by the extent to which we have to export to the markets of the world. That is obviously our primary limitation, but it is not our only limitation. There are other limitations which are perhaps even more disastrous. What I have to say on this point will not please everyone. I say without hesitation that the reason why Britain has made less progress than she might have done in the last ten years has been the existence of restrictive practices by trade associations.

Mr. H. Lever

And the Government.

Mr. Shepherd

If the hon. Member likes to refer to the restrictive practices of the nationalised industries, I will go into that later.

Mr. Lever

I have been referring to the misguided restrictive practices of the Government in regard to the present Bank Rate and the like from time to time.

Mr. Shepherd

The hon. Gentleman is ahead of me, but only slightly. I shall come to these misdemeanours in a short time.

I was saying when I was interrupted by the hon. Gentleman that the greatest single factor in retarding the economic vitality and dynamism of British industry has been these disastrous trade associations with their restrictive practices.

Mr. Jack Jones

I want to be clear about this and these trade associations. Does the hon. Gentleman include the trade unions, or the trade unions along with management, and all the people engaged in industry?

Mr. Shepherd

I was not referring to the trade unions. I did refer exclusively in this context to trade associations, although, of course, there tends to be a nice ganging up of the boys on both sides of the table to ensure that the comfort is well spread and that they all enjoy life.

I repeat my belief that the greatest single cause of the lack of all dynamism in British industry has been the fact that we have been riddled with restrictive practices by trade associations. No doubt some of these practices have been motivated by the best possible intentions. At trade meetings it has been said: "Poor old Joe—if we reduce our prices by 10 per cent. we will put him out of business. He's a very good fellow. We must not reduce our prices by 10 per cent. because we just cannot see poor Joe going on the bread line."

This attitude of mind, this keeping in existence inefficient plants and inefficient producers, this tendency to measure the pace by the slowest, has been the greatest single cause of our failure to display the economic vitality of which we as a nation are capable. I say that there is no other race that is capable of the dynamism of the British people. That has been proved by our history over the past hundred years.

Therefore, we have to get rid of the restrictive practices of our trade associations, and I urge the Government not to take notice of those of my hon. Friends, and of other people outside who say, "You are being too harsh". If anything, we are not harsh enough. If anything, we are not going fast enough. If we do not eradicate the dragging of feet that comes from restrictive practices by trade associations we shall find ourselves even more overhauled by the rest of the world.

I urge hon. Members opposite not to flinch at the consequences of this policy. It may well mean that we shall have fewer companies, that we shall have more large concerns dominating industries, but if that is to be for our economic efficiency, it must be, and I urge hon. Gentlemen not to quarrel with it. The world is changing, and if we are to keep pace with the economies of other nations we must to some extent abandon the place that we have hitherto held in world trade—the making of a lot of specialised goods, sending endless varieties to different markets. We have been prepared to make half a dozen of this or a thousand yards of that.

Some of that trade must be retained, because it is valuable, but in order to be truly competitive we must turn to larger-scale production and spread our development and research costs over larger areas of manufacturing. That must inevitably mean the abolition of a number of small firms and the domination in industry of the large ones. I ask hon. Members to accept this as being a reasonable proposition, and I do so as one who is himself engaged, in a relatively small way, in private industry.

I want next to deal with what I think are the mistaken concepts of the Government, and to criticise what they have done in some respects, because I think that in some measure the Government have contributed to their own difficulties and to the lack of dynamism in our economy. My first criticism is of this extraordinary affection for the outmoded device of Bank Rate. If we did not have a silly policy on interest rates we could probably raise some of the money for the nationalised industries on the open market. Who will go for long-term money at 7 per cent. if he wants to run a business on sensible lines?

The Government have to think again about interest rates, and have to realise how limited is the effect of the interest rate in an economy in which everybody has been enjoying relative prosperity for twenty years and in which they only indulge in expenditure if they are to get a return of 10 per cent., 15 per cent. or 20 per cent. on their capital. The rate of interest is no longer a critical factor, and the Government cripple themselves by the application of interest rates in what I consider to be an insensate manner.

Not only are the Government thereby unable to deal with their own funding problems and not only are they unable to deal with the question of raising money for the nationalised industries, but they are also put into an extremely difficult position in regard to housing. I believe that the time has came when we should rethink about this question of interest rates. We must realise that the interest rate today is in something like the same position as was the gold standard in 1925. I urge my right hon. Friends to try to display a little originality. What the Government lack is originality of thought, and originality of thought is what we must have if we are to improve our position.

The second defect of which I complain very bitterly is this absolute nonsense of messing about with hire-purchase regulations. I cannot conceive the mentality of a Government that really believe that that brings any effective change—any beneficial change—in the tempo of the economy. We cannot have these regular, unco-ordinated and unregulated changes in hire-purchase conditions. These changes are grossly unfair to many of those engaged in industry, and they damage the thing that is so essential to any Government, which is to take industry with them in what they want to do.

I do not believe overmuch in exhortation, but I believe that there is no mechanisation known to Government that can succeed in directing the economy of the country if those who run industry believe that policy to be wrong. If we are to succeed in this hazardous business of running our economy full blast and without having the dangers of inflation, a prime essential is to carry industrialists with us in what we seek to do.

One of the greatest failures of the Conservative Government is that they have not succeeded in doing that, and I lament, as one engaged in industry, that, in many casec, Socialist Ministers who were concerned with trade and finance were thought of rather more highly than our own. That is because there is not sufficient contact with industry, and because we do these wholly unjustified things like chopping off people's trade overnight by hire-purchase changes.

Many of the industries affected are, by their nature, cyclical, most of them are seasonal by their nature and most of them are susceptible to market competition from overseas. Yet the Government change the hire-purchase regulations without any regard to the welfare of the people in those industries. The result is that there is very little effect upon the sum total of the economy. The time has come to set up definite regulations governing hire purchase for all industries concerned, and we should stick to those regulations.

I do not want to see a situation in which, as has happened during the last two years, motor car dealers sell secondhand cars to men earning £14 a week, with four years' credit, with no deposit and weekly payments of £4. That is a form of suicide for trade and industry. I respectfully suggest that we ought to have an arrangement—and I feel sure there would be no difficulty in getting such an arrangement—whereby the minimum terms are set down and that we stick to those rates, instead of varying them, for the purpose of securing economic control.

I have said that I am dissatisfied with some aspects of the Government's policy. It is true to say that there has been a failure to appreciate some of the problems facing us in this second half of the twentieth century. We have got to deal with the problem of maintaining sterling much more imaginatively than we have up to now. We run a million miles at the sight of a bit of trouble. In fact, we convince the foreigner that our position is even worse than it is. Why have not the Government tried to tabulate and broadcast British assets held overseas? They are infinitely greater than our liabilities. It is no good saying that we cannot do it when countries like America and India have done it.

We have got to face the situation that we have a certain amount of difficulty but that our assets are immense. Our overseas assets are immense. The story put out in 1945 that we sold our overseas assets to keep the war going is still believed by about 99 per cent. of the British public. We sold only about one-third of those assets, and now the remaining two-thirds are probably worth three times as much as the whole of our assets at that time.

We must have a much more imaginative approach by the Government and a greater dynamism must be displayed by British industry. We can do all those things with the right kind of policy. I am not a defeatist in the present situation. No other race can be so inventive, so energetic and ingenious as the British. With the right kind of leadership and economic conditions we can not only maintain our place in the world industrially, which is so vital to our social and foreign policies, but we can improve upon those because the British people have the ability.

I hope that the Government will change from a policy which appears to be one of adhering to the status quo, will realise the need for expansion and for dynamism and will lead the country along a path that will improve our industries and give us even more security than we are enjoying today.

7.54 p.m.

Mr. Jack Jones (Rotherham)

We have heard some interesting speeches today. The contribution by the hon. Member for Cheadle (Mr. Shepherd) is one of the most interesting that we have heard for a long time, coming from one of the younger Tories. We had from him a complete denunciation of Government policy relating to the increase in taxation, hire-purchase restrictions, and so on, which make life much more difficult, particularly for younger people. The hon. Member advocated that there should be greater common ownership of industry and the integration of the smaller units. We never heard a speech of that sort in the early days from any Tories after the Socialist Government failed to retain the confidence of the people.

We have heard some other interesting speeches today. The hon. Member for Harwich (Mr. Ridsdale) complained bitterly about Britons buying foreign goods. He then displayed to the House the suit that he bought in Hong Kong. I am proud to display the suit that I am wearing. I bought it twelve years ago, to wear at my son's wedding. It is made of Australian wool, spun in Bradford. It will still be a suit when the hon. Member's suit has been exchanged for two balloons from the ragman.

We heard from another of the younger Tories, the hon. Member for Bristol, North-East (Mr. Hopkins), a story about a cavalry man. I was in the yeomanry in the First World War, and I always made sure that I had a better horse than the horse had rider. By this means we always managed to get to the other side of the fence. The hon. Member admitted that he always fell off, and I am not a bit surprised. Many people in this country are finding that they have backed the wrong horse.

During the speech by the Economic Secretary I made an intervention on the failure of the Government to mention in the White Paper the amount of money invested in the nationalised portion of the steel industry. I do not know much about a lot of things, but I know a lot about the industry in which both my father and I have worked. I am not surprised that the Government have thought fit, in a page of 31 items covering everything from coal to electricity down to crematoria and police stations, to omit to tell us something about the wonderful success enjoyed by the public, by those who own the nationalised portion of the steel industry. I am not at all surprised that this has been left out of the White Paper. But I would have been surprised if it had been left out if the industry had been a failure.

I want to say a word about the steel industry. We have been discussing how to bring about an expansion of our economy. I am a simple chap. I cannot go into the question of the trebling of the value of gold, who got it, who moved it, where it was moved and who brought it back. I cannot go into the theories of these wonderful economic ideas. But I know the simple facts of life. If we want to live, we have got to work. We have got to produce something better than our competitors can produce, and at a lower price. If we cannot do so, our competitors will get into the British market and we shall have unemployment.

Before I came to this House I was never paid a penny except on tonnage production. The more steel I produced the more "brass" I got. If I did not make any steel I did not get any "brass". That is not a bad way of deciding what people should have. That principle should be applied to the fellows on the Stock Exchange, to the fiddlers and the rest of them.

I am not satisfied that to increase our production it is necessary to increase our plant. I do not believe that we are getting what we could get out of our existing capacity. Fourteen years ago I had the privilege of following that great statesman, the right hon. Member for Woodford (Sir W. Churchill), in a steel debate. I spoke at the Dispatch Box in another place, which was then being used by the House of Commons as a war emergency measure, on the induction of oxygen in the production of steel. After all these years we now have a pamphlet, issued by the British Steel Federation, which discusses the idea of oxygen induction in the production of steel so as to make it more quickly and cheaply.

Steel is the basis of our great exporting trades, of the engineering trade, farm implements, the lot. But the important thing is not what we have in the way of capacity, but what we do with it. I heard two Tory friends of mine this morning discussing farming. They were complaining about the floods on their land and they went on to speak about gathering in potatoes. They talked about the tonnage of potatoes per acre that they had. I take a great interest in the affairs of farmers where I live. As everyone knows, I love the land, and I am an amateur gardener of some little repute.

One farmer said that he had a friend who had got seven tons of potatoes per acre. The other one said, quite enthusiastically and with pride, that he was getting 20 tons per acre. There was the difference between those two farmers, 7 tans and 20 tons. I give that as an example to reinforce what I say. What matters is not so much whether we spend money on increased capacity. We should be worried far more about using what capacity we have to the fullest possible extent.

The hon. Member for Cheadle mentioned trade restrictions. I am not ashamed to mention trade union restrictions. I am not at all happy about the situation in which we find ourselves in relation to full employment. Full employment has created great problems—the "I'm all right, Jack" idea—"I can get a job down the street and I can thumb my nose at the boss. It does not matter if I do not do quite as much as I am expected to do". Let us face the truth. That has happened, but it has happened primarily because of the example set by those who should know better, by those who are responsible for the conduct of industry.

A few weeks ago we discussed in the House the enormous loans which were to be made for the purpose of setting up a new strip mill in South Wales and a new strip mill in Scotland. I am beginning to wonder whether those two strip mills will be needed. In my candid opinion, though I am not an expert, the recession in the motor car industry is not a temporary one. The recession in America brought prosperity to the car industry in Britain. That may sound "Irish" and ridiculous, but this is what happened.

The American who found himself with less money to spend decided not to run a big car any more. Many thousands of Americans bought small British cars. Then the Americans, in their turn, saw that they had that market of their own and that a small car should be produced to meet their own demands. They are now producing small cars. The result is that the people of America are now buying small horsepower cars equivalent to what we ourselves could send out to them. It is quite logical.

I have had the privilege of going out of this country about forty times since the war, and I know very well that it is no good saying that other people are not doing this, that or the other. There is the great steel works in Eastern Germany, at Stalinstadt. There are great steel works in Russia, in Western Germany and in Italy. A week last Saturday, the Italians—whom some people called "Wogs"—issued the statistics for their steel industry. Italy had an increase of 27 per cent. in steel production over the previous year. Our people have produced their figures; they are good, but they are relatively nothing like so good as those which some other nations can show.

I come back again to the business of producing something better, more quickly and more cheaply than we do at present. I have already referred to the oxygen induction process. I will tell the Chancellor of the Exchequer where to invest some money. It may sound too simple to be true, but I want him to invest money in fresh air, in oxygen, and in sea water. There is a tremendous demand today for oxygen for the steel industry. To produce the amount of oxygen required, an expensive plant has to be put down. Enormous capital investment is required. If the Government established the plant and allowed the steel industry to have its oxygen, charging a fair price for it, they could recoup millions of pounds and, what is more, increase the production of steel, from which the owners, the men and the country as a whole could benefit.

This would bring greater productivity out of the same furnaces and the same capacity, with the same number of men. This is not something new, but it is as simple as that. Fresh air. Bags of it are available and it is cheap enough, provided, of course, that it is not too polluted with some of the stuff which is going up into the atmosphere these days. That is investment item No. I—investment in fresh air, in oxygen.

In Austria, Germany, Russia and in America—the whole "shooting match" of steel producers are going ahead. Even Nasser is now talking about producing steel in Egypt, where I spent far too much of my youth running about the desert. India is putting in four of the biggest steel works in the world. America is building one. We are building one. Russia is building one. Germany is building one. When those works are completed, will the Indians come to us for their major steel products? Not likely. We must face these facts and we must march abreast of events.

I come now to another very simple suggestion. When the war was on, we produced magnesium from sea water. Goodness knows, there is enough of that, and it is cheap enough. In West Hartlepool, we put in a plant the like of which was to be found in only one other place in the world, in America, to produce magnesium for flares for the Royal Air Force. When the war was over, it was discovered that magnesium produced for flares could be precipitated and used for the manufacture of the finest refractory fire bricks in the world.

What happened to the plant? It was owned by the Government, by the nation. It could produce wonderful bricks. I myself have worked at furnaces built with them, and I know that they are almost indestructible. I am not talking about something I have read in a book. I had thirty-four years in front of those searing, blinding furnaces and I know what I am talking about. Within weeks, production went up by 30 per cent. with the use of these better bricks, but, because of vested interests, we are still using inferior types of bricks in the steel industry.

Here is an opportunity to create a new form of refractory brick, and plenty of them. Here is another opportunity to invest money. Sea water costs nothing; it is as cheap as could be. These are the sort of things about which one could talk for a long time. By the means I have suggested, our great steel industry could have its major requirements met at this moment. With the new type of fire brick, with its longer life, maintenance costs are reduced, production is greater, while overheads remain the same and the manpower remains the same. The work is easier for the men themselves because, when a man knows that he is using a good fire brick rather than something else, he feels more confidence in getting on with the job. I know, because I have had my time at it, as my father and grandfather did before me.

My hon. Friend the Member for Leek (Mr. Harold Davies) spoke about the machine tool industry. I am ashamed to admit that in this country today there are firms which are sharing some of their tremendously valuable machinery which they have had to buy from elsewhere. They are letting it out to their competitors for use on night shifts because our own machine tool industry does not produce that type of tool. It makes a man think. These are facts, and I know that there are friends of mine among hon. Gentlemen opposite who know them to be true, too.

I do not say that everything that is wrong today is the fault of Government policy. I know very well, as I have said, that full employment has brought a feeling of laissez-faire—"It will be all right". Young folk today saddle themselves with greater burdens than they can bear, as I learn week after week of my life in my job of welfare supervision in one of the finest undertakings in the land. I see broken homes, broken hearts, and broken pockets because of the shifting about which occurs. A man says, "I contracted to buy a house at 5½ per cent., but now the interest has gone up to 61 per cent.". The I per cent. makes all the difference to his pocket money and the little bits of pleasure and leisure that he and his wife enjoyed.

A man like that is disgruntled and he turns towards those who are designedly doing all sorts of things within industry to make trouble, to those who are there specifically to undermine industry, to undermine the great trade union movement and, in turn, to undermine the stability of this great nation itself. These are some of the things that the Government should look at. I could go on for a long time, but I know that time is short.

It is sometimes said that the people of Western Germany are working hard. They do not really work any harder than our working men do, but what happens is that the engineer turning a screw in Germany works in such a way that, at the end of the day, because of the way he has applied himself, he has turned two or three more screws than our man has. It is plodding on and working steadily that matters. In Germany, men work at night under lights repairing buildings. They work on whatever they can under artificial light at night, during their tea breaks, and in all sorts of ways that we do not.

I do not want to belittle the good work done by millions of trade unionists and good craftsmen. I am pointing out the undermining that is done by the rotten few. No one can deny that we have got them, just as we have them on the owners' side, on the controlling side. They are the few diehards, and, thank heaven, they are dying out. There is a more progressive outlook these days. Nepotism, and all that went with it in the 'thirties, is now dying the death that it deserves.

I have tried to point out one or two things that the Economic Secretary might bring to the attention of the Chancellor of the Exchequer. Every firm ought to do more in explaining to its employees what it is really up to, where the raw materials are coming from, what is the future programme, what the order book is like, and what the profits will be; whether they are high or low, let the men know. Let them feel that they belong to the job instead of telling them that it is none of their damned business—" Mind your own business. We will look after it." That creates unnecessary suspicion.

It is all very well to talk about what has happened in America, but I am pleased to know from what I see, hear and read that there is to be an upsurge in expansion in America which should benefit this country. At the same time, we want to go right ahead, get a surplus of production if possible and send it out to our unfortunate coloured brothers and sisters. But for the grace of God, they would be standing here and I should be in one of their mud huts, nearly dying of starvation. Let us get this production and send it to those who deserve to be helped. It can be done; it must be done. If it is not done, whether it is a Labour Government or a Tory Government, or even a coalition Government, it will go to the wall.

8.13 p.m.

Mr. Maurice Macmillan (Halifax)

The hon. Member for Rotherham (Mr. Jack Jones) will, I am sure, forgive me if I do not follow him. It is not because I think that either his subject or his speech were unimportant, but because I would hesitate to carry on after one who has so much knowledge of this subject. I think that it was the hon. Member for Manchester, Cheetham (Mr. H. Lever) who said that very few practical solutions had been produced in this debate. The hon. Member for Rotherham has now made some which, although he said they are simple, would, I am sure, be effective.

Although, in the course of the debate, there has been no discrepancy in the figures, so to speak, on which we are basing our arguments, there has been a very great discrepancy in their interpretation. This difference of interpretation cuts completely across party lines. There are those who, on the one hand, think that we are in a healthy, well balanced, prosperous economy and those who, on the other, think that we are in stagnation, heading for deflationary disaster.

Most hon. Members who have spoken seem to have taken the line somewhere between those two extremes. In doing so myself, I agree with a great deal that has been said by the right hon. Member for Battersea, North (Mr. Jay) and with practically everything said by the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). I think that we must all admit that whatever the figures of growth which various sources disclose the real growth is less than those figures indicate.

The White Paper contains only gross figures and both the right hon. Member for Battersea, North and my hon. Friend the Member for Twickenham (Mr. Gresham Cooke), who spoke yesterday, seem to agree that the net figure would be about half. Yet the Economic Secretary has stated that there has been a considerable rise over the last ten years or so in public investment. I think that possibly these facts indicate, as so many of the speeches from both sides of the House have done, that what is wrong is the direction and type of investment that we are undertaking—wrong from a purely productive point of view, however necessary some of it may be socially.

Table C of Appendix 2 of the White Paper splits the figures into new buildings on the one hand, and vehicles, ships and aircraft, and plant and machinery, on the other. Taking the vehicles, ships and aircraft, plus plant and machinery, as broadly to be those types of capital investment which will bring a quick return and a chance of a return in the export market, according to the percentages in Table A of the same Appendix this means that our gross formation of fixed capital liable to produce a fairly rapid return is about only 10 per cent. of the gross national product.

This means that our net growth, if the figures quoted earlier are more or less right, of capital investment that will be productive is only about 5 per cent. of our gross national product, or about £1,000 million a year. I think that the point made about savings is a very valid one. An hon. Member pointed out in a debate some time ago that it would take about another £500 million a year in investment to match the German rate of growth. That is about 8s. a week per worker saved, which is not as great as it would appear to be at first sight.

Whether or not we shall get that extra investment over and above the present level we must surely, in considering both our public and private investment, think about the type of enterprises in which we are putting the country's money. I wish that the Government, in presenting these figures to us, and in seeking, as they have done, by publishing the White Paper earlier than usual to help Parliament keep control on their expenditure, would see whether they cannot divide the investment not only on the lines that it is in the White Paper, but on the lines of a division between that which is directly productive, such as new machinery in factories and that which is productive in the sense that it saves money and will bring returns in due course, such as new roads. In a third category they might put that which is productive in the long-term—there I would put industrial and technical training—and, finally, that which is nonproductive in the industrial sense, but which is absolutely necessary in social and other ways—such as hospitals and prisons.

I am sure that one thing that we have to do is to make certain that the balance of our investment is right. That point has been ably brought out by many speakers today. The right hon. Member for Battersea, North referred in this connection to our external operations and I think that we must keep a balance there, too. We all very much share his concern on the question of lending long and borrowing short. I think that the hon. Member for Cheetham, whose charm and distinction in developing his argument almost prompts me to call him my hon. Friend, did, in developing his analogy with the American situation, make clear the dangers of exporting capital without goods.

There are some figures which show that my hon. Friend the Member for Cheadle (Mr. Shepherd) is probably quite right when he says that our assets abroad are much higher than we sometimes realise. In the Westminster Bank Review of August of this year, it was pointed out that according to the Radcliffe Report the gross capital exports on private account for 1946 to 1957 was £3,200 million, for 1958–59 a further £600 million and that, added to a post-war increment of nearly £4,000 million, it gave a gross figure of our total capital investment overseas of about £7,000 million on private account alone.

Those sources made it clear that this is a very conservative figure. Even allowing for foreign investment in the United Kingdom, the figure is probably nearer £6,000 million than £5,000 million for our net overseas holdings on private account. Even taking the net Government indebtedness of £1,500 million and about £1,000 million on short-term liability, we must have overseas investment of about £3,000 million compared with £4,000 million in 1939. That 1939 figure of £4,000 million was built up over nearly one hundred years and to restore it since 1949, when the total deficit on the basis that I have used was £500 million, to £3,000 million on the right side must have meant the export of a very great deal of capital without the export of goods.

It has been clearly shown what happens. A great deal of this capital has been created by the retention of profits, in sterling countries particularly, and I think that the taxation policies of some of the Commonwealth countries have made it very difficult for private concerns to repatriate their profits to the extent that they should do, and it might well repay the Government to look into the matter to see what can be done. It is not necessarily economic to have capital retained in individual businesses abroad. It might be much better to have it brought back here and further investment in different businesses in more backward countries made possible as a result.

I do not want to develop this point, particularly the tax point, because I think that in another debate later in the year, or early next year, we shall have an opportunity of criticising the effect of the Government's fiscal policy on growth and development, and I would rather not do that now. I was, however, very sorry that the hon. Member for Newton (Mr. Lee) and the right hon. Member for Battersea, North made such play in this connection with the question of dividends. It is equally possible to argue, as I have argued about the unnecessary retention of capital overseas, that a too conservative dividend policy merely builds up unnecessary reserves in a company; in many cases it is more in the interest of a country that a higher dividend should be paid and for development to be financed at market prices with money borrowed from the market.

Again, that is a point which I do not want to develop too far, but it has a connection with what has been said by the hon. Members for Rotherham and Stechford and many other speakers, namely, the feeling that everything is all right in the economy. This feeling runs right through the whole of industry. It is felt that we are all right and are getting on very nicely, thank you. I know many cases where that is happening. Some of it is a question of taxation. People who are better off are doing so well that they do not have to bother too much about working hard. Many people on the other side of the industrial fence know that they can get a job at any time and do not mind missing a day or two. It would, however, be better for the country if we did not seek to allocate blame, but started to think, as, I think, has been done in this debate, on a more or less non-party line of methods of solving these difficulties.

Mr. Jack Jones

Would the hon. Gentleman agree that where a company finds that, due to propitious and advantageous circumstances in any one year, it is able to pay a higher dividend than it expected, it would be as well to explain to the workers how much was to be ploughed back? That would be a tremendous advantage, but it is not being done throughout 90 per cent. of industry.

Mr. Macmillan

I am glad to have that interruption, because it is extremely important that management should take the trouble, as a matter of courtesy if nothing else, to explain to its workpeople what is happening in their firm. In nine cases out of ten the response is one of complete understanding and greater co-operation. The problem of combining incentive and security is one which we have not faced either in the Welfare State as a whole or in encouraging growth and development. For many of us who have dealt with constituency cases it is painfully noticeable that very often those who profit and benefit most from the Welfare State are those who have made least effort themselves and that those who have tried very hard tend to be penalised.

The question of full employment, security and incentive needs much more careful thought, particularly in view of the increasing competition which we shall have to face from overseas, whatever our European solution is to be. There is no question that we shall be seriously damaged deliberately, or that the European Economic Community will necessarily be to our disadvantage, but I am certain that it will be to our disadvantage unless we in this country make an effort as great and well directed as that of European countries.

The hon. Member for Sheffield, Park (Mr. Mulley) said that we could not be like Scandinavia—standing still. But I have just been attending a conference of all the E.F.T.A. countries, which made it clear to me that not even the Scandinavians are standing still. They are all becoming more dynamic. It is important that we should not get behind.

Mr. Mulley

The hon. Member is mistaken. I did not make that statement.

Mr. Macmillan

I am sorry. It was made by one of the hon. Gentleman's hon. Friends.

With regard to overall investment, I am sure, as I have said before, that it is not the amount spent but the amount spent in relation to yield which is important. The hon. Member for Sheffield, Park. And my right hon. Friend the Member for Blackpool, North (Sir T. Low) developed that point. Moreover, it is not only a question of yield, but the period over which the yield is earned. It is obvious that the more long-term investments we have which will not show a return for a long time, and the more socially desirable capital investment, such as hospital development, we have, which shows no direct return the greater must be the yield on the profitable investment.

In addition to being a back bencher, I am also a publisher. It is easy to publish books which are of artistic ability, like one concerning which there was a recent case, but it is not as easy to sell them in as large quantities as that will be sold. One of the most important things in my industry is to make sure that when a book does not make money this is done consciously. Many books are published which eventually will bring a return—school books, for example, and the like—and until they do they must be financed by an adequate return on the odd best seller which one happens to get, and other quick selling lines. It is when the best seller does not make profits that the publisher gets into difficulties. I fear that we in this country are beginning to get into that state on the question of our economic growth and investment.

We in this House should all be reassured to discover that the Treasury and the Government were aware of the sort of problems that we have been pointing out to them. We would be even more reassured to know that they have been studying them actively. My hon. Friend the Member for Harwich (Mr. Ridsdale) was perfectly right in saying that if the Government were to take the House and the country into their confidence, just as managements have found it a successful method, so they would find that we would be willing to face the realities and to respond to the leadership which, I fear, they have not yet given to us.

8.29 p.m.

Mr. Leslie Spriggs (St. Helens)

I wish to discuss a part of the subject which is mentioned in the Government White Paper, but which I have not heard referred to by any other hon. Member; that is, local government finance. To make it easier for hon. Members to follow me, I refer them to page 6 of the White Paper, in which the Government state: Local authorities finance most of their investment by borrowing; certain services, such as education and housing, are aided by Exchequer grants, either specific or as part of the general grant to local authorities. These grants may be made towards the loan charges, or, for classified roads and certain other services, towards the capital cost. While local authorities borrow from the market when they can, and in recent years have largely done so, the Public Works Loan Board remains their lender of last resort, so that their investment also constitutes a contingent liability on the Exchequer. Their decreasing reliance on borrowing from the Public Works Loan Board is illustrated by the fact that advances to local authorities by the Board have fallen from £364 million in 1955–56 to £45 million in 1959–60. To get a true picture of the story behind this move from the Public Works Loan Board to the private moneylending market, I refer the House to the Report of the Committee on the Working of the Monetary System. That Report exposes the negative attitude of the Government towards financing local government projects. It would be as well if I refer the House to part of the Report concerning local authorities. I shall try not to weary the House, but this is necessary for both hon. Members and the country to understand why local authorities find it almost impossible to carry out their schemes.

I quote from paragraph 90: The capital investment programmes of the local authorities are subject to close control by the central Government, in that an authority is required to obtain a loan sanction for every project which it proposes to finance from borrowed money; the extent to which authorities may finance capital projects from revenue is effectively limited by the manner in which the central authorities limit the qualification for grant of such projects. These are the negative aspects of central control; positively the central authorities by virtue of social legislation in effect determine the scale and direction of the investment of local authorities in most of the main fields of expenditure (notably housing and education). It is necessary to give that quotation.

I have been doing a little research and I asked the treasurer of the County Borough of St. Helens, Lancashire, my constituency, to give me some material on how Government financial policy affects the poorer members of the family—that is to say, local government—without which the central Government could not carry on with what we know as local services, such as housing, education, fire brigades, police, roads, mental health, and so on. I wanted to know how borrowing in the private market operated and how the Government's policy of allowing increased interest rates affected local government.

While I was in one of the offices of a local authority, to make inquiries there, I found the mayor signing documents authorising the withdrawal of, at the very least, £250,000—withdrawal from the local authority. That money was being withdrawn to reinvest, because under the free-for-all economy of the Tory Government people with money to invest and who are living on their interest, moved their money away where they could get more for it. That was what was happening. The Government are responsible for forcing the local authorities to go into the private market to borrow their money. That is what I found.

Let me refer to a Question I put to the Minister of Housing and Local Government on 14th April this year. It was: … what sums were borrowed by the County Borough of St. Helens Corporation for housing, up to the latest convenient date; and what is the total capital and interest repayments made over the same period by this local authority, giving the figures separately for 1945 to 1951 and 1952 to the latest convenient date. The right hon. Gentleman answered: Between 1st April, 1945, and 31st March, 1951, the Council borrowed £1,417,368 for housing purposes, and paid a total of £616,139 in interest and repayment of capital. Between 1st April, 1951, and 31st March, 1959, it borrowed £4,848,154 and paid £1,947,315."—[OFFICIAL REPORT, 14th April, 1960; Vol. 621, c. 169.] I have tried to get behind this problem. I have tried to find Why the Government discriminate between the public sector and the private sector. If there were no discrimination one would not mind quite as much, but I have put Questions to the Minister and been refused an answer. I asked the Minister to tell me the difference between the interest rates charged to local authorities and other public authorities and private firms, and he would not tell me. One of my right hon. Friends lumped to the Dispatch Box and asked the Minister to give a general answer, but he refused.

I think it is asking too much, if one is to ask for the confidence of the people in general let alone hon. and right hon. Members of this House, if the Minister is not prepared to give vital information about the money which belongs to the nation. I think that hon. and right hon. Members of the House should take legal opinion on this, because I believe that a Minister is wrong in principle and in practice to refuse to give information of such a nature. There is no Official Secrets Act required here. What the Minister is doing is covering up the policy of discrimination in money matters as between the public sector and the private firms.

To develop this, when we see what the local authorities are attempting to do, when we see the price of land, when we find the sharks investing money in land with no intent of developing that land but just to hold it till the value has risen high enough to sell again, holding the country to ransom and particularly the local authorities, we surely must feel justified in demanding full information.

I was called to investigate certain terraced houses. I found conditions which are unfit for human beings to live in. The houses are infested and falling to pieces. Yet the Tory Party tells these people, when it wants their votes, that they have never had it so good. I challenge the Minister of Housing and Local Government to come to St. Helens. I will take him to the houses about which I am talking and let him meet the people there. He will get no change from them because they are tired and fed up of waiting for the local authority to condemn the houses; and, goodness knows, the local authority has done everything it possibly could.

It has compelled private owners to make these houses wind and weather proof. These houses were built to meet the demands of the Industrial Revolution. Some of them are more than a hundred years old and are not fit to be lived in. Some of them have gone beyond the useful life of an ordinary dwelling. They cannot be made fit for human habitation. This is an example of what the local authority has to face.

I have received a petition from the people in Langtree Street in the Parr district of St. Helens. I have also received a petition from another place begging me to do something to get these houses closed. I guarantee that the right hon. Gentleman opposite would not smile if he had to take his wife and family 'to live in one of those houses. They are a disgrace. It is heartbreaking for the people who live and bring up their famlies in such premises, yet it is from these houses that they go out to work week in and week out, and year in and year out.

I can do little for these people apart from telling the House the conditions under which they suffer. When my local authority last answered my questions about one large area which it wanted to clear, the authority said that it was waiting for the Minister of Housing and Local Government to sanction the condemning of the houses in that area. The right hon. Gentleman overlooked that scheme, because he and his friends did not have to live in such conditions.

When we look at how local government authorities are struggling to carry on, and when we discover how much they have to pay for a small dwelling, it is little wonder that they are frustrated. On 25th October my hon. Friend the Member for Salford, East (Mr. Frank Allaun) asked the Chancellor of the Exchequer what it cost local authorities under the present interest rate to build a house costing £1,600, with repayments over 60 years. The right hon. Gentleman replied: The total amount repayable on a loan of £1,600 over 60 years at 6⅛ per cent. is £6,042."—[OFFICIAL REPORT, 25th October, 1960; Vol. 627, c. 2127] Under the present financial structure, how can local authorities rehouse their people in a reasonable time? A lot of the people who are now on waiting lists will become grandfathers or grandmothers, or possibly pass away, before the local authority has a house available. Yet we are told that we have never had it so good.

Of the correspondence that I receive, 95 per cent. of the letters are complaints about houses which are in a shocking condition. On the way to church one Sunday morning I was asked to go through a row of terraced houses in my constituency and, as true as I stand here, it was raining as hard in the kitchen as it was outside. Water was rushing down the curtains and dripping all over the kitchen from the ceiling—the floor of the bedrooms above, and people had to try to sleep up there. In some instances the landlords have disappeared. The local authority cannot trace them to force them to carry out the repairs.

I asked my local authority what the Government policy on borrowing meant to it. The information I have been given is that from 1946–47 to 1955–56—and especially in the earlier part of that period—the main part of the money the authority borrowed was borrowed from the Public Works Loan Board. The former Labour Government has been criticised by the Tory Party time and time again in respect of its housing programme, because it had the good sense to make money cheap enough to enable local authorities to meet the social necessities of our people.

From 1956–57 to the present day, however, the County Borough of St. Helens has not borrowed a penny from the Public Works Loan Board because Government policy has compelled it to go outside for it. It is a victim of the short-term lenders. It is compelled to borrow from them, and they want their money quickly so that they can transfer it at short notice to investments which are paying higher interest rates. We are now living in a time when most people who have money to invest put that money before people, in our so-called civilised society. They also put money before important public works schemes.

Shortly after I first came to the House, St. Helens had to meet a bill of £1 million for a new sewerage scheme. It had to borrow the money, and it obtained Ministerial sanction to do so. At the interest rates which local authorities are having to pay now we find that the general rate fund is increasing every year. Those responsible for forcing an increase in rates are not honest enough to admit it to the nation. Furthermore, not only do they increase the rates but also the rents. The St. Helens Council has been compelled to increase its rents four times since 1947. Commencing at the beginning of the financial year, council house tenants in St. Helens have again had to pay increased rents.

We should spare a thought for the thousands of young people who are trying to buy their own homes so as to be independent of State and council. These people are prepared to put their last penny into the purchase of a home. I have an interest to declare here. My local authority has served a time and place notice on my landlord, and I shall have to leave it very shortly.

I have been looking at what it costs to buy a house. I have been to a building society which is a member of the Building Societies Association and I have been granted a housing loan. That is the most crippling part of the transaction. Fees are charged for this, that and the other, and it appears that everyone wants to dip into the pocket of the purchaser. When I see announcements in the local newspapers about young people who are getting married I wonder how long it will be before I receive a storm of letters from them appealing to me to tell them how it is possible to buy a house within their means.

Some local authorities are progressive enough to lend money and there are some associations which lend money. But, generally speaking, it is practically impossible for the average working man to buy a decent house today. A man should not borrow anything from £2,500 to £3,500 unless he is getting at least the salary of a Member of Parliament, or he will not be able to afford the repayments.

What has been done to damage the image of public ownership has also affected the private sector. If we are to do any good in this country; if we are to win our way and pay our way, both sides of industry must be given enough confidence to get together and help to win for this nation a place in the world economy. If we do not do that this nation and our people will go down.

8.53 p.m.

Mr. Michael Shaw (Brighouse and Spenborough)

I will not pursue the argument of the hon. Member for St. Helens (Mr Spriggs). We all sympathise with the cases which the hon. Gentleman has brought to our attention, but I think that he would be the first to agree that the direction to which he looked for a reply was most specific.

As I listened to the debate yesterday I gained the impression from several of the speeches of hon. Members opposite, particularly from the speech of the hon. Member for Newton (Mr. Lee), that during the last nine years there had been a violently fluctuating pattern in the investment programme. Indeed, it seemed to me that the very word "programme" was open to doubt. Referring to the White Paper I do not get that impression at all.

In paragraph 9 something we already know is stated—that the original pattern of slump and boom envisaged in 1944 has now changed. The investment programme has not been needed to be used in the way in which it was first envisaged. Variations in investment, as the paragraph says, have been only marginal. That is borne out by the figures in Table A on page 31. The remarkable fact about that is the consistency of the percentage of the capital formation that has taken place over the years, compared with the gross national product.

Although there has been criticism in certain quarters that investment in the private sector has shown the same trend, it has gone up faster than that in the public sector. I think that criticism is unwarrantable. As has been said, we are moving in times of greater competition and I believe that the private sector is the one which must act as shock troops in the competitive battles which lie ahead. I should have thought that it would have been a sign of encouragement that the private sector had been arming itself for those battles.

One of the questions we have to ask ourselves is whether enough investment is taking place at present. Of one thing I am certain, and that is that in our present circumstances we cannot do more. At present we are spending as much as we can afford. We have an overall full employment situation. If we were to strain the economy by trying to do more capital investment, that would lead once more to a situation of inflation.

How are we to get more? The only way in which we can hope to get greater investment is by having greater national output. In the debate several hon. Members have 'referred to the P.E.P. Report on Growth in the British Economy, but no one has yet mentioned that it states what, to me, is the critical difficulty with which we are faced. That is that as the economy expands, so the expansion is taken up completely by increased wages and consumer demand. The Report states: … one condition of all policies which involve some sacrifice of consumption is that they should not be immediately offset by demands for compensatory wage increases. That is one of the problems we shall have to face in the years ahead. We also have to face competition in the years ahead.

Although I have not time in this last minute of my speech to develop the argument I wished to develop, I believe I can state it briefly. While there are difficulties in our drawing closer and closer to the other countries of Europe, the advantages to be gained in the long run are overwhelming. What has been happening at the conference table this week, and what I hope will be happening at conference tables over many months to come, will bring us closer into unity—with due safeguards—with the other countries of Europe. Out of that will come the benefits we have been seeking throughout this two-day debate.

9.0 p.m.

Mr. G. R. Mitchison (Kettering)

The hon. Member for Brighouse and Spenborough (Mr. Shaw) is not the first Tory to ask for no increase in wages without saying anything about dividends or profits. I have no more to say on the subject than that.

We are discussing an Amendment to a Government Motion which invites us to take note of the White Paper … and welcomes the opportunity to debate its implications. In the Amendment we regret that the investment programme makes no adequate provision for the expansion of the economy, the relief of local unemployment or the improvement of social services. The 64,000 dollar question which I want to ask the Chancellor is this: does he suggest that it makes adequate provision?

I entirely agree with my hon. Friend the Member for Manchester, Cheetham (Mr. H. Lever), who made, as usual, a most interesting speech, that league tables have to be used with great caution, but when the question which we have to consider is one of a rate of progress and when we have not one league table but half a dozen or more, then if they all agree, as they do in this case, we must come to the conclusion that there is a lesson to be learned.

Dealing with the criticism that the investment programme makes no adequate provision for the expansion of the economy", I refer hon. Members to the World Economic Survey for 1959, which was placed in the Library a month or two ago and which for most purposes is the latest available information. I take the period 1950–58, because that is the period taken in these tables.

Comparing this country with other European countries—the significant countries which are included in these tables—and with the United States and Canada, which are also included, I find, first of all, that the growth of output in this country was lower than in any one of the others; secondly, that the growth of the share of investment in output in this country was lower than in any one of the others; thirdly, that the gross fixed capital formation as a percentage of the gross domestic product grew more slowly in this country than in any one of the others; and, fourthly—this has been mentioned already—not surprisingly in these circumstances the growth of output per worker in the United Kingdom was the lowest in Europe. In the last case they do not give the American figures.

What these figures indicate quite clearly is that in the progress of different countries in Europe comparable with this country, we are falling lamentably behind. They do not show that there is no increase; they show that the increase is very much slower in this country than in others. If we take the countries as a whole, and take either the O.E.E.C. countries or the six countries, we come to the same conclusion. Those figures included investment and they also included the resulting output.

I am not here to say that investment is the only factor which affects output, but I am here to say that it is obviously an exceedingly important factor for that purpose. When this coincidence is observed in such tables, the only possible conclusion is that an adequate rate of expansion is not being attained and that the investment programme is not such as to support an adequate rate of expansion.

It is not for my party to suggest answers. Many of my hon. Friends have suggested answers, varying from oxygen to a number of other remedies. That is as may be. Will the Government tell us why those tables all point to that conclusion? Do they, in face of the tables, still say that the investment programme is sufficient to support an expanding economy, or are they content to say that they do not want the economy to expand?

I am not talking in terms of this year or last year. I am talking about a trend which has been going on ever since the Government came to office. We have never had an expanding economy. We have always lost ground by comparison with other similar countries—in investment, in output, in output per worker and in all the other factors I have mentioned.

Since that is the case, what are the Government's comments on it? Are they satisfied? Are they happy? I point out to them that this is a continuing trend. Though it has varied a little from time to time, it has been a steady trend. If it goes on further it will mean that our standard of life will be affected—to what degree no one can say—and our place as an industrial country will be lost to other countries, whether they are in the Six or in another part of the world. The Government appear to be quite happy about it.

If that is the case, what is the reason for it and what remedy have they? It is not up to us on these benches to tell the Government what the reason is or what the remedy should be. We are entitled to have their statement of the reason and their suggestions for the remedy. Perhaps they think that no remedy is required. A degree of complacency unusual even in Tory Governments has shown itself today in the Government, but not so much among their supporters.

Today we heard the Economic Secretary trying to deal with it. He made a short approach at it. All he did was to deal with it as if it were a momentary thing just at this time. He said that the economy is still running at pressure, that there is a risk of overloading it, that it would be felt on the balance of payments and that we cannot afford to increase total investment. If that is so, has it been the position over the whole long period that the Government have been in office? The tendency has been there all the time. The progress, or lack of it in comparison with other countries, has been there. If those things affect this country, do not they affect other countries also?

Why, as my right hon. Friend the Member for Battersea, North (Mr. Jay) said, have countries in such totally different positions as France, on the one hand, and Western Germany on the other been able to meet this difficulty without incurring any trouble with their balance of payments which they did not finally overcome? What happened, apparently, was that the West Germans did not have it and the French, with what is sometimes a characteristic national attitude, found that the position was no doubt desperate but not serious, and so they overcame it finally.

I turn next to the second deficiency, as we see it, in the investment programme. This is the relief of local unemployment. First one member of the Government and then another has risen and boasted about what wonderful things they have done about it. We have been told that they introduced a new Act. The new Act was substantially the same as the Distribution of Industry Acts which were on the Statute Book already.

The important question is: What have the Government done about it? I do not say that there is widespread unemployment over the whole country. The Amendment does not say so. I do say, however, that there is serious local unemployment—particularly in two places. The first is Northern Ireland, where it amounts to about 6 per cent. The second is the industrial belt of Scotland—indeed the whole of Scotland—where it runs on the average at about 3 per cent. We were told that all is well. New jobs are being provided, but at what interval of time nobody told us.

We were told, for instance, that there was an advance factory near Coatbridge, and another one, we understand, on the north-east coast, which I shall mention in a minute, but that there was difficulty in letting the one at Coatbridge. I believe that the rental per square foot of an advance factory in Northern Ireland at present is 2s. 9d. What are the Government, or those they control for this purpose, asking for rent of the advance factory near Coatbridge? Is it 2s. 9d. per square foot, which is a highly subsidised figure, or is it some other figure?

Since the Government are fervent advocates of the competitive system, do they not realise that if they are to meet the unemployment situation without causing a great deal of hardship in Scotland they must meet it by offering to industrialists terms which will bring them up there, as they are being offered terms which will make them go to Northern Ireland. I hope the Chancellor will answer the question about what is being done by comparison between the two areas.

I turn to another instance, which was admirably put in an eloquent speech by my hon. Friend the Member for Sunderland, North (Mr. Willey). Shipbuilding at present may not be in the desperate straits that quite clearly threaten it, but the Government do not have to wait until the shipbuilding yards close down and until men are actually thrown out of work in the shipbuilding areas. They must make provision beforehand, and that provision involves investment. All we have heard from the Government about this position is "It is not so bad yet". Surely even in a Tory Government we can require a little foresight which is, after all, what their own Act requires them to exercise—a little foresight in cases of that kind.

Now I turn from these questions to the question whether the investment programme today is enough to provide adequately for the improvement of the social services. I quite agree that there are a number of minor services which are of very great importance, but I am going to take only three, and the most obvious one is housing. The Chancellor of the Exchequer mentioned housing, but when the Economic Secretary was asked to say a little more about it today, he said that his right hon. and learned Friend had given all the figures and said all that was required. Let us therefore see exactly what the right hon. and learned Gentleman did say. He said: With regard to social service investment, first, there is the massive programme of housing by local authorities, amounting to almost £270 million a year. This is enabling good progress to be made in clearing slums, as well as providing for the overspill of big cities and the building of accommodation specially suitable for elderly people."—[OFFICIAL REPORT, 9th November. 1960; Vol. 629, c. 1055.] Let us now look at what the Government have actually done about housing.

What happened was that up to about 1955 the Government encouraged council housing, and said, time and time again, that they regarded housing subsidies as a necessity just as they regarded council housing as a necessity. They then changed their policy completely in regard to this particular social service, and what they have done has been to remove all the housing subsidies, to bring down the rate of council house building to just about half what it was in 1954 and to reduce it merely to the two things that the right hon. and learned Gentleman specifically mentioned—the housing of old people and slum clearance.

I do not say absolutely—there is rather more housing going on at present—but anyone who knows anything about this, and every hon. Member is bound to know something about it, is painfully aware that young people who do not want to buy a house but do want a council house just cannot get one at present. Hon. Members know of case after case of other people who on every consideration of decency and humanity ought to be rehoused, but who are not being rehoused because they will not conform to the Government's ideology and become owner-occupiers. We on this side have nothing against owner-occupiers. We want to help them, of course, and we shall help them when we have the chance, but the fact is that there are many people who have to be provided for by means of houses to let, and particularly council houses. The Government have made quite insufficient provision in that direction.

I turn from that to the thing on which the Government usually fall back as their defence. The right hon. and learned Gentleman did it this time in those portentous two sentences, using the word "massive", which represented his whole contribution to this social question. The Government usually fall back on slum clearance. What is the position there? By the 1954 Act the local authorities were asked to say what slums they had and at what rate they could clear them. There was no question at the time of any Government drive. The local authorities gave a figure—and the Government have never got as far with the help they have given and the campaign they have forwarded as the local authorities would have got by their own sweet selves.

What a programme! What a magnificent lead for the local authorities! It is used as an excuse to hide the complete insufficiency of the Government's programme in other respects. To say that their investment programme meets the present needs of housing is to go against the opinion not merely of every conscientious local authority but of the millions and millions of people who are suffering misery because they cannot get houses—and I mean millions. Looking at the figure, that is what it amounts to. That is one thing that the Government's investment programme appears insufficient to support.

I turn to two other matters that stand on a quite different footing. First of all there is education. I recognise, as we all do, that there has been a considerable increase in educational expenditure, but the question is, in the words of the Amendment, whether it is "adequate"; whether there has been a sufficient improvement. It is to that question that I wish to direct my remarks for a moment or two.

How can it be said that there is adequate provision for education when we still have so many classes above the figure that everyone recognises ought to be the maximum? This is not merely a matter of teachers; it is also a matter of what we are discussing today—capital investment in schools. If I am given figures about the number of schools built, and so on, I reply, "I do not care about your figures. What I care about is that I know of case after case where there are classes too large because there are not enough schools." That is the test—and it must be the test.

I am no educationist, but I hope that I have a little common sense about the matter, and I hope that the rest of the House has, too.

Now I turn to something quite different. I am taking these points quite generally. Does anybody suggest today that technological education in this country is adequate and up to the standard of other countries, that we are not falling back in matters of that kind by comparison with other industrial countries? Do even the Government themselves suggest that? Can we really say that the investment programme is sufficient? I want to know what more is going to be done about it.

I turn to the third of the matters which I wish to discuss. This is a programme of which I am sure the Government feel that they might really be proud. I refer to the health programme. But are they right to be proud of it? There is one outstanding figure that hits anybody in the eye at once when looking into the Health Service. I am talking of capital expenditure, and I refer particularly to hospitals.

I have with me the Conservative election programme. Like us, the Conservatives indicated that the hospital provision was quite inadequate. The Government have been here for the best part of ten years in one form or another, and what is the result? The result is that all through this time the waiting lists in the hospitals have been larger than the number of people who were actually inside at any given moment. That is not good enough. Hon. Members can say what they like, but there is only one answer and that is that hospital accommodation is quite inadequate, and it has been year after year.

Is this recognised in the White Paper? Is it made clear that the Government admit that they have not done their job over the past nine or ten years, that they repent and now propose to do their job? This does not mean that there is merely a waiting list which sooner or later will become exhausted by places being found for those who require medical attention. It means that the same number of people are always on that waiting list. It does not get any shorter. When one person gets in, somebody else comes on to the waiting list.

It is a scandal that the Government should say, in the words of the Economic Secretary, that they cannot afford to put that kind of thing right. If I am told that they can put it right, why have they not done it before? They have had nine years in which to do it. All hon. Members are well aware of cases in their own constituencies of person after person who ought to be in hospital and who cannot get in because there is no room. As a rule they are not the most urgent cases. The urgent cases get in. But there are people who will get worse it they are not admitted.

I turn, finally, to the moral content of the Amendment, and I am not ashamed to put it to hon. Members opposite. They, too, should consider it, as should the right hon. and learned Gentleman the Chancellor of the Exchequer. This is an investment programme by the Government. We have been referred to paragraphs 11 and 12 of the White Paper and we were told, "This is the control of the Government over expenditure". A Government ought not merely to control expenditure; it ought to initiate it. If Her Majesty's Government have not got the power to do it, they ought to take the power to do it. It is not possible to carry on a modern State by waiting until somebody or another proposes to spend some money, and then consider whether to stop him spending it.

The Government themselves ought to have some investment programme and they ought to have it in relation to the things that we are discussing today. The first of these is the essential matter of our surviving as a competitive nation in this modern economy—the question whether we can keep up production. It carries with it for the man in the street and his wife the very simple proposition that if we do not keep it up he will lose his job or worsen his standard of life, or both. That is the human threat behind not keeping up in competition with other countries. Local unemployment, I agree, is a local thing; but any unemployment is a scandal in modern times, and unemployment in a wealthy country such as this is a disgrace to any Government. It ought to be dealt with.

Now what of the social services? As I have said, there are the waiting lists of people who need to be in hospital and there are the many houses in which people ought not to be called upon to live. I hope that hon. Members heard what my hon. Friend the Member for St. Helens (Mr. Spriggs) said about this just now. He told us of houses in some of our Lancashire towns which are a hundred years old, falling to bits and requiring replacement at once. This is true, of course, not only of Lancashire. The Government say that housing has a massive programme, as if everything were lovely and beautiful in the garden—except, of course, for the houses infested with bed bugs and falling to bits. How can the Government say that they are doing their job?

Health, of course, is a matter for investment. It is the worst form of disinvestment to keep people out of hospital when they ought to be in. What is the use of the advances that medical science is making? What is the use of advances in therapy of one kind and another if, at the end of the day, not enough hospitals have been built to allow people to be admitted in time?

If the suggestion in the Amendment is right, then it shows a disgraceful state of complacency and stagnation over eight or nine years past, and it is time that the Government considered the financial and social implications of this document and gave an answer to some of the conclusions we draw from it. After all, are not our conclusions correct? I repeat my question to the right hon. and learned Gentleman: Is not what is said in the Amendment perfectly true? If it is, as I believe it to be, why have these things happened, and what do the Government intend to do at long last to set them right?

9.28 p.m.

The Chancellor of the Exchequer (Mr. Selwyn Lloyd)

There have been many interesting speeches in this two-day debate. I am sorry that I was not able to hear them all, and I am grateful to the hon. Member for Sheffield, Park (Mr. Mulley) for his statement that I had tried to listen to quite a number of them. I am grateful also for the courteous remarks which have been made on both sides about my first appearance in a major debate as Chancellor of the Exchequer. Were I to say that I hoped that this atmosphere would continue, no doubt I should be accused of being complacent. In fact, I have no illusions on that topic.

I do not propose to try to deal with all the matters which have been raised. Speeches have been made about the problems of the Six and the Seven, about the Common Market and about exports. New ideas about taxation came from my hon. Friend the Member for Heywood and Royton (Mr. Leavey). All these matters I shall consider, but I cannot deal with them all in my reply tonight. Certain points have been made about the White Paper itself, and several speakers, including the right hon. Member for Battersea, North (Mr. Jay) asked whether the Government could break down the investment figures of the nationalised industries to distinguish between new money and money from internal resources such as depreciation funds. I shall certainly see what can be done. Probably, the most convenient place for such information would be in the White Paper next spring on Government methods of financing the borrowings of these undertakings.

I was asked also if the Government could distinguish between gross and net investment of the nationalised industries. I have taken note of the point, but, frankly, I am doubtful whether anything can be done especially in the way of a forecast which goes further than the figures provided in table 58 of the annual Blue Book on National Income and Expenditure.

Several hon. Members—and the hon. Member for Rotherham (Mr. Jack Jones) mentioned this point vociferously more than once during the course of the debate—have asked why particulars of loans and aid to private industry were not shown in the White Paper. I think that it is right that I should try to provide particulars of that information, and I will do that at a convenient time. I just wanted to consider, from that point of view, which time would be most convenient to the House; in other words, when I should be able to give the fullest information on that point.

My right hon. Friend the Member for Blackpool, North (Sir T. Low) made certain points in his speech. I am very grateful to him for what he said, because he has great experience as Chairman of the Select Committee on Nationalised Industries, and he put forward certain suggestions of ways in which the House could help the Government in arriving at right decisions on investment in the nationalised industries. I should like to think over his suggestion that the Select Committee on Nationalised Industries should have a short and quick inquiry immediately after the publication of the White Paper on Public Investment next year, so as to be able to report to the House on any investment proposal which might arouse anxiety. I have an open mind on this matter. He referred to the inquiry being short and quick. I am not certain whether he had the intention that evidence should be called before the Select Committee. If evidence were to be called, I wonder whether the reply would be short and quick. I should like to discuss that with him further in the months ahead.

We will certainly consider other suggestions that were made in the speeches of my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) and my hon. Friend the Member for Twickenham (Mr. Gresham Cooke).

With regard to the debate that we have had, I think that the principal criticism that has been made of the Government has been that of complacency. The vocabulary must have been searched for epithets with which to describe our complacency. I think that has been wholly unfair to the tenor of my own speech when opening the debate yesterday. I pointed out then a number of factors in the situation. I want, if I may, to mention two more. I am not putting them forward as excuses, but as facts.

First of all, we have been carrying overseas a very heavy burden of defence expenditure and other sorts of expenditure. There are those who criticise the value of that expenditure—whether it is right to do it or not—but the fact remains that we have been carrying, in my view, a very considerable burden of defending the free world, and, it may be said, a burden which is a good deal heavier than that of some of our allies.

The other factor to which I think we should have regard is that of our investment and aid overseas which have been running at a very high level; I think relatively higher than that of most of our allies. Those are two factors. They are not excuses. They are part of the burden that this country has been bearing and, in my view, rightly bearing, which have affected our general economic capacity.

Suggestions have been made that we are satisfied with things as they are. I am not in the least satisfied with things as they are. I shall not be satisfied until we have a steadily rising standard of living not only in this country but throughout the other countries of the world. Any idea that one sits back and says that everything is all right is a quite wrong and utterly false description of the attitude of this party.

The first matter which I pointed out as an adverse factor in the present situation was the danger of inflation. I think that the Opposition and particularly the Opposition Front Bench take a little light-heartedly the danger of inflation. The whole question of inflation is wrapped up with the strength of sterling. If sterling weakens, imparts will become more expensive. If there is inflation, that will damage our capacity to compete in the world. I think that we are right in our priorities in putting first the strength of sterling and resistance of the tendency to inflation. That is in our interests. It is certainly in the interests of those living on small fixed incomes. But, more than that, it is very much in our interests in improving our competitive capacity. I have tried to warn people 'about the factors making for inflation. I will not repeat what I said yesterday. I referred in my speech yesterday to the importance of investment. I agree with my hon. Friend the Member for Harwich (Mr. Ridsdale) that it is important that investment should be on sound lines.

I now come to the second theme which has run through the debate, namely, the question whether our investment is upon the right lines and how it should be controlled, directed or guided. One idea which was put forward was that we ought to consider again import restrictions. It was said that there were too many manufactured goods coming into this country, that we ought to have regard to danger signals and that we should consider cutting out the import of manufactured goods either on a basis of discrimination or in some other way. But that is completely inconsistent with the argument that British industry ought to face competition.

Moreover, I do not think that, if we as a country say that we have to live on the export of manufactured articles, we make a very good beginning by stopping other people importing manufactured articles. Multilateral liberalisation of trade is in the interest of this country and we should work for that.

Another point which was made concerned the control of private investment. There are, I think, quite well known and honest differences of outlook with regard to the control of private investment. We on this side believe in generalised and indirect methods operating through market forces rather than decisions on specific matters taken by Ministers and civil servants.

Reference has been made today to the proposal for a National Investment Board. The suggestion has been made that all investment in the public and private sector should be planned by such a Board. At the present time, investment in the public sector is planned, but as regards private investment I think it is influenced by the Government at present through general incentives, including the investment allowance. Also, the Government have, as has been said, very considerable powers to influence the geographical location of investment. But I say quite frankly to the House that I am very much opposed to any attempt to regulate private investment generally by any system of licensing. I think that that would defeat its own purpose, that it would be discouraging to investment and that it would be almost impossible to administer it on a rational basis.

On the other hand, we do not pretend that everything is right in these very large programmes. Not everything is right and not everything is sacrosanct. Nor do I claim that we are absolutely right either in the balance between public and private investment or the extent of the resources we ought to put into investment. These involve very difficult matters of judgment and essentially a process for balancing diverse claims on our resources—as I said, a determination of priorities. I hope to have opportunities of discussing these questions, and, in particular, anything more which can be done by way of longterm forecasting of investment intentions, with representatives of both sides of industry in the normal course of my business as Chancellor of the Exchequer. I shall certainly pay attention to what they say.

Considerable reference has been made in the debate to the P.E.P. book. It is a most interesting analysis. The hon. Member for Manchester, Cheetham (Mr. H. Lever) said that the League Tables should be used with great care. The thesis of this book is that if we put growth before everything else, certain things should follow. The inference, as far as I have been able to understand it in the time I have had to study the book, is that if we put growth before everything else, it is doubtful whether we can have full employment it is for consideration whether employment has not been overfull so far. The second inference is that the pricing policies of the nationalised industries have been wrong, and the third, that labour has been too immobile.

Whenever we talk about the mobility of labour, I always think that just a little bit of the human factor arises. The idea that a person should dig himself up by the roots and go off to some other place—[Interruption.] When we talk about the mobility of labour, we should at least mention that there are certain other factors in the situation.

The next suggestion is that the cost of social services should have been borne more by employers and employed persons by way of insurance contributions, as in France. That is an interesting thesis in the book. Another is that taxation should be modified to provide much greater incentives. It is suggested that the investment and aid overseas that we have done have been beyond our resources. There are a number of other points in the book.

I do not say that I accept any of those inferences, but when people throw the conclusions of the book at me, they should also take into account some of the remedies which are proposed. I am not saying that I accept these conclusions. I may have over-simplified them. There is, however, a great deal of room for thought about them. I liked very much—I hope I will not damage him too much by saying this—the note struck by the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) in his very interesting speech, which I hope every Member of the House will read. So much for the P.E.P. book.

I have tried to indicate to the House that I am not complacent about the situation. There are serious causes for anxiety. The conclusions of the book and the inferences to be drawn from its deductions need careful study. At the same time, however, is it right that we should be too depressed about the present situation? Today, everybody has been talking about stagnation. The word "stagnation" has rolled off the lips of hon. Members opposite. There is a new phrase "stagnation at a high level". I do not know what it means.

Of course, there is cause for anxiety in some fields. There is cause for anxiety in shipbuilding and elsewhere. Let us, however, without being complacent, recognise that there have been substantial achievements. The hon. Member for Rotherham talked about what has been done in the steel industry. I hardly dare use the expression "record" in view of what was said by the hon. Member for Sheffield, Park, but they are record figures. There is an increase of 20 per cent. in the third quarter of 1960 over the third quarter of 1959. That is a fine achievement, for which all sides of the industry deserve credit.

Mr. Jack Jones

It was pointed out that the figures for Italy—the Wogs, as we call them—showed an increase of 27 per cent. We could do better.

Mr. Lloyd

I am glad to hear that, and I have no doubt that all sides in the steel industry will do so. That, however, is not a picture of stagnation.

Does anybody say that the picture in the textile industry is one of stagnation? Things have been bad, but now they are certainly going up again. Then, there are chemicals—[Interruption.] Why should hon. Members opposite be so depressed to hear this? I quite admit that the picture is not perfect over every field. I have said that. Nevertheless, let us remember that there are certain areas from which we can derive considerable encouragement. Chemicals are up 10 per cent. on this time last year, textiles 4 per cent. up, clothing and footwear 6 per cent., the paper and board industry is up 20 per cent., and construction, on which a great deal depends, is up between 6 per cent. and 7 per cent.

Mr. Jack Jones

Shipbuilding?

Mr. Lloyd

Of course, there are areas in the economy which give rise for anxiety, but I think that it is giving a completely false picture of the situation to suggest that throughout the whole area of the economy there is nothing but stagnation. That just is not true. I think it is important that we should not talk ourselves, talk the country, and talk other people into thinking that the picture here is just simply one of dead, steady stagnation. There is great growth going on in certain areas of our economic body. [Interruption.] I am sorry that this should distress hon. and right hon. Gentlemen opposite, but still I think it is something which has to be said.

Dr. J. Dickson Mabon (Greenock)

Amusing, not distressing.

Mr. Lloyd

The right hon. Gentleman the Member for Battersea, North asked whether it was the policy of the Government to restore the pre-war pattern of the distribution of wealth. I think, if I may say so, that he misread something I said. I think that if he will read again—I do not propose to read it out to him tonight—what I said about the relationship between wages and salaries and profits and dividends, he will see that I did not make any such suggestion. Certainly, I do not suggest that we should look back on these things twenty-five years to try to restore some previous pattern. I think we have to look much more to the future. I think that he will see that I was right. In any comparison which is to be made a very important factor is the level of taxation, and of course the level of taxation now is quite different from what it was between the wars.

I now come to the Amendment. The hon. and learned Gentleman the Member for Kettering (Mr. Mitchison) really tried to say that the Opposition Amendment was invincible because it had the word "adequate" in it. Of course, it is quite possible to argue that till we have perfection nothing is adequate. Is anything adequate short of perfection? That is a nice, philosophical, learned point for him to consider. But I construe the Amendment really in the sense in which it was meant, that is as a censure upon our policies. It is a censure questioning whether we have expanded sufficiently, whether we have taken the right policies with regard to local employment, whether we have the right policies and priorities in the social services.

Nothing is ever perfect, but have we achieved reasonably good results in consequence of our policies? On the question of local employment, I think that, of course, everyone would want to reduce local unemployment as much as can possibly be done, and I remind the House again of the figures which were given by my right hon. Friend the President of the Board of Trade, which were also given by the Economic Secretary today, when he said that the jobs in sight in development districts numbered 90,000—50,000 in England, 30,000 in Scotland and 10,000 in Wales. He also referred to the money being provided for this purpose. Already £11 million worth of expenditure on buildings has been approved and £4 million of building grants have been offered. B.O.T.A.C. help offered, mainly in loans, amounts to £12 million. Also there has been reference to the reduction in percentages of those unemployed.

Again, I do not suggest for a minute that this record is a perfect record, but it does show that the Act which we passed has been implemented, and I do not think that the description of it, of its just adding to something already on the Statute Book, exactly corresponds to the kind of comments made about it when it was going through the House.

We come to the question of housing, as to whether enough has been done in that respect. Public authority house building reached a peak in 1954.

Let me deal with the growth of private housebuilding. In 1951 fewer than 23,000 houses were built. In 1959 more than 150,000 houses were built, and in 1960 the figure may well be higher. The figures already given show that 8 million to 9 million people have been provided with homes since 1951, and that by the end of next year one in four families will be living in post-war houses. When the comparison is made with housing between the wars, it should be remembered that five million new houses were built during that period.

With regard to slum clearance about which the hon. and learned Gentleman spoke, 270,000 houses have been cleared since 1956, and a total of 800,000 people have been rehoused. In 1960, 140,000 houses will have been improved by means of improvement grants, compared with 80,000 houses last year. Twice as many one-bedroom dwellings are being built this year as were built in 1951. I do not think that that is a housing record of which we have any cause to be ashamed.

In 1960, about £900 million is to be spent on education, compared with £383 million in 1951. On present plans, if the money can be found, the bill could rise to £1,400 million by 1970.

We were criticised for the lack of hospital building. There is now a programme of £100 million of hospital building under way.

I maintain that those are records of which we can be proud.

Certain political points were made during the debate. It was suggested that we have some frightful prejudice or bias against investment in the public sector. I have no bias against it, provided value can be obtained for money, and on that point I hope that the House will give all the help it can by the various methods which have been discussed. Provided, also, that regard is had to the resources available, I think that investment in the public sector is good.

The hon. Member for Manchester, Cheetham in an interjection said that in 1958 we turned the tap on because there was going to be a General Election. The tap was turned on in 1958 because of the economic situation. There was spare capacity, and speaker after speaker, on both sides of the House, referred to the rising figures of unemployment. That is why the tap was turned on.

Mr. H. Lever

My complaint was not that the right hon. and learned Gentleman's predecessor turned on the tap. He turned on the wrong tap. He turned on the tap which was most convenient to enable the Tory Party to win the election, namely, refrigerators, washing machines and motor cars. As a result, our exports declined sharply, and they have started to recover only now that that tap has been turned off.

Mr. Lloyd

I think that if that criticism was made at the time it would have carried more weight.

Mr. Harold Wilson (Huyton)

rose—

Mr. Lloyd

I am afraid that I cannot give way.

During the debate there has been a good deal of abuse of the Government. I do not complain about that. The hon. Member for Sunderland, North (Mr. Willey) accused us of being enervated. I do not think that it is we who are the enervated party. The hon. Gentleman referred critically to the statement "Life is better under the Conservatives", the implication being that during the election we had gone so far as to state that life was better. That was a statement of fact which is quite uncon-trovertible.

The hon. Gentleman and others criticised us, to use his phrase, for resting our power on the morality of "I am all right Jack". The inference to be drawn from that was that we over-emphasised prosperity; we encouraged selfishness; we led people to expect too easy a life: and that we offered too much by way of personal material well-being and benefit.

That criticism comes very ill from the Opposition. Had they themselves fought the election on a programme of austerity their criticisms would have been very different, but they claimed that, if elected, they would hand to the electors benefits in cash and kind on a huge scale, without any increase in Income Tax, and with reductions in Purchase Tax. Their whole appeal was that if only they were returned there would be a greater material benefit for every section of the community—all at practically no cost. It was their appeal which was the material appeal, but the public rejected them decisively.

I do not attempt to diminish or minimise the difficulties which confront us. They confront us as a nation in a very changing world, and I repeat what I said at the conclusion of my speech yesterday. I am quite certain that the problems of the 'sixties will be very different from those of the 'fifties. They will be much more testing for us. Certain favourable factors during the 1950s will no longer continue to apply in the 'sixties. In spite of our political difficulties we have to try to face these tests and challenges as a nation, united as far as possible in our purposes. I believe that we shall do that, and I believe that the Amendment should be rejected as decisively as were the appeals of the Party opposite to the country at the last election.

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

The House divided: Ayes 216, Noes 157.

Division No. 4.]	AYES	[9.58 p.m.
Agnew, Sir Peter	Browne, Percy (Torrington)	Critchley, Julian
Aitken, W. T.	Bullard, Denys	Crosthwaite-Eyre, Col. O. E.
Allason, James	Bullus, wing Commander Eric	Curran, Charles
Alport, Rt. Hon. C. J. M.	Butler, Rt. Hn. R. A. (Saffron Walden)	Currie, G. B. H.
Arbuthnot, John	Campbell, Gordon (Moray & Nairn)	Dalkeith, Earl of
Ashton, Sir Hubert	Carr, Compton (Barons Court)	Dance, James
Atkine, Humphrey	Carr, Robert (Mitcham)	d'Avigdor-Goldsmld, Sir Henry
Barber, Anthony	Cary, Sir Robert	Digby, Simon Wingfield
Batsford, Brian	Channon, H. p. G.	Doughty, Charles
Beamish, Col. Tufton	Chataway, Christopher	Drayson, G. B.
Bell, Ronald (S. Bucks.)	Chichester-Clark, R.	du Cann, Edward
Berkeley, Humphry	Clark, Henry (Antrim, N.)	Eden, John
Bidgood, John C.	Clark, William (Nottingham, S.)	Elliott, R. W.
Biggs-Davison, John	Clarke, Brig. Terence (Portsmth, W.)	Emmet, Hon. Mrs. Evelyn
Bingham, R. M.	Cleaver, Leonard	Errington, Sir Eric
Birch, Rt. Hon. Nigel	Cole, Norman	Farr, John
Bishop, F. P.	Cooke, Robert	Finlay, Graeme
Black, Sir Cyril	Cooper, A. E.	Fisher, Nigel
Bossom, Clive	Cordeaux, Lt.-Col. J. K.	Fletcher-Cooke, Charles
Box, Donald	Corfield, F. V.	Foster, John
Boyle, Sir Edward	Costain, A. P.	Fraser, Ian (Plymouth, Button)
Bromley-Davenport, Lt.-Col. W. H.	Coulson, J. M.	Gammans, Lady
Brooman-White, R.	Craddock, Sir Beresford	Gardner, Edward
Glover, Sir Douglas	Lloyd, Rt. Hon. Selwyn (Wirral)	Rippon, Geoffrey
Glyn, Dr. Alan (Clapham)	Longbottom, Charles	Robinson, Sir Roland (Blackpool, S.)
Goodhart, Philip	Longden, Gilbert	Roots, William
Goodhew, Victor	Loveys, Walter H.	Ropner, Col. Sir Leonard
Grant-Ferris, Wg Cdr. R. (Nantwich)	Low, Rt. Hon. Sir Toby	Russell, Ronald
Green, Alan	Lucas-Tooth, sir Hugh	Scott-Hopkins, James
Gresham Cooke, R.	MacArthur, Ian	Shaw, M.
Grosvenor, Lt.-Col. R. G.	McLaren, Martin	Shepherd, William
Gurden, Harold	McLaughlin, Mrs. Patricia	Skeet, T. H. H.
Hall, John (Wycombe)	Maclean, Sir Fitzroy (Bute & N. Ayrs.)	Smith, Dudley (Br'ntf'rd & Chiswick)
Hamilton, Michael (Wellingborough)	McMaster, Stanley R.	Smyth, Brig. Sir John (Norwood)
Hare, Rt. Hon. John	Macpherson, Niall (Dumfries)	Spearman, Sir Alexander
Harris, Frederic (Croydon, N. W.)	Maddan, Martin	Speir, Rupert
Harris, Reader (Heston)	Maitland, Sir John	Stevens, Geoffrey
Harrison, Col. J. H. (Eye)	Manningham-Buller, Rt. Hn. Sir R.	Steward, Harold (Stockport, S.)
Harvey, Sir Arthur Vere (Macclesf'd)	Marples, Rt. Hon. Ernest	Stodart, J. A.
Hay, John	Marten, Neil	Studholme, Sir Henry
Heald, Rt. Hon. Sir Llonel	Mathew, Robert (Honiton)	Summers, Sir Spencer (Aylesbury)
Henderson-Stewart, Sir James	Maudling, Rt. Hon. Reginald	Tapsell, Peter
Hendry, Forbes	Maydon, Lt.-Cmdr. S. L. C.	Taylor, Sir Charles (Eastbourne)
Hicks Beach, Maj. W.	Mills, Stratton	Teeling, William
Hiley, Joseph	Montgomery, Fergus	Temple, John M.
Hill, Dr. Rt. Hon. Charles (Luton)	Morgan, William	Thatcher, Mrs. Margaret
Hirst, Geoffrey	Mott-Radclyffe, Sir Charles	Thomas, Leslie (Canterbury)
Holland, Philip	Neave, Airey	Thompson, Richard (Croydon, S.)
Hopkins, Alan	Noble, Michael	Thornton-Kemsley, Sir Colin
Hornby, R. P.	Nugent, Sir Richard	Tiley, Arthur (Bradford, W.)
Hornsby-Smith, Rt. Hon. Patricia	Oakshott, Sir Hendrie	Turner, Colin
Howard, Hon. G. R. (St. Ives)	Orr-Ewing, C. Ian	van Straubenzee, W. R.
Howard, John (Southampton, Test)	Page, John (Harrow, West)	Vane, W. M. F.
Hughes-Young, Michael	Page, Graham	Vosper, Rt. Hon. Dennis
Hulbert, Sir Norman	Partridge, E.	Wakefield, Edward (Derbyshire, W.)
Hurd, Sir Anthony	Pearson, Frank (Clitheroe)	Wakefield, Sir Wavell (St. M'lebone)
Hutchison, Michael Clark	Peel, John	Wall, Patrick
Iremonger, T. L.	Percival, Ian	Ward, Dame Irene (Tynemouth)
Irvine, Bryant Godman (Rye)	Pickthorn, Sir Kenneth	Watts, James
Johnson, Dr. Donald (Carlisle)	Pilkington, Capt. Richard	Webster, David
Johnson, Eric (Blackley)	Pitman, I. J.	Wells, John (Maidstone)
Johnson Smith, Geoffrey	Pott, Percivali	Whitelaw, William
Jones, Rt. Hn. Aubrey (Hall Green)
Kerans, Cdr. J. S.	Price, David (Eastleigh)	Williams, Paul (Sunderland, S.)
Kerr, Sir Hamilton	Price, H. A. (Lewisham, W.)	Wood, Rt. Hon. Richard
Lagden, Godfrey	Prior, J. M. L.	Woodhouse, C. M.
Lancaster, Col. C. G.	Prior-Palmer, Brig. Sir Otho	Woodnutt, Mark
Langford-Holt, J.	Profumo, Rt. Hon. John	Woollam, John
Legge-Bourke, Sir Harry	Ramsden, James	Worsley, Marcus
Lewis, Kenneth (Rutland)	Rawlinson, Peter	Yates, William (The Wrekin)
Lilley, F. J. P.	Redmayne, Rt. Hon. Martin
Lindsay, Martin	Rees-Davies, W. R.	TELLERS FOR THE AYES:
Linstead, Sir Hugh	Ridley, Hon. Nicholas	Mr. J. E. B. Hill and Mr. Sharples.
Litchfield, Capt. John	Ridsdale, Julian
NOES
Ainsley, William	Deer, George	Houghton, Douglas
Albu, Austen	Delargy, Hugh	Hughes, Emrys (S. Ayrshire)
Allaun, Frank (Salford, E.)	Dempsey, James	Hughes, Hector (Aberdeen, N.)
Allen, Scholefield (Crewe)	Donnelly, Desmond	Hunter, A. E.
Bacon, Miss Alice	Driberg, Tom	Irving, Sydney (Dartford)
Beaney, Alan	Dugdale, Rt. Hon. John	Janner, Barnett
Bellenger, Rt. Hon. F. J.	Ede, Rt. Hon. Chuter	Jay, Rt. Hon. Douglas
Benn, Hn. A. Wedgwood (Brist'l, S. E.)	Edelman, Maurice	Jeger, George
Benson, Sir George	Edwards, Robert (Bilston)	Jenkins, Roy (Stechford)
Blackburn, F.	Edwards, Walter (Stepney)	Jones, Rt. Hn. A. Creech (Wakefield)
Blyton, William	Evans, Albert	Jones, Dan (Burnley)
Boardman, H.	Fernyhough, E.	Jones, Elwyn (West Ham, S.)
Bowden, Herbert W. (Leics, S. W.)	Fletcher, Eric	Jones, Jack (Rotherham)
Bowles, Frank	Fraser, Thomas (Hamilton)	Kelley, Richard
Boyden, James	Gaitskell, Rt. Hon. Hugh	Kenyon, Clifford
Braddock, Mrs. E. M.	George, Lady Megan Lloyd	Key, Rt. Hon. C. W.
Brockway, A. Fenner	Ginsburg, David	King, Dr. Horace
Brown, Alan (Tottenham)	Gordon Walker, Rt. Hon. P. C.	Ledger, Ron
Brown, Thomas (Ince)	Gourlay, Harry	Lee, Frederick (Newton)
Butler, Mrs. Joyce (Wood Green)	Greenwood, Anthony	Lee, Miss Jennie (Cannock)
Callaghan, James	Griffiths, David (Rother Valley)	Lever, Harold (Cheetham)
Castle, Mrs. Barbara	Griffiths, Rt. Hon. James (Llanelly)	Lipton, Marcus
Chetwynd, George	Grimond, J.	Mabon, Dr. J. Dickson
Cliffe, Michael	Hale, Leslie (Oldham, W.)	MacColl, James
Collick, Percy	Hamilton, William (West Fife)	McInnes, James
Corbet, Mrs. Freda	Hannan, William	McKay, John (Wallsend)
Craddock, George (Bradford, S.)	Hart, Mrs. Judith	Mackie, John
Cronin, John	Hayman, F. H.	Manuel, A. C.
Crosland, Anthony	Herbison, Miss Margaret	Marquand, Rt. Hon. H. A.
Cullen, Mrs. Alice	Hill, J. (Midlothian)	Marsh, Richard
Davies, Harold (Leek)	Hilton, A. V.	Mayhew, Christopher
Davies, Ifor (Gower)	Holman, Percy	Mendelson, J. J.

Millan, Bruce	Roberts, Goronwy (Caernarvon)	Thorpe, Jeremy
Mitchison, G. R.	Robinson, Kenneth (St. Pancras, N.)	Tomney, Frank
Moody, A. S.	Ross, William	Ungoed-Thomas, Sir Lynn
Morris, John	Silverman, Sydney (Nelson)	Wainwright, Edwin
Moyle, Arthur	Skeffington, Arthur	Warbey, William
Mulley, Frederick	Slater, Joseph (Sedgefield)	Weitzman, David
Noel-Baker, Francis (Swindon)	Small, William	Wells, Percy (Faversham)
Noel-Baker, Rt. Hn. Philip (Derby, S.)	Snow, Julian	Wells, William (Walsall, N.)
Oram, A. E.	Sorensen, R. W.	White, Mrs. Eirene
Oswald, Thomas	Soskice, Rt. Hon. Sir Frank	Wigg, George
Owen, Will	Spriggs, Leslie	Wilcock, Group Capt. C. A. B.
Paget, R. T.	Steele, Thomas	Wilkins, W. A.
Pannell, Charles (Leeds, W.)	Stewart, Michael (Fulham)	Willey, Frederick
Pargiter, G. A.	Stones, William	Williams, Ll. (Abertillery)
Parker, John (Dagenham)	Strachey, Rt. Hon. John	Williams, W. R. (Openshaw)
Pavitt, Laurence	Stross, Dr. Barnett (Stoke-on-Trent, C.)	Willis, E. G. (Edinburgh, E.)
Peart, Frederick	Sylvester, George	Wilson, Rt. Hon. Harold (Huyton)
Pentland, Norman	Symonds, J. B.	Woof, Robert
Pursey, Cmdr. Harry	Taylor, Bernard (Mansfield)	Yates, Victor (Ladywood)
Randall, Harry	Taylor, John (West Lothian)
Redhead, E. C.	Thornton, Ernest	TELLERS FOR THE NOES:
		Mr. Lawson and Mr. Mahon.

Main Question put and agreed to.

Resolved. That this House takes note of the White Paper on Public Investment in Great Britain (Command Paper No. 1203) and welcomes the opportunity to debate the financial and economic implications of the programmes set out therein.