Amendment proposed: At the end of the Question to add:
but humbly regret that the Gracious Speech contains no practical proposals directed to achieving sustained expansion of production without inflation, the necessary increase in our exports, and justice as between different sections of the community."—[Mr. Bowden.]
§ 3.43 p.m.
§ Mr. Hugh Gaitskell (Leeds, South)
I rise to support the Amendment so ably moved by my hon. Friend the Member for Leicester, South-West (Mr. Bowden). This is the first general economic debate that we have had since July. There is one thing that one can say about the July crisis which is in its favour. It is that it blew away a whole collection of illusions which existed about the facts of our economic situation and the facts of our economic record over the past ten years. It also certainly blew away some illusions about the policies which had created that situation.
It is now not denied in any quarter that the economic record of this country in those ten years was the worst, taken as a whole, of any advanced industrial country in the world. We were worst in respect of the expansion of exports. We were worst but one in expanding production. Our share of world trade fell steadily, and we were almost the worst in rising prices.
805 So far as the last two years are concerned, illusions have also gone. Nobody thinks now of 1960 as being a favourable year when everything was going well. We now understand that we were building up the largest deficit in our balance of payments for many years, and this was only cloaked and hidden from us through the increase in the gold reserves as a result of enormous borrowing at short-term. We now know quite well that over the ten years as a whole, while we have exported a good deal of capital and invested a good deal abroad, this has been balanced, nevertheless, by enormous borrowings at short-term which make sterling extremely vulnerable.
We can now add to this the Chancellor's own confession in his famous reply at Leicester. I quote, first, what was originally said. He is said to have said:I think that would take it as a criticism of myself. For a time, for a year or two, we had stable prices and I thought that the increase in personal incomes did not matter. That is a lesson we have learned. To that extent I must share the blame.Since when there has been an amendment to this; for "matter" read "materialise".
But thinking this over and assuming that there will be no further amendments —a point on which we shall all be glad to hear from the Chancellor later —I do not really see that it makes a great deal of difference. The plain fact is that, while there is a certain charm in the Chancellor's openness and naivety, he did not realise why prices were stable in those two years from the middle of 1958 to the middle of 1960. Yet it would not have been very difficult for the Chancellor to have found out. It is set out very plainly in the last Report of the Council on Prices Productivity and Incomes.
The explanation is given in that Report in terms, first, of the fact that basic material prices fell by 20 per cent. during that period, which, of course, was an enormous help to us. Secondly, that we had for the earlier part of the period an economic recession, and it is not difficult to keep prices stable if one damps down production enough. Thirdly, that when production was expanding it was taking up slack in circumstances where productivity almost always rises. But it is 806 worth quoting what the Council said in paragraph 24 of the its July Report about the present situation.Thus the factors which caused prices to be fairly stable from about the beginning of 1958 are no longer at work. Import prices are unlikely to fall substantially in the near future. Taking up slack no longer offers a quick way of raising productivity. The normal post-war trend of the economy has been reestablished; money incomes have been rising faster than production and prices are bound to rise in consequence.It is a good thing that the Chancellor should have thus admitted his mistakes, but the delay that he went through in discovering what was wrong has been a rather expensive matter for the country as a whole. What he seems to have supposed was that during these two years inflation had been vanquished, but for the reasons given by the Council nothing of the kind had occurred; inflation was, because of special circumstances, simply absent for the time being.
All this that has happened, and all these facts now known about the economic record of our country in the last ten years and especially the last two or three years should also have destroyed illusions about policies. We really ought to hear no more from hon. and right hon. Members opposite about the virtues of laissez-faire. It is time that they stopped talking about the necessity of decontrolling and about the advantages of having fewer controls. This does not seem to have got round to the Secretary of State for Scotland when he replied to the debate last night and came out with the astonishing claim that as the result of the decontrol of building all sorts of mysterious forces in pursuit of progress were let loose. We shall see a little later whether that is still the view of Her Majesty's Government.
Not only shall we hope not to hear about the virtues of laissez-faire and fewer controls, but I hope, also, that we shall have no more nonsense about the economic advantages of redistributing wealth and income in favour of the rich so as to give them more incentives. I hope that we shall have a little less obsession with public expenditure as the cause of all our evils, and that we shall also have rather less rigid defence of the virtues of high interest rates as the way out of our difficulties.
Possibly all this has begun to have some effect on the attitude of the Government. The Prime Minister, always 807 flexible in his attitude, was able to say at the Tory Party Conference:In any event—in this Common Market or out of it —our economic policy must be dynamic, not static. It must change with changing conditions. Naturally, after the restraints of six years of war and six years of Socialism our first instinct in 1951 was to set ourselves free —free from the restrictions and controls inevitable to a seige economy.He went on, somewhat surprisingly:We have only to look round the country to see the beneficial results of that broad policy. But freedom must not be made the excuse for licence. It must not mean waste, in efficiency or unwillingness to develop any of our resources to the maximum in an orderly and constructive way.That is, of course, the Prime Minister's method of telling the country that the previous policies have got us into a terrible mess and there must be a change of front.
But has there really been much change of front? So far the reactions on the Government side have been largely negative, for the only definite measures put into operation of all those announced in July were the old familiar faces —high interest rates; the credit squeeze, perhaps a little tougher than usual; the imposition of more taxes, indirect taxes, of course; and borrowing on an even more massive scale than usual —£700 million from the International Monetary Fund.
None of those measures was directed in any way to the real long-term problems facing the country. With regard to those problems, the Chancellor contented himself then, and, by and large, has contented himself ever since, with statements of intentions only. No doubt he will claim that the short-term measures are beginning to have some effect. I would not deny it. There is no great difficulty in damping down an economy if one really wants to do it. It is easy to depress production. One has only to do the sort of things that were done in July and in the autumn of 1957. It is easy.
The results are certainly becoming apparent. Production, which had been rising for a few months in the earlier part of this year, now appears to have flattened off and is fairly stationary. To quote one or two industries, steel production is now only 77 per cent. of capacity. The position in shipbuilding 808 is extraordinarily disturbing. Tonnage under construction for registration abroad —that is, exports —amounts to 42 ships of 302,974 tons, a total which is 7,286 tons less than the last quarter. Tonnage being built abroad for registration in Great Britain and Northern Ireland has risen during the quarter from 693,000 tons to a record figure of 762,000.
The following is a quotation from the Financial Times:Britain, as a result, is shown by these figures to be a net importer of almost 460,000 tons of shipping —equivalent to one third of our yards' annual output in recent years.It is significant, too, that the production in our yards is exactly one third less than it was in the peak of the post-war period.
The Federation of British Industries recently conducted an inquiry into the views of its members about production and its prospects. With regard to the level of output, whereas, in June, 38 per cent. of those asked considered that production was up compared with four months ago, the figure in October is down to 27, and the number of those who considered output to be down has increased from 13 per cent. to 20 per cent. There is the same story with length of order books. In June 28 per cent. were announcing longer order books, but in October there were only 17 per cent. In June, 23 per cent. were announcing shorter order books; in October, the proportion was 35 per cent.
I do not think there is much doubt about the picture confronting the country. It is one of the tailing off of a slight industrial expansion. This is certainly in part the result of the Chancellor's measures. I say "in part" because there is reason to believe that some of this was going to happen anyhow. Once again, it looks rather as though the Government have proceeded to apply deflationary policies to an economy which was already moving in that direction.
If the House would like any other figures, I can give those for industrial buildings. There a very striking decline is shown. The number of approvals — that is, the number of industrial development certificates issued —has fallen in the second and third quarters of this year compared with last year. In the 809 second quarter of last year the total was 1,024; in the second quarter of this year it was 639. In the third quarter of last year it was 764; in the third quarter of this year it was 596. In terms of area of factory space, something which is very familiar to the President of the Board of Trade, the figure for the 1961 second and third quarters is not much above half what it was last year. On top of that, today's figures for retail trade show that even there the tendency now is downwards.
What about the balance of payments? There has been some improvement, but it was already beginning to appear even before July, and it was natural that it should, because after the very large volume of imports associated with restocking last year, we would expect to be able to save something on that account this year.
There has been some rise in exports, but it is worth mentioning that the September exports, the last available, were lower than in any month this year except May and that the third quarter's exports were still only 1 per cent. above those for the first quarter of 1960 and the same as those for the second quarter of 1961. The Board of Trade Journal comments:The general picture is, therefore, of little change during this year in the underlying trend of exports.—though, of course, the average is 4 per cent above last year. It is also necessary to draw attention to the fact that the share of our exports in world manufactures is also continuing to fall, from 16.8 to 16.1 per cent. between the first and second quarters.
Once again, the inquiry by the Federation of British Industries shows gloomy results. The rate of new orders received for exports is down in October compared with June, and so is the amount of export orders on hand. The Chancellor referred the other day to the fact that there were better prospects ahead. I would not deny that. Indeed, I warmly welcome the fact that that is so. I agree with him that there is a greater opportunity for British exports at present than there has been for some months. But that has nothing to do with us. It is simply the result of favourable conditions generated by American recovery.
810 Even if one allows for that, and even if one allows for the decline in imports, the plain fact seems to be that we are not yet earning a surplus. We may perhaps just be balancing our trade and overseas payments. But we have to set against that the need, repeatedly urged upon us by the Government, to achieve a surplus of £400 million.
The conclusion is inevitable: we are nowhere near our target of exports. I think that it is also an inevitable conclusion that to hope to reach this target by general monetary and budgetary measures is a dangerously false illusion. It is always possible to put right the balance of payments in the short period —indeed, I suppose, also in the long period —by cutting down production and reducing imports. No doubt, in doing so, the Government will squeeze out a certain amount of exports into the world markets, but it is not good enough to rescue the balance of payments at the expense of cutting back industrial expansion. There is no answer in that way, and the conclusion I draw —one which I believe that any sensible person must draw —is the need for specific measures for the long-term solution of our problems.
The Gracious Speech had a curious reference to the "vigorous promotion" which was to be undertaken by the Government. We were told that the "vigorous promotion of exports" had already been announced. I must ask the Chancellor of the Exchequer to tell us what has been done. I cannot, for the life of me, find any specific measures in the Gracious Speech. Certainly, there is no lack of evidence of the need for more to be done. A survey of exports recently conducted by the Institute of Directors came to this conclusion, reported on 28th July in the Financial Times:In most cases, the manufacturer's failure to export successfully was a function not of any external circumstances but of a general attitude towards exports. 'It is not that he cannot export, but simply that he does not want to …Perhaps the most pronounced feature of this enquiry was the difference in the amount of interest exhibited in exporting and the conspicuously low proportion of managing directors who were really enthusiastic about, or were even interested in, this side of their business.That is a terrible indictment, and we want to know what the Government are doing about it. We want to know what 811 they are doing to change that atmosphere. There are any number of examples, published in newspapers in the last few months, which one could quote about this matter, and I shall take one or two. One was from the Secretary-Manager of the British Chamber of Commerce, in Switzerland, in a letter to The Times on 26th July last. This said:But of paramount importance is to create the conviction of a real desire to sell the impression of a take-it-or-leave-it attitude prevails strongly in this country.Why? Because British firms are too often uncompetitive in price, too careless about strict adherence to delivery arrangements, too inclined to favour the home customer and treat the export field as the depository for surplus stock, and inelastic about their promotion methods.One could give other examples.
The Chairman of the British Import Union, in Copenhagen, mentioned prices, design, and delivery dates and said:Within the textile and clothing trade complaints about design are overwhelming. Many British firms go on offering Continental importers merchandise which is by them considered old-fashioned, and which is bought by a tiny minority in Western Europe.I will say this for the Government. They have set up the Export Council for Europe, and that Council certainly does not mince its words. In its September paper, "Further trading opportunities in Europe", this is what the Council had to say, after giving a number of specific complaints:An image, far too widely accepted across the Channel, of a nation thinking and working in terms of the last century, devoid of initiative, inelastic in approach, and encompassed by restrictive price and transport regulations, needs to be dispelled and a new and truer picture substituted —of wideawake industrialists, controlling an efficient production structure, able and anxious to match new needs with new ideas.I can think of no better epitaph on this last decade of Tory rule.
Other things are wrong. There is complacency. One example of that comes from the steel industry, particularly the Steel Company of Wales. This company has recently been putting out advertisements with attractive photographs of the Chancellor of the Exchequer. When I first saw them they were so attractive that I thought they must be political advertisements. Perhaps they were. But this one 812 went wrong. After boasting about exports in the year to the end of September, 1961, and quoting the amounts of the direct exports of tin plate, sheet steel and electrical steel from the company at £34¼ million, it described this increase as encouraging. But we have to compare with the previous year's, and then we find that the figure described as encouraging showed a fall on the previous year. Perhaps, after all, it was a political advertisement.
We know the facts. I could go on for half-an-hour quoting similar statements about particular industries and things which are wrong. Many suggestions have been made. Are they being followed up? One suggestion is very simple —it is that we should insist on firms giving precise publicity to the proportion of their output which is exported. This would be a help. I think that they should be obliged to do it in their company reports. The more that we bring out the difference between different firms and their performances in this way, the better it will be.
It is suggested that firms engaged in the export business should be given more preference in credit. I do not know how far the right hon. and learned Gentleman thinks that that is discharged by the instructions given to the banks a little time ago, but one still continues to get a lot of complaints from exporters on this score.
Has he considered that, despite the expansion of the Export Credits Guarantee Department's capital —if that is the right word to use —there is still a great deal of complaint about high interest rates being paid by British exporters? It is even suggested in the Economist this week that there should be a special low rate of interest for exporters. That is an interesting suggestion, but I believe that it would be better to bring down interest rates altogether, for reasons which I shall explain later. Is there an instruction going to the employment exchanges to see that preference is given in the supply of skilled labour to those firms engaged in exports? What is being done about the proposal to set up co-operative selling agencies for small firms, a move which has worked well in one or two instances?
Above all, what is needed here is not so much general measures of the kind 813 I have suggested —these certainly must be considered —but specific inquiries into individual industries. What the Chancellor and the President of the Board of Trade ought to be doing is asking, in every industry which has a poor export performance, what has gone wrong.
It is not only a question of poor export performance either, but whether imports have risen sharply in these industries. The Government boast of their change of front. They are becoming keen on planning and are more partial to the measures adopted by Sir Stafford Cripps as President of the Board of Trade and as Chancellor of the Exchequer. I suggest that they could go one step further, and appoint, as he did, working parties for individual industries. I see no reason why they should oppose this, and I think that my right hon. Friend the Member for Huyton (Mr. H. Wilson) will agree with me that after the war these working parties did a very good job.
Now the Government have come along with their proposals for planning, and we must consider what those proposals are. It is not so much a matter of not hearing what they say, but that the whole thing is wrapped in complete mystery. I ask: what are the Government's intentions? Of course, it is a splendid thing that they recognise the need for planning, even if it is a little odd after all the bitter attacks they made on us after the war.
Naturally, they will explain all that away by saying that they are in favour of Conservative planning and not Socialist planning. Seriously, however, I believe that in this matter it would be as well if we dropped the "isms" altogether for the moment. Let us ask what we want to do. The answer is not in doubt. It is, through purposive planning, to achieve expansion and a growth in the economy.
If we can agree on that, the next question is how we are to do it. A great deal has been said and written recently about the French experience. Speaking in July, I commended it as something which the Government should consider very seriously. So far as one can make out, what happens in France is that the planning machine, as it were, has discussions with industries and with firms about their probable and possible expansion of output and, after a good deal of argument, agrees with them 814 upon certain figures. Those figures are then co-ordinated with those of other industries to see that they match up properly. They are then written into a plan which, in due course, is published. I may say that that is almost precisely what the Labour Government did in the immediate post-war years, at which right hon. and hon. Members opposite mocked so much.
Never mind that, I want to know what the Government are going to do now. Is it their intention that there should be such discussions by members of some planning staff with industries and with firms so that there can be agreement on the possible rate of expansion? The other day the Chancellor said that an expansion of 3 per cent. per annum was the best that he could hope for. Is he aware that the figure in the French new plan is not 3, but 5½ per cent. per annum increase in the gross national product, or 20 per cent. in four years? That is what the French expect to achieve.
I anticipate the criticism—indeed, I make it myself —that one can put down any figures one likes, but that they do not necessarily give the expansion which one wants. However, the important thing is that, having worked out these figures —which may be technically difficult, but which does not present any insuperable obstacles —one has to face the question of how they are to be enforced. How is one to see that the figures are achieved?
Different things can be done. One of them is through controls, and through controls because if there its a generally expansionist climate in the economy and a particular figure of investment for a particular sector is decided, one has to see that the other sectors do not go beyond the figures allotted to them. For example, supposing, as the French have done and as we on this side would very much wish to do, there were a bold and ambitious programme of municipal housing, supposing it became clear that it could not be achieved if private enterprise were allowed complete freedom to put up office buildings when and where liked, are the Government prepared, in that case, to introduce the necessary controls to prevent the office building from getting out of hand? That is a question which the Chancellor cannot evade, for it is something which is bound to come up. 815 There cannot be an effective plan without it being said what is to be built awl whether the building is to be in (the form of offices, houses, factories, or whatever it may be.
The French have a number of important sanctions. They can and do strictly control access to the capital market. It so happens that, owing to the structure of French industry, very many fewer firms there can rely on themselves for their own finance, so they have to go to the market for it. In order to get to the, market, they have to get the permission and support of the Government. Does the Chancellor propose to follow up that idea? I repeat that we cannot do as much as the French in this way because our industry is different, but a good deal more could be done to tighten up access to the capital market and to use it as a sanction to ensure fulfilment of plans.
The French also use other methods. For instance, they have an accelerated depreciation allowance for firms exporting more than 20 per cent. That is apparently allowed and nobody seems to compain about it. Have the Government considered that? I quote from an article in the Financial Times of 20th October which is relevant in this connection and which says:The nationalised industries have a large degree of independence as a reward for conforming to the broad lines of the plan, while private industries … accept a good deal of State guidance in return for help with finance, raw material supplies, export campaigns and so on. But it is a fact that each year between one-third and two-fifths of all productive investment is made by nationalised industries, whose key positions were an important factor in getting the plan off the ground after the end of the war.So they were here, but the Government had better think very carefully about this.
The article goes on:In the last resort, a firm is free to go its own way if it disagrees with the planners. But it will generally find that it pays to rejoin the fold. The State can apply sanctions, for example, by refusing to let the firm in on the Government-sponsored loans raised on the market for key industries … or by withholding special tax privileges or by not giving investment grants through the Economic and Social Development Fund …The smaller firms in manufacturing industry … do not fit easily into this picture. They are being given special attention at present. For example, 37 groups of small 816 firms have signed agreements with the State, under which they contract to carry out certain production objectives, in return for tax advantages and help in financing export promotion. M. Debre, the Prime Minister, has gone further —-too far, many industrialists say —by revealing that the Government is looking into the idea of nationalising firms which do not fulfil the objectives set for them by the Plan.Perhaps the Chancellor would like to give us his views on that. He cannot evade these vital questions.
It is no use just agreeing on certain figures. I do not deny that that has some value. The publicity is good if only for the general atmosphere created. As the Council on Prices and Productivity said, the view that one is to have generally an expansion of 4 or 5 per cent. a year, or whatever the figure is, may be a help. But do not let us "kid" ourselves, for that will not carry us very far unless we put some teeth into the planning machine as well, that is to say, unless it has some powers to see that its objectives are carried out.
Another problem which is closely associated with this is that of the shortage of skilled labour. I do not think that anybody denies that this is one of the main bottlenecks which will have to be got rid of if we are to have expansion. A general planning set-up is not needed to achieve this. It should have been dealt with long ago. The shortage of skilled labour is notorious, yet not enough apprenticeships by a long way are provided. As we all know very well, the position is that a few firms do an excellent job, but, unfortunately for them, they do not always keep the labour which they have trained.
There is a further point to bear in mind in connection with this problem, which, as the Minister of Labour knows, will get worse in the next two years as the bulge gradually comes on to the labour market. What has the Chancellor done about this? This is a perfectly straightforward, clear-cut, problem, although I do not think that there is any easy solution to it. So far as I can make out, however, all that has happened has been the establishment of the Industrial Training Council which, however hard its members work, simply lacks the authority and power necessary to achieve results.
In April, 1960, the then Minister of Labour announced that eight training 817 centres, formerly used for disabled persons, would now be available for training full-time craftsmen. After all these months, there are now precisely 132 boys in these eight training centres. That seems to be the height of the achievement.
On top of that, we now have something else. The Minister of Labour plans to save £750,000 by closing down two Government centres in Nottingham and London for training unskilled and unemployed persons and by reducing the intake at 15 rehabilitation units for disabled persons. It is a scandal that, at a moment when we ought to be trying to increase the mobility of labour and its skill, this is the sort of stupid economy which is proposed.
Incidentally, equally, the proposal to close down the Government Register of Scientific and Technical jobs is exceedingly mistaken. I do not know what the Minister of Labour thinks of his Estimates this year. I wonder whether he will be very proud of the fact that he is trying to save £750,000 in these ways while adding £500,000 for the administration of the Bill to control immigration.
I turn to the other main problem with which the Chancellor is concerned, namely, that of incomes and productivity, of which we have heard so much from him before. I suppose that it would be fair to say that in going into so much detail as to all the planning involved, and what is necessary, I am perhaps moving rather far ahead of the Chancellor. He is still uncertain of how much support his proposals will receive. The Trades Union Congress is considering the matter. It has not yet given its reply. I am sure that the trade union leaders, who are able and patriotic men, will do what they think best for the country, but it is not surprising that they have been a little reluctant about this matter, in view of the way in which the Chancellor has treated them.
There was no consultation with them before the pay pause policy was introduced. There was no discussion then about what should be done. We had a debate just before the Prorogation on the pay pause in the public sector, when my right hon. Friends both made what I thought were extraordinarily effective- 818 indeed, devastating —speeches. There was no effective reply from the Government. They simply cannot get away from the fact that they have broken these agreements and that they have simply asserted their right to disregard the solemn contracts they have made.
I do not want to go over that ground again. I want to confine myself to the more general issue. The first question that we must ask ourselves is: are we concerned with a short-term or a long-term problem here, and with a short-term or a long-term policy? If it is simply a short-term policy that the Chancellor is putting forward, for the crisis only, does he really think that it is still necessary to continue with it? If, at the beginning, he had said, "The exchange position is profoundly dangerous. I am really worried about it. We need some desperate measures of a purely temporary character to see us through, but they will be enforced only for as long as the £ is in danger", he might have got a better understanding. He did not take that line. He has never cleared up what was the short-run and what was the long-run here. [An HON. MEMBER: "He does not know."] One of my hon. Friends said that he does not know. I dare say that that is so, but there are one or two leaks which are beginning to appear.
The Minister of Labour confirmed a wages council award, but dated it from 2nd April. He avoided 1st April. The electricity supply authorities made an offer to apply after 1st April, as I understand it. Will the Chancellor tell us whether that is the date on which he has decided to bring this policy to an end?
The right hon. and learned Gentleman really should ask himself a question on this. When he brings it to an end, as he is bound to do —even the Prime Minister said that the pay pause does not solve the problem —what will he have achieved? The private sector will have gone ahead. I do not know by how much, but it will have gone ahead by a certain amount. The public sector, because of the Government's action, will have lagged behind. Does the Chancellor really suppose that the public employees will not demand to catch up again? Does he really think that they will simply accept the new differentials which have been created as a result of 819 the right hon. and learned Gentleman's actions? Has not he learned enough from the experience of the last few years, with the succession of commissions and committees that we have had which have had to settle the pay of the civil servants and the police, the doctors and the dentists; and does not he think we ought to have one to settle the pay of the firemen as well?
I cannot understand what advantage he thinks there is in prolonging this period. The great weakness of his attitude on this matter is not that he tells us that there is a problem —we know that there is a problem —'but that he has treated a long-run problem as though it was a short-run problem, and he has tackled that short-run problem in the most foolish way imaginable.
The right hon. and learned Gentleman may ask me, "What should I have done?" or, "What should I do now?" I shall try to tell him. The first thing he must do is to recognise that this is a long-term problem and that it certainly cannot easily be solved. But the most important thing is not so much to impose restraints on incomes as to obtain higher productivity. If we are to get higher productivity we may as well take one recognised road towards it, and that is to reduce interest rates still further. He should have a fresh look at the interest rate policy.
It is an absurd situation that this country should continue to have one of the highest interest rates in the world — fax higher than Germany, America, France, and almost every other industrial country. Why is this? It is simply because, year after year, we have had to borrow large sums at short term in order to protect the exchanges. This, again, in my view, has come about because of the effort we have made —and on the whole, knowing the difficulties, I think that it has been a great effort —to maintain ourselves as world bankers with totally inadequate reserves and an extremely uncertain balance of payments situation.
That is a separate subject, which I do not propose to press further, but the latest figures, according to Mr. Conant, in an article in the Bankers' Magazine —and he is quite an expert in this field — show that the cost of the high interest rates on short-term borrowing, in terms 820 of our invisibles, has increased from £33 million in 1950 to £175 million in 1961. We can discount some of that if we like, but it seems clear that we are paying, on the balance of payments, about £100 million a year more as a result of the interest rate policy. Bearing that in mind, and remembering the restrictive effect it has at home, I suggest that it is time it was looked at.
The second thing that the Chancellor must understand is that if he wants restraint on incomes he will get it only by agreement. The third thing is that people will agree only if they think that the general situation is fair, or that the Government are trying to make it so. Therefore, it follows automatically that we shall not succeed in this task unless our social policies are just, and seem to be just to the workers, whose help we seek to obtain.
The trouble is that the Chancellor has not yet confessed quite enough. He has confessed his ignorance of the situation over the last two years, but he has not yet confessed the foolishness of the steps he took earlier in the year. It is a pity. He has had several opportunities of admitting that he did not understand how grave the problem was during the last Parliament, and that he would like to reconsider it. He can still do this. He can still cancel the Surtax concession. Does not he understand that failure to do this is a very grave obstacle to him in his effort to achieve what is far more important —for the Surtax payers as well —namely, steady expansion without inflation?
The right hon. and learned Gentleman has talked about a capital gains tax. Will he explain to us why this was not mentioned in the Gracious Speech? Will he tell us when he will introduce it? Will it be before the Budget, or during the Budget? Is it to be expected then, or later? Can we have a little more light thrown on the question whether this is a serious attempt to redress the balance of taxation or just one of the little gimmicks with which he hopes to win some support?
The next thing he must do if he wants support and assistance from the organised labour movement is to drop the arbitrary and unfair discrimination against public employees.
I would make one other suggestion to him, which I think he and the Leader 821 of the House should consider very seriously. If they want to win over people to their point of view —and especially if they want to ask the people to do some things which are very difficult for them to do, and which it will not be easy for union leaders to persuade their members to support —they might consider offering the people something else which they want. It so happens that the people do want something else very badly. They want the full implementation of the Gowers Report. Why cannot that be done in this Parliament?
The Government's record on this is scandalous. They faithfully promised last year that they would introduce legislation. Why have we not had it? If we are to have it, let them tell us, for heaven's sake. After all, they should try to put over what they can to the T.U.C. and the other people concerned.
Three and a half months have elapsed since the Chancellor admitted the grave crisis facing the nation and announced what he proposed to do about it. The impression we received then has not been altered by anything which has happened since. It is an impression of a Government who are dimly conscious of the failure of their previous policies and how disastrous they have been for the country but who are only vaguely groping towards a new policy. They recognise that this new policy must involve the abandonment of many cherished nostrums which appeal to their party and the adoption of much that they have attacked and despised in the past. The trouble is that they cannot bring themselves to take the vital steps which alone make sense of the new start for which the Prime Minister has asked.
The Chancellor admits that he did not understand what was happening in the last two years, but he is still not prepared to admit the mistakes he made as a consequence of that ignorance. We are confronted with a collection of aspirations and hopes without much meaning, such as, "There is a problem of incomes and productivity which somehow or other we must solve", or "We must have planning but it must be Conservative planning without controls".
The Prime Minister, who, of course, is better at this sort of thing than anyone else, even finds it possible in one 822 and the same speech to promise everyone £1,000 a year and yet lament the gross materialism which so disfigures society today. How he imagines that anyone can be impressed by that sort of thing from him, of all people, the great architect of complacency and the materialistic outlook, I cannot imagine. One would have supposed that even he would realise that hypocrisy on this scale really can be a trifle nauseating.
The Prime Minister makes a plea to us —he did it the other day in the first debate on the Gracious Speech —thatwe should try to join together in this new approach with the hope of making it as effective as possible."—[OFFICIAL REPORT, 31st October, 1961; Vol. 648, c. 42.]That is a bit cool. He asks for our help in re-creating policies which he and his friends bitterly attacked and then destroyed. We will give him advice. We will tell him what we think he should do. I have been trying to do that this afternoon. But we cannot ensure his success, which is threatened not so much by our criticisms as by his own past, for people do not forget so easily. Having gulled them into complacency, you cannot galvanise them into action.
Having deliberately pursued policies which appear to millions of people as monstrously unfair, you cannot expect people to respond kindly when they are asked to accept the status quo as an ideal distribution of wealth. Having done your best to stress, encourage and underline the supreme duty of the individual to look after himself, you will not get him easily to understand the need for considering the wants of others.
There is a simpler way out for the right hon. Gentleman, the Chancellor and their right hon. and hon. Friends —to confess their failure and get out altogether.
§ 4.34 p.m.
§ The Chancellor of the Exchequer (Mr.Selwyn Lloyd)
When we consider the state of the economy, the dominant matter in our minds must be exports. The right hon. Gentleman the Leader of the Opposition devoted a good deal of the earlier part of his speech to exports. He referred to better prospects, although I do not think he said that our own exporters deserve some credit in this respect, which was rather unfair to them. 823 The work of the Export Councils for Europe, the Western Hemisphere and the Middle East has been very good, and much is being done by those bodies to promote exports. We have been having encouraging success in markets where competition is keen.
Exports to the United States are now at a higher level than in the first half of the year, and in the three months ending 31st August there was a rise of 23 per cent. over the previous three months. Exports to Western Europe were more than £100 million in September, for the fourth month running, compared with a monthly average of about £85 million in 1960. It is quite true that these increases were, unfortunately, accompanied by poorer figures for the sterling area markets, but we have reason to believe that purchasing power will be improving in those markets and prospects will be better there also. On the assumption that there is no disaster in international relations, I think it looks as though world trade is in for a period of expansion and there is a great opportunity for exporters.
The right hon. Gentleman posed the question whether the Government have done what they should or could do, remembering that we cannot force people overseas by Act of Parliament to buy our goods. I turn, first, to credit insurance. During the past year, my right hon. Friend the present Secretary of State for the Colonies and I undertook a major overhaul of the services offered to exporters by the Export Credits Guarantee Department. We are convinced that the services available to exporters here are as good as those provided by any other country. In fact, they are a reason for some complaint by other countries. Further, in the provision of credit, we have made it easier in some respects to raise finance for export. For example, the Bank of England, with our support, earlier this year introduced arrangements whereby banks, by discounting at the Bank of England, are able to treat as liquid assets the first 18 months of medium term credits advanced to exporters. The new Export Guarantees Bill, just introduced, increases the amount available for export guarantees under Section 2 of the Export Guarantees Act from £400 million to £800 million.
824 I turn, next, to help for the small exporter. In order to help the small firm with little or no experience in exporting, we introduced last April a new form of export credit cover for firms with a current export turn-over of less than £10,000 a year. These firms do not now have to cover their whole turnover with E.C.G.D., but they can get cover for transactions with individually approved buyers.
As regards the general promotion of exports, the most recent figures show that the Board of Trade services in giving information and assistance to exporters in this country have doubled in volume this year compared with the same period last year. Full publicity is being given to the export effort. A great deal of trouble has been taken in relation to individual concerns, and the Board of Trade has carried out inquiries into the achievements of individual firms, he right hon. Gentleman referred to this. Also, in the current financial year, we are helping exporters by increased grants for trade fairs overseas.
It is said —the right hon. Gentleman skated rather warily round this point — that we ought to give an incentive for exports by relieving exporters of direct taxation. To do that would be to act directly contrary to our international obligations, which we helped to frame and which, with some success, we have urged upon other countries. If we were to do that, other countries, we believe, would follow suit. We are vulnerable to retaliation because of our dependence upon exports, and I believe that our exports would suffer, not gain. If anyone knows of cases of relief of direct taxation on exporters in other countries, I should very much like to know about them so that representations may be made. I am speaking here about the relief of direct taxation.
§ Mr. Harold Wilson (Huyton)
Does the right hon. and learned Gentleman agree that an accelerated depreciation allowance on direct taxation or an investment allowance such as we have pressed for in Finance Bill after Finance Bill would be contrary to our international obligations? If so, why has he not complained about the French having one?
§ Mr. Lloyd
First, there is some uncertainty as to exactly what the French 825 procedure is, but in my view it would be contrary and a matter on which representations should be made —[HON. MEMBERS: "Why?"] One of the points about this is that I have found from experience that these allegations are frequently made but that when one tries to track them down one very often finds that the facts are quite different from what has been suggested. I shall come to a specific practice by one country, but relief from direct taxation is against the rules, and it is more in our interests to keep to the rules.
§ Mr. Gerald Nabarro (Kidderminster)
As the Chancellor knows, my hon. Friends and I have continuously supported him in the matter of not giving a direct exports tax incentive, which is contrary to our international obligations, but an accelerated depreciation allowance, as suggested by the right hon. Member for Huyton (Mr. H. Wilson), is a different matter. Then we would still be giving the exporter a global sum in depreciation equal to the historical value of his assets, but concentrating it over a shorter period of years. That is what the French are doing with very great effect and success. Cannot we examine that matter promptly?
§ Mr. Lloyd
I promise my hon. Friend the Member for Kidderminster (Mr. Nabarro) and the right hon. Member for Huyton (Mr. H. Wilson), who raised it, that the matter will be examined. I think the whole question of depreciation allowance is one which deserves examination, and, in fact, it is currently being done.
I was dealing first with relief of direct taxation. Then it is said by some people that we ought to subsidise our exports. I do not think anyone really favours direct subsidy, because that also would be contrary to our obligations and would be a dangerous precedent. Then it is said, "If you do not subsidise exports you ought to subsidise credit rates for them. "Again, my view is that that would be contrary to our obligations. Again, if our competitors are doing that it is a matter for representation. I am not giving particulars of a case, but we have reason to believe that in one instance that is now being done, and that matter is being taken up. I think it is in our interests as a whole 826 to try to keep these rules universally observed rather than to join in breaking them ourselves.
Thirdly, it is said that we ought to alter our system of taxation and bring in a turn-over tax in substitution for our present Purchase Tax. I think the right hon. Member for Huyton has suggested this; certainly he has raised it.
§ Mr. H. Wilson
I must correct that. I made it perfectly plain on 25th July, that it would not be in substitution for Purchase Tax, because that would mean a sales tax. What I said was that the Government should consider a system of industrial turn-over tax on those items not currently covered by Purchase Tax, not in substitution for Purchase Tax.
§ Mr. Lloyd
I was dealing with the suggestion that we should have a turnover tax on the German model. I think there are substantial pros and cons. The German turn-over tax is one levied at each stage of production of the finished article. It is criticised by the Germans themselves. To use a perfectly horrible word, it has led to "verticalisation" of industry so that the same concern carries out all the processes to avoid tax. I think this can have dangers. There is also the question of the effect on the cost of living. I should like to work out more precisely how it would affect the cost of living, but I am told that on a rough calculation on certain assumptions each 1 per cent. of the turn-over tax on the German model would mean 1 per cent. would be added to the cost of living. If there were a turn-over tax of 10 per cent. it would put the cost of living up 10 per cent. Although it would be an inducement for some to go into export, it might price others out of a market which they have already established. My view is that we should not follow that German precedent.
I think there is room for improvement in our machinery for the provision of credit. My right hon. Friend the President of the Board of Trade and I are now examining whether there are opportunities for further action over the provision of credit and whether our arrangements for the various types of credit needed for various periods meet the requirements. When we are talking about terms of credit, it should be remembered that we want exports for which we are paid. That 827 is the object of the exercise. The more generous the credit terms —although it is quite true that we may have a better chance of getting an order —if they become the rule rather than the exception the balance of payments is not in fact helped in the long run.
After considering these matters, I am perfectly certain that the most important ways to help exports are, first, to stop inflation and the rise in costs so that exporters can plan and quote on a stable basis, and secondly, to ensure that there is room in the economy for the needed expansion of exports.
From those two aspects, I want to consider the present position. The right hon. Gentleman the Leader of the Opposition admitted that since 25th July confidence in sterling has been much improved. The capital outflow of the previous months has been reversed. The rate of exchange with the dollar is above parity. It has been possible to reduce Bank Rate from 7 per cent. to 6 per cent. Reserves have been strengthened and we have paid back £100 million of the I.M.F. drawing. [HON. MEMBERS: "Oh."] I should have thought that anyone would have drawn a modest measure of satisfaction from those facts if one were interested in the prosperity and standard of living of the country. Measures taken to reduce pressure of home demand have had some effect. The total advances by the London clearing banks after a large and prolonged rise fell by £220 million in August and September and by a further, although smaller sum, in October. There are indications in the statistics of retail sales that the rise in consumer expenditure was checked in the third quarter. There has also been a slight easing in the pressure of demand for labour.
In my statement, on 25th July, I asked for the co-operation of the banks, building societies and insurance companies in restraining advances for personal consumption and also for finance of speculative building and other speculative projects, the purpose being to leave room for exports and productive industry. I am grateful for the help received from these institutions and ask for their continued co-operation. These actions have helped to curb inflation and to ensure that more resources are available for export.
828 I believe that the pause in the increase of personal incomes is also necessary. The right hon. Gentleman referred to it, and we discussed it at length a fortnight ago. Although people fulminate against it and abuse me to their hearts' content, they know that in fact it is right and that, if we did not have this pause, prices, wages and costs would go spiralling up-wards and in that process the poorest paid, those with the smallest incomes, would come off worst.
With regard to the balance of payments, there has been—
§ Mr. Lloyd
The right hon. Member will allow me to make my speech in my own way. With regard to the balance of payments, there has been a steady improvement in the current balance. The excess of imports over exports for the first quarter averaged £64 million a month. For the second quarter it averaged £43 million a month, and in the third quarter £34 million a month. That is a satisfactory improvement, but it is not satisfactory enough, because —I agree with the right hon. Gentleman —our total earnings, both visible and invisible, are still a long way short of what is needed to finance our overseas expenditure even on a reduced basis and to finance our commitments for investment and aid.
Therefore, we must continue with our present policies. We must continue to restrain home demand. That may seem a harsh doctrine, but my view is that nothing will frustrate the export drive more than the pull of the home market.
I do not accept what the right hon. Gentleman said —that the danger at the moment is that we are moving into a deflationary phase. The advice given to me is that in the early part of next year there will be strong expansionary forces at work again. In the present situation, I think that we must realise that sound growth can come only from an expansion in exports.
The second thing which we must do for the long term is help the balance of payments by curtailing Government expenditure overseas. This is not a very opportune time to discuss the reduction of overseas military expenditure, but as a deficit country we cannot afford to add 829 to the existing imbalance by payment of large sums across the exchanges to West Germany, a surplus country, for the maintenance of our troops. Other arrangements will have to be made in the next financial year, and that will be the responsibility of N.A.T.O.
But both these methods, the restraint of home demand and the cutting down of Government expenditure overseas, are negative, and the third thing which we have to do is to attack the obstacles to growth. This is a positive task which has to be carried out by the Government and by both sides of industry together.
I have been asked about my ideas on planning and about the progress which has been made in the talks with both sides of industry on this subject. I have seen representatives of the T.U.C. and of the employers' organisations each upon two occasions and the heads of the nationalised industries on one occasion. The objective which I had in mind was stated by me in the House on 26th July. Since the right hon. Gentleman referred to the matter, perhaps he will forgive my quoting what I then said: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."—[OFFICIAL REPORT, 26th July, 1961; Vol. 644, c. 439.]As I have tried to put it to the representatives of both sides of industry, what I have in mind is a body which does not meet just to comment on decisions already taken. There must be genuine consultation and people, and particularly Government representatives, must not go there, with their minds made up, to announce decisions and just to hear comments.
The second purpose is the examination of the problems involved in national economic development, of the forward plans for the various sectors of 830 the economy and for particular industries, and an examination, as I said, of the obstacles to sound growth. The organisation which I have in mind is a council not very large in size but a council which would consult, in the sense which I have indicated, which would examine and which would recommend and which would perhaps make declarations. But I do not think that the council would be able to take action in the spheres in which legislation is needed. There, executive action must rest with the Government of the day, the House of Commons and Parliament. But certainly there are other spheres —the right hon. Gentleman referred to one, technical training, for example —in which one would expect the deliberations of the council to lead to action.
But the point would be that it would provide a great opportunity for both sides of industry to influence policy at the formative stage. I have stated that one of the objectives is the encouragement of sound growth and the removal of obstacles to it. In that connection, I think that the work of the staff of the council will be very important. It has been referred to as the office or the secretariat or the staff. I think that that staff must have a measure of autonomy, a life and vigour of its own, operating within lines generally approved by the council.
There was a view held by some people in the beginning that the French Commission de Plan had nothing to do with the Government. In fact, it is a Government Department and works within the Government. Therefore, although one hopes that this staff will have a life of its own, it must work within lines generally laid down by the council. I have not yet had the final answer of the representatives of the Trades Union Congress to my proposals. I am very anxious to get on with this as quickly as possible. I think that they understand the urgency of the matter, and I hope that I shall get their answer as soon as possible. I do not want this to be another advisory committee or debating society. I want a body which will be effective at the policy-making stage.
After all, in spite of the right hon. Gentleman's tale of woe today, the object 831 of this exercise is to continue the improvement in the standard of living of the past ten years. During the past ten years —the right hon. Gentleman will not dispute this —there has been a massive improvement to the extent of one-third in real terms of the average weekly earnings. A figure which was frequently quoted at me during the debates on the Finance Bill was that there are still 10 million people in this country, it was said, earning £10 a week or less. In fact, ½million of those are juveniles under 18 and 2½million are retired people. Even so, I compared the figures with those in 1951, and allowing for the change in the value of money I found that the number of people then in this category was 16 million, so that 6 million have moved across that line which is so often quoted. It is to continue that process which is the main object of the work of this body.
The right hon. Gentleman twitted me at the beginning of his speech with the suggestion that I made many miscalculations during my Budget proposals.
§ Mr. Lloyd
I am intrigued by the interest which has been displayed by him and by the right hon. Member for Huyton in what I said at Leicester. Of course, neither of them has ever admitted that he was wrong about anything. That is why they take this interest. The right hon. Member for Belper (Mr. G. Brown), the Deputy Leader of the Opposition, even dragged the matter into a debate on defence. I also see that for some strange reason it is described as an indiscretion for a Minister to admit that he has been wrong. That was not said by the right hon. Gentleman, but it was said over the week-end that I had committed an indiscretion by saying that I had been wrong about something.
It is, however, of some slight importance what it was that I said I was wrong about, and there is a difference of opinion about that. There has been a very strong reaction to the idea that a reporter could have made a mistake or misheard what I said. I have never suggested that it was anything more than an unintentional mistake.
However that may be, what I intended to convey in my answer to the question 832 and what I think I conveyed to most of my audience, was that in dealing with these recurrent crises the country is not master of all the circumstances. We cannot foretell what fluctuations there will be in international currencies. We cannot sell exports by passing laws here, and we cannot foresee the effect upon our export markets of international developments or troubles. Nor can we precisely forecast, in spite of all the superabundance of statistics, matters like growth in personal incomes, stock building and the like.
At the beginning of April, I estimated that a surplus of £500 million above the line would exercise a sufficiently deflationary effect upon the economy and that on a reasonable prognosis we should get through 1961 without further deflationary measures. I did, however, ask for two additional powers if I should be wrong, the two surcharges, to be available in addition to the normal monetary weapons. In the event, I had to take further deflationary steps, using some of the monetary weapons and one of the two regulators.
But who are the Opposition, who are right hon. and hon. Gentlemen opposite, to talk about miscalculation? At no time in the Budget debate did any of them suggest that I should take additional measures to squeeze credit and reduce demand. There was not one warning word about the danger of increases in personal incomes, wages and salaries from them. The Leader of the Opposition, speaking the other day, and referring to my remark about personal incomes, said that I might have thought about the increase in personal incomes before the Budget. I hate to remind him of what I said in my Budget speech.
§ Mr. Lloyd
I will come to that. Having referred to the 2½ years before mid-1960, I said that the most recent wage round had provided increases going well beyond the rate of productivity increase and that the interval since the previous round had also been shortened. I said,Such developments are bound to put pressure on costs and prices.I went on to say, as recorded at the foot of column 798 of the OFFICIAL REPORT,There is reason to fear that the cost-inflationary process will speed up further. That, 833 I feel, is our principal menace at present, and one which it is impossible to exaggerate."— [OFFICIAL REPORT, 17th April, 1961; Vol. 638, c. 796–98.]To suggest that at the time of the Budget I was not concerned with this increase in personal incomes is ridiculous. The suggestion that 'I thought at that time that increases in personal incomes did not matter is a (palpable absurdity, as the quotation I have just made proves.
What I said at Leicester last Saturday week was really what I said in the House of Commons on 23rd October. I have been criticised for it by the right hon. Gentleman today, but I was speaking of the general increase in personal incomes beyond what the increase in national production made reasonable. I said that I had thought that stability of consumer prices would make it easier to get restraint over increases in incomes. A great many other people have been proved to be wrong about that as well. I admit at once that there is something in the right hon. Gentleman's argument about import prices, but it is precisely because the period of stability did not lead to restraint in the sense in which I have described it that it is necessary for us to work out new methods of keeping a better relationship between increases in personal incomes and increases in production. These new methods must be worked out, or at all events a commencement must be made, during the period of the current pause.
Towards the end of his speech the right hon. Gentleman said that what was wrong was that we had been unfair. He alleged that we were really asking only wage earners and salary earners for sacrifices. That is not true. Profits are falling. [HON. MEMBERS: "Oh."] I gave the figures on 23rd October. There has been a 7 per cent. fall in the first half of 1961 compared with the first half of 1960. There is in addition the increase of 2½ per cent. in the Profits Tax.
With regard to my statement that I saw no reason for a general increase in dividends, that too is being regarded. I said on 25th July that I was satisfied in regard to what are called short-term gains that further legislation is necessary to bring certain transactions —for example, transactions on the Stock Exchange and in property, which are at present tax-free —within the existing tax system. I said that I would include this in next year's 834 Budget. On 23rd October I said that I would do this earlier if it proved practicable. The fact that it is not mentioned in the Gracious Speech is an unsound debating point. The right hon. Gentleman might have commented just as unfavourably on the fact that there is no reference in the Gracious Speech to a Finance Bill. The matter was specifically covered by what I said. We are at work on the details now. I warn hon. Members that they will find it an exceedingly complicated matter when they come to it, but the draftsmen are drafting as quickly as they can. I am not yet able to say when they will be able to complete their work and whether it will be possible to have a separate Bill before the Budget.
§ Mr. Lloyd
The right hon. Gentleman must wait to see what is in the Bill. I shall not anticipate what will be in the Bill. It would be quite wrong and improper for me to attempt to do so.
The final point which the right hon. Gentleman made was with regard to the Surtax concession. It has been referred to again and again. Tremendous efforts have been made by the Opposition to raise public indignation about this. I suspect that if I had taken no action about Surtax they would have criticised me for that. I ask the Opposition to listen to what the Daily Herald leading article said on 16th January.
§ Mr. Lloyd
The right hon. Gentleman is going to hear it again. This was written when it was probably thought that I would not do anything about Surtax. The Daily Herald said:And he —the Chancellor —would encourage able young men in industry, as well as performing a belated act of justice, if he ended the collection of Surtax on earnings as low as £2,000 a year. Surtax was meant to be a tax on the rich. But £2,000 a year is now equal to only £700 before the war. Even if the starting level were raised to £5,000 the tax would still be discouraging people whom it was never meant to reach. People to whom £2,000 still sounds a lot of money should not be jealous; for the present state of affairs is harming the interests of the whole country.That is a comprehensive, clear and convincing justification of what I have done.
The Amendment cannot be sustained by reason. The only argument which the 835 Opposition can put forward is rather irrelevant interruptions.
§ Mr. Gaitskell
There is one very important question which I put to the right hon. and learned Gentleman but which he has not answered. It is very relevant to all the discussions he is having with industry at the moment. How long does he expect his pay pause to continue and what is the relationship of this pay pause to what he apparently regards, and I think rightly regards, as the long-term problem of incomes and productivity?
§ Mr. Lloyd
What I have said before with regard to the length of the pay pause is that I do not think that increases in personal incomes were justified this year and that when we have the figures for this year we should look at the situation again. This means taking a look at the situation early in the next year. I certainly am not going to commit myself to any date or time, because this is a matter of common sense. If we do not get acceptance of the pause and of the fact that personal incomes must not increase faster than the rate of increase in production, we shall price ourselves out of our markets and have great difficulty in sustaining our balance of payments. This is a matter of common sense which I believe is being generally accepted. I think that it represents the view of the country far more than the Amendment.
§ 5.7 p.m.
§ Mr. J. Idwal Jones (Wrexham)
Debates on the economic situation take place at such frequent intervals that they usually follow the same pattern. The pattern has already shown itself this afternoon. There is generally a complacent attitude towards the economy as it is but at the same time a certain measure of concern to justify the Chancellor of the Exchequer and the Government applying certain restraints.
We have seen that happen this afternoon. We experienced it many years ago when the present Home Secretary was Chancellor of the Exchequer. He said very complacently that we could increase the national product and double the standard of living in twenty-five years, but at the same time he applied 836 restraints on the economy. Even the Prime Minister applied the same principle when he was Chancellor of the Exchequer. After selling the Trinidad Oil assets, after putting 1s. per item on prescriptions and after introducing Premium Bonds, he insisted that the economy at heart was really sound. This has been the general attitude of the Government for the past ten years. They say, on the one hand, that the economy is sound. On the other hand, they try to justify restraints on the economy.
Last July, after we had the extraordinary experience of having virtually three Budgets in six months, the then President of the Board of Trade said this, which shows the complacency of the period:Our reserves are not as inadequate as that, especially when you add the increased facilities available from the International Monetary Fund. We must not give the impression that we cannot meet our commitments and position as world bankers."—[OFFICIAL REPORT, 18th July, 1961; Vol. 644, c. 1083–4.]To me that is the crux of the situation.
We are told that we must keep up appearances. The right hon. Member for Woodford (Sir W. Churchill), whom we are all glad to see here this afternoon, said in 1951 that the Conservatives had been returned to power to put the finances of this country on a sound financial basis after "six years of Socialist misrule." Yet, after ten years of continuous Conservative rule, this country, as the Chancellor admitted this afternoon, has become so dependent on the moods and whims of international speculators that we have lost our sovereignty over a large part of our domestic economy, and we are having to fall back on keeping up appearances. We must keep up appearances at all costs. We must continue with the paint, the powder, the clothing, and the glamour, even though it means starving the body which has to wear them. That has been the Government's policy for the last ten years, and we have been deluding ourselves that the international speculator was not able to discover the real weakness of our economy.
The Chancellor, with the experience of his predecessor and his own, should have learned a lesson. To justify the wage pause, he said that our productivity had gone up by only £630 million 837 in the last year. Did he inquire into the reason why it had increased by only that sum? Was not the financial policy which has been pursued for the last ten years responsible for that small increase in our productivity?
Let us follow the story further. In 1960 we had a balance of payments deficiency of £340 million. To meet our current requirements, we need a net surplus of £450 million, so the deficit was really £800 million. What did the Chancellor do to keep up appearances? He kept a high rate of interest and thereby attracted £700 million of hot money. The £ was artificially strengthened. It was given the appearance of strength, but it was weak.
International speculators were not deluded. They saw the danger of devaluation, and withdrawals followed at an increasingly alarming rate. By July last £650 million had been withdrawn. What did the Chancellor do then? He raised the Bank Rate to 7 per cent. and fell back on the International Monetary Fund. He had a loan of £650 million at 2 per cent. Again, to keep up appearances, he decided to prematurely repay £100 million to the International Monetary Fund. What he actually did was to use dear money to pay back part of a cheap loan.
When are the Chancellor and the Government going to face the fundamental contradiction underlying our problem today? When is the Chancellor going to face the fundamental contradiction of our economic affairs, the contradiction between the strength of the currency on one hand, and the strength of the economy on the other? We need a strong currency, but we also need a strong, healthy and growing economy. I think, and I am sure that every boy in school thinks, that the currency should be the handmaiden of the economy and a reflection of its strength.
The picture we have had in the last decade is of a tug-of-war between our currency on the one hand, and our economy on the other. To strengthen the £, the economy is weakened; and, when the economy begins to assume a little more robustness, sterling weakens. There must be something wrong somewhere when the strengthening of the economy is inimical to the strengthening 838 of the currency. This is not a new phenomenon, and it is time we faced it.
To strengthen the £ in the inter-war period 2 million people were kept unemployed for twenty years. After immeasurable suffering, after unprecedented dereliction of vast areas, the £ was no stronger, and no more proud, in 1939 than it was in 1925. The contradiction is there, and it is time that we faced it. Until it is faced —and the Chancellor referred to this in his speech this afternoon —the £ will be a gambling piece in the casino of international speculators, playing havoc with our economy.
What is to be done? At last we hear sounds of movement. Something is going to happen. The Chancellor said on 23rd October, and repeated this afternoon:I am engaged in discussions with both sides of industry about new machinery designed to help in the acceleration of the growth of the national economy. These are the most important domestic issues of the nineteen-sixties.But the Chancellor is ten years out of date. They were the most important domestic issues of the nineteen-fifties — the locust years of Conservative rule. All through the years we have not seen a shadow of a long-term policy of economic expansion. Whenever we on these benches have suggested national planning, we have been greeted with mocking laughter. Are we at long last to have a long-term policy?
The wage pause and the Purchase Tax regulator are not parts of a long-term policy. They are measures designed to meet an emergency situation. With regard to long-term policy, the Chancellor said:Any long-term policy will have to be addressed to securing restraint in income. — [OFFICIAL REPORT, 23 rd October, 1961; Vol. 646, c. 629–30.]I should have thought that the emphasis would have been on maximising the national output. Through over-reliance on the monetary instrument during the last ten years, the country has lost import orders, lost its competitive strength, created demands for higher incomes, caused less investment, and created stagnation. It is no use denying that.
On page 6 of the Economic Survey for 1961 we read:Exports in the last quarter of 1960 were no higher than in the last quarter of 1959. There was no net rise in industrial production in the last three quarters of 1960.839 If that does not mean stagnation, what does it mean?
Let us examine the matter a little more closely, and deal with invisible exports. During the last two years we have lost an income of £200 million from invisible exports. Two years ago our earnings were £200 million; now they are practically nil. Broadly speaking, since the end of the First World War this country has depended on invisible exports to balance her accounts. It was the wiping out of this source of income which created our difficulties in 1945, but we have had sixteen years in which to recover. Defeated nations have recovered, but the story of this country is that whilst two years ago we had an income of £200 million from invisible exports, today we have none. "A sober thought" was the only observation which the Minister of Labour could make a few weeks ago.
§ Mr. John Harvey (Walthamstow, East)
Is the hon. Gentleman seriously saying that today we have no income from invisible exports?
§ Mr. Jones
The hon. Gentleman ought to read the speeches made by Ministers in the last fortnight. He will find that what I am saying is justified. The hon. Gentleman should read the speeches of Ministers. If he does that I shall be satisfied. If it is a sober thought to the Minister of Labour, it should be a sober thought to hon. Members opposite.
Coming to shipping, this was at one time a most lucrative source of income. We were well placed on the Western seaboard of Europe. Our ports were near the sea and our industrial areas were near the ports. What is the position now? It is logical to say that all ports are not always near the sea. I can see hon. Members opposite laughing, but it is true to say that some ports are near the sea whereas others are very distant from it. In this country we have our ports near the sea. In addition to that, we have our industrial areas near the sea. All that is conducive to shipping, but we have lost £50 million from our shipping. At one time shipping was a source of income whereas now it is becoming a liability.
Turning to exports again, we hear a great deal about costs. We are told that if wages were stabilised or, better 840 still, reduced, our prices would become more competitive. But let us see. Speaking in the debate on 18th July, the then President of the Board of Trade said:I do not think the effective level of industrial costs of this country and of our Continental competitors varies very much.If that is correct, then it disposes of the costs argument. The right hon. Gentleman went on to say:Turning to exports, the fact is that we are doing a good job in exporting, but not just good enough by a noticeable margin.Fair enough. If costs are approximately on a par with our European competitors and if we are doing a fairly reasonable job in exporting, what can be wrong with our exports position? That is a very fair question. The then President of the Board of Trade tried to give the explanation. He said:The best British businesses and the best British business men sell as hard, as well and as effectively as those of any country in the world, but, generally, one cannot help getting the impression from reports from overseas ports and visits to other countries that more consistent sales effort, more consistent follow-up, better after-sales services and more deliberate study of the needs of the customer are essential if we are to maximise our export effort."—[OFFICIAL REPORT, 18th July, 1961: Vol. 644, c. 1088–90.]What do we learn from that? We learn that there is a substantial section in the exports field which is doing a good job, but, at the same time, there is a substantial section which is not doing its best: it lacks consistent and persistent effort. In other words, the people concerned are dragging their feet.
What does the Chancellor do? To this class of person he hands the Surtax reliefs as an incentive to bigger effort. The human nature of this class must be considered. Purchase Tax and the wages pause, on the one hand, but a promised handout to these people on the other. This is so true to pattern. In 1956 the present Home Secretary, then the Chancellor of the Exchequer, applied the same principle. On the one hand, he restricted hire purchase and, on the other, he handed nearly half the Budget surplus to industry. The Chancellor is applying old remedies which are really no remedies at all.
The conflict between the £, on the one hand, and the economy on the other remains. In attempting to strengthen 841 the £ the right hon. and learned Gentleman is weakening the economy. It is no use denying this fundamental fact. Last Thursday the Bank Rate was reduced from 6½ to 6 per cent. The reaction of the Press was universally the same. One newspaper stated:On the home front the lower rate will help industry which has been hampered by having to pay very high interest rates on its bank and other transactions.If a reduction of the Bank Rate helps industry in November, then the raising of the Bank Rate in July must have hampered industry.
To continue the quotation:Exporters in particular will welcome a return to slightly cheaper money. Many of their efforts have been frustrated through high interest rates on credit.If a reduction of the Bank Rate helps exporters in November, then the raising of the Bank Rate in July must have hampered exports. For ten years the Government have been relying unduly on the monetary weapon and they must not blame the chickens if they are coming home to roost.
In conclusion, what is the position? As the Bulletin of the Bank of England puts it:To sustain a satisfactory rate of economic growth and, at the same time, restore external balance, an increase in exports of some 10 per cent. per annum may well be required for two or three years, assuming no change in the terms of trade.We need an increase of 10 per cent, in exports immediately. Time is running out. Yet, as Mr. Samuel Brittan, the Economic Editor of the Observer, wrote on 15th October:The number of industrialists who plan to cut their expenditure on new plant and equipment exceeds by a clear 10 per cent. margin the number who are planning increases.Again, the Economist on 7th October confirmed this point. It stated:Investment inside the British economy has been showing advance signs of decline in 1962.This is no evidence of expansion in our productive capacity. This is no evidence of growth. On the contrary, it is evidence of continued contraction.
The Government have been relying unduly on the monetary instrument all through the years, and now no less a figure than Lord Cromer has expressed his concern about this disproportionate 842 use of monetary measures. He has asked the following most pertinent question:Have the money rates we have seen in this country in recent years been the most appropriate to achieve the rate of progress we would like to see?Ten years of monetary policy and a lack of economic policy have been weighed in the balance and have been found wanting.
§ 5.28 p.m.
§ Sir Arthur Vere Harvey (Macclesfield)
We have listened to the speech of the hon. Member for Wrexham (Mr. Idwal Jones) with much interest. I thought that he repeated much of what the Leader of the Opposition said earlier on. Quite frankly, I was very disappointed with the speech of the Leader of the Opposition. He used the word "scandalous" four or five times. He had nothing good to say about industry or about those involved in it. It is all very well to criticise, but one has to be fair in doing so. The right hon. Gentleman did not refer to the loss of invisible exports. I think that most of us know the reason why the net result from this source is diminishing. It used to be a great source of earning to Britain, but today it is very tough going, and we must make up leeway in that direction.
In making his speech, my right hon. and learned Friend the Chancellor said that he would look into a number of things which the other member countries of G.A.T.T. are alleged to be doing. I would say with respect to my right hon. and learned Friend that this ought to have been done already. There have been several weeks during which to go into these matters. They are important, and I will refer to them as I proceed with my speech and try to put forward some evidence of what has been happening in France and Germany.
This country's whole heritage and future depend on whether we can make and sell goods at a competitive price in the world market. If we fail to do that, everything —education and the welfare services —will go for six. The sooner we realise that the better. If other countries are cheating or chiselling, then we must have it out with them. I should like to be assured that we are not holding back in making representations to this end because of our application to join the Common Market. We should be absolutely frank about what was being done, because certain things are being done.
843 I believe that my right hon. and learned Friend's measures are fully understood by the people. I represent an average type of constituency, with two industrial boroughs, and I have had no real complaints about what has been done. If I have had any criticism, it is that it has not been done soon enough and that my right hon. and learned Friend has not done enough. I suggest that, even now, he should give a greater lead to industry as to what he really expects of it in regard to the pause.
He has not compelled industrialists on the subject of wages and salaries, but problems arise where personnel are on service contracts. I am sure that if the Chancellor made a direct appeal to industry to stop giving increases in salaries and wages, in the same way as has been done in the public service, he would get a greater response. His present request has been very woolly; the appeal should be put more directly to industry so that those in it may know what is expected of them.
Recent events have brought home to everyone the difficulties lying ahead, and the biggest difficulty is foreign competition. As we know, Britain has the skill and the "know-how". I think that our technical and ordinary educational system has given us something that other countries have not got, although they are catching up.
The trouble is that for several years a number of industries have had a boom. The motor car industry is one example; with one or two short intervals it has enjoyed a boom period. The car firms have employed far more labour than they needed. They wanted a reserve of labour in case of expansion; these workers might well be taken out of that industry and put into the machine-tool industry, manufacturing goods for export.
It is, of course, extraordinary how labour can flock to the Midlands when it is wanted regardless of lack of homes but that the moment when there is a shortage and cuts have to be made those people find difficulty in getting accommodation elsewhere. The high wages are very attractive —the men seem to make do then. There must be a comb-out in all industries.
844 For many decades Britain has obtained a great proportion of its exports on a quality basis —let us say, on a Rolls Royce basis —but that situation has changed enormously in the last five or six years. Other countries have caught up. Before the war, many of the manu-facured goods from Japan were rubbish, but today Japanese standards are extremely high. For instance, the Japanese optics industry is almost on a par with that in Germany, and other goods have to be produced to given standards.
As we know, in Italy there is no planned economy, but I was in Milan three or four weeks ago —not having been there for 20 years —and I was staggered by what I saw in the way of new industries and the people's working conditions. I went round a textile mill —at, I think, half-past seven in the morning —that makes the most beautiful brocades one ever saw. I inquired what the women were being paid and found that it was not much less than women are being paid in Macclesfield today.
The fact is that in Northern Italy today there is a shortage of labour. The Germans have training schools in Milan, and they pick out the best workers and send them to Germany. We really have something to fear from Italian exports. They lead in design of women's clothes, handbags, furniture and motor cars. The Italians, of course, did not have the problems that we had after the war —one accepts that —but we must look out for them as competitors.
Our delivery dates are often quite deplorable. Exporters must realise that if they want business they must be competitive, not only in price and quality, but in delivery. The bulk of British exports is done by only a few firms, and the best way to get business is to go on the spot personally. Last June I was in Trinidad on business and asked one or two people there, "Do you see many British, executives out here trying to get business?" They replied, "Oh yes, we see them in January, February and March —when the climate is more agreeable." I do not want to be unfair here, but industrialists must realise that if they want orders they must go out and get them regardless of climate or conditions. I speak quite frankly about this, because I have myself seen examples of it.
845 Many small firms are unable to get out into the world to gat exports. Travel is a costly business and the smaller people just cannot afford it, but in London, Manchester and elsewhere there are still some good import-export houses which know their business and which can help materially in this respect.
It has been said that nothing much more can be done about incentives for export. My right hon. and learned Friend may well be right, but with Bank Rate at 6 per cent. there is little need for other countries to give incentives —bat is the answer today. I understand that the Chancellor has had to have a high Bank Rate in recent months to get over his present difficulties, but we cannot constantly switch from ½ per cent. to 7 per cent. in a period of months.
There is nothing more disturbing to industry than 'these fluctuations in Bank Rate, and I hope that when my right hon. and learned Friend has sorted out the present crisis we may have some continuity in our Bank Rate which, with the exception of Japan, is the highest in the world. How can the small man compete? He wants £10,000 to extend his factory. He gets what he wants from the bank manager but then finds that he has to pay several hundred pounds more in interest each year. That just cannot be done; we must get the Bank Rate down if we are to help exporters.
Other countries are extremely clever at arranging incentives for their exporters —very clever, indeed. I am told that the Banque de France discounts bills at a fixed rate of 3 per cent. —I do not know whether my right hon. and learned Friend knows about that —when the official rate is, of course, well above that figure. Our banks charge exporters a minimum of 7 per cent. on the present Bank Rate of 6 per cent., which means that the French have an advantage of 4 per cent. there.
I am sure that the high cost of borrowing encourages stagnation in capital investment, and if British firms do not invest in new plant we shall, in a very short space of time, find ourselves at a disadvantage with our competitors. I am not against a measure of planning. We on this side are often taunted by the Opposition about the word "planning", but one plans in industry, and I am sure that my right hon. and learned Friend is not against a measure of it.
846 I have been appalled in the last year or two to see the number of lush offices being built all over Britain. There is no doubt that new offices cost much more to run than the old ones. Some people think they are cheaper to run, but when the refrigeration and other services have been installed they cost very much more. I believe that if we had put a halt to building these skyscrapers and had put the money into well-designed factories producing goods we should have been better off. We should not be ashamed to call a halt even now; the people would understand if they were spoken to in that language.
It is quite alarming to note how much building costs have increased in the last three years. Three years ago, one could build a factory in the Manchester area for 10 per cent. less than in Switzerland. Today, our building costs are 10 per cent. more than those in Switzerland, and we do not build our factories as well as the Swiss do, because of the climatic conditions. The people in the building trade have too many orders; they can pick and choose, and do as they like. That must be thinned out. We should stop some of this unnecessary building. Let us have it when we can afford it, but today let us get the money into industry and plant.
What are the remedies? Incentives must be examined. We have a population of 52 million to house, feed and educate. We all want the Welfare State —it is accepted —but it is a very costly thing and must be paid for, though not by the Government's money. The Government have no money. The Welfare State has to be paid for by the taxpayers. There is no short-cut to a higher standard of living. It can only be done by hard work by both management and workers. I would say that, wherever it is possible, let us cut Government expenditure. I still believe that in certain cases it could be cut.
I heard of a case recently where a fighter airfield, since the 1957 White Paper on Defence, had its runway lengthened at an enormous cost and the station in recent months was closed down. Anyone could have known, after the 1957 White Paper, that it was not necessary to extend the runways of fighter airfields. Are we to waste money like that which we badly need for other things?
847 The dilemma is: how can our home market be made to balance the export market? We must have a flourishing home market if we are to have exports. If we do what the Opposition so often ask us to do —extend our home market —we shall not get exports and we shall be overtaken again by inflation in a very short time. The difficulty of my right hon. Friend is to find a balance between the two —how far we should support the home market to enable us to proceed with exports.
Concerning the under-developed countries, where we have to enlarge the grants and loans to those countries in need, let us tie these grants and loans to sterling. I should like to know how many grants and loans have been tied to sterling in the last twelve months. We cannot afford to do otherwise.
Before our entry into the Common Market, assuming that it may take place, I suggest that the Government should have a critical review of all tariffs on raw materials. I know of several raw materials made in this country where there is a complete monopoly, and this, in turn, is preventing the smaller firms which have to buy these materials from exporting manufactured goods at a competitive price.
I am sorry that the President of the Board of Trade is not in the Chamber, because I want to congratulate him on his new appointment. I think that we have an energetic young President of the Board of Trade who came up the hard way and had his apprenticeship in the shops. He has been in industry, and if anyone knows about the difficulties of getting exports, I think he does.
Let us look into this question of raw materials. I personally sent a case to the Board of Trade three years ago of a British firm —I shall not mention names because I have an interest —with a complete monopoly. With the freeing of trade, the firm with which I am connected went abroad and bought its raw materials. It could pay 33½ per cent. import duty and still beat the other firm. It is very wrong that British £s should be converted into a foreign currency, and it is equally wrong that any one firm should have such a monopoly. Eventually, the Board of Trade reduced the duty by about 7 per cent. That has gone some way, but it is not enough. I 848 should like to see a thorough overhaul of all tariffs on raw materials.
The Export Credits Guarantee Department has done an excellent job. The Chancellor said this afternoon that it was being encouraged to do even more. I do not think that the arrangements available are yet fully understood by all the firms concerned. They need publicising more and more. But the interest rates are too high.
I come back again to the old bugbear of the interest rates. If one can get a long-term loan it is killed before one starts when one has to pay ½ per cent. or 7 per cent. In future, money will be required for something like 5 to 15 years if we are to be competitive. I know that we cannot accept all big orders on that duration of credit, but nevertheless we have to accept quite a large number of them because they will lead to other orders.
I would ask my right hon. Friend to have a stern talk to everybody in industry. I have thought it over very carefully and I believe that a greater example could be set by management in industry to the highly paid workers, particularly in the home counties. One sees a great number of motor cars going up the Kingston by-pass or the Great West Road at a quarter to ten or ten o'clock in the morning. Where are they all going? I think that the boss ought to get to work at the same time as his workers.
I see no reason why the boy who goes into a company as an office boy, drawing £7 a week, should arrive an hour later than the young man who has spent five years on the bench. It is time that we had a new approach to all these matters. If we get top management arriving at the time the other staff start work, I am sure that we shall get better results. Unless we tackle this problem, we are in for a difficult time. We have the skill, the "know-how", the ports and the facilities to do these things, and I believe that if the Government give a lead, encourage industry, and put this over in the right way, Britain can yet hold its own.
§ 5.46 p.m.
§ Mr. H. Rhodes (Ashton-under-Lyne)
I followed the speech of the hon. Member for Macclesfield (Sir A. V. Harvey) very closely, and I am with him 849 when he says that this country and the people in it can do the job, but they have to be properly led.
Comparisons have been made across the Floor of the House about the way in which we are tackling this job and the way in which the French have tackled it. My right hon. Friend the Member for Leeds, South (Mr. Gait-skell) made several references to the planning authority in France. I would remind the House that in France they had a leader. Whether or not we agree with his politics or with his principles, which I personally do not, the truth was that when he gave the lead the French people followed. His first stipulation was that there should be collaboration between both sides of industry before any plan was put into effect. It was significant that the plan was introduced by a suggestion from the Government to industry that the lower-paid workers in industry should be given a rise of 4½ per cent. at the beginning of the working of the plan. It was also significant that the whole of the programme for education, including teachers' salaries, was put through, although the rest of the country was subjected to some austerity. For six months, the public of France was subjected to propaganda of all kinds before the plan was put into effect. The hoardings, for instance, had on them "You cannot consume more than you produce. You cannot buy more than you can sell. You cannot spend more than you receive." If one tried to do so, one would as an individual or a country be bankrupt.
In France the political approach came first, and then came the economic. The trouble with us in this country is that we have no sort of patriotic focus at the moment which our people will follow, because during the last ten years the behaviour of successive Conservative Governments have made cynics of us all.
The first job in cleaning up, ready for leadership and for the momentum that we must get, is to rid election programmes of the kind of thing that was put over to the country before the last election by the Tories. The country was hoaxed. I believe that the present troubles stem from the time when the 850 present Viscount Amory was put into the office of Chancellor of the Exchequer as a stooge, to win the election. The Bank Rate was 7 per cent. when the right hon. Member for Monmouth (Mr. Thorneycroft) was at the Treasury. Then came his resignation in the early part of 1958 and the taking up of the Chancellorship by Viscount Amory. We know the story. He was a "go" Chancellor. The previous Chancellor was a "stop" Chancellor. Before the right hon. Member for Monmouth we had the present Prime Minister as Chancellor. He was a "stop and go" man. Before the present Prime Minister was Chancellor we had the right hon. Gentleman who is now Home Secretary. He was all "go", and he went very quickly after his "pots and pans" Budget.
Now we have a "stop" Chancellor — almost dead stop. It can be very serious. But I hope and pray —and we have the Leader of the House with us —that there will be no jiggery-pokery by way of giving a false stimulus to the economy of this country by methods designed to get votes at a future election, when an "ease" takes place. The cynics are looking for a "go" in the early part of next year. If the present Chancellor is in line with previous Chancellors, and he is a "stop" Chancellor, we can possibly look for his resignation round about next February or March. But I should be very sorry to see the present Chancellor competing for one of the seats below the Gangway which are reserved for resigned Ministers. I should like to see him having a bit of a go at "go". I think it is about time that we had a Chancellor who has done both stop and go, as during the last tern years we have had five Chancellors of the Exchequer.
The hon. Member for Macclesfield (Sir A. V. Harvey) spoke about aids for exports in other countries, and I wish to make a brief reference to that subject before coming to my other points about productivity. The Sunday Telegraph of 5th November carried an article headed "German export subsidy works like clockwork". I will not read the article or elaborate on it, but if it could be handed to the Ministers at present on the Front Bench so that they could later examine the method of subsidy 851 mentioned in the article, I should be very pleased.
The hon. Member for Macclesfield spoke of what people in industry in a small way had to suffer. I have seen this pattern for many years —a high Bank Rate, hire-purchase restrictions, cutting down stocks, damping down production, resulting in a reduction in imports. Then the business man, be he big or small, thinks in terms of his own commitments and tries to get out of a few of them. If he has got machinery on order through enthusiasm during the previous boom, he tries to postpone delivery or cancel it.
It now takes the full strength of a boom to use all the capacity that we have installed, and this is the crux of our productivity troubles. The manufacturer, after he has made his arrangements and a credit squeeze is introduced, then concentrates on how to hold his labour force together —it is only natural —until the Chancellor relaxes so that there can be another spate of orders —or until the Chancellor relaxes at a time when it is necessary to win another General Election. The workpeople are not slow; in fact, they are as quick to sense what is afoot as the managing director, with his glum face, as he enters the works. Then we get workers' solidarity against redundancy. It is automatic. Then once again productivity is shelved.
The Government begin their plans again for the stimulation of the economy, perhaps knowing that they have got to have full employment before they can win the next election. [Interruption.] I say to hon. Members opposite: "You gave us ' groundnuts' to some tune in years gone by, and I shall continue to put over what you said and what you did before the election in 1959". Out come the familiar gimmicks to send industrial activity soaring again, and confidence returns. New machines are ordered, mainly for more capacity, as a result of the enthusiasm and the confidence that a manufacturer gets at the crest of a boom.
Beyond any doubt, what we need is to keep our investment constant. We should be aiming now at productivity investment —new machines for old to help us to produce goods cheaper.
852 I made a suggestion last July, and I follow it with another, concerning the chain of information and the ability of the central planning authority to take advantage of that information. May I illustrate what I mean with the industry with which I have been connected for many years? At the moment we make a monthly return to the authorities on sales in terms of square yards. There is a monthly return on the consumption of wool and a weekly return on labour turnover and machinery activity. Those reports are made to the central authority in the trade. To the Ministry of Labour we send a monthly return on the turnover of labour and a monthly return on hours worked and earnings.
What is needed, in my opinion, is for this to be augmented by a return every two months of earnings in the industry, every month of orders in hand, every three months of the stocks held in the industry and every three months of the export performance. If I were the Chancellor of the Exchequer I should make individual industries responsible for their own figures and the assessing of their own productivity. I would not give that job to the office department of the planning authority, for the responsibility should definitely be on the shoulders of the industry.
When the industry is bringing these figures forward to the planning authority the statistics will obviously be within the full knowledge of both sides of the industry. That method might obviate many mistakes that have been made in the past through ignorance concerning the economic facts of the industry. For instance, this year we had a reduction of two and a half hours. In theory that reduction should have represented an increase in wages of 5.8 per cent., but our experience has been that the increase has been of 9 per cent. in practice, which has had a serious effect on costs. If both sides of industry worked together in the preliminary stages of the reports to the central planning authority it would prevent mistakes being made.
I hope that the Chancellor will have an opportunity to "go". I think that he is a better man where he is than he was when he was at the Foreign Office. He did not do so well this afternoon, but I am hoping that he will do better in the future. The country needs a 853 strong lead and the Government can expect bitter criticism until they give it.
§ 6.5 p.m.
§ Mr. John Harvey (Walthamstow, East)
The right hon. Gentleman the Leader of the Opposition showed this afternoon that among the other things he has been doing, he has been reading the Economist reasonably well. The right hon. Gentleman, perhaps not surprisingly, quoted very selectively from it without, perhaps, making all the necessary acknowledgments.
The hon. Gentleman the Member for Ashton-under-Lyne (Mr. Rhodes), on the other hand, has done some original thinking and talking this afternoon about which he deserves to be congratulated up to a point, although he will not expect me to agree with everything he said. I will try, however, to follow him in some of that original thinking because, really, one can go on quoting from articles in this or that newspaper or periodical, which we can all read. In our debates it is useful to try to contribute something from our own experience and knowledge and at least to give our own views on what may be wrong and what may need putting right.
Sometimes in discussing all the various problems that face the nation we tend to lose sight of the fact that one of the greatest priorities of all is that of the allocation of manpower —the competition for manpower in all the different ways in which it is needed to keep our national life ticking over, let alone to build up the volume of productivity to the point we would all like to see.
On Friday I listened to a number of hon. Members discussing primarily education problems and, understandably, there was a good deal of discussion about the need to expand the teaching force. None of us would dissent from that, but as we discuss something about which we have knowledge or feel keenly interested we tend to speak as though it is the subject requiring the greatest priority. We tend, sometimes, to forget that along with the necessary demand for more teachers goes the task of having to find them from somewhere.
Therefore, when we are looking today at the sort of economy we need, surely one of the top priorities the Government 854 must consider —and one of the leading pieces of guidance we all need —is not only whether we are going to get the manpower we need but how we are to seek to allocate it in a free society in conditions where none of us would like to see labour ordered here or there but where, nevertheless, intelligent use of manpower is absolutely vital —more vital than ever before.
This must be the top priority, and it follows that it does not necessarily mean that it is right for the Government to seek all the time to cut back public expenditure. Naturally it is difficult to let public expenditure rise in circumstances where economies of one sort or another seem to be as necessary as they are today. Some examination of the needs of the nation as a whole is imperative. It may be necessary to spend more, for instance, on the education services at the moment in order to give us the sort of educated people we shall need in the years to come —and I mean educated in the skills that we shall need.
It may be right that service in certain sectors of the public service should be better rewarded than that in others. It may be that we ought to consider deliberately attracting people into those parts of the public service where they are most wanted. It may well be that we should spend more, as I have suggested, on education and more on the police force and the maintenance of law and order. It may well be that we should spend more on roads and on various forms of investment in the public sector. If we decide that this is necessary, right, proper and vital for our future, the Government should say, "Here we believe that there must be an increase of expenditure in the public sector". If we think it right and proper to pay larger salaries to attract the "Dr. Beedings" we should not be afraid to do so, if the end result is that which the nation needs and desires.
In this context let me say that I regret, as I said a year ago, that even now the Government have still not faced the need to pay Ministers of the Crown the sort of salaries they ought to receive to do the jobs which they are expected to do and to bold their own in the onerous responsibilities that they face. I am sure that this cannot be 855 regarded as a party matter in this day and age.
Having talked about some of the priorities, as I see them, I should like to detain the House for a short while in order to talk about the general economic situation. The hon. Member for Ashton-under-Lyne mentioned "stop and go" Chancellors and "stop" Chancellors. He hoped that the present Chancellor would be a "go" Chancellor. I hope so too. But one of the difficulties that we have had to face time and again since the war is that, every time the green light is given to the economy, expansion tends to take place here at home. Every time it is easy to move ahead, it is easiest to do so at home. I agree with the suggestion of the hon. Member for Ashton-under-Lyne that we need very much more than we have been able to do before to bring home to the nation the fact that, unless we can earn our bread and butter in the export markets of the world, the day must come when we can no longer sustain the sort of standard of living to which we have become accustomed and which we wish to preserve and to build up.
When the hon. Member suggested that in future elections we might try to out out some of the more glowing promises for the future and come down to earth, I hope that he was not just criticising hon. Members on this side of the House. On balance the catalogue of promises made by a good many hon. Members opposite at election times, and by the Leader of the Opposition, was an expensive one. But I will not go into that now, because I do not think that we need to pursue that matter this afternoon. I agree with the hon. Gentleman that if we could all agree to be more realistic, the cynicism about politics which results in such things as a 29 per cent. poll in a ward by-election in the Borough of Walthamstow last week — the sort of cynicism which does the nation no good and public life no good —might begin to disappear. Somehow we must find a way to persuade the nation that one of our great problems relates to exports.
The hon. Member for Wrexham (Mr. Idwal Jones) bemoaned the disappearance of the "invisibles" and suggested that 856 there were no invisible exports. The hon. Gentleman meant, of course, that on balance, net, we do not make the profit out of "invisibles" that we used to do. This is quite a separate problem. One of the greatest difficulties has been the rising economic nationalism of a good many countries for whom we once provided goods and services, such as shipping and insurance. One might take the case of India, for example, which so far as possible insists on shipping her own goods and doing her own insurance. I do not think that the hon. Member for Wrexham would seek to deny those countries that right. But if we accept that economic nationalism is something which has come to stay, particularly in the underdeveloped and under-privileged countries which are still fighting to get their economies on some sort of even keel, we must face the fact that invisibles will not be what they used to be; and this only accentuates the need to make other types of exports more what they should be.
The Leader of the Opposition delivered a slashing attack on export practice, or the lack of it, but I have in this House, on two occasions in the past, referred to the Goodenough Committee which in 1929 presented a Report to Parliament making exactly the same condemnations of the British export trade which the right hon. Gentleman made this afternoon and which others of us have made from time to time. While I believe that the Government can and must do a lot, it is also important that British industrialists should ask themselves what they can do in the way of self-help.
In the debate a year ago I pointed out that in Germany, for instance, they were running export clubs in many towns and cities. I suggested that it might not be a bad thing if some British cities were to form export clubs. Chambers of commerce and rotary clubs could run these export clubs and do something themselves about advertising the wares of their cities abroad. I am glad to say that during the last Recess I was invited by the Walthamstow Chamber of Commerce and by the Slough Chamber of Commerce to speak at the opening meetings of export clubs in those two towns. But there are greater cities with greater export reputations than those enjoyed by Walthamstow or Slough, though I am 857 sure that the hon. Member for Waltham-stow, West (Mr. Redhead) would agree with me that Walthamstow has a pretty good record in these matters. There are, however, other cities which could do something in this way to stir their own industries and industrialists to do something themselves about advertising their wares throughout the length and breadth of the world.
Having said that, I believe that the Government must take some notice of the definite, not allegations, but evidence, which some of us could produce of practices in other countries which look suspiciously like export subsidising of one sort or another. It could be shipping companies which are willing to carry goods at lower freights than the British who have in general stuck to the rules of the conferences. We think that it is admirable for a nation such as ours to stick to playing cricket the right way. But we have to take a little notice when we feel that other countries are cheating perhaps so often that we are getting the worst of the deal too jolly often for our own good. I think that is happening at present, and I urge the Chancellor of the Exchequer and the President of the Board of Trade to take serious note of these matters.
I think that the Chancellor should see how far he can go within the rules positively to encourage, by fiscal or other reasonable means, entry into the export markets. I see no harm in attempting to do that and, indeed, nothing but good. We must look at the minor irritations which sometimes tend to arise. The other day I could not help wondering when, after keeping in step with Western Europe —and there, after all, we are building up so much trade nowadays —in the matter of Summer Time for a good bit longer this year than ever before, in the end we still had to have all the inconvenience of change. What must it cost, for example, the airlines? What an upheaval there must be at London Airport. How much difficulty is created for those doing business with continental countries to have to remember that for some months in the year we must put in a last telephone call from London before five o'clock if we wish to contact people abroad if we hope to catch them in the office, although they are more likely to be there earlier than we are. All these things have to be taken into consideration.
858 How much longer will it be before we have a decision about the decimal system, whether with regard to coinage or weights and measures? My right hon. Friend the Minister of Transport said at Brighton that his Department was considering the question of which side of the road we should drive on. I have argued before — and I cannot help feeling that there must be a lot in it —that it must cost our motor car industry more to have to make two models of every type of car than it would if it had to make only one. How can we help ourselves if we want to do everything that a certain exalted gentleman exhorted us as a nation to do the other day and get going on building up our exports, looking positively ahead and not being afraid to plan?
Finally, this is a national matter. It is all very well for the Leader of the Opposition to criticise exporting firms, executives and others for their lack of initiative. It is relevant to bear in mind that when the docks of London are closed by this unofficial strike or that unofficial strike for weeks, it plays havoc with our export trade. We lose orders, and we never see them again, because they go elsewhere. There is an urgent need for a closer understanding between both sides of industry. We must consider these real problems at every level and see how far, by intelligent forethought and intelligent co-operation, we can overcome them. To that extent, we all welcome the initiative that the Chancellor of the Exchequer has taken in seeking at least to bring about the first steps of a collaboration from which surely, if they are successful, all of us must necessarily benefit.
§ 6.22 p.m.
§ Mr. Leslie Hale (Oldham, West)
The writer of the hymn who declared that one step was enough for him was not referring to the eleventh year of his activities. We have a standard form of speech from the Tory benches in which complaint is made about inactivity under every head. Hon. Members opposite say that something must be done quickly, that no steps have been taken and that no solutions have been found, winding up with the concluding sentence in which they say, "I desire to congratulate the Minister on his initiative, ability and discretion and the wisdom with which he spoke to the House." I except the 859 hon. Member for Macclesfield (Sir A. V. Harvey) from that general description, because he made a very serious contribution to which I want to refer.
I should like to say a word or two about the Observer conflict to which my right hon. Friend the Leader of the Opposition, in his very brilliant speech, referred. I have some sympathy with the Chancellor of the Exchequer here, because it seems to me that the Treasury burst in and said, "We deny this statement on the ground that no Chancellor could say anything as daft as that." This is a triumph of present confidence over past experience. The case against the right hon. and learned Gentleman is that there is almost nothing foolish that that can be said about economic affairs that has not been said by one or other of the many Chancellors we have had in the last ten years or so.
I hesitate to inflict an old story on the House, but it is sufficiently relevant to be put in an abbreviated form. It is the story of the new vicar who devoted his first sermon to anti-gambling. When it was finished, the verger said that it was a good sermon but that, unfortunately, the biggest donor to the Church was the local bookmaker, who was sitting in the front row. The vicar said, "I cannot adjust my views for a purpose like that, but I will make it clear that nothing personal was intended," and this he did. The two men shook hands at the back of the church. The bookmaker said, "Do not worry. It is a mighty poor sermon which does not hit me somewhere."
It is a mighty poor economic statement which does not hit this Government somewhere. They have put forward every possible argument to justify every possible conflicting cause. There is a serious case against the Government. I agree with the hon. Member for Macclesfield about the necessity for leadership, of workers as well as of employers, but there is a sordid dishonesty about so many recent statements of the Government that is making a lot of us worry about the future of democracy. It is a sort of Gem and Magnet mentality to score over people by giving half answers. We have had half information and astute denials that are technically true because they have been so framed. We have had the sort 860 of evidence which the gunsmith gave against Sacco and Vanzetti. "Yes", it was said, "it is consistent with having been fired from this gun". No one spotted that he had not said that he thought it had been fired from the gun, because he did not think that it had and, in fact, knew that it had not. That sort of half truth is coming from the Government benches and it is a serious matter.
We had a remarkable contribution yesterday. The hon. Member for The Wrekin (Mr. W. Yates) made an astonishing and very able and forceful speech at a rather unusual time, by virtue of the fact that he was on his feet at four o'clock last Friday. I wondered for a time whether he was giving us a piece of accomplished irony or whether it was unconscious irony. As I say, it was a very forceful speech. I should like to say to my hon. Friends that I cherish the way in which they applaud these demonstrations of independence, shouting "Vote against your party". I hope that I shall hear them repeat it upstairs on a future occasion.
The hon. Member for The Wrekin said that it was time that we started an export drive, and why did not the Prime Minister take the initiative and launch a drive for more exports. Clearly he had forgotten that it had all happened last year and nobody noticed it. The Prime Minister launched an export drive. There was a mass meeting at Church House, of all places, about exports. There was probably also an appeal about exporting missionaries, and I am all in favour of that. More missionaries in Angola would do a lot of good. At Church House, the Prime Minister addressed the F.B.I., the A.B.C.C., the National Union of Manufacturers, and so on. I turned up Keesing's to find out what was the rousing appeal that the Prime Minister addressed to these assembled manufacturers who had left their exporting industries to come and learn a little more about Government policy.
§ Mr. Hale
That is all right, but it is not relevant. On 18th July, 1960 —it was a little longer ago than I thought —the Prime Minister said —and I am quoting from the reputable Keesing, who 861 is engaged in a constant endeavour to be completely impartial about anything and not to put anything polemically; when he quotes from a speech he naturally picks out the most favourable bits from the speaker's point of view—I do not propose a target … to be attained. I always think that this is rather a dangerous method. I am not going to suggest a figure which we must reach in order to be safe, or even an average annual rate of increase; or a race with other trading nations for a higher place in the league tables of world trade. When you come down to it the amount we must earn must and should be dictated by our needs. But these needs must grow if we are to play our part as a leading modern industrial society. Our exports are not just the achievement of the big industries, but the result of many individual efforts of a great number of firms, some big, some not so big, and some quite small …After this rousing appeal, the right hon. Gentleman went on to say that there were some firms which were exporting a considerable amount and that they could export more; some firms were exporting less and therefore could export a bit more, and that some firms were not exporting at all and that if they considered the matter they might find that they could export. This was the initiation of a great Government to improve exports. What is the right hon. Gentleman doing?
We have had these discussions over the years. We had them regularly on the Export Credits Guarantee Bill which used to pop up fairly frequently. The same points have been made time after time. The hon. Member for Macclesfield said that a good deal of labour was kept in reserve. I know that he has some connection with the aircraft industry, and I hope that he will forgive my saying that it is in that industry that a great deal of that is being done.
§ Mr. Hale
I beg the hon. Gentleman's pardon: I thought that he had. What I have just said was in no way a criticism of him, and I think that he understands that. It is in the aircraft industry that the holding on to skilled labour is being done. The reason for this is that the industry can charge pretty well the whole of its costs to the Government under the system of Government buying and B.O.A.C buying. It is 862 pretty well insured against loss under the old system of cost —plus contracts. That is a matter for consideration.
What information is available about colonial markets? What organisation does it? I happen to be a consultant director of a firm which has an interest in market research. It was looking into the whole question of how far it was desirable or necessary to consider the question of finding information about colonial markets. We were unable to find that any adequate information was available to the small manufacturer in relation to colonial markets —which is, of course, a question of colonial policy.
Of course, the Chancellor of the Exchequer is always accurate in these statements. Nobody disputes the almost dumb accuracy of some of his statements. He says that if we give long-term credit we do not get the money quickly enough to balance our payments, and so it does not help us next year. Unless, however, we give long credits to undeveloped Colonial Territories, we cannot do trade with them. Other Governments are doing it, as the information shows.
I do not know whether when the hon. Member for Macclesfield went to Trinidad he went to Caracas. If he had been to Caracas, he would have found there a few months ago an ambassador who had been a commercial attache who really was interested in developing trade, who was showing people how to do it and whose duties as an ambassador had a good deal of reflex in the British and American trading community in Venezuela and in developing trade and economic relations there. It can be done, How many of our embassies do it?
§ Mr. Hale
I do not believe it. My experience of British embassies in many parts is that they are shelters for political reaction. [HON. MEMBERS: "No."] If I am challenged about it, I will quote one or two examples. I do not want to go into the personal aspect, but there have been fairly classic examples.
What are the Government doing about the Colonies? What are they doing about the independent territories in Africa? This is vital to the planning and development of export trade. A 863 country like Nigeria will have to face an immense amount of problems. It must have some sort of industrialisation to produce a taxable revenue. At the moment that the Nigerians develop an industry based on mining they will have inflation and urban inflation. They will have denudation—
§ Mr. Hale
No. The hon. Member might let me finish one sentence. [Interruption.] This is the first sentence I have said on this subject. I have started on Nigeria and I cannot stop halfway in a sentence on the borders of Nigeria, even for the hon. Member for Kidderminster (Mr. Nabarro).
What I said was that if the Nigerians develop their industries they will have urban inflation. They will have denudation of agriculture. They must have consumer goods as a weapon against their own urban inflation. It is no use our thinking that we shall go on exporting those consumer goods for long to Nigeria. The Nigerians must make them themselves. They have their balance of payments problems, too, and in the end we must send machines to them. The planning of British industry in relation to African development must be the planned production of the sort of machines that produce machines and the sort of machines that produce consumer goods. The real needs of Africa—
§ Mr. Nabarro
I would not like the hon. Member's allegation that British embassies abroad are shelters of political reaction to go in an entirely unqualified sense during this debate. I wrote to my right hon. Friend the President of the Board of Trade a matter of four or five weeks ago after a lengthy commercial and industrial tour in Western Europe with a special note of commendation on behalf of the commercial staff at no less than three British embassies. One was at Stockholm, the second at Copenhagen and the third in Luxembourg. That was from my own experience. It is quite wrong for the hon. Member to try to tar them all with the same brush.
§ Mr. Hale
The hon. Member for Kidderminster is a shocker. I gave way to him as a matter of courtesy. I 864 usually have treated him with courtesy. He made a wholly unjustified attack and said that I tried to tar them all with the same brush. I started by pointing to a brilliant ambassador who was developing trade and said that I wished I saw more like him. The hon. Member then quoted as one of the three the same man who has been transferred to one of the places which he has mentioned. It is this blatant dishonesty of attitude to which I have been referring when the hon. Member was not in the Chamber, this same sort of attitude that one has to score.
The hon. Member for Macclesfield talked about good relations in employment. How do hon. Members opposite expect to get good relations in the coalmining industry with the hon. Member for Kidderminster popping up and saying what he does time after time? We had the drivel on Friday in the debate on coal—
§ Mr. Hale
—on Tuesday 24th October, when the hon. Member was making an appeal for good household coal in Kidderminster, Stourbridge and all over that part of the world and, at the same time, making an appeal for permission to import poor quality coal. If the hon. Member knew anything about the coal industry, he would know that, in the main, we do not produce the one without the other and that what he said was a contradiction in terms.
The hon. Member for Kidderminster then applauded the fact that there was a reduction of employment in the coal industry and said that this was the way to develop matters. Of course, he repudiated the whole policy of the Home Secretary who, on an earlier occasion, talked about doubling the standard of life within a limited number of years.
§ Mr. Nabarro rose—
§ Mr. Hale
The hon. Member had at least 55 words of irrelevance on my first give-away and I do not propose to risk another.
The hon. Member for Macclesfield made a sincere statement that faults in 865 industry are far from being on one side only. He suggested that the good employer can get good labour, or, at least, that the bad employer is not likely to get good labour. I happen to notice on the benches opposite the hon. Member for Morecambe and Lonsdale (Mr. de Ferranti), who is a considerable employer in my constituency. The firm with which his name is associated is, I should think, one of the largest employers in my constituency and one of the best respected.
Most of the hon. Member's employees are members of a trade union that has come in for a fair amount of censure. We have a lot of active Communists in Oldham, some of them very nice and very able men. They put up a candidate against me one year and denounced me as a Right-wing Ernie Bevin devia-tionist. They offered to support me next time, and I said, "If you support me you do me harm. If you had done that last time instead of opposing me you would have lost me the seat." Since then we have had a reasonable understanding.
The hon. Member for Morecambe and Lonsdale would, I think, confirm two things that are relevant in this matter. The firm is known as good employers. It is known to have rather exceptional privileges which it gives and which are not always to be expected. If a worker at Ferranti's is a member of a local government body they allow him time off to perform his local government duties, and he gets his money made up. A lot of firms in Oldham do not do that. It is a pity. It is the same with workers who are justices of the peace. Ferranti provides decent conditions, a decent canteen. With a militant union —a highly militant union —conscious of its rights, I do not think that far the seventeen years that I have been Member for Oldham there has been anything like a serious stoppage of labour at all.
What is the result? I must confess that I have always had the view that John Hampden was a bit of a pest. People who are constantly arguing about their rights can be an infernal nuisance. But the result today is that because of the good labour relations in Oldham employers have good workers, and new firms feel that they have come to a place where they can have decent co- 866 operation between workers and employers, a decent sense of understanding and will not have any hostilities in industry. That is contributed to, and I am sure that the hon. Member will say so, by both sides. Possibly it is true to say —I hope it is true to say — that we are to have more expansion of employment in the very near future.
I am glad to see the Chancellor here because I wanted to make reference to one or two observations of his. In particular, the Chancellor of the Exchequer made a very remarkable statement, I think on 10th January. He was speaking at Liverpool, to the Press as I understand it; certainly there was a large number of Press people there. I quote again from Keesing's. This is 10th January, 1961. These things are set out under a number of heads starting off with a most astonishing statement under the heading, "Causes of concern. The international situation":No one can survey the international scene with much satisfaction.This rather recalls the attitude of the virtuous fiance who said: "I have got to break my engagement. I cannot marry that woman. She has been the victim of a savage rape". His friend said, "Good heavens, you don't say so. Who did it?" The virtuous fiance said, "I did".
Now I am not selecting these quotations. I am giving the sentences under each head from Keesing's just as they are. I should not like to be thought to be selective. Then we get:Of one thing I am certain. We can never be satisfied with staying in the same place.Well, of course, it depends where you are. If this was in reference to the Foreign Office one could understand it. The right hon. and learned Gentleman was there a long time.
§ Mr. Hale
What? I cannot hear.
Next, the heading is, "Possibilities of Government action." The Pressmen have sharpened their pencils and are all agog waiting for it. He said:You may say, we know all this, we've heard it all before. What we want to know is, what are the Government going to do about it. That is a fair question, although before answering it we must be clear as to what matters are 867 suitable for Government action. In the international field, it is a proper Government responsibility to take action … I do not believe in a complicated system of physical controls. I prefer monetary measures, i.e. restriction on credit and fiscal measures through the Budget, which hold back consumption. In the last Budget my predecessor did some things to restrict consumption, and during his last six months as Chancellor did quite a lot to restrict credit. On the whole these measures have fulfilled their purposes and slowed up the pressure of demand at home. I will relax these measures as and when I can in the interests of the economy as a whole.That is one statement of policy which most people will not think very profound or find particularly illuminating, but the Prime Minister made another statement. I cannot remember his exact words. They were said in Oldham in 1959, and to paraphrase and colloquialise them he said, roughly, "You can't shove 40 million nicker down the drain without doing some good for somebody." This was a slightly inaccurate figure, but one expects that. What has it done, anyhow?
Then we got the present —I hardly know what he is at the moment —Colonial Secretary; he was the President of the Board of Trade a week or so ago —making a statement about Ford's. In point of fact, the debate took place the previous November. The present Colonial Secretary said that it is a jolly good thing to sell out to America. There are great advantages in this.
If this is so, what on earth is the point of trying to balance the payments at all? Up to now we have always been told that foreign investments provided the basic balancing repayment which goes far to cover the gap, that it was the destruction of foreign investments in the First World War which led to the initiation of this series of crises —if they are a series of crises.
It is at this stage that the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) pops up in debate on the Common Market —I quote him from memory; I have HANSARD here, but I do not think he would suspect me of misinterpretation —and says, "We have a ' stop and go' system. We stop when we are reaching an inflationary situation and we go when we are reaching a high degree of unemployment." Then he added the words, "Carefully timed electorally." Well, I was a little surprised that the Chancellor did not reply to that one. The 868 noble Lord always speaks with integrity and with clarity, and this was as grave an allegation, after all, as could be levelled against anybody. The suggestion behind it is explicit, that measures are taken, and it is very convenient to have an economic crisis half-way through one's period of office.
Indeed, the Chancellor today in one of the most amazing of his observations, and he has made some amazing ones, described the position like this. He said, "We are getting on like wildfire now. We have reduced the Bank Rate from 7 to 6 per cent." One would have thought that some criminal from beyond our borders had put it up to 7!"We are making progress; we are getting back to where we were before I started." It is surely a rather astonishing state of affairs.
The right hon. Gentleman the Home Secretary, who told us that we were going to double the standard of living in twenty-five years, and has never told us how, is absent from this debate, but, of course, we are going to restrict consumption to expand the standard of living!
Then, of course, the Chancellor has got this one. I had forgotten this one. This is the best of all —he says, "So you see, we budget for a surplus. We always budget for a large surplus to reduce the purchasing capacity." Where has the money gone to, because the argument seems to be that all that money is in our pockets somewhere?
An hon. Member opposite was saying that £15,000 million was missing in the National Debt. He could not find it, he was saying only an hour or two ago. It reminds one of Francois Villon's "Snows of Autumn"—" Ou sont les neiges d'Antan?" What has happened to the surplus? Because the National Debt has gone up every year. Every time we have a surplus in our pockets we owe more money!
Then the Minister says that having sold Ford's of Dagenham we will join United Europe with Ford's of Detroit having 99 per cent. of the German Ford's so that there can be all sorts of jiggery-pokery and organised local competition, and so on. The Minister said that it was a jolly good thing, and then we find that it leads, as it inevitably must, to an entry in the balance of payments, and the current month's deficit is 869 reduced by that amount. That is what happened to the £100 million and more which came from Detroit for taking over the Ford interests at Dagenham. It now means, of course, that the invisible exports are going the wrong way. A lot of things are going the wrong way.
Finally, there seems to be a complete lack of efficient control. We have every Minister with his own ideas and recently every Minister has his own alias and alibi and they sleep two in a cell instead of three, and each answers for the other and vice versa, but there is nobody nowadays who is responsible for anything.
I was told a story the other day, though I am not sure that I believe it. An industrialist said, "I have constantly to ring up Government headquarters"— he was in the advertising business —"and wherever they are, Chequers, or Drumnadrochit or Inverlochy, wherever the Government happen to be at the moment I have to ring them up. On this occasion instead of the normal, civilised, urbane and perhaps rather snooty voice the answer was a cheerful ' Mac, Mac and Mac speaking.' What was I to do? You have to play up on these occasions so I said, ' I want to speak to Mac' and I was told ' He is out to lunch '. I said 'What, at eleven o'clock?' and I was told ' Yes, but he is in South Dakota. President Kennedy sent for him on something urgent'.
Then I asked to speak to Mac Minor —the Foreign Secretary. The reply was, ' He is on the telephone'. I asked, ' Will he be long?' The voice replied, ' He may be. He is talking to General de Gaulle. He has not said a word yet, but he has been on a long time. He is getting Home sweet Home.' I then asked, ' What about Mac Minimus — the Chancellor?' The voice replied, ' He is up in the attic with a wet towel round his head playing with his regulators.' I asked, ' What's wrong with those? ' and I was told, 'Some will not regulate and some are not regular'."
My friend was a bit worried and he said, "Who can I speak to then?" The voice replied, "What about me?" "Who are you?" Well, I am the butler here. I do pretty well everything. I clean the carpets. I put reports in pigeon holes and pick up all the bricks Master Marples drops. Only a fortnight 870 ago he made the Atlantic into a one-way street." My friend said, "I frankly did not believe this. I felt like the man in Edgar Allen Poe:'Deep into that darkness peering, long I stood there wondering, fearing,Doubting, dreaming dreams no mortal ever dared to dream beforeBut the silence was unbroken, and the darkness gave no token,And the only word there spoken …'And then, my friend said, there was a word. Someone in the distance had left the television set on and the programme had changed and from the set there came a beautiful, pellucid voice like an archangel, somewhere between Enrico Caruso and Adam Faith, talking with all the dignity of a life peeress and all the authority of a retired Chief Whip and saying, repetitively, "Rab washes whiter, Rab washes whiter." I replied, "I know that is true anyhow because Mrs. Jones of Oswaldthwistle says so."
§ 6.53 p.m.
§ Sir Harmar Nicholls (Peterborough)
Without any doubt at all, the hon. Member for Oldham, West (Mr. Hale) is a most enlivening speaker. Everybody in the House enjoys his speeches and benefits, except the hon. Member who has to follow him. I had intended to make a most incisive and effective speech, but whatever I say now is bound to fall flat after the hon. Member's speech. It reminds me of the advertisement I saw in America which read, "Annual strawberry tea. Owing to changed conditions, prunes will be served instead."
The hon. Member has spoken rather more slowly than usual, but his speech is none the worse for that. He had room enough in his old speed in the years gone by for slowing up, but I regret that he has also rather got out of touch, and I was astonished that he of all people had had to go back to 1960 to find a quotation from the Prime Minister to give to the House. That is not up to his old form. It shows that he is out of touch.
It also shows that the hon. Member is a little out of touch when he refers to the embassies abroad as "shelters for political reactionaries". That charge might have stood some years ago, but I do not think that it can stand up today. 871 It is the exception rather than the rule that one does not find first-class commercial advice in our embassies throughout the world. I hope, therefore, that whilst the hon. Member has slowed down, it does not mean that he will not keep up-to-date so that we may go on enjoying his excellent speeches.
I very much agree with the hon. Member in his compliments to my hon. Friend the Member for Macclesfield (Sir A. V. Harvey). I hope that my hon. Friend's thoughtful and useful contribution will be heeded by the Treasury Bench. I had hoped to say much of what my hon. Friend said so effectively, with ail the background of experience he has had for many years in industry.
I should like to comment on one sentence used by the hon. Member for Ashton-under-Lyne (Mr. Rhodes). His contributions are always practical and useful, but on consideration I am certain that he would not wish to stand on record his suggestion that the Viscount Amory was a "stooge" when he was Chancellor. Those of us who served in Ministries with the noble Lord can testify, and I think that this is recognised throughout the House, that if there was one Member of the House who did not ever deserve the title of "stooge" it was the noble Lord. I am sure that the hon. Member for Ashton-under-Lyne would not wish that to stand on record because, after consideration, I do not believe that that would be the (hon. Member's view either.
I feel a little demoralised after the speech of the hon. Member for Oldham, West. He started by saying that there was something rather unclean about paying compliments to the Government, particularly if one sat on the Government benches, but I must pay a compliment to my right hon. and learned Friend the Chancellor of the Exchequer on one point because I want to criticise him on another point later.
We all recognise the success —not big enough yet as he himself admitted — that has flowed from his first effort to expand our exports. He said that in the past three-quarters of this year we have seen the adverse balance of trade fall from £64 million to £33 million a month. That is a move in the right direction, and I know that it will be 872 welcomed by everyone in the House who recognises the importance of building our export trade. This is the outstanding matter on the agenda of the country's economy, and we should congratulate the Government on that success so far, at any rate.
I should like to say how sad I am that the Treasury Bench is still not prepared to look with more sympathy at some form of export incentive. I am convinced that in the end we shall have to come to that. Whilst the export credits guarantee facilities show some effect and exhortations may sometimes produce results, I am certain that at the end of the day it must be made worthwhile in a practical way for the small and medium-sized industrialist to get into the export market. Far too few are playing their part now. I have quoted before, and it has not been denied, the research team report which said that 30 per cent. of our exports are done by 40 firms. When one realises that there are 8,000 members of the F.B.I., it can be seen that there is a great deal of leeway to be made up. I am convinced that it can be made up by the direct implementation of some form of export incentive.
Perhaps I might say to my right hon. Friend the President of the Board of Trade, whom I should like to congratulate —he has had many congratulations —that we have great hopes of him. We know that he has some practical experience and plenty of vigour; indeed, he has Ministerial experience in the very field about which I am talking. He has been energetic and good as the Minister of State, and now that he is the big white chief in the Department I feel sure that we shall see some worth-while results.
But I hope that my right hon. Friend will appreciate that we must be prepared to recognise the changed conditions of today. While I can well understand the efforts of the F.B.I. and the Government of the day saying, back in 1938, that we ought to maintain the status quo when our share of world exports was 23–24 per cent. —to have frozen it at that level would have been very satisfactory —our proportion has now fallen to 15–16 per cent., which is much too low. We cannot afford to stand pat on the conditions that we were rightly 873 advocating in 1938. What we have to face now is that many of our competitors —the ones which are really frightening us —have some form or another of export incentive. I believe that we must follow suit. Let us by all means do it through the front door and get the permission of G.A.T.T. Let us have it properly formalised and give proper notice. But the sooner we get down to deciding whether we are going to make it worth while for industrialists to export by giving them tax concessions to meet the extra costs involved in exporting, the better.
That was the point made by my hon. Friend the Member for Macclesfield. He said that it was an expensive game going into the export market and that if we want the small and medium-sized firms to do it, we must see that they get the money from somewhere to cover the costs. I can think of no better way —because we want the exports —than using the fiscal weapon and giving them tax concessions to encourage them. When we try to encourage firms to go to areas of high unemployment, we give them inducements. When we want the cotton industry to consolidate itself, we spend money to encourage it to do so. We do not merely exhort and leave it all to those concerned. We recognise the practical fact that there is "no taste in nothing."
I am certain that when we ask people to move from the home market to the export market there must be some definite incentive which can be easily recognised and is worth something to those concerned.
§ Viscount Hinchingbrooke (Dorset, South)
Will my hon. Friend deal with a point which always worries me? There is no special virtue in exporting, surely; if there is a special virtue, it is one which applies equally to firms which avoid importing by manufacturing for the home market. Would he give the incentives that he suggests to people who save imports by manufacturing for the home market, because they are just as virtuous as the others?
§ Sir H. Nicholls
If that could be shown to achieve the same object, I would support it. My hon. Friend says that there is no special virtue in exporting, but I believe that there is every virtue in so 874 doing. It is only by exporting that we can have the healthy trade balance that we must have. The reason why I am advocating an export incentive is that I think it can be done simply and in a practical way. But I can think of no practical way of adding to that my hon. Friend's suggestion.
It is easy to recognise the part of a firm's business which goes into the export market and to distinguish what part of its profits comes from it. The certificate from the accountant who tells a firm what tax it shall pay on its total profits can also show the separation between export and home market business. I concentrate on the export incentive because I believe that this can be achieved in an easy and effective way.
I now want to read an extract —it was not quoted by the hon. Member for Ashton-under-Lyne —from a Sunday Telegraph article last Sunday because I believe it should be on the record. The contributor said:Last week I was shown authentic documents demonstrating beyond doubt that a Hamburg export merchant has been regularly paying a turn-over tax of 1 per cent, and successfully claiming back 5.8 per cent. from the tax authorities… The success of this and other German measures to help exporters is amply shown in that country's immensely strong balance of payments position… It is clear that this makes nonsense of the repeatedly heard British Ministerial argument that we cannot possibly introduce an export tax incentive of our own, because ' other countries would follow.'It is known that this form of incentive is given in Germany, France, Italy and Australia. I do not believe that we can any longer accept the argument that our introduction of this incentive would mean that we should be opening up for ourselves prospects of having all sorts of competitors.
I beg my right hon. Friend to look very sympathetically at this point. I ask him to consult the Federation of British Industries and ask it to recognise the altered conditions where our share of world exports has declined from 23 to 16 per cent. I raised this subject in the Budget and economic debate last year, and I make no apology for raising the same arguments now.
Secondly, I appeal to the Conservative Party not to gain any wrong impressions from the Tory Party Conference at Brighton. I have formed the view that it is being assiduously spread 875 about in some quarters that the Tory Party Conference gave clear support to this country's entry into the Common Market without any question.
§ Sir H. Nicholls
The Chairman of the Party Conference says "Nothing of the sort". This is precisely what I want to underline. The message from the Tory Party Conference was that we were prepared to wait until the negotiations which are now going on had produced sufficient evidence to enable us to make up our minds. I would say that 50 per cent. of the Tory Party are instinctively against the Common Market and the remainder are instinctively for it.
§ Sir H. Nicholls
Yes, 50 per cent. are instinctively against it and 50 per cent. are instinctively for it. But the British people are natural jurymen and are not prepared to bring in a verdict until they have heard the evidence, particularly when they can see that there is a good chance of the evidence soon being forthcoming. Rather than that the leaders of the Conservative Party should think that they had a blank cheque from the conference to go in without question, I would point out that the message from the conference was no more and no less than that we merely want to give ourselves time to weigh the evidence when the negotiations have produced it and then give our decision.
I address my third point to the leaders of the two principal parties in the House. The one thing which is on trial today perhaps more than anything else in the domestic field is the standing of Parliament itself. It is the Parliamentary system itself which is on trial. If the exhortations to do with our export trade or anything else are to be given the weight by the country which they ought to have, we ought to have one or two other people in the House who are recognised as leaders by the people. I am not criticising the calibre, standing or ability of the 630 Members of Parliament here now. I think it is fair to say that those who have looked at the House of Commons since the 'twenties 876 will say that the general standard of ability, knowledge and, certainly, industry among Members of Parliament is higher now than it has ever been. There is certainly no criticism of the present membership in what I have to say.
But when the people of the country think of leaders, they think in terms of people like Lord Fleck, the head of I.C.I., or Lord Nelson, the head of English-Electric, or Lord Rootes, the head of the Rootes Group. On the other side, they think of the great trade union leaders, such as Mr. Cousins and Sir William Tewson. But those people are not in the House. I believe that such leaders ought to be represented in the House of Commons. Their presence in such debates as this would enhance the message that goes out from Parliament. I believe that both sides of the House must use their party machines — because it is the party system under which we work —to ensure that those people are represented here.
Such people used to be represented here. Going back into the really distant past, Drake and Raleigh were Members of this House. I do not think that they were great Parliamentarians, but their very presence in the House meant that the standing of Parliament was very much higher and the messages going out from it were treated with greater respect.
By removing the rule against trade union leaders being members of this House and cutting out all the nonsense about a Member of this House not also running business when he knows he can do so, we would make a great contribution. Then we could try to inject new blood into the natural leadership here and I think that some of the messages we send out would be better received in the country.
Export is the outstanding item on the domestic agendas today. I ask the Government not to have a closed mind on proposals for helping exports.
§ Mr. Jack Jones (Rotherham)
The hon. Member is always used to stating the facts. Can he tell us what trade union bars its leaders from coming here? There are leaders and general secretaries of trade unions who sit on these benches. Beyond that, the trade union leaders of today have a big job in hand. If they 877 came here they would have to leave the work they are doing in the industrial field. That would act tremendously against the export drive about which the hon. Member is speaking.
§ Mr. Speaker
Order. I thought the hon. Baronet was coming to the end of his speech. Had that not been so, I should have been obliged to point out that the debate is limited to the question of adding certain words to the Motion.
§ Sir H. Nicholls
I was coming to an end, but in making the comments I made it was certainly with no wish to disparage the excellent trade union hon. Members in this House nor the leaders in the country.
I think this debate is the most timely one we have had. Unless in this Session of Parliament we can see the excellent trends which the Chancellor has announced today bringing our balance of trade into a healthier state and unless they are brought to satisfactory fruition this year, it will be too late. That is why I hope that both sides of the House can forget the "isms", as the Leader of the Opposition said, and together get down to seeing that we can use our opportunities to really good purpose.
§ 7.12 p.m.
§ Mr. Arthur Holt (Bolton, West)
I do not disagree with the object which the hon. Member for Peterborough (Sir Harmar Nicholls) elucidated, namely, somehow or other to bring about more exports, not because there is any special merit in them, but merely because we require more to pay for our imports and also to provide far larger sums of capital development in the under-developed parts of the world. I am still mot impressed, however, by any of the arguments I have heard which advocate in some way or other subsidisation of exports.
I do not think the hon. Member was right about the German rebate being any monetary assistance to German firms. It is only like not having to pay a purchase tax on a taxable article when it is exported. Perhaps the President of the Board of Trade will correct me, but I have looked into this before and, so far as I know, there is no monetary advantage given to the German firm by this so-called 6½ per cent, rebate on their tax. The problem exists whatever we try to 878 do in the way of providing extra monetary incentives for exports. If it is really effective —and there is no point in doing it if it is not —I cannot see how one could then stop other countries following the same kind of practice. That would start a vicious spiral, and I do not see that in the end we would have benefited from the practice. I do not think it is any use stimulating exports in any false and artificial way.
I wish to address most of my remarks to the question of planning and wages policy. In what I thought in many ways an excellent and wide-ranging speech, if he will not think me presumptious for saying so, I was sorry that the Leader of the Opposition still did not seem to have moved away from many of the thoughts which have been current in the Labour Party for a long time. The difficulty about any comprehensive planning is that if it is to be successful it must not prevent enterprising people from doing things which the consumer wants but which the planner, because of some previous conception about what he wants, thinks do not fit in and so tries to stop them. Surely this is the great argument against licences for building. It is also, surely, the argument which finally demolished the Capital Issues Committee. It is no use trying to develop our thoughts on successful planning along those kind of lines. I was sorry that the Leader of the Opposition raised those ideas again as if they were still of value.
The great difficulty about discussing this subject in a coherent way is that we are not examining some unsuccessful planning by the Government and saying how we might improve it. We are, in fact, discussing this against a complete absence of any coherent economic policy on the Government's part. It has been the most extraordinary shift from one expedient to another with the crowning fiasco of their decision to support the subsidisation of the Q.3. Then even the business men decided that this was not on and the Government were left in a most embarrassing situation.
This has gone on for a long time. Before the debate I was looking up some of the details of Government economic policy. The economic position of the country is so perilous that I think people of whatever party would wish the Government of the day to succeed in an 879 economic policy which produced a good steady growth with the people getting the benefit of it and having full employment, steady prices —even, preferably, lower prices —and at last removing inflation. Efforts have been made at various times. The closing words of the Chancellor today were so like the words which were spoken by the present Prime Minister when he was Chancellor of the Exchequer in 1956. A White Paper at that time said that the situation was extremely serious and:The solution lies in self-restraint in making wage claims and fixing profit margins and prices.Later that year, on 25th May, the Prime Minister, then Chancellor of the Exchequer, declared:Another round of wage increases could not be repeated without disaster.He made an appeal for his price plateau.
Hon. Members will also remember that as a result of that kind of appeal the engineering employers were encouraged to resist a wage demand which was being made on them at that time and the Government finally ratted on them. This is certainly what many engineering employers think. The usual round of 5 per cent. or 6 per cent. wage increases were given in the early part of 1957. The whole of that cycle was actually a repetition of what had gone on in previous years, even in the first year after this Government were returned, in 1951–52. Throughout the whole of these ten years, although they have varied a bit, wage increases have been roughly 6 per cent. over the whole field. Sometimes they have been more, sometimes less, yet we have not even had a 5 per cent. steady growth throughout the time. Could we possibly have absorbed those wage increases without inflation?
I feel sure that everybody is agreed about the objective. But how to do it? It is not necessary for us to set up at first a very elaborate and complicated planning organisation. It is necessary to develop a special planning department of the Government, with extremely able people, and the Government should take them not only from the Civil Service but from the professions outside, universities and the Eke, in order to get the most expert group of people possible. They must try to work out a 880 coherent plan roughly on the basis of about 5 per cent. growth each year. If that is done, they provide the information for a council of the type described by the Chancellor of the Exchequer. I understand that in France this council is completely ineffective, and whether it will be any more effective in this country is in doubt. It is most important to get the professional side right first.
Once this general level of development is decided the Government must get their own actions into line. They cannot go on providing money for capital development in uneconomic nationalised industries. Undoubtedly a lot of money has been wasted in that respect since the war. They must cut out the subsidisation of such things as the Q.3, but they must be very fair and frank with the contracting industries.
For example, they have not been frank with the cotton textile industry. We have had the redundancy scheme to reduce the size of the industry, with the subsidisation of the purchase of new machinery for the redevelopment of the industry, as it were, but it is all in a climate in which very few people feel that the industry has a prosperous and expanding future unless a highly protected market is provided for it. It appears from what the Government have done so far that they have no intention of providing the cotton industry with a highly protected market, in which case there is no point in either the Government or the cotton industry spending a lot of money on new development.
It is this kind of frankness to an industry in the position of the cotton industry —and this may apply to other industries such as shipping and tanning, which have been in difficulties recently — which is important. If the Government are prepared to protect them, which I think is very difficult, there may be some future for them, but if not, it is ridiculous for the Government to put money into them and to encourage industry to put money into them beyond that which any firm thinks economically wise.
Having cleared the decks, as it were, with the Government pursuing an economic policy on capital development and subsidisation which makes sense, they must then also pursue a policy which will ensure that demand is not excessive.
§ Sir A. V. Harvey
Is the hon. Member saying that the Government should have done nothing to help the cotton industry in its problems or should have allowed the industry to decay? Does he not agree that by modernising the plant and getting more than one-shift working the industry has at least been given a chance to hold its own with some competitors in high-quality goods?
§ Mr. Holt
The hon. Member knows that some parts of the cotton industry are in difficulties again, particularly the spinning section. There were two parts of the redundancy scheme. If the first part —reducing the number of looms and the spindlage —were right, then before the Government decided to put money into building up the industry again and to encourage the employers to do likewise, they should have taken some view about the size of the market in which that industry could operate. That market is shrinking all the time, and the chance of the Government ever having to meet the responsibilities of providing money for machinery is not likely to come about, because that investment will not be made by many of the mills. Already some money has been wasted. But I do not wish to spend too much time on this subject.
Having followed an economic policy which is designed to cut out uneconomic activities, the Government must next see that they follow a monetary policy which does not encourage an excessively high level of demand. A wages policy or planning is no substitution for this. Otherwise, all that will happen is that they will try to keep a sensible wages policy but there will be an excessive demand and employers will invite workers to go from one industry to another by offering rates higher than those already agreed.
It is no good having an overall plan for economic growth unless side by side there is a wages policy which fits it. Where the Government have made a mistake, due largely to not taking action early enough, is that they have failed to appreciate the importance of not being involved in trying to damage, or break confidence in, negotiating machinery. They must keep their two jobs quite separate. The job of conciliation in the Ministry of Labour must be maintained, 882 and all the Minister's efforts must be used to recover from the damage already done and to build up again confidence in negotiating machinery and the fairness of the conciliation machinery in the Ministry of Labour. That must be one part of Government policy.
The other must be the activities of the new planning department, whose job it must be to put before everybody who is concerned with wages and salaries their arguments about what they think the economy can stand. This must be a question of argument and of convincing people. There is no future in arbitrary action by the Government on this score. The views and advice of the planning department must be available to anyone conducting a court of inquiry or acting as arbitrator and in negotiations in the first place between employers and trade unions. These two jobs of the Ministry of Labour and the planning department must be kept clearly distinct. The object of this policy must be to build up a climate in which reason will prevail —and I do not see why this should be a hopeless objective in a democracy. If we cannot get reason to prevail, our democracy itself is at fault. It can prevail against the brute force which exists, and is used, in negotiating by groups of people who are in a strong position to hold the community to ransom.
We must recognise that we can move out of the jungle of wage negotiation conducted on the basis of strong unions in a powerful position and strong employers in an equally powerful position only by pursuing a wages policy in which the facts of the situation are placed clearly before both parties and both agree to act on the figures. This will mean a major change of attitude, not only on the part of trade union leaders but also on the part of employers. No one can complain in present circumstances about a trade union leader going out for all that he can get. Up to now that has been his job. His own men would have no confidence in him if he did not try to do that. But in a climate of the type I have described he would have a quite different purpose. Once the educational process had gone far enough I do not see any reason why it should not be acceptable.
This leaves one other important part of such a policy. The policy will not 883 succeed unless we are ready to accept by and large the present income structure in the country. The country and the Chancellor of the Exchequer must be prepared to accept it. It is no use setting up elaborate negotiating machinery for wages and asking men to act on the basis of reason and what the economy can stand —they are dealing with gross income —if the Chancellor of the Exchequer comes along at Budget time, when he is dealing with what amounts to net income, and suddenly completely changes the relationship between the incomes of executives and people on shop floors or between people in the lower income group and people in the medium income group, such as more highly skilled operatives. It just does not make sense.
If we intend seriously to try to pursue a wages policy based on people receiving the same wage for working in similar conditions and with similar skills in any part of the country and if we want to achieve a proper relationship between the semi-skilled, the skilled and higher executives, it is no use the Chancellor of the Exchequer coming to the House of Commons on Budget Day and upsetting the whole relationship by making discriminatory tax alterations. Whether the House and the country are prepared to accept the present income structure is another question. Perhaps people will see such advantages in at last having a sane wages policy under a steady development plan that they will be prepared to accept it.
The initiative is entirely in the hands of the Government. It is astounding how little and how rarely Governments use their tremendous power. If a Government produce a coherent policy, which makes sense and looks fair, for the steady regular development of the economy, and if they attempt to bring in a fair wages policy, I have not the slightest doubt that if they educate people properly they will win and get support for their policy, however much people in some sections of the economy object to it. So often Governments appear to have no confidence in their own ideas and prefer to let things drift. If we let things drift now we shall head for disaster.
§ 7.35 p.m.
§ Sir Richard Glyn (Dorset, North)
It is a great pleasure for me to follow the hon. Member for Bolton, West (Mr. Holt), because I am in agreement with a number of his remarks. I wish he had said a little more about the Liberal Party's view on wages policy. He started by saying that he would say something about it, but he ended by saying that it should be fair. We all agree with that. I gather that he thought that it should be promoted by education, to use his word, and by persuasion and should be achieved by agreement. No one can disagree with those sentiments. So far as I can ascertain, in those countries where a successful wages policy has been worked out in the post-war period —a good example is in the shipyards in Sweden —there it has been done by agreement. It seems to work well. It would be of great benefit to some of our industries if a similar arrangement came into being here. However, this is not a subject on which I am particularly qualified to speak. It has been covered thoroughly by previous speakers.
I now want to do something which has not been done recently. I want to refer to the words of the Amendment. I am very interested to note that the Amendment is in favour ofachieving sustained expansion of production without inflation".The word "inflation" has not been mentioned very much in the debate, although several hon. Members, including the hon. Member for Bolton, West, have spoken about prices. He very properly said that they should be kept steady, and with that sentiment everyone agrees. The Leader of the Opposition twice said that high prices made it very much harder to promote exports.
Rising prices are at the bottom of a good deal of this country's troubles and I am convinced that they are at the bottom of a great deal of the injustice between different sections of the community, which is referred to in the last line of the Amendment. I hope that the right hon. Member for Huyton (Mr. H. Wilson) will deal with this aspect very fully when he winds up, because this sentiment has not been referred to by any Opposition Member.
885 I come from a constituency in an area where wages and incomes generally are very low. Four years ago when the survey of wage levels throughout Britain was held, Dorset and the surrounding counties which had little industry came out extremely low in the scale. They were very much below the national average and below the average of any similar area. That position still obtains. In some areas the minimum agricultural wage is a very low wage and farmers have to pay well above it and provide good accommodation to attract workers, but in other rural areas, such as parts of my constituency, there are people working at wage rates below the minimum agricultural wage rates. I mean people working in shops —both men and women —and in some cases working in offices.
I will give only one example. Not long ago I was going into the case of a constituent whose employer —a firm —went into liquidation. This man, who was a milk roundsman, was working long hours for £7 15s. a week, which was rather less, in view of his family and rent, than he could have got from Public Assistance. He had been in the same job for ten years. When he took it in 1948 it was a very good job. He then received £6 10s., which was good money in those days and well above both the agricultural wage and the National Assistance rate. In those ten years he was overtaken not only by the agricultural wage but also by the National Assistance rate, because his wages had risen by only 25s. At the end of the ten years his employer went "bust" and the firm that followed found it impossible to continue to deliver milk in those areas. It was not any longer an economic possibility and many of my constituents had to fetch their milk, and this state of affairs still continues.
I mention this case merely to show some of the hardship caused in rural areas by rising prices. The House hears much about the problems and hardships caused by unemployment in industrial areas, and we are all very sympathetic. However, I do not believe that hon. Members who represent industrial areas are fully aware of the great hardships associated with employment at low wages which are overtaken by rising 886 prices. That is the difficulty with which we so often have to contend.
These workers who are doing a good job which is important to the community are being overtaken by rising prices, because the job they are doing will not carry anything like the wage increases which are associated with industrial areas and industrial jobs.
This raises the question of justice referred to at the end of the Amendment, and I hope that the right hon. Member for Huyton will deal with this aspect of the matter which is very important in my constituency and in many other rural areas throughout the country.
I think that this problem is shown in sharp relief if we think of ourselves not so much as receivers of incomes but as consumers of goods, because that is where the pinch comes. We are all consumers of goods and are affected when prices rise. Those whose incomes also rise do not notice the pinch so much, but those whose incomes rise slowly or not at all are severely pinched by this constant increase in prices which, because of inflation, has been going on since the end of the war. I hope that we will hear something about this from the Opposition speakers in support of the Amendment which, as I said, refers particularly to this problem.
The problem is worse in some areas, such as the one I know, but it extends everywhere. There is a distinction between two different groups of households in Britain. There are the fortunate households whose incomes are going up faster than prices and who have the pleasant task of deciding each year on what new thing they will go in for —a television set if they have not got one, but most of them have, a new car, or a holiday abroad —but the other group has a different choice to make. People in that group have the unpleasant necessity of deciding year by year what they will give up —which economy they will make after last year's economy, which in turn followed the economy of the year before that. They are pinched by this inflation referred to in the Amendment, but not yet referred to in speeches from the benches opposite. This inflation causes not only great difficulty for the export trade, which is very important, but an enormous amount of 887 hardship to little people; people who are entitled to as much justice as anyone else. In my submission they are not at present getting it, partly because their difficulties are not sufficiently understood or sufficiently widely known.
How can we ensure justice for these little people? This brings us to a crucial difficulty due to others not understanding their difficulties. I do not think that this aspect is sufficiently widely appreciated. We must face the fact that we now have perfectly democratic procedures which are used in wage negotiations without a thought of harming anybody but which in fact have the effect of forcing up prices and injuring these less fortunate under-privileged households. This point was, I think, covered by the hon. Member for Bolton, West when he spoke about the necessity for education.
I did my best to present this problem in a letter which The Times published last month under the heading, "Consider the consumer". It was the longest letter I have ever had published, but I will read only a couple of paragraphs from it to explain the difficulty. I wrote:No one questions the rights of employees to withhold their labour, nor the duty of Trades Union leaders to obtain the best possible terms for those they represent, but is there any justification for exercising these rights and duties without regard of the effect on the rest of the community?The Trade Unions achieved their privileged position at a time when wage and salary increases normally came out of profits, so that such increases were not inflationary, but merely transferred purchasing power from one group of people to another. For this reason, most Trades Unionists maintain that wage and salary negotiations concern only themselves and their employers. In modern conditions, however, wage and salary increases tend to be passed on to the consumers in the form of higher prices, fares, etc., because modern profit margins are incapable of absorbing more than a small proportion of the wage and salary increases agreed to year after year.I then set out the difference, as I saw it, between the fortunate households whose incomes were going up faster than prices, and the unfortunate consumers whose incomes were going up slower, or not at all, and concluded by saying:In these circumstances, one may inquire of all concerned: ' Are these millions of less fortunate consumers to be written off as socially and economically, expendable merely because they are not organised for "collective bargaining"?'888 I then quoted from the Daily Mirror, which is not a strong Right-wing paper. I said:Walter Reuther, the American Trades Union leader, told the British Trades Union Congress in 1957 that 'wage increases which result in price increases are wrong because they rob the customer.'Those were his words. They are strong words, but I think they convey the idea, and I think that there is a great deal in them.
Since 1957 millions of consumers have been adversely affected by these wage and salary increases which have put up prices. That is the difficulty. I do not say that the people who received them were not entitled to some increases but these increases were not balanced by production and were therefore inflationary and caused hardship.
In a democracy I do not see how this difficulty can be got over other than by agreement and understanding, but if we are to do this we must promote understanding and knowledge of the problems, and a knowledge of the consequences which an action which seems logical and fair in an industrial area may have on a rural area where wages do not go up at the same rate. That is the problem we are up against, and it is not an easy one to deal with.
I hope that I have raised this fairly and squarely, and I hope that the right hon. Gentleman who winds up for the Opposition will deal with those points in the Amendment which refer to the necessity for production without inflation and the necessity for justice for all sections of our community, because I believe that if hon. Gentlemen opposite grasp this nettle and use their undoubted influence to get this problem more widely understood we shall have much more chance of reducing these inflationary demands to the level of production and thereby avoid inflation, help our exports, and cut out a great deal of hardship for the less privileged families.
§ 7.49 p.m.
§ Mr. William Stones (Consett)
I know that a number of other hon. Members wish to take part in this debate. I shall therefore not take up time by attempting to deal specifically with arguments which have been adduced by hon. Gentlemen opposite, but I hope to deal in a general way with some of them.
889 I am interested in those parts of the Gracious Speech which refer to the proposals for maintaining a sound economy, overseas trade and the balance of payments.
Similar statements appeared a year ago in the Gracious Speech. I do not complain about the similarity of the economic proposals in the two Speeches. In themselves they are quite good and no one could quarrel with them, because it is essential that we should seek to maintain a sound economy, high and stable employment, stability of prices and the balance of payments. The Ministers responsible for the preparation of the Queen's Speech are to be commended on their use of laudable words, but words are not enough.
Despite the Chancellor's speech this afternoon, I am still quite sceptical about the ability of the Government and the responsible Ministers to give effect to those proposals in the Gracious Speech. My scepticism arises from certain facts that I believe will be quite readily understood. I know that the House does not like to be bored with a lot of statistics, but I must point out that in not one single year since the Tory Government took over has our national industrial production increased at a rate comparable with that of the six countries which form the European Economic Community. It has not even kept pace with that of the rest of the countries of the European Free Trade Association.
Our share of world trade has gone down. Cmnd. 1506 shows that despite the fact that there has been some improvement in the balance of payments, in the first half of this year we were down by £83 million. These figures take into account both visible and invisible trade. It is very alarming to learn that our invisible trading, which in the past has helped us in no small measure to maintain our balance of payments, has fallen from £285 million in 1958 to £59 million in 1960 and to £25 million in the first half of 1961.
These facts show quite clearly that we are seriously lagging behind other industrial nations in our share of world trade and in our industrial production. Tory spokesmen, of course, are putting forward the usual excuses for failure to keep in step with our major overseas competitors. 890 They mention high wages and strikes-official and unofficial. The cost of the Welfare State sometimes comes into their picture, as does the lack of incentives to industrialists because of high taxation.
The facts are these. In certain competing countries, wages are increasing even more rapidly than in the United Kingdom. Those countries are catching up with our standards, and, in some cases, even surpassing them. As to strike action, the Prime Minister himself had to admit some twelve months ago that our record was comparable with that of any other country except Western Germany.
We are told by the political and economic planning people that there is no evidence whatsoever to show that the Welfare State cost has had any significant effect on our economic problems. Neither is it true that the total amount of taxation expressed as a proportion of our national income is higher than that of any competing countries. In Western Germany, taxation accounts for 34 per cent. of the total national income; it accounts for slightly less than 30 per cent. here, and both France and Sweden are ahead of us in this respect.
It might be said by advocates of our entry into the Common Market that the Six have advanced more rapidly than we have because of the Common Market itself. Again, the facts are that by far the greatest increase in world trading and industrial production occurred in the countries of the Six between 1950 and 1958, before the Common Market came into operation.
The responsibility for the failure to measure up economically lies on the shoulders of the Government and of our industrialists. It lies with the Government for their doctrinaire refusal to plan our economy. In the time at my disposal I shall not start to justify planning, but I have here a broadsheet, issued by the Central Office of Information, showing conclusively that planning was very successful in the years following the war. It was successful then; it could be equally successful now. The industrialists can be blamed for their exploitation of a booming home market and a consequentially lesser drive in the export markets. It seems to them to be more profitable to deal at home than abroad.
891 I do not often quote from the Press, but I should like now to quote from an article in the Guardian on 19th October, dealing with German shipbuilding firms. It states:In the last few months some German shipbuilding firms —those not associated with the steel industry —have been trying to purchase steel plates and sections in Britain where plates at any rate are up to 10 per cent. cheaper. They have come up against an unexpected difficulty. While they were able to place orders for sections, British steel companies were reluctant to sell any plates to Germany. It appears that there is a gentleman's agreement between British and German plate producers to leave each other's home markets alone.I believe that the Government are at last beginning to recognise that the remedial measures adopted in the last ten years to deal with recurring crises are merely temporary, and quite ineffective in the long run. The credit squeeze and high Bank Rate have been mentioned. Cutting back investment in industry may help slightly and temporarily, but, in the long run, it reduces our power to compete in the world markets. The cost of high Bank Rate to industry has been specifically mentioned today, but there is also its cost to the Government, both internally and on the foreign exchanges —not to mention higher cost to local authorities.
The credit squeeze and the hire-purchase restrictions exercise a measure of restraint on home demand, but they do not release goods for export. Industries are running below capacity as a result of falling home demand. As a result, costs of production have gone up, again making it less possible for us to compete on favourable terms in the world markets. Further, the poor prospects in the home market have failed to attract investors. The whole thing simply cannot materially affect invisible earnings. These things actually reduce output and make matters much more difficult.
I do not profess to be an expert economist, but when prices of imports are down and those of exports are up; when prices of primary products have fallen since 1951, and the prices of manufactured goods have gone up —-and I am told that such a situation is very favourable to a great manufacturing country like ours —I wonder why the United Kingdom cannot keep pace with other countries. How in the world can we expect to give effect to the proposals for economic advance contained in the Gracious Speech in the 892 face of facts which seem to me to indicate an inability on the part of the Government to do so?
I read in the Press on Sunday that the Government intend to make drastic cuts in spending at home and abroad. No one will complain if that saving is effective as long as it is done without a corresponding cut in certain services. I think, in particular, of services designed to bring about more friendly relations with other countries which are likely to boost our exports.
The Government should do everything possible to make available to our industralists information on other services that are likely to be of use to them in their efforts to regain and retain markets abroad. That has already been mentioned this afternoon. The measures to be adopted and provided are controversial, but, nevertheless, whatever is being done in that direction, I believe that the Government should endeavour to do even more. I believe, too, that the Government, if they are to give effect to the proposals, should give every encouragement to industrialists and investors to invest in the United Kingdom rather than in countries outside the Commonwealth. To do this there should be greater differentiation between the taxation on undistributed profits and on distributed profits where the investment of the undistributed profits takes place at home.
It follows that in a capitalist society the profit motive is a very decisive factor. Industrialists and merchants will invest and manufacture and trade in industries which are the more profitable and which give a speedier and greater return on capital investment. Not all of them will take into account the economic welfare of the nation as a whole. I am not accusing all industrialists and capitalists of profit making irrespective of the good of the nation. When one reads of the shipbuilding abroad on British orders and the clamour for cheaper fuel, oil, methane and even coal from the United States and other countries without regard to our indigenous resources of coal, I am amazed at what appears to me to be an entire lack of regard for the nation's welfare.
If we are to expand our economy and overseas trade and balance our trade 893 figures, we cannot rely on exhortations and appeals for balanced production, for restraint of importation of the less essential goods. Likewise, if we are to increase our production of goods for export and make a greater drive for overseas markets, exhortations and appeals will not bring about the desired results. There must be some measure of both physical and monetary control. I believe this is essential to the planning of our national economy.
The economic planning council, which the Government propose to set up, will be absolutely futile, in my opinion, without such control. It should be made possible for credit to be given to the less efficient firms of this country dealing with goods for export to replace obsolete plant, because quite often it is the inefficient firms that are going along with obsolete plant. Credit should be given to them to replace such obsolete plant and to become more efficient. On the other hand, if credits are for less essential projects, they should be refused. It may be necessary to restrict the import of certain commodities, but I cannot see how this can be done without giving the proposed economic planning council these powers. These proposals will not meet with the approval of certain hon. Members opposite, but I believe them to be necessary.
I turn to another paragraph in the Gracious Speech which tells us:My Minister will continue to seek the co-operation of both sides industry in the better co-ordination of the national effort with a view to promoting faster economic growth …Again, I regard this as quite laudable. But I tell the Government, in all sincerity, that if they follow up their present policy of wage pauses, interfering with the conciliation machinery and with arbitration to the detriment of the wage earners in industry, in administration and in the social services and, at the same time, make no effort to ensure equal sacrifices all round, they will again be doomed to failure. If the Government desire cooperation with the workers and there has to be sacrifice, there must be equality of sacrifice. Our trade unions —I speak as a trade unionist in constant touch with the trade unions at home —believe that, in general, the workers are of the opinion that they are the first that have to make sacrifices in an economic crisis and the 894 last to profit from a booming economy. They see the increased incomes from rents, interest, dividends, capital gains and particularly from land speculation without restraint while they are being asked to sacrifice in the best interests of the nation. In the face of this very deep feeling —and I assure the House that there is very deep feeling about it —how can the Government expect the necessary co-operation?
We on this side of the House believe, as do hon. Members opposite, that we simply cannot go on spending more than we earn as a nation. We know that constant chasing after higher wages and better conditions without increased productivity will benefit nobody in the long run. There may well have to be restraint if we are to get out of the mess which the Tory Government have got us into, but let those who can afford the most make the greatest sacrifices and those who can afford the least make the lesser sacrifices. If the Government are sincere in their proposals as contained in the Gracious Speech, I ask them to consider what I have said. I have said this not as an expert but as a layman, but I believe that I am expressing here the thoughts and desires of millions of people throughout the country.
§ 8.9 p.m.
§ Mr. R. W. Elliott (Newcastle-upon-Tyne, North)
I am very pleased to follow the hon. Member for Consett (Mr. Stones) who has spoken with his usual sincerity and with a great deal of common sense. I agree with many of the comments he made. He and I cope from the same part of the country, the north-east of England, which had a great deal of unemployment in other days, so I share his desire for a lasting high level of employment such as we have at this time.
I should like to suggest to him that the most sensible thing he said, and it has been said already today on both sides of the House, is that we cannot go on spending more than we earn and that restraint is necessary. I would, therefore, take issue with him in his criticism of the wage pause, which has been given such publicity, in that it is designed to cure the particular ill of spending more than we earn. It is far from the desire of this Government or this Chancellor or this party to interfere 895 with established wage negotiating machinery. It is merely a pause which is needed in order that production can catch up with expenditure. As to the point made by the hon. Member for Consett about equality of sacrifices, I agree wholeheartedly that we want equality of sacrifice, but it is just not true to say that our Surtax concession is in any way against the interest of equality of sacrifice.
My right hon. and learned Friend today quoted from the Daily Herald which stated so wisely in a leader some time ago that our able and enterprising young men badly needed to be encouraged, that they were the last to be encouraged and, indeed, if they had not been they would have left this nation, to its detriment.
I also agree with the hon. Member for Consett that exhortation is not enough, but I would suggest to him that exhortation has been somewhat successful in connection with our need for increased exports. The fact is that industry, both large and small, is realising that we must export more if we are to maintain and increase our standard of living. Perhaps this has not got through to the population as a whole, but I suggest that it is getting through to industry itself.
During the summer Recess I took an opportunity to visit firms on Tyneside, which the hon. Member for Consett knows as well as I do, engaged in the export business. I tried to find out what industry was thinking about the need to increase our exports. I found, wherever I went, that whatever difficulties are being experienced with exports, there was a general appreciation of the national and regional organisation of the Board of Trade. The export services branch and the regional controllers are playing a valuable and most energetic part in giving advice, encouragement and assistance to industry, large and small, on Tyneside and, I have no doubt, throughout the country.
I was assured by Tyneside industrialists that in the markets of the world our trade commissioners and our commercial diplomatic officers are forming a very much appreciated network. Difficulties being experienced by export- 896 ing firms varied, but were automatically greater with the smaller firms. The larger firm, with its extensive reserves and larger turn-over, is obviously better able to meet keen competition.
I would say in answer to a great deal of pessimism expressed on the other side of the House, and occasionally on this side, too, that I found in the ranks of those on Tyneside engaged in exports a great deal of enthusiasm and pride of achievement; and those very valuable men in our economy today, the export managers of the larger firms, had a most refreshing confidence. I was told of new markets, of others extended and of many fresh fields to conquer. It is very encouraging to realise that there are many fresh fields to conquer for our manufacturing industry in particular. For so many of our products there are immeasurable opportunities, but the problems facing the exporting firms, and in particular the small exporters, are fairly constant and they are almost entirely financial.
To establish what was described to me as close contact representation abroad costs a lot of money. Exporting is expensive. To get this contact absorbs an abnormally high percentage of profits from sales and represents a very heavy initial expense. I found, unfortunately, that so many small firms were deterred by this initial expense from exporting at all. The main expenses of the small exporter seem to be commission to foreign agents. Also there are customs duties, transport and packing charges, storage, display and advertising, and the heavy cost of the export surveys. I am aware that the export surveys are assisted by the Export Credits Guarantee Department, but I would suggest that more publicity might be given with advantage to this fact and that we might well consider an extension of assistance to the actual export survey.
As has been said so many times during the debate, it is difficult to locate the point at which capital assistance is justified in exports. But I agree with a great deal of what my hon. Friend the Member for Peterborough (Sir Harmar Nicholls) said. After talking during the past two months to a great number of people engaged in exporting, my opinion is that we need to give some 897 form of tax incentive. It is very necessary with all those engaged in exporting, but particularly with the smaller firms. I can assure my right hon. and learned Friend that the exporter on Tyneside is very quick to emphasise the advantages of his European competitors in this respect.
If one presents the case against export assistance by any form of taxation easement by stating the unfair credit position of the component manufacturer, the direct exporter very quickly emphasises that the component manufacturer has nothing like the risk in his business that the direct exporter encounters. He has none of the export risks and expense. If one argues on the international agreement plane, which my right hon. and learned Friend mentioned this afternoon, the direct exporter quickly indicates quite a number of countries which are signatories to G.A.T.T. and which are at this time nevertheless managing to give very reasonable preferential conditions to their exporters.
I found considerable support for the provision by the Government of trade centres to assist the smaller exporter. Such centres, if set up in strategic positions, particularly in Europe, could provide office, conference and information services. They could provide a great deal of encouragement to the smaller exporter and could do a great deal to reduce costs and to make the extension of our markets considerably less frightening. A pool of interpreters, typists and banking facilities could be of great assistance. It is obvious that to obtain the premises necessary for these centres would be extremely difficult in most cases. Location, getting somewhere within reasonable access to railways, airports and general transport facilities would present difficulties, but I should like the possibilities here to be considered. I believe that the Government should also consider extending the commercial and information departments of some of our embassies. On this point
I disagree with the hon. Member for Oldham, West (Mr. Hale) in his criticism. In talking to exporters on Tyneside I found that, over and over again, they commended most warmly the information and commercial departments of our embassies, particularly, in Europe.
898 A further possibility for the smaller exporting firm is the formation of group sales organisations. Here, so far as I can see, there is great scope and considerable possibility of saving of costs. We seem to duplicate all forms of production. We seem to over-capitalise particular forms of production. In such things as advertising I am sure that a great deal could be co-ordinated. Exporting, especially for the smaller firms, is highly expensive, and I should like the Government further to consider giving as much encouragement as they can to the formation of such groups.
A short while ago in Newcastle-upon-Tyne we held "Norway Week" when a trade delegation, led by King Olav himself and supported by cultural organisations, visited our city. This week did a great deal to further trade and friendship between our two countries. Such organised visits have immense possibilities and I commend this particular visit, which was initiated by the trading organisations of the Tyne.
I am rather more optimistic than many hon. Members who have spoken today. I see considerable possibilities of expanding our export trade, but the Government must take a lead, must give more assistance than at present to assist the coordination of the efforts of smaller firms. The enthusiasm of those involved is immense. Everyone involved in the export trade with whom I talked looks forward to exploiting the very real possibilities which are before us in the world today. I look forward, in this coming Session of Parliament, to ever greater Government encouragement for this essential endeavour.
§ 8.22 p.m.
§ Mr. Norman Pentland (Chester-le-Street)
At the beginning of his speech, the hon. Gentleman the Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) spoke of the need for wage restraint and of how he was fully in support of the Government's pay pause. I have always said that if any Government expected the workers to indulge in wage restraint or pay pauses, that Government must first of all set an example. I will illustrate how, in my view, this Government have not set that example.
I wish to concentrate my remarks on matters affecting the industrial scene, and 899 in this context I must quote a passage from the Gracious Speech which was quoted by my hon. Friend the Member for Consett (Mr. Stones). It reads:My Ministers will continue to seek the cooperation of both sides of industry in the better co-ordination of the national effort with a view to promoting faster economic growth, while maintaining stability in prices and a high and stable level of employment.The line in that passage which intrigues me is:My Ministers will continue to seek the cooperation of both sides of industry …I realise that this is a time-honoured formula for the Gracious Speech, but the operative word so far as I am concerned is "continue". What will they continue? What direction will the Government give? It is in the direction that probably the answer lies. I mention this passage because we have had no indication from the Chancellor today that their policies are in any way different from what my right hon. Friend the Leader of the Opposition said was not a change in anything substantial at all. Nothing has been forthcoming in that direction.
I assume from the Chancellor's speech today that the Government wish to imply that their policies over the past ten years have encouraged first-class labour relationships. Indeed, the Chancellor said that he was delighted with the success of Tory policies over those years. More important, he declared that the Government wished to imply by the word "continue" that the economic policies which they have implemented in the past have been policies which have offered equal opportunities for equal demands from both shareholders and workers alike.
We all know that nothing could be further from the truth, because time and again my hon. Friends have asked the Government, "How can one expect to have a free-for-all in profits and divi-dents and at the same time not expect a free-for-all in wages and salaries?" That has been put time and again, but to no avail.
If the Government believe that the policies they have introduced over the years have offered equal opportunities to workers and shareholders alike, we are entitled to look back over the years. In my view, if any Government gets itself into economic difficulties —as this 900 one has done —and seeks the co-operation and sacrifice of the workers, the workers are entitled to judge the Government against the background of events leading up to the economic difficulties.
I need not go far back. In 1958 wage and salary payments, in money terms, rose by only 3 per cent. or 7d. in the £. Indeed, the earnings of the manual workers rose barely 2 per cent. —only 4d. in the £. Meanwhile, rent, interest and dividend rates, even before tax, rose by 9 per cent. —or 1s. 9d. in the £, and share prices in 1958 rose by 25 per cent. In 1959 wages and salaries rose by 3½ per cent. —or 8d. in the £ —dividends before tax went up by 13 per cent. —2s. 7d. in the £ —and undistributed profits went up by 19 per cent. —3s. 10d. in the £.
The evidence is there, and if hon. Gentlemen opposite care to go into the Library they can find the figures for themselves. The evidence is there to prove that in 1960 the rise in profits and dividends jumped quicker than before and dividends were rising four times faster than wages and salaries. So one can go on, because this is the familiar pattern which we have seen with this Government.
I have quoted these figures because an hon. Member referred earlier to the former Chancellor of the Exchequer, Lord Amory, who was always presented by the Tory Party as being a fair-minded and sympathetic man. I have no doubt that he wanted to be that kind of man, and there is also no doubt that he was more sympathetic to shareholders than he was to workers. In the 1958 Budget —his Budget —companies got a tax bonus of £16 million a year lower Profits Tax and £23 million a year in higher depreciation allowances. They are crying out for this. Industrialists on the opposite side of the House are crying out for these very allowances.
In 1959 £229 million was remitted in Income Tax, and again it can be proved that more than half of this went to those receiving dividends rather than to those earning wages and salaries. Therefore, every worker in the country fully realises that these concessions have been given year after year. In fact, we know full well that the whole objective of this Government's policy has been to shift back the country's wealth to the shareholders and profit earners and away from 901 the wage earners and salaried workers. That has been the whole objective of the Government's policy right through.
§ Mr. J. Harvey rose—
§ Mr. Pentland
Does anyone on the Government benches think that the workers of this country do not realise this? Does anyone think that the trade unionists in this country have not at some time or other had their attention drawn to the failure of the financial policy of the Government?
§ Mr. Harvey
Is the hon. Gentleman seriously arguing that the average worker in this country is worse off today as a result of the Government's policy?
§ Mr. Pentland
If the hon. Member for Walthamstow, East (Mr. J. Harvey) had been in the Chamber a short while ago, he would have heard one of his own hon. Friends complaining that a lower-paid worker in his constituency had not had a rise for, I think it was, five or six years. The hon. Gentleman was complaining that in ten years such workers had had a rise of only 25s.
§ Mr. Pentland
I know full well that it could be argued by right hon. and hon. Members opposite, "We have heard all this before. This is where we came in. So what are we to do about it? What is the T.U.C. to do about it?" That could be said by hon. Gentlemen opposite, but the simple answer is: what are the Government going to do about it themselves? At present they have given no indication or lead to the trade union movement of the country. It should be remembered that while the Opposition has continually tried to warn the Government that their economic policy, in the final analysis, would lead to the situation which we have today, the trade union movement has always said 902 when we have had Tory Governments that if the Government were prepared to alter their negative and unequal economic policies which have characterised their approach in the past, the movement would co-operate with the Government. But Tory Government have not been prepared to do this and that is why the T.U.C. cannot trust the present Government. It has never been able to trust Tory Governments in the past and, as a result of Government policy over the years, it finds itself in a position today where it cannot trust the present Tory Government.
What amazes me is that the Chancellor fails to realise that his new policy or austerity programme —call it what we may —debars the trade union movement from going to the workers and saying, "Now is the time for us to co-operate with the Government." These policies leave the trade union movement no alternative. How in the world can the Chancellor or the Government expect the workers meekly to accept the impositions which the right hon. and learned Gentleman has imposed upon them over the past four years? Do not they realise that if the trade union movement were to accept the pay pause in present conditions, all it would be doing would be giving an invitation to the Government to carry on as before with their stupid economic policies once the present difficulties had been temporarily overcome? Nothing that has been said today from the Government or by the Chancellor can alter that fact. The sooner the Government face these facts and realise how the trade union movement is placed and how it is committed to the membership to fight against the policy being implemented by the Government, the better it will be for the Government and for the country.
I wish finally to turn to a problem affecting my own part of the country, the North-East. I thought that the hon. Member for Newcastle-upon-Tyne, North would refer to this problem—
§ Mr. Pentland
Maybe he is not interested, I do not know.
It also states in the Gracious Speech that the Government will seek to maintain a high and stable level of employment.
903 I was most disappointed to note that in the Gracious Speech there was no indication of any new thinking on the part of the Government as to how they would speed up the development of new industries in areas which continue to have a high and persistent rate of unemployment. The Prime Minister, in opening the debate on the Gracious Speech last Tuesday, seemed to be highly satisfied with the unemployment position. He spoke as though there were no black spots throughout the whole of Britain. We must therefore assume that the right hon. Gentleman was satisfied that the Local Employment Act was working satisfactorily and was overcoming all the problems and difficulties in the areas about which I am speaking. I cannot imagine that any hon. Member on this side is satisfied with the progress which has been made since this Act came into force, particularly those of us who come from regions which have a high and persistent rate of unemployment.
When the Bill which became the Local Employment Act was introduced we were led to believe that it would not only deal with the present unemployment situation, but also anticipate future unemployment. It is having very little impression on the existing unemployment situation in the North-East. Nothing has been forthcoming to prove that eventually it will solve the long-term unemployment problem.
At all times when I speak on these matters, it is the long-term problem in the North-East which worries and concerns me more than anything. It is well known to hon. Members that, in the main, the North-East depends on the basic industries of coal, shipbuilding and ship-repairing. It is just as well known to the House that today these industries are in a serious phase of contraction. The Minister of Power's recent statement has only further aggravated the problems in the Durham coalfields. There will be a further contraction in the Durham coalfield in the very near future. The decision concerning the importation of liquid methane has done nothing to ease the problems in the Durham coalfield. That is something to which the Government should give, full consideration.
In Question after Question at Question Time, we have said to the Government, 904 "What are you prepared to do in realistic terms to avoid social hardship and unemployment among our people if the contraction in the basic industries continues?" We have not had a satisfactory answer to that question. We have had plenty of promises —jobs in the pipeline, and all that. The pipeline has a terrible habit of becoming blocked too many times for our fancy. The truth is that the Government have never carried out any intelligent research nor devised a plan which could, in the long run, bring industries to our area, which would solve the problem of unemployment as the contraction in the basic industries continued.
§ Mr. R. W. Elliott
Would not the hon. Gentleman agree that there has been a quite steady flow of new industry to the North-East because of the Local Employment Act? We have even had one or two nice new factories in the past few months which have created quite a number of new jobs. Would not the hon. Gentleman further agree that the Team Valley Trading Estate and the North-East Trading Estates generally represent very intelligent thinking on behalf of Conservative Governments in other days of long-term unemployment in the area?
§ Mr. Pentland
We want two or three Team Valley Trading Estates in the North-East. In regard to the hon. Member's other question, I accept that in the North-East we have hardworking, conscientious organisations that are doing everything in their power to attract industries to the area. In the main, however, the industries that they have attracted have been more or less light industries. With the density of employment which we so much desire, the great danger is that with a preponderance of light industries coming into areas like the North-East of England, in which we expect new industry to replace the contracting basic industries, those same light industries will take up valuable industrial sites, thus leaving few desirable sites for the heavy industry which is expected to come to those areas. The crux of the problem is that what it vitally needed in the North-East is more and more heavy industries.
We have evidence to prove —this is part of the national problem —that some 905 parts of the country are becoming literally cluttered up with industry. In my view, there is danger of the country becoming industrially and economically unbalanced. Every hon. Member from the North-East who is here tonight knows full well that since 1951, tens of thousands of people have migrated from the North-East to those other parts of the country simply to find employment. Indeed, the outward migration from the North-East, particularly amongst our younger people, creates a serious situation, because it could jeopardise the industrial future of the north-east of England.
In recent weeks, the Government have talked about a planned economy. I trust that they will put their talk into action. I ask them to bring forward an industrial plan for the North-East, because only then will we be satisfied that our long-term problems are at least being recognised in a realistic fashion by the Government. Only then will our people be able to look to the future with hope and confidence.
§ 8.43 p.m.
Mr. Basil dc Ferranti (Morecambe and Lonsdale)
I do not think I should be exaggerating if I described the first part of the speech of the hon. Member for Chester-le-Street (Mr. Pentland) as being somewhat partisan.
§ Mr. de Ferranti
I accept that it is to his credit. In following the hon. Member, I should like to say that the growth rates that we have been able to achieve in the United Kingdom in the last ten years of approximately 2.7 per cent. have made it more difficult for trade unionists and trade union leaders to obtain their own members' support in any policy of moderating wage demands. We must nationally aim to achieve a higher rate of growth and in so doing make it less likely for the hon. Member for Chester-le-Street in five years' time to make the sort of speech he has made tonight.
The Opposition Amendment has somewhat missed the bus. It states that the Government have no proposals. Here, however, the Government have made two of, perhaps, the most dramatic proposals ever made in this country. One is that we should join the Common 906 Market and the other that we should establish a National Economic Development Council, to which, I suppose, one can familiarly refer as N.E.D.
In the debate on the Address a year ago, I urged that, in this highly technological age, we should try to understand the great importance of economies of scale in manufacturing. I made the somewhat sweeping statement, for which I apologised in advance, thatIf we are to achieve any sort of increase in the rate of productivity which we should like to see, and achieve the level of exports which we must have to survive, we must have at least one company in each product as big or preferably bigger than any of its competitors overseas."—[OFFICIAL REPORT, 2nd November, I960; Vol. 629, c. 282.]I am proud that in my constituency there are the companies of Glaxo and I.C.I., which, I think everybody will accept, have done a magnificent job in helping to raise productivity and helping to solve the country's export problem.
I urged, too, last year that the Board of Trade —I think I should have added the Government themselves —should be much better informed about the detailed problems of industry, all the sorts of little things which are incredibly important to a busines man but are tiny little problems to the Government, even information about what sort of subsidies our competitors overseas are giving. The Board of Trade appears to take not really very seriously these difficulties which we encounter.
I then said that on the basis of this much better information the Government should do three things; first of all, that the Government should use the immense weight of their own purchasing power the central Government, the nationalised industries, and local authorities. Lord Plowden pointed out in the White Paper that this amounts to 40 per cent. of our gross national product. We could use that purchasing power in a more rational way to achieve a solution of our exports and of our rate of growth. I said also that we should also play it by ear, as the Americans say, and use schemes, as we did in the textile industry and as we did in the aircraft industry, and anything that appears to be sensible, such as the use of civil development contracts in those industries which are technologically lagging behind the Americans or the Russians or the Europeans.
907 However, I naively under-estimated last year the difficulty for any Government to achieve these sorts of things, because with the way we are organised at the moment there is no framework in which these myriad decisions can be made, and can be made towards a common objective.
However, since last year we have made this great decision to join the European Economic Community. [HON. MEMBERS: "Not yet."] We have made this great decision to ask, if possible, subject to all the safeguards, to join the European Economic Community. I think that in some ways Governments are like people. We are what the Americans call crisis-orientated. That is to say, we only actually do anything when there is a crisis on. The prospect of joining the Common Market is a sort of self-induced crisis, to which we have got to respond. Because of this prospect, things have got to be done, and the things I mentioned last year must now be carefully considered. I believe that the establishment of a N.E.D. could well prove to be the framework which would enable the Government to achieve these desirable objects.
I was fortunate enough last week to be able to spend a little time in Paris, which I greatly enjoyed. I learned a great deal. In particular I learned about the French methods of planning. I learned that their most effective work in their own planning was accomplished by nearly 250 working groups studying in detail the particular problems of industry. They were organised by twenty-five commissions.
Industry is a very big thing. The hon. Member for Macclesfield (Sir A. V. Harvey) urged the Chancellor of the Exchequer to go to talk to everybody in industry. That would take him really a long time. If he is going effectively to be able to talk to everybody in industry he needs to have twenty-five commission and 250 working groups, really to enable him to do a proper job. Although perhaps it is jumping the gun a bit, so far as his proposals for N.E.D. go, I would urge him to consider very seriously the establishment of this type of working group, if a N.E.D. does, as I hope it will, begin to function.
908 As to the activities of the committee itself, which the Chancellor today said would be a small body, the really important decisions which will be effective in this field are very small decisions. They are detailed decisions as far as the Chancellor is concerned and the N.E.D. will tend to become rather like the conseil superieur in Paris, which does the rather grand launching of the whole plan and does not meet on a particularly regular basis. It is the office and the working parties and the commissions which really do the job. The N.E.D. should be there to see fair play.
I also learned in Paris that a five per cent. growth rate is perfectly possible in this country and I think that we could work up to it in about three years' time. I believe now that we in the House of Commons should stop arguing whether planning is a good thing, that we should drop the "isms", as the Leader of the Opposition has said, and should now get on with arguing what the rate of growth could and should be. The Frenchmen said that before they decided which rate of growth to adopt they would have welcome a much greater degree of public debate of the pros and cons of the three different plans that they were considering. I believe that all of us who are interested in the future of the House of Commons should concern themselves with this now and should start informing ourselves now of the pros and cons of different rates of growth. We should stop arguing about planning and get on with arguing how we should achieve a 5 per cent. growth which would solve our problems, including those of the constituents of the hon. Member for Chester-le-Street.
It was interesting to learn in Paris that the French regard exports as a problem which is now in the past. They say that they have achieved the solution to exports largely because of the success of modernisation encouraged by the working groups. I have no doubt that a large measure of their success was achieved by means of what I might call the "old boy network" established with the Commisariat at its centre. This enabled them to make sensible decisions to achieve the national objective. They made these decisions without any real use of the sanctions mentioned by the 909 Leader of the Opposition. They achieved them because everybody wanted to achieve them. I am confident that Conservative planning would ensure that the country would want to achieve and would be able to achieve a 5 per cent. growth rate without the use of sanctions, except that we would haye the most powerful sanction of all in that we must compete in the Common Market. We must do the sensible thing, and this perhaps is the most powerful sanction of all.
My hon. Friend the Member for Macclesfield said that we should all get to work earlier and get to work at the same time as everybody else in the factory or office. I agree with him. But I think that the targets that could be set by an economic development organisation would do much to ensure that when we did get to our offices or factories we would all feel that that little extra work that we would then do could cure our export problems and enable us to double our standard of living in twelve years rather than in twenty-five.
§ 8.55 p.m.
§ Mr. Harold Wilson (Huyton)
I am sure that the hon. Member for More cambe and Lonsdale (Mr. de Ferranti) will forgive me if I do not follow him in his recent journeyings, which must have been most invigorating. I am also sure that the House will understand if, instead of commenting on all the points which have been raised in the debate, I deal mainly with the speech which the Chancellor of the Exchequer made this afternoon.
I think that most of us who heard the right hon. and learned Gentleman's speech thought that the most serious thing which emerged from it was the dangerous complacency which it revealed. I think the Chancellor actually believes that the measures which he took last July have been successful in strengthening sterling, and that he thinks that if only we will all listen to him and accept the pay pause, our problems will be solved, production will expand year by year and exports will be pouring out of the country.
That is what the right hon. and learned Gentleman claimed. I use his exact words as I took them down. I am not a skilled shorthand writer, and I am sure he will forgive me if I did not take down his words accurately, but I 910 think it is fair to suggest that what he said was: "Confidence in sterling has been much improved"—
§ Mr. Wilson
—"the capital outflow of recent months has been reversed, the sterling rate is well above parity with the dollar, and we have paid back £100 million to the International Monetary Fund."
This really is a dangerous illusion. Sterling is stronger today not because the Chancellor has done anything to revitalise the economy but because he borrowed £500 million and so convinced the speculators that sterling would not be devalued. Sterling is stronger because he put the Bank Rate up to the crippling level of 7 per cent. and attracted a lot of hot money that we did not need, cannot use and cannot afford, and which is a perpetual embarrassment to us and also extremely dangerous to us when it starts to leave.
It was predictable that sterling would be stronger. Even before we had the July crisis, even before the Budget and even before we knew what the Chancellor was going to do, I said in a newspaper article, "Of course sterling will recover, for a time." About the same time I even predicted the present complacency. We have had this previously from the Chancellor's predecessors. In 1955 the present Home Secretary said, "Thank goodness we acted in time." That was two months before the crisis of July, 1955, and four months before the autumn Budget. Every one of the present Chancellor's predecessors has shown the same complacency. What we have not had from any of them —we have not had it from the Chancellor today —is any policy at all which will strengthen the economy and enable us to go forward with increased production year by year instead of just increased production one year in every four.
The absolute bankruptcy of the Chancellor's approach to the matter today was a grievous disappointment to me. Last year I believed what the Press said about him when he was appointed. I have had occasion previously to quote in the House the tremendous build-up that he had —how he was keeping his own counsel but would produce new 911 methods and break the cycle of squeeze and ease, and all the rest of it. Yet here we are now. He has been at the Treasury for fifteen months and has presented two Budgets in three months, vast hand-outs in April, squeeze in July and panic measures to hold investment down at the very moment when the investment boom was tailing off and excess capacity was developing.
I do not propose to waste the time of the House on what the Chancellor said or did not say at Leicester. I am sure that will be some relief to him. After all, for a Tory Chancellor to embark on a bout of Marxist self-criticism is, I think, rather endearing. Obviously, the right hon. and learned Gentleman was deeply affected by what was going on in Moscow at the time. He tells us that he was misreported. That is all right; we have all been misreported, I think. I was once, and I never heard the end of it from hon. Gentlemen opposite.
Frankly, I take a charitable view of these things. But I remember a debate during the time of the Labour Government when my right hon. Friend the Member for Dundee, West (Mr. Strachey) made a remark about the Schuman Plan which led to the then Opposition spending half a day of Parliamentary time debating it. Of course, he had been misreported. I cannot remember the exact date, for I have not looked it up, but I think it was 8th July, 1950. What I do remember, however, is that the noble Lord the present Lord Chancellor, then Sir David Maxwell-Fyfe, came to this Dispatch Box and thundered about it. He said "Complaints of misreporting —they are a political niblick for getting one out of a bad lie." I am not going to say anything like that about the Chancellor of the Exchequer. It would be unworthy.
The obvious lesson, of course, is that he should not be allowed out without his script writer. Obviously the Observer itself is open to criticism for taking any notice of what he says when his script writer is not there. There is one thing which the House should be concerned about. When the reporter concerned —a reporter known to many of us on both sides of the House as an honest, experienced, conscientious reporter of a very high standard —was summoned to 912 the Treasury, he was confronted with a phalanx not only of Treasury officials but of officials from the Conservative Central Office.
We know, of course, that the Prime Minister has devalued public standards in this country, but I think this House must insist even on members of this shabby Administration learning to draw a sharp dividing line between Government information services on the one hand, and Conservative Party propaganda on the other. I know that is a distinction which will seem a little unreal and academic to the Prime Minster, but I hope that there are hon. Members opposite who will realise the importance of this being done.
Whatever the Chancellor did or did not say about "materialising" and "matters"—
§ Mr. Wilson
Do not tempt me now. Whatever the Chancellor may have said on that point, he has not denied this particular gem. I hope that the hon. Member for Louth (Sir C. Osborne) will allow me to quote it. This is what the Chancellor has not denied that he said; this is not in dispute. [An HON. MEMBER: "In Leicester?"] Leicester is not a proscribed organisation. We can talk about Leicester if we want to do so, and what I am quoting is highly relevant to the general issue of this debate. It is something which the Chancellor has not denied he said, neither have the Treasury officials nor the Conservative Party Central Office denied it. The Chancellor said:What I did not know was the extent of the uncertainty of international currencies and the extent of the lack of confidence.Why did the Chancellor not know this? Everyone else did. We warned him of it. I will give him the references: 2nd November, last year, column 192; 7th February this year, column 324, and 18th April, column 978. I may refer him also, now that he is learning to use the word "planning", to an article which I wrote in the New Statesman last March which warned him very clearly about the dangers to this country of a run on sterling in the summer. Everyone warned 913 him. Yet he could not see it. If he could not see that, he could not see a house end at five yards.
What he is telling us is that his optimism last April when he perpetrated his Budget was due to the fact that he did not know the uncertainties of international currency. He was not putting forward a plea of not guilty, but one of diminished responsibility. Yet at that very time he had already borrowed — how much, £100 million, £200 million? —from European central bankers to cover the run on sterling and the withdrawal of hot money. Yet he could not see the danger to sterling at that time. Now he is asking us to trust him with the forward planning of the economy for five years ahead.
I want to turn, as the Chancellor did this afternoon, to the export problem, the most immediately pressing problem of all. The Prime Minister, I thought, made a good point a week ago when he said that we can no longer count on invisibles to make any net contribution to our balance of payments but that the surplus which we need now must come from the surplus of exports over imports. The Prime Minister cannot be here tonight and has courteously explained to me that he cannot be present. If he were here, I would congratulate him on that dazzling revelation which enabled him to see so clearly what we have been telling him in debate after debate over two years. I think that he sees it now. What he may not see is what an admission he has made, because the whole Tory freedom, decontrol policy of the past ten years was put forward on the ground that it would increase our invisible earnings.
The Liverpool Cotton Market, the other speculative commodity markets, the end of bulk buying and long-term contracts, all the measures which were so successful in destroying the links of Commonwealth trade, all these things were justified on the ground that they would help our invisible earnings; but as Tory freedom has increased, the invisibles have decreased, until they have reached vanishing point as a net contribution to our balance of payments.
In the big debate which we had on the sterling area three years ago, the spokesmen for the City of London gave figures of how they were earning in the 914 City £125 million a year on invisibles. This was as a warning to anyone who might contemplate laying sacrilegious hands on the holy of holies by seeking to tax speculative gains on the Stock Exchange.
I do not underrate some of the difficulties which we face on invisibles. We have been warning the Government about them for many years —for example, the shipping problem and the oil problem. I wish that the Government would sometimes come clean about the earnings of the oil industry. After all, the whole of our economic policy in some directions has been sacrificed to the interests of the oil companies for very many years. There have been large sums of investment by the oil companies in the markets of the world. Why are the Government so coy about publishing the details in their balance of payments figures? They publish details of almost every other industry we have. Why are they so coy about telling us what is happening in the oil world? I hope that the Chancellor will look into that.
I do not underrate the effect on our invisibles of our overseas military expenditure. I do not want to repeat the debate which we had last week, but we have the Government insisting on the pretence of being an independent nuclear Power, with our kiloton bomb in a megaton world, at great cost. Now we have so impoverished ourselves in other ways that we have had to go to our allies for what they call a certificate of need to enable us to draw the N.A.T.O. dole. We have the Prime Minister with his insistence on a prestige defence policy, like a man who insists on flaunting an expensive pearl tie-pin when he cannot even afford to cover his basic commitments and to pay for his next meal.
We all agree that the problem Is one of physical exports. We had the complacency of the highly selective figures quoted by the Chancellor this afternoon; his export figures gave the impression of a great boom in exports which we all know is not happening. The fact is that exports today are barely increasing and export orders are down. This is at a time when our exports barely cover our imports and when the House knows that we need a surplus of £30 million to £40 million every month 915 to cover our commitments abroad. I think that the Chancellor still stands by the old Treasury figure that we need a surplus on our visible trade of £450 million a year, in order to meet our essential investments, aid to underdeveloped areas and the rest. If that is so, the best that we have achieved this year is that our exports barely pay for our essential imports.
There has been some improvement in the visible trade balance over the last year, because a year ago it was in deficit, but the improvement, such as it is, is due in the main to a reduction in the imports of raw materials through running down stocks and to the fact that industrial production was stagnant for a full twelve months. The Chancellor tells us today —we are glad to hear him still mouthing these phrases —'that the policy is steady expansion for the future. We must ask him what happens if we do expand and if our raw material imports increase to meet the needs of expanding production. In other words, can we only achieve a bare physical balance of exports with imports at a time when stocks are being run down and our imports are artificially restricted by the fact that production is not increasing?
While I am on the question of imports I should draw attention to the fact that within our somewhat reduced import bill the imports of certain manufactured goods have been rising very sharply —clothing, footwear and, above all, capital goods. It is a very severe commentary on the vigour and competitiveness of British industry if all these additional manufactured imports are coming into this country. It certainly throws some doubt on the naive theory that all we have to do is to join the Common Market and a fresh cold wind of import competition will stimulate our industrialists into a posture of competitiveness, because they have not been stimulated yet by the sharp increase in imports of many manufactured goods.
Turning from the present position, what plans did the Chancellor of the Exchequer offer to help exporters? He dealt rather perfunctorily with the question of taxation incentives, which in the debate have since been pressed on the Government by my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), the 916 hon. Baronet the Member for Peterborough (Sir Harmar Nicholls) and others. This afternoon my right hon. Friend the Leader of the Opposition mentioned the French system of accelerated depreciation allowances for export firms. The French system is very similar to the Amendment that we have regularly moved year after year to the Finance Bill in favour of a discriminatory investment allowance. Hon. Members opposite have with equal regularity but much less imagination voted, it down year by year.
Now the Chancellor of the Exchequer is under pressure and he says, "Well, it will be looked at". If that is what he says this afternoon, why has it not been looked at already? Has he not got people to look at these things? Could he not have looked at it himself? The Financial Secretary has been over to Paris, as well as the hon. Member for Morecambe and Lonsdale. Did the Financial Secretary look into this question when he was there? Do all the ideas have to come from this side of the House? [Laughter.]Then there was the turnover tax.
When I mentioned the idea of the turnover tax in July —the suggestion has been put forward on many occasions — the only spark of interest it struck on the Treasury Bench was in the Prime Minister, who is always quick to see a political occasion. It is the only type of occasion to which he is capable of rising. He spent the next ten minutes, as we all saw, making feverish notes on his pad, not to see whether the turnover tax with its incentive to exports could be examined but to see whether Tory Central Office could make full use of the fact that the Socialists were proposing a fresh tax and how useful it might be at the next General Election.
The Chancellor of the Exchequer's speech this afternoon showed that the suggestion has not been taken seriously, despite the fact that all German banker-industrialists will state that the turnover tax, with its exemption for export, is the biggest single factor in the German export drive and the biggest single factor in their aggressiveness in overseas markets.
I turn now to export finance. Two years ago, on 26th November, 1959, we debated the Radcliffe Report. On that occasion we put forward some radical 917 schemes for improving export finance. We proposed an export-import bank. I do not suppose this suggestion has ever been considered by the Government in the two years which have passed. We proposed favourable rates of interest for export finance. This afternoon the Chancellor of the Exchequer dismissed this proposal in the most perfunctory manner, thus remaining true to a good old Treasury motto —"Never do anything for the first time".
Listening to the right hon. and learned Gentleman's speech of a fortnight ago and his speech this afternoon, one would think that the man endangering our export effort was a porter in a Government military hospital on £8 19s. a week recklessly and irresponsibly asking for the 2s. a week due to him under an agreement the Government signed. We get the impression that this is the man who is endangering our exports, whereas the man who is doing more than anyone else to sabotage our export drive is the Chancellor of the Exchequer because interest rates at 7 and 8 per cent. are making it impossible for exporters in capital goods to offer credit at rates comparable with those being offered by their competitors. Therefore, I seriously press on the Government this proposal for a two-tier interest rate structure with specially low rates for exporters.
I turn now to the wider subject of interest rates, as the Chancellor did this afternoon. My right hon. Friend quoted today the devastating estimates —£100 million a year or more —of the effect of these panic level rates of interest on our overseas payments, quite apart from the effect on exports which I have mentioned. The House knows what these high interests rates mean for local authorities, for owner occupiers, and for small businesses. I should like to draw the attention of the House to what they mean for the taxpayer in terms of the burden placed on him with the annual National Debt charge at current rates of interest.
The Chief Secretary to the Treasury is here tonight. It is his job to examine ways of minimising Government expenditure, and I am sure that he will be interested in these figures. If one looks at the National Debt charge this financial year, so far —that is rather less than seven months —it has cost the taxpayer 918 £50 million more than in the same period last year, and £74 million more than in the same period of 1959. I commend to the right hon. Gentleman the calculation that if he could save this £74 million by bringing interest rates down to a more tolerable level it would be enough to remove all the health charges, including the prescription charges, the greater part of the increase in National Insurance and National Health contributions, and to restore the general housing subsidy at the full rate on a local authority housing programme twice as big as the present one. That is what he would get if he could save £74 million which is the cost to the country of the present interest rates.
I follow the Chancellor in referring to the pay pause. We are told that if we can hold wages for 24½ weeks longer —? until All Fools' Day —all our problems will be over. To achieve this, we will break agreements, bully civil servants and teachers, and go on doing this until 1st April and then, of course, that will be it. But, on their argument, as soon as the pay pause ends and the floodgates are opened, will the trouble not start again? Will there be two more Budgets next year and fresh measures to hold down production? If, as the Chancellor says, we need the pay pause to increase exports, what will happen to exports after 1st April?
I understand that the Chairman of the Conservative Party is to reply to this debate. I should like to ask him this question. If the Chancellor says that it is wrong for incomes to increase more than current production, how do they justify winning the last election on a hire purchase boom, which, by definition, increased purchasing power far beyond even current incomes? Can we have the explanation to that one when the Chairman of the Conservative Party comes to wind up? The Chancellor, with his usual highly selective statistics, told us that wages were up this year and profits down, but does he deny that this year dividends have gone up far more than wages, despite his appeal?
The other question which one must ask about all these deflationary measures relates to their timing. The right hon. and learned Gentleman, like the Minister of Aviation three years ago, chooses the very moment when we are moving into a deflationary position to introduce a credit 919 squeeze, a 7 per cent. Bank Rate, cuts in investment, and all the rest. The steel industry is working far below capacity, furnaces are closing down —if the Prime Minister were here he would like to know that this is happening even in Stockton — engineering orders are down, industrial investment is turning sharply downwards, and at this moment of time the Chancellor tightens the screw. We were told by him this afternoon that the purpose is to make more resources available for export, as though once furnaces are closed down export orders increase.
If that is the argument of the right hon. and learned Gentleman, how does he explain the fact that some of his measures are closing down productive units in the steel industry, that orders cannot be found and that exports are not being helped by them? How does he explain the fact that according to the Federation of British Industries almost a record proportion of British firms in the manufacturing industries are today working below capacity?
I want to turn now to the Chancellor's words about planning. He must not think us churlish, or unappreciative of what he is doing. There is, in fact, more rejoicing in the Kingdom of Heaven over one Tory that repenteth than over 90 and 9 just Socialists who believed in planning all the time. But he will forgive us for wanting to be sure: has he repented? Is it planning that he really believes in, or is it, like his long-deferred capital gains tax, just a bait aimed at getting the T.U.C. on the hook?
From what he has said today it would appear that he has two ideas —and they are good ideas, although he has rather mixed them up. One is a machinery for co-ordinating the production targets of certain industries —and this is quite useful; the other, a council consisting of far-sighted men, like the Chancellor, who will sit there murmuring grave "Hear, hears" as the Chancellor unravels slanted documents designed to convince the trade union leaders round the table that we cannot afford a wage increase this year.
Like my right hon. Friend, I do not underrate the importance of coordinating industrial targets. All of us have warned the House about the difficulties that arise when we have the 920 steel industry and the motor industry working on different estimates of the increase in national production and the coal and electricity industries told to work on plans differing from either. It is, therefore, very useful to co-ordinate plans of expansion, and I do not underestimate, any more than did my right hon. Friend, the importance on industrial planning within individual industries and firms of published Government intentions to raise industrial production by 3 per cent., 4 per cent., or 5 per cent. per annum. What has been called the "announcement effect" has been very important in a number of countries, and as long as they think that the Government will stick to it, it can be a powerful incentive to increased production and investment.
Much has been said about the French system, and the House has been interested to hear the various accounts and explanations given of it. Certainly, to introduce the French system, as far as it goes, would be a vast improvement on the hiccupping rhythm that has passed for policy in this country for the last few years. But I hope that the Chancellor will not rely too much on the French pattern. In the first place, as my right hon. Friend said, some of the successes in the early years of the Monnet plan were achieved by a prodigious increase in investment and a dynamic expansion in the main publicly-owned industries —electricity, transport and so on —aided by the export successes of the nationalised Renault car concern and the nationalised Caravelle-producing firm in civil aviation. I do not know whether the right hon. and learned Gentleman intends to follow that example.
Apart from that, the essence of the French plan —apart from a great deal more interference in industry than this Government would ever consider practicable or desirable —there was the fact that in a period of inflation and shortage of capital the planning authorities effectively controlled the capital market and the raising and application of capital to industry. It is right, however, to warn the House against the view that the so-called French "economic miracle" of the past two years has been achieved by the system of painless planning that the Chancellor has in mind. It has not. 921 It is the product of two things —two substantial devaluations in 18 months, and six per cent. to eight per cent. reduction in wage standards. I sometimes fear that that is what lies behind Ministers' enthusiasm for the Common Market.
No, planning we must have but, as my right hon. Friend argued this afternoon it must be real planning, and right hon. Gentlemen had better realise from the start that this means controls and purposive measures to stimulate expansion in the key industries where expansion is needed. Planning without controls is as meaningless as a gearbox without teeth; one gets a lot of wheels running round, but nothing happens.
Let me give an example —fuel policy. Three years ago we called for a national fuel policy, for a figure that the Government would honour for the size of the coal industry. Two hundred million tons was mentioned as a figure for the national indigenous coal industry to work to. This would have meant controlling fuel oil imports, and controlling other things as well, but the Government insisted on what they call freedom of choice —by which they meant, of course, a refusal to touch the profits of the oil companies —[Interruption.]Certainly —I would refer hon. Members to the speeches of the then Paymaster General.
As a result of their policy we lost 150,000 miners from the industry, and we now face a problem in house coal supplies this winter —as we said three years ago would happen. We can give some other evils that will follow if the Government go in for this sort of planning. My right hon. Friend this afternoon mentioned the need, if we are to have a big increase in essential investment, for controlling the inessential investment in order to give the necessary degree of priority for what is wanted. Last week we had a White Paper setting out the limits which the Government are placing on essential capital investment in the public sector, the limits on the mines, the railways, electricity, hospitals, local authority housing and so on, but, of course, there is no White Paper setting the ceiling, the limits that the Government are setting, for speculative office blocks or luxury housing developments. The Chancellor had better realise, if he means business about planning, that we shall have to have much 922 more restrictive controls about inessential development.
We shall have to have more measures than we have had or stimulating expansion of investment in essential industries. We shall need this whether in the private or in the public sector. In private industry we shall need tax incentives, discriminatory tax incentives, investment allowances favouring essential industries, such as exports, and a much more ruthless system of measuring the depreciation allowances so that virile expanding firms can charge more of their investment against profits and slothful, lethargic firms have to pay higher Profits Tax. It will mean restoring the dual rate of Profits Tax, a lower rate on profits ploughed back into new investment and a much higher rate on profits dissipated as dividends, it will mean protecting the firm which puts capital development before high dividends from the predatory attentions of the take-over bidder.
And the other thing it means —and the House and the Chancellor must face this —is more public ownership, especially in the development of new industry based on science and on the exploitation of revolutionary inventions made by scientists in Government research establishments or universites.
If we want to get the exports which all of us today agree are necessary, it will mean constructive changes in British industry. Most of us have given up hope of being the workshop of the world, but we can be its pilot and its tool room. Yet what is happening today with the country's technical manpower and automated machine tools?
Year by year our imports and capital costs are rising, and year by year we are supplying a smaller proportion of the worlds exports of capital equipment of all kinds. That is why we tell the Chancellor that much more positive measures will be needed than anything he has contemplated if we are to get, as we need, a big increase in the productive capacity of those industries which can meet the requirements of world markets. We shall not get the necessary increase in exports —the President of the Board of Trade knows this —on the basis of an overspill from our brand of the affluent society, what I called last year, the candy floss economy. We are not going 923 to get the exports that we need from exporting candy floss machinery. We need to develop new industries where there is a good healthy demand. That is why sterling area trade is languishing under the present Government.
I understand that the debate is to be wound up tonight by the Leader of the House. We welcome him in his first speech as Leader of the House in this debate. Disappointed as we are in the Chancellor, the Leader of the House brings a fresh mind —at any rate fairly fresh —to these problems. But the last time he spoke on economic subjects he said:The truth is that both parties have sought earnestly since the end of the war for a continuation of stable prices with expansion. We believe that because we have secured our base first we are nearer fuller success than at any time since the war."—[OFFICIAL REPORT, 3rd November, 1958; Vol. 594, c. 736.]He made that speech three years ago. Does he still claim that that is all that has happened between then and now. The right hon. Gentleman —and this is one of the reasons why we welcome his incursion into the debate tonight —was many years ago given the credit, if that is the word, for the preparation of the Conservative Party's industrial charter. I think the actual salesman who launched it on the public was the Home Secretary, but we always understood that the Leader of the House played a leading part in it.
§ The Chancellor of the Duchy of Lancaster (Mr. Iain Macleod) indicated dissent.
§ Mr. Macleod
I think the right hon. Gentleman is wrong. It is almost the only pamphlet in those five years that I had nothing to do with at all.
§ Mr. Wilson
I must say that raises my appreciation of the right hon. Gentleman even more, because I do not think he could possibly have written this sentence:We desire to state quite clearly…"—[Interruption.] Hon. Members opposite are here because they fought the election on the Industrial Charter. They had better not run away from it now.
We desire to state quite clearly that the official policy of the Conservative Party is in favour of trade unions.924 It is a wonderful development and a wonderful admission for the right hon. Gentleman. They told us:We propose to establish a series of standards in the field of industrial relations to which we are convinced employers must conform.I hope the right hon. Gentleman will tell us now whether he really stands by the decisions of the Government in the past three months under which, having said that they are going to lead the way in industry, under which they have broken these agreements to which they have set their hands —[HON. MEMBERS: "Oh."] I can understand the desire of hon. Members opposite not to be pinned down on this. The right hon. Gentleman the Chancellor of the Duchy of Lancaster, I hope, is going to begin by telling us tonight, as a former Minister of Labour, as a man who at any rate agreed with the document even if he did not write it, whether he stands by the decisions of the Government to break their solemnly pledged word on industrial agreements.
§ 9.32 p.m.
§ The Chancellor of the Duchy of Lancaster (Mr. Iain Macleod)
As the right hon. Member for Huyton (Mr. H. Wilson) has said, apart from a certain number of routine appearances at the Dispatch Box, this is my first occasion as Leader of the House to speak to the House. I am conscious that I am very junior in service to this House and, indeed, that I have only one qualification to be Leader of the House of Commons, but that perhaps is not a bad one, namely, that I have a very great affection for the House of Commons, and in all things I shall try as Leader of the House to serve the House.
I have been asked a number of specific questions, particularly by the Leader of the Opposition, and the same questions earlier in the debate by the Deputy Leader, on measures which are in and are not in the Gracious Speech, and I should like to begin with some comments on that matter.
First, on the question of government, the position here is that a Measure, the Offices Act, was passed in 1960 and becomes operative on 1st January, 1962. It is an enabling Measure under which Ministers could make regulations. There are certain policy matters in it, 925 like the question of fire precaution which we think is delegated to the wrong authority, with which we disagree. But the reason that has led us to say that we will not make regulations under this Act goes wider than that. It is because we are in the process of compiling an extremely complex and far-reaching Bill which will cover not only offices but shops and railway premises. There is provision in the Offices Act for consultation, quite rightly, with various organisations, and we 'think it would be wrong to start consultations on those regulations before the more comprehensive Measure is introduced.
§ Mr. Richard Marsh (Greenwich)
We are very grateful to the right hon. Gentleman for that, but is he not aware that during the debate on the Committee stage of the Offices Act there was a statement from the Government about the probability of introducing comprehensive legislation? It was made by the then Joint Under-Secretary of State for the Home Department and a date of operation of the Act was, in fact, suggested by the then Joint Under-Secretary. Is not this a rather transparent way out?
§ Mr. Macleod
No. I agree that I would have liked, if possible and if this legislation had been far enough advanced, to see it in this Session. The Leader of the Opposition asked whether it would come in this Parliament and the answer is "Yes". It will come in the 1962–63 Session. It is not possible, for drafting reasons, for it to be produced earlier.
The only other Bill to which I wish to refer —and on this the Leader of the Opposition made two perfectly courteous but very personal references to me —is the Commonwealth Immigrants Bill which, again, is closely concerned with the matters we are debating today. The right hon. Gentleman asked me in effect how I reconciled what I said about the brotherhood of man with this particular Bill. There is, here, a debating point and a point of substance.
As far as the debating point is concerned, we can dismiss it, because if to believe in the brotherhood of man is incompatible with having restrictions, then overwhelmingly, as far as the latest polls are concerned, this country — including the Labour Party —would not 926 believe in the brotherhood of man. In the West Indies we know that there is no such freedom of movement.
The point of substance is more important and on this I must give a frank answer to the Leader of the Opposition. I detest the necessity for it in this country. I say that frankly, but I believe it to be necessary and I believe that when we have examined it carefully it will commend itself to both sides of the House. I said almost a year ago, and no one challenged me then, that administrative methods alone were becoming no good because this country, with its prosperity, was like a magnet; traffic was so easy and it was so easy to come through a second country to this.
I do not believe for a moment that this could be achieved by the imposition of any suggestion in relation to requirements for housing because that, as I am sure the House appreciates, would mean that the tap would be turned off altogether, for no local authority would give anyone unknown from another country a direct lift over the heads of those on their housing lists. So my position is, as I say to the House, that I believe that this Bill is necessary. I believe that the choice is only between doing it now or in a year's time when the pressure, I think, will have become extremely acute.
There can be no question, as was suggested, of there being unseemly haste in this matter. We have taken years to decide it. No one has been closer to this problem than myself, other than perhaps the Home Secretary. I have seen this when I was Minister of Labour grow from something about which no figures and no problem existed into a problem that flared into the headlines with race riots in this country, of all countries, and I have seen it when I was Colonial Secretary. I came to the conclusion in the spring of this year, looking at those figures, that it was no longer possible to avoid such legislation. I thought that I would give that answer to the House and to the Leader of the Opposition.
It is never very easy when replying to a debate to know to which speeches to reply. An illustration of this difficulty is that while I was away from the Chamber for a time one of my hon. Friends took a note of the speech of the hon. Gentleman the Member for Oldham, West (Mr. Hale). There are two points mentioned in this note. 927 Point one says "The sordid dishonesty of Government statements" and point two says, "Very witty speech indeed". I am sure that it was, but the hon. Member will realise that the information provided here is a little scanty for me to offer any real comment. Nor, frankly, do I think I can comment very helpfully on the speech that the right hon. Gentleman the Member for Huyton has just delivered. It was, as always, witty, cogent and polished —and polished —and polished —[Laughter.] He paid me the great compliment of saying that to this situation and to this debate I had brought a fresh mind. I wish that he would bring a fresh speech.
Ten years ago when first as an hon. Member of this House I listened to a debate on the Address being wound up, it was wound up by Lord Crookshank, to whom the Leader of the Opposition paid a delightful tribute a short time ago. Always at twenty minutes to ten, Lord Crookshank used to pick up the Order Paper —or so it seems to me looking back over the years —and, looking at the Amendment that was before the House, he used to say, "Mr. Speaker, this is a very remarkable Amendment." And indeed, Mr. Speaker, so it is.
There seems to be a pattern in this matter. If I remember rightly, ten years ago we were debating housing and also had a general debate on the Address. I think this a very suitable pattern which we might follow every tenth year. What I should like to do is to concentrate on the third part of the Amendment—
§ Mr. Macleod
—before the House. The third section of it, says:and justice as between different sections of the community.I think this is really the heart of the Amendment and the heart of the debate. I know perfectly well that there are differences between the two sides of the House which are differences both of policy and of philosophy. I have no desire at all to do other than to acknowledge that and to try to answer this and to explain what, in my view, justice means to us.
It has been said that Socialism is about equality, and that, I dare say, is 928 a fine creed which strikes many a chord in the hearts of hon. Members opposite. But I do not mind saying frankly that it finds no echo on this side of the House —[HON. MEMBERS: "Hear, hear."] If we went on to pick a phrase to put against that, against the phrase, "Socialism is about equality", I would say, "Conservatism is about opportunity". It is in these terms that I wish to examine this question of justice between the different sections of the community.
Over and over again hon. Members have said that to have the changes in the provision for Surtax relief a year and a bit from now is repugnant to them, or, anyway, they think out of tune with what should be done at this time. I do not think that, and I propose to argue the case briefly, if I may. I think that this springs from an entirely out-dated approach by the Opposition to the sort of people who pay Surtax today. The main story in the home news in The Times of yesterday came from Lowestoft, where I am speaking on Friday. There is no need for hon. Members to come, but I am. It is headed:Young trawler skippers in Surtax class.The article states:To be paying surtax at the age of 22 is an achievement (or fate) rare even in the affluent Britain of today.We all know that if trawler skippers are earning money in the Surtax range—
§ Mr. Macleod
—they earn it, and good luck to them. They earn it the hard way. Everyone would admit that.
The truth is that £2,000 today is, as the Chancellor of the Exchequer said this afternoon, worth no more than £700 before the war. The rates have remained unaltered for a very long time indeed, and although I can see an argument —indeed, I would subscribe to it —? for saying that, when my right hon. and learned Friend studies the question of exemptions, Surtax payers should be a long way down in the queue. I can see no argument whatever for saying that they should not be in the queue at all.
We have heard a good deal today from the hon. Member for Chester-le-Street (Mr. Pentland) and other hon. Members 929 about earnings. The facts are these, and they are quite simple. From July, 1945, to October, 1951, the average weekly rate of earnings went up from £6 1s. 4d. to £8 6s. 0d., a rise of 37 per cent., but there was an increase of 40 per cent. in the cost of living which wiped it out. In the last ten years the rate has gone from £8 6s. 0d. to £15 1s. 4d., a rise of 80 per cent. as against a 35 per cent. increase in the cost of living.
The leader of the Opposition was very anxious to interrupt my right hon. and learned Friend the Chancellor in the last few moments of his speech to ask him how long the pay pause was going to last. I cannot tell him that. What I can tell him is that, under the Socialist Government, it lasted six and quarter years. [HON. MEMBERS: "Not true."]
My hon. Friend the Member for Macclesfield (Sir A. V. Harvey) made a speech to which many hon.. Members have referred, I think justly, with admiration. He asked two specific questions. The first was why the Chancellor of the Exchequer did not give to the private sector a lead comparable —he can do it only by exhortation, because he has no direct power —to that which he has given in the sector for which he has responsibility. I shall not weary the House with the quotation, although I have it here, but the answer is that he did that, and it is in his speech of 25th July, 1961,
The other extremely interesting question which my hon. Friend asked was to what extent grants and loans abroad are tied to sterling. Multilateral loans cannot be tied, and the total amount of bilateral loans in 1960 was £125 million. Of that, £37½ million was formally tied, but a great deal more than that comes back in one way or another through trade to this country.
There are strong arguments against a country in our position trying to tie the whole of our loan and grant aid. To give one example from my own experience, I know very well how, as Secretary of State for the Colonies, I was always anxious to ensure that those who were receiving the money in the Colonies should have the widest possible opportunity for spending it. That meant considerable freedom in choosing their sources of supply.
930 We have been told by hon. Members in this debate that we are engaged in an exercise to pull down the standards of the working classes. We were told officially from the Opposition Front Bench by the hon. Member for Sunderland, North (Mr. Willey) that one of the characteristics of a Conservative Government was the contempt they showed for the professional classes. What puzzled me as I listened to that speech was that if we are engaged on that exercise of attacking the working classes, if we have that contempt for the professional and the middle classes and if the peers of the realm, as is the position, do not vote, who are the 14 million people who vote Conservative? [Interruption.] I am told that we duped them. Very well. If we hoaxed them in 1959 at the General Election, did we hoax them again in 1961 at the local government elections? How is it that our machine is so efficient that we can actually hoax the individuals who are questioned in public opinion polls without knowing who those individuals will be?
The truth of the matter is that the Socialist Party —and this can be seen in the speech of the right hon. Member for Caerphilly (Mr. Ness Edwards) and of the hon. Member for Newton (Mr. Lee), with their harking back to 1926 —does not realise the economic position in which the country is, nor does it realise —[Interruption.] It is not just 1926. That is a very long time ago.
There has been full employment for twenty-two years. That means that practically nobody under the age of 40 knows the days to which hon. Members opposite refer over and over again. And not only 1926. To many hon. Members on this side, even 1946 is a long time ago, because on this side, since the 1945 ejection, no fewer than 284 Members have come to this House, and that is more than the whole of the Labour Party, the whole of the Liberal Party and the whole of the anti-party group put together.
We are debating an official Amendment to the Address in reply to the Gracious Speech. [Interruption.] I fully acknowledge that I have made a number of party and partisan points. I have tried to answer the argument in the debate, perhaps not to the satisfaction of hon. Members opposite, but I have tried.
931 All the same, I should like to say this. There has been comment in speeches and in the newspapers that in some of the days of this debate, the benches have been deserted and there has been a lack of debating fire. It applied to the benches on both sides. I have seen a great deal of these debates, and I believe that there is a reason for this.
The reason is simply that we all know perfectly well that in this coming Session it is not the Bills which we shall pass or shall not pass which are the really great issues which lie in front of us. With this every hon. Member will agree.
We do not know if there are going to be successful negotiations over Berlin. We do not know even yet whether there will be negotiations over Berlin. We do not know whether there will be successful agreements on nuclear or disarmament tests, although we shall certainly strive to secure them. There are sores all over the world like the Congo and Angola that we hope will be healed in this year. But surely it is these matters, and the far graver one which lies behind them all, which matter most. The great issue which lies behind all our debates in this Session is, of course, what use mankind is going to make of the
§ power that it has itself discovered to destroy mankind. It is this, I am certain, that is in the hearts of every hon. and right hon. Member.
§ I am certain that this is the test for us as a House of Commons. I am certain that the House will be judged—[HON. MEMBERS: "Stop preaching."]—in the country, by the words which are used and actions which we take in relation to these great matters, rather than by the legislation which is adumbrated in the Queen's Speech.
§ We have been discussing the question of justice between different sections of the community. I have acknowledged that the two sides of the House have a different approach, and I have tried to defend the point of view in which I believe. I am certain that these great issues to which I have referred are more in our minds than the legislation which is in front of us. I am certain that we on this side of the House have policies which will bring justice to all sections of the community in this country. I ask the House to support the Motion.
§ Question put, That those words be there added:—
§ The House divided: Ayes 233, Noes 341.935
|Division No. 2.]||AYES||[10.0 p.m.|
|Abse, Leo||Davies, G. Elfed (Rhondda, E.)||Griffiths, W. (Exchange)|
|Ainsley, William||Davies, Harold (Leek)||Grimond, J.|
|Albu, Austen||Davies, Ifor (Gower)||Gunter, Ray|
|Allaun, Frank (Salford, E.)||Davies, S. O. (Merthyr)||Hale, Leslie (Oldham, w.)|
|Allen, Scholefield (Crewe)||Deer, George||Hall, Rt. Hn. Glenvil (Colne Valley)|
|Awbery, Stan||Delargy, Hugh||Hamilton, William (West Fife)|
|Bacon, Miss Alice||Dempsey, James||Hannan, William|
|Baird, John||Diamond, John||Hart, Mrs. Judith|
|Baxter, William (Stirlingshire, W.)||Dodds, Norman||Hayman, F. H.|
|Bellenger, Rt. Hon. F. J.||Donnelly, Desmond||Henderson, Rt. Hn. Arthur (Rwly Regis)|
|Bence, Cyril||Driberg, Tom||Hill, J. (Midlothian)|
|Benson, Sir George||Dugdale, Rt. Hon. John||Hilton, A. V.|
|Blackburn, F.||Ede, Rt. Hon. C.||Holman, Percy|
|Blyton, William||Edelman, Maurice||Holt, Arthur|
|Boardman, H.||Edwards, Rt. Hon. Nees (Caerphilly)||Houghton, Douglas|
|Bowden, Herbert W. (Leics, S.W.)||Edwards, Robert (Bilston)||Howell, Charles A. (Perry Barr)|
|Bowies, Frank||Edwards, Walter (Stepney)||Hoy, James H.|
|Boyden, James||Evans, Albert||Hughes, Emrys (S. Ayrshire)|
|Braddock, Mrs. E. M.||Fernyhough, E.||Hughes, Hector (Aberdeen, N.)|
|Brockway, A. Fenner||Finch, Harold||Hunter, A. E.|
|Broughton, Dr. A. D. D.||Fitch, Alan||Hynd, H. (Accrington)|
|Brown, Rt. Hon. George (Belper)||Fletcher, Eric||Hynd, John (Attercliffe)|
|Butler, Herbert (Hackney, C.)||Foot, Michael (Ebbw Vale)||Irvine, A. J. (Edge Hill)|
|Butler, Mrs. Joyce (Wood Green)||Forman, J. c.||Irving, Sydney (Dartford)|
|Castle, Mrs. Barbara||Fraser, Thomas (Hamilton)||Janner, Sir Barnett|
|Chapman, Donald||Gaitskell, Rt. Hon. Hugh||Jay, Rt. Hon. Douglas|
|Chetwynd, George||Calpern, Sir Myer||Jeger, George|
|Cliffe, Michael||Ginsburg, David||Jenkins, Roy (Stechford)|
|Collick, Percy||Gooch, E. G.||Johnson, Carol (Lewisham, s.)|
|Corbet, Mrs. Freda||Gordon Walker, Rt. Hon. P. C.||Jones, Rt. Hn. A. Creech (Wakefield)|
|Craddock, George (Bradford, S.)||Gourlay, Harry||Jones, Dan (Burnley)|
|Cronin, John||Greenwood, Anthony||Jones, Elwyn (West Ham, S.)|
|Crosland, Anthony||Grey, Charles||Jones, Jack (Rotherham)|
|Grossman, R. H. S.||Griffiths, David (Rother Valley)||Jones, J. Idwal (Wrexham)|
|Darling, George||Griffiths, Rt. Hon. James (Llanelly)||Jones, T. W. (Merioneth)|
|Kelley, Richard||Oswald, Thomas||Stewart, Michael (Fulham)|
|Kenyon, Clifford||Owen, Will||Stonehouse, John|
|Key, Rt. Hon. C. W.||Padley, W. E.||Stones, William|
|King, Dr. Horace||Paget, R. T.||Strachey, Rt. Hon. John|
|Lawson, George||Pannell, Charles (Leeds, W.)||Strauss, Rt. Hn. G. S. (Vauxhall)|
|Ledger, Ron||Pargiter, G. A.||Stross, Dr. Barnett (Stoke-on-Trent, C.)|
|Lee, Frederick (Newton)||Parker, John||Swain, Thomas|
|Lee, Miss Jennie (Cannock)||Paton, John||Swingler, Stephen|
|Lever, Harold (Cheetham)||Pavitt, Laurence||Symonds, J. B.|
|Lever, L. M. (Ardwick)||Pearson, Arthur (Pontypridd)||Thomas, George (Cardiff, w.)|
|Lewis, Arthur (West Ham, N.)||Peart, Frederick||Thomas, Iorwerth (Rhondda, W.)|
|Lipton, Marcus||Pentland, Norman||Thornton, Ernest|
|Logan, David||Plummer, Sir Leslie||Thorpe, Jeremy|
|Loughlin, Charles||Popplewell, Ernest||Timmons, John|
|McCann, John||Prentice, R. E.||Tomney, Frank|
|MacColl, James||Price, J. T. (Westhoughton)||Ungoed-Thomas, Sir Lynn|
|McInnes, James||Probert, Arthur||Wade, Donald|
|McKay, John (Wallsend)||Pursey, Cmdr. Harry||Wainwright, Edwin|
|Mackie, John (Enfield, East)||Randall, Harry||Warbey, William|
|McLeavy, Frank||Rankin, John||Watkins, Tudor|
|MacPherson, Malcolm (Stirling)||Redhead, E. C.||Weitzman, David|
|Mallalieu, E. L. (Brigg)||Reid, William||Wells, Percy (Faversham)|
|Mallalieu, J.P.W. (Huddersfield, E.)||Reynolds, G. W.||Wells, William (Walsall, N.)|
|Manuel, A. C.||Rhodes, H.||White, Mrs. Eirene|
|Mapp, Charles||Roberts, Albert (Normanton)||Whitlock, William|
|Marquand, Rt. Hon. H. A.||Roberts, Goronwy (Caernarvon)||Wigg, George|
|Marsh, Richard||Robertson, John (Paisley)||Wilcock, Group Capt. C. A. B.|
|Mason, Roy||Robinson, Kenneth (St. Pancras, N.)||Wilkins, W. A.|
|Mayhew, Christopher||Ross, William||Willey, Frederick|
|Mellish, R. J.||Royle, Charles (Salford, West)||Williams, D. J. (Neath)|
|Mendelson, J. J.||Shinwell, Rt. Hon. E.||Williams, Ll. (Abertillery)|
|Millan, Bruce||Short, Edward||Williams, W. R. (Openshaw)|
|Milne, Edward J.||Silverman, Julius (Aston)||Willis, E. G. (Edinburgh, E.)|
|Mitchison, G. R.||Silverman, Sydney (Nelson)||Wilson, Rt. Hon. Harold (Huyton)|
|Monslow, Walter||Skeffington, Arthur||Winterbottom, R. E.|
|Moody, A. S.||Slater, Mrs. Harriet (Stoke, N.)||Woodburn, Rt. Hon. A.|
|Morris, John||Slater, Joseph (Sedgefield)||Woof, Robert|
|Mort, D. L.||Small, William||Wyatt, Woodrow|
|Moyle, Arthur||Smith, Ellis (Stoke, S.)||Yates, Victor (Ladywood)|
|Mulley, Frederick||Snow, Julian||Zilliacus, K.|
|Neal, Harold||Sorensen, R. W.||TELLERS FOR THE AYES:|
|Noel-Baker, Francis (Swindon)||Soskice, Rt. Hon. Sir Frank||Mr. John Taylor and|
|Oliver, G. H.||Spriggs, Leslie||Mr. G. H. R. Rogers.|
|Oram, A. E.||Steele, Thomas|
|Agnew, Sir Peter||Browne, Percy (Torrington)||Currie, G. B. H.|
|Aitken, W. T.||Bryan, Paul||Dalkeith, Earl of|
|Allan, Robert (Paddington, S.)||Buck, Antony||Dance, James|
|Allason, James||Bullard, Denye||d'Avigdor-Goldsmid, Sir Henry|
|Amery, Rt. Hon. Julian||Bullus, Wing Commander Eric||Deedes, W. F.|
|Ashton, Sir Hubert||Burden, F. A.||de Ferranti, Basil|
|Atkins, Humphrey||Butcher, Sir Herbert||Digby, Simon Wingfield|
|Balniel, Lord||Butler, Rt. Hn. R. A. (Saffron Warden)||Donaldson, Cmdr. C. E. M.|
|Barber, Anthony||Campbell, Sir David (Belfast, S.)||Doughty, Charles|
|Barlow, Sir John||Campbell, Gordon (Moray & Nairn)||Drayson, G B.|
|Barter, John||Carr, Compton (Barons Court)||du Cann, Edward|
|Batsford, Brian||Carr, Robert (Mitcham)||Duncan, Sir James|
|Baxter, Sir Beverley (Southgate)||Cary, Sir Robert||Eccles, Rt. Hon. Sir David|
|Beamish, Col. Sir Tufton||Channon, H. P. G.||Eden, John|
|Bell, Ronald||Chataway, Christopher||Elliot, Capt. Walter (Carshalton)|
|Bennett, F. M. (Torquay)||Chichester-Clark, R.||Elliott, R. W. (Nwcstle-upon-Tyne, N.)|
|Bennett, Dr. Reginald (Gos & Fhm)||Churchill, Rt. Hon. Sir Winston||Emery, Peter|
|Berkeley, Humphry||Clark, Henry (Antrim, N.)||Emmet, Hon. Mrs. Evelyn|
|Bevins, Rt. Hon. Reginald||Clark, William (Nottingham, S.)||Errington, Sir Eric|
|Bidgood, John c.||Clarke, Brig. Terence (Portsmth, W.)||Erroll, Rt. Hon. F. J.|
|Biggs-Davjson, John||Cleaver, Leonard||Farey-Jones, F. W.|
|Bingham, R. M.||Cooke, Robert||Farr, John|
|Birch, Rt. Hon. Nigel||Cooper, A. E.||Fell, Anthony|
|Bishop, F. P.||Cooper-Key, Sir Neill||Finlay, Graeme|
|Black, Sir Cyril||Cordeaux, Lt.-Col. J. K.||Fisher, Nigel|
|Bossom, Clive||Cordle, John||Fletcher-Cooke, Charles|
|Bourne-Arton, A.||Corfield, F. V.||Forrest, George|
|Box, Donald||Costain, A. P.||Foster, John|
|Boyd-Carpenter, Rt. Hon. John||Coulson, J. M.||Fraser, Hn. Hugh (Stafford & Stone)|
|Boyle, Sir Edward||Courtney, Cdr. Anthony||Fraser, Ian (Plymouth, Sutton)|
|Braine, Bernard||Craddock, Sir Beresford||Freeth, Denzil|
|Brewis, John||Critohley, Julian||Galbraith, Hon. T. G. D.|
|Bromley-Davenport, Lt.-Col. Sir Walter||Crosthwaite-Eyre, Col. Sir Oliver||Gammans, Lady|
|Brooke, Rt. Hon. Henry||Crowder, F. P.||Gardner, Edward|
|Brooman-White, R.||Cunningham, Knox||Gibson-Watt, David|
|Brown, Alan (Tottenham)||Curran, Charles||Glover, Sir Douglas|
|Glyn, Dr. Alan (Clapham)||Longden, Gilbert||Ridley, Hon. Nicholas|
|Glyn, Sir Richard (Dorset, N.)||Loveys, Walter H.||Ridsdale, Julian|
|Goodhart, Philip||Low, Rt. Hon. Sir Toby||Rippon, Geoffrey|
|Goodhew, Victor||Lucas, Sir Jocelyn||Roberts, Sir Peter (Heeley)|
|Gough, Frederick||Lucas-Tooth, Sir Hugh||Robinson, Sir Roland (Blackpool, S.)|
|Cower, Raymond||McAdden, Stephen||Robson Brown, Sir William|
|Grant, Rt. Hon. William||Mac Arthur, Ian||Rodgers, John (Sevenoaks)|
|Grant-Ferris, Wg. Cdr. R.||McLaren, Martin||Roots, William|
|Green, Alan||McLaughlin, Mrs. Patricia||Ropner, Col. Sir Leonard|
|Gresham Cooke, R.||Maclay, Rt. Hon. John||Royle, Anthony (Richmond, Surrey)|
|Grimston, sir Robert||Maclean, SirFitzroy(Bute&N.Ayrs.)||Russell, Ronald|
|Grosvenor, Lt.-Col. R. G.||McLean, Neil (Inverness)||St. Clair, M.|
|Gurden, Harold||Macieod, Rt. Hn. Iain (Enfield, W.)||Scott-Hopkins, James|
|Hall, John (Wycombe)||MacLeod, John (Ross & Cromarty)||Seymour, Leslie|
|Hamilton, Michael (Wellingborough)||McMaster, Stanley R.||Sharples, Richard|
|Hare, Rt. Hon. John||Macmillan, Maurice (Halifax)||Shaw, M.|
|Harris, Reader (Heston)||Macpherson, Niall (Dumfries)||Shepherd, William|
|Harrison, Brian (Maldon)||Maddan, Martin||Simon, Rt. Hon. Sir Jocelyn|
|Harvey, Sir Arthur Vere (Macolesf'd)||Maginnis, John E.||Skeet, T. H. H.|
|Harvey, John (Walthamstow, E.)||Maitland, Sir John||Smith, Dudley (Br'ntf'd & Chiswiok)|
|Harvie Anderson, Miss||Manningham-Buller, Rt. Hn. Sir R.||Smyth, Brig. Sir John (Norwood)|
|Hastings, Stephen||Markham, Major Sir Frank||Soames, Rt. Hon. Christopher|
|Hay, John||Marlowe, Anthony||Spearman, Sir Alexander|
|Heald, Rt. Hon. Sir Lionel||Marples, Rt. Hon. Ernest||Speir, Rupert|
|Henderson, John (Cathcart)||Marshall, Douglas||Stanley, Hon. Richard|
|Hendry, Forbes||Marten, Neil||Stevens, Geoffrey|
|Hicks Beach, Maj. W.||Mathew, Robert (Honiton)||Steward, Harold (Stockport, S.)|
|Hiley, Joseph||Matthews, Gordon (Meriden)||Stodart, J. A.|
|Hill, Dr. Rt. Hon. Charles (Luton)||Maudling, Rt. Hon. Reginald||Stoddart-Scott, Col. Sir Malcolm|
|Hill, Mrs. Eveline (Wythenshawe)||Mawby, Ray||Storey, Sir Samuel|
|Hill, J. E. B. (S. Norfolk)||Maxwell-Hyslop, R. J.||Studholme, Sir Henry|
|Hinchingbrooke, Viscount||Maydon, Lt.-Cmdr. S. L. C.||Summers, Sir Spencer (Aylesbury)|
|Hirst, Geoffrey||Mills, Stratton||Talbot, John E.|
|Hobson, John||Montgomery, Fergus||Tapsell, Peter|
|Hocking, Philip N.||Moore, Sir Thomas (Ayr)||Taylor, Sir Charles (Eastbourne)|
|Holland, Philip||More, Jasper (Ludlow)||Taylor, Edwin (Bolton, E.)|
|Hollingworth, John||Morgan, William||Taylor, W. J. (Bradford, N.)|
|Hope, Rt. Hon. Lord John||Morrison, John||Teeling, William|
|Hopkins, Alan||Mott-Radclyffe, Sir Charles||Temple, John M.|
|Hornby, R. P.||Nabarro, Gerald||Thatcher, Mrs. Margaret|
|Hornsby-Smith, Rt. Hon. Patricia||Neave, Alrey||Thomas, Leslie (Canterbury)|
|Howard, Hon. G. R. (St. Ives)||Nicholls, Sir Harmar||Thomas, Peter (Conway)|
|Howard, John (Southampton, Test)||Nicholson, Sir Godfrey||Thompson, Kenneth (Walton)|
|Hughes Hallett, Vice-Admiral John||Noble, Michael||Thompson, Richard (Croydon, S.)|
|Hughes-Young, Michael||Nugent, Sir Richard||Thornton-Kemsley, Sir Colin|
|Hulbert, Sir Norman||Oakshott, Sir Hendrle||Tiley, Arthur (Bradford, W.)|
|Hurd, Sir Anthony||Orr, Capt. L. P. S.||Tilney, John (Wavertree)|
|Hutchison, Michael Clark||Orr-Ewing, C. Ian||Turner, Colin|
|Iremonger, T. L.||Osborn, John (Hallam)||Turton, Rt. Hon. R. H.|
|Irvine, Bryant Godman (Rye)||Osborne, Sir Cyril (Louth)||van Strauhenzee, W. R.|
|James, David||Page, John (Harrow, West)||Vane, W. M. F.|
|Jenkins, Robert (Dulwich)||Page, Graham (Crosby)||Vaughan-Morgan, Rt. Hon. Sir John|
|Jennings, J. C.||pannell, Norman (Kirkdale)||Vickers, Miss Joan|
|Johnson, Dr. Donald (Carlisle)||Partridge, E.||Vosper, Rt. Hon. Dennis|
|Johnson, Eric (Blackley)||Pearson, Frank (Clitheroe)||Walder, David|
|Johnson Smith, Geoffrey||Peel, John||Walker, Peter|
|Joseph, Sir Keith||Percival, Ian||Walker-Smith, Rt. Hon. Sir Derek|
|Kaberry, Sir Donald||Peyton, John||Walt, Patrick|
|Kerans, Cdr. J. S.||Pickthorn, Sir Kenneth||Ward, Dame Irene|
|Kerby, Capt. Henry||Pike, Miss Mervyn||Watkinson. Rt. Hon. Harold|
|Kerr, Sir Hamilton||Pilkington, Sir Richard||Webster, David|
|Kershaw, Anthony||Pitman, Sir James||Wells, John (Maidstone)|
|Kimball, Marcus||Pitt, Miss Edith||Whitelaw, William|
|Kirk, Peter||Pott, Percivall||Williams, Dudley (Exeter)|
|Kitson, Timothy||Powell, Rt. Hon. J. Enoch||Williams, Paul (Sunderland, S.)|
|Lagden, Godfrey||Price, David (Eastleigh)||Wills, Sir Gerald (Bridgwater)|
|Lambton, Viscount||Price, H. A. (Lewisham, W.)||Wilson, Geoffrey (Truro)|
|Lancaster, Col. C. G.||Prior, J. M. L.||Wise, A. R.|
|Leavey, J. A.||Prior-Palmer, Brig. Sir Otho||Wolrige-Gordon, Patrick|
|Leburn, Gilmour||Profumo, Rt. Hon. John||Wood, Rt. Hon. Richard|
|Legge-Bourke, Sir Harry||Proudfoot, Wilfred||Woodhouse, C. M.|
|Lewis, Kenneth (Rutland)||Pym, Francis||Woodnutt, Mark|
|Lilley, F. J. P.||Quennell, Miss J. M.||Woollam, John|
|Lindsay, Martin||Ramsden, James||Worsley, Marcus|
|Linstead, Sir Hugh||Rawlinson, Peter||Yates, William (The Wrekin)|
|Litchfield, Capt. John||Redmayne, Rt. Hon. Martin||TELLERS FOR THE NOES:|
|Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)||Rees, Hugh||Mr. Edward Wakefield and|
|Lloyd, Rt. Hon. Selwyn (Wirral)||Rees-Davies, W. R.||Colonel Sir Harwood Harrison.|
|Longbottom, Charles||Renton, David|
§ Main Question put and agreed to.937
That an humble Address be presented to Her Majesty, as follows: —
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.
§ To be presented by Privy Councillors or Members of Her Majesty's Household.