Commons Sitting of 26 July 1961

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  BRITISH ARMY

    No. 7 Military Families Hostel, Kidderminster
    Mr. Nabarroasked the Secretary of State for War whether he will make a statement concerning the future of No. 7 Families Camp at Kidderminster.
    The Under-Secretary of State for War (Mr. James Ramsden): Present plans are to release No. 7 Military Families Hostel in about March, 1963.
    Mr. Nabarro: Will my hon. Friend tell the House two things about the future of this camp? First, is the closure to be total and at the same moment in 1963, or is it to be a gradual close-down? Secondly, how many women and children are at present accommodated in this camp? Will it be the responsibility of my right hon. Friend the Secretary of State for War to arrange alternative accommodation for them in concert with the appropriate local authorities?
    Mr. Ramsden: At the moment, there are 59 families, including 133 children, in the hostel. In the nature of things, a closure of this kind would be gradual. We should naturally, when making our plans nearer the appropriate time, pay regard to the convenience of the families then concerned and to my right hon. Friend's other responsibilities.

    Gurkha Soldiers (Pay)
    Mr. Rankinasked the Secretary of State for War whether he has now evolved a system of total remuneration for Gurkha soldiers parallel to that paid to others.
    The Secretary of State for War (Mr. John Profumo): Yes, Sir. The Gurkha soldier will get a special United Kingdom allowance on top of his Indian basic rates of pay, which will make his total remuneration almost the same as that of the British soldier.
    Mr. Rankin: May I thank the Secretary of State warmly for that reply, because I take it that it fits into what he told me on 17th May and he has now achieved his aim of giving a total remuneration which will be in tune with the cost of living in this country and other standards.
    Mr. Nabarro: Is that the Gurkha tie that the the hon. Member has borrowed?
    Mr. Rankin: No. Nor do I wear a Gurkha moustache.

    Sandhurst Cadets
    Mr. Liptonasked the Secretary of State for War what proportion of cadets at Sandhurst come direct from public schools.
    Mr. Profumo: Forty-nine per cent.
    Mr. Lipton: Does the Minister think that in the national interest it is a good thing that Army officers should be selected from so small a minority of the general population? Will he do what he can to broaden the intake? If I send him details of regiments which accept commissioned officers who have been only to public schools, will he investigate the matter?
    Mr. Profumo: I am not very keen on the imputation made by the hon. Member. The selection of an officer is on merit only—[HON. MEMBERS: "Oh."] It is on merit only—[HON. MEMBERS: "Rubbish."]—but the selection board can choose only from the people who apply. It is a fact that the public schools provide something like one-half of the applications for entry. I should add that the selection board is a wise body of people and that it is open to the hon. Member or anyone who has any qualms about what happens to attend a selection board.

    Accommodation, Kuwait
    Mr. Mayhewasked the Secretary of State for War if he will make a further statement on the provision of

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    accommodation for British troops stationed in Kuwait.
    Mr. Ramsden: Forward troops are still deployed operationally in the desert, but their numbers are being reduced. Most of the rest are accommodated in buildings. An air-conditioned rest camp is available in the desert for the use of the forward troops, and another one for 150 men in Ahmadi. There is a tented rest camp by the sea which can accommodate about 500 men.
    Mr. Mayhew: What use is being made of schools?
    Mr. Ramsden: Without notice, and trying to recollect what I saw when I was there, I would say none from the point of view of rest camps, but I can assure the hon. Gentleman from my own observation that the accommodation in the direction he is asking about is adequate for the reasonable comfort of the troops, bearing in mind the rigours of the climate.
    Mr. Mayhew: Will the hon. Gentleman look into the question of schools? My information is that they could be much better used than they are.
    Mr. Ramsden: I am not aware of any request from those on the spot for more accommodation. My information is that they have what they feel they need, but I will certainly bear in mind what the hon. Gentleman has said.

    Signallers, Kuwait (Reinforcements)
    Mr. Mayhewasked the Secretary of State for War what reinforcements of signallers were sent to Kuwait to supplement those landed with their units.
    Mr. Profurno: Eighty-six.
    Mr. Mayhew: Is the right hon. Gentleman aware that there was a serious Shortage of signallers in the crucial stage in the Kuwait campaign? Will he say, first, where the 86 came from—what theatres; and what action he is taking to prevent shortages of this kind from occurring on future occasions?
    Mr. Profumo: With great respect, there was not an acute shortage. They could have carried on even without the reinforcements, but this was part of a reinforcement which we knew would
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    have to take place if we intervened in Kuwait. At any given time units are under strength with men away sick, on leave or on courses. It is obviously uneconomic to post a surplus of men to allow for this in normal times. I cannot give the hon. Gentleman particulars of exactly where they came from, but I will write to him, or perhaps he would like to put down another Question.
    There is no need for action to prevent this happening on another occasion. It all went all right. It is not a question of signallers. I do not want to delude the House. There is a shortage of signallers, but when we do send troops abroad we send a sufficient complement of ancillary troops so that they can do their job.

    Regular Army Recruitment
    Mr. Liptonasked the Secretary of State for War whether he is satisfied that on the basis of the latest recruiting figures the target of 165,000 for the Regular Army by January, 1963, is going to be reached; and if he will make a statement.
    Mr. Profumo: I have nothing to add to the very full statement I made to the House last Wednesday.
    Mr. Lipton: Does the right hon. Gentleman realise that to save the Government's skin he is taking a terrible gamble with our national security? Will he agree that if his present sales promotion methods fail he will have to introduce a sudden measure of conscription so that we can face our commitments?
    Mr. Profumo: I answered that specific question in reply to a supplementary question on my statement last week. I cannot and will not agree that we are taking a gamble with our national security. What I have announced to the House—and perhaps the hon. Gentleman will have a look at it, for it was a very full statement—seems to me to represent a sensible attempt to see that we are not on present trends running a great risk, as I said last week, in what I have done. I would ask the hon. Gentleman to throw himself behind this and not against it.
    Sir J. Smyth: I congratulate my right hon. Friend on the efforts he is making to establish an adequate long-service voluntary Regular Army, but will he

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    inform the House how individual Members of Parliameat can help in his endeavours—
    Mr. Emrys Hughes: By joining up.
    Sir J. Smyth:—bearing in mind that this is not a party political matter but something of vital importance in the national interest?
    Mr. Profumo: I am very grateful to my hon. and gallant Friend, particularly with his record, for what he has just said. I did ask the House when I first made my statement, and I would appeal again to all hon. and right hon. Members, when they are in their constituencies or making public speeches, to stress the importance of our having adequate forces to carry out any defensive rôle and to point out that life in the Army today is a really good life, a life of service, and that the conditions have considerably improved. If any hon. Member would like to have specific points to make in his speech, I will gladly give them to him.
    Mr. Shinwell: Would the right hon. Gentleman, to settle this controversy, since it is becoming a little tiresome, break clown the figures showing the number he is anticipating as the number of combatant troops to be at his disposal when he reaches the target of 165,000, and the number of ancillary troops, because everything depends on the number of troops available in an emergency?
    Mr. Profumo: I agree with the right hon. Gentleman, and my colleagues at the War Office and I are attempting to see that just what he has in mind does happen, and we are trying to steer the new recruits into those spheres of the Army where there are particular shortages. I believe we can do this.

    Caterham Barracks
    Mr. Doughtyasked the Secretary of State for War when Caterham Barracks will cease to be occupied by troops; and what are the future plans for the use of this property.
    Mr. Ramsden: On present plans Caterham will continue to be occupied by troops until at least 1967–68. It is therefore too early to draw up plans for the use of the property after this date.
    Mr. Doughty: In view of the fact that Chelsea Barracks are being rebuilt to accommodate two battalions, why is it necessary to keep troops at Caterham after Chelsea Barracks are finished?
    Mr. Ramsden: As my hon. and learned Friend knows, Caterham is needed in connection with the current rebuilding plans. I will keep him in touch with progress.
    Mr. Doughty: I am much obliged.

  ROYAL AIR FORCE

    Meteorological Research
    Mr. Rankinasked the Secretary of State for Air if he will make a statement about his proposals for improving meteorological research.
    The Secretary of State for Air (Mr. Julian Amery): I would refer the hon. Member to paragraphs 123 and 124 of the Air Estimates Memorandum.
    Mr. Rankin: That is not helpful, Mr. Speaker, because I have not seen those paragraphs. When the right hon. Gentleman listens to the weather broadcast on the radio at night does he not think the coverage given is very short, and will he say what research is going on in co-operation with America, when the satellite is put up, and, if necessary, with Russia, to provide us with a world coverage which will tell us not merely about rain and change of wind but about those vast tornadoes which sometimes destroy crops and kill thousands of people?
    Mr. Amery: I can assure the hon. Gentleman that the Meterological Office is in the closest touch with scientific work in meteorology, mainly through membership of the World Meteorological Organisation, and also by attending ad hoc conferences on meteorological subjects.

    V-Bomber Force
    Mr. Grimondasked the Secretary of State for Air what consideration is now being given to the life of the V-bomber force and Great Britain's independent deterrent, in view of the fact that the recent display of Soviet air

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    strength indicated that Russian air defences now include Mach 2 fighters.
    Mr. Amery: Nothing seen at Tushino alters our view that the V-force, with the successive improvements already planned in its offensive capability, will remain a valid deterrent for the rest of this decade.
    Mr. Grimond: Would the right hon. Gentleman be a little more specific? Is he saying that the existing V-bomber force is a valid deterrent in view of what we saw at the air display, or that the V-force which he has in mind, which I understand is not in operation, would be a valid deterrent if it were in operation?
    Mr. Amery: The V-force as it is is a valid deterrent. We are, of course, and have been for some time aware of the general direction of Soviet developments in air defence, and, of course, it has been with this in mind that the improvements we have planned and are undertaking have been conceived. We are quite satisfied that as things are developing at the moment the V-force is and will continue to be an effective deterrent.
    Mr. Eden: Would my right hon. Friend not agree that, whatever else may have been learned from the Soviet Air Display, it certainly indicated a great and important rôle for manned aircraft in the future?
    Mr. Amery: I agree very much with what my hon. Friend has just said.
    Mr. Mulley: Would the right hon. Gentleman not also consider this in the light of the general requirements of the Air Force, and if we are short of transport and other planes, should he not perhaps consider that these should also be taken into account and that we should concentrate more on mobility than on producing a new V-bomber force at this time?
    Mr. Amery: As the hon. Gentleman knows, we attach the greatest importance to mobility and to transport, but plainly, I think, the evidence of increasing developments in Soviet air defence and combat shows the wisdom of our plans in the Air Ministry for maintaining the effectiveness of the deterrent over the decade ahead.

    Middleton St. George Station
    Mr. Chetwyndasked the Secretary of State for Air (1) on how many occasions during the last year Middleton St. George Royal Air Force Station has been used by civil aeroplanes; and what are the conditions for its use for this purpose;
    (2) on how many days in the last year Middleton St. George Royal Air Force Station has been in use for Service flying.
    Mr. Amery: Middleton St. George airfield has been out of use since the beginning of June for runway repairs. However, in the year ended 31st May, it was open for flying on 351 days and used by Service aircraft on 292 of them. This involved about 20,000 movements. It was used by civil aircraft on 92 occasions. When the runway repairs are completed next month, the airfield will again be available to civil aircraft for diversion purposes and for occasional civil flights provided the permission of the Commanding Officer is obtained beforehand.
    Mr. Chetwynd: As the only means of developing a civil air service to and from Tees-side lies in the use of this airfield, and as there seems to be scope for the use of it to be increased provided that there is no interference with priorities for the Air Force, will the right hon. Gentleman make every effort to bring this about so that we can have a civil air service to Tees-side?
    Mr. Amery: I am well aware of the strong feeling on Tees-side about this. It was made clear to me during a visit which I paid recently to Middlesbrough. We shall certainly do everything we can to provide this, compatible with the operational rôle.
    Sir L. Ropner: Are requests growing greatly at the moment for the use of this station by civil aeroplanes?
    Mr. Amery: I do not think that they are growing all that much. There were 92 occasions on which there were civil movements up to 31st May this year.

    Skybolt
    Mr. Grimondasked the Secretary of State for Air what version of Skybolt has been ordered for the Royal Air

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    Farce, in view of the fact that the United States Government have already produced a surface-to-air missile capable of intercepting a weapon with the performance of Skybolt Mark 1.
    Mr. Amery: Only one version of the Skybolt is at present being made. We are ordering this, as is the United States Air Force. We know of no developments in anti-missile defence which give reason to suppose that Skybolt will not remain a valid deterrent throughout the 1960s.
    Mr. Grimond: Is the Secretary of State prepared to deny the American claim to have developed a surface-to-air missile capable of intercepting?
    Mr. Amery: The hon. Member would have to study very carefully, as we will have to study, the capability of any antimissile defence system. So far there is not even a proving test taking place, and certainly no test against Skybolt, which has not yet been perfected and built. Although plainly there are all sorts of Possibilities in anti-missile defence, we do not believe that anything sufficiently effective can be devised in the decade ahead to prevent Skybolt continuing as an effective deterrent for ourselves and the United States Air Force.

    Blue Steel
    Mr. Croninasked the Secretary of State for Air when he expects the air-to-ground missile, Blue Steel, to be operational with Bomber Command.
    Mr. Amery: I have nothing to add to the forecast I made on 8th March in the Air Estimates debate.
    Mr. Cronin: Is it not the case, therefore, that Blue Steel now is being so seriously delayed that it is quite probable that Skybolt, which has a vastly superior performance, will be available very shortly after Blue Steel? Is there a real purpose to be achieved by continuing with the production of Blue Steel?
    Mr. Amery: Yes, indeed, Sir. I do not accept, to begin with, that we shall not have Blue Steel substantially in advance of Skybolt, and I think that it will fulfil a very useful rôle. Its continuing importance in air defence all over the world, to which reference has
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    been made already in Questions today, underlines the importance of having a stand-off weapon of short-range first and of long-range later, and we shall be glad to have Blue Steel.
    Mr. Cronin: What is the purpose of having a stand-off weapon with a 100-mile range about a year before having one with a 1,000-mile range?
    Mr. Amery: I do not entirely accept the hon. Member's time-scale, but as I tried to explain during the Air Estimates debate, there are two phases in air defence: one is point defence, namely, building up defence round a particular target; the other is overall defence over the country's air space. The stand-off missile would be extremely valuable, whatever the state of overall defence, in attacking a particular target.
    Mr. Mulley: We are discussing rather hypothetical considerations, but may I ask the right hon. Gentleman whether he can give an assurance, in pursuing the idea of Blue Steel, that it will come in a considerable time before Skybolt? In a previous answer the right hon. Gentleman said that the United States had now definitely ordered Skybolt for the United States Air Force. Is that so? I was under the impression that it was still in an experimental stage and that no firm order had been placed.
    Mr. Amery: I am answerable in the House only for the Royal Air Force, and I think that what I have said explains the situation where Skybolt is concerned. As to Blue Steel, I have nothing to add to the forecast which I made and which I think at the time went fairly far.

    Transport Aircraft
    Mr. Croninasked the Secretary of State for Air what interim arrangements he is making to improve the carrying capacity of Transport Command, pending the entry into service of the Belfast transport aircraft in 1964.
    Mr. Amery: We expect to take delivery of the 56 Argosies and 5 Comet 4s now on order.
    Mr. Cronin: Is it not the case that none of these aircraft to which the right hon. Gentleman has referred is capable of carrying heavy equipment long distances? In view of this very serious gap

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    in our transport capacity between now and 1964, may I ask whether the right hon. Gentleman could indicate what consideration the Government have given to purchasing Lockheed C.130s, which are the only aircraft to have a cargo cross-section, a payload, and a range so as to be capable of carrying heavy equipment long distances, until the Belfasts are available?
    Mr. Amery: We have considered all these things. The hon. Member must realise that the Belfast is due to fulfil the strategic rôle of carrying not only heavy payloads but particularly the bulky equipment required by both the Army and the Air Force. The Hercules, or Lockheed C.130, would not be able to carry the equipment which we have in mind, not so much because of the weight as because of the bulk. Therefore, it would not fulfil the rôle for which the Belfast is required.
    Mr. Mulleyasked the Secretary of State for Air when he expects to have strategic air freighters in service; and whether he will now arrange for the placing of orders for the Lockheed Hercules as soon as satisfactory arrangements are made for its manufacture in this country.
    Mr. Amery: The Britannia already gives us some strategic freighting capability and the Belfast is due in service in 1964. We have no plans to order the Hercules for this task.
    Mr. Mulley: Can the right hon. Gentleman really assure the House that he is satisfied with the strategic freight capability of the Royal Air Force and is prepared to wait until 1964 for the substantial addition of the Belfast with these very small additions in the meantime? Is the right hon. Gentleman satisfied that we can wait three years after what was disclosed in the Kuwait operation?
    Mr. Amery: As I tried to make plain when we discussed Kuwait a week ago, we are certainly not complacent or satisfied with the situation. But there is no aircraft that we know of, apart from the Belfast, which, between now and 1964, would carry the heavy and bulky items of equipment that the Army and Air Force wish to be transported. We there-
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    fore have to wait for the Belfast for that purpose.
    Sir A. V. Harvey: Is my right hon. Friend aware that the American Air Force has equipment which could do this work and that by not acquiring suitable aircraft this country runs itself into a dangerous position in the present state of international affairs? Does he not think that for all we do for the Americans it is about time that they did something for us?
    Mr. Amery: We are well aware of the importance of carrying this equipment around. Some of it exists and some of it is still in development in this country, but heavy equipment—not Skybolt—as far as we can make out, could be effectively carried only in the Belfast, and we shall have the Belfast in 1964.

    Farm, Maidenhead (Right of Way)
    Sir C. Mott-Radclyffeasked the Secretary of State for Air whether he is aware of the inconvenience caused both to Mr. H. J. Burfitt, of Altwood Farm, Maidenhead, and to the Maidenhead Borough Counciil by his Department's delay in issuing the necessary documents concerning a right of way over Lees Gardens; and when he expects to be in a position to reach a final settlement with Mr. Burfitt.
    Mr. J. Amery: I think my hon. Friend the Under-Secretary of State has written to my hon. Friend. He will appreciate that there are several matters still to be settled between Mr. Burfitt and the Air Ministry and that it depends on both sides when a final settlement will be reached. But I can assure my hon. Friend that we are anxious to reach a settlement at the earliest possible moment.
    Sir C. Mott-Radclyffe: While I am grateful to my right hon. Friend for at last taking speedy action since I put the Question down on the documents concerning the right of way, may I call his attention to the fact that negotiations between his Department and my constituent have been running for nearly nine years? Although I admit that this is not entirely a straightforward case, may I ask whether he will do his best to reach a final solution fairly early?
    Mr. Amery: As I have said, we are very anxious to reach a solution as soon as we possibly can, but the difficulties are not all on one side in this matter.

    Kenley Airport (Land)
    Mr. Doughtyasked the Secretary of State for Air whether the land at Kenley Airport comprising the old runway and adjoining land can now be released for use for building or as a public open space.
    Mr. Amery: I have asked my Department to review our requirements for land at Kepley, but I am not yet ready to make a statement.
    Mr. Doughty: Will my right hon. Friend be kind enough to inform me as soon as he comes to a decision? I think that he ought to do his best to come to a decision as soon as possible.
    Mr. Amery: Yes, indeed, I will inform my hon. and learned Friend.

    Aircraft and Missiles (Expenditure)
    Mr. Mulleyasked the Secretary of State for Air what percentages of his expenditure on new aircraft and missiles in the financial year 1960–61 and in the current financial year have been for Bomber Command, Fighter Command and Transport Command, respectively.
    Mr. Amery: The estimated cost of new airframes, engines and missiles, expressed as a percentage of the net Vote for aircraft and stores was, for Bomber forces 11 per cent. last year and 13·5 per cent. this year; for Fighter forces, 9·5 per cent. and 9·5 per cent.; and for Transport forces 4·5 per cent. and 6 per cent.
    Mr. Mulley: Do these figures not disclose the inadequate state of Transport Command, and in view of the increasing necessity for preparing for possible limited war action as distinct from global war, should not the Transport Command allocation be very substantially increased?
    Mr. Amery: I think the hon. Gentleman has to realise that the figures are, naturally, influenced not simply by the programme but by the dates on which the bills for the aircraft acquired fall due. Thus, in 1959–60 the Transport percentage of expenditure was higher than the
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    Fighter. It is a question of when the actual bill is presented by the firm concerned for the aircraft supplied.
    Mr. Mulley: While I understand the difficulties of accounting and the rest of it, might I ask whether the right hon. Gentleman does not realise that the important thing is what planes are actually in service with the Royal Air Force at this moment?
    Mr. Amery: Yes, Sir, and the planes in service with the Royal Air Force at the moment do not bear a direct relation to the percentage of expenditure incurred in one year.
    Mr. G. Brown: Nor to our needs.

  MINISTRY OF DEFENCE

    Sea Cadets, Dewsbury (Equipment)
    Mr. Ginsburgasked the Minister of Defence why his Department and the Service Departments concerned were unable to meet the request of the Dewsbury Sea Cadets for the loan of one small marquee, two small tents and some cooking equipment for their summer camp.
    The Minister of Defence (Mr. Harold Watkinson): I have already written to the hon. Member on this subject. We always want to help Cadet units as far as we can; it is patently in our interests to do so. Nevertheless the demand for this kind of equipment during the summer months, when service training is at its height, is very great and some units must inevitably be disappointed. I am sorry that we could not meet this particular request.
    Mr. Ginsburg: But is the Minister aware that this is an extremely bad piece of public relations by his Department and the Service Departments generally? Is he aware that my constituents were willing to fetch and transport the tentage if it were made available? Is he further aware that the Departments cannot really have it both ways; either they will not make the tentage available as a matter of principle, or, which I cannot believe, the tentage is simply not there? Finally, is the right hon. Gentleman aware that, despite his lack of co-operation, the camp will go on anyway?
    Mr. Watkinson: I am very glad to hear that the camp will go on, because I spent a great deal of time on this matter personally, as the hon. Gentleman knows, and I am very sorry that we could not meet the request.

    United States Secretary for Defence (Discussions)
    Mr. Emrys Hughesasked the Minister of Defence (1) if he will make a statement on his conversations with Mr. McNamara, the United States Defence Secretary;
    (2) what representations he has received from the United States Government to increase expenditure on the United Kingdom Armed Forces.
    Mr. Warbeyasked the Minister of Defence if he will make a statement on his recent discussions with the United States Defence Secretary concerning military planning in preparation for a crisis over Berlin.
    Mr. Shinwellasked the Minister of Defence whether, in his talks with the United States Secretary of Defence, an increase in the number of troops and other forces at the disposal of North Atlantic Treaty Organisation was under consideration; and if he will make a statement.
    Mr. Watkinson: My meeting with the United States Secretary for Defence was one in a series of informal meetings between N.A.T.O. Defence Ministers for exchanging views on mutual defence problems. We discussed interdependence and N.A.T.O. long-term planning and Mr. McNamara took the opportunity which I welcomed of giving me the views of the United States Government on the military aspects of the Berlin situation.
    Mr. Hughes: Can the right hon. Gentleman tell us whether Mr. McNamara made certain proposals which would greatly increase the defence expenditure of this country and whether he told Mr. McNamara that we are facing a financial crisis and that he did not want the same percentage of unemployed as America has?
    Mr. Watkinson: Mr. McNamara and I found ourselves in general agreement about the military measures which
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    might become desirable, but only when Foreign Secretaries have met and decided the general policy.
    Mr. Shinwell: While I do not ask the right hon. Gentleman to confide details in us, for that would be asking too much, might I ask whether we can have his assurance that he is not going to yield to the United States—to Mr. McNamara, President Kennedy, or anybody else—and increase our defence commitments, which we cannot afford?
    Mr. Watkinson: The right hon. Gentleman can have my assurance—he knows this already—that I hope that I shall behave to the United States as a good ally of very long standing and recognise that it is in our mutual interest to strengthen N.A.T.O. at this time against the possibility of difficulties over Berlin.
    Mr. M. Foot: Is the right hon. Gentleman aware that The Times today reports Mr. McNamara as saying when he got back to Washington that he could find no feeling of opposition in Britain against dramatic moves over Berlin? Does he confirm that that is a correct statement?
    Mr. Watkinson: I am not responsible for what appears in The Times, but Mr. McNamara and I discussed no dramatic moves over Berlin so far as I am aware.
    Mr. Biggs-Davison: While I am not a consistent advocate of excessive deference to the United States, might I ask my right hon. Friend, with reference to the question asked by the right hon. Member for Easington (Mr. Shinwell), whether our defence commitments ought not really to be determined by what is necessary for the safety of the Realm?
    Mr. Watkinson: That seems to me to be a very good yardstick and I agree with my hon. Friend.
    Mr. G. Brown: Is there any significance in the fact that in his original reply the Minister listed some questions which he and Mr. McNamara had discussed and that be then said that Mr. McNamara took the opportunity, to quote the Minister, "which I welcomed, to give me the American Government's views about Berlin"? Does that phraseology mean that our Minister of Defence did not take the opportunity

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    which, no doubt, Mr. McNamara would have welcomed, to give the United States Defence Secretary the British Government's views about Berlin?
    Mr. Watkinson: No, Sir. I certainly gave Mr. McNamara my views about Berlin and the general situation with which we are faced, and we found the mutual interchange of great value.

    Kuwait
    Mr. Nabarroasked the Minister of Defence whether he will make a statement upon the formations and dispositions of British troops now remaining in Kuwait; what is the total cost to date to British public funds of the Kuwaiti expedition; whether a supplementary service estimate is to be called for; what part of the cost of the expedition is to be contributed by the Sheik of Kuwait or United States oil interests; or whether the entire cost of the expedition is to fall on the United Kingdom.
    Mr. W. Hamiltonasked the Minister of Defence what has been the estimated weekly cost of operations in Kuwait; and by whom such costs will be borne.
    Mr. Watkinson: I will circulate in the OFFICIAL REPORT details of the main units which have been withdrawn from Kuwait; it would not be in the public interest to identify those remaining or their dispositions. As I said yesterday in reply to the hon. Member for Dudley (Mr. Wigg), the extra cost of operations in Kuwait up to the end of July is likely to be of the order of £1 million. I have no statement to make at present on how the costs will be borne.
    Mr. Nabarro: Will my right hon. Friend bear in mind that the Chancellor of the Exchequer yesterday referred in his statement to negotiations within the framework of N.A.T.O. as to our defence costs in Western Europe? Would it not be wholly incompatible with national economic policy that we should allow the whole cost of the Kuwaiti expedition to fall on our shoulders when the Sheik, a very friendly Sheik, has £300 million or more lying here in London while we have defended as to 50 per cent. American oil interests? Surely there should be some equity in a matter of this kind.
    Mr. Watkinson: I take careful note of what my hon. Friend has just said.
    Following is the information:

    2 Companies Coldstream Guards.

    1 Squadron Hunter aircraft.

    1 Parachute Battalion and Light Battery.

    2 Royal Marine Commandos.

    H.M.S. "Bulwark".

    United States Navy (Facilities)
    Mr. G. Brownasked the Minister of Defence if he will make a statement about additional facilities for the United States Navy in the United Kingdom.
    Mr. Watkinson: Agreement has been reached with the United States Government to provide certain facilities in the United Kingdom in connection with the Distant Early Warning Line. A small communications station will be established by the United States Navy near Thurso to supplement the facilities already available at the United States station at Londonderry. In addition certain radar picket escort vessels will make use of existing naval facilities at Rosyth and commercial facilities on the Clyde.
    Mr. G. Brown: Can the right hon. Gentleman say what this involves us in by way of provision facilities and financial obligations?
    Mr. Watkinson: The financial obligations will be borne entirely by the Americans except for the provision of one small area of land. The other provisions which we shall make are largely docking and repair facilities and so on, for which, again, the United States will pay. This is actually, as I think the right hon. Gentleman knows, a radar warning system. It is against conventional aircraft, but it serves a useful purpose and fills a gap in the chain.

    German Troops, United Kingdom
    Sir B. Jannerasked the Minister of Defence what steps he is taking to ensure that former Nazis and neo-Nazis are not included amongst those Germans who will be coming to this country for military training.
    Mr. Watkinson: No such steps are contemplated.
    Sir B. Janner: Surely the right hon Gentleman is not saying that anybody, whether he has a Nazi background, happens to have been of high ranking order in the Nazi set-up, or is a neo-Nazi, will be allowed into this country in order to spread that sort of vicious doctrine? Is not something going to be done about it? Will the right hon. Gentleman consult the Home Office or the Foreign Secretary about what is to be done?
    Mr. Watkinson: The hon. Gentleman might take note of two things, first, the extreme care with which the Federal German Republic acted when its forces carried out similar training in France, entirely without any incident or objection, and, secondly, that ever since the new German forces were raised by the Democratic Government immense care has been taken to screen not only the forces but all servants of the Government against Nazi backgrounds.
    Sir B. Janner: But surely in a case of this description the right hon. Gentleman will make it known to those who are going to send troops here that we do not and will not tolerate the spreading of that kind of doctrine in this country?
    Mr. Watkinson: That goes without saying, and it is just as clearly known to the German Government as to the hon. Gentleman.
    Sir L. Plummer: Has the Minister any information to show that the Federal Government have checked on Heusinger and his association with the Nazi Party?
    Mr. Watkinson: That is quite another matter. I think that the gentleman whom the hon. Gentleman mentions was involved in the plot against Hitler.
    Sir B. Janner: In view of the unsatisfactory nature of the reply, Mr. Speaker, I give notice that I propose to raise this matter again at an early opportunity.

  SHIPPING

    Nuclear Propulsion
    Mr. Straussasked the Minister of Transport whether he will now make a statement about the award of a contract for the building of a nuclear-powered tanker.
    The Minister of Transport (Mr. Ernest Marples): I will make a statement as soon as I can.
    Mr. Strauss: Can the right hon. Gentleman give the reason for this very long delay? The shipbuilding industry is very anxious about this. It is over a year since tenders were invited, yet the right hon. Gentleman, week after week and month after month, refuses to give any indication of whether the whole project is to be abandoned or of what the situation is. Why the delay? Cannot he at least answer that?
    Mr. Marples: The reason for the delay is the complexity of the technical considerations. The question exercising my mind is whether our limited resources should be used in another way.
    Dame Irene Ward: In view of the progress that has been made by the United States and Russia in this, will my right hon. Friend make a statement before the House rises for the Summer Recess? Will he bear in mind that quite a lot of technical information was assembled by the Galbraith Committee, and that the decision was taken to try to embark on the building of a commercial ship to collect commercial data? Is my right hon. Friend's difficulty related to the fact that the shipbuilders do not want to find the money and neither do the Government?
    Mr. Marples: I said during my speech during the recent debate on shipping and the shipbuilding industry that I hoped, but could not promise, to make a statement before the House rises. As for the second part of my hon. Friend's supplementary question, I am bound to say that neither the shipbuilders nor any shipping firms want to make a contribution. We have to decide whether it is worth while to spend money this way or upon trying to find a reactor which is economic.
    Dame Irene Ward: Then why not say so?
    Mr. Bence: In view of the slack in the shipbuilding industry—when we have considerable unemployment in the yards and berths lying empty—is not this a glorious opportunity in physical terms to undertake some experimental construction of this kind?
    Mr. Marples: If this project were agreed to it would hardly make any difference to the shipbuilding industry. The great thing is for that industry to be competitive, because there are quite enough orders going about if it can get them.

    Foreign Orders
    Mr. Hector Hughesasked the Minister of Transport if he is aware of the drift of shipbuilding and ship-repairing orders from British shipyards to continental shipyards; and what steps he now plans to counteract this drift of British finance and employment away from Great Britain.
    Mr. Marples: I am aware of this development. I told hon. Members in the debate on shipping and shipbuilding on 13th July of the independent inquiry which I have arranged for Messrs. Peat, Marwick, Mitchell and Company to make into the reasons why British ship-owners have ordered ships abroad.
    Mr. Hughes: Why did not the right hon. Gentleman act earlier? Is he aware that this drift has been going on for far too long, and that during the last three months alone the tonnage that has gone to foreign shipyards from British yards amounts to over 250,000 tons? That is a very serious loss to British employment and to British finance. What is he doing about it?
    Mr. Marples: I am finding out the real answer, firmly and impartially, as to why these orders are going abroad. Then perhaps we can see that our own industry is made more competitive.
    Mr. Strauss: In spite of what the right hon. Gentleman said during the recent debate on the shipbuilding industry, is he aware that the leaders of the industry still maintain that their major handicap in getting orders is absence of credit facilities comparable to those granted by other Government and foreign banks to their own industries? Will the right hon. Gentleman look into this further?
    Mr. Marples: I have myself recently seen about 15 ship-owners, and not one of them has given as a reason the fact that they could not obtain credit. No case like that has been brought to my
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    notice. The inquiry will soon find out whether that is the reason, but I do not believe it is.
    Mr. P. Williams: Can my right hon. Friend say whether he will be able to get the sort of information from the foreign yards that he is to get from British yards? Unless he gets that information and is then able to make a direct comparison, the whole operation will be valueless.
    Mr. Marples: I do not agree that it will be valueless, but the firm will try to get what information it can from abroad.
    Mr. Shinwell: Can the right hon. Gentleman say whether the British ship-owners who have placed orders for vessels in foreign yards are recipients of the 40 per cent. investment allowance? If they are, is it not time to persuade the Chancellor of the Exchequer to inform these owners who are so unpatriotic that they will not receive this relief at the expense of the public?
    Mr. Marples: Any owner who buys a new ship is entitled to the 40 per cent. investment allowance.

    Passenger Liners (Accommodation)
    Mr. Benceasked the Minister of Transport if he is aware of the inadequate provision of accommodation on some British passenger liners; and if he will take steps to ensure that reasonable standards are maintained for passengers on all ships.
    Mr. Marples: The standard of accommodation in British post-war passenger liners is extremely high. There are, however, a few pre-war ships, now near the end of their useful lives, in which some of the accommodation is not up to present-day standards. If the hon. Member will let me have particulars of the ships he has in mind, I will look into the matter.
    Mr. Bence: Is the right hon. Gentleman aware that I have a very serious complaint, concerning the s.s. "Orontes", that six men are sleeping in bunks in a cabin in which they have 70 inches by 40 inches in which to dress and undress and do everything else they wish to do in that cabin? There are also six women in another cabin with six bunks with only 70 inches by 40 inches

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    free space. Is the right hon. Gentleman aware that that is less than the space provided for quality animals in transit?
    Mr. Marples: I will look into that case.

  ROADS

    Road Programme
    Sir B. Jannerasked the Minister of Transport whether he is aware of the need for the road programme to be expanded forthwith to at least twice its present size; and whether he expects to make a statement before the Summer Recess with regard to his plans for expanding present expenditure on the roads.
    Mr. Marples: We are already devoting a large proportion of our resources to the road programme, and it would be wrong for me in present circumstances to hold out any hope of an increase of the order suggested by the hon. Member.
    Sir B. Janner: Was the right hon. Gentleman in the House yesterday when the Chancellor of the Exchequer said that, in the field of public expenditure, it is essential to see that priority is given to whatever directly affects national efficiency and that we should not wastefully disrupt programmes under way? Will the right hon. Gentleman insist that the Chancellor recognises that a great improvement in our roads is absolutely essential to national efficiency?
    Mr. Marples: That is why we have the biggest programme this year that we have ever had.
    Sir L. Ropner: Can my right hon. Friend say whether he intends to take any steps this year to free the Selby toll bridge?
    Mr. Marples: I can answer that categorically. I do not intend to take any steps this year to free Selby toll bridge.
    Mr. Mellish: Is the right hon. Gentleman aware that his statement will be viewed with great concern by all road users? Although, as we freely admit, the programme is a large one, it is still not large enough. Is the right hon. Gentleman aware that, if long-term programmes are to be cut down because of the economic situation, this nation will be the first to suffer?
    Mr. Marples: There is an overload on the building industry at the present time. For example, there are 1,111 vacancies for carpenters in London and the South-East but only about 230 carpenters registered as unemployed. Merely to announce an astronomical figure, as was suggested in the Question, would be disastrous.

    Gossops Green, Crawley
    Mr. Goughasked the Minister of Transport what steps he proposes to take to provide safe access for pedestrians and particularly children across A.23 in the Gossops Green neighbourhood of Crawley.
    The Parliamentary Secretary to the Ministry of Transport (Mr. John Hay): We propose to ask the Crawley Development Corporation and the Crawley Urban District Council to discuss the provision of a suitable facility with officers of our Department, though we cannot at this stage undertake to accept any financial responsibility.

    Great West Road
    Sir W. Wakefieldasked the Minister of Transport what progress has been made in improving the efficiency of the flow of traffic on the Great West Road, as a result of the study that has recently been made of traffic problems on that road.
    Mr. Marples: I hope soon to introduce clearway conditions between Chiswick Flyover and Colnbrook. A dual carriageway now in course of construction at Cranford will help to eliminate some turns. Schemes for dealing with right turning traffic at other junctions are being worked out. Four sets of traffic lights are shortly to be linked.
    Sir W. Wakefield: I thank my right hon. Friend for that statement. Can he tell the House when he expects to have further information available in connection with the right turns and other matters now under investigation on the Great West Road?
    Mr. Marples: All the conditions are now being surveyed, so it should not be too long.

    Warwickshire
    Mr. Lindsayasked the Minister of Transport why, in respect of the county of Warwick, he has not so far authorised any classified road scheme of over £100,000 grant value for the next three years; and when any such additional authorisation can be expected.
    Mr. Hay: We have been able to include in the first three year programme only those schemes which command the highest priority throughout the country, having regard to the urgent need to alleviate congestion in our cities. I regret that it was not possible to include all the schemes submitted. We hope to announce the programme for 1964–65 later this year.
    Mr. Mellish: Cain we have an assurance that road schemes of this character which have been announced will not be cut back because of any financial arrangements about which we heard something yesterday?
    Mr. Hay: I cannot depart from the terms in which my right hon. and learned Friend addressed the House yesterday.

    Car Parking
    Mr. Spriggsasked the Minister of Transport whether he will take powers to control car parking in streets too narrow for this purpose.
    Mr. Marples: I already have powers to control car parking on trunk roads and on roads in the London Traffic Area. On other roads this is a matter for the local authorities.
    Mr. Spriggs: Is the right hon. Gentleman aware that his right hon. Friend the Home Secretary has been reported as saying that he gave some measure of encouragement to car drivers to park part-way on the footpaths? Will he ask his right hon. Friend at least to show a good example to the travelling public?
    Mr. Marples: The hon. Member should put a Question to my right hon. Friend so that he can answer it direct.
    Mr. Manuel: What is the right hon. Gentleman doing to control the all-night parking of commercial vehicles in streets already overcrowded? If members of the public have to provide garage accommodation for their cars, is
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    not the least we can do to see that off-street parking facilities are used by these commercial vehicles?
    Mr. Marples: In London, where this problem is at its most acute, my Department and the police are in consultation with local authorities at Bermondsey and other places in the hope of taking remedial action.
    Mr. Strauss: While there has been much discussion of this matter in the House and statements by the Home Secretary and the Minister, is it not about time that this serious problem was sorted out and some announcement made about car parking on the pavements in narrow streets, often making it impossible for pedestrians to walk along the pavements properly? Ought there not to be some decision in the matter and a proper Government announcement, or some direction to the police which can be properly obeyed?
    Mr. Marples: Any question of directions to the police is a matter for my right hon. Friend the Home Secretary and not for me.
    Mr. G. Brown: Can the Minister of Transport say whether it was after consultation with him that the Metropolitan police moved parked cars away from outside the house of the Home Secretary?
    Mr. Marples: I am afraid that I could not answer that.
    Mr. Speaker: That is outside the terms of the Question.

    Euston Road (Traffic Congestion)
    Miss Baconasked the Minister of Transport why repair work is being done to the road outside St. Pancras and King's Cross stations in the middle of July, so causing dislocation at the height of the holiday period.
    Mr. Hay: These are improvements urgently needed to improve traffic conditions at King's Cross. They should result in better traffic movement and savings in police manpower.
    Miss Bacon: Is the hon. Gentleman aware that by that answer he has proved that he has not been in that area during certain times of the day? Is he aware

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    that what I thought was temporary dislocation at the time I put down the Question is in fact to be permanent chaos in the area? Is he aware that people desiring to catch trains at King's Cross Station now find themselves in a queue for about 20 minutes, and that those arriving at St. Pancras and desiring to go westwards must first go 300 or 400 yards eastwards, 20 minutes later finding themselves on the opposite side of the road?
    Mr. Hay: I assure the hon. Lady that there will be no condition of permanent chaos at this place. What we are trying to do is to improve the traffic flow, something on which the House has consistently helped us. I hope that this improvement will be completed within a short time.

  TRANSPORT

    Motor Vehicles (Noise)
    Mr. Leaveyasked the Minister of Transport whether he will introduce regulations prescribing noise levels, based on an acceptance of the internationally agreed methods of noise measurement as applied to motor vehicles.
    Mr. Hay: The International Standards Organisation has not yet agreed the proposed standard method of measuring noise from motor vehicles. In view of the delay, we propose to put in hand the making of new regulations based on the revised British Standard, which I understand will be published shortly. It will, however, be some time before new regulations in this complex field can be drafted and the statutory consultations completed.
    Mr. Leavey: While thanking my hon. Friend for that statement, may I ask him for an assurance that, when these regulations are introduced, he and his right hon. Friend will use what good offices they can to see that they are robustly enforced, since he will agree that a great deal of noise resulting from transport is wholly unnecessary and, indeed, is deliberately created? This is a matter in which a great deal of progress can be made by robust administration of the regulations.
    Mr. Hay: It is because we are well aware of these considerations that we are taking the action I mentioned. We are, in fact, going a little ahead of international agreement on this matter.

    British Transport Commission (Houses)
    Mr. Hector Hughesasked the Minister of Transport if he will give a general direction to the British Transport Commission to undertake the immediate repair, with a view to letting, of all untenanted houses in their possession.
    Mr. Marples: No, Sir. This is a matter of management for the Commission.
    Mr. Hughes: Does the Minister realise that this doctrine of the day-to-day affairs of the Commission can be carried too far and that this problem has been rendered acute by the closure of branch lines in Scotland? Is he aware that many of the buildings at level crossings and elsewhere are lying derelict and are a great loss of public property? Will he remedy this state of affairs?
    Mr. Marples: I am afraid that this is a matter of day-to-day management for the Commission.
    Mr. Gresham Cooke: Is my right hon. Friend aware that at the same time there is a good deal of evidence coming to hand to show that the British Transport Commission is very slow in getting rid of untenanted and unwanted property? Will he give a general direction to the Commission telling it to hurry up and to get rid of the houses and buildings and so on which it does not require?
    Mr. Marples: No, I will not give a general direction to the Commission, but when reorganisation takes place it will no doubt have greater powers than it now has about property.

    Channel Tunnel
    Mr. E. L. Mallalieuasked the Minister of Transport whether in view of the need to decide future policy for the improvement of road and rail communications with the Continent of Europe, he will organise at the earliest possible opportunity a conference of those authorities concerned with the problem of the Channel Tunnel.
    Mr. Teelingasked the Minister of Transport whether in view of the need to provide better and cheaper transport facilities for British exports to the Continent of Europe, he will now state Her Majesty's Government's policy with regard to the authorisation of a Channel Tunnel, so that a decision can be taken in this matter at an early date.
    Mr. Marples: I shall not be in a position to consider calling a conference or to make a policy statement until a later stage in our consultations with the French Government.
    Mr. Mallalieu: Can the right hon. Gentleman say that conversations with the French Government on this subject are taking place? Is he not aware that there is widespread opinion in both countries that the two Governments are playing an Earl of Chatham and Sir Richard Straughan game with this business? Will he make a move?
    Mr. Marples: It cannot be done unilaterally. We are in touch with the French Government through the usual diplomatic channels.
    Mr. Teeling: Can my right hon. Friend tell us exactly how far he is in touch with the French Government? Is he aware that there is tremendous difficulty about developments on the coast on both sides of the Channel because of the uncertainty about how the money is to be spent, as people do not know whether we are to have a tunnel or not? Is he not aware that there is an appalling increase of traffic between the countries?
    Mr. Marples: All I can say is that we are in touch with the French Government. I had better leave it at that.

    Coal (Transport)
    Mr. P. Noel-Bakerasked the Minister of Transport what is the policy of Her Majesty's Government with regard to the transport of coal by lorry.
    Mr. Marples: The Government's policy is to permit the transport of coal by lorry according to the desire of the user and the facilities available.
    Mr. Noel-Baker: Does not the Minister agree that it is far more suitable that coal should be carried by rail? Does
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    he think that the small marginal gain in road costs to industrial undertakings should outweigh the grave nuisance caused to the public by coal lorries in many places such as Derby?
    Mr. Marples: Most of the coal is taken by rail, of course, and it is a traffic suitable to rail. In those cases where industrialists choose to send it by road it is obviously because the balance of advantage lies in taking it by road.
    Mr. Noel-Baker: Should not the public loss in the discharge of diesel fumes and accidents and other things be a grave factor on the other side?
    Mr. Marples: It is very difficult to assess all those things.
    Dame Irene Ward: In his assessment of the carriage of coal, will my right hon. Friend bear in mind that coastal shipping is also available, and will he take care not to eliminate coastal shipping in this matter?
    Mr. Marples: I do not think that Derby has a great deal of coastal shipping.

  RAILWAYS

    Electrification
    Mr. Ellis Smithasked the Minister of Transport what capital expenditure he has authorised to electrify the North Staffordshire loop line, for the construction of a main line by-pass diversion of Harecastle tunnel, and for electrification of the main line that runs through Stoke-on-Trent.
    Mr. Hay: No proposals have been submitted to my right hon. Friend by the British Transport Commission for the electrification of the North Staffordshire loop line. The London Midland Region electrification scheme, which has been given general approval, includes the electrification of the main line through Stoke-on-Trent. I understand from the Commission that they are planning to by-pass the Harecastle tunnels.
    Mr. Ellis Smith: Will the Parliamentary Secretary be good enough to convey to the British Transport Commission the ideas contained in the Question?
    Mr. Hay: I think that the Commission is already aware of the hon. Member's views, because it was consulted about this Question.
    Mr. Ellis Smithasked the Minister of Transport what capital expenditure he has authorised or intends to authorise to modernise and electrify the line which connects Piccadilly, Manchester, main line with Ordsall Lane, linking up Exchange and Victoria Stations, and to provide for direct and indirect through running between the electrified lines at Piccadilly, Manchester, and Liverpool.
    Mr. Hay: None, Sir.
    Mr. Ellis Smith: Does the Parliamentary Secretary agree with me that density of population in this area is the greatest in the country, if not in the world, and that revenue where modernisation has been applied has already increased by between 50 and 70 per cent.? In view of the urgent needs of people who render great service to the country's export trade, should not the Commission concentrate on this area to carry modernisation to the maximum extent?
    Mr. Hay: The hon. Member asked my right hon. Friend what capital expenditure he had authorised in this connection, and I gave the answer which is that we have not authorised any. However, if the hon. Gentleman has a suggestion to make to the Commission about this electrification, the proper course is to approach the Commission direct.
    Mr. Ellis Smith: Will the Parliamentary Secretary bear in mind that, because of Parliamentary rules, the Question had to be phrased in this way? It is due to a weakness imposed on us by someone who is no longer a Member but who is now in another place and against whom some of us took a strong stand at the time. We have been proved right. Will the hon. Gentleman ask the Commission to consider the ideas contained in the Question?
    Mr. Hay: I am not altogether clear to what Member of another place the hon. Gentleman is referring. I think that that must have happened before my time.

  MR. WANG (VISA)
  Mr. Harold Davies(by Private Notice) asked the Secretary of State for the Home Department what action he is taking to prevent the exclusion from the United Kingdom of Mr. Wang, a political refugee from Taiwan.
  The Minister of State, Home Office (Mr. David Renton): Mr. Wang, who appears to be an officer of the Formosan Navy, arrived at London Airport yesterday afternoon, having obtained a visa for a visit to the United Kingdom in Los Angeles on 20th July. He informed the immigration officer that he wished to stay here permanently. He claimed to have left the United States as an alternative to returning to Formosa where, he said, he would be under suspicion in respect of his political opinions. The immigration officer took the view that the visa had been obtained by misrepresentation and, in the exercise of his powers under Article 1 (1) of the Aliens Order, 1953, he refused Mr. Wang leave to land.
  In deference to representations by the hon. Member, I am inquiring into the circumstances of Mr. Wang's case, and, meanwhile, my right hon. Friend has authorised him to stay for 14 days. I shall communicate with the hon. Member as soon as possible.
  Mr. Davies: I thank the hon. and learned Gentleman for that Answer. May I ask, in defence of Mr. Wang, whether the Minister is aware that he has passed a master's degree in mechanical engineering—it is true that he passed this degree in the United States of America while an officer of the Taiwan Navy; that he wishes to live in the free world and is not desirous of going to the Communist part of the world; that he and his wife are being trained in the Catholic faith; and that because of being harrassed both he and his wife have attempted suicide? Will the Minister therefore look carefully into this case to consider whether Mr. Wang might be given an opportunity of exercising his profession either in the United Kingdom or ultimately in the United States of America?
  Mr. Renton: Those of the considerations mentioned by the hon. Gentleman which are relevant will be borne in mind.
  Mr. Teeling: On a point of order, Mr. Speaker. Is it right for an hon. Gentleman to say that Roman Catholics want to commit suicide? They do not.
  Mr. Speaker: I think that, by and large, the House would be well advised to pass to other business.

  KUWAIT-IRAQ BORDER (ARRESTED BRITISH SOLDIERS)
  Mr. Mayhew(by Private Notice) asked the Secretary of State for War whether he will make a statement on the arrest of three British soldiers on the Kuwait border with Iraq.
  The Secretary of State for War (Mr. John Profumo): Yes, Sir. On the morning of Sunday, 23rd July, a Ferret scout car, carrying three Royal Engineers—a staff sergeant, a lance corporal, and a sapper, from 34 Field Squadron, Royal Engineers—set out on a routine road check in the forward desert area. The scout car was unarmed but the crew, of course, had personal weapons. The party had instructions to stop at the 11th Hussars check-point, which is 12 miles from the frontier.
  In fact, at about 1.30 p.m., the scout car passed the check-point without stopping, and proceeded northward along the main road to the border. The soldiers are then believed to have lost their way and accidentally entered Iraq where they were arrested.
  According to the Iraqi Press reports, the men are now at Rashid Camp, Baghdad. They are reported to have stated at a Press conference the day before yesterday that they were in good health and were being well treated.
  A note from Her Majesty's Ambassador was handed to the Minister of Foreign Affairs yesterday morning, asking for the men's release, and for access to them meanwhile. Her Majesty's Embassy is pressing for a reply.
  Although Baghdad Radio has been reported as stating that the men will be tried by a military court, Her Majesty's Embassy understands that it is not at present intended to hold more than a judicial investigation.
  Mr. Mayhew: Is the right hon. Gentleman aware that this incident might have
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  led to much graver results? Will he answer three questions? First, what instructions are given in these cases where, as often happens in desert conditions, a reconnaissance patrol loses its bearings? What instructions are given during the course of training? Secondly, what action is he taking to prevent incidents of this kind occurring again? Thirdly, will he say what grounds the Iraqis have given for denying access to the men by the British Embassy?
  Mr. Profumo: So far, the Iraqis have not given any grounds for denying access. That is why Her Majesty's Ambassador is pressing for it.
  The instruction to all troops, particularly those on active service, is that when they get lost near the territory of another country they should return to their own units. Indeed, there is evidence that in this case they stopped a local person and asked how they could get back to Kuwait. I agree that this could have led to something more serious, but I am happy to take the opportunity of saying that it was an innocent mistake and not an intentional act. I am seeing whether the instructions need any alteration to prevent further occurrences of this nature.
  Mr. Mayhew: Is it not the case that they asked the way of a young lad, who led them to an Iraqi post? The Minister treats this with some levity, but will he try to prevent this kind of thing recurring, if only in view of our manpower shortage?
  Mr. Profumo: I was not treating it with levity. Hon. Gentlemen opposite were doing that. They stopped and asked the way from the only person they could find. I am not sure whether it was a boy, a girl, or a grown-up, but they were led to the wrong place.
  Mr. Mendelson: Can the Minister, first, give an assurance that all the legal rights of these three soldiers will be properly safeguarded; and, secondly, that while the soldiers are being detained the interests of their dependants will be fully looked after by Her Majesty's Government?
  Mr. Profumo: I certainly give an undertaking about the last part of the

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  hon. Gentleman's question, and it will be the intention of Her Majesty's Ambassador to secure an answer to the first part of his question.

BUSINESS OF THE HOUSE
Mr. Gaitskell: Mr. Speaker, I wish to raise a point of order in connection with the debate which is to follow. The debate on the economic situation presumably takes place on the Government Motion and the Opposition Amendment, but there are two Orders on the Order Paper—the Surcharge on Revenue Duties Order, and the Exchequer Advances (Limit) (No. 2) Order, which are closely associated with the Motions. The first Order is, of course, an integral part of the Chancellor's proposals. The second Order is something which the Government have proposed should be discussed in this debate.
Can we be assured that if we discuss the contents of these two Orders in the course of the general debate we shall not be barred by the rule of anticipation because the Orders will come up later?
Mr. Speaker: I am obliged to the right hon. Gentleman. Is it not the other way round? Unless we did something about our rules, we should be debarred from discussing the Orders in the general debate. That would seem to be very inconvenient in the context, and I expect that the House would like to discuss the Orders in the general debate. If we do that, I feel that we ought not to discuss them all over again afterwards, but, subject to that matter, no doubt it would be for the convenience of the House to adopt the course suggested by the right hon. Gentleman. The Chancellor of the Exchequer.
Mr. Diamond: On a point of order. I apologise for not catching your eye immediately, Mr. Speaker, but I did not want to interrupt the Chancellor. At the time when power was taken in the Finance Bill to introduce this regulator we were told that there would be a full
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and adequate discussion of it, in general terms.
The economic debate will cover a wide variety of matters associated with the regulator, but not part of the regulator. I had assumed—and I dare say that many of my hon. Friends and some hon. Members opposite had also assumed—that two days was by no means an excessive time in which to discuss the general economic situation, and that there would be a need to discuss the economic regulator—the first of its kind ever—in full detail.
In those circumstances, may we ask for some enlightenment of your last remark, that you hoped that if two days were spent on the general economic debate, in this very critical situation, there would be no further discussion on the Orders themselves?
Mr. Speaker: I did not say that. I just thought that it would be extremely awkward to have this general economic debate and to apply our rule which would exclude from that debate a discussion of the contents of the Orders. But it seemed a reasonable corollary to say that we should not go over the same ground again. That would appear to be rather inconvenient to the House. I am not saying that we should not have any discussion of the Orders at all.
Mr. Gaitskell: I am obliged to you for the first Ruling you gave, Mr. Speaker, which was certainly in accordance with the wishes of the House. But there is no suggestion that we should be debarred altogether from discussing the Orders after the main Motion and Amendments have been disposed of; it was merely a suggestion that we should not want to go too long on them. Am I right in that assumption?
Mr. Speaker: I am not in a position to bind the House about that. I made what I hoped would be thought to be a reasonable suggestion, so that we did not duplicate the debate in respect of the Orders.

ECONOMIC SITUATION
3.42 p.m.
The Chancellor of the Exchequer (Mr. Selwyn Lloyd): I beg to move,
That this House endorses the policy of Her Majesty's Government as outlined by the Chancellor of the Exchequer on 25th July for the purposes of upholding the strength of sterling, improving the balance of payments and maintaining a sound basis for the continuing prosperity of the nation.
I promised the House yesterday that the making of a rather long statement then would enable me to take up less of the House's time today [HON. MEMBERS: "Hear, hear."] I am glad to have the Opposition with me so far. There are, however, certain points that I wish to emphasise in moving the Motion standing on the Order Paper in the names of my right hon. Friend and hon. Friends and myself.
First, I am asked what are the changes in the situation since the Budget which justify the measures which I outlined. The changes are these: there has been continued pressure on sterling; contributed to, in part, by the underlying deficit still shown by the trade returns but also caused by troubles and uncertainties in the international field. Instead of the atmosphere being one of increasing confidence and the relaxation of tensions such as, for example, in 1959, this year it is an atmosphere of increasing uncertainty and increasing anxiety. That is bound to affect the reserve currencies, particularly the one under pressure at the time.
The second change is that I now have later forecasts about our situation for the first half of 1962. It is true that they are only forecasts, but they show an increasing pressure of demand upon our resources greater than expected and likely to affect exports and the balance of payments. I also have later evidence about stocks, personal incomes and consumer credit.
In my Budget speech I referred to the strong expansionary forces working on home demand, but I did not think that the situation then and the evidence then before me warranted my asking for further sacrifices than those involved in the surplus of £500 million above the line. On the forecasts now before me it is clearly necessary for me to take further sharp steps to lessen the load on the
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economy, and that is why I have taken certain short-term or immediate actions.
The Bank Rate, the special deposits, the other restrictions of credit for which I have asked, the drawing on the International Monetary Fund, and the increased taxation involved in the use of the first regulator—in taking these short-term measures I have tried to act in such a way as not to harm the long term. There has been no cut in investment or initial allowances. In that respect, it is not the medicine as before. In 1951, 1956, and 1957 there were restrictions on investment, which affected investment in productive industry. This departure from precedent will, I believe, command general support. On the other hand, the House must face the consequences of that decision. Investment has been moving up quite sharply over the past two years.
That is a good thing. It may be said that it was an overdue process. At the same time, it imposes a very large demand upon our resources, and is in itself responsible for part of the overload. Unless we have a pause in additions to personal incomes and in public and private expenditure on less essential things we cannot have soundly based long-term growth. For such growth to take place I believe that the most helpful action which the Government for their part can take is to—[HON. MEMBERS: "Resign."] No; it was another panty which ran away from the situation in 1951.
For such growth to take place I believe that the most helpful action that the Government, for their part, can take is to bring public expenditure of all sorts under better control and make it better related to the resources available. That is the really significant contribution which the Government can make. This I intend to do, and I am very grateful to Lord Plowden and his colleagues for a most constructive Report on this matter.
I want to expand to some extent what I said about this yesterday. If public expenditure pre-empts an essential part of the national resources there is bound to be not only a continual increase in direct and indirect taxation, but, also, we will perpetuate the overload on the economy and add to the difficulties of paying our way on international account.

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What is required, therefore, is the long-term redeployment of the public services over a period of several years. This must be carried out in a way that both slows down the rate of increase in the aggregate of expenditure and also Changes the priorities to strengthen our resources and competitive power and national efficiency.
It is very easy to get support, in principle, for this kind of statement in general. The difficulty comes when one tries to carry it through in the particular. The House of Commons does not differ from other gatherings of consumers, employers, traders and trade unionists, where the particular suggestions made are always for increases in public expenditure and reductions are very seldom suggested.
First, to deal with the nationalised industries. The Government policy was laid down in the April White Paper. We are now discussing financial targets with the industries and hope to reach agreement on them by the autumn. This policy will lead to more effective concentration upon productive efficiency in the use both of labour and capital. As a result of increased efficiency and higher earnings I expect the calls of these industries on the Exchequer for finance to be progressively and substantially reduced over the next five years in spite of substantial increases of investment in some cases.
To help the industries to carry out this policy the Government will leave them as much freedom and responsibility as possible in fixing their prices. The Government will allow the industries the investment which is agreed to be required for attaining their financial targets and providing essential supplies and services. We are, however, asking them to avoid investment expenditure where this can be done without damage to these central objectives.
Next, assistance to industry. On this, we are reaching the end of a phase of heavy expenditure. Expenditure above and below the line, which, this year, is £135 million, will go down to less than £60 million next year and will continue to decline thereafter. Loans and grants to the steel and cotton industries have, I think, been important in expanding strip steel mill capacity and in helping the cotton industry to improve its efficiency, but these rather special operations are
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coming to an end and we see no reason ahead for more.
New commitments for assistance can be justified only if they can be shown to make important contributions to competitiveness and national efficiency which can be secured in no other way. If any new proposals come forward the Government will apply this criterion stringently. I want to make one point clear in this connection. The Government's local employment policy has so far succeeded, that, when the projects already in hand come into production, virtually only in Scotland and Northern Ireland should there be a serious lack of employment opportunities. The Government will, of course, continue to use their powers vigorously to deal with these local situations and any others at present unforeseeable, that may emerge.
I take, next, the services provided by central and local government which involve both capital and current expenditures. These are to some extent intertwined in the Exchequer accounts, and, as the House will remember, I said in my Budget speech that I hoped to get a more logical presentation of these accounts in due course, but for the time being I must take them as they are.
I shall deal, first, with the local government services. The Government seek the co-operation of local authorities in restraining and postponing expenditure, capital and current, wherever they can, to relieve the overload on the economy. This will involve the postponement, perhaps for a considerable period, of many desirable projects. There is a great deal of work in hand, so that new authorisations and loan sanctions to local authorities will for some time have to run at a much lower level. I am now dealing with matters that are desirable, but not essential.
I take an example, which, I think, may not command the agreement of the House, but is an example of the position in which I am in, and an example, also, I would say, of this business that there is always agreement in principle but when we come to anything in particular there is disagreement—the Wolfenden Report on Sport and the Community. We may say that this is only a small matter. It is something which, in the present circumstances, must wait for some time to come.

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The established New Town development corporations will he asked to contain their rate of expenditure within present levels and, indeed, to make reductions where they can, and so on, over the whole range, including matters which I shall come to in a moment—education, health and roads.
I hope that the effect of this will be that the local authorities' capital expenditure in 1962–63 will, in the aggregate, not exceed significantly that of the current year. I have invited the leaders of the local authority associations in England and Wales and Scotland to a meeting next week to ensure that we work together in this question of expenditure.
In the field of education, there will be reductions in authorisations for minor works, and my right hon. Friend the Minister of Education is considering a rearrangement of priorities in favour of scientific and technical education. In Scotland, there will be some rephasing of the educational building programme, but, again, with special consideration for the need of technical education. The reason for rearranging priorities is to concentrate on the matters which will more rapidly assist national production and national productivity.
On one matter to which I referred yesterday, the salaries increase of the teachers in England and Wales, my right hon. Friend has this morning, in accordance with my statement yesterday, intimated the Government's willingness to accept an increase, not the full one asked for, but one the bill for which will be £42 million. As this figure shows, there is no question of singling out the teachers for discriminatory treatment. [HON. MEMBERS: "Oh."] This is another example of acceptance in principle of the idea of containing Government expenditure, but here there is a bill which we are prepared to meet for £42 million.
For the National Health Service, including local authority health and welfare services, the growth of current expenditure in real terms will, for the next four years, be planned at about 2½ per cent. per year—that is, the increase.
For roads, the Government have decided upon a firm five-year programme,
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which will involve a considerable increase above the present rate of expenditure, but one which I judge to be within our capacity, and also one which, I think, is directly related to production and productivity. We intend to develop other long-term programmes in the same way.
I shall not repeat the figures for the financial year 1962–63 which I gave yesterday, but I am determined that this operation of controlling public expenditure shall be successful. It is a matter which lies within the Government's power and that power must be exercised.
So far as the long-term is concerned, these decisions on investment and with regard to public expenditure are of major importance. I stated yesterday our views about tariffs. With regard to the growth of exports, the answer lies in our goods being competitive, delivery dates being fixed and kept to, credit facilities being adequate, and there being much more aggressive salesmanship. With regard to the first two of those matters, the action taken by the Government to reduce the overload on the economy and the pause to allow the rise in productivity to catch up with the rise in personal incomes and living standards, directly help.
On credit facilities, we have already taken action, on rather more radical and comprehensive lines, than I think many people realise. With a view to more aggressive salesmanship we are encouraging in every way possible the export councils and the promotion of selling campaigns overseas.
I have been asked why the Government do not do more about restrictive practices. We have, of course, passed a Restrictive Practices Act dealing with one aspect of the matter. I think that there are many other aspects which are better dealt with by the two sides of industry, and they must be dealt with if we are to have growth and get the best out of the heavy investment programme on which we have embarked.
I am not satisfied with the progress being made in the training of skilled labour, and the Government certainly will help, as we are doing, by our technical training programme. I referred a moment ago to the increased priority to be given to Government expenditure under that head.

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In my statement yesterday I referred to planning. I have been accused. I understand, of having been very vague. Let me be quite clear as to my objective. At the moment, we have these various bodies whose function is to take stock of the present situation, to comment on what is happening, or what has happened, and to advise. These bodies do very valuable work within their terms of reference.
I say frankly to the House that I want something more purposeful than that. I envisage a joint examination of the economic prospects of the country stretching five or more years into the future. It would cover the growth of national production and distribution of our resources between the main uses, consumption, Government expenditure, investment, and so on. Above all, it would try to establish what are the essential conditions for realising potential growth.
That covers, first, the supply of labour and capital, secondly, the balance of payments conditions and the development of imports and exports, and, thirdly, the growth of incomes. In other words, I want both sides of industry to share with the Government the task of relating plans to the resources likely to be available. When it is suggested that I have been vague, may I say that I have deliberately not been specific about machinery because, for the Government to lay that down beforehand is not, I think, the best way to get full co-operation.
I repeat that there is the short-term situation and the long-term problem. In the short term, we have to take immediate action to deal with the serious pressure upon sterling. That comes first, and success in that is essential for our long-term plans. But that success is only one essential precondition for solving the long-term programme.
I have indicated at some length the lines along which I believe the Government's principal contribution should lie, namely, by keeping public expenditure in its proper relationship to the growth of our resources as a whole. But it is not the Government alone who can act. Increase in exports, the development of a more efficient and dynamic economy, restraint in personal incomes, attack upon manifest weaknesses, such as restrictive
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practices, can be carried through successfully only with general co-operation.
After the substantial and rapid improvements in living standards and in the social services which have taken place in the last nine years, I believe that the Government are entitled to ask for and to receive that support from the nation.
4.3 p.m.
Mr. Harold Wilson: I beg to move to leave out from "House" to the end of the Question and to add instead thereof:
"has no confidence in the policies of Her Majesty's Government as outlined by the Chancellor of the Exchequer on 25th July which, being most unfair in their incidence, are calculated to divide rather than to unite the nation, offer no long-term remedies for the weakness of the British economy and resemble in many respects those adopted by Her Majesty's Government in the past with such lamentable consequences for the country"
I think that the kindest thing I can say about the Chancellor's speech this afternoon is that he should now seek the advice of the Secretary of State for War—when you have lost your bearings, go back to your unit. All that the Chancellor said today confirms the impression which, I think, the whole House had of the fundamentally biassed character of what he announced yesterday.
Our charge against the Chancellor is that this long-awaited, long-heralded, much-trumpeted July "Budget" is monumentally irrelevant and monstrously unjust. I think that its irrelevance to the problems facing the nation can be compared only with the irrelevance of the now discredited April Budget. Our national needs—we are all agreed on this, surely—are production, exports and costs and the Chancellor's proposals make no contribution to any one of those three, except in a harmful sense.
Production which we need to expand will be held back by the 7 per cent. Bank Rate, by the taxation measures and by the effects of the Chancellor's proposals generally on investment. There is not a single measure of direct relevance to exports. But in so far as the tax measures and the Bank Rate have their intended effect in causing a slump in the mass-production industries, such as motor cars, the effect, of course, will be to raise unit costs and to make us less competitive.

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As for costs, apart from the effect on productivity, the Chancellor, by his tax measures, is directly raising the cost of living by 1½ points, on his own figures, and indirectly, when the manufacturers and retailers have added their cut, by a good deal more—to say nothing, of course, of the effect on wages. The higher petrol and distribution costs and higher loan charges for industry—has not the Chancellor calculated the effects of these upon our competitive position?
Last week, I appealed to the Chancellor not to deal with the short-term problem of the run on sterling by measures which would make our long-term position worse through harming production and investment. The right hon. and learned Gentleman has ignored that warning. We face an immediate run on sterling. The economy is so weak that last year we avoided a disaster only through borrowing hundreds of millions of "hot" money which was attracted here by high and costly interest rates. This year that money is moving out again.
To deal with this the Chancellor borrows hundreds of millions of pounds from the International Monetary Fund. Of course, the immediate effects of doing this were predictable. Once the Chancellor made clear to the speculators that sterling would not be devalued, once he buttressed his scanty reserves by massive borrowing, it was obvious that the "bears" would run to cover and the immediate crisis would be resolved for a time.
But, of course, like every one of his immediate predecessors—we see the Minister of Aviation sitting opposite—he had to satisfy the international banking community by masochistic and irrelevant outs in our standard of living, harmful restrictions on our production and needless increases in our costs and price structure, because he believes that international speculators are impressed only by actions which in the long term harm the economy.
The right hon. and learned Gentleman obviously believes that these financiers are dictated not so much by economic considerations as by a rather twisted, morbid psychology. In fact, if international financiers do reason in this irrational way it is a grave reflection on Conservative economic management in
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the past ten years that we are now so much in their power.
So we say to the Chancellor, "Borrow—go ahead." The Government's policies are so bankrupt that all we can do, sixteen years after the war, is to go for international aid and to buttress the economy with costly, unnecessary short-term borrowing at 7 per cent. which is a magnet for "hot" money from all over the world to come here once again. The Prime Minister is having a lovely time rehearsing his speech for tomorrow night. He is passing one "gem" along the Government Front Bench to his right hon. Friends. The very mention of "borrowing" is inspiring him with lovely references to 1946, one year after the war. I am glad to have provided the right hon. Gentleman with these relevant thoughts.
It is, of course, quite obvious that the 7 per cent. Bank Rate, apart from its harmful effects on our internal structure, simply adds tens of millions of pounds to our annual outgoings on invisible accounts through the increased interest charges paid across the exchanges. The Chancellor told us yesterday very clearly that this is the third year in which we have been in international deficit. I think that those were his words. But it was less than two years ago that the Prime Minister was proclaiming these words at the hustings:
"Today, the British economy is sounder than at any time since the First World War. Sterling has been re-established as a sound and respected currency. Our balance of payments is strong."
That was in September, 1959. But for three years, the Chancellor tells us, we have been in international deficit. Perhaps when the Prime Minister speaks—if I could just take him from his usual 1951 speech to 1961, or, at any rate, to 1959—he will tell us how he came to make that utterly misleading statement when he must have known the facts as stated by the Chancellor yesterday.
We welcome the fact that the Prime Minister is to speak in this debate. It is right that he should be called to account in a debate such as this, because no man bears a heavier responsibility either for misdirected policies or for the inculcation of this climate of national complacency. I do not want to address too many words to him. I suppose that

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it must seem to him years since he strutted on to the platform of that 1958 Conservative conference as the mighty Wurlitzer organ throbbed to the strains of "Mr. Wonderful, that's you," and then called his troops to the forthcoming election battle with a speech which was an orgy of self-satisfaction and boasts that our economy was in such fine shape.
The right hon. Gentleman, who pledged himself, on television, on becoming Prime Minister, to "make Great Britain great" has so imperilled and squandered our economic security that we are in danger of earning for ourselves the gibe which the Czar Nicholas addressed to the dying Ottoman Empire, "The sick man of Europe". That is his contribution.
Sir Cyril Osborne: Nonsense.
Mr. Wilson: This is a hard thing to say, but it is not imagination. One of the leading German periodicals has an article in this week's issue headed. "The sick man of Europe." I know what the hon. Member for Louth (Sir C. Osborne) is saying and I am going to answer him. I am not running Britain down, but running the Government down. Fundamentally, as the whole House knows, our latent virility, vigour, skill, ingenuity and inventiveness are such that instead of presenting this image of sickness we could present an image to the world of bounding energy and enterprise. All that is lacking is the leadership and inspiration, the call for service and sacrifice which this Administration is unable to give.
I turn to the specific proposals of the Chancellor. I begin with the commodity price regulator, the 10 per cent. surcharge on taxes. To impose this less than a week after the Finance Bill has received Royal Assent is clear evidence of the most culpable miscalculation in the Budget because, despite his claim about the outside world, little has altered in respect of the Budget and the financial position. The Chancellor is talking bravely about five-year planning, but his Budget would not stand up for three months.
To impose these charges on the ordinary expenditure of ordinary families while leaving unchanged the levels of direct taxation is clear evidence of the Government's regressive bias in taxation matters. We have had three
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Budgets this year, so far. The first raised Health Service charges and levied £45 million on every family in the land by stamp contributions. The second gave Surtax concessions, and the third is once more taxing ordinary families' consumption. This is a miserable record of fiscal injustice. There is 4d. on cigarettes after last year's Budget increase. Is this to strengthen sterling? There is 5d. on tobacco, including 5d. on old-age pensioners' tobacco, which is no longer protected by vouchers. Is this needed to make Britain strong and free?
There is 3d. on petrol. Will this bring costs down? I should remind the Chancellor of the arguments used from this Box by a Conservative spokesman when we raised the petrol duty. The Prime Minister obviously remembers this. I am on his special period here. We did not raise it to its present level of 2s. 9d., but to 1s. 10½d. These were the words used:
"Now I come to one or two of the specific tax proposals, first of all, the tax on petrol. That is a directly inflationary tax. … It is time that someone in the House drew attention to the enormously increased taxation which road transport has been called upon to bear during the past two years."
Then, after a learned disquisition about the taxable capacity of the nation, he said:
"The very fact that there is not that reserve of taxable capacity is proved by this tax, because the Chancellor has had to go to a tax which is, in my submission, directly inflationary in order to get the necessary amount of money."—[OFFICIAL REPORT, 8th May, 1951; Vol. 487, c. 1890–1.]
That was when the duty on petrol was is. 10½d.
The words I have quoted were the words of the present Chancellor of the Exchequer, but in 1950 he said this:
"That is yet another example of the way in which this new impost is going to increase the burden of the cost of living upon ordinary people in this country. It is a thoroughly bad tax … I do not think that there could be a better case for not having this increase in taxation."—[OFFICIAL REPORT, 14th June, 1950; Vol. 476, c. 253.]
So that the Home Secretary does not get too complacent, because he has lived to see an "autumn" Budget so early in the year, perhaps I should quote what he said:
"It is not a case of fair shares for all, but a case of those with sufficient money who can

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afford the petrol being able to buy it"—[OFFICIAL REPORT, 19th April, 1950; Vol. 474,c. 153.]
There are also superb quotations, which, no doubt, could be circulated, by the Conservative Central Office, from the Chancellor of the Duchy of Lancaster, who put his oar in, too.
The depressed consumer durable industries, including cars, which have uneasily recovered from last year's slump, are facing new uncertainties. If their spokesmen are to be believed they are facing the dangers of unemployment and redundancy, with incalculable effects on exports costs. Wines and spirits I shall pass over, because £40 million of expenditure there, on the Government's own figures, are paid for by the Chancellor in businessmen's expenses.
I turn to the Bank Rate at 7 per cent., almost the highest in our peacetime history. Have we not learned by experience? Have we forgotten the devastating analysis of the Radcliffe Report about over-reliance on monetary policy? Its argument was that Bank Rate was no gentle hand on the steering wheel which keeps the car in the centre of the road. Even the Chancellor, commending his fiscal regulator in his Budget speech, seemed to have been converted from this dangerous and debilitating over-reliance on the monetary weapon. Now he sinks again into the old groove. Once again, there is the screeching of brakes and the scorching of the tyres, the substitution of shock, jolt and jerk for planned regulation of the economy.
Did the Chancellor stop to think of the effect on the local authorities? I understand that he is to spend his holidays this year at Hoylake, a very nice place on the Wirral Peninsula. If he can tear himself away from contemplating the beauties of Hilbre Island, I hope that he will go to the local council offices, where, I understand, he once had his greatest triumphs, and ask the local authority what effects his proposals will have there. When he has done that let him cross the Mersey, to Liverpool, where he will find 88,000 houses scheduled for slum clearance and 40,000 families on the housing list. What effect does he think the 7 per cent. Bank Rate will have on the solution of those problems?
Although its effect as a regulator in the private sector can be greatly exag-
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gerated, I hope the right hon. and learned Gentleman will not disregard the effect on investment of this blunt instrument and the effect of failing to distinguish between the essential and less essential and the frivolous. Of course, his clear bias against the public sector was shown yesterday and again today in his determination to starve the public services in an otherwise affluent society. That is shown, above all, in his policies for housing. Council housing, the spearhead, as it must be, in our attack on the chronic overcrowding and the slum problem, is to be cut. Last year, the rate of local authority house-building starts in England and Wales was 98,000. The Prime Minister achieved a much higher figure when he was Minister of Housing, but it had fallen to 98,000 last year.
This figure is not much more than half the rate which we achieved in 1948, three years after the war, when we were still beset by shortages of imported timber, bricks, cement and building labour. Now it is to be cut again. I remind the Chancellor of the Exchequer of the heartaches of overcrowded families, of husbands and wives living apart, which he must know from his own constituency.
Mr. Charles Loughlin: Living in slums.
Mr. Wilson: They are living apart or with in-laws or suffer the degradation of living in slums.
This will continue for years longer because of a doctrinaire Chancellor who refuses to control luxury building, and the building of inessential prestige office blocks, and who prefers to go for the easy option of attacking the local authorities. He used the phrase "desirable but not essential". The Shell building? The Vickers building? Are they essential or desirable? What about the speculative office block built in Holborn and still empty? Had those been controlled when we suggested it, might he not have the resources for maintaining the council housing programme?
At Blackpool, the Prime Minister said:
"The Socialists want to see a nation of council-house tenants; we want to see a nation of house owners."
But for a very large section of our people there will not now be the chance

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of either. Last week, the chairman of the Building Societies Association, speaking when the Bank Rate was still only 5 per cent. and not 7 per cent. said that if prices continued to go up as they had for the last two years, a man earning under £1,000 a year would be excluded completely from the house-buying market before the end of this year. His income would be insufficient to provide the necessary amount for mortgage repayments. The prerequisite for getting a house today in this property-owning democracy is £1,000 a year, or £20 a week.
I wonder whether the Chancellor recalls the earnings figures published by the Ministry of Labour, two months ago, showing that of all manual workers only 11 per cent., or one in nine, last year earned £20 a week. Only one in nine came within the income bracket necessary, according to the chairman of the Building Societies Association, far entering the house-buying business. I want to know—and I am sure that the Prime Minister takes this seriously—,what the remainder are to do. What are the other 89 per cent. of the manual workers to do if they need a house? When the Prime Minister replies to the debate tomorrow night I hope that he will answer that question clearly.
This same bias against the public sector, short-sighted and prejudiced, is shown in the Chancellor's mean, one might almost say spiteful, use of the grip which he has on wages and salaries in the public sector. At the time of the last squeeze, it was the Health Service employees. This time it is the teachers. Deliberately, and with a full realisation of what he is doing, he is wrecking the established salary negotiating machinery.
The Chancellor is throwing it over at a time when this country depends as never before on an imaginative education drive far beyond the capacity or grasp of the elegant nonentity who presides over the Ministry of Education today. When investment in machines is important, as we all agree, but when investment in the nation's children is even moire vital—at this very time the Chancellor makes the announcement which he made this afternoon about re-phasing the education programme.
I ask the Chancellor, does he think that we can carry through this educ-
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ational programme? Shall we still have the confidence and co-operation of the teaching profession? The starting point in the Burnham award for teachers, I understand, is £600 a year. We do not know what will happen to that figure of £600 a year, but it is a very long way below the minimum figure required as a qualification for buying a house, and a very large proportion of the teachers, on the figures which I have just quoted, will not be able to afford to buy a house. The Chancellor is doing this for the sake of £6 million saving, we read in the newspapers today—a small fraction of his hand-out to the Surtax payers.
Why is this? Is it short-sightedness, or is it that teachers are not regarded as "top" people? The Chancellor should realise that the smouldering, burning resentment which he has kindled by his action will enflame and embitter educational policies for as long as a Conservative Government cling to office.
The right hon. and learned Gentleman demands wage restraint—and I will come to that in a minute. What of dividends, which were 23 per cent. up, as the President of the Board of Trade told us last week in an outburst of condemnation which we thought might mean something? The Chancellor appeals for dividend restraint. This is at a time when cautious and far-sighted managements who want to plough back their profits in further expansion are forced into uneconomic dividends because of the fears of predatory take-over bidders.
If dividends are excessive and provocative, the answer is simple: he should return to the system overthrown in the 1958 Budget, a dual rate of Profits Tax, with a low rate of, then, 3 per cent. on undistributed profits and a much higher rate, then 30 per cent., on profits paid out as dividends to shareholders. He could have done this in the next Budget, whenever it may be, in a single uncontroversial Clause, but, of course, he knows that that would be to strike at the ark of the covenant.
I turn to the proposals for the private sector. The Chancellor promises to deal in his next Budget with some short-term speculative gains and to bring some property deals within the scope of Income Tax. We suggested those measures some years ago as a first step to a comprehensive capital gains tax. But the Chancellor must beware. Will he not find

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that the best brains in the country, by definition those which he helped in the name of incentives in his Surtax concessions, working overtime to defeat and frustrate his new proposals? One thing which we should like to know is whether the Chancellor intends to make this capital gains tax retrospective now that he has announced it. Will he do that? He ought to do so, otherwise the best brains and the "wide boys" will be conditioning the situation and getting all the pickings long before the next Finance Bill reaches the Statute Book.
The Chancellor intends to ask big business to bring back to this country its overseas earnings. We told him last week how he could do this. There is no need to appeal. All he has to do is to repeal the provision in the 1957 Finance Act which provided an open incentive to business concerns to avoid United Kingdom taxation by setting up tax-free overseas trade corporations, another matter in the fiscal sphere of the Minister of Aviation.
While the Chancellor is on this subject, we should like to ask him what he will do to stop the outflow of millions upon millions of pounds to tax havens in Bermuda, the Bahamas and Southern Rhodesia for the purpose of evading United Kingdom death duties.
Sir C. Osborne: Not now.
Mr. Wilson: I will send the hon. Member a copy of a brochure inviting these things. I know that there is some inhibition about sending them there. That is why Bermuda is doing so well.
The Chancellor intends to be stricter about capital movements to foreign countries. That is very nice. Here we have the Government, as we heard yesterday, refusing to find the relatively small sums needed to finance the vital development programme of newly-independent Tanganyika while City Centre Properties and others have been free to take millions of pounds out of the country for property development in New York. It is a question of priorities. Which is the more important to our economic future and the future of the world—the development of Tanganyika, or the development of Manhattan? Perhaps the Chancellor will answer that question.
The Chancellor said nothing about businessmen's expenses. I sum up his proposals: they do nothing to increase
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production, they do nothing to increase productivity, to reduce costs, to promote social justice, and to bring about greater equality in the distribution of wealth and the economic power which goes with it. This morning the Conservative, Labour and Liberal Press—practically every newspaper—commented on the tremendous build-up which was given week after week to the statement which the Government were to make. We were promised that the Chancellor would break away from the stop-go-stop-go, or slow-slow-quick-quick-slow business of his predecessors. We were to be given a new line from him and some new long-term policies which would enable Britain to stand on her feet. All that we were given were these panic measures, which add up to an exercise in economic and social irrelevance.
I should like to turn for a few minutes to the measures which should be taken. While borrowing will undoubtedly get us round the immediate corner financially, our fundamental problem remains unsolved. Last week, I said that we have reached the moment of truth. This is not just one more in the series of speculative ebbs and tides, to be met by international borrowing and panic measures and then forgotten until the next crisis. This is a deep-seated, fundamental, long-term crisis, comparable perhaps only to 1931—a crisis we have faced for many years, even if it has been disguised by an improvement of 23 per cent. in our terms of trade, representing a windfall to our balance of payments of about £1,400 million a year.
When the present Government took office the £ stood at 2·80 dollars. The windfall in the terms of trade should have meant automatically, if nothing had been done to worsen our position, that we should today be able to manage at a dollar-sterling rate of between 3·60 dollars and 3·65 dollars—in other words, 80 to 85 cents higher than it is. That should have been the automatic result of the improvement in the terms of trade. That is the measure of our lost opportunity and our decline. Now we need every panic measure in the Chancellor's book to stay on 2·80 dollars yesterday.
All of us know, and the world knows, that a further devaluation would not be like the last one—a readjustment forced on us four years after the war by the consequences of the war and a hungry

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post-war world. A second devaluation would be regarded all over the world as an acknowledgement of defeat, a recognition that we were not on a springboard, but a slide. I myself have always deprecated—perhaps rightly, perhaps wrongly—in crisis after crisis, appeals to the Dunkirk spirit as an answer to our problem, because what is required in our economic situation is not a brief period of inspired improvisation, work and sacrifice, such as we had under the leadership of the right hon. Member for Woodford (Sir W. Churchill), but a very long, hard, prolonged period of reorganisation and rededication. It is the long haul, not the inspired spurt, that we need.
But perhaps in the crisis we face today —this continuing crisis—we do need the realisation which the right hon. Member for Woodford inspired in the nation twenty-one years ago in the memorable speeches he made—the realisation that in a very special sense today, as then, we stand alone, that we can look to no one to provide an easy way out, that no one owes us a living, that on our own efforts, our own sense of purpose and our unity in overcoming these problems—that in these things alone lies our hope of success. In that sense, if in that sense only, we do need the spirit of Dunkirk.
We shall not create that spirit by appeals to materialism, or selfish acquisitiveness, or competitive social emulation—keeping up with the Joneses—by either snobbery or its no less ugly partner, inverted snobbery. We shall not realise it by sinking back into the syrupy, demoralising persuasion which pours into our homes night after night via the commercial channel. Only when this country loses its soft centre, its candy-floss philosophy, and is allowed to aspire to more astringent policies can we succeed.
In that spirit, I want briefly to put the headings—no more—of the sort of policy which we feel could unite our people and strengthen our economy. It may not command the support of all hon. Members opposite. I do not expect it to, but I accept that we have a duty to put forward an alternative in this debate. We also have a right, because the country has tried the Tory way and it has failed.
First, I repeat our proposal for a plan —a four-year plan, a five-year plan, if
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necessary—for steady and sustained economic expansion, setting the national targets, and especially the targets which need to be achieved in the industries which can make the most contribution in the markets of the world. It should be a plan worked out in consultation with management and workers, giving a real priority to the investment we need, and not, as the Chancellor proposes, a mere coordination of planners and consultation systems. It should be an effective, purposive plan, to which private profit and sectional interests would be subordinated.
What the Chancellor proposes is a paper plan. No Conservative will give it the backing it needs in terms of controls and an extension of public ownership in the key centres of the economy. But such a plan we need, a plan, above all, to raise our investment in the industries where it is most needed, a plan to apply more purposefully the results of scientific discovery in our industrial machine.
My second point is on exports. The Government must now take positive action to help our exporters. We need in this country to alter our sense of values so that the man who exports and takes risks in world markets is regarded as a man worthy of the nation's respect, a man to honour, not a sucker". It should be recognised that it is he, not the advertising agent or the sharepusher, who is top of the scale.
Therefore, the Government should make the job of the exporter easier. Eighteen months ago we suggested fundamental improvements in our export credit system. This was in the debate on the Radcliffe Report, on 26th November, 1959. We suggested improvements in export credits so that we can offer the same terms as our ruthlessly efficient competitors on the Continent. The Government have limped along very slowly since that time, but what about our proposal for a British export-import bank? Has that ever been seriously considered by the Cabinet?
Again, where there are controls or instruments available to the Government—there are not many-the Government should use them blatantly and unashamedly in the interests of the exporter. Non-discrimination is a fine liberal principle, but too often it is the last refuge of a tired or complacent

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administration. After all, the apotheosis of non-discrimination is death. We want to see something done, but too often because of non-discrimination nothing has been done to help the exporter.
I know all the difficulties of discriminatory taxation. I looked into it when I was in the office held by the right hon. Gentleman, but I think that there are a number of things we can do. I would have an open mind—this needs to be looked at—on the question whether we should supplement the Purchase Tax by some kind of industrial turnover tax, with total exemption for exports, such as they have in Germany.
Viscount Hinchingbrooke: Like Dr. Schacht?
Mr. Wilson: I did not know that Dr. Schacht was the present Minister of Finance in Western Germany. I thought it was Dr. Erhardt. I ask the Prime Minister to study this suggestion very carefully before tomorrow night. I want him to take it seriously. The Government should have an open mind on it. They should study the proposal. It should apply in industry, but not to the things covered by Purchase Tax. The yield from it might enable us to remove Purchase Tax from some essential goods where it has been placed by the right hon. Gentleman the Home Secretary. Right hon. Gentlemen will know perfectly well, if they have studied the trade situation, that anybody who goes to Germany is told there that this is the biggest single instrument in the success of the German export drive.
I have many reservations, doubts and anxieties about the proposal, but I hope that the Government will examine it and see whether it is a feasible one. I am not talking about a general sales tax. We have been over that argument year after year. I am talking of an industrial turnover tax, with blatant discrimination in favour of exports. I hope that the Prime Minister will have my suggestion carefully examined.
I suggest, also, that the Chancellor of the Exchequer tackles the business expenses problem—the entertainment problem—by providing that only half business entertainment expenditure should rank for tax exemption, except where it is shown to be directly related
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to exports. I should make no bones about that kind of discrimination. The same might be considered in connection with expenditure on advertising.
Lastly, I turn to costs. I think that the whole House will agree that we need a spirit on both sides of industry which can produce the efforts and sacrifices which will be necessary. We need two things. We need a more sustained increase in production, and a greater determination to control rising costs. It is, I think, a truism to say that we cannot afford, year by year, an increase in economic rewards—whether profits or salaries, or rents, or wages—greater than the increase in productivity which provides the means to all rewards.
The nation, and I make this clear, cannot, over a period, afford wage increases—I say this quite frankly—greater than our national rise in productivity. That, of course, is an argument in favour of giving much higher priority to increased productivity instead of these repeated lurches into economic restrictionism. It is no good the Chancellor complaining that wages and other payments have outrun productivity when it has been Government policy to hold production down, so that, over the past year, productivity actually fell.
It is well within the capacity of the nation, and nobody will be defeatist enough to deny it, to achieve an increase, year by year, of 4 per cent. or 5 per cent. in productivity and of 4 per cent. or 5 per cent. in wages—and if this means an increase of 4 per cent. or 5 per cent. in profits and dividends, no one will lose sleep. What we cannot afford are the predatory dividend increases of the kind quoted by the President of the Board of Trade, or uncovenanted capital gains cornering for a few favoured shareholders a disproportionate share of our increased national assets.
We need a national attack on the spirit of lethargy which pervades too great a part of our industry. That is why I advocate the ending of restrictive practices wherever they occur—on either side of industry—which hold back our natural national inventiveness and skill. That is why we on this side condemn equally those who shirk their task, whatever their rôle in industry—,the fomenters of unofficial strikes and those who too easily follow them—and the businessmen who

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cling to out-of-date methods and out-of-date machinery because it yields them a profit, who turn their backs on export orders, and who devote their ingenuity, not to increasing production or lowing taxation, but to tax avoidance. To say this is not idealism, or puritanism; it is plain common sense for the nation.
Neither in power nor in opposition has this party or the trade union movement shirked the task of calling for wage restraint when it was needed in the national interest. We do not shirk it now. But we cannot ask for that sacrifice from one part of the nation only—and that the least well paid. We cannot make that appeal to men earning £8 or £9 or £10 a week when the Government ment have just issued a statutory promissory note on next year's Budget to people who are immeasurably better off.
If, therefore, we are to tackle the job of controlling our national costs it must be a national endeavour, and the Government, whether Conservative or Labour, must give the lead, because it is the Government which create the climate of opinion that can make this possible. There is no sacrifice harder to make than the sacrifice of dearly-held doctrine and ideology. That is why, though it is hard for the Government to concede, my right hon. Friend was right in asking for the repeal—the postponement, if hon. Members like—of the Surtax concession in the Budget until the national economy permits of a fundamental reconstruction of our tax system.
The Government cannot ask for a national endeavour in production and restraint in incomes when they refuse to deal with capital gains, OT when they refuse to institute measures that really got at the root of the problem of coping with land speculation and property deals, or when they refuse to restore the tax on dividends.
If the Chancellor would restore the tax on dividends today—yes, another tax; the Prime Minister can make a note of it—the yields from it would enable us to recast our whole system of industrial taxation. To encourage investment, we could enable expansion-minded industrialists to write off a great deal of their capital expenditure much more quickly than they can under the obsolete rule that we have at present; writing
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off, perhaps, the whole amount in a single year, as they did under the Swedish proposals. That would be financed out of the tax on dissipated dividends. What we need, as I am sure the House will agree, is a system of industrial taxation that does far more to reward enterprise in expanding firms and, at the same time, penalises the slothful firms, and those Which refuse to play their part in the national economy.
We cannot make the national appeal we need in an economic society dominated by the take-over bidder. We cannot appeal for restraint in productive industry when the Stock Exchange behaves like a casino. I do not apologise for saying that because, as the Prime Minister knows, it is taken from a famous book of his written before the war, and if it was true then it is no less true today. The Chancellor knows this. Let him, then, put duties on all Stook Exchange transactions in industrial securities, including all those speculative deals within the account which at present escape taxation altogether.
The right hon. and learned Gentleman yesterday referred to the banks. I hope that he really will stop the banks, by direction, if necessary, lending for speculative deals; and it is worthy of consideration whether the interest on borrowed bank money—at any rate, the bank money borrowed not for the purposes of trade—should no longer rank as a Charge against taxation.
These are a number of things which I hope the Government will consider, because the statement that we had yesterday contained no proposals related either to production or exports. I know that these proposals—and I could suggest many more—may be controversial, but at least they are relevant. They would provide the political and economic and social background of purposive planning, of mobilisation of the nation's resources for national needs, of social justice not only done but manifestly seen to be done, because, without these things, no Government can conscientiously appeal for the efforts and sacrifices that are needed.
The Government, by their drift, by their complacency, by their perpetuation —indeed, increase—of injustice, have lost the moral right to make that appeal.

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They have themselves become an irrelevance, a tedious, boring, ineffective irrelevance, and that is why, in our Amendment, we call not only for new measures but for new men, who can lead the nation to its rightful place in the world.
4.48 p.m.
Mr. Nigel Birch: Towards the end of his speech, the right hon. Member for Huyton (Mr. H. Wilson) indulged in a certain amount of preaching, and I should like to deal with that aspect of it later in my remarks. For the rest, his speech was very typical. There was the usual party knock-about and the usual extraordinarily irrelevant and ill-worked-out proposals.
But one always wants to congratulate the right hon. Gentleman if one can, and I should like to congratulate him—
Mr. Norman Dodds: Give us some ideas.
Mr. Birch: The hon. Gentleman will get them. I should like to congratulate the right hon. Member on losing his memory for his own jokes. I was amazed that he did not repeat his jokes about Boyle's Law—
Mr. Dodds: Give us some ideas.
Mr. Birch: I want to give the House some ideas about our present situation. Today we are mourning the sixth foreign exchange crisis since the war. There have been three under each Government. I think it is worth while the House trying to consider seriously why this has come about. I believe that the main reason is that this country, after the war, honourably set out to do a great many things. We set out to make a great figure in foreign affairs, to have a great financial policy, to be armed with the latest atomic weapons, to have the best social services in the world, to secure a vast expansion in our educational policy, to sustain under-developed countries, and we sought to lend and invest in developed and under-developed countries all over the world.
All these things were right and honourable, but we took on rather more than our resources would really allow. That has been the fundamental and not dishonourable reason why we have so often
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got into difficulties. Things would have been better, of course, had we been willing
"To scorn delights, and live laborious clays;"
But we are not madly keen on living laborious days and, as for scorning delights, the real problem is that if one has constant inflation—as we have had under both parties—there is no possible way of stopping incomes going up. They are bound to go up.
Under the Conservative Party, if I may use the fashionable illiteracy, people have certainly had it gooder; it is a matter of historical fact. Under the Socialists, owing to the immense pains they took to frustrate the consequences of their own actions, they succeeded in bringing about a situation whereby everyone had it badder. Although Conservative freedom has worked and has been more rational than Socialism, under both systems there has been inflation and we have had crises in our balance of payments.
Mr. Jack Jones: Bring back the birch.
Mr. Birch: The hon. Gentleman has a good memory for other people's jokes. That remark has already been made by his right hon. Friend the Member for Huyton on three occasions.
On top of this overstraining of our economy, we have, by agreement with both Front Benches, done things which really do not make economic sense.
It is a fact that in this country we cannot expand faster than our increased exports allow and the whole of our export trade is carried out by private enterprise. The capital needed to expand those industries has been pre-empted by nationalised industries, which really have been had bargains to the country. For example, coal. Since nationalisation, capital expenditure on coal has amounted to £963 million. In 1960 the output per man year was lower than it was in 1937 and today one can import coal to South Wales coming from West Virginia more cheaply than it can be produced in South Wales. Neither Front Bench, as far as I know, is keen to import coal from West Virginia—so up goes the price of steel. I think that the humanity of the House will allow me to draw a veil over the record of British Railways.

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On top of all this there has been a tendency to back the losers, to subsidise declining industries—cotton and the new Cunarder, for example. I never thought it made very much sense to subsidise firms to go to uneconomic locations. I believe that we shall bitterly regret that in the end but, here again, it was supported by both Front Benches.
Then we come to the position of over-full employment, where there are more unfilled vacancies than unemployed. Every time that happens we always get into foreign exchange crises and, as Colin Clark pointed out in the Financial Times, production will never rise in such a situation. But again and again we have allowed it to happen, without much protest from anyone. And, on top of all that, we have fairly high tariffs so that business in this country is not only protected by constant inflation but by tariffs as well. It is not very surprising that we have had the troubles we have, looking at the way we have run the show.
There are two escape routes, both of which are popular with hon. Gentlemen opposite. The first concerns the question of growth. Hon. Gentlemen opposite feel that they can justify their promises if the economy grows fast enough. Of course growth is essential. We should have more growth than we have had and we should have had more if we had not had constant inflation. But, at the same time, one must be careful, because we cannot grow more rapidly than our exports grow and one cannot do a lot about planning exports because so many of the factors are outside our control and the number of risks one can take is fairly limited.
Sir Oliver Franks said earlier this year something which I believe to be profoundly true. He said:
"Expansion which is bought at the cost of the exchange reserves and the stability of the currency can only harm us in the long run; to put 'sterling second' and go all out for expansion is not a possible policy for Britain."
Hon. Members will note the phrase "not a possible policy", and I believe that this is profoundly true. Simply to justify plans in the way hon. Gentlemen opposite did at the last election, by postulating an improbable rate of growth, is dishonest. It is like a defaulting bank clerk who hopes to get it all
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back on the 2.30. Actually, it is rather worse, because he might win on the 2.30.
The second escape route is to preach about the moral evils of the age. There are certainly plenty of moral evils about and a great many of them spring from inflation. If I recollect aright, it was Lenin who said:
"If you want to destroy a country you must first debauch its currency."
He was right. What are all the complaints about? They are about easy profits, speculative gains without risk, the attitude of "couldn't care less," high wages without effort, defeat of the hopes of savers, and demoralisation of the gilt-edged market. All these things are the direct results of inflation. It is no good preaching against it.
Not only have we had this continuing inflation but what is rather sinister is the increasingly cynical acceptance of it, particularly by the younger economists—often younger Socialist economists, I am sorry to say. The locus classicus here was an article by Alan Day in the Observer of 29th November, 1959. Needless to say, he has now been promoted to higher things. He said:
"Periods of stability are a good thing in that they suggest to some people that price stability has come to stay so that confidence in the currency is restored."
Fraud is a good thing—that is what that means. I am constantly surprised at the way the silly clever believe that people less bright than themselves are necessarily bigger fools. They are not. Everybody knew that price stability would not last. But to suggest that one should carry out a deliberate fraud on the people shows how far the rot has gone.
What can be done to put these things right? I was very glad indeed to hear my right hon. and learned Friend say that he was going to have this five-year consideration of expenditure and match it with resources, as suggested by Lord Plowden. I hope that when he is doing that he will take a realistic view of what those resources are likely to be. Also, I hope that he will put aside something for contingencies.
One of the things that has weakened us most in the world ever since the war is that everybody knows that if anything goes wrong we must necessarily immediately get into a mess because we have not the reserves behind us. Take

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the present troubles, for instance. Nothing has really gone wrong. The economic climate is about as favourable as any reasonable man could expect it to be. In that connection, I hope that my right hon. and learned Friend will ignore one of Lord Plowden's recommendations, which was that the result of the five-year survey should not be published. If the Chancellor is to hold the House of Commons and the people with him in a reasonable financial policy, they must understand what is going on. When one is trying to control expenditure, one is always up against defeat in detail. People say "This inhuman Minister denies us some paltry £20 million for this or that." However, if one adds up all the other £20 millions involved, one gets a situation which is quite impossible. What we have to put to the people is the totality of the position. If they are then not prepared to wear the rate of taxation required, we must cut back in general, or, if expenditure on some services must rise, we must cut down on others, or else finance things outside the Budget. But to let things rip is dishonest and hopeless.
Secondly, I turn to the efficiency and the will to compete on the part of the country. Some industries are efficient, but some are not, but until recently they have all been protected by both inflation and tariffs. A sensible economic system is one that sweats the business man; and that has not been happening. What we have to do is to produce a situation where there is no domestic inflation, and proper competition owing to the reduction of tariffs. In these circumstances the business man has to work to earn his money. If he is working to earn his money, good luck to him. It is not wrong for these people to make well-earned profits, because they are in the profits business. If we try to stop them making profits, the whole system is impaired. What we have to ensure is that the man genuinely earns his profits. That should be the task of my right hon. and learned Friend.
My last point is on wages and productivity, on which we had a lot of moralising from the right hon. Member for Huyton. The other day the hon. Member for Grimsby (Mr. Crosland) said that most nations at various times have tried some sort of wages policy. Holland
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and Sweden have been perhaps the most successful, the most highly worked out. They had not worked very well. The real point is that if the pressure of demand for labour rises beyond a certain point, any wages policy or system always breaks down.
It is not really entirely a matter of unions. Professor Lionel Robbins made an interesting point the other day, that where wages have gone up more than anywhere else is in the field of domestic help. None of those concerned is in any union at all. It is simply the demand. Suppose my right hon. and learned Friend got the enthusiastic support of Mr. Ted Hill and his colleagues. It would still not make any difference if the demand for labour was too great. They would simply be swept aside. It is no good dealing out to trade union officials a hand containing all trumps and then telling them that it is their moral duty not to play trumps. That is not only silly but vulgar—insufferably vulgar.
These moral appeals really are not much good. The right hon. Gentleman asked who has the right to make a moral appeal, and said that the Government have no right to do so. I suppose that the Leader of the Opposition thought he had the right to make a moral appeal when he was the Chancellor of the Exchequer. He will no doubt remember the incident. He made a tremendous moral appeal to the miners, and he got so soused with his own verbosity that he burst into tears. But it made no difference. He could have washed their feet with his tears, and dried them with his hair and it would still have made no difference. The right hon. Gentleman and others stumped the country making these speeches, but made absolutely no difference to the situation in any way whatsoever.
If we can produce a situation where inflation has been ended and there is a reasonable state of competition in the country, I think that we shall find that the wages problem will not be too difficult. No doubt, with industry expanding fast, and productivity going up, we should get good rises in some wages. If the total demand is not too great, the problem is perfectly soluble. What is no good at all is expecting people over a long period to act in ways which must appear to them to be contrary to their own interests.

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I always bear in mind a very wise remark made by the Trimmer Halifax a great many years ago. He said:
"Temporal things will have their weight in the world, and though zeal may prevail for a time and get the better in a skirmish, yet the war endeth generally on the side of flesh and blood and will do so until mankind is another thing than it is at present."
The answer is that people do not act against their interest. It does not matter whether they are employers or employees; they are all flesh and blood.
I think that we have a perfectly good chance of getting out of this difficulty. Not only that; I believe that if we have the will we can keep our place in the world and be far more prosperous than we are now. It is a question of having the will. From the Government we must have courage, integrity and perseverance. My right hon. and learned Friend has shown courage and integrity. What I hope he will show is perseverance as well.
It is the right and duty of the Opposition to criticise—that is what they are paid for.
Hon. Members: What are you paid for?
Mr. Birch: They need not show perseverance, but they ought to show a minimum of integrity. [HON. MEMBERS: "Oh."' In the old days the value of our currency was not a party issue. [HON. MEMBERS: "Humbug."] We shall never get confidence back in sterling if the Labour Party produces such a dishonest election programme as it did last time.
Mr. Dodds: What is the right hon. Gentleman preaching about?
Mr. Birch: To put it at its lowest, I should have thought that it would pay them not to. The question remains: will the Government show the perseverance that is required, and will the Opposition show the necessary minimum of integrity?
Mr. Dodds: It is enough to make one vomit.
Mr. Birch: I do not know, but I pray for the triumph of hope over experience.
5.10 p.m.
Mr. J. Grimond: If the speech we have just listened to was not preaching, I do not
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know what was. The right hon. Member for Flint, West (Mr. Birch) must be a slightly awkward ghost to his own Front Bench. When we hear of a 7 per cent. Bank Rate and of vigorous attempts to stop Government expenditure from rising further, our minds go back to his days, because all this has been said before. What has been the result? Here we are, back to the same old position and hearing the same old speeches from the Government.
The right hon. Gentleman accused some people of telling the same joke three times. I have heard his speech many more times than three. I remember the present Minister of Aviation, when he was Chancellor of the Exchequer, saying that we were trying to do too much. We suggested to him that we should give up making the hydrogen bomb, but we are still making it. Who has been in charge of this country for ten years? If we are trying to do too much, whose fault is it?
The right hon. Gentleman complained about the nationalised industries. Who has been running them for ten years? We heard a sermon about the evils of inflation. The curious thing about this Government is that they are the first Government to have succeeded in combining inflation and stagnation at the same time. The right hon. Gentleman was presumably addressing his remarks to his Front Bench, but I do not notice him leaving the Conservative Party or ever voting against the Government. The trouble is that the Conservative Party goes on supporting policies which, according to Conservative speeches, are entirely wrong.
Today, the Chancellor of the Exchequer succeeded in making a speech in which there was practically no reference to any methods of controlling wages and profits, in which there was very little—if any—reference to exports,and in which, I think I am right in saying, the word "productivity" did not occur at all. That is rather an achievement in present circumstances, even bearing in mind the length of his statement yesterday.
The right hon. and learned Gentleman said that we had to divide the long-term from the short-term measures, and I agree. I do not intend to say much about the short-term measures except to

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say that they are bound to be harmful, and I trust, therefore, that the Government will attempt as little as possible which will inevitably do harm and not good to the long-term objectives which they ought to be setting before the economy.
A 7 per cent. Bank Rate will not encourage investment. To put the price of petrol up will not bring the costs of industry down. To attract hot money to the country will not, in the long run, be a solution of our difficulties and may well get us into severe trouble in any crisis in the autumn. When the Government talk of control of Government expenditure, I do not think that anyone will believe in it until we hear of measures they are to take to bring it about. At every election which I have fought, Tory candidates have said that we must reduce Government expenditure, but after each election Government expenditure has gone up.
I turn now to the long-term prospects. Yesterday the Chancellor mentioned investment and long-term growth. I wish that he had mentioned them long ago. I hope that this means that there has been a political decision that the economy must aim at a steady and reasonable rate of growth and investment. The question is, does his statement on this mean anything, or it is just an obeisance to the popular ideas of the moment? The Press obviously does not think that it means anything.
One popular newspaper said today
"… the one obvious, depressing thing is that, whatever the details, the voice, the approach and the single-minded concentration on cuts are drearily the same."
That is not some wicked Liberal or Labour newspaper. It is the Daily Telegraph. The Daily Mail described it as
"The mixture as before."
and said:
"The Government still believes that the only way to help exports is to clobber the home market."
The Guardian said:
"A great opportunity for a new departure has been missed."
What would give the Chancellor's in-tensions some bite and inspire some belief that he was going to take steps to see that they were effective and that we could achieve a steady increase in
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productivity without inflation? It means closing the gap between the figures—which he gave yesterday—of a £1,450 million increase in personal incomes and only a £650 million increase in production. That situation means having a policy for wages, salaries and profits. I know that such a policy is difficult, but it is time that we began to discuss this and to consider what can be done.
Then if recurrent crises are due to pressure on the £ and are to be avoided, this means a permanent strengthening of our export position.
It is on these two points—a policy for wages and other incomes, and the export position—that I want to concentrate. But, of course, they must be dealt with in tine context of a general economic policy.
At the moment the most essential thing in this policy is more competition. I wholeheartedly agree with the right hon. Member for Flint West that one of the great advantages of having a more competitive economy would be that it would put pressure where it should be put—upon the managers of industry. It would encourage them to introduce new methods, to economise in labour, and to keep costs and the distribution of profits within reasonable bounds.
The Chancellor spoke vaguely yesterday about cutting tariffs. Why does he not cult them here and now? I know that he is in negotiation, and I appreciate the desirability of getting as much as possible in return. But when France offered a 20 per cent. reduction in tariffs, we said that we were not willing to do this. I am not talking of the tariffs which are tied up with the excise position on the home market. If the right hon. and learned Gentleman staid that the Government would out tariffs but, if they were not reciprocated, he reserved his right to reintroduce them, this would bring about a far better position.
The right hon. and learned Gentleman spoke about the undesirability of restrictive practices. Will he give the Restrictive Practices Court more powers? Will he also take powers to look at monopolies, because, as we disperse restrictive practices, monopolies grow. We should have an economic budget running for four or five years, and the Government should not be too frightened to call it a

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plan. It should be separate from the fiscal Budget.
I am glad that this will be in line with the measures Lord Plowden recommends to give better direction to the economy. I hope that we shall have a unit in the Treasury which will collate information from both the private and the public sectors and indicate a target for the rate of industrial growth. The right hon. and learned Gentleman mentioned two bodies in his speech. I understand that they are advisory bodies. I am not clear that they either have sufficient access to information or are of sufficient standing to do the job which is, for instance, done in France by the Commissariat du Plan. Such bodies are becoming increasingly common abroad. We need an investment board for the nationalised industries. I was glad to hear the right hon. and learned Gentleman say that he would try to maintain a steady rate of investment in these industries. But there is a need here for an investment board. Are we to hear more about the Chancellor's statement? Has he a definite proposal for changes in the Treasury to give him the sort of instrument which he says he wants?
If we are to have this instrument, then the Government can settle dawn to aim at a steady rate of growth in the economy. If we are to improve productivity and, at the same time, share out the products of industry fairly and avoid inflation, we must give some thought to the distribution of the wealth that industry generates.
Other countries—Sweden and Holland, for instaince—have tackled this problem with a bipartisan approach. There is much better co-operation in those countries between what are foolishly called the two sides of industry than there is in many industries in this country. To bring about this situation here, we must have wider ownership and wider co-responsibility in industry. We must get the employers and unions together. We must mobilise public opinion. If the unions feel that public opinion is favourable, they will make a move in the direction of taking on greater responsibility for the overall planning of industry. If we have the right sort of competitiveness in the economy and some overall idea of the
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targets at which we are aiming, I see no harm in the Government setting before industry ceilings as well as floors, not only for wages but for profits and for other forms of income.
I realise that there are difficulties about this and that profits are not technically a cost on industry. I know that wages account for over 46 per cent. of the national product as against 10 per cent. as income from investment. But it is to live in cloud cuckoo land to think that we shall have restraint on wages with absolute freedom in profits, salaries and other income. The annual reports of many companies for the last five to ten years show that directors' emoluments have certainly risen as much as or far more than wages.
Mr. F. H. Hayman: And there are invisible earnings.
Mr. Grimond: As the hon. Gentleman says, and their invisible earnings. I am not contemplating a temporary dividend freeze. If freezes are put on which are ultimately taken off, the situation is wide open for takeover bids and speculation of all kinds. I am talking about a year to year consideration of what the economy can afford to pay. I am aware that we should not penalise the growing and expanding company, but we must realise that members of the public have an interest in good labour relations and efficient industry and in seeing a fair distribution of the production of the industrial power of this country.
If firms persistently overbid for labour or if they distribute what appears to be a totally unjustified sum in profits, there should be some power in the Government's possession to go to those firms and say, "What is the reason for this? Are you in a monopoly position?" If they are, then they should appear before the Monopolies Commission, which I should like to see extended. Alternatively, they should be asked, "Can you bring down prices?" If the answer is "No" then the first sanction is publicity, but in the last resort I believe that the Government may have to take power to levy discriminatory taxation against firms which run counter to the Government's avowed economic policy.
We are getting into difficulties because it seems to me that, when it comes to

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disputes, the Government appear to be playing two rôles. They have their traditional rôle as a conciliator anxious to find a solution when employers and employed are in dispute. They also have a rôle as a positive force in the economy which, at a particular time, may wish to keep wages down. These two rôles have to be separated. I am not sure that the Government have adequately set out to play either rôle.
Between the ceiling and the floor of wages it seems to me that earnings should be negotiated at plant level and that they should be related much more closely to productivity. At the same time, I should have thought that the unions should be persuaded to press for contracts of service on a much wider basis than at present, and that consideration should be given to the system of apprenticeship and training, particularly the re-training of older men when, for instance, their skills have possibly been rendered useless by automation.
In making industry skilful, it seems to me that there can be no more foolish thing than to get into a row with the teachers. I do not say that the teaching profession is the only sector concerned in making industry more skilful, but this action against the teachers will be taken as an earnest of the Government's general attitude.
The figures of exports of manufactured goods show that the largest group of these exports are made up of non-electrical machinery. This is an increasing proportion of our total exports and it is largely carried on by a great number of firms, not many of which are large. The Government could assist in advertising and sales promotion overseas by putting forward general slogans such as, "Best is cheapest".
At home a continual complaint is that the Board of Trade is too slow in making decisions. Firms which wish to expand cannot get an answer to their applications and thereby export orders are held up. Medium-sized firms which often find difficulty in training apprentices would welcome Government assistance.
I return to the cuts in tariffs. In answer to my hon. Friend the Member for Bolton, West (Mr. Holt), the Chancellor of the Exchequer said yesterday
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that the amount collected in protective tariffs was £155 million. That is twice the sum collected in 1952. A great deal of it was levied on tools which are used in factories which, in turn, are producing goods for export. I beg the Government to look at the question of tariffs again.
Exports are bedevilled by the position between the home market and the export market. While there is a difficulty in the export market there is every incentive for an organisation to sell, so to speak, across the road from its works in the home market. This is surely a very strong argument for joining the Common Market to enable Britain to have easy access to a very much larger market and to bring the home market and the export market together.
I do not intend to say any more about the Common Market today, but this seems to me one of the strongest reasons for making an effort now to go into Europe. I wholly agree, however, with those who say that this cannot be used as a sort of scapegoat and that it would be madness to go into Europe simply in order to try to divert attention from our troubles at home. The worst possible moment to go into Europe is when the economy is weak. It would have been much easier to enter negotiations to enter two years ago. There will be very much more difficulty to do it now. It is a parlous reflection on the handling by the Government of our relations with Europe that as late as four years after the Common Market first came into existence they have to send Ministers scurrying round the world in order to find out what the Commonwealth thinks. They had the Commonwealth Prime Ministers here two months ago and they have been faced with the growing strength of Europe for many years.
Yesterday, we had the usual appeal for strength through misery. In answer to my question, the Chancellor of the Exchequer said that I should remember that things have become very much more difficult. In fact, economically they have not become more difficult. The rest of the world is increasing its trade. It is untrue to say that anything has become more difficult except in this country. I do not say that the Government have got much worse, but they have got no better. They have wasted ten years. They have reduced productivity to the lowest level

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of any industrial nation. Our labour relations over a wide field are wholly out of date. Our taxation system is in a muddle and they have hopelessly fumbled the Common Market.
I believe that this country potentially is strong. Primarily I believe that, because it still has stores of inventiveness which not many other countries have. The trouble is that we lack an ability to exploit and develop. We have too sluggish an economy for making the best use of our own inventiveness. But today there is beneath the crust, so to speak, an upsurge of feeling, a lot of impatience with the way in which things have been going for the last ten years. The Government have convinced themselves that nearly everything in politics can be reduced to a public relations enterprise, that one can play Father Christmas before an election and then make an appeal for high morality between elections.
One of the most encouraging things was that when the Home Secretary tried this line last week it was met with universal derision throughout the country. It did not take in a single person. The fashionable thing now is to say that we must have a pause. But we have been in a Rip Van Winkle state for three or four years. What really is wanted now is not a pause but a leap forward, a break-through, an attempt to change the climate of this country—some effort to make it a country in which it is more worth while to work than to gamble, in which it is more worth while for all to work because all are going to share in the results of that work. In fact, the real long-term result of this crisis ought not only to be a new break-through in the economy but a total change in our attitude to the state of society in this country, and to the type of country we are trying to build and its relations with the rest of the world.
5.32 p.m.
Mr. Robert Carr: I will not follow the hon. Member for Orkney and Shetland (Mr. Grimond) in some of his rather general observations about our economy, even though, I think, many of us would agree with some of them if they were gathered together and somewhat sharpened up.
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I want, first, to say a few words about the immediate problems that confront us and then to turn to the longer term problems. I am an expansionist. I am sure that we shall not sustain British influence or a prosperous and healthy society in this country unless we have a growing economy, growing industrial production, and, incidentally, growing personal incomes of all kinds. But we cannot, as my right hon. Friend the Member for Flint, West (Mr. Birch) said, have an expansion where home consumption runs ahead of exports. It must be the other way round.
Neither must we have an expansion based on inflation and rising prices. When our exports are not expanding faster than home consumption and when our prices are rising—both things are happening at the moment—we have to put brakes on expansion, however much we regret it and wish not to do so. Therefore, I am in no doubt at all that there is need for action at this time.
I give my unqualified support to my right hon. and learned Friend not only in his judgment about the need for action, but in the measures which he has taken to deal with the immediate problems which face us. These immediate problems are likely to arise in this country from time to time for the reasons which I thought were so well analysed by my hon. Friend the Member for Flint, West a short time ago, but whenever they do arise—we must see that they do not arise mare often than we can help—we must deal with them at once.
We must, however, have a strong policy and a firm sense of direction for the long-term growth of our economy, and this policy must be visible for the whole country to see. I say to my right hon. and learned Friend that the consistent repetition and clear exposition of this policy are almost as important as perseverance in the policy itself. The repetition of what that policy should be is a need which has not been met and which must receive further attention.
Turning to the long term, having made clear my support for my right hon. and learned Friend in his action to meet the immediate situation, I want to mention four headings under which, in my opinion, action should be taken if we are to strip our economy for expansion

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in a competitive world. The first is the point of controlling and planning Government expenditure and action, the point already dealt with by my right hon. Friend the Member for Flint, West. There were signs, both in the Chancellor's Budget and in his statements yesterday and today, of a new and more methodical, purposeful approach to this problem which is also in line with the Plowden Report, published recently.
But why, we have the right to ask, have we had to wait until 1961 for this new approach? Why was it necessary to have the Estimates Committee prodding the Treasury into the acceptance of an inquiry such as the Plowden Committee before measures were thought of which, apparently, are now to be adopted and which any large industrial organisation has found to be necessary for many years past?
There can be no doubt about the failure of the Treasury in its management rôle. If the House and the country want any evidence of that they can turn to a Report published this week by the Select Committee of Estimates on London's airports. Paragraph 140 states:
"Your Committee criticise the Treasury for their failure to perceive this major deficiency in the financial control exercised over the airports in a period of nearly ten years in which costs were steadily rising and parliamentary concern was being expressed about the financial conditions of the airports."
Throughout this period, London's airports were allowed to continue with a form of cost accounting and general expenditure control which, however polite one is about it, cannot be described as better than third-rate. Yet the Treasury, while insisting on a great deal of control over what is happening at the airports, apparently turned a blind eye to the requirement of proper procedures in such a great and expensive undertaking.
It seems as if, at last, there are to be changes in this direction. If so, these changes will be the first step required to get our economy stripped for continuous expansion in the future. We shall need, I suspect, not only a change in method of and approach to Government expenditure and control, but also a change in outlook and staffing in the Treasury, and, perhaps, in other Govern-
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ment Departments. I would ask my hon. Friend the Economic Secretary, or whoever is to wind up the debate this evening, if he can tell us, for example, how many qualified cost accountants and how many qualified scientists there are in the top fifty or so people in the Treasury.
I am not, I assure the House, casting any aspersions on the tremendous ability and intergrity of those who serve us in the Government service, but I do not believe that it is possible for men, of whatever calibre, to undertake such tasks without including among their number a proportion of trained experts in these various fields. In this respect, our administration has got to be professionalised more than it has been in the past.
The second main heading, about which I wish to say something, is the need to expose our economy to the searching test and stimulation of competition and also of belonging to the largest possible market. Here, I think that I need only reaffirm what was said by my right hon. Friend and by the Leader of the Liberal Party about the need for lower tariffs and also about the tremendous importance of becoming attached to the Common Market. We shall not raise exports sufficiently unless a number of things happen, the most important among which, I think, are the following. It seems to me that our manufacturers must meet in equal competition at home as well as abroad these goods against which they have to sell their products in the export markets.
It also seems to me essential, if we are to get more exports, that the levels of profitability in the home and export markets have to be made more nearly equal than they are at present; and that probably means a move in two directions. It probably means making the home market less easy and less profitable. Hence the attack on restrictive practices, hence the need for more competition, a lowering of tariffs and the Common Market. It posibly also means taking steps to make the export markets more attractive. Hence the importance which should be attached to the consideration of methods such as those mentioned in the latter part of his speech by the right hon. Member for Huyton (Mr. H. Wilson). These things must be looked at, because both ends have to be tackled.

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There is a third point which I believe to be important. It is extremely valuable for British manufacturers who are to sell in the export markets also to get used to working and operating in other countries in the world. There was one measure which my right hon. and learned Friend the Chancellor mentioned yesterday which disturbed me on this account, when he referred to the restriction of private investment overseas. Historically, I believe that Britain's rôle in the world owes a great deal to the way in which British traders, men of commerce as well as manufacturers, went about the world and set up in business. If we are to establish our strength and influence again in future, it seems to me that we ought to be encouraging, not standing in the way of, companies in this country which are progressive and adventurous enough to be prepared to operate plants overseas, both inside and outside the sterling area.
Mr. H. Hynd: Would the hon. Member add to that, bringing their profits back to this country?
Mr. Carr: I certainly believe that profits should accrue to this country, but I would only beg the House, and particularly my right hon. and learned Friend, not to take too short a view of where the benefit to this country lies, because to set up manufacturing units overseas and plough back the profits in those units overseas may be just as important as ploughing back the profits into the factories operating at home.
The third of my headings refers to the need to overcome the shortage of labour. This seems to me to be our chief handicap. Whenever we get an expansion going, what is it that brings us to a halt? Nearly always, the shortage of labour in our chief industrial areas, with the inflationary effects that go with it. My right hon. Friend the Member for Flint, West was quite right in saying that we could go to the trade union leaders, and they could grant our request for a complete cessation of claims for wages, and yet, because of the extreme shortage of labour in the main industrial areas, inflationary earnings could still come about. It is actual earnings rather than wages rates which determine the amount of inflationary pressure. There-
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fore, as a long-term policy, the Government must encourage increased laboursaving capital investment.
I believe that there are a number of ways in which this could be tackled. There should be higher depreciation allowances for companies in this country. I think that we are at a disadvantage in this respect when we compare British industry with industry in most of the countries which are our chief competitors. I think, also, that the system of rates should be looked at. I do not object to industry paying 100 per cent. rates, but I do object to the present system, under which, if a firm has little capital but employs a lot of labour, it pays less rates than if it employs little labour but a lot of capital. Generally speaking, the whole tax system ought to be looked art again to encourage capital-intensive industries and to discourage labour-intensive industries. This latter aspect is the unpopular side of the coin.
On another point affecting the shortage of labour, I think that efforts are justified—and here I differ from my right hon. Friend the Member for Flint, West —to get a better distribution of labour by a location of industry policy. I should like to see the Government pursuing a location of industry policy more vigorously in both directions, by grants to help the workers to move to areas where there is a great demand for labour, as well as bringing industries to areas Where a surplus of labour exists. Both have to be done, and in so far as it allows a bigger number of our potential labour force to be brought into use, it seems to me to be economically as well as socially justifiable.
Skilled labour is the particular shortage, and here I believe that this is the job of industry. I had the honour of presiding over a Committee which reported—
Mr. Edward J. Milne: On this question of the location of industry and helping workers to move from one area to another, does not the hon. Gentleman consider that the Chancellor, by restricting private and council house building, will put a damper on the policy which he is advocating?
Mr. Carr: I could go into that at some length, but I think that it would be unfair to the House to do so, because I

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have set myself these four headings to which I want to refer, though I agree that housing is very relevant to the mobility of labour.
I had the honour of presiding over a Committee which reported on the problem of the training of skilled workers. The main conclusion of that Committee, to which I still adhere, is that training is the responsibility of industry. I think that that is right. In a section of that report we said, though perhaps not in as clear terms as we might have done, though it is there to be understood with only a little reading between the lines, that those parts of industry which were not themselves prepared to train men ought to be prepared to contribute towards the cost of the training.
I believe that that time has come when we ought to ask the Government not to spend more of the taxpayers' money on training, but that the Govern-meat should compel those firms which are not prepared to undertake training themselves to contribute by means of a training levy towards the cost of the training which is done elsewhere, with, of course, a rebate for those who are doing the training. This is a system which is operating in France, and I do not see why it should not operate here.
My fourth and final heading the overriding one—relates to personal incomes. We cannot get beyond what my right hon. and learned Friend said yesterday—that with personal incomes of all kinds rising by £1,450 million and production rising only by £650 million the country will be in difficulties, and action has to be taken. If I were in the shoes of my right hon. and learned Friend—though it is easy to say that when one is not—I would take the following five steps.
First, I would obtain better and quicker information about total earnings and incomes. It is not just wage rates that matter, but earnings of all kinds. Secondly, I would make an announcement, having got that information, of the overall sum each year by which it would appear that incomes in total could rise, based on increases in production. Thirdly, I would also make an advance announcement that as soon as the trend of earnings began to run ahead of the trend of production, I would bring into play effective automatic regulators.
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Fourthly, these regulators should, I think, be of three kinds, and I should use all of them or any one of them, according to the circumstances. First, there would be the regulator which my right hon. and learned Friend the Chancellor is using at this moment, the first regulator for which he took power in his recent Budget. For the second regulator I think that we should go back to the Coalition Government's White Paper, published towards the end of the war, dealing with full employment and the National Insurance Scheme, and be prepared to use variable National Insurance contributions as an economic weapon.
For the third regulator I should like to see a re-examination of the possibility of what is now a very unpopular subject —forced saving. I know that post-war credits, as they were operated, have come into disrepute, but if we have compulsorily to take purchasing power out of the economy it is better to take it out by forced saving than by adding to prices, as we have had to do hitherto. I wonder whether there is not a possibility of taking money out in savings, not in the same form as post-war credits, but as negotiable Government bonds of some kind or another. People might be sceptical about this, but it is at least better from their point of view than paying away the money for all time in higher prices.
Finally, if I were in the unenviable position of having to deal with the question of personal incomes I would set up a fundamental inquiry into the structure and method of industrial relations. Miinsters were saying something about this in 1958, since when, I am sorry to say, they seem to have forgotten it. It is about thirty years at least since the Mond-Turner talks, Which were an attempt to examine our system of industrial negotiations.
We can be proud of our industrial relations to a certain extent, but we would be foolish not to admit that in many respects they were old-fashioned. We would also be foolish not to admit that it is extremely difficult for the T.U.C. leaders or for the employers' leaders, who are the ones engaged in the present machinery, to make changes. It is not surprising that sometimes they cannot see the wood for the trees. That

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is why the time has come for an inquiry of this kind, the membership of Which should include not only representatives of employers and of trade unions, but also outside people, to consider whether recommendations could not be made that would find acceptance on both sides of industry for the modernisation of our structure of industrial relations.
5.51 p.m.
Mr. George Darling: The hon. Member for Mitcham (Mr. R. Carr) has given us the first constructive ideas that we have had from the Government side of the House in all our debates on economic affairs since the Chancellor introduced his Budget. I am tempted to throw away my prepared notes and to follow the hon. Member in the most interesting discussion he has started, which is related to all our economic problems. It is, perhaps, partly from his experience at the Ministry of Labour that the hon. Member has put his finger on a number of difficult problems that we must solve if the country is to be the prosperous and expanding nation that we 'want it to be.
The hon. Member asked for an inquiry into industrial relations. There have been inquiries in the past, many of them going back to the years immediately after the First World War, even before the Mond-Turner negotiations, which produced many useful suggestions. I am, however, rather sceptical about an inquiry of this kind if it were to be carried out by the usual employers' and trade union bodies.
The Trades Union Congress is an excellent body run on a shoestring. Until the trade unionists appreciate that they should have a far better central organisation and are prepared to pay for it, I am afraid that the T.U.C. will be overworked when proposals of this kind come forward. On the other side of the picture, however, we are up against a far more difficult problem in that, perhaps inevitably, the employers' associations tend to be representative of the least efficient and the least progressive firms. That can be seen clearly when one considers the attitude of the Engineering Employers' National Federation, which consistently rejects progressive proposals, although individual firms in the engineering industry have a good
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record of labour relations, are progressive and try to do the job properly.
I am now throwing away my notes and I am tempted to remind the House of something relevant which I said some years ago. I remember that after the war, when I was an industrial reporter, the engineering trade unions asked the employers for a new wages system in the engineering industry, to take account of all the developments that were needed to get rid of craft divisions in the industry, and which, incidentally, might well have led to apprentices being apprenticed to the industry instead of to crafts. The employers rejected the request by the unions for a new wages structure which was essential for progress in industrial relations. When the unions made the same request a year or two later, it was again turned down. A Ministry of Labour inquiry almost ordered the employers to agree to the introduction of a new wages system, but still we have not got it. The unions, however, are blamed by many hon. Members opposite for the fact that in the engineering industry restrictive practices still remain.
The first step to get rid of those restrictive practices is a new wages system. The employers have consistently rejected proposals for a new wages system, although individual employers have got rid of the old-fashioned ways of calculating wages and have got rid of a system which still provides about 87 different grades of pay in the industry. So long as the employers take that attitude, there will be little progress towards getting rid of restrictive practices.
Why do the employers take that attitude? A little while ago, there was a B.B.C. television programme concerned with industrial problems—
Mr. Ellis Smith: It was against the workers.
Mr. Darling: Oh, no, it was not.
Mr. Smith: Yes, it was.
Mr. Darling: On that programme, we were shocked to discover the attitude of the shipbuilding employers. My hon. Friend could not have seen the programme.
Mr. Smith: I saw it, and I saw those who were on it.
Mr. Darling: It showed the attitude of the shipbuilding employers to the question of getting rid of the craft divisions in the industry.
Obviously, there has to be a division of labour in shipbuilding. The way that ships are built necessarily calls for a division of labour. The platers come in first, the hull has to be built up and in due course the furniture workers, the electricians, the plumbers and the rest come in. The employers have shown, however—and this has been brought out, I understand, in the inquiry by the Department of Scientific and Industrial Research into shipbuilding—that they are quite satisfied with the existing system of the division of labour. So long as they are satisfied, progress will not be made. In the present state of things, progress has to come from dissatisfaction with things as they are. There is no sense of dissatisfaction on the employers' side.
Let us be honest about this. All the proposals that have so far been presented in the engineering industries for a new wages system, for new methods of operation and for a joint industrial council to deal with the whole question of productivity, have come from the trade union side, and every one has been turned down by the Employers' National Federation. It is no use, therefore, saying that the trade unions are sticking out for restrictive practices.
I have made this case before and I repeat it. From my experience, dating back over the whole of the post-war period, when new methods of production, of new machines, new layouts, new methods of working, and so on, have been intelligently and sensibly presented to the workers and their co-operation has been requested, I know of no occasion when the unions have turned down such proposals. I could, however, quote cases of new proposals being turned down, not because the unions were against them but because they were so badly presented.
To use shipbuilding again as an example, hon. Members opposite have frequently pointed to the stupid strikes, as they are called, that occurred at Birkenhead, at Cammell Laird's over the riveting of wood and aluminium. That is part of the difficulty which arises as a result of the industry not having a new wages system.
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Let me turn to another side of shipbuilding. A few years ago, Bartram's Yard, at Sunderland, had to meet a delivery date. The employers said to the workers, "We must break a record if we are to fulfil this delivery date". The workers built an 8,000-ton motor ship in ten months. The workers will always respond to that kind of appeal. To meet the contract to which I have referred, the men were almost doing the jab of the management in supervision, planning and other respects. If more firms were as enterprising as Bartram's in this regard, there would be a wider and real response from the workers. But, of course, Cammell Laird's do not work like that.
However, I do not want to pursue this any further. I had not intended to raise it—
Mr. James Callaghan: A good speech, though.
Mr. Darling: —but I am following up the suggestions made by the hon. Member for Mitcham. He went on to mention that we have got to give a great deal more assistance to firms which can do and ought to be doing more in the export drive. If the House will permit me, I should like to give another example from my own experience in this matter.
A few years ago I was in Vancouver and I was talking to an agent for a group of department stores in the Western Provinces of Canada. He was born in this country and he wanted to trade with this country and buy his goods from Britain. He told me of his sorry experiences. With respect to the hon. Member for Sheffield, Heeley (Sir P. Roberts), I must recall that he brought the cutlery industry into this matter. At any rate, these were some of the examples which he gave me. He said he would write to British firms first of all, to some of the smaller firms he wanted to deal with. But there was no central point among them that he could get to, so he had to write to individual firms, although that was not what he wanted to do. He would get specifications which did not mean a great deal to him. There would be symbols which probably meant something to the managements and the firms but meant nothing to him—and the prices were expressed in pounds, shillings and pence.

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So then he would write to American firms in the same line of business and he would get beautifully-illustrated catalogues, explanatory letters and undertakings about deliveries. Next he would write to German firms and the representatives of the German firms in that trade would come out on the next plane for Toronto with samples. These were his words to me, probably exaggerated by his own experience: "There is no desire in Britain, compared with the German and American desire, to trade with us in Canada. We get from Britain no similar desire to that we get from those other countries".
Sir C. Osborne: I think the hon. Member is over-painting things and not being quite fair to those who try to export to Canada. If he will give me that man's name and his address I will contact him within this week and try to get some trade.
Mr. Darling: The hon. Member for Louth (Sir C. Osborne) and I agree about many things and we can discuss this between us.
Mr. Callaghan: Anyway, this is about cutlery, not stocks and shares.
Mr. Darling: I would take up another suggestion which the hon. Member for Mitcham made. I hope he will be pleased that he is making my speech for me. This is not the speech I had intended to make. He talked about a training levy for industry. That is very much overdue. I hope the hon. Member realises—it was mentioned in the Report of the Committee of which he was chairman—the difficulty of getting small firms to work together in a training scheme when they are scattered throughout the country, and I hope that he will not stick rigidly to the point which he put forward that we do not want Government assistance for this kind of thing. I think we do require a great deal of Government help in the training scheme for industrial workers in this country.
The final point I want to take up with the hon. Member concerns his adulation —I think that that would be the word to describe it—of the very vague proposals which came from the Chancellor of the Exchequer about his planning schemes. Those proposals were extremely vague, and, quite frankly. they scare me. I, of
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course, was pleased, as, I am sure, many of my hon. Friends were, to discover that the Treasury Planning Board is still in existence. We thought it was moribund. We thought it had disappeared, but, apparently, it is still here, and the Chancellor has some idea of reviving it and adding to it joint national production committees.
However, I should have thought that the last body to which to give the job of planning would be a mass meeting of representative bodies. They cannot turn themselves into a planning board. They might be useful in discussing planning projects which might be put before them. This was the only proposal the Chancellor gave us, but it was not a suggestion for setting up—and the Treasury is not the place for it —a national planning board which would do the job on the lines of the job done by the planning board in France. I do not want to develop that. I am sure that the right hon. and learned Gentleman has looked into the way that—
Mr. Selwyn Lloyd: This is rather important. I am certainly not restricting myself to the idea of some planning board within the Treasury.
Mr. Denis Howell: What is the right hon. and learned Gentleman doing, then?
Mr. Darling: That is most interesting, and I am gratified to hear it. But why were we not told what the right hon. and learned Gentleman intends to do?
Mr. Lloyd: Because, as I explained, if one is to get the co-operation of both sides of industry one should not, before the consultations, lay down exact machinery.
Mr. Darling: I am sorry, but I still disagree with the Chancellor. This is not a job for which we must seek the co-operation of both sides in industry; it is a Government job to set up a planning board, and till we get some kind of purposeful planning in the Government set-up we are not going to get very far.
I think this is germane to the remarks which the hon. Member for Mitcham made—and this is the last time I am going to quote him—when he said, it I remember him correctly, that the whole

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of our incomes in this country have got to be related to increased productivity; in other words, that we must not give to any groups in our community increased incomes which go beyond a general increase in productivity year by year.
As a general rule, of course, that is quite satisfactory, but it assumes that the present distribution of incomes is fair and satisfactory—and the present distribution of incomes is very unsatisfactory. If the hon. Member and the Government are going to leave out altogether the whole question of doing social justice and of dealing with those people who at the moment are underpaid—to make sure that they get something more out of the kitty than other people if their claim is justified—they will not get the response which they want to their appeal to the nation anyhow. I do not think that any Government could get the response to an appeal to the whole nation to put more in than they get back and to get greater production unless they made sure that social justice was done.
The hon. Member mentioned the need for better statistics about our earnings and incomes. He will know that for Live years I kept on pressing Ministers of Labour to give us better information about the earnings of the workers of this country, and it took more than five years for them to accept the very simple suggestion that, in addition to knowing the average earnings of the workers, we should find out how many workers there are on each level of income. That is the kind of progress we expect, of course, from a Conservative Government, but five years is a dickens of a long time.
A figure frequently used is that the average figure of earnings of our workers in this country is about £15 a week. That figure is frequently used by Ministers to try to show how prosperous this country is. The fact is that a very large proportion of the workers of this country get about £9, £10 or £11 a week. I am speaking of men workers. [Interruption.] Perhaps I may explain this to the hon. Member for Louth. The national average is quite misleading. There are many workers in this country earning about £20 a week. There are many in Sheffield who are earning about £20 a week—and they do earn it; there is no question about that. But there
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are far too many workers in this country with a low remuneration of £8, £9, £10, £11 a week, and we cannot justify these incomes in our present state of society, with our present levels of prosperity, depressed as those levels are by the actions of the Conservative Government.
They cannot be defended, and we have got to make efforts—and this is the point I really wanted to come to in the speech I originally intended to make, and it is the last point I shall make today—efforts not only to get the country out of this crisis but to make sure that the standards of living of those people who are on low earnings at the moment are raised. The answer to it is that they must produce more, or fewer people should be employed, where they are employed in service trades, to provide improved services.
We on this side of the House quite agree with that, but hon. Members opposite, when they discuss this kind of question, must not run away with the idea that the workers and trade unions are in charge of industry. They are not, and whether these workers earn more or not depends not on the decisions which they can take but on the decisions of management, on the provision of new machines and new and better methods of production. I can guarantee from experience that when new methods are asked for, and new machines are put in, sensibly with the co-operation of the workers, there will be no trade union or workers' opposition. Management, therefore, must make sensible and progressive decisions.
Then we come up against the problem on which the whole of our prosperity now depends. Suppose that management will not take the right decisions. Suppose that managements will be so backward in many industries that new machines available to them will not be installed. Suppose that they will not amalgamate with other firms where that is useful and will not have co-operative export schemes and progressive developments of that kind. What sanctions do the Government bring to bear to make sure that industrialists who are lagging behind, who are backward and incompetent, come up to the standards of the best? Competition will not do that. We have seen that. We have been living in a competitive society, so-called, for at

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least ten years. Hon. Members opposite got rid of controls to provide us with that competitive society.
Clearly, competition has not done the job. Improvements in production in this country are lagging behind those in most European countries. Some of those countries have a competitive system. If their competitive system works, why does not ours? If ours does not work, what are we going to do to make it work? We cannot deliberately introduce more competition. We do not want two firms making nylon yarn, because we should lose all the benefits of mass production. If we have two firms making Terylene we lose the benefits of mass production. I.C.I. has sunk £16 million into its single Terylene plant. We cannot have two such plants unless we want to preserve the idea of competition for dogmatic or doctrinaire reasons.
What do the Government intend to do? We have had no suggestion whatsoever in the Budget debate, in discussions on economic affairs or in the Chancellor's speech yesterday, of any ideas to bring industry in this country up to the standards which it should have. We can go to the workers and say that they must play their part, and my right hon. Friend the Member for Huyton (Mr. H. Wilson) in his admirable speech today showed how that appeal could be made. But unless management does its job, that appeal will be wasted. How are we to appeal to management and to the whole nation to make a supreme effort to put the country into a position in which we can have the continually expanding prosperity that other countries now seem to enjoy?
It is very simple. We must take exports first. The Chancellor, a few months ago in his first speech to the National Joint Advisory Council, said that the country must increase its national production by 3 per cent. a year and that in order to do that we must increase exports at the rate of 6 per cent. There is nothing new in all this. The right hon. and learned Gentleman did not give birth to that idea. Some of us have expressed this view over the years. It requires only a small exercise in statistics to see how it comes out. It is perfectly sound.
If we want to increase national production by 5 per cent. a year, we must
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increase exports by 10 per cent. The 3 per cent. increase in production which the Chancellor has suggested, with our present ageing population and our present circumstances and what ought to be our community commitments, is far too low. I do not think that we can sustain our present standard of living, with all these other commitments, on a 3 per cent. increase in production. The minimum that we must aim for is 5 per cent.
But let us face what it means if we accept the Chancellor's formula. It means that we must double our export trade in ten years. That is the nation's task. It is to that task that all our skills should be devoted—to increase exports by 10 per cent. a year, that is, to double exports in ten years, leaving out the cumulative effect and taking it in round figures. We cannot achieve that by leaving it to employers to please themselves whether they go into the export market or not, and by leaving managements free to decide whether to put in labour-saving machines, if the competitive system as we have seen it in the last ten years goes on working in the next ten years. There must be Government intervention in all the weak spots in our economy.
I finish with a point with which I almost started my speech. Shipbuilding should be making a tremendous contribution to this doubling of our export trade in ten years. Instead, shipbuilding is becoming almost a dead loss to us. We have shipping companies increasing the orders for ships which they give to foreign shipyards.
Sir C. Osborne: Why?
Mr. Darling: We come back to where I started, and obviously the hon. Member for Louth did not listen. Bartram's of Sunderland, working to a time schedule under contract, appealed to workers for help and built an 8,000 ton motor ship in the world record time of ten months. Why cannot other shipyards do the same thing? They can have the co-operation of the workers, but we have a backward management set-up in the whole of our shipbuilding industry.
The Government must not leave that industry alone. They cannot say that they will not interfere when prosperity will probably rest not just on shipbuilding alone but on making half-a-dozen

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industries like shipbuilding play their part in the development of the national economy. But we get no ideas and no suggestions whatsoever from the Government.
The hon. Member for Mitcham mentioned publicity as a desirable thing to drive employers to do better, but when there is criticism of the shipbuilding industry in the Report of the Department for Scientific and Industrial Research it is suppressed. We are not allowed to have the publicity, and shipbuilding employers go on in their old ways, turning down progressive proposals for better labour relations, working to old methods, and driving out of the country orders which should be placed here and, worse still, getting far too few orders from abroad.
There are other industries such as the machine tool industry where there must be Government intervention on the lines suggested by my right hon. Friend the Member for Huyton to make sure that this country, with a Government lead, with Government help, with Government sanctions, with Government encouragement and with Government purpose, meets the challenge and doubles its export trade in ten years, because that is the beginning and the end of the story. This is what all our debates are about, but we have not had a single idea from the Government and the best thing that we can suggest to them, in order that the lob can be done, is that they get out of the way.
6.18 p.m.
Sir James Pitman: The hon. Member for Sheffield, Hillsborough (Mr. Darling) is quite right when he says that we can double or add 20 per cent. to our exports in ten years. He would be right if he staid that we could double OT increase our own standard of living by 20 per cent. or 25 per cent. in the same period.
Mr. Darling: I did not use those figures at all. I said that we should double our exports in tem years. I aim not good at arithmetic and the hon. Member can work out for himself what a 5 per cent. per annum increase cumulatively would be in our national production.
Sir J. Pitman: I thought the hon. Member used the figure of 20 per cent.
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I agree that he said that we could double our exports in ten years, and he is right. We can do it. But he is wrong in saying that it can be done by exhortation from the man in Whitehall. That is the last way in which that can be achieved. That is really the one essential point of difference between the two sides of the House.
It seems clear that it is the long-term value of money, the honesty of our currency, Which is the basis of achieving that end because low costs and nothing else will get us exports. It does not matter what anybody in Whitehall does; if our costs are low, we will automatically cash in on the good results of low-cost operation. The problem that Britain faces today is how we can get low-cost operation. I was hoping to show that the essential first step is to get back to an honest currency—
Mr. A. Woodburn: Does the hon. Gentleman recall that Our experience after the war was that the motor car industry would not have exported any oars had it been allowed to use the home market to absorb all it could produce'? It is only because we kept back the raw materials unless a proportion of the motor cars produced was sent abroad that we have been able to build up an enormous motor car export trade.
Sir J. Pitman: I stick to my point that the world is absolutely crying out for goods and with expansion we can produce them in the world. We need, however, good, honest competition as well as honest money in which low-cost operation can come about. In order to achieve both low-cost operation and competition, we must have a really honest currency. I expected to receive no opposition to that proposition. Certainly I should have thought that every hon. Member on this side of the House in his election address referred to the long-term value of the £ as the real anchor of policy at home and abroad. I should have thought that hon. Members opposite would have agreed with that in everything that they said in their election addresses.
Yet what have we had? In the gilt-edged market, no one trusts the longterm value of money sufficiently to be willing to lend long at fixed interest. I

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ask hon. Members to read the proceedings of the Standing Committee on the Trustee Investments Bill and to see what hon. Members on both sides of the Committee said about the need for trustees to protect their beneficiaries against inflation by buying equities and not buying fixed interest long-term stock. Such a climate of general opinion is the road to ruin.
At the moment we are all so unhopeful that the Government will really succeed in tackling this problem that in our own private affairs we go for equities rather than for long-term fixed interest stack, and in any trusts that we serve we so advise and then the trustees, if allowed to do so, act accordingly. As directors' too, we seek to borrow as much as we can on fixed interest and to invest as much as we can in equities. As a nation we are certainly not yet aware of the Government really intending to ensure for us an honest money policy over the next fifty years.
That distrust of the long-term value of money seems to me to be at the root of the matter. Why is it? In our family budgeting there are lots of things that we want to do, but we have to relate them to what we can afford and we do not expect to do all we want to do. But when we act politically there is this anonymous "they". "They" ought to build hospitals, roads and bigger and better schools. "They" ought to do this, that, and the other. People overlook entirely the fact that "they" is the collectiveness of themselves. It is really "I" and "we" who can do no more than we can afford to do—no more than there are resources to do it with.
It is as impracticable for a collective community as for a family to act in a way in which outgoings are not related to incomings. As a nation we suffer exactly the same unfortunate result, as we do as a family, because nature steps in and, by devaluing the currency, makes us balance our outgo with our resources —in other words, we achieve a state of affairs in which we still have got to do, land by dishonest methods, what we might have done by honest methods.
I should like to advance four remedies all of which will do great good. First, we must stop printing money. What are
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the forces which at the moment are operating to stop inflation? There is not one. We can all see thousands of forces operating in the other direction, to produce inflation. I had hoped at one time that, at any rate, the old-age pensioner might be one such force who would say, "I am all on the side of an honest £ with a stable long-term value, because I suffer." But now they and the whole country assume that there is to be an automatic escalator whereby as the cost of living goes up so the pension goes up accordingly. I ask anybody to tell me whether he can find one single force which is at work to stop inflation and to protect the long-term value of the £.
I would then point to the way in which we are borrowing short and investing long. It is not only that the floating debt is enormous. There are also the enormous short-term borrowings of local government authorities. Furthermore each year our long-term indebtedness under the National Debt gets one year nearer to its maturity, in a context in which it is impossible far the Government to barriow long when such long-term stocks have matured; and we are, in effect, thus adding greatly each year to the short-term debt. Moreover, this short-term indebtedness is invested in long-term assets—such as roads, hospitals, houses, drainage, and so on—and anybody who knows anything of economics knows quite well that a situation in which one has borrowed vast sums short and has invested them long is a position of intolerable vulnerability.
Mr. Woodburn: I apologise for interrupting the hon. Gentleman once more. He has a very interesting thesis, but I notice that he is confining his criticism of borrowing only to the Government and public authorities. Would he also deal with the tremendous amount of public borrowing that was started by the personal loan schemes of the banks and the hire-purchase squandermania just before the election?
Sir J. Pitman: Any form of short-term borrowing which is invested long comes under my criticism. If it is invested short, that is another matter. The point that I am making is that to borrow short and invest long is the road to ruin, and the sooner we recognise it the better.

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There is nothing to stop the Government deciding to reduce short-term indebtedness and to fund it long. The reason why they regret doing it is, first, because it will cost them a high rate of interest. At the moment, in order to got anybody to lend money, there has to be in the interest rate not only enough by way of interest to satisfy the saver but enough by way of extra interest to cover the apparently inevitable loss that one will suffer by reason of the devaluation of what will be received in a depreciated £ at the end of the fifty years of the loan. Secondly, because they, the Government, who are always the borrower and never the saver, gain all that the saver loses through such depreciation.
The moment the saving public were to become aware that the Government really intended to keep the long-term value, of money stable, long-term borrowing would came down to a much lower rate of interest. The only way to do that is by funding the short-term indebtedness to show that the Government mean to pay back in a value as much as or not significantly less than that which was borrowed.
The mere printing of money and borrowing short is the device by which we get away with the theory that "they" can spend more on roads, hospitals, export credits and the rest than "we" really have to spend. The right hon. Member for Huyton (Mr. H. Wilson) said that we should give export credits. We cannot give export credits unless we have the savings and the real resources behind us to do so. Giving export credits if you have not got the honest backing for the credit is pure paper work, leading to more inflation. It is no use pretending we can do more to develop ourselves and the under-developed countries than we have real resources saved so to invest.
The second remedy is to exploit our existing investments. It seems to me that we have in our past investments been buying leisure rather than increased productivity. If any hon. Member doubts this, let him go to Israel, Poland, Russia, or any place where people have a real desire to sweat their machinery, and let him see how they use and exploit the investments which they have. Then let him go round Britain and see the way in which first-class machinery is not being used to the full extent for which
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it was designed and which could give us the greater productivity we desire, indeed must have.
The real problem is that full employment of men does not apparently give us full employment of machines. In any good economy there must be full employment of all resources, manpower and machinery. This is something in which we are falling down.
Mr. Gerald Nebarro: I am entirely with my hon. Friend in What he says about machinery resources, notably valuable machine tools, but can he suggest an answer to the problem which has afflicted me in industry during the last fifteen years, namely, how to persuade the workers to work shift systems in order to use valuable tools twenty-four hours round the clock?
Sir J. Pitman: I shall later show that this is a spiritual problem, a matter of desire, will-power and achievement. The point I make fully supports what my hon. Friend says. Our job is to sweat the machines, not to sweat the men. But we are not sweating the machines as we should and we suffer accordingly.
The right hon. Member for Huyton referred to social justice, and so did the hon. Member for Hillsborough when he spoke of the "average wage" and, very rightly, referred to the immense difference between £20 a week and more at the top and £8 or £9 at the bottom. There is great social injustice in our wages system. The trouble is worse in that the man in the street knows that it often comes from what I call the blackmail situation, not from any real social justice affecting the workers concerned.
A man may work for one of the big national dailies where the blackmail situation is extraordinarily effective. He may work for, say, B.O.A.C. where the loss of, perhaps, £1 million a day can be caused, or he may work as a member of a trade union like the E.T.U., which can call out a few key men and wreck the whole production. In such a special situation, a man and his union are in a very different position from that of, shall I say, the poor teachers or, more particularly, agricultural workers. An agricultural worker has no blackmail position to exploit. The good God goes on growing the crops every day. Some pressure

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may be applied at harvest time if trouble continues too long, but the chances are that the employer saves the wages and suffers too little to be pressured. The same thing applies to the teachers, because the cost of the labour of teachers is so very high in proportion to the cost of the whole educational operation.
If such an employer has a strike on his hands, he saves all the wages and salaries he would otherwise pay. He faces a strike with an equanimity not felt by someone who is saving only a very small amount of wages because a few electricians have been pulled out, but is losing vast sums for every minute that work is held up. Similarly, in certain industries like the steel industry—this was referred to by the hon. Member for Hillsborough when he spoke of people earning £20 a week—there is a vast capital employed and the ratio of wages thereto is relatively small.
Mr. Ted Hill has been complaining that the newspapers have given a worse press to trade unionism than ever in the past. The Press has a happy knack of knowing what people are thinking and of giving them what they wish to read. The Press knows quite well that there is in this dominance of some unions and their members a great social injustice and that that social injustice is felt acutely by the ordinary man whose earnings are below the national average. Such a man, when he looks at the man who is earning above average earnings, knows that he is not receiving those earnings as a result of any particular merit but he is receiving them because, perhaps, he is in a closed-shop industry and that in that closed shop a blackmail situation operates.
Mr. Loughlin: Will the hon. Gentleman be very careful about this? He is painting what could be an extremely damaging picture at this time. He should remember that there are over 8 million trade unionists constantly working in industry, participating in all types of productivity schemes and doing their utmost to ensure that Britain retains her position. If he wishes to castigate the trade union movement in this country, he should be prepared for his Government to take the consequences.
Sir J. Pitman: In my view, the Govment really ought to take up the matter
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of social justice in wage inequality as between one union and another. I have mentioned before in the House the scandal of printing inefficiency and the appalling waste in the printing of the national dailies. I do not so much mind people buying leisure with fresh investment if it is leisure outside the hours of work, but what people are doing in the printing industry, in the big national dailies, is buying leisure during the hours of work. They are not using—
Mr. Loughlin: The hon. Member does not know what he is talking about.
Sir J. Pitman: I know precisely what I am talking about. I know it extremely well. There is in the printing industry the blackmail situation in a national daily paper of the union official being able to go to the production manager at half-past five and say, "We have a dispute on", implying that, if the dispute is not settled, that big national daily will not catch the trains at ten o'clock at the London termini and the whole issue will be spoiled. In such circumstances there is a weak giving way because it is something which can be passed on to the consumer by the employer, and gross social injustice arises.
Mr. Darling: I am reluctant to interrupt the hon. Gentleman, but this is very important. He has said that high wages come about as a result of trade union blackmail. This is completely untrue in relation to most industries in this country. I take the steel industry as an example. There is no workers' blackmail there. There is complete cooperation between management and men to achieve high productivity and low costs. As regards the newspapers, it is the fact that the main daily newspapers with large circulations did not want to improve working efficiency in their offices because, by maintaining the system of raising the costs to their competitors, they had the easiest way of putting their competitors out of business.
Sir J. Pitman: The hon. Gentleman gives me my point about the newspaper printing industry in his last remark. I make a distinction between pure blackmail and what occurs among those who are extremely fortunate in working in an industry in which overhead capital costs are so high that wage costs are, comparatively very unimportant. It is

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practical and it definitely pays to be extremely generous in wage payments in that situation.
I do not think there is any hon. Member who would say that, if there is a John Smith working on the land in, say, Somerset and another John Smith working in a steel works in the constituency of the hon. Member for Hillsborough, there could be said to be any difference in merit and hard work between the two John Smiths in any way comparable to the difference which there is in their wages. If we mean anything by "social justice". surely those two people of equal merit should at any rate closely approximate in terms of remuneration.
The third point with which I must quickly deal is that we must foster competition. The sooner we get into strict and vigorous competition with Europe and into the bigger market of Europe, the sooner we shall find that that competition will lower costs and our exports will take care of themselves.
We must give up this double-talk, this "candy-floss", as the right hon. Member for Huyton called it. My right hon. Friend the Member for Flint, West (Mr. Birch) said that exhortations to "restraint" were no good and got us absolutely nowhere. It is no use, either, talking about a "good plan". That is just double-talk. It means that we have a problem and we have to solve it, but it does nothing to solve it. It is no use worrying about capital gains and speculative take-overs and all the rest of it. All that means is that from the pocket of one Englishman to the pocket of another there are transferred assets. That does not affect the export position or the value of the £ or anything else in the slightest. To mention it all is just a piece of pure class struggle prejudice, which is another form of damaging double-talk which has to be given up.
The fundamental fact is that we have to balance income and savings on the one side with expenditure and investment on the other. If we do not, the £ will go down. I make a plea for honest money, honest work and honest competitiveness. Our grandfathers would be ashamed of us for the little use we make of our opportunities. I am sure that we and the rest of the world will double our standard of living in a very short time,
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but I am sure that we will go to terrible disaster unless we base our attempts at that doubling of our standard of living, upon an honest currency.
6.43 p.m.
Miss Margaret Herbison: I listened with interest to the speech of the hon. Member for Bath (Sir J. Pitman) and what he had to say about inequality between the wages of various categories of workers. But I waited in vain for him to point out the very much greater inequalities between all the workers and those who live on profits and what they get out of takeover bids. Until we get rid of that type of inequality by Government action there is no chance of getting our people to put their backs behind any Government measures to solve our problems.
Sir J. Pitman: If Mr. John Cotton were to make several million dollars for this country by his deal in New York, which he will probably do, does not that raise the whole standard of Britain? Is it in any way to be deplored? Is it not pure double talk to deny it?
Miss Herbison: Even if he brings it over here, one swallow does not make a summer, and, with my hon. Friends, I believe that there is very little chance of the money coming over here to help us in our present difficulties.
The right hon. Member for Flint, West (Mr. Birch) was the first back bencher to speak in the debate. His speech was nauseating at times. It sank to the very depths of vulgarity, but hon. Members around him gave him their hyena laughs in his support. That kind of speech is the kind which could divide the country from top to bottom at a time when we need the greatest unity.
The right hon. Member said the Government had made a mistake in subsidising firms to go to uneconomic locations. I wonder what he meant by that. I suspect that he was referring to Wales, Scotland, and the North-East. How does he know that when the Government used their influence and the firms went to those areas they found them to be un-economic? All the evidence is the other way. All the evidence shows that firms which have gone to Scotland, from England, or the United States of America—from where many of them have come—have proved soundly economic and have been making profits.

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An hon. Member who ought to have known better, the hon. Member for Mitcham (Mr. R. Carr), said that he believed in the Local Employment Act and that the Government should give aid to workers to move from one area to another. The hon. Member was Parliamentary Secretary to the Ministry of Labour and should appreciate only too well that the places to which they could come would be London, the South and the Midlands, where there are already far too many people from the North-East and Scotland. Great problems are to be found in those areas. Housing conditions in London are shocking, with overcrowding and slum conditions still. Housing problems in the Midlands are all the greater because the Government, over the last ten years, have not followed a policy of attracting work to the areas where it was wanted.
Sir C. Osborne: In justice to my right hon. Friend the Member for Flint, West (Mr. Birch), who is absent, I point out to the hon. Lady that while I agree that, in social justice, industries ought to be taken to parts of the country where there is unemployment, my right hon. Friend, I think, was saying that there was a point beyond which it would be uneconomic so to do, so that if we did it we would have to pay the price for that social justice. There is a point beyond which the nation could not afford it.
Miss Herbison: It is a good thing that the hon. Member for Louth (Sir C. Osborne) said that he thought that that was what his right hon. Friend was saying. It was not what he said. He criticised the Government for their policy to date, their policy of taking firms to what he called uneconomic areas.
On Monday, we had a Scottish debate, when we heard a most complacent speech by the President of the Board of Trade. During the whole of the debate he appeared to be completely bored with matters of the greatest importance to more than 5 million people in Scotland. The Secretary of State for Scotland wound up the debate and tried to paint a wonderful picture of Scotland today.
Will the Financial Secretary to the Treasury tell us what effect the Chancellor's measures will have on Scotland's economy and on the figures of unem-
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ployment? These measures, including the 7 per cent. Bank Rate, are similar to those taken by the present Minister of Aviation in 1957. What happened in Scotland then? If we compare the unemployment figures for 1957 with those of 1958, we find that there was an increase of 31 per cent. as a result of Government policy.
If we consider the improvement between 1959 and 1960, we find that there was a 17 per cent. improvement in Scotland compared with a 24 per cent. improvement in the United Kingdom as a whole. The fact is that when measures like this are taken the North-East and Scotland suffer far more than the rest of the United Kingdom. If conditions improve in the United Kingdom, it always takes much longer for those improvements to be felt in Scotland. What is the Secretary of State for Scotland doing in the Cabinet to try to ensure that what happened to our country as a result of the 1957 measures will not happen again?
The latest unemployment figures issued for July—and I am comparing July of this year with July, 1957—show that we now have 25 per cent. more unemployment in Scotland than we had four years ago. That is the state in which we are today. That is the picture we face, and we face the threat of worse to come, as it did in 1957, after the Government announced their measures.
That is not the whole picture. Let us consider the length of time for which people are unemployed. Although Scotland has only 10 per cent. of the population of the United Kingdom, the latest figures for long-term unemployment show that we have 23 per cent. of the total unemployed. That figure relates only to men. In addition, we have 29 per cent. of the long-term unemployment amongst women. It is not surprising that the first Scottish Member to speak today should ask what the Secretary of State for Scotland is doing to improve the position. When he was painting that picture of Scotland, on Monday, was he aware of the measures which were to be announced the following day?
I have quoted figures from the Ministry of Labour Gazette. At the end there is a note, which says:
"There was evidence of increased migration of workers particularly into London and the

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South-East and Eastern and Southern Regions out of Scotland and the Northern Region."
Over the last ten years we in Scotland have lost over a quarter of a million people from Scotland.
The Press today is making a great deal of capital out of the fact that a number of refugees are moving into West Germany from East Germany, It is perhaps right that the Press should stress this. The reason given for their leaving is that they are afraid of the Communist way of life, and that steps might be taken to keep them within the Communist State. We do not need a Communist State so far as Scotland is concerned. All we need is a long period of Tory Government and we get the trek from Scotland to England similar to that of the East Germans into West Germany.
The tragedy is that most of the people leaving Scotland are young people. Scotland is being denuded of many of its best young people, and we are being left with an ageing population. We are being denuded of those young men who have the skills, and who are vitally important if we are to attract new industries to our country. Industries will find it very difficult to get that skilled labour because of the policies of the Government. I am certain that people all over Scotland will be wondering what the effects of the Chancellor's measures will be on the employment situation.
Another point of great importance to Scotland is the effect which the measures will have on house building and on building trade workers. I looked up the relevant figures. The Secretary of State for Scotland knows about the crying needs of places like Glasgow, where we still have whole families living in one room; rooms which sometimes have to be vacated because the wall of the tenement house collapses. This is the kind of accommodation we have in many areas in Glasgow.
The figures show that 32,437 houses were built in 1957. That was the total building carried out by local authorities, by private builders, and the Scottish Special Housing Association. By 1959, as a result of the last credit squeeze, there was a 16 per cent. drop in completions. The local authority figures were even worse. As a result of the last credit squeeze, between 1957 and 1959 there was a 23 per cent. decrease in the number
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of houses completed. Comparing 1960 with 1957 the figure is even worse—a decrease of 26 per cent.
Will the Chancellor of the Exchequer, or the Secretary of State for Scotland, say to those who are living in these miserable conditions, "We want your full backing for these strict measures"? How dare they say that when, at a time of supposed affluence, they have made our people live in those miserably shocking conditions?
What will be the cut in local authority housing as a result of these proposals? We all want to know the answer to that. Does the Secretary of State for Scotland intend to send a circular to Scottish local authorities within the next few days telling them that they cannot go on with their house building programmes as planned? The right hon. Gentleman could give an easy answer to that— "Yes", or "No". Even a nod of the head would help. The right hon. Gentleman's silence shows that our worst fears will be realised.
I am concerned about the effect of a cut in house building policy not only on those who desperately need houses, but on employment generally. Considering the year 1957–58 again, when the credit squeeze began to operate, we find that 4,700 building operatives lost their jobs. That was an addition to the number of unemployed. That was a very serious figure for Scotland. The latest figures for Scotland that I have been able to obtain show that in June of this year—when we had the best weather for building in Scotland—there were 8,200 unemployed building trade workers. That is why it tires some of us to hear Members like the right hon. Member for Flint, West talking about over-full employment.
I warn the Chancellor and the Secretary of State for Scotland that there will he very grave opposition by Scottish local authorities to any measure that the Government try to force upon them. In his statement yesterday the Chancellor said:
"In the services provided by central and local government, we shall have to ask for desirable proposals to he postponed or abandoned."—[OFFicim. REPORT, 25th July, 1961; Vol. 645, c. 223.]
In his speech today the right hon. and learned Gentleman said that there would be a rephasing of the school programme

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in Scotland. What a polite word for "postponing"! He said that the programme would be rephased, and that more attention would be paid to the provision of technical education.
Five years ago all the Scottish Press talked of the £10 million being provided by the Government during the following five years for technical colleges and technical education in Scotland. The five years are up now, and we discovered on Tuesday at a sitting of the Scottish Grand Committee, that we had completed about £1 million of the £10 million worth of work. Today, we are told that the programme will be rephased, and that most of what may be spent will be spent on technical education.
I do not know a great deal about the English system of education, but I am familiar with the Scottish one. Is the Secretary of State aware that many of our secondary schools need to be renewed and that in places like East Kilbride we are desperately short of secondary school places? Does the Secretary of State know that we have technical and scientific education in our Scottish secondary schools? What will happen 40 that? What is to happen even about the reduced proposals that he made last year? Are our teachers and pupils to be denied the chance of playing their pant in saving the nation?
The Chancellor said that we were really living beyond our income and were not producing enough. He seemed to suggest that this was because rises in wages were not matched by rises in production. Does he think that that is the only thing that is wrong with our country? He gave no other reason. Has he heard about the large sums of money, larger per head of the population than in Britain, which are spent in other countries on technological and scientific development? Has he heard about the application of that knowledge in industry in those other countries? Does not he realise that unless we have that here we shall never attain the degree of productivity that will got us out of our difficulties?
The Chancellor showed no signs whatever in his speech of being aware that that was the case. His biggest blunder in this connection is his decision affecting the teachers. How shall we ever get
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the necessary degree of scientific and technical training for our people if teachers are to be treated in the way that the Chancellor proposes?
The hon. Member for Kidderminster (Mr. Nabarro) seems to know so much about it. I challenge him to appear with me on a platform anywhere in Britain to discuss the nationalised coal industry. I have no time to deal with it today.
Mr. Nabarro rose—
Miss Herbison: I am not giving way to the hon. Member.
There is a great shortage of teachers—
Mr. Nabarro: What has that to do with the coal industry?
Miss Herbison: —and there is a very grave shortage of science and mathematics teachers. These are the people that we will need in the long term if we are to develop scientifically and technologically. These are not short-term difficulties. The gravest blow to our prospects in that direction has been dealt by the Chancellor, in his attitude towards the teachers.
Sir James Duncan: Not in Scotland.
Miss Herbison: I know that Scottish teachers have been more lucky, but they did not get all that they hoped for. Even the hon. Member will know that there are many complaints among the Scottish teachers. We cannot take any real pride in what is happening there.
As my right hon. Friend the Member for Huyton (Mr. H. Wilson) said, the Government have no moral right to appeal to the people to give of their best at this time. The Government, during the past ten years, has fostered a spirit of "I'm all right, Jack", and "Get something for nothing". They cannot expect the workers to co-operate when they see the take-over bidders getting something for nothing. How can the workers be expected to work for less, as some hon. Members opposite would like to see? The spirit that has been developed has meant that many of our people have become Bingo-crazy. The values which the Government have fostered over the

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years are very low. How can they possibly say that they want our people to give of their best?
The Government can make no claim to patriotism. They can make no claim to be a Government that loves or cares for the country. The one thing that they have shown clearly to the people is that we are all up against it and have all got to pull our weight. In his statement yesterday the Chancellor should have said that the £83 million is no longer to be given to the Surtax payers. The Chancellor did not say that—possibly for the good reason that the people who will be getting the £83 million are the very people who poured money into the coffers of the Tory Party so that they could win the last General Election. This is their rake-off—a rake-off that will do great harm to the country.
We believe in our people. We care for our country. We care for its good name. The only way that we shall have any chance of solving our difficulties is by the Government's having the decency to take these measures to the country in a General Election immediately. Then we shall have a Government returned that will be patriotic, and that will attempt to solve our difficulties.
7.10 p.m.
Sir Peter Roberts: I do not think that the hon. Member for Lanarkshire, North (Miss Herbison) will expect me, coming from Sheffield, to follow her in the details of Scottish education—it might be improper for me to do so—but I felt that the more reasonable part of her speech was spoilt by what she said at the end.
To turn to the more important point in the debate, I feel that the statement which was made by the Chancellor yesterday could be summed up in one sentence which he used, that we are cashing in ahead of production. That seemed to me to be his main theme. I want to analyse that a little further in the few minutes that I have.
I believe it is true to say that we are cashing in ahead of production. We are doing so, first, by the importation of finished goods from abroad, which increases the deficit of our balance of payments. Secondly, we are cashing in ahead of production by purchasing finished goods at home which could be
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exported, thereby swelling the balance of payments credit of this country. I believe that this is an economic tendency which, despite what the hon. Lady has been saying, is not an adverse reflection on the methods of the Government. I believe that, fundamentally, it shows people's natural desire to obtain the fruits of prosperity, and I therefore support the Conservative Administration and the proposals of the Chancellor.
I should like, however, to make one friendly criticism. I cannot help feeling that the increase in the Bank Rate by 2 per cent. is too severe. I would recall what the Chancellor himself said on 17th April, that the Bank Rate has its disadvantages. He said:
"It is not always possible to arrange that the same level of Bank Rate suits us domestically and internationally."—[OFFICIAL, REPORT. 17th April. 1961; Vol. 638, c. 805.]
I believe that what he said then is just as true today. This imposing of a 7 per cent. Bank Rate will be expensive for the Government and, what is possibly worse, it will act harshly upon firms which may have an overdraft for expansion purposes, which are trying to export and which have, possibly, built up their export business on an overdraft. It will hit them just as hard as it will hit someone who is working for the home market.
I would say to the Government, if they feel that they ought to make a gesture through the Bank Rate, that 6 per cent. would have been sufficient. I would have timed it differently from the statement which the Chancellor has made on these proposals. I cannot see that the Bank Rate proposals are quite consistent with his other proposals.
Subject to that criticism, I return to the question of cashing in ahead of production. This is demonstrated by the deficit in our balance of payments and by our lack of exports rather than by our excess of imports. I would make the point that we cannot have exports unless we first have imports. What we have to do is to differentiate in the form of imports.
I want to speak particularly about the industries of which I have a little more knowledge than I have of others—coal, steel and engineering, which are the basis of our economy. I believe that it is important to draw a distinction between the vital imports which we must have,

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and which we must see increased, and the unnecessary imports which, I think, help to depress our balance of payments deficit.
As an analogy I would liken the United Kingdom to a factory wishing to increase its production. If we read the Economic Survey published earlier this year, we find in it:
"It is the Government's intention to encourage economic growth."
That is the task which the Government have set themselves. That is exactly what a factory has to do. It has to increase its economic growth. How does it do that? First, it has to spend new capital in building up accommodation and on new machines. It has to increase its working capital and increase its raw material stocks. All this costs money and has to be paid before the final product is made. That can only be done either by drawing on the existing funds of the company or by borrowing from outside sources. There my analogy stops and I come back to the United Kingdom as a whole.
I believe that exactly the same thing applies. If we are to increase our exports it is essential for the proper sort of imports to increase as well. That automatically will produce the beginnings of a deficit in our gold and dollar reserves. My experience of a factory is that it may take six months to a year for the pipeline to go through to the end of full production. Nationally it may take up to two years for the pipeline conception to be effective.
What do we see in regard to our United Kingdom economy? First, we have a spurt of production. Imports start to come in. The balance of payments appear to be adverse. I have found that certain economists, and even certain members of the Government, begin to become nervous when they see this happening. It is perfectly logical because once restrictions come on, our imports go down, and our production goes down as well. During the fifteen years that I have been in the House, with two forms of Government, I have seen this picture repeated—this getting going, the imports necessary for production, upset in the balance of payments, a crisis, and then, once again, restrictions. It is a fact that the figures which
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we have of production and exports are not satisfactory. The figures that I have show that in the last five years exports have gone up by only 16 per cent. whereas in some of the other countries of Europe they have gone up by 57 per cent. That, to my mind, seems to be our immediate problem. I do not think that it helps very much to go over the wide picture of what we might call class hatred at this stage.
Mr. A. C. Manuel: What about education and housing?
Sir P. Roberts: I will debate the other matters later, if the hon. Member wishes.
I believe that the Chancellor's remedy is twofold. He must make a distinction between vital and unnecessary imports. Secondly, he must so organise the finances of the country that during the period of the build-up of our increased export trade, finance is available to carry the loss on the gold and dollar reserves. In other words, he should call on the International Monetary Fund, and I am glad to note that that is one of the things he proposes to do. I shall have more to say about that in a moment.
I feel that one of the difficulties confronting the Chancellor is that he has not sufficient and effective machinery to differentiate between vital imports and unnecessary imports; to differentiate between iron ore, nickel and wood pulp, on the one hand, and silk stockings, surplus barley and cotton goods on the other. I do not know whether my hon. Friend will be able to answer tonight, but it would be interesting to know how much our balance of payments has been affected by the increase in the overseas travel allowance to £250 in one year. That might total quite a considerable amount which might have upset the balance of payments. I would put that on the unnecessary side as opposed to iron ore, nickel and wood pulp on the necessary side.
This automatically leads me to the conclusion that the Chancellor and the Government must have some form of tariff and quota control. Admittedly we have them now. They are being used to stop the importation of coal into South Wales, and they have been used belatedly in relation to the importation of barley into this country. But I believe that the Government and the Chancellor

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have not sufficient machinery to enable them to act in as flexible a way as I should like.
The Financial Secretary to the Treasury (Sir Edward Boyle): If my hon. Friend thinks that our balance of payments troubles have been seriously affected by what he calls unnecessary imports in recent years, I beg him to look at the speech made last week by my right hon. Friend the President of the Board of Trade which I think deals effectively with that criticism. I am rather surprised to find my hon. Friend advocating the greater use of quota restrictions just at the time when it appears no longer to be the official policy of the Opposition.
Sir P. Roberts: It may be, I must confess, that I have not studied the speech of my right hon. Friend the President of the Board of Trade as closely as I ought. I do not know whether my hon. Friend is arguing that, for instance, the amount of money which must have gone out on the purchase of barley recently has helped our balance of payments. Is he saying that? Is that his suggestion? Is he suggesting that the increased travel allowance has helped our balance of payments? Is he suggesting that? [HON. MEMBERS: "Answer."] I am sorry, but my hon. Friend interrupted me. I am trying to be helpful in this matter, but I cannot help feeling that unnecessary imports must upset our balance of payments position.
This brings me to the second point, the question of tariffs. This matter has been mentioned by my hon. Friends the Members for Bath (Sir J. Pitman) and Mitcham (Mr. R. Carr), the hon. Member for Orkney and Shetland (Mr. Grimond) and by my right hon. Friend the Member for Flint, West (Mr. Birch). They all seem to think that our balance of payments position and this question of building up the gold and dollar reserves can be assisted by taking down tariff barriers against the importation of what we might call luxury goods. I wish that someone would explain this to me. I should like to know how we can reduce our tariff barriers and allow goods into the country in competition with our workers and yet not upset our balance of payments.
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I do not want to go too far with this point. We are to have a debate on the Common Market next week. It might be argued that if we restrict the importation of finished goods other countries may restrict their imports of a similar kind from us. I do not believe that to be a sound argument. In this country we require raw materials on which we can exercise our arts and crafts. That is our primary need. Our purchases of raw materials will come from developing countries and Commonwealth countries who will receive sterling in return. This sterling they will not put into the ground, but will use to buy our finished goods. I should much prefer to see our sterling used for the purchase of raw materials from Commonwealth and developing countries than for purchases from Europe where, in fact, there are few raw materials and where they can compete with us in skill and techniques. As I say, I do not want to pursue that argument too far, but it seems to me that it would be extremely dangerous to reduce tariffs and to think that our balance of payments will not be upset.
Mr. Jack Jones: Is not the hon. Gentleman aware that when we are purchasing vital raw materials from abroad, by agreement we must take some of the surplus production from the countries from which we make those purchases; otherwise we shall not get the raw materials which are vital to us?
Sir P. Roberts: I am not sure that that is an accurate statement—
Mr. Jones: It is accurate.
Sir P. Roberts: —and I do not think that it advances the argument one way or the other.
Mr. Jones: It does.
Sir P. Roberts: The second difficulty confronting the Chancellor is possibly a more fundamental difficulty than the one which I have been discussing. It relates to the shape and farm of our gold and dollar reserves. As we know, they represent the banking base of the United Kingdom and the sterling area.
I have attempted to put myself in the position in which the Chancellor must have found himself six months ago when examining the state of the gold and dollar reserves. At that time the figure was roughly £1,100 million, of which £230 million must have been short-term

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or what we might call "hot" investments. Therefore, the base of the gold and dollar reserves was about £870 million.
Now we come to the question of increasing exports. The hon. Member for Sheffield, Hillsborough (Mr. Darling) was, I am glad to say, prepared to advocate a 10 per cent. increase as the target. I agree with that. The Chancellor has set it at 6 per cent. but I should make the figure slightly higher. Taking it at 10 per cent., which is easier to calculate, the amount of exports would increase by £350 million. On the basis that the raw materials from abroad represent about one-fifth, which is about right, we should have to have a deficit of a further £70 million in the gold and dollar reserves, which would bring them down roughly to £800 million.
I dare say that six months ago, with the flight of hot money and the upsurge of exports one could have foreseen that the gold and dollar reserves would go down perhaps as low as £800 million. That might be all right for the United Kingdom trade, but it has to do far the whole of the sterling area and this is Where we begin to find a fundamental difficulty. I have tried to make some calculations about the total trade of the sterling area export-wise. The best figure I can get is something like £15,000 million a year, which means that we are trying to deal with a total turnover of £15,000 million with a banking base of £800 million. That, I believe, is one of the forms of our difficulties which successive Chancellors have had to face.
I suggest, therefore, that my right hon. and learned Friend is perfectly right to approach the International Monetary Fund again. That organisation has been set up to try to bridge the period before the money comes back into the pipeline. Unfortunately, my right hon. and learned Friend did not say how much he was going to borrow. That is very important. It must be sufficient to do the job. It is no use borrowing too little. One can look at it by assessing British assets abroad. Just after the war they were as low as £900 million. Now they have increased to £4,000 million, which in itself is reasonably creditable to this country. There is no reason why we should not take about 10 per cent. of that as a drawing figure, and I should have thought
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we could have drawn up to £4.00 million from the International Monetary Fund without that in any way being inflationary. We have these sterling assets of the United Kingdom abroad amounting to £4,000 million. That would give the Chancellor of the Exchequer a firm gold and dollar base of something like £1,200 million which would not be fluctuating according to what the gentlemen in Zurich happen to do.
I think there will be a lot of money coming in during the next week or two over and above that. I am rather worried about the way in which we get depressed when this money goes out and too encouraged by its return. Let the Chancellor produce the figures for the country as a whole, rather like Sir Stafford Cripps did, for above-the-line and below-the-line expenditure. Let him divide the gold and dollar reserves so that we can see what the firm basis is and what the fluctuating short-term basis is. If he did that and was prepared to borrow up to £400 million from the International Monetary Fund, it would go a long way towards solving our present problems.
We must not be too frightened by the flight of short-term credit and not too encouraged by its return. It worries me that we seem to move from the heights of confidence to the depths of doubt so quickly. Fundamentally, if we could finance our exports in this way, we should get over these problems.
I agree with much of what the hon. Member for Hillsborough said when he was taken away from his speech by my hon. Friend the Member for Mitcham, which, possibly, was to our advantage. I believe that in Britain today we have the finest labour force, craft, skill and management of any country. Paten-tinny we have the best industrial team in the world. We must see that we use it properly. That was why I was a little distressed when the hon. Lady the Member for Lanarkshire, North (Miss Herbison) tried in some way to draw the parties apart. We must try, despite what she said, to weld the parties together. I believe that there is a great body of public opinion in the country which wants us to do that. I echo the words which the Chancellor used yesterday:
"To suggest that British industry is generally inefficient gives a totally false picture."—[OFFICIAL REPORT, 25th July, 1961; Vol. 654. c. 221.]

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I entirely agree with the Chancellor on that.
The measures which the Chancellor has produced, of which I am sure the House will finally approve, are on the right lines. They may be a little blunt and could possibly be more pointed towards exports. Subject to what I have said about the Bank Rate, I am certain that the proposals are sound. We must build up our future resources of production for export now. We must not spend so much on immediate consumable goods. The Government have given us the lead. This House and the country should support it.
7.34 p.m.
Mr. David Ginsburg: I was a little amused when listening to the hon. Member for Sheffield, Heeley (Sir P. Roberts). He was one more of the procession of hon. Members opposite who have suddenly become converted to planning. I felt somewhat sorry for the Financial Secretary, who is rather isolated on the Front Government Bench. He and the Treasury are at present the last repositories of liberalism and an unplanned economy for the country.
Four issues already stand out in this debate. The first is the absolutely lamentable record of the Government's conduct of our economic affairs over the past ten, and particularly the last five, years. I shall return to that. The second is the Chancellor's appalling failure in the normal prudent exercise of budgeting. The third, and perhaps more difficult point, is the validity of his diagnosis of the economic situation which faces the country. The fourth is the actual soundness of the measures and their relevance for dealing with the problems we face at this time.
As to the Government's record, I shall simply list a few facts which have been mentioned before, but which could be profitably restated. First, Britain's costs and her export prices have risen faster than those of any of our competitors. Secondly, productivity rises more slowly in this country than in the performance of our competitors. Thirdly, investment in new capital equipment for private industry is lowest in this country compared with that of our competitors.
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Fourthly—and this is a point of considerable importance at the moment—the rise in our imports, in contrast, has been relatively the largest of the major industrial countries, This rise in our imports has been paid for almost entirely by a favourable turn in the terms of trade, a turn in the terms of trade which on present trends may stop very soon indeed.
Fifthly, under the Government we have lost traditional markets, especially within the sterling area and among many primary producers, which we shall find it very difficult indeed to reconquer. As a result of this unique combination of circumstances—they are unique compared with many other advanced industrial nations—we have the facts that our standards of living have risen far less than those of any other country and our cost of living has risen far more than in any other economically advanced country. All those facts were brought out in the debate last week. I feel it only right that they should be stated again and again.
It is the more surprising that the Chancellor, knowing these facts, should have produced a Budget last April containing the biggest budgetary miscalculation in Budget history. It is widely recognised that steering the economy is not a oncefor-all operation. We do not have a Budget once a year and then leave the economy to run on its own. It is something which has to be attended to all the time.
When the Chancellor came to the House in April and put forward proposals for economic regulators they were generally welcomed, not because we viewed the particular regulators with favour or disfavour, but because we felt that it was necessary to steer the economy along. If we talk of steering the economy, and, in particular, if we talk of using the Budget to influence the economy, two things, above all, are absolutely vital. First, there has to be forethought by the Government. Secondly, there has to be confidence by industry in the continuity of a Government's policy. Reading the Press, and considering what was done and stated yesterday, I wonder how the Government's measures leave industry in regard to continuity.
I wish to say a further word about continuity and certainty. Given that

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continuity and certainty are so important, could we be told why the Chancellor kept the country waiting for so long in uncertainty? He kept the people waiting for several weeks. Why was there all this rumour and build-up? Why all this dithering? If we examine the particular measures outlined yesterday we find that only one of them, the increase in the level of Purchase Tax and other taxation, had to wait until this week. All the other measures, good or bad as they may have been, could have been introduced weeks ago. Then, from the point of view of the Government, considerable uncertainty could have been avoided.
One critical requirement is faith in the ability of the Government to budget with competence and prudence. I turn immediately to the Economic Survey, written in April, 1961, because it is on this document that we base our case that the Budget was one of the most imprudent ever embarked upon. Paragraph 25 makes it clear what was the Government's philosophy at the time of the introduction of the Budget:
"The Government believe that the measures taken in recent years to influence the level of demand have made conditions more and not less stable than they would otherwise have been. Nevertheless they recognise the desirability of having a higher and steadier rate of growth. provided that this can be done without risk to the balance of payments, in order to encourage the sense of security and confidence in the future which are so important for business development".
I am bound to ask, three months later, whether the Chancellor was wrong when those words were written, or what 'has happened since to make them wrong. Was the advice which the Chancellor received at that time sound advice? Or is it that the advice contained in that document is sound advice, that it holds good at present and that the mistake which has been made is that the Chancellor has totally misunderstood the nature of the economic problems which the country faces?
That brings me to the third leg of my argument. It has been developed in the House, and even by the Chancellor, but it needs saying again: the British economy faces two distinct problems, the major long-term, problem, on which hon. Members opposite have exercised their minds, and the immediate short-term problem. The long-term problem is
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simply the structural failure of the country to compete and to pay its way. It is generally recognised that planned and sustained economic growth is the only solution to that problem.
But the Chancellor was not sufficiently frank with the House, particularly yesterday, in that he did not make it clear that the short-term problem is simply and solely a new crisis of confidence in the £. It has nothing to do with the pressure of demand, as I shall show in a moment. We recognise that the Chancellor's task was to separate the two problems and to ensure that the measures which he took to tackle the short-term difficulties did not prejudice our long-term recovery. It is our indictment of him that he failed to do this exercise in separation.
I turn to my fourth point, the adequacy or the relevance of the Chancellor's measures. Last week, in his concluding words, the Chancellor berated hon. Members on this side of the House for denigrating the country's economic achievements, but, having heard him yesterday and today, one is bound to ask who has been denigrating the country's economic achievements this week? I have looked at the figures extremely carefully. The Chancellor has spoken about reforms in planning and in statistics, and he ought to look at the way in which some Government statistics are produced.
I have looked at them extremely carefully, and there are convincing and sound reasons for believing that, because of the resilience of our people, and not because of anything which the Government have done, the country's economy is beginning to climb out of one-and-a-half years' of credit squeeze and that, as a result of the built-in pressures of full employment, production is at last beginning to rise. I think that informed opinion would generally share my view on that point. Is this the right time, therefore, to administer another turn of the screw, another, much tighter, credit squeeze—because it is much tighter than that imposed at any time in 1960?
What is wrong at present? The Chancellor, particularly yesterday, made it clear that in his view there was too much demand and that the economy was overloaded. I found his evidence that the

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economy was overloaded singularly unconvincing. He should look at the durable goods industries and also at many other industries in which there is excess capacity, and at other industries in which, owing to the deterioration in demand, excess capacity is likely to occur. That is particularly probable in the clothing industry.
Apart from the excess capacity which exists at present, we have it on the Chancellor's authority, repeated yesterday and today, that the country's economic potential is already rising at about 3 per cent. per annum. It is, therefore, true that we have excess capacity, and, secondly, that at last production is rising. I find it extremely hard to sustain the argument that the economy is overloaded unless the Chancellor is postulating that there is a level of demand which is growing at the rate of 5 to 7 per cent., which I do not believe to be the case. In fact, rash though it may sound, I will go as far as to do the Government the credit of suggesting that we are as near equilibrium between production and demand as the economy has been for some time.
The Chancellor said that his main concern and priority was to help exports. There is nothing in this catalogue of economic actions which can be remotely held to sustain, foster or increase exports. The Chancellor's actions are also deficient in one other very important degree. He has failed to press home the fact that the country's long-term problems arise from the failure of our invisible account to earn the country any money. Before the war, as has been said in debates this year, about 25 per cent. of our imports were paid for by invisible earnings. These invisible earnings were to a large extent mortgaged during the war. They recovered when my right hon. Friend the Leader of the Opposition was at the Treasury; they then recovered to the substantial level of paying for l3 to 14 per cent. of the country's imports. At present—and I hope that the Economic Secretary will contradict me if I am wrong—our invisible earnings are paying for less than ½per cent. of our imports.
I am, therefore, bound to ask, what is contained in the Chancellor's statement which will give positive assistance to the fortification of the invisible account? There were many vague promises and
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hopes about Germany in negotiations, but nothing very positive. It is worth while looking at the profits of overseas companies, which the Chancellor hopes to tackle—or, rather, he said that there should be tighter criteria for new investment of overseas concerns and that we should look at the balance of payments position and the profitability of any investment before deciding whether it was desirable that it should take place.
What is the position at present with regard to the oil industry? We on this side have been pressing for an examination of the whole balance sheets of the oil industry to see whether this vast amount of economic activity is paying off for this country. I see that the hon. Member for Kidderminster (Mr. Nabarro) is looking towards me. At present, I am quite prepared to suspend judgment. In March, I pressed the Prime Minister to publish figures on this subject. My right hon. Friend the Leader of the Opposition sustained me. I wrote to the Prime Minister on this topic. He replied that he had the matter under study. After two months I rang up his office to find out what was happening. I gathered that the matter was being actively considered at the Treasury.
If the Prime Minister felt that I was talking rubbish, and that there was no need for the figures to be published, it was up to him to write and say that that was the position. Inasmuch as the matter was still being considered at the Treasury, it is to be assumed that the Government still feel that there is some force in the argument. I hope that one of the Treasury Ministers will say something about the oil figures. I hope that adequate statistics will be published enabling us to judge whether, on balance, we are gaining or losing from this very vast and continuously growing Investment overseas.
What are the measures which the Chancellor outlined yesterday designed to do? As I understand them, they are designed principally to do one thing only, namely, to deal with a crisis of confidence in the £ which in political terms can even be said to be a crisis of confidence in the Government. From the point of view of the crisis of confidence, unpalatable as it may sound, there is some logic in raising the Bank

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Rate, always recognising that there will be a pay-off in the future. It will in the short-term, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) recognised, buttress the reserves, but in due course a reckoning will have to be paid.
Even if there is a case, which I concede, for increasing the Bank Rate as an emergency measure, there is no logic in the cuts in Government expenditure as a method of fortifying the £. There is no logic in the restraints on housing. There is no logic in the restraints on people's spending and living standards. Al these things are a far cry from defending the £.They do nothing to help it, and they indirectly help to depress the economy further.
Mr. Andrew Shonfield wrote some very wise words in an article in last Sunday's Observer explaining why the Government were using the axe. He said:
"It is hard to avoid the suspicion that the real trouble is that the Government feels that it must impose some general punishment at the moment—if only to impress foreign opinions and to create confidence all around the place by showing its readiness to indulge in painful activities. Financial masochism, of an exhibitionist variety, is an essential ingredient of public relations nowadays for an international currency struggling to hold its own in foreign exchange markets. Since it has now been decided that it would be wrong to take another swipe at industrial investment, what is left is a tax on consumption goods.
These words illustrate the philosophy behind the action which the Government have taken.
Is the real truth that the Government did these things to get the loan from the I.M.F. or, to put the question in another and perhaps a blunter way, were the Government told by foreign bankers or by the I.M.F. that they had to do unpleasant things to the British economy if they were to get the loan? If this is the fact, it would have been better for this country if we had not applied for the loan. It would have been better, if necessary, for us to have lived on the reserves, as the French did in their difficult period. It would have been better if the Government had come to the House and asked for sacrifices, which people would have made. If, as I suspect, there was no such pressure from the International Monetary Fund, what
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fools the Government are. Not only are the Government foolish in their misunderstanding of international banking psychology. They are equally foolish in their complete misunderstanding of the psychology of our own people.
I stated earlier in my speech that there was the possibility of equilibrium in the British economy between demand and supply. If that is so, the trends in incomes in the next few months are admittedly matters of important concern. Between December and May wage rates rose by only 0·9 per cent. They have risen slower than profits—not faster than profits, as the Chancellor stated yesterday. If the Chancellor really wants moderation in incomes, given the extremely small increase there has recently been in wages, the obligation is on him to desist from measures which will put up the basic cost of living.
My right hon. and hon. Friends, particularly my right hon. Friend the Leader of the Opposition, have always recognised that it is important to have moderation in demands for incomes of all kinds. We recognise that the problem of demands for income in a fully employed economy in a free society is an exceptionally difficult one. We believe that the problem can be solved, but only in an atmosphere of fairness. I believe that this year the Chancellor had an opportunity of securing income advances in our community which would have corresponded to the economy's capacity to produce. I believe that such a development would have been very welcome to our people. I believe, too, that by successive Government actions—I say "Government actions" deliberately—by pushing up the cost of living of the less well off he has forfeited this confidence. I sincerely believe that it is in the national interest that we should have fresh economic leadership.
7.57 p.m.
Mr. Peter Walker: We have listened to very constructive suggestions from both sides of the House today. I disagree with the hon. Member for Dewsbury (Mr. Ginsburg) in his oversimplification of the immediate problem of pressure on the £. I strongly support my right hon. and learned Friend the Chancellor in the measures he has taken. One of the interesting factors about today's debate is that we have heard very

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few constructive suggestions as to alternative short-term measures to tackle the immediate problem. This is probably because many of the measures taken by my right hon. and learned Friend to meet the immediate problem are measures which both sides appreciate are necessary.
The right hon. Member for Huyton (Mr. H. Wilson) quoted the remarks my right hon. and learned Friend made when Vie petrol duty was increased in 1950. It would have been interesting if the right hon. Gentleman had gone on to quote his reply to my right hon. and learned Friend in the 1950 debate. It was probably very similar to the reply he will get from the Government Front Bench today.
I shall concentrate on some of the long-term problems facing our economy. As we on this side of the House believe fundamentally in a free enterprise economy, we need to do a little more to ensure that our economy is more enterprising. We must concentrate on the three fundamentals of the economy —men, money and markets. On the subject of manpower, the Government could be far more positive in endeavouring to create a climate of opportunity and enterprise. It is probably true that many young people leave grammar schools, technical schools and secondary modern schools with a good basic education and able to apply their ability but with absolutely no knowledge of the type of opportunities which exist for them. There are still far too many young people who leave school and go to work in the same town and in the same industries as their friends, and as their fathers did before them. Much more could be done to bring a positive approach to the problem.
So often, advice upon careers is left to a careers master at school, who obviously has very little practical knoweldeg of any career other than teaching. The Government could reform the whole basis of our employment exchanges so that people of the top management, and so on, are brought into the schools to explain to the young people the great diversity of opportunities that now exist.
The other factor in this crying need is for far more concentration on commercial education. This has been a
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neglected sphere of our educational system. We all concentrate on the importance of having scientists and technologists, but if we are not careful we shall create a position where we have scientists and technicians without the skilled administrative executives for careful management of their firms.
It is a scandal that a nation such as this, which is world known for its commercial activities, should be so far behind other countries in its provision of facilities for commercial education. There is no doubt that such schools as the Harvard Business School of Admtion have made a very useful contribution to the American economy. The fact that many American universities have attached to them such faculties as that gives a vigour and respectability to commerce that we badly need here.
There is the problem of financial facilities for small growth industries. One of the factors here is that many of the small firms, not yet of a size sufficient to obtain money directly from the public, have great difficulty in obtaining long-term finance. The I.C.F.C. was formed some sixteen years ago to try to bridge this gap. It has not succeeded. In those sixteen years fewer than a thousand loans have been made to small firms by that Corporation.
In the United States, for example, a similar organisation set up by that Government, known as the Small Business Administration, is at present lending about 20 million dollars a month to small firms—and not only lending the money but furnishing the managerial technical advice needed to use the money wisely. I urge my right hon. and learned Friend to look at the whole administration of S.B.A. in the United States, and to see whether it is possible to adopt a similar pattern here.
I should like to bring to the attention of my right hon. and learned Friend—and to ask him, in turn, to bring it to the attention of some of the institutions in the City of London—the necessity for our financial institutions to be far more dynamic and positive in their endeavours to assist the export trade. Our great merchant banks are skilled and very proficient in assisting companies with their export problems, yet they tend to sit in their parlours in the City of London waiting for business to come to

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them. I should like to see more of our great merchant banks opening up far more branches and centres, with bankers present and able to make decisions, rather than have these institutions centralising themselves in the City of London.
One of the advantages of the United States and Western Germany is that their banking and insurance systems are on a State basis. That means, taking Western Germany, that in each industrial region —Hamburg, Munich, Cologne and others —one finds merchant bankers and insurance companies armed with the power to make decisions on investment As a result, there is far closer association between these institutions than there is in certain parts of this country. For example, I believe it to be true that hardly any of our merchant banks have a branch in a city like Birmingham, and there are no merchant banks in the whole of Ulster. This is a strong criticism of those institutions.
The same thing applies to the immense investment powers of the insurance companies. Obviously, their first duty is to see that their funds are safely invested, but I believe that they could be a little more progressive and imaginative in providing funds to growth industries. They should be able to have in the various industrial centres people who could give a quick decision, so that when firms wanted money for new plant and machinery they could obtain the appropriate funds on a short-term basis at an agreed, fixed rate of interest.
I want, now, to turn to the problem of markets and exports. It would appear that my right hon. and learned Friend is tending to concentrate on discouraging business in the home market in order to get exports. This is a somewhat negative approach to the problem. Lowering our tariffs, creating more competition in the home market, and seeing that there is a decline in demand in the home market are factors that, perhaps, give an incentive to people to go into the export market, but on a negative basis.
I had much sympathy with the right hon. Member for Huyton when he suggested the possibility of some form of discrimination in favour of exports. Let us appreciate, however, the fact that one of the important things we could do
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would be to make the necessary financial arrangements far easier for people wanting to export.
The right hon. Member for Huyton quoted Western Germany, but I think that, on examination, he would agree that one of the other factors that has contributed to the growth of exports there has been that the West German banking services have created a situation in which the West German manufacturer deciding to go into export markets can obtain his money far more speedily by exporting than by selling to the chap in the next town. The West German banks have a very highly developed service to provide that sort of financial assistance for their customers—
Mr. H. Wilson: I am grateful to the hon. Member for giving way. I very much agree with what he says. I had it partly in mind in my reference to improvement in our banking facilities for exports. What the hon. Gentleman says should also be stressed.
Mr. Walker: I should also like to ask the Chancellor, together with his colleague the President of the Board of Trade, to devote far more time to studying long-term international market trends. There is a tendency at present to ignore long-term raw material problems. In this context, my one criticism of my right hon. and learned Friend's statement yesterday relates to his suggestion that we should freeze investments and aid to underdeveloped territories.
I make this criticism because I think that we underestimate the business potential of these underdeveloped territories. I would draw the Chancellor's attention to a recent publication by Mr. Paul Hoffman on the problem of giving aid to these territories. It is interesting to note that, in his first paragraph, he states that this is not just an act of morality or charity but good sound business. He argues that every £1 million per year that we invest over the next ten years in the under-developed territories will result in £2 million per year of exports thereafter. If that is so, and if those figures are correct, it is obviously important that we should concentrate far more on the economic potentialities of these countries.

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Not only that, but, in the broadest possible way, I cannot help feeling that when history judges this period economically, it will be a little concerned —and will possibly note with wonder—that we could create an economy where at home we spend about £1,000 million a year on alcohol, a similar sum on tobacco, £1,500 million or £1,600 million a year on the military defence of the Western world, but only a meagre £150 million on the economic defence of Africa and Asia. In terms of loss of raw materials and of loss of markets, if we lose those territories to Communism it will be a very important economic factor.
8.12 p.m.
Mr. John Diamond: It is not expected in a debate of this kind that an hon. Member on this side should, when following an hon. Gentleman opposite, say that he agrees with what the hon. Gentleman said. On this occasion, however, a great deal of what was said by the hon. Member for Worcesler (Mr. Walker) struck sympathetic chords on this side, and the intervention of my right hon. Friend the Member for Huyton (Mr. Wilson) confirmed that.
I was glad to hear the hon. Member for Worcester talk about better education for management in industry. I was equally glad to hear him speak about more enterprise being instilled into private enterprise. I was delighted to hear the hon. Gentleman regretting the Chancellor's decision to reduce the amount of help to be given to the underdeveloped countries and to hear him pointing out that that is not only unwise in terms of helping a neighbour but stupid in terms of self-interest.
I was delighted to hear the hon. Gentleman refer to the export-mindedness of the merchant banks in Germany. Merchant banks are there to serve a need, and the need is felt in Germany because the German, by nature, is an exporter—while the Britisher, unfortunately, by nature, is not yet an exporter. We must change his nature and make him think, first, of exports and, secondly, of the home market, just as the German generally does and as the German did before the war, instead of concentrating on the home market and, if there is anything
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left over and if someone from abroad is knocking on his door, let him have what is left as a favour. Because of that difference of attitude the German merchant banks, before the war and now, have developed this service by which they are able to help the exporter enormously.
West Germany has no doubt gone ahead substantially and a German can now meet an Englishman in an hotel abroad and buy the Englishman drinks which the Englishman cannot return, because the Germans have concentrated on exports and are in a strong position in terms of foreign currency.
In what I have to say I hope that I shall not be misunderstood or misquoted, but I feel that it is in the interests of truth and my duty to say that what we are considering is not a crisis. I cannot underline that sufficiently. We are not considering a short-term crisis in the ordinary sense of the term, in which the patient must receive special treatment and tomorrow will either die or recover and the crisis will be over. That is not the situation. The situation was correctly described by the Chancellor in a statement which was not even printed and which was hardly circulated until there was an enormous row, and then we did not get it until some hours after the Chancellor had promised it. In this roneo-ed statement the Chancellor described the situation, in paragraph 3, in the following words:
"This is the third successive year in which our balance of payments has been in deficit …"
The third successive year, the right hon. Gentleman stated, but, in fact, our balance of payments would have been in deficit for a much longer period had that situation not been shrouded by the very favourable situation in terms of trade favouring us and enabling us to carry on with an inadequate balance of payments.
That is one element of the situation, and the other element of the difficulty was described by the Chancellor in paragraph 7, where he said:
"… We should maintain investment in productive industry with a view to the long-term growth of the economy."
These are the two things and they are both long term. I shall examine them in turn. First, the balance of payments.

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I regret, as much as anyone, that the Tories have wasted all these years of favourable terms of trade when they could have built up an adequate working capital for the sterling area instead of the inadequate sum we now have.
Nevertheless, since we are in this situation, we cannot do other than borrow temporarily in order to get a breathing space. I recognise that borrowing from the International Monetary Fund and the increase in the Bank Rate are justified, in principle, provided they are seen to be methods by which we can have this breathing space, and are not looked at as in a crisis, so that once the worst is over, all our ill's are felt to be over and one can relax. Once the pressure is over we shall be able to go on and not be diverted from the real needs of securing the long-term growth of our economy, with substantial reserves, so that we shall not again be disturbed in this way.
I also recognise that so long as we want—and we do—to keep a course which is as near as possible to the ceiling of full employment and the full use of our resources, we need to have a sensitive instrument of control available to the Government to prevent wide undulations. In that context and in principle—but not in detail—a regulator of the kind of the first one in the Finance Bill, which we shall be discussing tomorrow, has its place for such a purpose.
I do not share the view, which is often repeated, that this balance of payments crisis is an inevitable situation which will recur and recur. All hon. Members will recall that before the war unemployment was, we were told, a situation which was inevitable; that no Government knew how to deal with it and that there would always be a substantial measure of unemployment. But the more we learn to handle our economic affairs, the more able are we to prevent these crises, and I hope that we are about to learn that lesson on this occasion.
The real answer lies in long-term growth. Perhaps the most constructive way of expressing my remarks would be to indicate what I think should be done about long-term growth and then to compare the Chancellor's proposals and see how they help in terms of long-term growth. The first thing must be genuine overall planning. By that, I have in mind
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the suggestion which I was bold enough to make two-and-a-half years ago in this House—that the Government should collect together the development and investment plans of the major firms in this country. That would not be a difficult matter, for there are only about 500 firms which are responsible for the largest part of the production of the whole of the country. If the Government were to collect those plans from these firms they could see clearly whether the accumulation is too great, whether it leaves slack, whether some should be encouraged to accelerate their development plans, whether others should be encouraged to go a little easier and postpone some and, in this way, information would be available so that production could be increased among the various industries in the closest possible co-operation between the two sides of industry, the Government and the firms concerned.
That would mean real planning—the whole purpose of planning—and it would achieve results which would be comparable to the planning of the French, who have achieved enormous success in spite of their mainly private enterprise industry. They have been prepared to get together and plan in detail and agree among the firms which is to have the first turn at the next major step forward. That is the first need; for real planning.
The second is the need for better management and administration, as the hon. Member for Worcester said. In that I include more knowledge among skilled and semi-skilled workers. In terms of better management in administration I am always amazed by the fact that hardly a single board of management in Britain does not have a chartered accountant on it. Why should that be so? In all modesty, I am bound to say—and I hope my professional colleagues will agree with me—that we are not supermen. We just have an advantage of the only real practical training for business that exists in this country. As the hon. Member for Worcester said, it is a shocking gap, a lacuna in our arrangements, that there should not be many other methods by which people of equal and greater ability and with a flair for business could have the same experience, could learn the same things and have the same practice, and thus be able to make an enormous contribution to business in this country.

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There was a time when to be a businessman was, in terms of status, not quite the thing. That, fortunately, has long since gone by, and we all realise that business makes its major contribution to the welfare of this country. The better able the businessman to conduct his affairs, the better for all concerned. The one thing that every worker wants is a good boss.
One cannot talk about better knowledge in terms of the administration and the management of business without also drawing attention to the need for better education and training of the skilled and semi-skilled worker. We need to get the best out of every one of our people. What the hon. Member for Worcester said is to the point. Many young people go to a firm because their friends or perhaps their fathers have been there. This does not apply universally, but it happens in many cases. They have very little idea of what they are going into and little idea of continuing to make use of the inherent ability which they have.
The best firms realise that their skilled and semi-skilled manpower is their real capital, and they develop it to the full. If all the firms in this country were on a level with the best firms, we could all go out and have our dinner—although in my case it would be my tea, for I am somewhat behind time. The problem is to raise the level of the mediocre to the level of the best. That is the second thing which is needed in terms of long-term growth.
The third thing which is needed is a better relationship and fuller understanding between both sides of industry, which can only be arrived at by management being willing to share their plans and views with the workers' representatives so that they can all feel that they are making a contribution, that they are part of the general organisation and work together to achieve agreed ends. Of course, it is essential that the overall atmosphere should be one of happiness in feeling that there are fair shares all round. Without going into too much detail, those are three broad categories under which one could improve the long-term growth of the economy of this country.
Let us see for a few minutes to what extent the Chancellor's proposals meet those criteria or fail to meet them. The
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Chancellor has made one proposal which I welcome. It is always nice to find something which one can welcome. I refer to his proposal, very lukewarm as it is, of having a modified form of capital gains tax in next year's Budget. I do not know why it is not in this year's Budget or in the present proposals which we are now considering. However, it is still under consideration and having spoken more than a dozen times in favour of a capital gains tax, I must welcome the fact that there is some step forward. I hope that back benchers will take encouragement from the fact that if there is an idea which is accepted all round, and one keeps giving voice to it, gradually it goes through the machine and in due course comes out on the Front Bench. That part I welcome.
As for the rest, I have nothing but misgivings. In terms of the financial steps—that is to say, the increased Bank Rate, the increase in special deposits and the borrowing from the International Monetary Fund—what are all these going to do? They are going to increase costs. Of course, the increased rate of bank interest will lead to increased costs. It will result in an interruption of essential development and investment. It will slow down production, and anybody who is interested in business knows that slowing down production means increasing the unit cost of what is being produced.
It is going to slow down production especially in heavy industry, which is our greatest need. The cost is felt there most because it is in heavy industry that one turns over one's money only once, whereas in light industry one turns it over four times. In heavy industry an increase of 2 per cent. in the Bank Rate means an increase of 2 per cent. on what is borrowed, whereas in light industry, where the money is turned over four times, it means an increase of ½ per cent. If it is turned over seven times, it means an increase of two-sevenths per cent. It is in heavy industry that this effect will be felt most and will do the greatest damage.
I agree with the hon. Member for Sheffield, Heeley (Sir P. Roberts) that this increase from 5 per cent. to 7 per cent. was unnecessarily stiff for the purpose. It is quite unnecessary, to protect sterling, continually to descend to a rate of 7 per cent. I ask the Government to

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bear in mind that if they continually descend to a rate of 7 per cent. they destroy confidence in sterling. A low Bank Rate creates confidence in the currency. If hon. Members are interested, the Bank Rate figures, by and large, in most comparable countries are 2½ per cent., 3 per cent. or 3½ per cent. I have the details if anybody wants them. All our competitors in similarly placed countries have a Bank Rate of about 3 per cent.
We are going up to 7 per cent.—more than double the average. This, in addition to being a very expensive way of attracting temporary hot money—which is not a very reliable asset to go on—will lead to the very thing which we are anxious to avoid, namely, the lowering of the status of sterling, sterling being the sort of currency where, in order to protect it, we have to descend to a 7 per cent. Bank Rate every three or four years. The last occasion was October, 1957.
Of course, higher interest rates all round will follow from this. The Bank Rate will tend to increase other rates. It is a very simple proposition that when we have higher rates of interest we have more money going from the borrower to the lender. More money goes from the poor man to the rich man. It is simply a method for making the rich richer and the poor poorer. The man who has to borrow in order to provide his bed, his furniture and his house has to pay more. The man who has money to spare and who lends it out receives more. So, on social grounds, it is completely undesirable.
I repeat that the financial steps are unnecessarily severe to achieve what is commonly desired, the protection of sterling and a breathing space so that we may get down to the major problem of growth in our economy. The steps are over-stiff to secure that and they have many unsatisfactory and anti-social results.
As for the other steps, I can describe them quite shortly as being grossly unfair. They do not have the slightest effect on production. I cannot relate them to what I have been saying about increasing growth. Although the Chancellor said that greater growth was the main need of the country, the proposals
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he made have no relevance to it whatever, and it is impossible for any hon. Member in this debate to relate the two in sensible speech. What one can say is that, instead of building up a sense of fair play, they do precisely the opposite.
The Chancellor said something about planning, but his words were too vague to mean anything, so far as I could understand them. If they meant anything, they meant that the Government were once more proposing to delegate their responsibilities to industry instead of showing the leadership which any Government should show.
So far from these other steps making any contribution to better understanding between the two sides of industry, they do precisely the reverse. This is the balance sheet put before the ordinary worker. As a result of what the Government are doing now and have done in the past three weeks, the worker is being offered a wage freeze, an increase in the cost of living and fewer houses. On the other side of the balance sheet, the Surtax payer is offered a reduction of one half of his Surtax. Will the Government and hon. Members opposite ask themselves this question? How can any ordinary worker or any ordinary decent-minded person regard that as other than grossly unfair and conducive to the sort of atmosphere in which a man will say, "I refuse to co-operate. They have no understanding of my needs. They are looking after themselves only. If they are looking after No. 1, I shall do the same"?
I beg the Government, even at this late stage, to have second thoughts about their Surtax concession. It is such an irritant to anyone who gives thought to the matter. The Government know that it would not cost them a penny to withdraw the Surtax concession for the current year. Their Budget would not be affected by one penny. Yet the Surtax concession is one of the greatest irritants in society today, one of the greatest bars to overcoming our difficulties satisfactorily.
The Government have talked a lot of nonsense about the Surtax concession being an incentive to production. It is not. We all know that it is an incentive to spending. Anyone at the Surtax level knows that, in a year or whenever it is, he will have, say, £1,250 less in tax to

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pay. He knows that very well and he feels better off. He can afford more. There are always plenty of pressures on people at home to suggest ways of spending more. By definition, there is not a single Surtax payer who has not now the money to spend more if he wants to. I think that the figures show that about £20,000 is the average sum of capital held by Surtax payers. The average Surtax payer has some cash resources, and he can spend money now in the knowledge that it will be made up to him out of a reduction in Surtax demands in a year or so.
I repeat that the Surtax concession is an incentive to spending at a time when we are considering deflationary measures, It is not an incentive to earnings. If the Government want to make it an incentive to earnings, if they want to meet the point so rightly made by every hon. Member on this side of the House about fairness and justice, why not make it a real incentive to earnings and withdraw the concession this year? They have plenty of time to introduce the concessions next year if they want to. We do not want them to do so, but, if they want to, they can withdraw them this year and introduce them in twelve months, which is the normal date for provisions in Finance Bills changing the rate of Surtax. They could say now that the concessions will be reintroduced in twelve months if the economy is curt of its present trouble and if everyone in the Surtax class has taken off his jacket and done his best to pull the country out of its present difficulties.
Why have the Government not done that? Why are they always so ham-handed in these matters of psychology? They have not by one iota attempted to meat the point we make. It would not cost them a farthing. The Budget would not be affected by one farthing.
I ask the House to remember that the Budget was finished with only one day less than three weeks ago. It was a Budget based on a deficit below the line of about £60 million. The Economic Secretary will correct me if I am wrong in my figures. Yet here we are, not quite three weeks later, and the Government. with their whole machine behind them —we, of course, have to work on our awn common sense and what we can scrape from our past experience—say
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that, whereas they thought that a Budget with a £60 million deficit below the line was the right thing in our present situation, they now want a Budget which turns that into a very substantial surplus of £120 million or £150 million—I do not know the exact figure, but something on those lines.
Mr. Ellis Smith: What aroused the wrath of those of us engaged in industry was to know that those who did not take their coats off did not do the work.
Mr. Diamond: I understand my hon. Friend's point. I was trying—it is a wasted effort, I am afraid—at this late stage to get the Government to do something to help this country. I have come to the conclusion that the job of the Opposition has ceased to be to encourage the Government towards good government. The only job of the Opposition today is to get the Government out.
8.35 p.m.
Mr. David Webster (Weston-superMare): I agreed with some of what the hon. Member for Gloucester (Mr. Diamond) said at the beginning of his speech. I entirely agree with his view that this is, not a short-Item, but a long-term problem, and that it will need a long-term solution. We are dealing with things which have been of concern to this country for many years. I also agree that there is a need for greater skill in management in industry and a greater need for training for these skills. Far too many people, particularly on the sales side, think that, because they have been selling for a number of years, they know all that there is to know about it. Training in selling is essential as well.
As a provincial stockbroker, far once I agree with the hon. Gentleman to a certain extent about short-term capital gains. It strikes me as odd that the taxation system gives a concession to people who speculate within the account over two or three weeks and people who speculate by stagging on new issues. The stag speculator has his uses, particularly in taking issues on to the market, but it does not seem to me that he should have particular concessions.
I should like to make my point of departure the Plowden Report. A great deal of what is said in it was reflected in the remarks of my right hon. and

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learned Friend the Chancellor of the Exchequer yesterday. I think that it is almost platitudinous, there is so much sense in it, that a long sharp look should be taken every year at Government expenditure on a five-year review basis. It is right that this should also tend to overflow into private industry.
That is a very good thing. If private industry is to be encouraged to carry out a five-year review—and that depends on there not being a regular bulge-squeeze cycle—much depends on the nationalised industries and the Government-controlled sector of the economy which, with horror, I learned from the Plowden Report accounts for 42 per cent. of the gross national product. I think that few people could quarrel with a five-year review each year.
We learn in politics that the essential purpose is that we should match our programme and aims against the resources at our disposal. The forecasting of these resources and the matching of our programme to them is vital in the economy because both parties, when in office, tend to aim for full employment, which I support. That means, however, that our margin of manoeuvre is considerably reduced.
It is a good thing that planning, not only in capital expenditure, but on revenue account, should be developed as much as possible in certain departments, although the Plowden Report clearly says that it cannot be done so well on revenue account. This is possibly more feasible in the Services than in most others. The Plowden Report states that a long-term programme based upon a five-year schedule gives a greater financial discipline and greater economy. I think that this, too, is accepted in the private sector generally when we think of all the squeezes and bulges which have an unsettling effect on industry in general.
At the same time, the Report quite clearly warns against the risk of trying to impose this type of discipline straight away on all aspects of our affairs. If that is done, it will probably do very much more harm than good, and it could be a doctrinaire procedure.
Another thing that comes out in the Plowden Report is the essential need of an establishment officer with the fullest powers and with the closest connection
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with the Permanent Secretary in each Department. Often those of us on the Estimates Committee are frequently finding that in sections of Departments which have been less active than they used to be we do not know for certain whether they are being run down as rapidly as possible. That is a fact of great significance, because all of us in this House call for economies and also call for new expenditure, but if that new expenditure is to be carried out and be fruitful we need to prune back what is called the dead wood at the same time.
We should take a long, sharp look at parts of Government capital investment which are no longer required, not only in the Departments, but generally. There has been reference to agriculture, which is referred to particularly in the Plowden Committee's Report. There has been reference to the surplus railway properties, which have nothing to do with the running of the railways, and I look forward very much next year to a Bill coming before the House to give the British Transport Commission the right to develop these properties, and, if necessary, to sell them, so that the benefits shall accrue to the taxpayer. These are valuable things. There is possibly a need for a look into the Service Departments to see whether they can dispose of hotels which they requisitioned during the war and which may possibly be disposed of today.
There is also the need to look at the hotels side of the Transport Commission, which, I should say, is earning considerably less than the interest charges on the capital employed. If that is so, it means that these hotels are the most odd adjuncts of the Welfare State, because they are subsidising the holidays of tycoons and American golfers. Though I have nothing against them, I do not see why the Welfare State should benefit them.
Mr. Richard Marsh: It is the same with the Cunard Steam-Ship Company.
Mr. Webster: I shall deal with that point.
Mr. Ernest Popplewell (Newcastle-upon-Tyne, West): On the question of the hotels, they are one of the paying lines of the Transport Commission, even after meeting interest charges.
Mr. Webster: If the hon. Gentleman would look at the Transport Commission's accounts he would find, I think, that the return on the capital value of the hotels in 1939, as far as I can discover, was about 3 per cent. this year. With today's Bank Rate, interest would be very much higher than that.
Mr. Popplewell: If the hon. Gentleman is saying they are not making sufficient profits, that is rather a different story, but, on balance, they are a little above breaking even.
Mr. Webster: I am saying that they are not making sufficient profits, and, as a result, are not meeting the interest charges out of the revenue from the hotels. It means that there is a charge on the taxpayer and another addition to the Welfare State.
Another basic factor that the economy is burdened with is that what the individual or the private or public company does not shoulder as a burden is made the responsibility of the taxpayer, and this is something which has borne heavily upon the excess of Government activity and the excess of Government indebtedness. It has added to Government indebtedness much beyond the willingness of investors to support the burden of Government debt, and it is that fact, coupled with the fear of inflation, that has brought the level of Government stocks, not only in this country but in America and many other countries as well, to a dangerously low level. It looks to me as if it will be impossible for the Government to launch an irredeemable stock an the market in the lifetime of anybody in this House. If that is the case, it is very hard on the holders of War Loan, and it means that the Government have to put out much more attractive terms and, therefore, much more expensive terms to the British taxpayer and the country. That is one of the things which should be fundamentally tackled when we are trying to out down not only revenue expenditure, but the degree of the total indebtedness of the country.
Mr. Diamond: If the Government treat the present holders of War Loan like this, is it not reasonable to conclude that never again will they invest in an irredeemable Government stock?
Mr. Webster: The last irredeemable Government stock was launched by a gentleman who used to be called Mr. Dalton, and few of us will forgive his activities in that respect.
Reasons are frequently put forward for Government expenditure to be increased, and there has been a danger of the House accepting a purpose of Government expenditure without adequate definition. Particularly hon. Members on this side of the House would support a policy by which the individual had the right to take responsibility and to take the opportunity to go ahead, but, at the same time, we appreciate that there are many people who, while needing short-term assistance as individuals, or as regions, or as industries, can get themselves on their feet quite rapidly and again contribute to the common weal.
The Scottish and Welsh stripmills are undoubtedly a case, for good social and sound economic reasons. I wish that I could feel as happy about Lancashire cotton. It appears that too many units of the cotton industry have been kept in activity, and when the squeeze comes in twelve months there will be considerable misfortune. That is dangerous, because the electronics and other industries are thriving in Lancashire and need more people in their factories.
I take the point about the North Atlantic Shipping Bill. I do not have a constituency closely connected with it or benefiting from it, so perhaps I lack knowledge, but it appears to me that we are running the risk of propping up an industry which will not rapidly come back to play its part in contributing to the benefit of the economy. For that reason, if such a Bill were put forward again today, I would be reluctant to be one of its most enthusiastic supporters.
The railways, roads and docks are acceptable things. I appreciate that there are those who will say that the crash programme for the railways was excessive and too quick, after having been delayed for many years. But one should always check the valid reason for these things and they are part of our communications services.
I want to refer to the docks. When we remember the North Atlantic Shipping Bill and the fact that £18 million of public money is to be spent on a new Cunarder

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and the fact that since the war we have spent only £120 million on the whole dock system, it will be appreciated that the expenditure is out of balance. I very much welcome the fact that the Rochdale Committee has begun its activities, although I understand that the first report will not be received until September. I hope that this will be treated as a most urgent matter, because I am certain that much of the trouble on the docks today—and 99 per cent. of our exports are still shipborne and go through the docks—has been because the equipment and the practices of management, as much as of labour, are out of date.
There is still a struggle to end the decasualisation of labour in the docks. Many of those things should be rapidly swept aside. I know that determined attempts are being made to bring that about. I congratulate the Port of London Authority on "jumping the gun" on this issue and recommending a £20 million project at Tilbury. This is vital. I regret that it will be two years before work commences, although I understand the reasons.
I have wearied the House in the past by saying that on the other side of the North Sea at the mouths of the Meuse and the Rhine and the Scheld, is being built one of the most modern and enterprising dock complexes ever to be constructed. This is right at the mouthpiece of the European Economic Community, as it prefers to call it itself. It is, without doubt, taking a vast amount of entrepreneur—
Mr. Darling: Entrepôt.
Mr. Webster: Entrepôt trade. I am obliged to the hon. Member. I have been abroad with him and I know that his knowledge of French is very wide, as I have seen in a number of interesting places. This trade is being taken from this country, a vital factor in our attempts to get more invisible exports.
There has been speculation recently on the possibility of a dividend freeze. If we are trying to encourage progressive companies to progress still faster, that would have been a most retrograde step. Had it been carried out, it would certainly have brought a spate of take-over bids, and if a company thinks that it is to be taken over the first thing it does is to try to increase its dividends to beat off the
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take-over person. If that is done, it starts an unpleasant form of speculation in the markets, and that is one reason why I would go against it.
It is also said that if dividends were frozen we would find that the workers would not be so keen on increasing their wages. The logic may sound practical, but in the shipping and shipbuilding industries, where there have been dividend freezes because there is no more money to pay out, I do not see Ted Hill, of the Boilermakers' Union, calling off the wage claims. I do not see the force of that argument.
I think that we as a country are carrying too great a burden of Government indebtedness in things which should be handed over to the private individual. In both management and labour—organised and disorganised labour—we are carrying a lot of old practices which we should shed rapidly. There is much in my right hon. and learned Friend's statement when he says that he is to get together with both sides of industry. I know that in the past he has got together most effectively with people like the various Service chiefs, and I am sure that he will do something to bring some fresh air into this business.
I am not one of those who wishes straight away to legislate on the trade unions, but I think that the trade unions are well aware of the anxieties of moderate people throughout the country about what is going on in industry. I am well aware that these are the things which are given the greatest publicity and that good labour relations are never news, but I hope that these things can be dealt with.
We are going into the last forty years of the twentieth century armed with the practices and weapons of the time of Balaclava, and it is time that we disposed of these things.
Mr. Marsh: The hon. Gentleman referred to restrictive practices in industry. Does he think that after the Government's attitude over Surtax they are in a position to implement a wage freeze, and that they can have friendly objective discussions which are necessary to meet the problem?
Mr. Webster: I said I thought there were bad practices on both sides of industry. I gave reasons why I thought management could improve its practices.

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One of the things which, I hope, can be rooted out of the trade union movement is the infiltration of Communism. I am sure that the T.U.C. will be very keen to root it out. This is one of the most fundamental things.
I do not necessarily regard high wages as bad for productivity, because if there are high wages in an industry there are good labour practices, labour-saving devices, and good automation equipment. But we cannot have high wages unless there is the productivity to produce them.
8.55 p.m.
Mr. Ray Gunter: Because of yesterday's events and today's debate, I suppose that it would be a strange reflection to say that we are all glad that we still live in the pleasant land m which we were born. I think that we should remember that it is because of the qualities which we cherish so much that we are in something of a mess today. We have a great regard for our traditions. Our roots are deep in history, and our institutions hallowed by time. This is a good thing, because it gives us a sense of security and stability. But those very factors sometimes make it difficult to get our people to realise that deep and fundamental changes are necessary in their thinking.
This nation must be brought quickly to face the fact that in fifty years the world has changed, and that we are living in a new world. Imperial grandeur has gone, and in fifty years we have been faced with world-wide revolutionary forces. In addition, and at the same time, the greatest technical and scientific revolution that the world has known is sweeping around us. It is at the end of that fifty years of great change and revolution that we find ourselves in a position in which, unless the British people realise the existence of the new world, only decline is before us.
Behind and beyond all the arguments adduced today about the Bank Rate and other measures lies the fact that, so far, the country has failed to meet the real Challenge of the new circumstances and the technical revolution. It is in industry that our greatest problems lie at present. This is the field where, so far, we have failed to utilise all the benefits that science and technology have poured upon us in the last few years. It is very necessary that both sides of industry
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should realise that unless they are prepared to take advantage of the new techniques and adapt their thinking and their machinery to them, only decline is in front of us.
Instead of our having continual squabbles and differences about whether or not the new machinery and new techniques should be introduced, we should be doing what some other countries are doing. Workers, managements and Governments are welcoming the introduction of every new machine and applying all the horse-power they can to the new methods. We have not done that. There are some sectors of British industry where this new process has operated, but there are large sectors, vital to our wellbeing, which are still laggardly in their employment of new methods and techniques. I do not know whether it is much good having an inquest to find out which side of industry is most to blame. What is necessary is that the British people should be jerked into the last forty years of this century and made to realise that old patterns of negotiation and of management are not relevant to present circumstances.
I want to deal with some of the problems of industry. One of the first things that we must get hold of is the fact that we are not supplying enough trained experts in industry—not only technicians but administrators. We must find some means—whether from within industry or, as I would imagine, with Government support—whereby we can provide the technicians and scientists that industry needs in order to give it a more purposeful direction. Many industrialists sit on the Government side of the House. I submit to them that there is still far too much nepotism in industry. Far too many promotions are still made to responsible positions in industry not on merit or ability, or even on training, but simply according to the particular drawer from which the person concerned comes. In present circumstances it is imperative that we should attract and promote the best brains within industry.
I would say to some of my trade union friends that some of their practices are not very helpful. There are occasions when the promotion of good men is retarded because of past practices, and there is a need on all sides of industry for a real determination that the best

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men in industry shall rise to the top and give direction.
Much has been said today about industrial relations. We have to be very careful when we seek to assess industrial relations and its practice in this country. By and large, the record of this country will hold up to that of any other industrial country in the world; nevertheless, it is not good enough.
I began my speech by stating that we were very mindful of our traditions, and that our roots were very deep. On both sides of industry an atmosphere should be created in which the book is closed and some of the old bitter chapters are, forgotten. We should really recognise and get down to the task of revision of our negotiating machinery to see whether past practices, so relevant in past days, cannot now be brought up to date.
There is another aspect of industry which puzzles many of us. We have embarked, with enlightened employers, both in the public and the private sector, on what has come to be known as industrial democracy. That really means that both sides of industry should be identified with the same purpose, that instead of sitting down at a table and arguing and quarrelling with one another, they should seek to find a common objective and a way of working it out.
There are hon. Members in the House today who are as aware as I am of the problem. We have drawn up agreements on joint consultation. We have spent many hours in detailing the best method by which management and men could consult together; how managements could bring before the workers their projects and policies, and how they could be discussed in a good atmosphere. We have written good books about it, and a lot of machinery has been established to encompass this. But it is my impression that in many parts of industry today it is not working. The machinery is there, books have been written about it, but the real spirit is not there. We could write the Sermon on the Mount into any agreements dealing with joint consultation, but unless the will for joint consultation is there, it would be of no use. In other words, this new field of industrial democracy will fail unless we can have the proper spirit.
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I submit that the Government, in large measure, are to blame for the apathy, Inertia and indifference in industry today. Many of us who served in the Armed Forces know full well that in any sphere where discipline is required, it is obtained only when it is seen at the top and percolates down. There is an atmosphere in too many spheres of industry today of "couldn't care less". I submit that it is time that the Government awoke to the fact that leadership is imperative.
Today much of our industry is leaderless, in the sense that people are not sure where they are going. If he knows the path to be followed and if he is led properly, generally speaking the British worker will follow. Today there is a sense of lack of direction. There is a desperate need for industry and our people to have the intentions of the Government clearly portrayed to them. Same form of national planning board is required because in many industries there is a deep sense of insecurity. Two of the great basic industries, coal and transport, do not know what is required of them.
The Chancellor talks of both sides of industry being involved in some sort of planning board. He told us that he is not too much concerned about including Treasury officials, and I hope that he is not. I am not sure that the Treasury is the right Department to bring vision and inspiration to any planning board. I am no an expert in these matters. My membership of this House is not sufficiently long for me to be able to make a considered judgment. But from the impression I formed in industrial life I do not believe that the machinery of Government has kept pace, or kept in line, with the developments of our economy or the techniques of industry. I do not believe that Government Departments are in a position—not because of ignorance, but because they have not the experts—to form judgments about some of the great projects of our nationalised industries.
I should like to deal for a moment with the transport industry with which I am closely concerned, because I think that what I can say about it is relevant to the paint which I am attempting to make. The Minister and his Department have proved over the past six years that they are incompetent, or at least ill-equipped, to deal with the problems of

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modern transport. There was a period some years ago when it became obvious that it was necessary to modernise and reorganise this great basic industry. A modernisation plan was brought forward in 1955 and submitted to the Minister who agreed with it and recommended it to the country.
It later transpired that, in the words of a Government spokesman, it had been a false prospectus, and that the British Transport Commission had not properly assessed the position. It had not looked into the future correctly. The original plan was ill-conceived. My point is that at that time the Minister blessed this false prospectus, if it was a false prospectus, and later, when he was challenged, his excuse was that he did not have the staff or the experts in his Department to go into all the details of the plan.
If we are to have planning and a central direction of the economy of the country, it is necessary that Government Departments should have staff competent to deal with such matters. To take the story a stage further, we are today faced with a situation in the transport world in which the Minister himself has to sanction any project costing over £250,000 which is submitted to him by the B.T.C. I believe that capital expenditure on the railways next year will be in the region of £174 million. In the light of that large amount of money the Minister must look at every project over £250,000. I submit that he cannot judge. How does he know whether a certain proposition is sound? How does his staff know what the consequences of this or that project will be?
That does not mean that I believe that it is better left entirely in the hands of an organisation such as the British Transport Commission, but that we should have some instrument, some machinery, or some board of competent men—transport men, economists or scientists —who can look into the future and dwell on the possibilities of rail transport and come to decisions. Then lest the B.T.C. get on with the job of creating a properly organised railway service stripped down to meet the necessities of the next forty years. That is one aspect of nationalised industry where I think that there has been a miserable failure to look at the facts of the situation, to face the possibilities of modern
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transport and to deal with them in a rational and planned way.
I turn for a moment to one of the other great basic industries which is in distress and insecurity—the coal industry. Here I say for the benefit of hon. Members opposite that I do not believe, and I am sure most of my trade union friends outside do not believe, that one could possibly defend an industry which could be proved to be out of date in view of new and modern methods. We should not seek to defend coal just because it has been a traditional basic industry of this country. I have never believed that it was socially desirable to send a man down a pit to dig coal.
On the other hand, we all know that coal is—and will be for a long time—a very great necessity to the economy of the country. What is the position at present? Because of the absence of a body which would work out and think out over a five- or ten-year period the possibilities of new forms of energy—whether by using liquid methane Or anything else—we have a situation in which we know that that industry is fundamental to the economy of the country but it is withering away in disorder and chaos.
Last year 30,000 men left the pits. Most of them were under 31 and were craftsmen of the pits. Why was that? It was because they do not know where the industry is going. Yet at the same time the Minister at the Dispatch Box tells us that there is a great future for the industry; that there is no need for anyone to worry, it will be all right. There have been all the arguments about the importation of American coal. There has been indecision and an unwillingness to make up one's mind. At the same time, millions of pounds are being poured into new investment in the pits of Monmouthshire where we have the best caking coal in South Wales.
If it be that there are new methods of producing fuel for the industry of the country, if it be to the benefit of the country that those new techniques should be adopted and old traditional methods of power should be given up, why not say so? Do not at the same time put millions of pounds into the old industry and destroy the morale of the people. There is a deep and urgent necessity for a real effort to review the economy of

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this country by a planning board of some sort being established, whether on five-year or ten-year basis, so that our people may know the direction in which they are going.
I turn to the issue which has been raised so forcibly today, not only here but in the General Council of the Trades Union Congress—the Chancellor's statement upon wage restraint. I have indicated before that I do not believe that this is a temporary crisis. This is not only a deep-seated crisis for the economy of the country but a crisis concerning the spirit of the nation. We shall rally the forces of the nation and bring about unity amongst our people only when ordinary men and women feel that justice is being done, and when they have a deep sense that the leadership is prepared to take every section of the nation into the struggle under the same conditions.
But as a trade union leader I say to the Chancellor that what he has done is to create the impression in the past twenty-four hours that he is calling for the sacrifices from only one section of the community. We shall get a unified nation, which is so necessary in this crisis, only when there is a feeling that justice is being done, that the rankling sores are eliminated and that obvious injustices are put right.
I say this to the Government: you will get into trouble. I am not given to warnings or threatenings, but what you are doing by this form of wage restraint or wage freeze and the conditions which the Chancellor outlined is to throw the challenge down to the trade unions. You are throwing down the gauntlet and deliberately provoking them, because a wage freeze must be very carefully handled and must command the unity of a nation. This wage freeze hits the worst-paid. It is in the public sector that it will be felt most deeply.
The worst-treated body in the country tonight are the teachers. They have been put on the altar. I do not know whether the Government are relying upon the deep sense of vocation and public duty among the teachers. If they are relying on that to avoid trouble, it is a cowardly way out, and, whatever else is done, even at this stage, justice should be done to the teaching profession—not only
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because of their own circumstances but because we can ill afford to have a dissatisfied teaching profession. If ever there were a time—and this crisis proves it—when we needed a teaching profession able to give the nation educated youngsters, scientifically and technically, it is the present time. It is no good saying, "We will concentrate on the technical side and not bother about the primary and junior school teachers". They are the people who lay the foundation for the future. If we do not teach the children to read and write properly we shall never train them to be good technicians. I think that the teachers have need of special mention tonight.
I am glad that the Prime Minister is here, because there is another industry which merits attention. On 10th March, 1960, he said at the Box, almost proudly, that he accepted the objectives of the Guillebaud Report for the railwaymen. He said that comparability of pay for railwaymen throughout the country was accepted by the Government and would be carried through with the necessary national financial resources. Since that time the workers in the industries with which the railways have been compared have made advances. Railwaymen are still the last in the queue. They are still behind.
The Prime Minister's statement on 10th March, 1960, is very relevant today. All that the railwaymen will ask for when we meet Dr. Beeching on 21st August is that that comparability should be maintained. In this field the Government may well get into trouble. I am not given to threats, but I warn the Government that they may well run into trouble because of this ill-conceived, ugly, cruel and unjustly operated wage freeze. There is one thing that the Government are incapable of doing, and that is handling people properly and decently. They do things which are an affront to decent people. They affront the workers of this country, who on the whole are decent people.
Hon. Members who have spoken today have asked the Government what right they have to ask trade union leaders to tell their members over the next six months that the country is in such a state of crisis that wage restraint is necessary and that claims which they have in the pipeline should be withdrawn or held over for a time while at the same

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time the Government shovel out £80 million into the hands of Surtax payers. The Government make our task almost impossible. However well-intentioned some of us may be, however patriotic we may want to be to dig the country out of the mess the Tories have got it into, the Government are placing responsible and decent trade union leaders in an almost impossible position. On the one hand, they push up the cost of living, while on the other hand they say that the workers are not to have any more.
I ask the Prime Minister to take full note of the statement issued by the General Council. I will give one more example of what has been done about wages. The railwaymen have a wage claim in. Dr. Beeching was given a salary of £24,000 a year, and the Minister of Transport stood at the Dispatch Box and said that that was the rate for the job and Dr. Beeching should have it. I have no complaint against Dr. Beeching. We have been in contact with him in the machinery of negotiation on a few occasions lately. He appears to me to be a powerful, authoritative, able and fresh man, who will probably bring fresh ideas to transport. I say with kindliness that he is a great refreshment to my soul after having looked at the Front Bench opposite week after week. Men earning £10 a week are being told that they can have no more money, although Dr. Beeching can be given the rate for the job, which is £24,000 a year. It is no good saying that the Government did not know about the economic crisis when they appointed Dr. Beeching.
In industrial relations there is a desperate and urgent need for all practices to be diminished or eliminated. There is a need for management and men to get together. There is a need for a new spirit and dynamic to flow through the face of industry. This will be made possible only as there is leadership from the top and only as direction and authority are revealed to those who work in industry. The nation will respond to leadership. The British people have never yet failed to respond to good leadership. I believe that the Prime Minister reads the good Book. The Children of Israel were not at their greatest when they were surrounded by the opulence of Solomon, nor when they weltered in luxury—or, in modern par-
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lance, when they counted the number of televisions, cans and refrigerators. The Children of Israel were at their greatest when they were called to duty and discipline. The call to the nation today is to duty and discipline. That can be done only as we have purposeful and real leadership.
The nation has a very great part to play in the future. I am not one of those who believe that we can be written off as a second-rate Power. By one great effort today, a united British people can again give a large measure of moral leadership to the world, which is badly needed. But it cannot be done and will not be done so long as the leadership given by the Government is so indecisive, so unfair and so unjust. The best service that the present Government could render to the history books of Britain would be to get out now.
9.25 p.m.
The Economic Secretary to the Treasury (Mr. Anthony Barber): Despite the concluding observations of the hon. Member for Southwark (Mr. Gunter), there is one reason why I am pleased to be winding up the debate this evening. To give that reason means that, despite the plea made by the right hon. Gentleman the Member for Huyton (Mr. H. Wilson), I must refer briefly to 1950 and 1951—(HON. MEMBERS; "Why?"] My reason for being particularly glad is that, for the first time, I am following the hon. Member for Southwark, and we fought two General Elections together. He won in 1950, and I won in 1951.
As the hon. Gentleman has now moved to a safer seat, I need not fear any personal political repercussions in saying that he is still remembered in Doncaster with very high regard and with great respect, and that the whole House will agree unreservedly with the hon. Gentleman's opening remarks about the challenge that faces the nation, particularly on the industrial front.
Before I turn to some of the more general aspects of the situation confronting us, and the measures proposed by my right hon. and learned Friend, I want to say something about the two Orders now before the House on which, in due course, we shall be taking a decision. The right hon. Gentleman the Leader of the Opposition rightly said, I think, that these Orders are clearly associated with

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the more general matters that we have been discussing today so, first, perhaps I may be allowed to say a word about the Exchequer Advances (Limit) (No. 2) Order. It is, I fear, somewhat involved, but I shall be as brief and lucid as I can in dealing with it.
I want, in particular, to explain why the Order that was laid on 5th July has been revoked, and why a new Order has been substituted with a limit reduced by £50 million. The Order now before the House renews and extends the Exchequer's power under Section 78 of last year's Finance Act to lend to the seven nationalised industries concerned.
First, I want to stress a point that is fundamental. This Order does not authorise the amounts that the nationalised industries may borrow. As the House knows, Parliament controls those amounts by other means; by the periodic borrowing Acts in respect of each industry. Again, the Order does not govern the amounts that each industry can spend; it is concerned solely with the method of financing.
I do not need to go over the history of the Order, as I think that it will be within the recollection of the House from last year. Briefly, the nationalised industries already have the power to borrow the additional sums that this Order empowers the Exchequer to lend to them. The purpose of the Order is to extend the total amount which the Treasury may lend to the seven nationalised industries concerned in the coming twelve months from September of this year to August, 1962.
The present limit on the Exchequer's power to make advances under Section 42 of the 1956 Act is £2,050 million; in other words, the total advances to the nationalised industries from August, 1956, to the end of August this year may not exceed £2,050 million. The Order provides that in the period ending August, 1962, the total advances that may be made by the Exchequer shall not exceed £2,450 million—that is to say £2,450 million for the whole period from August, 1956, to August of next year.
I will now explain why we have revoked the original Order, made only a few weeks ago, which set a new limit of £2,500 million, and have replaced it
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with an Order reducing that limit by £50 million. In other words, why we have decided to increase the limit by only £400 million as against the original figure of £450 million.
First, I should stress that the increase in the limit—and this is important for hon. Members who take an interest in the financing of the nationalised industries—does not coincide with the amount which we expect to advance to the industries during the relevant period of twelve months. We estimate that the advances between 1st September this year and 31st August, 1962, will amount to £480 million. The amount cannot be assessed with any certainty because, as hon. Members know, the firm borrowing figures for the financial year, 1962–63, have not and will not be decided before February, 1962. However, on the best estimate we can make, it is £480 million.
In answer to my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke) and the hon. and learned Gentleman the Member for Kettering (Mr. Mitchison), who put down Questions about this the other day, I gave a breakdown of this figure, industry by industry. Some people may have misunderstood this Order and may have thought that by changing it and by producing a figure of £50 million less, we are in some way cutting the investment rate contemplated for the nationalised industries.
I must make it absolutely clear that that is not so. We came to the conclusion that the original margin, which would have been about £30 million on the information which we had before us when we laid the first Order, might in fact be as much as £50 million on the basis of further information which we had given to us about the extent of the advances likely to be made to these nationalised industries before the end of August next.
We came to the conclusion that a £50 million margin was too much and given, in particular, the need for stringency in Government expenditure we came to the conclusion that it would be wrong to ask Parliament to approve an Order which contained a safety margin of that size. We decided, therefore, that the proper course was to revoke the original Order

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and replace it with the one which is now before the House.
I will now deal with the other Order which the House will be considering and I will then come on to more general matters—[HON. MEMBERS: "About time."]—at, I hope, about twenty-four minutes to ten.
Mr. E. G. Willis: On a point of order. These Orders are not before the House and Mr. Speaker ruled, I think, that while they can be discussed in general debate in connection with the Motion and Amendment being discussed, they would be fully discussed afterwards. Mr. Speaker suggested that we should not discuss them in too much detail, for while they could be discussed during the general debate, they could also be discussed tomorrow night, when the Orders are put before the House.
Mr. Deputy-Speaker (Sir Gordon Touche): Mr. Speaker ruled that they could be discussed now and that that did not rule them out of later discussion.
Mr. Barber: I remember that just a few hours ago the right hon. Gentleman the Leader of the Opposition suggested that it might be convenient to discuss these Orders in the course of the general debate. After all, in the second Order —the Customs and Excise Surcharge Order—the imposition of the surcharge at the full rate of 10 per cent. forms one of the principal measures of my right hon. and learned Friend to deal with our difficulties in the short term and it has been referred to by innumerable hon. Members throughout the debate.
Certainly, whether one agrees or disagrees that it is necessary to take action to deal with the growing pressure of home demand, there can be no doubt that the imposition of the surcharge will have a very significant effect. [HON. MEMBERS: "Hear, hear."] It is intended to do so. My right hon. and learned Friend has been frank with the House and explained that it will involve a withdrawal of purchasing power at the rate of £210 million a year, or £130 million if it were to remain in force for the remainder of this financial year at the full rate of 10 per cent.
I want to clear up one misconception which seems to have arisen concerning the calculation of the surcharge which
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will be paid along with the duty or tax at the normal time of payment. This calculation will be quite simple—[HON. MEMBERS "Oh."] I hope that hon. Members opposite will allow me to proceed. I have to consider not only Members of the House, although this has been raised with me by more than one of them, but also traders outside, who were under a misconception about the way that it will work.
I want to make this point clear, because it is very important. When an amount of duty or tax becomes due, and has been calculated in the normal way, there will be a simple additional piece of arithmetic adding 10 per cent. to the total. Some traders have thought —indeed, my hon. Friend the Member for Kidderminster also thought—that there would be a rise in the rates from, say, 5 per cent. to 5½ per cent., 12½ per cent. to 13¾ per cent., and so on. The fact is that the rate of tax will be unaffected. I am sorry that apparently this was not made clear during the passage of the Finance Bill.
All that will happen is that when the total amount of tax payable on the basis of the existing rates has been worked out, perhaps in respect of a variety of articles liable to different rates, one additional simple calculation will be made adding a further 10 per cent. to that total. Of course, the Opposition do not object in principle either to the use of such an economic regulator as this, or, indeed, to its actual use during this year. They have made no objection on those grounds. But my right hon. and learned Friend has been criticised for introducing it within three months or so of his Budget. Surely the whole point of an economic regulator is that it should be available and should be used when it is required.
Mr. H. Wilson: The hon. Gentleman must not misrepresent the position of the Opposition. We said that one reason that we welcomed it, in so far as we did welcome it, was that it showed that the Chancellor had forsworn the use of the monetary weapon in place of something which, while unpleasant, was less bad than the monetary weapon. It is now clear that he has not, so the whole of the argument goes. After the interesting semantics on how the 10 per cent. is calculated, will the hon. Gentleman now

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explain what some of us had difficulty in following—how something which increases the cast of living by 1½ points is supposed to bring prices down?
Mr. Barber: In the first place, the right hon. Gentleman cannot have thought that my right hon. and learned Friend the Chancellor of the Exchequer ever said in the course of the Budget debates, or when we were considering the regulator, that he had forsworn monetary methods. Indeed, as the right hon. Gentleman knows, he went out of his way on a number of occasions to say that that was not so, but that he hoped that if circumstances made it possible he would not have to rely to such a great extent on the monetary measures.
Indeed, as the right hon. Gentleman knows, in these proposals which have been put forward for the consideration of the House we have not, for example, thought it necessary to increase hire-purchase restrictions. As to the cost of living, as the right hon. Gentleman knows, if this is passed on in total it will involve a rise in the cost of living of 1½points. On the other hand, I am sure that the right hon. Gentleman will be the first to agree that inflation and rising prices for a temporary period as a result of the imposition of a regulator are not the same thing.
I shall later deal with the question whether there is an excess of home demand. Again, I am sure that the right hon. Gentleman will be the first to agree that, if this is so, it is desirable in the interest of encouraging the export trade to do somthing about it. That is precisely what my right hon. and learned Friend is doing. Certainly, this particular regulator has the great advantage that it restrains home demand without exerting a similar restraint on exports.
Mr. Grimond: If the hon. Gentleman has now finished the introduction to his speech in dealing with Orders which are not yet before the House, may I put this question to him? Quite apart from the economic importance of the Orders, which I readily concede is relevant to the debate, are we to gather from the hon. Gentleman's speech so far that the Government intend to give no explanation of the Orders as such tomorrow night, and that it is their view that they will be passed by the House without full
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discussion? Whatever may be their economic effect, there is very considerable constitutional importance in this type of Order. It is quite new, and, as the Chancellor admitted, it represents an important departure from previous custom.
Mr. Barber: I am sorry if the hon., Gentleman has not seen the Orders. They have been laid before the House, I think that he said that they were not before the House. What may happen tomorrow evening is not a matter for me. All I can say is that my hon. Friend the Financial Secretary and I shall be here and we shall be able to deal with any points which arise.
Mr. William Ross: On a point of order, Mr. Deputy-Speaker. Will not the very fact that we have had an explanation of the Orders in anticipation of their being moved itself be a factor which will curtail debate on the Orders?
Mr. Deputy-Speaker: I do not see why that should stop debate on the Orders.
Mr. Barber: If I may be allowed to do so in the time which remains, I wish now to turn to rather wider matters.
I have been very surprised at hon. Members opposite complaining that my right hon. and learned Friend made an inaccurate assessment of the economy at the time of his Budget three months ago. On the various indicators then available to us, most people, I think, believed that the assessment which he made was about right. There was no whisper from the Opposition that his proposals should have been more stringent. Be that as it may, one thing is absolutely certain; if we had heeded the proposals for reduced taxation which the Opposition put forward, we should now be facing a far more difficult problem.
I recently looked up what happened. I found that three of the Opposition's proposals alone would have injected into the economy additional purchasing power of over £100 million a year.
Mr. Denis Howell: What about Surtax?
Mr. Barber: What has happened since the Budget is that sterling has continued under heavy strain in the exchange markets and the pressure of home demand now looks as if it will be greater

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than we then expected. But it was just because we knew that these were possibilities that we took specific powers in the Finance Act to vary taxation during the course of the year. Again and again, my right hon. and learned Friend said that neither he nor any Chancellor could predict with accuracy the course of the economy over the year. It is not just a matter of attempting to forecast the course of events at home, but of making an assessment of the many and varied influences and actions abroad which bear upon our situation at home. [Interruption.] Even the hon. Member for Gloucestershire, West (Mr. Loughlin) will agree that even he could hardly claim to control influences and actions which arise abroad.
Whatever criticisms may be made of past assessments or judgments, or even of past actions—whether those criticisms be justified or not—the country is entitled to look to the House, to the Opposition as well as to the Government, for a constructive approach to the future. The fact is that, as events have turned out—I am being quite frank with the House—it is now clear that we placed too heavy a burden on the balance of payments.
In particular, the aggregate of our payments across the exchanges on Government account—on defence, aid and other purposes—have been rising at a rate which has not been justified by our overseas earnings. The proposals which my right hon. and learned Friend put before the House tackle this problem from both ends—by curbing the rise in overseas expenditure and, at the same time, by taking steps to improve our overseas earnings. In each case, there are the measures designed to improve the position in the immediate future and, what is of greater significance, the proposals to fortify our position in the long term.
I do not propose to go over again the details of the various measures that my right hon. and learned Friend explained in his long statement yesterday and in the speech which he made this afternoon. I merely wish to say this. We have shouldered the burden of our overseas military expenditure, which some hon. Members opposite have, with sincerity, criticised on many occasions, because we believed that it was in the interests of the defence of the free world.
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As regards United Kingdom aid to underdeveloped countries, which we do not propose to cut despite our difficulties, we have been making a contribution which, by any standards, compares favourably with that of any other country in the world. But if one answer to our present difficulties is to deal with the growth of overseas expenditure, there is no doubt that the root of the trouble lies in our failure since the war to earn consistently an adequate surplus on our current account. No one pretends that, in the near future, our invisibles are likely to yield a substantial surplus. It follows that we must look to our overseas trade for any improvement.
I do not believe that any responsible person would deny that the basic causes of our inability to export are twofold—the sustained pressure of home demand and our competitive position. I should like to say a few words about each of these two factors.
Mr. A. Woodburn: Before the hon. Gentleman leaves the point of invisibles, could he explain why this item, which has always formed a very considerable part of our overseas balance, has so suddenly and mysteriously disappeared?
Mr. Barber: I think that the right hon. Gentleman will remember that the President of the Board of Trade dealt with that point at some length the other day. He was congratulated by the right hon. Member for Huyton for doing so.
Mr. H. Wilson: I hope that the hon. Gentleman will withdraw that remark.
Mr. Barber: In the interests of time, I will do so with pleasure. I could not give an answer to the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) in a couple of minutes.
I was about to deal with domestic demand. There can be no doubt that but far the measures that we are taking it would have grown more rapidly than productive capacity and, accordingly, that the pres. sure of demand would have risen. Fixed investment has been rising rapidly and will continue to do so. In addition, personal incomes and expenditure have also been rising. The right hon. Member for Huyton said that little had altered since April, but there is abundant evidence that personal incomes have con-

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tinued to rise since the first quarter. Wage rates are up and employment is up. The number of workers on short time has fallen. Hire-purchase lending, which damped down consumption last year, has started to rise again significantly and, taking the second quarter as a whole, the volume of retail sales has also risen.
These increases in final sales have so far caused only a small increase in production. The reason for this is that investment in stocks, which was very high at the end of last year, has fallen sharply. There is certainly no reason to suppose that the fall in stock building will continue.
My right hon. and learned Friend has already referred to the effect of the proposed measures on the level of purchasing power. Taken in conjunction with the Budget surplus above the line of over £500 million, the impact on domestic demand will be very considerable. I make no apology to hon. Members opposite for saying that that is its intention. After all, we all know of many companies which put exports first, whatever the attractions of excessive demand in the home market. But we also know of others which take the short-term view and cash in on the home market at the expense of exports. For these, the steps which we are taking are bound to effect some diversion of effort from the home market to overseas markets.
I said that the basic causes of our inability to export more were twofold—the pressure of home demand and our competitive position—and I now want to say a word about the second factor. The majority of the British exporting firms are able to compete successfully in overseas markets with the best of their rivals, but there are some which are finding it more difficult. In any event, competition between industrialised countries has now become more fierce, and whether or not a particular firm is competitive may depend on any one or more of many factors, such as salesmanship, to which the right hon. Gentleman the Leader of the Opposition rightly referred last week, delivery dates, design, credit and restrictive practices, many of which have been mentioned in today's debate. Above all, it depends on costs, and it is an undeniable fact that by far the most important element in costs is wages and salaries. Nobody can deny that.
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In fact, wages and salaries account for nearly two-thirds of the domestic costs of production, and the most serious weakness in our economy is the way in which year after year increases in money incomes have outrun increases in output. Over the last year, between the first quarter of 1960 and the first quarter of 1961, wages and salaries per head rose by 7 per cent. In the same period, productivity rose by less than 1 per cent.
Mr. Hayman: How much did profits rise?
Mr. Barber: Profits are going down at the moment. Over the past ten years, wages and salaries per head have risen on the average by 6 per cent. a year over the ten years, while productivity has risen by only 2 per cent. a year. It really is no use burking the fact that it is this disparity which lies at the very heart of our present troubles. Indeed, I do not think, from what the right hon. Member for Huyton said this afternoon, that he would deny that fact, although I know that he would blame the Government, which I do not accept, and that he would also draw a different conclusion from it.
My right hon. and learned Friend has given a lead in the public sector, and I hope that the private sector will follow that lead. It is often suggested that the responsibility for the level of dividends is that of the employers and that the responsibility for wage levels is that of the trades unions. The first proposition is certainly true, but the second is nonsense. Responsibility for the level of wages in the private sector is just as much the responsibility of the employers as of the unions, and it simply will not do for employers to pretend that they can contract out of that responsibility.
I should now like to join in the congratulations which came from the other side of the House to my hon. Friend the Member for Mitcham (Mr. Carr) on the speech he made, which hon. Members opposite said was not only interesting but was full of constructive ideas. Perhaps my hon. Friend will forgive me if I deal with only one of the points he made—an important one. He expressed concern at the new criteria announced by my right hon. and learned Friend in respect of private investment overseas, and I would like to say two things about that.

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First, the new test to which my right hon. and learned Friend referred in his statement applies only to the non-sterling area. The second point, and, of course, I agree with my hon. Friend that private investment overseas is in normal circumstances an excellent thing, is that longterm it is generally of benefit to this country and also almost invariably of benefit to the recipient country. But in these present circumstances we felt that we must take action to ensure that future investment in the non-sterling area would make a real contribution to our balance of payments in the short term.
Some hon. Members have suggested that our proposals for limiting the increase of public expenditure on capital account ran counter to the recommendations of the Plowden Committee. My hon. Friend the Financial Secretary will be referring to this tomorrow. I will only say that we recognise the disadvantages of what the Plowden Committee called "short-term economy campaigns" and "stop-and-go" policies, but in the first place the Government's proposals for public expenditure are not of a short-term character. Secondly, no one would seriously suggest that if the economic situation warrants it, a change in the pace of public sector expenditure should not be made. Thirdly, the changes which my right hon. and learned Friend has proposed have been carefully selected to ensure that they are not of a character which will be uneconomic 02 wasteful.
The real significance of the proposals for public sector capital expenditure lies not only in the expenditure directly involved, but in the consequential savings. As I said in the debate on public investment, last November:
"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." —[OFFICIAL REPORT, 10th November, 1960; Vol. 629, c. 1243.]
The converse is equally true. The savings involved in my right hon. and learned Friend's proposals for public investment will affect the level of cur-
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rent expenditure and, in that sense, will also be effective in the years that lie ahead.
The right hon. Member for Huyton said that we were biased against the public sector. I was astonished that he should have referred to housing and slum clearance, but not at all surprised that at least on that score he expressed some anxiety that my right hon. Friend the Prime Minister would refer to the record of the Labour Government. The right hon. Gentleman seems to assume that there is something sacrosanct about the public sector of our economy and that there is something almost immoral about any attempt to 'tamper with it, yet one of the arguments always being put forward in favour of the complete Socialist State is that it would give greater control over the economy. Hon. Members opposite cannot have it both ways.
We have in the United Kingdom all the basic requisites for a thriving export trade on which a thriving economy must depend. Last year, the amount of net investment was almost twice as high as it was ten years ago, and this year it is expected to be up by another 7 per cent. As the hon. Member for Orkney and Shetland (Mr. Grimond) has said, we have the innate skills and a native adaptability to make us a match far any industrialised country through out the world.
The prospect before the United Kingdom is not, as the Opposition would have us believe, one of gloom and despondency. The outlook for the growth of world trade is good. Expanding markets for our exports are there to be exploited. Already, nearly two-fifths of the output of our manufacturing industry is sold abroad. If we had been able to devote only 1½ per cent. more of our national output to the balance of payments last year, our deficit of £344 million on current account would have been practically eliminated and another 1 per cent. would have given us a surplus of more than £200 million.
Those are the measures of the challenge which faces us. We are chided for having stated the obvious and undoubted fact that "we have never had it so good". All I would say to hon. Members is that, with a frank understanding of the difficulties Which face us

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and a determination to overcome them, there is no reason why we should not keep it that way.
Debate adjourned.—[Mr. Chichester-Clark.]
Debate to be resumed Tomorrow.

PLANNING DECISION, THURROCK
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]
9.59 p.m.
Mr. Hugh Delargy: I am going to talk about the threat to Rainbow Shaw. That is the pleasant name of a very pleasant place.
It being Ten o'clock, the Motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Chichester-Clark.]
Mr. Delargy: "Shaw" is an old English word for a copse, a thicket, or a small woodland.
This woodland is situated on high ground near the village of Linford in Thurrock, Essex. It is an old and beautiful wood, much appreciated by people in the neighbourhood and indeed by many people outside. It used to be very much larger. Much of it has been destroyed, and in its place there are sand and gravel pits which are hideous to look at, and dangerous to children.
The last remaining portion of Rainbow Shaw is threatened with similar destruction. The wood is owned by the Orsett Estate Company, and in May, 1960, this company applied to the Thurrock Urban District Council for permission to fell the trees and dig for gravel and sand. The council rejected the application, whereupon an appeal was made and a public inquiry was held, presided over by one of the Ministry's inspectors, who advised the Minister that the trees should be felled and that gravel and sand should be taken out.
The council objected on two simple grounds. First, that this was one of the few remaining natural amenities in this
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district which had been heavily industrialised. Secondly, the area was so small that it would not matter economically whether it was exploited or not. The council was, and still is, supported by all the societies in the area and in the county who are interested in wild life, bird watching, trees, and the preservation of rural England.
Some weeks ago I asked the Minister to reconsider the decision to have these woods felled. The Parliamentary Secretary replied that he would not do so. I am therefore asking him again tonight to reconsider this decision. I know that the Parliamentary Secretary will tell me that a full inquiry was held, that all the interested parties were given a full and sympathetic hearing, and that the inspector, having weighed all the evidence, came to a wise decision, but I should like to draw his attention to a rather curious aspect of this inquiry.
The first main point made by the Orsett Estate Company at the inquiry was that Rainbow Shaw was to be felled this year in any case. The inspector in reaching his decision made the same point. He wrote;
"This case must, I feel, be considered in the knowledge that this woodland will be felled in the near future in accordance with the agreement with the Forestry Commission."
Since the inquiry however, correspondence between the Commission and the Orsett Estate Company and between the county planning adviser and the company has come to light which indicates that the trees would be felled only after consultation with the Thurrock Urban District Council.
In a letter dated 5th February, 1959, to the Orsett Estate Company, the county planning adviser said;
"This of course"—
this being the application to fell the trees and develop the place for sand and gravel—
"would require a planning application which would have to go through the usual procedure, including consultations with interested parties, viz., the Thurrock U.D.C."
Later on the letter says;
"I would also advise my Committee not to grant a planning permission for mineral extraction until an agreement had been reached with the Orsett Estate Company to plant elsewhere, and subject to the views of the Thurrock U.D.C."
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph): From whom was this letter? I missed the hon. Member's reference to it.
Mr. Delargy: The county planning adviser. I will let the hon. Member have photostat copies of the correspondence. I thought that he might have had them already. The letter was sent by the Conservator, Forestry Commission, Block D., Government Offices, Brooklands Avenue, Cambridge. Less than a week later a letter was sent to the same company from the Forestry Commission, from which I extract one sentence;
"I am advised that the planning authority is likely to view favourably such an application, subject to consultations with the Thurrock U.D.C."
There were no consultations with the Thurrock U.D.C. There were no consultations between the county council and the urban district council, so the first point made both by the company and the inspector would appear to be quite invalid. That being so a fresh inquiry would seem to be called for.
The second request I make to the hon. Member—and I indicated in my supplementary question to him some weeks ago that I would make it—is that either he or his right hon. Friend should visit the district to see for himself what the results would be if his decision were carried out, and to realise the enormity of it. He may well answer that he cannot grant my request to make this visit, because if he did so he would have hundreds of similar requests from all over the country, which would be intolerable. I can see the force of his argument, but I stress that in this area the conditions are rather unusual. The people who live there suffer unusual disabilities arising from the local industries.
At one end of the constituency of West Thurrock we have the cement dust nuisance, and at the other end, at Shellhaven, there is the smell from the oil refineries. On many occasions I have asked successive Ministers to do something about the cement dust nuisance,. This is the responsibility of the Alkali Inspectorate of the hon. Member's Ministry. Every time I ask I receive the same answer, namely, that the inspectors are doing their best—as I
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have no doubt they are—and are keeping the matter under constant review. This is no very great consolation to the people living in West Thurrock, where all the houses and gardens are always shrouded in grey dust.
Not long ago a man who lives there wrote to me telling me that he poured himself out a cup of tea, and, since it was a warm afternoon, went outdoors to drink it, but before he could get the cup to his lips it was covered with a thick grey scum. At the other end of the constituency there is the smell from the oil refineries. I do not suppose that the hon. Gentleman can do much about that, but he can do something about Rainbow Shaw. It is one of the last remaining amenities, and it should be kept for the local people, who have given up rather more of their amenities than most people for the sake of the industry in the neighbourhood.
I ask the Minister to see this wood for himself. It is easy of access. We could leave after breakfast in a car, make a thorough examination of the wood, and be back in London for lunch. I should be delighted to go with him. He would be very welcome there, and I earnestly make this request to him to come and see our beautiful little Rainbow Shaw.
10.10 p.m.
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Sir Keith Joseph): The hon. Member for Thurrock (Mr. Delargy) has raised, understandable and strongly, a very legitimate point of view. This is a case where there is undoubted conflict between the economic needs of that part of the country and the amenity interests of the immediate inhabitants. No one wishes to gainsay that.
The hon. Gentleman has not spoken of this, but I know that he will not deny that there is a limited amount of sand and gravel in most of the areas of this country, and that if sand and gravel cannot be won in many of the places where it lies then building developments, which I know he will agree are necessary, will have to be supplied with sand and gravel from further afield and, therefore, at higher cost.

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This does not mean that I am saying for a moment that all sand and gravel must necessarily be allowed to be dug wherever it lies, but it means that in balancing the economy and the amenity interests of each area the economic need of the community in that area for sand and gravel must be given due weight.
I shall argue that the inspector's recommendation, and my right hon. Friend's acceptance of it, came down on the right side in this particular dilemma, although I am not for a moment denying that there were strong amenity interests on the other side.
I should like to pay tribute to the apparently dynamic vitality of the natural history interests of the local inhabitants of the hon. Member's constituency. I was most impressed to read that at the inquiry representatives of all sorts, of natural history, ecological societies, preservation societies and nature societies, were there making their views known, and no doubt there were others, not represented at the inquiry, who were also equally interested.
This is an admirable characteristic. No one is denying that Rainbow Shaw is, by all accounts, a most attractive patch of woodland and in the area concerned—which has been to some extent devastated by various forms of economic development, valuable though they may be—is an almost invaluable amenity. I hope that on the other side the hon. Gentleman will agree that it was the inspector himself Who pointed out that a large number of the trees in Rainbow Shaw were old. Although I am not a naturalist myself I think that he described some of them as being in poor condition—
Mr. Delargy: Some of them.
Sir K. Joseph: —and, therefore, needing replacement. It is pleasant to find a privately owned woodland so publicly accessible, which is a tribute to the owner.
I must make clear that there was a tree preservation order confirmed by my right hon. Friend on this woodland. That order was made in 1953. It was revoked three years later on the application of the Essex County Council. Because the woodland became dedicated to the Forestry Commission by the owner, this
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tree preservation order was no longer necessary. The dedication agreement made between the owner and the Forestry Commission took into account the need to fell the wood so as to replant it and get new trees. The felling was provided for in the agreement first to take place in 1962–63 and then the date was advanced to 1961.
Naturally, when the application was made for mineral development by the owner of this area there was strong local opposition. The local authority, the Thurrock Urban District Council, refused the application and there was an inquiry. As the hon. Gentleman made plain, after hearing the evidence the inspector recommended that economic interests should prevail in this case despite the clear recognition in his Report of the amenity value of Rainbow Shaw. My right hon. Friend backed his recommendation.
I should like, straight away, to dispose of the legal position and then to meet the other points raised by the hon. Gentleman. My right hon. Friend has an Obligation in these cases to make a decision. Once he has made the decision —the has made a decision in this case backing up his inspector's recommendation—there is no application technically before him. His statutory function is discharged. The hon. Gentleman may say that I am being legalistic, but that is the law. My right hon. Friend has no further function—
Mr. Delargy: Are we being told that if he is certain he has made a mistake the Minister cannot reverse that decision? It seems absurd.
Sir K. Joseph: Were my right hon. Friend absolutely satisfied that he had made a mistake—which is not so in this case—but in theory, were that the position, he has a reserve power to order revocation, which might then involve the local planning authority in the payment of compensation.
I was about to explain that when my right hon. Friend is satisfied that his decision is right and, therefore, is unwilling even to contemplate using this ultimate reserve power, it still remains open for the local planning authority to initiate a revocation order which would, in turn, need confirmation by my right

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hon. Friend. I must say that in most such cases compensation would be payable by the local planning authority. I am stating the legal position.
In this case, my right hon. Friend is satisfied that his decision was right and, therefore, no question can arise of my right hon. Friend initiating revocation proceedings. But, technically, it still remains open to the local planning authority to initiate such proceedings, with the consequences which I have described.
Now I should like to meet the other parts of the hon. Gentleman's argument.
I do not think it necessary, since the hon. Gentleman has not raised the subject, and, therefore, is not even disputing it, to argue the grave need for sand and gravel in the area. That is accepted and I need not go into it.
Mr. Delargy: Of course, we need sand and gravel, but the hon. Gentleman himself has said that that does not mean that we should take the sand from everywhere that we know there is sand. There are sandpits all round this wood and that is a powerful argument for not taking it from this place and disturbing the last beautiful little wood, when there are sandpits all round.
Sir K. Joseph: I accept that the presence of sand and gravel does not necessarily mean that it should be won from where it is. In this case, after the inquiry the inspector decided that it should be won and my right hon. Friend thought that his recommendation was correct.
It has to be remembered that the sand and gravel workings wil be dry work-nip. Conditions are attached to the planning permission requiring the ground to be restored and trees to be planted there. The decision as to what trees are to be planted is for the local authority—
Mr. Delargy: Not there.
Sir K. Joseph: In this particular case, once the sand and gravel is taken trees are to be planted. The hon. Gentleman will find it the condition in the report of the inquiry, that trees shall be planted over the worked out area of the site in accordance with such scheme as may be agreed with the local authority—there
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is a similar provision in the decision letter —and, therefore, this site will again be covered with trees.
The hon. Member and his constituents will say to me, "That is a theoretical argument if ever there was one. There may be twenty or thirty years before the wound is healed. "I agree that there may be many years before the wound caused by sand and gravel recovery will be healed, but I want to look at the alternative. It is necessary when thinking of the alternative to bear in mind that the dedication agreement made between the Forestry Commission and the owner, of which the county planning adviser was fully informed, provided for the felling of Rainbow Shaw in 1961 on technical forestry grounds without any thought of winning sand and gravel.
Mr. Delargy rose—
Sir K. Joseph: I shall explain the whole situation and the hon. Member can interrupt me later. I am advised that, had that felling been carried out, the Forestry Commission would have expected replanting to occur, not at once, but, say, within the next five years. This taking of sand and gravel will probably take about ten years at the end of which trees will be planted. So the net result of the sand and gravel winning as opposed to the felling and replanting of Rainbow Shaw that would have occurred if sand and gravel winning had not been allowed will probably be a delay of five years in the re-creation of woodlands.
I quite agree that five years is a long time and that the hon. Member's constituents would have mourned the felling of Rainbow Shaw whether it was felled by agreement between the Forestry Commission and the owner or for the winning of sand and gravel, but that was the alternative. There was no alternative of maintaining Rainbow Shaw as it is. The hon Member would say to me if we were talking this over in private, "That is all very well, but the owner applied to the Forestry Commission to leave Rainbow Shaw standing and to dedicate another piece of ground in his ownership, and the Forestry Commission agreed to that." That is quite correct.
The Forestry Commission was approached by the owner to substitute a replacement area for afforestation, and the Commission agreed. Again the

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county planning adviser was kept informed, but the owner applied for this substitution only in the hope that the application he was making to win sand and gravel at Rainbow Shaw would be allowed and the Forestry Commission agreed only on condition that the owner would restore to the Commission any forestry grant and meet the legal costs of the Commission for the two dedication agreements.
If my right hon. Friend's inspector had recommended that sand and gravel should not be won, or if my right hon. Friend had not come to the same conclusion as the inspector's recommendation—if, in other words, the owner's appeal had been dismissed—the owner's undertaking to fell Rainbow Shaw in compliance with the dedication agreement first made, so far as I can see, would have been automatically carried out. Obviously, the owner would not have gone to the expense and trouble of substituting another patch of land on which he would be due to plant woodland for Rainbow Shaw and meeting the obligation to restore forestry grants already made and pay the Commission's expenses for legal costs if he had not been allowed to win sand and gravel at Rainbow Shaw. He made the offer only with the possibility of being able and being allowed to win sand and gravel there.
I say to the hon. Member, although it will be small comfort to him and to his constituents, that, whether the appeal had been successful or not, Rainbow Shaw would have gone. If sand and gravel had not been allowed to be dug it is true that the residents would have been spared the mechanical misery that I am afraid is inseparable from the recovery of this essential material for ten years. If the appeal had not been allowed it is true that Rainbow Shaw would have been replaced by woodland probably five years earlier than it will be replaced now. I hope that the hon. Member will be satisfied by my argument, which I am sure is correct, and that his constituents will be satisfied that, even if the appeal had been dismissed, Rainbow Shaw would still have been felled. That is why I fear that I can give only this technical, legalistic, academic comfort to the hon. Member —that despite all the efforts of the local
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people and the undoubted amenity of this piece of woodland, an agreement had been made between the owner and the Forestry Commission and communicated to the county planning adviser which would have led inevitably to the destruction of that woodland on forestry grounds, without any connection with sand and gravel and even if the sand and gravel appeal had not been successful.
It is hard to say to the hon. Member and his constituents that in twenty or thirty years' time the wound will have healed and no one will know. I wish I could say that during those years the wild life which will be attracted to the sand and gravel workings will be as varied and as interesting as that which undoubtedly would be attracted to Rainbow Shaw. If I said that I fear that it would be misleading the House. But I hope that my argument will at least comfort the hon. Member and his constituents by showing that what will happen would in substance have happened in any case. With that, I fear, I must leave the matter.
Mr. Michael Stewart: Could the Minister clear up this point? He has rested a good deal of argument on the statement that in any case, as a result of the agreement betwen the owner and the Forestry Commission, the trees would have been felled, but if I heard my hon. Friend the Member for Thurrock (Mr. Delargy) aright, that was 'to be subject to the views of the Thurrock Urban District Council. The Minister did not deal with that point.
Sir K. Joseph: The hon. Member for Fulham (Mr. M. Stewart) is admirable in his attendance at these Adjournment debates and most painstaking in the way in which he listens to them. He is right; I did not deal with that point. I understand that the consultation with Thurrock U.D.C. which was undertaken was about the details of the area and the replanting of the substituted piece of land which the Forestry Commission would have accepted, and will accept, since Rainbow Shaw is to be felled. I do not know to what extent the county planning adviser and the Forestry Commission are consulting Thurrock U.D.C. I have not seen the letters, but the hon. Member undertook to send me photostat copies of them, and I shall be most interested to see them.
Mr. Delargy: Thurrock U.D.C. claims that it was not consulted at all and that there was no consultation with the county council., which is the principal planning authority, although fifteen months elapsed between sending these letters from the Forestry Commission and the county planning officer to the company and the time of its application to fell the trees.
Sir K. Joseph: I hope that the hon. Member will send me those letters. I am
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sure that the county planning officer intends to consult Thurrock. The delegation agreement changed between Essex Council Council and Thurrock U.D.C. in August, 1960, and Thurrock U.D.C. now has no power to refuse mineral applications or tree-planting orders, though it had power previously.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes past Ten o'clock.