HC Deb 26 July 1962 vol 663 cc1735-867

3.44 p.m.

Mr. Hugh Gaitskell (Leeds, South)

I beg to move, That this House declares that Her Majesty's Government no longer enjoys the confidence of the country, and accordingly calls upon the Prime Minister to advise Her Majesty to dissolve Parliament so that a General Election can be held. This debate takes place in the shadow of the sensational events of 20th and 21st July. The terms of the Motion are their direct consequence, for what happened then was the most convincing confession of failure which could have been offered by the Government, and the most complete vindication of the charges and criticisms put forward by the Opposition.

Of course, in all Governments incompetent Ministers are from time to time dismissed. In all Governments some older men retire. In all Governments reshuffles occur and resignations on political and personal grounds sometimes take place. But in all the flood of comment which has appeared since 20th July I have not seen a single suggestion that there is a precedent for the removal of no fewer than seven Ministers, one-third of the whole of the Cabinet, the curt dismissal of the Chancellor of the Exchequer, the man who had previously held the other highest office in the State under the Prime Minister, that of Secretary of State for Foreign Affairs, together with eight other Ministers in the Government.

Quotations from Kipling are popular nowadays, and I offer hon. Gentlemen opposite another to describe their feelings. It is from the "Song of the Dead": If blood be the price of admiralty, Lord God, we ha' paid enough!

Hon. Members: "in full".

Mr. Gaitskell

paid in full". How and why did all this happen? As to why, there is really no doubt that this was the act of a desperate man in a desperate situation, and the desperate situation was the steady, remorseless and steep decline of the Conservative Party's fortunes in by-election after by-election.

How is this decline to be explained? Some hon. Members and others outside have put it down to bad publicity. The policies, they say, were all right, if only they could get them over, and this point of view has been supported by some newspapers. For instance, the Daily Telegraph of 14th July said: Public relations inevitably come under fire when the Government does badly at by-elections. As Dr. Hill has been responsible for Government information since 1957 the tendency was to forecast that he would be dropped. The Daily Sketch said this of the new appointments: Mr. William Deedes, an old Fleet Street columnist who is to take charge of Government information services at home, has perhaps one of the toughest assignments of all. He has to get over to the electors the new image which the Prime Minister hopes he has created by his tough day's work yesterday. The Economist, referring to the new Cabinet Minister's tasks, said that one of them would be tactfully to co-ordinate the considerable publicity resources of the Conservative Central Office with those of the Government. It is hardly surprising that the same newspaper went on to question whether these functions are really an appropriate rôle for a Cabinet Minister. Indeed, the question must be asked, for hitherto it has always been understood that party propaganda and party propagandists were not paid for out of public funds.

Our suspicions about the Chancellor of the Duchy of Lancaster were expressed in the House in 1957, when my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson) asked the Prime Minister this Question: Could the Minister be a great deal more precise about the exact duties of his right hon. Friend? Is he, in fact, to be a public relations officer for the present Government, whose job will be to whitewash the policies of the present Government? Is the Prime Minister aware that this appointment is a very serious break with all peace-time precedents in this country? The Prime Minister replied: No, I think it is a very good arrangement, and I think it will be very valuable in the realm of information. It has no connection with any party propaganda. There are hon. Members … who think we ought to go back to having a full Ministry of Information. I do not share that view, but I do think that co-ordination of the work done by the P.R.O.s of the different Departments, especially in regard to our overseas work, is a very useful thing." — [OFFICIAL REPORT, 24th January, 1957; Vol. 563, c. 394.] Now the overseas work has been given to the Secretary for Technical Cooperation. What, then, is left for the new Minister to do, except to advertise for the Government and do propaganda for them; except to do a job for which he should not be paid out of public funds? Even the fig leaf that existed before, and covered the former Minister of Housing, when he was Chancellor of the Duchy of Lancaster, has now been removed, and a naked breach of constitutional principle is clearly exposed.

Whether or not the former Chancellor of the Duchy of Lancaster did his job, I do not believe that any failure there was the reason for the by-election catastrophies. For these there is no need to look beyond the social and economic record of the Government. The facts and figures speak for themselves. A year ago I spelled them out as they were then. In the economic debate on 18th July, 1961, summarising the position, I said: We have the worst export record in the past ten years, or the past five years, of any industrial country in the world. We have a steadily declining share of world trade. We have almost the worst production record, and we have almost the highest rise in prices."— [OFFICIAL REPORT, 18th July, 1961; Vol. 644, c. 1072.] All that needs to be done today is to bring the facts up to date.

It is true that the short-term crisis which occurred last summer was comparatively swiftly brought to an end. That was bound to be the case, as soon as we managed to borrow about £500 million from the International Monetary Fund. It is true that, in the ensuing months, there was a slight decline in imports, on account of destocking by producers. But imports are now rising again, fairly quickly. There has been a slight improvement in exports, but we cannot possibly say that we are anything like within sight of the target of £300 million surplus on current account which has always been accepted by successive Conservative Chancellors of the Exchequer.

For this modest result what a price we have paid! Unemployment is up by 130,000 compared with last year; unfilled vacancies are down by 130,000; production has been falling for about six months, and is only now back to where it was this time last year—only now, indeed, back to where it was two years ago; there has been a decline in investment and a sharp fall in industrial building projects; there has been a sharp rise in excess capacity; prices are up by 5½per cent., and wage rates, despite the pay pause, are up by 3 per cent., so that, for many living standards have declined. [An HON. MEMBER: "What about dividends?"] I am asked about dividends. The answer is that dividends have gone up, too, although profits are down.

But something else has happened during the last year. Not only have people become aware of the deplorable record of the country over the last years; not only do they feel that what has happened in the last twelve months shows no indication that we are really overcoming our fundamental difficulties: they are also increasingly conscious of our failure to solve the major social problems which confront the country. I will mention only two today—housing and education.

In housing, it is now well known that the slum clearance programme is a long, long way behind schedule. We should, in the first five years, have cleared 375,000 houses. In fact, we have cleared 250,000. The result is that 2½ million people are still living in dwellings which were classified as slums in 1955. In the 50 largest cities where most of the slums are concentrated, in the first half of the period only one-seventh of the slums were cleared. At this rate, the job will not be done until 1991 in those cities. In Birmingham, it will take another thirty-eight years if the same pace is continued. In Manchester, it will take another forty-five years, and in Liverpool it will take another ninety years—Liverpool, discovered by the former Minister of Housing; and well he might have discovered it! I only hope that his successor will see some of the other cities where slums still exist.

The programme put forward in 1955 is now universally recognised to have been aimed too low. In fact, in report after report—the latest one being the report of the Civic Trust Committee'— it is made plain that we must substantially increase the target of slum clearance. It is increasingly realised, too, that the whole idea of the new towns, which was carried out by the Labour Government, has for many years been allowed largely to lapse. Indeed, the rate of building in new towns has fallen by a half. This As the picture presented of this social problem, and the way in which it is not being solved today.

In education, too, more and more people are dis-satified with the continued overcrowding of classes. It is simply not good enough that a quarter of OUT primary school classes and two-thirds of our secondary school classes should be more crowded than the very modest standard laid down by the Ministry. We know why this is so; it is because the supply of teachers is inadequate, and has been increasing far too slowly. The Ministry's own Council on Teacher Training has recently pointed out that we are getting new teachers at no more than half the rate required—and required merely to cope with the overcrowding. We shall be about 50,000 short in 1970. Over and above all this, it means that there is no hope of raising the school-leaving age to 16—a course strongly recommended by the Crowther Committee, three years ago.

Then there is the sixth form scandal —the situation in which the number of boys and girls in the sixth forms has risen, as we are all glad to know, by about 60 per cent., and yet the number of university places planned has increased by only 25 per cent.

Than, in addition, we have the deplorable decision to cut the University Grants Committee's recommendation. Is it surprising that Sir Geoffrey Crowther should have said, speaking of the university decision—and the fact is that it is easier today for a boy or girl in Spain and Portugal to go to university than it is for a boy or girl in Britain— Can we conceive that the economy of the 21st century will be adequately run by a generation of whom only one in 25 has reached even a first degree? Is not this a formula for a national decline? Indeed it is. Indeed, the formula could be generalised as a description of where we are today, and of what the country is facing today.

Why has all this happened? What are the causes of this situation? No doubt there have been cases of ministerial incompetence, and no doubt errors of judgment have occurred. But these are not the main reasons. The main reasons are simply the Government policies which have been conceived and carried out. We are in this position because the Government willed it. They decided it. Why is slum clearance proceeding so slowly? It is because the Minister of Housing—or the one who was in that office for most of the time and has now been promoted to Home Secretary—did not want any more slums to be cleared.

In speech after speech at that Dispatch Box the right hon. Gentleman defended the decisions of the Government and his own decisions as Minister. And what sort of help did he give to the local authorities in overcoming obstacles?— [HON. MEMBERS: "What help did you give?"] Everybody knows perfectly well that the rate of municipal house building today is half what it was seven or eight years ago. Is that an accident? Of course not. It was the deliberate decision of right hon. and hon. Gentlemen on the benches opposite.

To make quite sure that it should be kept down we have had the intolerably high interest rates—6¾ per cent.—charged by the Public Works Loans Board. We have had the appalling rise in land prices, the direct result of Government policy; the direct result of the introduction of the so-called free market and the abandonment stage by stage of the Town and Country Planning Act provisions created by the Labour Government.

But was this the fault of the right hon. Gentleman the Member for Luton (Dr. Hill)? At least, as I have said, he did discover the slums of Liverpool. It was not his fault. It was the fault of his predecessors and his colleagues. It was the fault of the right hon. Gentleman the Home Secretary. It was the fault of the right hon. Gentleman the Secretary of State for Commonwealth Relations. It was the fault of the Prime Minister himself.

If we consider the position of education, are hon. Gentlemen opposite going to say that they have not willed that situation? And, if they say that, how do they explain it? Do they simply say that it is the result of the foolishness and the stupidity of the former Minister of Education that there are not enough teachers coming forward? They cannot say that. They know that it is not so. They know that these were deliberate decisions. They know that the cut in the proposals of the University Grants Committee was not made by one Minister. Indeed, in all probability the Minister of Education fought hard against it. It was not even defended by him; it was defended by the new Home Secretary. And, of course, it was approved by the Government as a whole. All of them are responsible for these things that have happened. All of them are responsible, because they will not give such things as housing and education the priority which they should have in our national life and our national economy.

Of course, we all agree that we are bound to be limited in what we can do in this and in other fields by the rate of our general economic expansion and I turn to that particular phase of policy. First, a word about the pay pause. I will say this of the former Chancellor of the Exchequer. Although I do not think that he carried out his policy well—I do not think the policy itself was wise—the right hon. and learned Gentleman has done one thing. He has brought out into the foreground, again, that there is a problem of an incomes policy. We all knew that there was in the 1940s—until the problem was swept under the rug by the present Chancellor of the Exchequer and the first Chief Secretary, who pretended that it had not existed for all these years.

If we are to have an incomes policy, there are four essential conditions which have to be fulfilled. First, it must be based on expanding production and expanding productivity. Precisely the opposite has happened in this last year, and the inevitable consequence has, of course, been a rise in labour costs. Secondly, it must be on the basis of agreement by both sides of industry with Government. Thirdly, it must be comprehensive, covering not merely wages but all incomes. Indeed, all sources of spending. Not only wages, but salaries, capital gains, rents and interest. Fourthly, it must be fair as between the sections of the community. It is the tragedy of the former Chancellor's policy that all these four principles were broken and in consequence, inevitably, the pay pause is in ruins today.

But was this the policy of the right hon. and learned Gentleman alone? Was it not accepted by the rest of the Government? Was it not supported energetically by hon. Members opposite? Did not the Minister of Health take a very firm line when we were asking him to give the nurses a little more than a miserable 2½ per cent.? Even the Minister of Power, in his way, even the Minister of Labour, in his way, at least did their best to work with and carry out the policy. Nobody suggests that they did not believe in it. If they had not believed in it, if they had discarded it, they might perhaps have done some other things. None of them, none of the hon. Members opposite, opposed it in any way. On the contrary, they actively and enthusiastically supported the introduction of higher Health Service charges and contributions. They actively supported the concession of £80 million to Surtax payers within a few weeks after that. They were fully committed to these policies, which, more than anything else, made an incomes policy quite impossible in the months that followed.

Did any of them ever suggest that there should be a real capital gains tax? Why, they even objected to the miserable sham and substitute which we were offered in the Budget this year. Did any of them suggest that dividend control might be necessary? Not a murmur. Not a whisper from the benches opposite. Hon Members opposite were wholly with the former Chancellor—

Sir Cyril Osborne (Louth)


Mr. Gaitskell

I am sorry. I cannot give way.

Now I come to the question of the general economic policy—

Sir C. Osborne

I advocated statutory dividend control and a capital gains tax.

Mr. Gaitskell

Very well. I will exempt the hon. Member, if he wishes to be in a class by himself.

Then there is the question of the general economic policy. Is the former Chancellor wholly responsible here? I think we must agree that undoubtedly he inherited a difficult situation. It is rather well put by Mr. Harold Wincott, in the Financial Times—

Mr. Gerald Nabarro (Kidderminster)

I did not know that the right hon. Gentleman read that.

Mr. Gaitskell

When I saw an article headed "Betrayal of Selwyn Lloyd" I thought that it might be interesting— and it was.

I will remind the hon. Member for Kidderminster (Mr. Nabarro) that what Mr. Wincott says is this: Mr. Selwyn Lloyd became Chancellor of the Exchequer in July, 1960. The date is significant … With the wisdom of hindsight, we can see that the Amory policies of 1958 and 1959 proved disastrous … Of course the policies won the election for the Tories in October, 1959, but already by that time they had put our balance of payments once again in the red. On top of these measures, during the 1959 campaign the Conservatives promised largesse wherever they thought it necessary"—

Hon. Members: Oh.

Mr. Gaitskell

Wait a moment— and the bills, for around £250 million, mostly fell on Selwyn Lloyd's doormat.

Sir Godfrey Nicholson (Farnham)

What did the right hon. Gentleman promise?

Mr. Gaitskell

That was the fate of the right hon. and learned Gentleman when he took over the office of Chancellor of the Exchequer.

The right hon. and learned Gentleman then proceeded, when faced with a crisis, to carry out exactly the same policy as his predecessors—the outs in public expenditure; the credit squeeze; the rise in interest rates; the general deflation; higher taxation, and the rest of it. We had it all before and we have had it again. And ail of them agreed on this. There is only one difference between hon. Gentlemen opposite when it comes to the question how to handle an economic crisis and what kind of economic policy to pursue.

There are some who say—the right hon. Member for Flint, West (Mr. Birch) is the most notable exponent of this view—that these policies of deflation have never been carried far enough. In the old days the present Minister of Defence was a supporter and associate of the right hon. Gentleman. They say, "Go on toeing tough. Don't let up. Never mind about electoral prospects." But they are in a small minority. The others say, "Go on for the time being, but, far heaven's sake, stop in time so that we can get the votes." In fact, of course, neither of these policies solve, or could solve, our long-term problems. They need far more drastic changes than right hon. and hon. Members opposite are likely to contemplate.

This brings us to two vital questions. Was there a dispute about economic policy before the massacre of 20th July, and is there now to be a change? Was there a dispute? Until the former Chancellor's dismissal there certainly was no suggestion of this. All were united. The Government were quite monolithic on the subject. It is only since the dismissal of the Chancellor, not by public utterance but by whispers, by rumours, by leaks, that the story has got around that there were disagreements in the Cabinet, that the Chancellor wanted to stand firm for a tougher policy and the others said, "No it is time that we let up."

The letter written by the right hon. Member for Flint, West to some extent gives countenance to this theory. Hon. Members will remember it. He said: Sir, For the second time the Prime Minister has got rid of a Chancellor of the Exchequer who tried to get expenditure under control. Once is more than enough. That suggests that there was a disgreement. Is it so? If it had been so I wonder how we are to explain the attitude today of the present Minister of Defence and the present Minister of Health who, with the right hon. Member for Flint, West, resigned on the first occasion. I wonder how we are to explain the attitude of the two former Treasury Ministers, the Home Secretary and the new Minister of Education. All four of them have done very well out of the Government changes. Did they abandon their friends and their policy?

It may be so, but, if that had been the case, my view is that events would have taken rather a different course. There would have been discussions in the Cabinet. There would no doubt have been a special sub-Committee of the Cabinet set up to discuss the matter with the Chancellor of the Exchequer. I can imagine the Prime Minister saying, "I am not satisfied with the advice you get from the Treasury and the economists who advise them. Why don't we call in Sir Roy Harrod, an old friend of mine and an expansionist?" Then there would have been three possible outcomes. Either the former Chancellor would have won the argument and they would have agreed to stand firm; or he would have lost the argument but nevertheless accepted it and we would have had a change of policy; or he might have lost but resigned. But he did not resign, so I do not think that there was any dispute of this sort.

I think that the story is probably a different one. I do not believe that the former Chancellor expected his dismissal for one moment. I do not think that he even realised that the Prime Minister disagreed with him at all. On the other hand, the newspapers told us that the Prime Minister had been thinking about this for some time, but that he had kept his counsel and raised no objection. He even congratulated the farmer Chancellor at the Cabinet meeting on that fateful Thursday morning and on Thursday, at six o'clock in the evening, he curtly dismissed him.

That is, of course, one of the two possible explanations. We should all be interested to hear which is correct, but if the second one is correct it still leaves unexplained the reason for the right hon. and learned Gentleman's dismissal To that I shall come back in a moment, but before I do so there is a second vital question. Is there to be a change of policy? We know from the letter sent by the Prime Minister to the farmer Chancellor that that is not in his mind. He said: Your courageous policies at the Treasury have always commanded the support of your colleagues. You can rest assured that we intend to continue on the path that you have prepared. I am certain that this is the only way in which we can, in your own words, build growth upon a sound basis. However, we are rather accustomed to the Prime Minister saying one thing and doing another. So it probably means that there is to be a change of policy.

Perhaps we could have some answers to specific questions. First, on the pay pause and the incomes policy we hear rumours of some now board which is to be set up. It is difficult to comment until one hears further details. Is this to settle wages and salaries, is it to override decisions reached voluntarily in industry? What is the idea? What is the new piece of machinery which the Prime Minister has in mind? In introducing it, are the Government standing by the White Paper on Incomes Policy, surely one of the most absurd documents ever issued from the Treasury? Do they still believe in it?

Do they recognise that the time has come when, in view of the state of the economy, we must have some positive encouragement to expansion? Are they prepared now to say that they will not go on waiting indefinitely and hoping and relying entirely on increased exports to get that expansion? Does the new Chancellor contemplate, for instance, encouraging demand, which is now worrying industry a good deal, by reducing interest rates still further? Is he going to remove the surcharges in order to encourage consumer demand? Is he even contemplating a new Budget in the autumn? At least, it would be a change to have a Budget for expansion in the autumn instead of a budget for dealing with a crisis. Are we to have any attempt to deal with the long-term problems of the economy, which have been so shamefully neglected? What is to be done about research and the deplorably low level in the major part of British industry? What is to be done towards encouraging investment? It is still, in this country, far below most of our industrial competitors. What is to be done about apprenticeship and the need to increase the supply of skilled labour? Are the Government coming forward with changes in this field, or are they waiting for "Neddy"?

In the field of housing, do the Government intend to continue to defend the present rate of municipal building as the best of all possible rates, or are they going to say, "Yes, it is time that we had some more council houses": and if they say that, how will they encourage the local authorities to build more? Will they offer them specially low interest rates? Will they give them some help in tackling the problem of land prices, or do they stand on the previous policy that it must be a free market no matter how high prices go or how great are the fortunes made?

Are the Government prepared to do something about the supply of building labour? Are they prepared to contemplate the effective control of office building so that flats—places where people can live instead of in slums— will be built in priority to offices and shops? On education, are we to have a change on the university grants position or do they still stand where the Home Secretary stood the other day—that although the sixth forms will be overflowing, there must be a quarter, perhaps a half, of the boys and girls going into them in the next few years who will not be able to go to the universities though they are willing, anxious and able to go.

Then there is the famous cat in the bag, whose existence was disclosed by the Leader of the House. I have wondered, during the last few days, whether it was the tiger which was let loose on that famous Thursday, or is it a rather sleepy, gentle, harmless pussy cat, something for the consumers, the Molony Report? [An HON. MEMBER: "Baloney."] Someone said, "Baloney". That may be, after our experience with the Weights and Measures Bill. I expect that we shall be having a No. 3 Weights and Measures Bill before long. Are the Government doing something about redundancy? If they are, they might well support the Bill of my hon. Friend the Member for Gloucester (Mr. Diamond). It would be interesting to know whether Ministers are to be covered by redundancy payments, too. All these are useful things, but they will not solve the nation's problems.

We come to the other alternative—that it was not a question of policy but simply a need for new men which led to the changes. Was it the beauty treatment solution which the Prime Minister had in mind? According to this theory, it dawned upon the Prime Minister one day that his colleagues ware tired. That was no surprise to us. The Leader of the House was so enthusiastic about this that as Chairman of the Conservative Party he sent out a circular ramming the point home. In this circular he said of the Conservative organisations: Many, unfortunately, display all the signs of tiredness that are not surprising when we have been in office so long. He went on, rather blandly I thought: You may find that some people who were admirable leaders a few years ago have lost much of the zest that must be an essential part of our appeal. I'm sure, too, you will agree that it is only right that you should apply the same standard to yourself and to the other officers of your association. That is a very good recommendation which might be applied to the other members of the Government, too.

If this is the explanation, there is one question which follows: why did the Prime Minister stop at seven? What about the Leader of the House himself? He does not always strike us as being flowing over with buoyancy and ebullience. Or the new First Secretary of State? To tell the truth, I must say that the former Chancellor of the Exchequer looks far more ruddy and healthy and wide awake than any of these Ministers. But perhaps we have not finished. Perhaps before long some of the others will be told that they are tired. There is the Minister of Labour. I understand that he even thought of resigning, but was fairly easily persuaded not to.

There is the Minister of Power, who had a narrow escape. There is even the Minister of Agriculture; though a little more youthful-looking than some of the others, he certainly should not regard himself as quite safe. One of these days they may go down the trap, finished, out of sight for good, just like the other seven who have recently left us.

But we must take them as they are today, the new team, forward-looking, brilliant, modern and progressive. Very high up in the list is the new Lord Chancellor, to give him his title, Lord Dilhorne of Towcester, that radical reformer whose appointment was greeted with such acclamation by the Bar, whose sparkling performances from that Box we all recall and which no doubt will be received with even greater enthusiasm in another place.

There is the new Home Secretary, that enthusiastic reformer whose first performance at the Box heralded the new liberal era at the Home Office. At least, however, he was able to make it plain that he was not to blame for all these cases, but that it was his predecessor who had left him all these babies. Nevertheless, we have the splendid success of his negative policy on housing and his negative policy at the Treasury to assure us of the reforms which lie ahead for the Home Office.

There is the new Minister of Defence. He is not exactly a new face, but at least he has been out to grass for some time. He is familiar with the game of snakes and ladders. Perhaps he is even immunised by now from any dangers from the Prime Minister. But there is one question of policy in which we are all interested. In his resignation speech in 1958 he complained that it was no use trying to maintain at one and the same time the Welfare State and Britain as a nuclear Power. Which one of these will he now abandon?

There is the new Chancellor of the Exchequer, not exactly a new face, if I may say so to him, but able, intelligent and likeable, his talent at last uncovered after all these years. The only point is this: he will be remembered particularly, as President of the Board of Trade, for the great success with which he conducted the Free Trade Area negotiations. Now he will be able to lend a hand in Brussels—although I wonder whether the Lord Privy Seal will be greatly encouraged by this prospect I wonder whether the new Chancellor of the Exchequer will quite live up to the standard of enthusiasm for the Common Market recently laid down by the First Secretary.

And there is the First Secretary himself. One of his ambitions has been achieved. After being the assumed acting Prime Minister he is now officially Deputy Prime Minister—the best Deputy Prime Minister that we have. But new, fresh? Hardly. He and the Foreign Secretary are the only two relics of the Chamberlain Government.

There is one other, younger man, the Minister of Education, an endearing personality whose speeches we always enjoy. I cannot but help a certain regret at the loss of Sir David Eccles. He was not the most tactful of men at times, but he was not incompetent; nobody would say that he was. He must be reflecting a trifle bitterly on his famous remark, "Treat 'em mean, keep 'em keen". Perhaps he is wishing that he had been even more accurate—"First back 'em, then sack 'em".

So we come to the Prime Minister, the leader of the new team—and the leader of the old team as well; the old team which was so bad, so tired, so worn out, so ineffective, all chosen by him, whose policies have led us to this pass—all approved by him. For no Government has ever been so much presented as the creation of one man. Colman, Prentis and Varley saw to that, even though the hon. Member for Peterborough (Sir Harmar Nicholls) thinks that they oversold him a bit at the last General Election. I give the hon. Gentleman the prize for the understatement of the year.

July has left him still more on his own, no longer able to share the cartoons with the former Chancellor of the Exchequer, which he did for so long, first as Foreign Secretary and then as Chancellor of the Exchequer. Of course, all this has been a continuing process. It is said that the right hon. Gentleman became Prime Minister at the beginning of 1957 on the votes of his former colleagues in Lord Avon's Cabinet. How many of the old comrades who voted him into power now remain? Six out of nineteen. Not since Stalin liquidated the old Bolsheviks has there been such a successful process of elimination.

But if some of these old comrades from their places of exile—Lord Salisbury, Lord Avon, Viscount Head and the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd)—feel a little bitter and angry, and even a little lonely, they can reflect that the man who got rid of them all is now perilously alone, too, his friends gone and the Deputy Prime Minister, whom he elbowed out of the succession at the time of Suez, breathing down his neck.

Why is it that this Government is a Government of which nobody—not the House, nor the country, nor, I think, the Conservative Party—is particularly proud? It is not merely their dismal record of failure. It is not merely the pursuance of policies which are neither just nor wise. There is another reason. The great Governments of the past have often been composed of men of different views and outlook, but they have been bound together by some common purpose. Prime Ministers who have lived in history have set more store by their policy objectives than by the time they remained in office. This was true of Peel, of Gladstone, of Churchill, of Attlee. It was true of Lord Avon, however mistaken we may think the policy was.

It is not true of the right hon. Gentleman the Prime Minister. His Government will be remembered not for the leadership they gave the nation, but as a conspiracy to retain power. Men and measures have been equally sacrificed for this purpose. That is why we call it a Government of gimmicks, an Administration of ad-men. I believe that this is a very grave weakness today. No doubt when things are easy and no response is needed from the people they can get away with it. But today it is clear that we cannot solve our problems as a nation without a deeper sense of national purpose. Such a purpose is not created when evasion is regarded as a virtue and double talk is regarded as a duty.

If the Prime Minister had proclaimed a policy and chosen a team and stuck to them, we could have respected him, even though we profoundly disagreed. It is because he can do neither that he and those with him have lost the confidence of the nation. Let him do this last service to the people—give them the freedom to choose a new Government.

4.33 p.m.

The Prime Minister (Mr. Harold Macmillan)

The right hon. Member the Leader of the Opposition, in moving the Motion, has dealt partly with personalities and partly with policies. I am bound to say that he did not say much about policies. He soon came back to the personalities. No doubt he found it much easier.

Mr. William Hamilton (Fife, West)

So did the Prime Minister.

The Prime Minister

I congratulate the right hon. Gentleman on his being so persistent a reader of the gossip columns. I am not at all abashed by the accusations of disloyalty or lack of courage or panic. These taunts are natural. Obviously, they are very easy to make, but, curiously, two exactly opposite attacks have been made on me since I became Prime Minister. I have been accused during my years in office of excessive loyalty to old friends and colleagues and unwillingness to introduce new blood into the Government. I have also been accused of a detachment amounting almost to disdain. Now I am accused of taking violent action in a moment of panic.

These contradictory accusations do not move me. I am content to be judged by those with whom I have worked during nearly fifty years of active life—in the Army, in business, here in the House of Commons and in Government.

But what has distressed me is having to make a number of decisions which are unhappily necessary from time to time, affecting long friendships. My right hon. and learned Friend the former Chancellor of the Exchequer has worked with me in close partnership for six years. He has held the high offices of both Foreign Secretary and Chancellor of the Exchequer. We all recognise the courage, single mindedness and patriotism that he has shown. Last July, with my full support, he embarked upon an operation made necessary by the fierce pressures on sterling which were then being developed. That phase of the battle is over. We have achieved a sound basis for growth and we must confirm that and move to a new phase.

I have decided that for this new phase there must be some new commanders. These decisions are, as all those who have held this office know, one of the greatest burdens that fall upon a Prime Minister. I can assure the House that they are much easier to evade than to make. There is no inconsistency in all this. To take the decision and to face its consequences does not detract in the slightest degree from the sincerity of my tribute to the work of my right hon. and learned Friend, which, I believe, will be shared by all hon. Members on this side of the House.

The reconstruction of the Government has also involved my parting with other colleagues, many of them very old friends. But in any Government changes have to be made from time to time. The reconstruction of a Government is, at the same time, more necessary and more difficult when a party has been so fortunate as to receive on three successive occasions the support of the electorate and to have governed for a period of nearly twelve years. I have no doubt that we shall be faced with a similar problem in 1966 or 1967. So much for the personalities.

The only clear policy that the Leader of the Opposition seemed to recommend is the dissolution of Parliament. But before that we have a lot to do and we mean to do it. I would have thought that an Opposition demanding an election would perhaps have given some indication of their own policy. Suppose we take the right hon. Gentleman at his word and the Opposition had an election on Europe. What would happen then—still on the fence? The right hon. Gentleman's attitude throughout has been prudent but not very inspiring.

Then there is the question of defence, to which the right hon. Gentleman referred. My right hon. Friend the Member for Woking (Mr. Watkinson) has done a very fine job. [HON. MEMBERS: "You got rid of him."] My right hon. Friend informed me some time ago of his willingness to make way in any reconstruction of the Government when it was made. He can be proud of the fact that during his period of office he has presided over the most difficult of all operations, the transition of the Armed Forces of the Crown from a compulsory to a voluntary all-regular basis. We believe that the recruiting figures will justify his policy. He has maintained a firm unity on defence policy between ourselves and our partners, the United States, and in N.A.T.O., and the Defence White Paper which he presented in February had the full support and has the full support, of the Cabinet.

As to the question of the deterrent, there has never been any change in the Government's view, but what the Opposition's policies are to the deterrent would need a very specialised student of political history to find out.

What about economic policy? There, we had just a little bit of the professor, as usual, but not very convincing. The Opposition accept the need, I am told now, for an incomes policy in principle, but they have done their very best to frustrate it and undermine it in practice. In the debate last December, they were challenged as to what their incomes policy would be. It was the same cry, "Wait and see. Wait until we have worked one out, and then we will tell you about it at the General Election." So we must not have the General Election too soon.

As I say, before we have an election there are a number of things we mean to do which we believe to be in the national interest, and which will, we think, lead to further progress. Meanwhile, I must remind the House, as the right hon. Gentleman has done, of the progress that has been made. The right hon. Gentleman gave an account of Britain over the last eleven years which, I think, would be unrecognisable by anyone who really made an objective study of the country. His was not a history, but a caricature. Let me give my own picture, which is much closer to the actual facts.

The standard of living in this country has risen more in the past ten or eleven years than it did in all the previous half-century. That is not what the man in the street calls stagnation. It has been achieved at a time when we have been devoting an increasing proportion of the national income to social services, capital investment and, I am happy to say, to overseas aid. On the average, the level of unemployment since the war has been lower than, I think, that in any other industrial country with, perhaps, one excepted. As a measure of confidence in our administration, personal savings have risen twentyfold since 1950. That is what the ordinary people think about the Government. That is helping to finance our present great programmes for the modernisation of industry, transport and commerce.

Our exports have reached a record level, largely due, I agree, to the firm measures taken last year. They have expanded every month this year and, of course, the pay pause has helped to make our costs competitive. It has helped us to expand our exports and preserve full employment and, as a result also, our gold reserves have risen by about £350 million. We have beaten off last year's attack, and although we have continued our aid to the full, and our other overseas expenditure, although we have played our part in the arrangement for giving financial help to Canada at a critical moment, we have been able to pay off a large part of our emergency borrowing.

The social services have expanded during this period rapidly and continuously. Expenditure on them— [Interruption.] We have had the caricature, so hon. Members opposite may as well have the true picture. Expenditure on the social services in the past ten years has nearly doubled in money terms, and has gone up by at least 50 per cent. in real terms. As for housing, I really never thought that the Opposition would ever taunt me about houses. During all those years we have averaged 300,000 houses a year, a figure that was described by the opposite side as being neither desirable nor possible. Of course, there is still a great need, and we are driving forward for this last clearing of the slums, and so forth. If ever there was a story of which the party of which I am the leader had a right to be proud, it is the story of housing.

Let me come to education. An extraordinary desire always to denigrate this country seems to fill the right hon. Gentleman. We are spending on education more per head than any other country in Western Europe except, perhaps, Sweden. We have managed to cope with the birth-rate "bulge" without resorting to the shift system in education which most other countries have had to adopt. Large and necessary expansion is going on at every level, from primary school to university. We are getting better value for money through improved design, and an interesting figure is that building costs per school place, owing to this great skill shown, were less per place last year than in 1949.

The hospitals and local services have been greatly improved. The hospital service has been transformed by the new building programme, and the elderly are sharing, as we always intended that they should, in the prosperity they helped to create. Pensions have not merely been raised to meet rising prices, but today have 50 per cent. more purchasing power than they had eleven years ago. The elderly need care as well as cash, and our programmes have provided for a growing number of suitable homes and services in the home, as well as looking to their special needs in hospital treatment.

That is the true story of the eleven years of the Administration—[Interruption.] Inevitably, the speed of our advance has developed stresses—personal and public, economic and social, national and international—which must be remedied if they are not to hinder expansion and future progress. At the same time, there has come about all over the country a growing awareness that a high standard of living cannot be our final goal, that it carries with it obligations to the outside world which we have in these years, with all our difficulties, done our best to meet, and which we are determined to meet on an increasing scale in the future; and that we must find a way—because that is what the old world must do—to redress the economic balance of the new.

All this can only be achieved, and the right hon. Gentleman knows it, from a firm economic basis at home, and this the Government are determined to maintain. Through the establishment of the National Economic Development Council we have taken an important step forward to find ways of achieving a steadier and more rapid rate of expansion. We are giving full support to the firm, though sometimes painful, methods and measures by which the nationalised industries must improve their efficiency.

Yet there still remains—and the right hon. Gentleman just touched on it, and only just touched on it—the great economic question today, the problem that faces ail advanced countries today. The four main objectives are really the same; I imagine we all share them. They are full employment, steady prices, a strong currency and expansion, or growth. In a country like ours, where there is, broadly speaking, full employment—or, at any rate, where there are no massive reserves of manpower as there are in some of the European countries, or have been—expansion can be achieved only in two ways—by the rapid transfer of manpower where it is available from declining to expanding industries, and by the removal of any obstacles to growth.

Secondly, we must make sure—and for this we look to the National Economic Development Council for vital assistance—that the most efficient use is made by management and labour of all the vast complication of machinery and techniques which modern science has made available. For example, if the nation as a whole pays itself in increased wages, salaries and dividends more than is justified by increasing production, it is surely accepted that costs will rise and exports fall. In that event even the increase in individual incomes will be but Dead Sea fruit, for they will not realise their true value. I should have thought that that was self evident.

An incomes policy is, therefore, necessary as a permanent feature of our economic life. It is not, of course, the only element in our economic policy but it is an indispensable element in the foundations on which to build a policy of sound economic growth. If costs rise exports will fall and the weight of imports will correspondingly increase and lead to a balance of payments crisis, so that the rise in prices will inflict great injury on those whose incomes are in fixed terms or cannot be readily advanced to meet the rising prices.

How to reconcile an incomes policy in a free society means digging right down into the roots of our philosophy. [Interruption.] I should like the House to consider this matter seriously, for this is the reason why we have been considering what form the next step should take. I will now answer the questions put to me by the right hon. Gentleman the Leader of the Opposition. Even in war —with controlled prices, rationing, the direction of labour, 100 per cent. Excess Profits Tax and post-war credits to reduce the impact of increasing wages and the rest—we did not have a wholly successful incomes policy. One of the results is the immense debt we now carry.

Even after the war, when the Labour Government of the day inherited this highly-controlled system which had been brought about by the siege economy inevitable to an island in war, they found themselves baffled by the same problem. Many of us remember how they resorted, as we have, to appeal and exhortation and many of us remember the immense energy and enthusiasm which Sir Stafford Cripps devoted to this purpose. [HON. MEMBERS: "Hear, hear."] But even he was not successful and now that we have a much freer economy it may be that the task is more difficult. I freely admit that.

But that is not to say that the efforts of successive Governments have altogether been in vain. Public opinion—and the debate we had the other day showed this —has developed over the years. People are beginning to understand much more readily what happens if one sector tries to gain some undue advantage over the rest and how fatal will be the result if all together insist on pursuing increasing incomes without regard to their real value. We can claim that our actions over this past year have given the economy a real advantage and have helped to keep our costs reasonable compared with other countries. What we need now is a new machinery or mechanism and a new advance.

In a free society an incomes policy cannot, in my view at any rate, be imposed. It can come about only by general acceptance, and if it is to be a permanent feature and not a temporary thing in a difficult crisis, as I believe it must be if we are to achieve our four objectives, then it must be regarded both as necessary and as fair. This is the problem to which the whole House must address itself. It must not, as a permanent feature, be rigid. A temporary measure must necessarily be somewhat rigid and sometimes unfair. A permanent policy, however, must be flexible so that it can take account of the different conditions and needs of different services and industries and of the intervals that may have elapsed between the last increase and a new claim.

It must have regard to better ways of working or new responsibilities. It must be capable of providing a workable system of adjustment of pay, not only in those occupations where the ordinary forces of the market apply but in the wide area of the public service where they do so to only a limited extent. First of all, the Government must continue to inform the country from time to time as to the rate of increase in total incomes which is compatible with the growth of total production.

This does not mean that the general figure will be the appropriate figure in every particular case. For example, there may be a need to increase rates of pay in a particular industry to build up its manpower relative to other industries, or some special increase may be justified by the fact that workers in a particular industry are able to make a special contribution to greater productivity and efficiency. And, as I have said, the history and timing of earlier pay increases may properly need to be taken into account.

What is essential, however—and we may as well face it or otherwise we shall fail to obtain our four objectives—if we are to meet the national interest is that every case should not be regarded as a special case and that the broad matching of incomes and production should, in fact, take place. Our experience over the past year has shown clearly that it is not enough for the Government to offer guidance in general terms. What we need is an impartial and authoritative view on the more important or difficult pay questions given by a body which can see these questions both as they affect individual interests and the nation.

To fill this need we have decided to set up a National Incomes Commission. This, of course, will be a permanent body. Before I describe its functions I should like to say this. There is no intention to deprive any man of his right in a free society to sell his labour or hire other men's labour as he may wish. It is inherent in our plan that free negotiation shall continue and that the right to withdraw labour or withhold employment shall remain unimpaired. Nor is there any intention of dismantling or abandoning the machinery of arbitration. The present working of the wage-council system will continue. The wage-council system is the modern form of a machinery developed over a great number of years which protects those classes of workers who, for various reasons, are least able to protect themselves.

The main features of the Commission will be these. It will be given terms of reference requiring it to inquire into and to express views on claims of special importance. In so doing it will take into account not only the circumstances of each claim but also the wider considerations of national interest such as the need for increases in incomes to be matched by increases in production. It will carry out this work, so far as possible, in public. It will publish its findings and its reasons for them in full and this is important, for one of our main needs today is to mobilise and inform public opinion.

Much that happens now in the sort of dim industrial twilight might well be brought into the clear light of day. The Commission will deal not only with prob- lems in industry but also with public and other services, the value of which cannot be measured by purely commercial considerations.

Mr. E. Shinwell (Easington)


The Prime Minister

If the right hon. Gentleman will allow me to finish this passage I will give way. As our society develops, more and more of the population work in such services, and this is a mark of progress, for in a primitive society most people are engaged in merely keeping alive. The more advanced and complex the society the more compact is the base and the more elaborate is the superstructure. It must be clear that while the Government are able, and indeed may feel obliged, to enforce their views upon the public services for a limited period, it would not be tolerable that a widening gap should develop between rates of pay in the public and private sectors. Therefore, the Incomes Commission must have regard to both forms of employment.

It will function broadly like this. First, let me take the private sector, with which I group for present purposes the nationalised industries and those public services, in local government for example, for which the Government have no direct management responsibility. Here the Commission will consider specially important pay claims or disputes which may be referred to it by the agreement of the parties concerned. But there may well be cases from time to time in which, although one side or the other is reluctant to agree to the reference of a claim to the Commission, the Government may nevertheless form the view, on representations from one of the panties, or on wider grounds, that the Commission should consider the question in the public interest.

I cannot believe that in practice the parties would not give weight to the Government's expressed view, and I cannot believe that either side would disregard it. But if it did, the public would form its own conclusion. But the question whether any formal provision is desirable to cover cases of this sort is, I adroit, a difficult one, and before we take a final decision we shall have more detailed consultations than have so far taken place with representatives of employers and trade unions. In the public services the procedure would be the same. The Commission will be there to examine important claims referred to it by both parties. Arbitration will, I repeat, be respected.

Now let us consider a settlement reached in the private sector which appears to the Government ox to the Commission itself damaging to the national interest—damaging either because the increase in pay is excessive or because the repercussions on other industries are likely to be harmful, or for any other reason. Then the Commission will, at the request of the Government, have the right and the duty to carry out a retrospective examination of the settlement. It will not alter the settlement. The terms will stand. But it will be considered, and the report will be positive and constructive.

For example, it might well draw attention to the level of efficiency in the industry concerned, both of management and of labour; to the increase in prices, especially in a sheltered industry, which would follow the settlement; what would be the effect upon exports in the unsheltered industries; and also whether there were questions of restrictive practices on either side of the industry. In other words, it should be not merely restrictive but positive, not negative but constructive, and should be able to make positive proposals for improvement. It must act rapidly, as courts of inquiry set up by the Minister of Labour have shown themselves able to do.

Many of our industrial weaknesses— for instance, restrictive practices—are very difficult to remedy by any general law. But they can be influenced by public opinion if the public are allowed to know what is going on. In effect, this instrument will bring these issues to the bar of public opinion. Apart from claims for higher wages and salaries that are put forward from time to time, often following in the wake of an increase in the private sector, there are already in existence in the case of certain professions and services—the higher Civil Service, doctors and dentists—independent committees which provide the Government with advice on pay. The Government have entered into certain undertakings in relation to them. It will be desirable in due course to consider, in consultation both with the advisory com- mittees and the representatives of the professions concerned, what form of association with the Commission could usefully be developed for the future.

It has also in the past—and this is another whole field for its operations— been the practice of all Governments to refer from time to time the question of pay or status of particular classes of public servants to Royal Commissions or committees appointed for this purpose ad hoc. There are a number of such. While the reports of these bodies have been valuable, the procedure is in this sense unsatisfactory, for each inquiry is undertaken entirely on its own without regard to anything except the problems of a particular service. An ad hoc committee, therefore, has little opportunity to see these problems set against the wider background. We intend that special inquiries of this type shall be undertaken at the Government's request by the Incomes Commission.

As I say, since the Commission will not be merely negative but positive, it should also benefit some of those whose special claims are sometimes overlooked in the struggle between the great organised forces. The Commission must, therefore, be so constituted as to work largely by influence and by the steady growth of its authority, and that is similar to the development of many of our institutions.

I should inform the House that in recent weeks there have been purely informal contacts on this policy between the Government and representatives of trade unions and of employers. This morning I saw representatives of both sides and gave them an outline of the Government's proposals. Of course, there will be further full discussions with all concerned both in the public and private sector—[An HON. MEMBER: "They are not with you."] That may be so, but this is a great national question, and I would ask them to give it serious thought.

I realise that there are people who will feel that such a Commission has no place in the highly-developed system such as we have got of industrial bargaining. But to accept that view would be to abandon an incomes policy and to resign ourselves to the inevitability of the old classical method of monetary policies, stop and go—call it what you will. There are others who will say that the Commission has insufficient power, that it should have the right to assess and impose wages. In my view, that is wholly contrary to the concept of a free society, and I hope that the House and She country will feel that we have struck about the right balance.

Mr. W. Hamilton

Tell us about dividends.

The Prime Minister

I shall come to that. Just be patient.

I have spoken of increases in wages and salaries. But I am not unmindful of the widespread and natural feeling that restraint in profits and dividends is no less important. It is vital that people should not feel that their acceptance of the restraint implied in a national incomes policy is merely going to give someone else a larger profit or dividend. This As to a large extent in the hands of the Government, and the Government will, by fiscal or any other appropriate means, restrain any undue growth in aggregate profits which might follow from restraint in wages and salaries.

In most economies, I think the right hon. Gentleman will agree, profits are usually drawn hand-in-hand with rising wages; and restraint in wages and salaries would be accompanied by falling profits. Nevertheless, I give this formal pledge.

As the House will see, a national incomes policy is to be considered not as one of the methods of temporary restriction if our economy outruns its strength, such as we have had to take from time to time. In my view, it is the essential foundation and support to a policy of expansion, for if we can be sure that full expansion will not result in running into all the dangers of inflation, then we shall have solved one of the major problems of the age. We shall have the means of meeting the large annual increase in Government expenditure which a modern society demands on schools, universities, roads and all the rest, and we shall have the means of meeting them without injury. The consumers will gain, for it is they most of all who have suffered from the inflationary rise in prices and who most of all feel themselves ground between the millstones of the powerful forces on both sides of industry.

The pensioners and the old people will gain; indeed the whole nation will gain. For the strange paradox is that this prize is there to be won, and if as a democratic people we have the self-control to operate over the years such a policy then there is the prize, with injury to none and with gain to all. All this we can, and must do, for ourselves. We intend to do it. But in economic policy, as in so many other spheres, we cannot think only of ourselves as if we were an isolated island.

Our economies are interdependent, and we must make sure that the mechanism of international exchange are adequate to serve the needs of mankind. I do not need to say much about this problem now; perhaps my right hon. Friend the Chancellor of the Exchequer will refer to it. The great post-war expansion was largely financed, in its early stages at any rate, by the exceptionally generous foreign aid programmes of the United States. Now that the United States themselves are feeling pressure on the dollar, we must look for other solutions. The financial basis on which international trade rests is determined by the financial policies of the countries administering the principal currencies of the world, primarily the dollar and sterling, but increasingly also the other European currencies, such as the deutschmark, the franc and the lira. The plans put forward at Vienna by Mr. Jacobsson, the Managing Director of the International Monetary Fund, have produced—I admit it and we all admit it— arrangements Which help to mobilise additional resources if the need arises.

But I must be frank and say that, speaking for myself, I do not believe that the ultimate solution can be found only in these measures. A solution can be found only by international co-operation and imagination, and, I must say this, by whatever means the nations of the world decide to seek a solution, they will not find Britain holding back. [Interruption.] The President and I have discussed this in great detail I mention it only because I do not think that it is right to discuss an economic debate without some reference to this matter. We have made some progress in the last year but not, in my view, enough.

Apart from this immediate policy— these long-term benefits—there are some special proposals which I am afraid I must detail to the House. First, as regards the consumer and, second, the general status of the employee whether in the factory, the office or the shop.—[Interruption.]—Of course, the consumer—the the right hon. Gentleman asked questions and I am afraid he must put up with the answers; not that they were not prepared already, I admit that—is an interested party in all wage settlements today. In the old days, a wage dispute was just a matter between the employer, on the one hand, and the employees, on the other. They were the only parties that were involved. It is very different now. The general public is a third party in all these struggles—the whole of the economy of the nation is in it—and it is up to now very rarely represented. But apart from this general interest there are other ways in which we can help the consumer.

The Report of the Molony Committee was published yesterday. The right hon. Gentleman has read it and does not seem to think much of it. He must have skimmed through it; it is quite long. The Government have decided to accept the proposal to set up a consumers' council. We are reviewing the legislation relating to monopolies and restrictive practices in the light of experience in the past five years, including mergers, and legislation in the field of consumer protection will come next Session. Then, of course—this is an important part of it—the steady reduction in tariffs is in itself a protection for the consumer.

Now for conditions of work. As regards factories, I have seen many Factory Bills in this House but, broadly speaking, our legislation is satisfactory although there are some Amendments which I should like to see in due course. I reaffirm the Government's undertaking that the Shops and Offices Bill will form part of our legislative programme next Session.

Now I come to the more important question—the question of the status of the worker. I am well aware, from many years' experience in the House of Commons, of at least one reaction that there will be to what I have to say about security for those who find themselves unemployed at short notice. I would just say that the conditions under which Government business has to be conducted with regard to foreign and home affairs and the need for rapid decisions make it necessary for Her Majesty's servants to accept this basis of employment, that when changes are made they are made rapidly. Only so can the collective responsibility of the Cabinet be maintained, and only so can it maintain any decisions that sometimes have to be taken at a few hours' notice.

But I am thinking of the millions of our countrymen who are affected by the hazards of industrial life, particularly in the changing pattern of industry. We think that the first need is for contracts of service which provide for a reasonable period of notice. For a long time it has been our aim to encourage employers to move towards this. Contracts of service to provide for substantially longer periods of notice are already provided, I think most people would agree, by many if not the majority of progressive firms. I was much impressed by what the President of the British Employers' Confederation said about this recently.

This should become a general practice and in due course we propose to introduce legislation to lay down a statutory minimum period of notice. We shall provide for this to come into effect at a forward date so that employers and unions will have time to make voluntary arrangements which suit their circumstances and which are not less favourable than the rule. At the same time, we shall legislate on contracts of service generally. I mean the right of a man to know precisely what are the conditions of his contract.

I want to say a word on the problem of the training of young people and adults, to which the right hon. Gentleman referred. First, apprenticeship. More apprentices have been taken on by employers during the last two years. But the quality of much apprenticeship training falls short of the needs of modern industrial techniques and five years' apprenticeship seems to me at any rate rather longer than it takes to learn the skills of many trades. Efficiency for a nation starts with the education and the training of its young people; and, whether we join the Common Market or not, the real struggle that British industry has to wage and win is that of competitive efficiency.

Accordingly, we intend, either through N.E.D.C. or through direct talks with employers and trade unions, to study urgently together how we can improve both the quality and the quantity of young people being trained for their future in industry. We also intend to expand the adult training schemes which are designed to fit workers for the inevitable changes of employment that the greater economic flexibility and the changing patterns of modern industry make very necessary today. We cannot afford the waste which is involved, apart from the human aspect.

Prosperity—and we have had great prosperity—has brought this nation many problems, just as depression does. We are conscious that these personal and private anxieties do come in one form or another to most families, and this is why the measures I have outlined, measures covering the whole field of incomes policy and measures to get a better system throughout for our people, will, I think, be acceptable and regarded as wise. I appeal to those who will have to deal with them at least to study them and think about them before making their final decision.

I believe that these measures will go far to check the abuse of power by either side of industry and to provide a just and more stable basis for advance than the incomes race which has proved so exhausting and not really of such great benefit to individuals or the nation.

The Motion takes the form of a Motion of censure. I hope that the House will forgive me if I have repelled it to the best of my ability in part of my speech only and have tried also to give the House as clear an indication as I can of the plans which we mean now to pursue. My right hon. Friend who will speak at the end of the debate will be able to answer particular questions and, of course, there will be further full consultations before all our plans come into effect.

Having said that, I confidently ask the House to reject the Motion. Since its return to power in 1951, the Conservative Party in office has faithfully carried out its programme. It was elected to office in 1951, and its mandate has twice been renewed and fortified. With the support of the House, we intend to carry on and complete our work.

5.22 p.m.

Mr. E. Shinwell (Easington)

Owing to some murmurs of protest around me, some of them, I gathered, verging on the acrimonious and many of them derisory, I was unable to hear the whole of the Prime Minister's speech, but I was profoundly disappointed at what I did hear.

The right hon. Gentleman developed various economic themes. This was to be expected, since from a perusal of the Press we gathered that his intention was to embark on a new and, apparently, adventurous economic policy. Having heard what the Prime Minister said, I wonder why it was necessary to change the Government. We had a reference to an incomes policy. We have heard about that for quite a long time. In a few minutes, I shall develop the original source of what is, apparently, a new idea to the Prime Minister. There was a reference to expansion. That is common form. Also, of course, we heard a succession of familiar platitudes about the intention of the Government to create a new economic climate for the people of this country.

More than thirty years ago, I sat somewhere on the benches in this Chamber —it may have been on the Front Bench —and listened to the right hon. Gentleman making speeches from a seat below the Gangway on this Slide of the House. He was then not the Prime Minister, nor did anyone imagine that he ever would become the Prime Minister.

Mr. Nabarro

There is hope for us all yet.

Mr. Shinwell

Indeed, it was much more likely that, because of the opinions he then held on economic policy, his expulsion from the Tory Party was imminent. When I contrast the speech to which we have just listened with the speeches made by the right hon. Gentleman thirty years or so ago, and, in particular, when I contrast his outline of a new and allegedly adventurous economic policy with what the right hon. Gentleman wrote at that time, I confess frankly that I am astonished, and I say to the night hon. Gentleman that, if he believed in what he then said and wrote, he has, having regard to what he said to us today, grossly betrayed the principles and convictions which he then expressed.

I think that it might be as wall to place on record now what the right hon. Gentleman did write at that time so that not only the House but the country may know. If I may say so, almost in parenthesis, I am less concerned about political irrelevancies and castigating the Prime Minister or about the changes in the Government than I am about the future of the country. I do not for a moment suppose that this approach is peculiar to myself, nor do I suggest that there is an absence of sincerity or integrity on the other side of the House. What we have to consider is not mere platitudinous utterances, or intentions however eloquently exposed, but—to put it very simply—the facts of the situation and the plight in which the country finds itself.

The right hon. Gentleman has made his Government changes. There is a lesson to be derived from what has happened in this crisis, a lesson particularly for the politically immature on the benches opposite. The right hon. and learned Gentleman the former Chancellor of the Exchequer was dismissed and, in spite of all the promises of the Prime Minister about redundancy, time for consideration and a lapse of time before redundancies are implemented, the right hon. and learned Gentleman was dismissed without even a week's notice.

Sir C. Osborne

Like the Minister of Fuel and Power in the Labour Government.

Mr. Shinwell

The hon. Gentleman is mistaken. He ought to make himself acquainted with the record of the time. However, I am not concerned with the hon. Gentleman I make this suggestion to ambitious back benchers opposite— [Interruption.] Even the hon. Member for Kidderminster (Mr. Nabarro) might take advantage of what I suggest.

Mr. Nabarro

Not likely.

Mr. Shinwell

The hon. Member for Kidderminster (Mr. Nabarro) has an excess of ambition. It is not a crime; it is quite laudable.

Let ambitious back benchers opposite contrive to become junior members of the Government and then contrive to be dismissed, and they will achieve a popularity out of office which they never achieved in office. That is precisely the position of the right hon. and learned Gentleman the ex-Chancellor of the Exchequer. While in office he was condemned and denounced repeatedly by hon. Members opposite. Now he has achieved a popularity in excess of anything accorded to the Prime Minister, who is now about to depart from the scene.

Mr. Nabarro

He has had enough.

Mr. Shinwell

Hon. Members opposite may, if they wish, interrupt me. I am quite capable of dealing with silly interruptions. They will not prevent me from expressing views that ought to be expressed in the House and made known to the people of the country.

What about the Prime Minister's writings?

Sir C. Osborne

He has not gone, you see.

Mr. Shinwell

I ask hon. Members to note this. The Prime Minister then wrote about the inevitable tendencies of capitalism towards collectivist construction, which he applauded. Does the right hon. Gentleman recall that? How does one compare that quite definitive statement, arising no doubt from his convictions, with the sort of piffle and waffle which we have had from him this afternoon? The right hon. Gentleman said more than that. He said: Nothing short of national organisation"— "national organisation" let it be noted— of our import and export transactions will be adequate if we are to hold our position in competition with other countries. The right hon. Gentleman then informed his readers that capitalism will transform itself by normal evolutionary processes and agreed that at the time capitalism was in dire distress.

The Prime Minister

Almost all the things which have then distressed me have now been cured. There are not now three million unemployed. There is not a situation in the world of a competition in deflation. There is not the terrible threat with which we were then faced. We have now all sorts of national plans. In fact, looking through some of my old writings, which I admit were, perhaps, immature, I am surprised how many of these things have come about.

Mr. Shinwell

If that is what the right hon. Gentleman really believes, he misconceives the whole purpose of economic planning. Of course there have been improvements. No one denies that. Is it suggested that any improvement that has developed during the course of the last fifty years is attributable to the present Tory Government or Tory policy?

Mr. Nabarro

Most of it is.

Mr. Shinwell

Not at all.

I now address myself to the Motion of censure, which is completely and absolutely justified. However, I have a reservation about the Motion. I am not quite certain whether it is desirable, or even practicable, to have an early General Election. I am not certain that that is the desire of anybody in the House. It is not the time of year for that sort of thing. But as to the rest, the condemnation of the Prime Minister and of the Government, that is surely justified in the circumstances.

I say this to the Prime Minister. If what he has said about the achievements of the Government in Ms time and of successive Tory Governments in the last ten years is true, how does he account for a rather peculiar phenomenon which has manifested itself in the country, namely, the lack of confidence in the Tory Government as exemplified by the result of recent by-elections? Is there any indication that the Government's policy has been endorsed? Of course not. Certainly not in the country. But let it be understood that while we condemn the Prime Minister and his Government, hon. Members on the back benches opposite who endorsed the ex-Chancellor's pay pause policy and deflation policy are as much to blame as the Government themselves. They cannot escape the liability which they accepted when they applauded the ex-Chancellor at the time when he introduced the original pay pause policy.

Mr. Nabarro

A jolly good policy, too.

Mr. Shinwell

I suggest that there is no particular need for a General Election. I think that if we give the Government enough rope and let them demonstrate the futility of the continuance of the pay pause—[An HON. MEMBER: "They will hang you."]—restraint on investments, on consumer demand and all the other piffling devices and nostrums of Tory policy, they will get what they deserve when the General Election comes.

Sir C. Osborne

That is what the right hon. Gentleman said in 1957, and he was wrong.

Mr. Shinwell

Incidentally, to expose the views of others than myself on this matter of a change in economic policy, I would direct attention to what appeared in the leading article of The Times. No doubt hon. Members opposite will be ready to accept what The Times declared. If not, then I can only assume that their reading matter is confined to the Daily Mirror—not that there is anything wrong with the Daily Mirror, but it is more their standard, perhaps, than is The Times. The Times said: Conservative back-benchers would put it differently."— that is, the suggestion about a return to inflationary policy— They believe that what the nation demands of the Government is a policy of expansion. All these are palliatives. They may temporarily put the temperature of the British economy up or down a little. They do not touch the things that really matter. Even expansion is no panacea, if forced in the wrong sectors and in the wrong way. What they demand, although they use very vague and ambiguous language, is a complete change in the economic purpose contained in the policy of the Government.

These problems of economic decline and the lack of confidence are not confined to this country. Even President Kennedy has discovered that he is not as popular as he once was. In last Sunday's Sunday Times I find the following observations from its Washington correspondent: President Kennedy is faced this weekend not only with new and nagging questions about his own and his party's political future, but by even deeper doubts about the Government's capacity to conduct the public's affairs in these times. So the problems with which we are confronted now, and with which we have been confronted for many years, are not peculiar to this country.

Let us look at the record of the Government. My right hon. Friend the Leader of the Opposition outlined the lack of achievements of the Government in the sphere of education, housing and in many other directions. What has happened? Over the last ten, or even twelve, years of Tory rule we have had 23 changes in the Bank Rate. Axe we to understand that these variations, these fluctuations, indicate stability in our economic policy? During the last twelve years we have had booms alternated by slumps. Is that denied? Does that indicate economic stability? Of course not. That is the kind of situation which satisfies hon. Members opposite, but it does not satisfy hon. Members on this Slide, and, as indicated by by-election results, it does not satisfy the people of this country. All the vague talk that we have had this afternoon about promoting stability in future is just a lot of poppycock, and the Prime Minister knows that quite well.

Mr. Nabarro


Mr. Shinwell

During the last twelve years, 25,000 industrial firms have gone into voluntary or compulsory liquidation —25,000 bankruptcies in this so-called best of all economic societies, the best of all capitalist worlds. A very large number of investors have lost millions of pounds during the last twelve years of Tory rule. These are facts which cannot be denied.

Mr. Nabarro


Mr. Shinwell

I am not bothering with the hon. Gentleman. The Prime Minister refused to yield to me when I ventured to intervene. I am about to tell him what I wished to say to him. I did not mind when he interjected.

I think that it is wise in debate to hear what the other side has to say, and that is why, when the Prime Minister was speaking, I was inclined to remonstrate with some of my colleagues for raising their voices. We must hear what others have to say and we must never underestimate the intelligence of our opponents, although there are some Members opposite whose intelligence we exaggerate—for example, that of the hon. Member for Kidderminster.

I wish to come to the question of future policy. Does anyone really believe that the measures outlined by the Prime Minister this afternoon will cure existing ills? Take the question of a National Incomes Commission. I cannot understand why it is necessary to indulge in this redundancy. The ex-Chancellor of the Exchequer created the National Economic Development Council. I understood the terms of reference of that Council were to consider all aspects of economic policy—planning, production, incomes related to the cost of living, the standard of living, and so on—and to offer advice to the Government. If the ex-Chancellor of the Exchequer repudiates what I say, no doubt he will correct me. Now we are to add to "Neddy" a Commission to do precisely what was included in that Council's terms of reference.

Where did this idea come from? It is by no meals original. It was suggested many years ago. It was considered by the Labour Government. It was considered, as the ex-Chancellor of the Exchequer knows, as the result of a memorandum which I submitted. [HON. MEMBERS: "Oh."] It so happens that the right hon. and learned Gentleman understands. I do not expect other hon. Members opposite to bother very much about matters of this sort, but that is how it happened. What was the purpose behind the suggestion? [HON. MEMBERS: "Tell us."] If hon. Members, listen, I shall tell them. It might illuminate their minds. Goodness knows, that is needed very badly. The purpose was to have a body to relate the cost of living to wages and wages to production and to make recommendations and, if possible, to direct labour and industry. Of course, without the direction of industry there is no case for the direction of labour.

All these suggestions were made at the time. They were unacceptable for reasons which I have never been able to understand. They may be unacceptable now. If they are unacceptable, I venture the opinion that whatever Government happen to be in power refuse to go to the root of the matter. My right hon. Friend the Leader of the Opposition, when he was denouncing the Government, said that a more drastic policy was required. He did not go into detail. Perhaps there was not time for that, or perhaps this was not the occasion on which to do it. But, obviously, all these nostrums and devices employed by Tory Governments for a long time do not go to the root of the matter. Something much more drastic is required.

I will tell the Government what will happen. There will be an economic shot in the arm. There will be a period of relief for the Government, because the people, and certainly hon. Members opposite, will advance the claim that the Government, and particularly new members of the Government, should have the opportunity to deploy their ideas and to engage in activities of advantage to the country. That is common form. But after the shot in the arm has had its effect, what will follow? The Prime Minister spoke about an incomes policy and said that it had to be fair, but the night hon. Gentleman, if he will allow himself to pay attention to what I am about to say, said nothing about ironing out inequalities in wages and salaries under the incomes policy.

It is no use deploying an incomes policy through a Commission on incomes, or in any other fashion, unless we start with an understanding of the basic principles of equality. I do not suggest that overnight or in a few years we can iron out all the inequalities, but as long as glaring and gross inequalities exist in a society in which, according to the Ministry of Labour, 7 million people still have less than £10 a week—[An HON. MEMBER: "Including girls."] Whether it is girls, boys or adults is beside the point.

There is a great deal of insecurity and unemployment in various parts of the country with no prospect of relief for some considerable time to come. That is a problem which has not been tackled. As long as a situation like this exists, what right have others on what is called the salary side to expose their pretensions to higher salaries? There acre far too many people who have too little and too many who have too much, and that situation must be corrected.

Sir C. Osborne

Can the right hon. Gentleman say why the very sensible and profoundly sound suggestions which he put forward, I understand, in 1947, concerning the control of prices, direction of labour and of industry, and so on, ware rejected by the then Socialist Cabinet?

Mr. Shinwell

Because it was thought at the time undesirable to implement them.

Since the hon. Gentleman has asked a question, let me contrast the Labour Government's position with the Tory Government's position over the last twelve years. Let it not be forgotten that when hon. Members opposite came to power in 1945 this country, in the words of the late Lord Waverley, previously Sir John Anderson, Chancellor of the Exchequer in the Coalition Government, said, not in this Chamber but in the Chamber across the way, that this country would be bankrupt at the end of the war. Indeed it was, so much so that it had to resort to an American loan which was spent before we received it.

These were not conditions of our own making. We had a rationing system which had been in operation during the war. I must not disclose Cabinet secrets, but I can say that when cargoes of grain were being exported from Canada and the United States to this country we had frequently to divert them to Burma and India because of threatened and actual famine. Conditions have been different during the last twelve years, yet a success of piffling and pettifogging devices has been employed which failed to go to the root of the matter.

Take what the Prime Minister said about his hopes that both sides of industry would accept the principle of an incomes policy and would work it out to the satisfaction and advantage of all concerned. Why is it that the T.U.C. is reported in the Press as objecting to a wages policy which is imposed and prefers to continue the policy of collective bargaining? We will never have a satisfactory egalitarian incomes policy unless we start by understanding that there cannot be an incomes policy that is static, or one that is related only to occasional changes in the cost of living. There will only be an incomes policy that is satisfactory to the T.U.C—and, in the long run, to the electors, whether Conservative, Labour or Liberal minded—if it is based on a higher standard of living and a better status for the workers.

What is the use of saying that we have an Incomes Commission and the Government accepting the proposals of that Commission that wages should be related to productivity or to the cost of living if those wages remain too low? There must be a complete change in the standard of living that modern conditions justify and the resources of the world can provide.

I am not concerned about all the palaver about resignations or impending resignations. I am not concerned about personalities in the Government. There are, however, things that bewilder me. I cannot understand, for example, why the former Minister of Defence was dismissed. Not so long ago, Field Marshal Montgomery, speaking in another place, ventured the opinion that he was the best Minister of Defence that this country had had for years. As an ex-Minister of Defence, I accept that willingly. I remind myself, however, that the Prime Minister was at one time a Minister of Defence. The former Chancellor of the Exchequer was an ex-Minister of Defence. Why dismiss this man, whom one of our greatest soldiers, one of our military experts, has declared to be the best Minister of Defence that we have had?

Nor do I complain because a number of young Members have been injected into the Government. The more we have the better, although I am far from ready to admit that it is always the young who have young ideas. Sometimes people accuse people like myself of being old-fashioned Socialists. Far from being old-fashioned, I have the most modern conceptions, one of which I offer to the Prime Minister. I make him a gift of it. It is that he should carry out a complete reorganisation of the public school system and iron out its inequalities. I speak as one who had no education at all, or practically none, and who left school before I was 11. That was not my fault. Speaking as one who had vary little education, I want to see every child with aptitude and talent given the opportunity to go to the best scholastic institutions.

I have already remarked on the need for a complete change in working-class status and in the standard of living. Much requires to be done. Therefore, I do not worry about the young men being in or about the old men going out. That does not matter. What matters is policy and not personalities. Change the Government. The more things change, the more they remain the same, to use the English equivalent of a French proverb.

I challenge hon. Members opposite, particularly back benchers. It is they who have the power to force the Government in the right direction. Let them try to understand the needs of the economy—

Mr. Nabarro

That is what we are doing.

Mr. Shinwell

—and the basis of our economic policy.

Mr. Nabarro

Give us the chance to do it.

Mr. Shinwell

Back bench Members opposite are not doing anything of the sort. They are just fooling around with a lot of silly nonsense.

Mr. Nabarro

On a point of order. Has the Chair any control over garrulous back bench Privy Councillors?

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

So long as the Privy Councillors keep in order, there is no need to control them.

Mr. Nabarro

Further to that point of order—

Mr. Deputy-Speaker

Order. There is no further point.

Mr. Nabarro

This is a new point of order. [HON. MEMBERS: "Sit down."] Have you observed, Mr. Deputy-Speaker, that the right hon. Member for Easing-ton (Mr. Shinwell) has already occupied 36 minutes—

Mr. Deputy-Speaker

Order, The hon. Member for Kidderminster (Mr. Nabarro) knows well that the Chair has no control over the length of speeches.

Mr. Shinwell

I do not mind hon. Members having a little fun and games, but it so happens that I am serious about these matters. I do not want fun and games any longer. I have a social purpose and I want to see it implemented.

Although I am no astrologer, I will forecast future events. There will be an economic shot in the arm. We will resort to modest inflation, and for a while it may cover up the cracks. Then, we shall face another slump. That is as sure as the noon-day sun, because the goods that we produce may become unsaleable, either because of competition, the price level, or whatever reason it may be. Then we may cut off the head of another Minister, or even the Prime Minister, or we may, as an alternative, as seems likely, rely on hopes which spring from association with the European Economic Community. I have ventured before to express the opinion that this is an escape from reality—that is all—from facts that confront everybody who thinks about these problems. And so we shall fail and fail again.

I want, in a sentence or so, to offer a word of advice to my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), who will wind up the debate from this side of the House. I beg him not to accept these nostrums, not to accept this miserable social reform. I beg him to demand from the Government—and to tell the country—that a thorough-going reorganisation of our economic policy is essential.

5.57 p.m.

Mr. John Biffen (Oswestry)

The House jealously accords a maiden speaker a great deal of tolerance and I trust that I shall not strain it when addressing myself to what is so obviously a controversial subject. I should probably begin, as my constituents would wish, essentially non-controversial, with a tribute to my predecessor, Sir David Ormsby-Gore. Whatever opinions and divisions we may have in this House, there will, I think, be general agreement that our relations with the United States are of the utmost importance and all would unite in sending him their best wishes for the work he is doing there.

This debate has naturally turned on economic matters, to which for a short while I should like to address myself. Perhaps the right hon. Member for Easington (Mr. Shinwell) will bear with me if I do not follow some of the rather interesting points which he elaborated in his speech. I should, first, like to record that I count it a privilege during my eight months in the House to have supported the economic policies of my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd). To my mind, those policies were carried out courageously and with tenacity. I suspect that in some ways almost a guilt complex swept over the nation with the considerable sympathy that was accorded to my right hon. and learned Friend a few days ago.

In saying that I would add my best wishes—if it is not arrogant to offer my best wishes to the new Chancellor of the Exchequer. I believe it is an appointment which will be widely welcomed in industry. I think that in this sense it is a change which could have welcome effects, because one of the difficulties of our present situation is undoubtedly a serious lack of business confidence, and while I welcome the news that the policies enunciated last July are in their essence to be continued, I hope that we may see a return to business confidence, which I believe is necessary to stimulate the economy and improve our situation. I am sure the Government have been conscious of the importance of business confidence, and they certainly have benefited from the experience of the Kennedy régime in the United States of America where I think the unfortunate clash between the business community and the Administration has had very real lessons for Governments throughout the West.

I now return to the support which I offered to my right hon. and learned Friend the Member for Wirral as the previous Chancellor. I believe that very few Chancellors in post-war Governments have found many friends when they have been fighting inflation. I think that industry has found inflation a fairly cosy aid to profits, and the trade unions—and heaven knows, one cannot expect otherwise from their leaders—through inflation have been able to get good rewards. I do not blame them. It is the job of their leaders to do their best for their union members and to get all the rewards they can.

However, I do not think that the public arbitration system has been of any particular assistance in the situation in which the Government have been operating. There is a curious predisposition on the part of the public to regard arbitration as some kind of sacred cow which must not be tampered with. I do not share that opinion, and I am confirmed in this view by some recent remarks of Mr. Henry Smith, the Vice-Principal of Ruskin College, who in a Hobart Paper, "The Wage Fixers", says: The task of arbitrators is to ensure as far as possible that a similar wage is paid for identical work. If this tends to increase inflationary pressure, the prevention of inflation is the responsibilty of government. I must say that I thought this a very fair expression of view about arbitration, and I noticed from the remarks of the Prime Minister that public opinion will be relied upon in the new policies. Undoubtedly the sanction of public opinion is very important, but to my mind it can never be a substitute for Government action and Government policy and Government resolve.

I was interested to see the speculation in the newspapers, notably in the Financial Times, which suggested that younger Members of Parliament differ from their elders in being more reflationary. If I may quote the Financial Times—in reading which, I notice, I am in very distinguished company—I would quote from the issue of 19th July, which says: To some extent the division between the two views runs along the lines of age. Broadly it is the older members who are the sternest supporters of"— my right hon. and learned Friend's— policies in the belief that they are essential for sterling. But younger M.P.s take a distinctly more expansionist line. It has been said that only a few, such as my right hon. Friend the Member for Flint, West (Mr. Birch), are serious opponents of inflation.

I think that is absolute nonsense. If there is one thing which unites these benches it is the determination that we have to counter the inflationary pressures. It is not a question of being hardhearted economists but of being concerned with social problems, for just as before the war unemployment was the great social scandal so today it is the inflation which we have had in the last decade and a half which has created no less a social problem than unemployment did in the interwar years. Before the war one could point to Jarrow and South Wales and say that that was something shocking and disgraceful which ought to command the attention of the Government, but in the post-war years, because of the spread of inflation ail over the country, the public conscience has been dulled on this issue, so that no Government in tackling this issue has had that support from public opinion which they might have expected. Some of us would take the view that the approach to the post-war problems has far too often been dominated by concern with pre-war conditions.

I turn now to the remarks of the right hon. Member for Easington (Mr. Shin-well), who chided the Prime Minister for still not holding the same views that he held thirty years ago. I think it would be absolutely disastrous if our economic policies were dominated by the kind of thinking provoked by mass unemployment in the inter-war years. I hope I do not sound pedantic or like a lecturer, but I would say that the present concern with the fashion of growth has been a thoroughly bad thing. I certainly found highly entertaining the remarks by Colin Clark about growth-manship, in his Hobart paper. To my mind, of the various forms of fixed investment normally associated with growth appears too indiscriminate an approach to our problems. Certainly the best kind of investment for long-term growth is education In that connection, I thoroughly welcome the new team at the Ministry of Education.

May I just very briefly return to the policies enunciated last July. They were referred to by the Leader of the Opposition as being some sort of colossal failure. I hope I am not being too controversial, but I must say that I really do part company from that point of view. After all, the right hon. Gentleman elaborated a number of factors which he believed showed the disastrous failure of the policies of my right hon. and learned Friend the Member for Wirral, but he did not mention the recent rise in exports which have risen for five consecutive months. I would have thought that rising exports, while I willingly concede that they reflect the growing buoyancy in world trade, also reflect an increasing cost-consciousness in British industry, and I believe that the measures taken by my right hon. and learned Friend and the Government last July have been beneficial. This was conceded by the Leader of the Opposition when he admitted our imports had fallen and the balance of payments had improved. But for the measures taken last July the pressure on sterling would have been completely uncontrollable and any consequential devaluation would have been disastrous to the Commonwealth at the crucial time of the Brussels negotiations However, the Leader of the Opposition only made a passing reference to the Brussels negotiations. The Leader of the Opposition claimed that our imports were now rising.

It seems to me an extraordinary exaggerated claim. In the second quarter of this year imports were at a monthly rate of £369 million compared with a monthly rate of £367 million in the first quarter. This is an increase, but it is only just the barest perceptible increase. I also think that the right hon. Gentleman dismissed rather casually that the index of industrial production was showing an upward trend. I believe that there is already a healthier attitude towards costs, and I believe that by far the most eloquent commentary on the work done by the Government and by my right hon. and learned Friend the Member for Wirral is contained in remarks by Mr. E. Russell Eggers of the Chase Manhattan Bank, who said recently: British industry is a lot more competitive than a lot of people think just now. He said that the competitiveness of our industry will be one of the delightful surprises if Britain joins the Common Market. This kind of remark makes up for many of the taunts we have so often heard on this subject.

Naturally as a Tory—I hope, a reasonably progressive one—I tend to favour expansion. I think the timing must still largely be dependant on the American situation. I think the present view of industry, to which I referred earlier, and the definite lack of confidence, must be taken into account although I believe that part of that lack of confidence is due to industry now operating in a much healthier climate where inflationary costs cannot just be handed on. Naturally this has provoked a reaction. Nonetheless, if we are to give the country a general stimulus, I think that there is a need for something more than action on consumer spending, and I hope that something will be done about industrial costs. I have in mind a reduction of fuel costs. To my mind, in this present situation, an obvious factor is the buoyancy of Government expenditure. I believe that it has a natural, and, as some would say, a depressing tendency to rise, and I think it certainly will rise.

In this context, perhaps I could make a special constituency plea. I have not referred to my constituency—the Oswestry division—previously, but, while it is largely agricultural, it has in the town of Oswestry railway workshops, and the railways loom very large in the economy of my constituency. To my mind, if we are to face the problems of the 'sixties, we should not merely accept but actually desire changes in the railways system which will release a large amount of valuable labour for employment in growth sectors of British industry. The same is probably true of the coal mines, though I will not be so provocative as to follow that line of argument.

May I suggest that the Government should accept the chance that is presented to them by the new railway structure as a chance to give an imaginative lead in redundancy schemes? In the Economist last week, it was tentatively suggested that Dr. Beeching's proposals in regard to redundancy would cost between £15 million and £20 million, and, on the other hand, there were the tentative proposals put forward by the Secretary-General of the National Union of Railwaymen, which would cost something between £60 million and £80 million.

It would be quite improper for me to go into detail now about that, but it seems to me that the changes in our railway structure should come, and should come soon, and that, therefore, this additional cash in the form of redundancy payments should be one factor which I hope the Chancellor of the Exchequer will bear in mind when determining the level of buoyancy in public expenditure. I believe that whatever terms are accepted should, at least, be equal to the best provided by private industry. I think we owe it to the railwaymen, who, I believe, have been a woefully underpaid body of men in the decades since the war.

I hardly know whether the ordeal of making a maiden speech is greater than the ordeal of fighting a by-election. I was described as indistinguishable from the Labour candidate by the Sunday Express, but worse was to follow, because the Guardian referred to me as "an impeccable Liberal". It was meant as a compliment, though I could not accept it as such because, to my mind, there is in all parties of the Left an element of escapism, though I would not presume to follow that line of argument.

There are two main challenges for the Government. One is the successful pursuit of an incomes policy which will restore public and foreign confidence in sterling, and I believe that confidence in sterling to be the prime concern of good Government. The second I believe to be an approach to the new Europe in a spirit of enterprise rather than of pessimism. It was quite extraordinary to find that a speech from the Leader of the Opposition which was designed to indicate to the nation that we should have a General Election in order to replace this Government did not contain anything other than a passing and quite irrelevant reference to the problems which my right hon. Friend the Lord Privy Seal is facing in Brussels. Is it suggested that anyone can make a case for changing the Government without any reference to the negotiations now going on? Is it seriously thought on the Opposition Front Bench that there is anyone there who can be classed as half equal to the Lord Privy Seal?

I realise that I have been a little controversial, and I apologise. It is probably just as well that at this juncture I should conclude my speech. For me, it is the Government who have accepted the challenge that confronts us in the 'sixties, and it is the detractors of the Government on all sides who shrink from the opportunities and realities of the situation.

6.15 p.m.

Mr. J Grimond (Orkney and Shetland)

It is my very pleasant duty, on behalf of the House, to extend our congratulations to the hon. Member for Oswestry (Mr. Biffen). We very much enjoyed his maiden speech. If, as he himself suggested, it was controversial in part, it was ambidextrous, so to speak, in that I discovered some rather oblique shafts at his own Government, as well as at the Opposition.

I sympathise with the hon. Member when he expresses his regret at the departure of his right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), and we share the good wishes which he extended to his predecessor. I only wish that, when he said that the Government are determined to stop inflation, their determination could be said to have met with better success.

We have at last heard the much-heralded speech from the Prime Minister. It was the speech of an exhausted man. What did he have to say? He told us in all seriousness that we must think about apprenticeships and about contracts of service—after eleven years of Tory government. People have been thinking about these things for the last fifteen or twenty years, and what is needed is some action. The Government did not come into power yesterday; they were elected eleven years ago.

The right hon. Gentleman also told us that we are to have another Commission. We have had enough Commissions. We had the "Three Wise Men" to tell us what wages ought to be. We have waited for the Government to make some of the decisions which lay on them about the state of our economy and the amount of growth we expect, and to right the situation in which 2 per cent. of the total adult population own 46 per cent. of the personal wealth. It will be impossible for the Government to get a wages policy until the Government themselves govern, and make this society fairer than it is.

Why, in any case, is this being done now? We are told by the Prime Minister that this is because we have a sound basis for the economy. We all know quite well what the real reason is. It has been spelled out across the country from Orpington to Leicester. Another difficulty of the Government is getting the trade unions or anyone else to accept their policy. It is well-known that it is not that the Government have been converted to economic sense, but that they are terrified of their electoral prospects. On top of this this policy is instituted when they have done the maximum damage to good relations by the insanities of last year.

We are asked to consider a Motion of censure, but no Motion of censure which the House can pass can be nearly as devastating as the vote of censure passed by the Prime Minister on his own Government. Whatever else may be said about the sacking of one-third of the Cabinet, it is a devastating vote of no confidence. We are told that the Prime Minister must be a good butcher, but good butchers kill the right animals at the right time and in the right way. They do not conduct an all-round slaughter in a state of panic.

Let us look at what has happened. The Prime Minister now tells us that suddenly he found that the basis of the economy was sound and that this was the reason why he decided that his colleagues who had made it so sound must go. It was a sudden flash of lighting which came to him, "The economy is sound. Sack the Chancellor of the Exchequer." If the Prime Minister disagreed with the Chancellor of the Exchequer, the time to say so was last autumn or last winter. But the Prime Minister said nothing of the sort; he supported the pay pause and the rest of the Chancellor's plans.

We are told that another reason why this had to be done in this extraordinary way arose from the doctrine of Cabinet responsibility. This puts a new gloss on that doctrine. Apparently "the responsibility of the Cabinet" means that when one has made up one's mind to sack one's fellows one goes on having Cabinet meetings and discussing the business of the day as though nothing was wrong. Alas, regardless of their doom The little victims play Nor sense have they of ills to come, Nor care beyond today. They were all meeting on the Thursday before they were all sacked. Had they fears? they were all preparing to go out to their public meetings; and what were they going to say? They were going to praise the Prime Minister, the Chancellor of the Exchequer and the Minister of Defence, and, indeed, play a little on that popular theme in the Tory Party now—that of loyalty. I understand that the Tory Party has been drawn together again on the theme of loyalty. I wonder when the Prime Minister really made up his mind for this slaughter. Is this really the conduct of a good butcher? It is not the conduct of a butcher at all; it is the conduct of the Borgias, on one of their more unsavoury evenings.

We are told now that the way it is done does not matter; we are told that what matters is what happens in the future and that the method does not matter. But it matters very much. It matters very much indeed how affairs are carried on at the head of this nation. The slaughter of last Friday week has confirmed the view of many people who thought that politics was a cynical profession and that it was concerned largely with keeping one's own head and taking off others. The Government have done immense damage not only to the Tory Party, but to politics in the country. On top of this, after an exhibition which would have been thought a bit extreme in a thieves' kitchen, we got several Companionships of Honour handed out.

What is the position now? We have been assured that the policies of the Government will not be changed. This has been met throughout the country with well-merited derision. As Mr. Christopher Hollis wrote in Punch: Prime Ministers are like deterrents. If they are to be effective they must be credible. The Prime Minister has become incredible, and we have become incredulous. Everybody knows that in due course the Government will change their tune and that we shall have a little reflation—not for the good of the country, but for the good of the family fortunes of the Tory Party.

But it is less than a month since we had the Third Reading of the Finance Bill in this Chamber, and the Government then pledged themselves to the policy of the right hon. and learned Gentleman the Chancellor of the Exchequer. The present Minister of Education went out of his way to defend that policy. He said: It is untrue that the Budget was too deflationary. He also said: My right hon. and learned Friend based his Budget not just on a view over the first few months, but over the year ahead, and I do not believe that there is any reason to make significantly different assessments of our prospects because of what has happened during the last two or three months. Did the Prime Minister know that this was being said? Did the approve of it? Did he make any protest about its being said?: I see no reason at all to go back on the forecast which my right hon. and learned Friend gave in his Budget for consumer spending over the financial year."—[OFFICIAL REPORT, 6th July, 1962; Vol. 662, c. 898–9.] Then we have had hints of a new defence policy. It is true that the Minister of Defence, at the time of his resignation as Chancellor, said that we could not have a British nuclear bomb and the Welfare State at the same time, but in a recent broadcast on television he said that if we dismantle the deterrent—meaning the British nuclear deterrent—we must have conscription. He is clearly implying Chat the alternative to conscription is to keep our nuclear weapons to make up for our lack of men. We could not have a more dangerous policy, and we could not have one more inconsistent with what the right hon. Gentleman said previously.

Most of the new team are the old cards reshuffled. These are the people who have been supporting the old policies now said to be wrong, supporting them up and down the country and in this House. But there are one or two new faces, and two of them, in particular, were prominent in criticising the Commonwealth Immigrants Bill. Have they received a pledge that the Act is to be repealed?

Sir C. Osborne

I hope not.

Mr. Grimond

I am sure that the hon. Gentleman hopes not, but I should like to know whether members of the Government hope that it will be. I know only too well what the hon. Gentleman the Member for Louth (Sir C. Osborne) thinks.

Mr. Nabarro

Would the right hon. Gentleman repeal it?

Mr. Grimond

I would repeal it, certainly. Of course I would.

I now turn to the mystery of the appointment of the First Secretary. In this interesting reshuffle, the former Home Secretary has been promoted and made First Secretary and Deputy Prime Minister. At the same time his direct deputy, the Minister of State, Home Office, has been sacked. He was a man who did a lot of work, and not very pleasant work. He was a man who spoke very intelligently, and in that was somewhat of a contrast to his superior, and we often had to look to the hon. and learned Gentleman to tell us what was really intended. But he is out.

We must suppose that the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler) fought like a tiger against this. He cannot possibly have acquiesced in the sacking of his Minister of State while he himself was promoted. I take it that there must be very cogent reasons for this, and that we shall hear something about them in the debate. It is hard to believe that all this is going through without that being done.

It is not a question, candidly, of the Government recovering the confidence of the country, because they will not do it. It is a question of rescuing the politics of the country from the way in which the Government have been managing its affairs during the last few years. The most regrettable casualty of the last three weeks has been public confidence in the processes of the government, public confidence in the decency of politicians, and public confidence in any belief that any party has any principle except the principle of sticking to office through thick and thin.

I will tell the House why the Government have lost so much confidence in the country. It is not because of the pay pause. It is because they have never told the country the truth. They have tried to avoid every decision. They came out of Suez with a determination to keep the Conservative Party in office by sweeping every ugly matter under the carpet and hiding every awkward discussion from the public.

Take the Common Market. At the last General Election the Tories want to Liberal constituencies in the West Country and said, "The Liberals are in favour of going into the Common Market. This will be the ruin of British agriculture." Do they believe that now? What are they tailing the country now about the political implications of the Common Market? Not a word. We do not know what the Government's view on this is. They have deliberately played down the political implications of the Common Market. Have they told the country that our forces in Germany are under-armed and under-strength? Have they told the country that our so-called independent nuclear deterrent cannot be used by us alone? Have they ever tried to lead the country to an understanding of its true economic position until after being defeated in a series of by-elections?

All this talk about an incomes policy, about the new Commission, about contracts of service and about redundancy anises now—eleven years after their first electoral victory. Have the Government been talking to the unions about it? Yes, they started at twelve o'clock this morning. Even Lord Avon, like the ghost of the late King in "Hamlet", arises on the battlements to remind them of where this all started. It started at Suez. The Government have now come to the end of the road, and no number of gimmicks will get them out of their difficulties. The people have had enough Tory pigs in a poke for a decade—and, indeed, enough "cats in the bag".

The Conservative Government have lost the confidence of the country. They are in grave danger of losing the confidence of the people in the whole political system as well as the confidence of the country. They should get out and allow the country to make up its mind once again.

6.30 p.m.

Mr. Robert Carr (Mitcham)

We have now received on this side of the House the two barrels of the censure Motion. There were, perhaps, two notable things in common about the speeches of the right hon. Gentleman the Leader of the Opposition and the right hon. Gentleman the Leader of the Liberal Party. First, there was an evident contempt for the British electorate. We are told that the Conservative Government have failed to tell the people the truth, have bribed them before every election. Since we have won three elections running, one can only presume that the electorate is supposed to be so foolish, so easily taken in, that it falls for these bribes and untruths. I simply do not believe it. I suspect that until both parties opposite learn to trust the people a little more themselves, they will remain on that side of the House.

The right hon. Member for Orkney and Shetland (Mr. Grimond) talked about the need for a fair society. Why do we not have a fair society today?

Mr. Jeremy Thorpe (Devon, North)

Because of eleven years of Toryism.

Mr. Carr

It was because, a century ago, the political predecessors of the right hon. Member for Orkney and Shetland were in power. Who were the supporters of the ultra-doctrine of laissez faire, or the supporters of the ultra doctrine of free trade, which brought unemployment, if not the Liberal Party of long ago? Who are the Liberals to talk about a fair society? Clever men in politics are usually proved by history to have been wrong.

The right hon. Gentleman the Leader of the Opposition pleased himself. I doubt, however, whether he will have pleased the electorate, because I doubt whether that electorate at this time wants to hear purely party boxing. I suspect, on the contrary, that it would like to hear, as it did from my right hon. Friend the Prime Minister, some ideas about how we should now conduct our affairs. The electors are perfectly able, when the time comes, to make up their own minds about whether the policies put before them are right or wrong. They are perfectly able to make up their own minds about the rights and wrongs of the conduct of affairs since the previous election.

Of course, all has not been right in the conduct of those affairs. I do not support every action taken by the Conservative Government since the last election, but I do support the main lines of their policy. I do at least know that we have a further policy to put before the country, but, having listened to the Leader of the Opposition and the Leader of the Liberal Party, the electors can have no idea of the alternatives the two claimants for their favours would put into operation.

During the next few years, the country has to face some of the most critical challenges and changes to befall it in peace time. First and foremost there is the question of the development of European unity. Whether we are able to join the Common Market, as I hope, and as the Government hope, or whether we eventually cannot achieve satisfactory terms and stay out, as some of my right hon. and hon. Friends and others in the country would like, the development of European unity confronts us with a situation totally different from anything either in politics or economics that we have had to face before.

Similarly, the development over the years of our policy of bringing independence to the Commonwealth and other political events—including the rise in power in the last two decades of Russia and the United States—mean that if we are to maintain the Commonwealth as a force, and not just as a name in world affairs, we have to develop a far more vigorous and far-sighted Commonwealth policy than we have ever had before.

That, also, is true whether we are in or out of a European union. I am convinced that to join a European Union would be a pro-Commonwealth policy, and not anti-Commonwealth, because I happen to believe that it is perhaps the only way in which, both politically and economically, this country can retain the influence and status without which, as head of the Commonwealth, it cannot maintain the Commonwealth as a live and virile institution.

However all this turns out, a very big challenge faces us abroad in the next few years, while at home we shall be faced with the task of bringing us level socially with the great developments of material prosperity which have taken place since the war. The obvious examples are the need for a new sweep forward in housing and education policies and performance.

In world affairs generally, many people are concerned about the size of British influence, about the purity of British sovereignty. Personally, I am more concerned about the effectiveness of British influence. Britain no longer has on its own decisive power or wealth, and we can now only exercise great influence in the world when we try to do it in combination with other independent countries both within and without the Commonwealth. But the extent of this influence depends, more than anything else, on our being successful and effective in running our economy and in building up our trade and investment throughout the world.

For all these reasons—Commonwealth affairs, European affairs, world affairs and the social ideals to be fulfilled at home—we need an economy which is both expanding and stable. Hitherto, we have had either one or the other. Only for very short periods have we had both expansion and stability.

Here I want to say how much I agree with my hon. Friend the Member for Oswestry (Mr. Biffen), who made such an excellent maiden speech and will clearly be a worthy successor to his distinguished predecessor, Sir David Ormsby-Gore. I agree with my hon. Friend when he says that stability is what matters most. I want growth, as he does, but if we can only have one or the other, then I am sure that stability is the more important of the two. But it is both that we want and it is both that we have so far failed to get. We must ask ourselves how we are to do better in the future.

There are many aspects of a policy which are designed to encourage expansion and stability. I can only deal with one or two of them, and, in particular, I want to deal with one which has attracted most attention in the last year —the problem of incomes, all sorts of incomes. The need for a national incomes policy is clearly vital, and in fairness it must be seen to embrace all forms of personal income. If it is to be successful, it must meet two needs. First, it must meet the need of confining the total increase of salaries and incomes of all kinds within the increase in national production. That is the overall and vital need. But it must also possess flexibility and fairness so that, within the total permissible increase, there can be changes in differentials between one section of income earners and another and with allowances for fairness, and, therefore, adequate reward, for those sections of our people who are in service industries and occupations whose incomes cannot be tied to actual production.

It is natural to look at the machinery by which our incomes are settled, and this afternoon the Prime Minister has announced a very important new piece of machinery. I should like to welcome the National Incomes Commission. Along with everybody else inside and outside the House, I think that we need to know more about its terms of reference, its composition and how the Government intend to make use of it before we can form our final judgments. There may be some who think that it is a weak suggestion and that we need something more vital, but I do not see how, in a free society, we could have that.

It seems to be a worth-while attempt to try to bring the actions of employers, both public and private, and the trade unions and others who seek wage increases, their motives, their claims and counterclaims, to the bar of public opinion. Such a piece of machinery has been sadly needed in this country for a long time and I hope that no section of the community, employers or trade unionists, will dare to flout public opinion and refuse to co-operate in the use of this machinery. [HON. MEMBERS: "The unions do not like it."] We will see. I believe that the trade union movement is highly responsible. If this machinery is used, as I am sure that it will be, as a means for bringing claims clearly and completely to the bar of public opinion, the trade union movement will not object to it, and it will not find that it has anything to lose by doing so.

While I welcome this, I am sure that more is needed. The time has come when we ought to take a new look at the wage negotiating machinery of both the public and private sectors. The Whitley Councils and Burnham Committees, to take the public sector, are long-established and hallowed institutions, and a wonderful job they have done ahead of similar institutions in almost every other country. But they were set up a very long time ago when the conditions and the scope of the public service were entirely different.

Similarly in industry; the structure of the negotiating machinery in private industry—and nationalised industry for that matter—the methods of negotiation and arbitration were all developed at a time when conditions were totally different from what they are today. When they were developed, the dominant fact was unemployment and a vast excess of labour compared with the jobs available. Today, the dominant fact is full employment and a critical shortage of labour in most industrial areas. I cannot believe that the same machinery which was needed in one set of conditions is best for the second.

We last had fundamental inquiries into industrial negotiating machinery a long time ago. The Whitley Committee was nearly fifty years ago and the Mond Turner talks were more than thirty years ago. Surely the time has now come for a new inquiry to see whether our traditional methods can be improved to meet modern conditions, in the interests not least of those whose incomes are settled by free collective bargaining.

I have pressed in the House many times for such an inquiry, and I remind the Government that they themselves spoke about it about four years ago. I recall that when the present Leader of the House was Minister of Labour, in February, 1958, he opened a debate on industrial reflations and referred to this need and to the fact that previous inquiries into our systems had been long ago and had taken place in conditions which were fundamentally different.

As I know that this proposal will meet with suspicion from trade union quarters, I should like to stress that in my view —and I am sure in the view of my right hon. Friend when he mentioned it four years ago—an inquiry is as much needed into the structure of the organisation and methods of employers, both public and private, as of the trade unions. The inquiry I have in mind would mot mean any trade union witch-hunting body. It would be a genuine inquiry to see whether we could improve and build on our existing methods to meet the conditions of full employment in a free society.

But no improvements of machinery can solve all our problems. The whole pressure of Government policy must also be working in the right direction, and closely related to the question of incomes policy is the shortage of labour. Here, again, I strongly agree with what was said by my horn. Friend the Member for Oswestry. The shortage of labour in our main industrial areas has been the chief cause of our having to give up each burst of expansion which we have attempted since the war. It is the chief cause of inflationary increases in earnings.

We are far too concerned with national negotiations about wage rates. The real inflationary element in our economy in industrial areas occurs in those areas where there is an acute shortage of labour and where earnings go up without relation to nationally negotiated wage rates. How else can one explain the level of earnings in certain areas in the Midlands and London and the South-East compared with the rest of the country? If we could persuade the trade unions to hold back every single claim for increases in wage rates, and if there were still conditions of acute shortages of labour in the main industrial areas, we would still get inflationary increases in those areas as employers, desperate for labour, bid up the prices, bribing labour up and down the road from one works to another.

A prime object of Government policy —and I hope that my right hon. Friend the new Chancellor of the Exchequer will give close attention to this over the year—must be to encourage the maxi-mum use of the labour available to us. Without going into details, I suggest Chat he must try to reconstruct our taxation system—and this is quite different from the total burden of taxation—to encourage capital intensive industries and discourage extravagant use of labour.

I hope that various Ministers will actively pursue a location of industry policy. I do not believe some of the theoretical economists who point to the paper inefficiency of industry going to outlying parts of the country. Of course, there are cases where that is true. A heavy industry could not consider putting a great steel works at John O' Groats, but when I was Parliamentary Secretary to the Ministry of Labour I went near to John O' Groats and saw remarkably thriving and efficient industries, thriving in their narrow ambits, in spite of distances from their main markets, because of the efficiencies which they got, for example, from an ample and stable labour force.

Similarly, I hope that the Government will not be mean in the funds they employ for helping labour to move to where jobs exist. However vigorously we try to encourage industry to go to the areas where there is unemployment, the main need will still be to get labour to move to where many jobs are already waiting. I suggest to my right hon. Friends that in future, when they disperse public funds on industry, they will do more good to the country and to the people if they give generous assistance for redeployment and retraining rather than provide sums of money to prop up industries which are declining, and which if we are truthful, we all know must continue to decline.

I beg them to look at the problems facing the coal and railway industries, to take two examples, and to make sure that there are generous facilities for redeployment and retraining, because money spent there wall bring results not only in terms of human aid but also in efficiency to the economy as a whole, whereas money spent on keeping open inefficient services—inefficient for whatever reason—will be money wasted. To spend money in redeployment and in helping people over the great human difficulties of redeployment will not only give them more help in the long run, but provide far more help to the economy as a whole.

Mr. William Ross (Kilmarnock)

The hon. Gentleman is making an excellent speech, but will he consider the position in Scotland and say what redeployment and retraining will mean there? We still do not have the industries to take the retrained men. Is this the Tory solution—to move Scottish labour to England?

Mr. Carr

I must not fall into a debate about Scotland, but I thought I had made it clear that I wanted the Government to pursue a vigorous policy to bring industties to the areas where there were people, as well as to help people to move to areas where industry was available. I believe that both policies have to be carried out if we wish to help constituents both here and in Scotland. Hon. Gentleman opposite will do their constituents no good if they resist both processes being applied.

Mr. Ross

Is the hon. Gentleman aware that we are losing people at the rate of 25,000 a year?

Mr. Carr

That is why I am asking the Government to continue to be as vigorous as possible in their location of industry policy, but both forms of help will be needed. The overall shortage of labour affects most of our industries, but the shortage of skilled labour is particularly acute. I had the honour to be chairman of a committee which is always referred to by my name, although as chairman I did little of the work. It was the committee which considered apprenticeships in this country and reported a few years ago. I therefore particularly welcome the signs given by my right hon. Friend the Prime Minister today when he said that a new drive was to be made to increase the amount of training of young workers, and also the training of adult workers.

My committee basically supported the traditional system of apprenticeships in this country. I believe that it was right to do so at the time, and I would not go back on tit now, even looking at it with the wisdom of hindsight. But, equally, I am sure that encouragement of the existing system will not be enough on its own, and I would, therefore, be the first to welcome any new step to bring other methods into play to train more people to meet this critical shortage of workers of all kinds.

Last, but perhaps most important, I come to the status of the worker, to which my right hon. Friend referred. At last—and I must admit that I agree with the criticism of the Leader of the Liberal Party—we are to have something done about a workers' charter, and I cannot forbear from reminding my right hon. Friend the Chancellor of the Exchequer that the Conservative Party Conference at Brighton, in 1947, adopted the Motion which he proposed and which I had the honour of seconding. We have had to wait a long time to see our intentions brought into action, not just because of apathy on this side— although I would not make us blameless —but largely because of opposition within industry from both employers and trade unions. I am glad to think that at last this opposition may be overcome, or if not overcome, in this case overridden.

In conclusion, I hope that the Government will also do their best to encourage industry not only to give the security that will come from a contract of service and that kind of thing, but to give more information to those who work in it about the affairs of their industries and companies. I do not believe that we can expect the best from people in industry unless they know what is going on, and why. It is a matter of right that shareholders in a company are told what is happening. It is also a matter of law that they should be told about the affairs of their company. In my view it is equally a matter of right that those who work in a company shall be told what is going on, and the results of their activities. I think that it is at least open to question whether it ought not also to be a matter of law.

In a free society the Government have severe limitations. There are no magic buttons to press. The main task is to make sure that every aspect of Government policy presses in the same direction. We must try to appeal to the nation as a whole. There is a dangerous tendency to think too much of sectional interests and to divide the nation into categories—trade unions, employers, farmers, housewives, pensioners, and so on—as though we were a lot of different species of plants each requiring our own specialised fertiliser or weed killer. In the end we are all first and foremost citizens of one nation whose individual interests must stand or fall together, and if the Government approach the people in that spirit, as I think my right hon. Friend was doing today, then I do not much mind who wins elections because I know that this country will flourish.

6.57 p.m.

Mr. Desmond Donnelly (Pembroke)

The hon. Member for Mitcham (Mr. R. Carr) made an eloquent appeal for an approach to a one-nation policy. This is an extraordinary appeal at this juncture in our political affairs. The hon. Gentleman was replying to a Motion of censure which has been tabled in the most extraordinary political circumstances of modern times. He is asking the House of Commons and the country to condone a state of affairs which, as my right hon. Friend the Leader of the Opposition pointed out, is without parallel. He is asking us to condone the present state of affairs and to retire for the Summer Recess with one-third of the Government having been dismissed. In parenthesis, may I say that I am delighted that not all the retiring Ministers are proposing to deliver resignation speeches, because if they did they would seriously curtail the Summer Recess.

The hon. Gentleman is asking us to close our ranks as a nation when a large number of junior Ministers, many of whom were unknown to me and, I am sure, unknown to the country, have suddenly gone. He is asking us to turn our eyes away from a most extraordinary constitutional situation in which a Chancellor of the Exchequer who has introduced two Budgets has for two long years conducted an economic policy apparently without the knowledge of the Cabinet or without the concurrence of the Prime Minister. He was the most remarkable Chancellor in our history, and I warmly congratulate him. The hon. Gentleman is asking us to turn our eyes away from all this and to carry on in the next year as we have done in the last five.

I listened carefully to the Prime Minister this afternoon. The first part of his speech was a recital of how well the country had been doing. We had a catalogue of improvements in housing, education and so on, which was all very superficial. It struck me as a third-rate by-election speech made by a second-rate candidate. He went on to produce this mangy cat out of a bag. Any hon. Member with any sense of objectivity or any grasp of modern affairs will realise that the record of the last five years has been a record of the industrial decline of this country as compared with others. Any hon. Member, from either side of the House, who challenges that statement should question his own premises. Stage by stage and bit by bit each section of our industry has been declining in comparison with our competitors in other industrial countries.

I give an example. My hon. Friend the Member for Edmonton (Mr. Albu) recently pointed out that we have now reached a situation in which the shipbuilding industry—which was one of our leading industries—is now employing less than 100 university graduates. In another five years with this present policy it is possible that we shall have no shipbuilding industry at all.

This is the sort of thing that has been happening, and this is the sort of thing which hon. Members opposite are asking us to condone today. We are not discussing merely the fate of the Government or of the Prime Minister; we are discussing the central problem—which we will go on doing for a long time, because this is the beginning of the great debate—of the way in which this country can so order its affairs that it will remain a leading industrial nation into the 21st century. This debate goes far beyond any question of party politics or of individual retention of power.

What are the essential requirements for revitalising our economy? First, we must have capital. This is a necessity, not a term of abuse. Any Government in any country must have capital. It is the knowledge in men's minds and the tools in their hands, as it has been over the centuries. The only way to obtain capital is out of savings, and the only way to obtain savings is by having the courage to tell the country, "We cannot have jam today; only a long time hence." That is the first moral requirement for the authority of any Government.

The second requirement is to look at the organisation of our industrial affairs. The industrial cycle, in a complicated society like ours, begins with research and goes on to development, production and, finally, to profits. The problem of the Government is to canalise and to bring into a correct balance the right proportions of research, development and production. This is the practical organisation problem. Of the money spent on research—£500 million a year—roughly one-third goes to the atomic energy industry and another third to the aircraft industry. Both industries have a limited earning capacity. The rest of British industry has to make do with the remaining third. That is why we are lagging behind.

As for development—it is probably more difficult in this country than in any other country to get a new idea off the ground, and to secure the successful development of a new invention. The record under this Government in the last ten years, which we are being asked to support, is a record of one good idea after another being left undeveloped.

The third primary requirement is industrial vitality. The next problem today is the question of obtaining industrial vitality. In crude terms this means getting people to work sufficiently hard. A large proportion of this nation, in the boardroom no less than on the factory floor, is not working. Until this situation is radically altered this country will continue to decline.

But none of these things can be altered without moral authority being exerted by the Government. That is the central issue of the debate. It cannot be done without effective economic planning, and without public ownership of some of the commanding heights of our economy. It is because I believe this that I am a Socialist. It cannot be done, in time, in any other way. The situation cannot be allowed to drift any longer. It cannot be done unless the Government is in tune with the electorate, and has that kind of moral authority which is drawn from a sense of spiritual union with it. This Government was elected in 1959 on a bogus company prospectus. That is what the by-elections have been about. That is why hon. Members have been losing their votes; that is why many more will lose their support in the next General Election, and that is why there is a sense of public disillusionment.

This situation cannot be remedied without a radical change in the sense of relationship between Government and people. This cannot be done by a Prime Minister who is so closely associated with policies which have been shown to have failed so abysmally since 1951. It cannot be done by a Chief Secretary and Deputy Prime Minister who have been associated with every Conservative Governmental failure from Munich to today. It cannot be done by a Leader of the House who is also one of the chief apologists of appeasement in international affairs, judging by his biography of Mr. Chamberlain. It can be achieved only by an attitude of mind which gains the respect of the electorate. It cannot be done unless right hon. Members on the Government Front Bench recognise that they have a duty to submit themselves to the judgment of their fellow men. That is the only way in which they will be able to regain the support of the electorate.

Speaking in this House on 5th October, 1938, in the famous Munich debate, the right hon. Member for Woodford (Sir W. Churchill) talked about the last five years"— five years have also elapsed since the Prime Minister took office— five years of futile good intention, five years of eager search for the line of least resistance, five years of uninterrupted retreat from British power, five years of neglect of our air defences … when I think of the immense combinations and resources which have been neglected or squandered, I cannot believe that a parallel exists in the whole course of history. So far as this country is concerned the responsibility must rest with those who have the undisputed control of our political affairs."—[OFFICIAL REPORT, 5th October. 1938; Vol. 339, c. 366.] I say to the Prime Minister and the Government, "Go, while you retain a single vestige of respect from your fellow countrymen."

7.9 p.m.

Mr. Aidan Crawley (Derbyshire, West)

I crave the indulgence of the House. Not having intervened in a major debate for eleven years, I hope that I may legitimately ask for a little indulgence. Having been away for so long, and having returned only so recently, I confess that I have been looking at the events of the past week with considerable awe, and also with a good deal of detachment. I have not shared in the deep personal loyalties or antipathies which hon. Members have developed while they have been trying to promote the interests of the nation during the last decade.

Some of the feelings which these events have aroused seem to me to be exaggerated. The right hon. Member for Orkney and Shetland (Mr. Grimond) said that Prime Ministers have to be butchers, and it does not seem to me to be a bad thing that our Prime Minister has adopted modern methods of mass production. It does not mean to me any of the melodramatic things mentioned by hon. Members opposite, but simply that Conservatives are not afraid of change, and change on a large scale.

Nor, for the same reasons, can I take the Opposition Motion seriously at its face value. It implies that, because the Tory vote in by-elections has dropped, the Conservative Government have lost the country's confidence, but by-elections are a very fickle barometer of public opinion. In several of them, the Labour vote has slumped markedly as well, and the reasons given by those who have temporarily transferred their allegiance to the right hon. Member for Orkney and Shetland and his friends are so various and contradictory as to make it quite impossible to draw any long-term conclusion from them.

I really do not believe that the Leader of the Opposition put down this Motion because he wants an election now. Since he rejected the advice proffered to him by his hon. Friend the Member for Bosworth (Mr. Wyatt) and will not even entertain the idea of an alliance with his Liberal friends, it seems to me most unlikely that he would wish to risk an election at a time when the result could possibly be, not victory for himself but a possibly enlarged but still tiny Liberal Party holding the balance of power. Therefore, I think that he had a more subtle reason for putting down this Motion. It was that he wished to postpone the election and consolidate the position of my right hon. Friend the Prime Minister. We on this side can be grateful to him for that, and we can also be grateful to him for giving us an opportunity to conduct a grand inquest on the nation's affairs.

Inevitably, hon. Members opposite pick out all the black sports in the state of the nation and present, as my right hon. Friend said, a parody of what the country looks like. It is an error, however, for either party to mistake for a really deep discontent the irritation which some of the electorate are undoubtedly feeling. It is something quite different. It is an impatience arising from the fact that, for almost everybody in the country, life has been much easier in the last decade, and they therefore expect much more.

That this is so was borne in on me in a very interesting way in the recent by-election. I was warned that the cost of living would be the most troublesome issue to deal with. Of course, if prices creep up, as they have been creeping up, it creates great hardship, particularly for the old people and for those living on fixed incomes and pensions. In passing, I must say that I welcome what has already been done to help those people, and what it is intended to do, and I believe that for old people on pension we have to do more.

But I do not think that for most people it is the cost of living that is the real source of discontent. I was immensely struck by the number of married couples, both middle-aged couples and young occupies with children, who suggested, quite openly and publicly, that they would be prepared to accept a reduction in children's allowances if the money could go to help the old. These were all working people —the wives of railwaymen, quarrymen, and others.

They said it because, as they made quite clear, they felt that they were bringing up their children in conditions so infinitely batter than those in which their parents had brought them up that they really were not feeling the pinch; that they could supply the education, the clothes, and the rest, that their children needed, and would like to make that contribution. They were taking the small increases in prices in their stride.

What they were looking for was greater opportunity to earn more money; and what we all want, if we are honest about it, is expansion. The differences between us are how we can accelerate expansion, and make it continue. I am one of those who agree with hon. Members on either side who believe that the only true basis for expansion is a gradual rise in home demand. I do not think that it can be confined to an increase in exports, but the problem is how to bring about that rise in home demand without causing an inflation that will, in the end, cut the expansion altogether.

This problem has been with us for many years, and what strikes me every time it is discussed is the terms in which it is discussed. Under the Labour Government, we had a wages policy, and for several years we also had a wages freeze, in which I believed. At the moment, we are talking about incomes policy, and we have had a pay pause, which I also believe to have been necessary.

But our policy is always expressed in the sense that we must see that incomes do not outrun production. I have never heard it suggested that we might have a policy which made production outrun incomes, yet that has already happened in many other countries. It has happened in Sweden; it has happened in Japan; at times it has happened in Germany. I believe that at present it is even happening in Italy.

I have noticed, reading past debates, that although almost everything else to do with production is mentioned—new capital investment, stock piling, incentives to exports, fiscal policy—the word "productivity" hardily ever occurs. I believe that we avoid a really detailed discussion of productivity because we all know in our hearts that that is where our real weakness lies.

Why is it that production in this country is rising more slowly than it is in other industrial countries? The Opposition say at once that lit is because Government policies have failed, but, in fact, the Government's policies have produced greater stability of prosperity in the last decade than we have ever known—but they have not produced the rate of increase that we want.

The causes go much deeper. They have quite recently been set out in this little booklet produced toy the British National Productivity Council, which announces a productivity year. I do not know how many hon. Members are aware that such a year is to be launched this autumn. Until I began to prepare for this debate, I did not know it myself, and all the hon. Members I have asked have told me that they did not know anything about it either. My case is further supported by the fact that although there has already been a debate on this subject in another place, I do not think that any such debate has taken place in films House at all.

All these reasons, all the problems which the National Productivity Year is designed to face, have a horribly familiar ring. There is, as usual, talk of the lack of new machinery, improper use by management of skilled men, the lack of training of foremen, lack of communication between management and factory floor, poor salesmanship, lack of knowledge of foreign markets, restrictive practices, the fact that most of our workmen are on only a week's notice. And all those shortcomings which this productivity year is designed to cure have been with us for years.

As many hon. Members know, ever since the war we have had difficulties of demarcation in the shipbuilding industry. Ever since the war, the unions in that industry have been trying to amalgamate, but I am told that it is only now, after twenty years of discussion that they may even begin to broach the subject seriously. Ever since the war, our salesmanship and our servicing of goods abroad has suffered by comparison with that of other people. Ever since the war, the whole pricing system of new jobs in the engineering industry has been geared, if not to the slowest at least to the slow worker, with the result that the best men cannot give the output of which they are easily capable.

Ever since the war, the value of scientific work study has been available, and could have been applied to an enormous range of British industry. In that respect, the Government and the publicly-owned industries are setting something of an example. As a result of work study, British Railways have saved £26 million in quite a short time, but the study covered only 10 per cent. of their employees. Some of the Service Departments have made great savings, and so have some local authorities. I.C.I., one of the pioneers in this field, has probably extended work study more widely than any other firm. As a result of that company's covering almost every one of its employees by work study, a saving of £2 a week has resulted in the case of every person studied.

It is, I think, a mistake that the benefits of work study should always be expressed in terms of saving, because it really results in the workman receiving more money for doing less arduous work in the same time. In fact, I.C.I. has found that if a man earns £9 for a normal week's work, he automatically receives an increase of one-third in his basic rate if he accepts the measures proposed by the work-study team. The increase in earnings for local government employees who have accepted work-study arrangements is as high as 16 per cent. and the incentives for piece work are as high as 30 per cent.

Despite this, work study has been applied in only a fraction of the industries in Britain and, despite the enormous improvements that can be brought about, we are still inclined to think that the National Economic Development Council is optimistic in believing that a 4 per cent. increase can take place in our productivity in any year. Why, when we have had this knowledge available for so many years and when examples of what can be done by work study are plentiful, is this method not more generally applied?

I believe that the answer is quite plain. It is a failure in human relations. Man for man we are co-operating less effectively than the peoples of other industrial nations. We have failed to slough off the fears of the pre-war era and we are still suspicious and jealous of each other. If we continue in this spirit we certainly shall not catch up on productivity our industrial rivals. With great courage one hon. Gentleman opposite has said as a trade unionist that it was high time that the whole idea of strikes as part of the industrial negotiation machinery was abandoned. Of course he is right. If we are to achieve that abandonment every hon. Member, particularly hon. Members opposite who are influential in trade union circles, must throw themselves behind it and we must do much more than merely launch a production year through a productivity council about which many people, I suspect, know very little.

The Government must also take a direct part. I do not know whether it falls within the scope of the N.E.D.C. or the proposed new National Incomes Commission, but I feel that it should be the responsibility of a Minister, perhaps the Minister of Labour. Traditionally he takes the part of umpire. I believe that his rôle should be changed. He should become an apostle of production. At present he does the job of umpire very well but in this changed rôle he could launch and sustain a campaign to increase productivity, making all the facts clear in every industry and factory. The world will not wait for us to bring our production up at our own leisurely speed.

This brings me to my last point. I believe that the underlying cause of this failure in human relations was largely our attitude to the outside world. For the past ten years I have been seeing these problems from afar, comparing our attitude with that of other countries. I find that our attitude is often incredibly narrow and insular. There are many minor examples of this—our failure to adopt the metric system or to drive on the right of the road, for example—but perhaps the most graphic is our method of teaching languages.

In the modern universities of Africa all modern languages are taught only by ear. Every desk is equipped with a two-way radio set so that each pupil is in direct communication with the teacher. In this way almost any African can learn a modern language and can speak it quite well inside twelve months. In this country we still teach languages as we did fifty years age—as dead languages. When children come out of British schools they have some knowledge of grammar but they are unable to write or speak a single fluent sentence.

This insular and narrow attitude is also adopted by many hon. Members and others about the Common Market. I was delighted to hear what the Prime Minister said on this subject, for I believe that his decision to apply to join the Treaty of Rome stands him as a man of vision and courage. If, as I pray, he succeeds in leading this country into the Common Market on the terms on which he is negotiating he will have launched on a path as exciting and adventurous as any we have known for two hundred years.

I do not propose to go into the economic merits and demerits of these negotiations. Like hon. Members opposite, I, too, share their concern for our agriculture and our obligations to the Commonwealth. Rut what has surprised me, having listened to the debates and having read newspaper articles on the subject, is the horror any suggestion of any political association with the Continent of Europe seems to arouse in so many people. It seems incredible that, after 1,000 years of war between the nations of Western Europe, now that they are beginning a more fruitful form of collaboration than any they have known in the past, we, who have been closely associated with them throughout this period of history, can conceivably stand aside.

Do hon. Members really think that this country, which has set a political example to all its European neighbours and in so many respects has been their political mentor, will contract out and take no leading part? Obviously the question of political association is many years ahead. If, from the start, we take the point of view that we are going to have as little as possible to do with it, we are not only betraying our whole history; we are throwing away the chance of increasing our influence in the world in a way I hope it will be increased.

Many hon. Members say, "What about the Commonwealth?" I am not sure that it is not considered almost treasonable to speak objectively about the Commonwealth. I have visited every Commonwealth nation bar two in the last ten years, and I know the value of this very loose association of nations which can vote on vital matters against each other in the United Nations but which, nevertheless, can meet here in Britain to try to obtain a wider and closer understanding of the different problems.

Although the whole economic relationships affecting the Commonwealth are changing and while most Commonwealth countries are extending their trade with other countries faster than with each other, we still have many mutual benefits to preserve and obligations we must honour. But when I hear some people speak about the Commonwealth or when I read articles they have written, it seems sometimes that they are in another world. The newly-independent countries of Africa and Asia are determined to assert their independence and are seeking new groupings and forms of federation which out right across the old imperial lines which were drawn. They also cut right across racial and tribal differences. In the Cameroons, for example, exists a federation of people who speak African languages, French and English. A new generation of leaders in Africa is seeking entirely new alignments from the old. They all want neutrality and some of them prefer a closer association with the Soviet Union and Communism.

If one is frank one accepts the fact that most of the new nations regard the Commonwealth quite legitimately—and in my opinion sensibly—as an organisation from Which they will draw a great deal, which will help them to develop as wholly independent people and which will help them to form these new federations and groups—at the same time leaving them free to associate themselves in any other way they like. The idea that these countries have the same loyalty to the Commonwealth idea as Australia and New Zealand is a myth.

Even the old Commonwealth is changing. To pretend that the Commonwealth in any shape or form is an alternative to the new developments in Europe is to condemn this country to a minor rôle and to lessen its influence in the world. These new groupings in the Commonwealth combine the legacies of many European countries. It is not to one European country that they look. They look to Europe as a whole. It is only through playing a leading part in Europe that we can contribute to help them. They look to Europe as a whole.

I think it is because we are in danger of failing in these wider human relationships that we are still failing in our industrial relations at home. We cannot insulate ourselves from what is going on around us. Unless we learn to share what our neighbours have, unless we learn from them, we shall neither match their productivity nor achieve an incomes policy in which production outruns income and incomes go up.

It is because I believe that the Prime Minister has shown the imagination and grasp to lead the country into the new Europe, and through Europe to play a leading part in the world, that I support him in opposing the Motion.

7.32 p.m.

Mr. A. G. Bottomley (Middlesbrough, East)

Like the hon. Member for Derbyshire, West (Mr. Crawley) I, too, recently returned to this House following a by-election. The Prime Minister said that the public were behind the Government and their policy. Ail I can say is that recent by-elections do not support that opinion.

I returned to the House following a by-election in Middlesbrough, East where the Labour vote was increased and where the Conservative percentage of votes fell more than it did at Orpington. This victory was fortified by the success of my hon. Friend the Member for Middlesbrough, West (Dr. Bray) where what was regarded as a safe Tory seat was won by Labour; and not even Stockton-on-Tees, with the Prime Minister's attendance, stopped the rot. It will be said that, of course, I am bound to say this, but let me refer to the Daily Telegraph which said the other day that since the Neville Chamberlain Government and the last days of his premiership never has a Prime Minister's stock fallen so low.

That is the position of the Prime Minister and the Government today. I think I shall command the support of both sides of the House if I say that in 1940 we were led by a statesman, the right hon. Member for Woodford (Sir W. Churchill). We certainly hope that he recovers from his illness. But he was ably assisted by another great statesman, Lord Attlee, who also had the most difficult task of taking the country through the post-war years. I think we are living too near history to appreciate the true work that was done during the period of the Labour Government when freedom was given to India, to Pakistan and other countries and the Welfare State was developed.

Then we had another Prime Minister, Lord Avon. In my judgment, as Leader of the Conservative Party he was certainly a more honourable and more positive leader than the present occupant of that office. We shall never know the truth about Suez. One can only conjecture. My conjecture is that the noble Lord Salisbury had something to do with the right hon. Member for Saffron Walden (Mr. R. A. Butler) not getting the leadership. That may be because Lord Salisbury remembered what was said by the Prime Minister on an earlier occasion. He said: The conception that property and political power must go hand in hand is a traditional Tory doctrine. The Prime Minister of today is not a statesman. Certainly the Prime Minister was not called to high office because of his great success in his Ministerial appointments. He boasted this afternoon about 300,000 houses being built when he was Minister of Housing and Local Government—a political stunt. What he did not say was that because of that policy we failed to get factories schools, hospitals and other necessary requirements with the result that the economy today is in a worse state than it would have been if we had made proper use of our resources at that time instead of concentrating on what was a political stunt to achieve the completion of 300,000 houses.

If anyone were to ask what the right hon. Gentleman did at the Ministry of Defence, I think there are many who have forgotten that he was ever there. At the Foreign Office he was quite undistinguished because he was only an assistant to the Prime Minister, Lord Avon. He went to the Treasury, and as Chancellor of the Exchequer he was neither distinguished nor distinctive, unless he can claim that the issue of Premium Bonds introduced gambling into the Treasury.

I think it can be shown from the speech of my right hon. Friend the Leader of the Opposition and from the support that he has that our present Prime Minister's tenure of office has been disastrous in the application of the policies which the party opposite have forced through the House. I do not think anybody can deny that under his leadership our economy has been shattered. Many people are prepared to say that we are facing econmic disaster almost equalling the military disaster of 1940. We must face this situation seriously. I agree with hon. Members on both sides of the House who have said that this is a vital national question and must be treated as such.

One of the reasons we believe that there should be a General Election in the near future is that we are confident that the kind of plan and policy necessary to give drive and to build up the country's economy are not forthcoming from the benches opposite. If we press for an election I am aware that the Prime Minister will choose the time. In our Parliamentary system there is nothing wrong in that. It is the right of the party in power to hold an election at the time that it thinks will be to its advantage.

There is, however, another consideration, and that is the national interest, and I believe the national interest demands that a General Election should be held now. Our troubles certainly will not be solved by changing Ministers. "Hunt the scapegoat" is a fascinating game, but it does not get us out of our difficulties. Minister-making is a very personal business, as we have seen. The Government reflect the ideals and principles of a Prime Minister. The Prime Minister picks from his party a team which commands the respect of the House on the basis of the personal and political forces within the majority party. This, however, is no longer the case after the recent upheaval in the Government.

The Prime Minister has always professed his belief in the concept of "one nation", but in practice under his leadership the gulf between the wage-earners and the privileged sections of the community—I do not mean the professional and administrative workers; I mean the Clores, the Cottons and the landed gentry—has widened, and those latter people to whom I have just referred have benefited whilst the mass of the income-earners have suffered. Indeed, the unearned incomes of the privileged sector have zoomed upwards. No incomes policy commission will stop this.

I could not help noticing this afternoon how gloomy the Minister of Labour looked. Well may he have reflected that his hon. and gallant Friend the Member for Knutsford (Sir W. Bromley-Davenport) who received a stab in the stomach got a much bigger cheer than the men who have been stabbed in the back. Clearly this incomes commission can only do the work that the Ministry of Labour has been doing already. Why not give the Ministry of Labour the opportunity to carry out its job and allow the arbitration machinery to do its job as it has always done in the past until this Government interfered?

The Government now talk of planning, of new ways to balance our economic growth, with targets set in proper relation to output, exports and incomes. This was precisely the policy followed by the late Sir Stafford Cripps and my right hon. Friend the Leader of the Opposition when he was Chancellor of the Exchequer. If the Conservative Party had given their support in those days, as they should have done, we would not have these recurring economic crises.

At the time of the Labour Government the party opposite made planning a dirty word. Tory planning is unethical; it does not concern itself with morals; it has no connection with any philosophy. It is simply a gospel of grab. The word "Tory" is old English for the less glamorous type of highwayman. Let me say at once that there are some hon. Members opposite whom I would claim as friends. There are some honourable exceptions, and there are some dupes. The real leaders of the party opposite— and this we must keep in mind—are those who hold the money strings, those who want to be rich, and those who want to be bosses. They are prepared to do anything to achieve their objectives. I believe that the reorganisation of the Government has been planned by them to fool the public once more.

It is only ten months since there were what the Press called "drastic Government changes". Perhaps I ought to refresh the memories of hon. Members opposite. As a result of those Government changes we had a new Leader of the House, a new Chief Secretary to the Treasury, a new Minister of Housing and Local Government. What did the Press have to say about that? It said that this was a new look. The Economist of 14th October, 1961, stated: Changes signal the arrival of a new Tory generation at the doorstep of power. All I can say is that that generation has been very short-lived.

Mr. David Webster (Weston-super-Mare)

Who is the Leader of the House?

Mr. Bottomley

If the hon. Member does not know, I can only tell him that ten months ago there was a change of leadership. There was a new Chief Secretary at the Treasury. If the hon. Member does not know what goes on in his own party it confirms what I have said, that there are some dupes on that side of the House.

Now just ten months later, the Economist states that the reason the Prime Minister had to act was: The Prime Minister has felt impatiently that he was living in a cabinet amid a landscape of exhausted volcanoes. I would say in conclusion that when Governments fail to persuade and cease to carry conviction, as this Government do, they fail to govern and cease to be Governments. I think that the by-elections have shown that the Government no longer have the confidence of the country. They are a house divided. It is time for them to go.

7.46 p.m.

Mr. John Henderson (Glasgow, Cathcart)

I am indeed grateful, Mr. Speaker, to have been fortunate enough to catch your eye and to be able to make a short speech on this very important occasion. I happen to have the honour of being the Chairman of the Scottish Unionist Committee in the House of Commons and I am sure that the House will forgive me if I begin by paying a personal tribute to my right hon. Friend the Member for Renfrew, West (Mr. Maclay) who prior to the change was the Secretary of State for Scotland. He is a most genial Member of this House, most considerate and possessed of an extremely kindly nature, and those qualities have made him esteemed and admired by almost every hon. Member, irrespective of political differences.

Secondly, I should like to say as a Unionist of Scotland in this House, without commenting on any of the other changes which the Prime Minister has seen fit to make, that far from forfeiting the confidence of Scotland and of Scottish Members, as the Opposition invite us to declare, the Prime Minister has considerably enhanced it. I am confident that when the time comes, which I believe will be in the distant future, the people of Scotland wild record in an unmistakable manner their confidence in the present Prime Minister.

The right hon. Member for Orkney and Shetland (Mr. Grimond), in an extremely interesting and very forthright speech, mentioned the fact that sometimes a Prime Minister had to act as a butcher. I do mot know why the right ban. Member for Orkney and Shetland should go to the slaughterhouse for an analogy. I would far rather go to the realm of sport, because, like many hon. Members, I am interested in football. I enjoy watching a good game of football. But what happens when a team is on the slide—

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

Sack the manager.

Mr. Henderson

The Government, perhaps, according to the by-elections were on a bit of a slide. The manager goes to the transfer market and buys players. He makes changes. If these changes are successful, the doom or the threat of relegation passes away and again the team climbs up the league. The Prime Minister has just done that. He thought it necessary that the team should be changed in certain positions and these changes have taken place. I have not the slightest doubt that in the immediate future many valuable points will be secured when the country has a General Election.

To come to the Motion, I was greatly interested, and I am sure the whole House was, in the speech of the Leader of the Opposition. It was an amazing sight to sit here and watch hon. Members on the benches opposite. They had a good time; they thoroughly enjoyed it. From the beginning to the end of his speech there were broad smiles, loud laughter and everyone on that side of the House thought that it was a very fine performance. But it was made in the wrong place. It should have been made in the Victoria Palace or in the London Hippodrome. It was by no means the speech of a statesman, in strong contrast to the speech of the Prime Minister.

I should like to say one or two things about the record of the Government. This Motion of censure is a condemnation of what has taken place under Tory Government. Years of Conservative Government have transformed the life and prospects of the whole nation. Our living standards are at the highest level ever known. This cannot be contradicted. We are investing, producing, exporting and earning more than ever before. We are doing more for the old, the ill and the infirm than ever before in our country's history. We are modernising our factories and making great progress with our roads and the reorganisation of our railways.

Mr. R. J. Mellish (Bermondsey)

Tell that to Londoners.

Mr. Henderson

The Government have set up the National Economic Development Council, and they are negotiating to join the Common Market in order to stimulate fresh endeavours.

During the past eleven years, Britain has shouldered a defence expenditure of about £1,000 million a year—

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

That is an underestimate.

Mr. Cyril Bence (Dunbartonshire, East)

More like £1,500 million.

Mr. Henderson

—and has played a leading part in the defence of the free world.

It is remarkable that when any hon. Members opposite speak there is seldom any interruption, but it is the habit of horn. Members opposite continually to try to interrupt any speaker from this side of the House. All we ask and all we expect, from Scottish Members at least, is a sense of fair play.

The Government have taken the initiative in international moves for peace and disarmament. Our Prime Minister is unceasing in has efforts to secure world peace. Recalling that, a year ago, he had described the international situation as one of international anarchy, the Foreign Secretary said yesterday, in a very able speech in another place, that with some obstinate exceptions, there is some improvement on the position as it was, when I spoke a year ago". He said that when he went to the S.E.A.T.O. Conference eighteen months ago, war was so near that it could have turned on the spin of a coin … and Britain would once more have been engaged in a world war … I hope that the British people realise that situations of this kind are not resolved by luck. We cannot pretend that we do not see them and just hope for the best. They depend for their solution on deliberate policies being adopted by the British Government, and the British Government's determination to see those policies through."—[OFFICIAL REPORT, House of Lords, 25th July, 1962; Vol. 242, c. 1029–31.] I invite right hon. and hon. Members opposite to remember that, when the Prime Minister changed the Foreign Secretary and appointed the Earl of Home, this change was bitterly opposed by almost every member of the Opposition, and yet today he is held in high esteem in every country of the world and is playing a tremendously important part in the making of peace throughout the world.

Aid to the under-developed countries during the past eleven years has risen from £61 million to over £180 million. Yet we have a Motion of censure against the Government for their activities in this direction. Steady progress has been made in bringing colonial territories to full self-government and independence, for example, in Ghana, Malaya, Nigeria, Sierra Leone, Cyprus and Tanganyika.

We are proud of our record. Controls have been lifted during these past years. Road transport and the iron and steel industry were denationalised. Industrial production has gone up by 30 per cent. Savings have soared, and net capital investment has doubled. Sterling has been made convertible. We joined the European Free Trade Association and now—without expressing any opinions about whether it is right or wrong—we await the final decision regarding entry into the Common Market. Government assistance to exporters has been improved, resulting in £10 million worth of goods now being exported daily. Our standard of living has gone up as much during the past eleven years as during the previous forty years.

I think it right to put the following figures on record. Agricultural production during the period of the Conservative Government has risen by 23 per cent. Britain's exports have risen by 26 per cent. during the same period. The average annual rate of house building has risen by 80 per cent. [HON. MEMBERS: "Where?"] I am speaking from a United Kingdom point of view. Expenditure on the social services has risen by over 100 per cent. Personal savings have risen by 1,400 per cent. The standard rate of Income Tax is down by 22½ per cent.

This is a record of which any Government might be proud. The Motion of censure will be defeated tonight by an overwhelming majority, and the Labour Party will be where it has been all along.

7.56 p.m.

Mr. Charles Pannell (Leeds, West)

I always think it one of the worst things one can do when speaking in a debate in the House to say that one will not attempt to follow the hon. Member who has just sat down. To do so shows a lack of respect to those who speak before oneself. The hon. Member for Glasgow, Cathcart (Mr. J. Henderson) took the analogy of a football team in speaking of his Government. I thought that it was a very good analogy. He said that they were in danger of relegation. He could not have put it better, and I think that his opening sentences very much belied his stirring peroration. The only good word he had was for the Earl of Home who is the outside right of his party.

The hon. Gentleman reproved my right hon. Friend the Leader of the Opposition for joking, saying that his performance would have gone down very well at the Victoria Palace. That is more than can be said for the Prime Minister, who would not have been a howling success in the Crazy Gang or anywhere else.

The curious feature of this debate is that it is on a Motion of censure, yet ban. Members opposite have been talking this afternoon as though it were on the Ministry of Labour Estimates. What they have said has had nothing whatever to do with the real subject of the debate. The Prime Minister began by saying that he would not talk about personalities. But this is what the debate is about. It starts with personalities.

I have been very touched during the past few days when, as I went about the building, some of my Conservative friends have said to me, "You ace making a mistake, old boy, in putting down a vote of Censure. You ought to let the sore fester. You ought to let the wound remain open and the trouble rankle. The Opposition are doing themselves a great disservice." I find all this solicitude by Tory back benchers for the fortunes of the Labour Party extremely distressing. However, such objections as those only go to prove that we are right. When I think of the sort of advice I have received, I think also of the former Attorney-General who goes to another place as keeper of the Queen's conscience and who, I presume, will now sit on the "Bull-sack".

The curious thing is that the weaker the Government side becomes—and it has been weak this afternoon—the more the Opposition are supposed to run away. But this is not an occasion for "gamesmanship" or "one-upmanship". This is the occasion for a frontal attack, for the Opposition to say that, as a result of the very things which have happened during the past fortnight, the Government have forfeited the confidence of the country. I take my stand very much where the Leader of the Liberal Party took Ms stand, on the principle that the coinage of politics in this country has been debased by what has happened. I feed physically sick about this sort of thing.

I want to say this, and the Tories had better understand it. When we talk about Ministers, they are not only Tory Ministers. They are Her Majesty's Ministers, and we on this aide should be able to take some pride in them, too. I must be honest about this. I do not like to see the Prime Minister make the sort of bankrupt speech which he made at the Dispatch Box this afternoon. It was one long waffle from start to finish. He met representatives of the T.U.C. at twelve o'clock today. He tried to sell them this curious idea about a wages commission, and, of course, they did not fall for it. He could not dispose of the T.U.C. as he disposed of the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd). We had a long dissertation from the Prime Minister about a wages council. One would have thought that that was what this debate was all about.

I say this about the Chief Secretary to the Treasury, whom I wish to congratulate. The Prime Minister has shifted him from the Ministry of Pensions and National Insurance after all these years. I am sure that the right hon. Gentleman is as relieved about that as we are. What happens to his doctrine of Cabinet responsibility when the Prime Minister gets rid of one-third of the Cabinet? Obviously, he is responsible for this, but we must bear in mind that he cannot do it again. He is the prisoner of his own Cabinet. He has lost the freedom of manoeuvre. We know that Prime Ministers get rid of sluggards and dead-beats from time to time, but this is a massacre. We now know that he cannot sack anyone else.

In the last few days I have been reading a rather topical book by a Mr. Anthony Sampson called "Anatomy of Britain", from which I should like to make a few quotations. He has interviewed most of the leading figures in this comedy. He interviewed Lord Kilmuir and asked him, Who really runs the Conservative Party? The question was carefully shrouded in mystery, but Lord Kilmuir said: Loyalty is the Tories' secret weapon. I find that pretty good!

He also interviewed the Prime Minister, Who said: The fact is that you can't be a Prime Minister unless you are prepared to stay up late. The right hon. and learned Member for Wirral found that out. A great deal of the hard work does not begin until the evening. What it all adds up to is that in these days the Prime Minister must have the constitution of an ox. It is no longer just a question of intellectual and mental capacity. We have suspected that for a long time. It was illustrated by the right hon. Gentleman's speech this afternoon.

In last weekend's Press we had the hon. Member for Kidderminster (Mr. Nabarro) saying, "Poor Selwyn; he has been badly treated." He may have been, but he looked rather better than the Prime Minister looked this afternoon. I thought that the right hon. and learned Gentleman was extraordinarily buoyant, whereas the Prime Minister looked as if he was on the way out. One can only imagine the sort of conversation which went on, with the Prime Minister saying, "Selwyn, you have got to go", and the right hon. and learned Member saying, "What, me? I have been with you since Suez, man and boy. I have been through all the offices in the Cabinet."

I was a delegate to the N.A.T.O. Parliamentarians about the time of Suez. The complicity of the right hon. and learned Member for Wirral and the present Prime Minister with Sir Anthony Eden was a commonplace of conversation. One would have been laughed out of court if one suggested that there was no complicity. They were all in it together, except that the Prime Minister was the first in and the first out, and he sold the then Prime Minister, now Lord Avon, down the river. The undertones and overtones of that were in Lord Avon's speech last weekend. He remembered the double-cross, and, of course, his sympathies were with the man who was left out.

There have been some funny things about this business. I happen to have a great regard for the hon. Member for Bradford, North (Mr. W. J. Taylor), who was the Under-Secretary of State for Air. Being an engineer, I happen to know something about the problems of his Department, and, when I heard that he was leaving Bradford to visit the Prime Minister, I thought that the right hon. Gentleman was about to inject some good, honest, Yorkshire common sense into the Board of Trade. But he did not; he gave the hon. Gentleman the sack. But his immediate boss, the Prime Minister's son-in-law, was elevated. The right hon. Gentleman does not have much time for his friends, but by God he sticks by his relations! To none of us here has the present Minister of Aviation proved that he is up to any job, or that it was anything but a piece of nepotism which put him there. He again was a discard of fine Suez group, but he is up and poor Selwyn is down.

Another thing which I welcome about these changes is this. We are to have no more humbug about the great Liberal Home Secretary. Thank goodness he is now the First Secretary of State. He used to say, "You know how good I am". He never finished a peroration without the phrase, "God be with us to the end". What was his last act? It was to sign on the dotted line a deportation order against the spirit of which he pledged himself before this House. At least it can be said of the present Home Secretary, who, by the way, I discovered from the book to which I have referred owns the copyright of "Silent Night"— [Interruption.] I knew that that would please the non-conformist conscience of the hon. Member for Glasgow, Cathcart.

At least the Home Secretary has made one good decision, even though he dropped his predecessor in the dirt before the House. I count it as one for righteousness, because in his capacity as Minister of various Departments I know of no man in this country who has brought more misery to others in the last ten years than the Home Secretary, with that wintry smile of his.

I was rather intrigued to notice this morning that The Times kicked off with a quotation from Bagehot. I did not think it was very good, so I tried to see whether I could do better. This is what Bagehot says on Ministry changes: It almost never happens that the ministry-maker can put into his offices whom he would like; a number of placemen are always too proud, too eager, or too obstinate to go just where they should. Later he says: Lastly, a sudden change of ministers may easily cause a mischievous change of policy. In many matters of business, perhaps in most, a continuity of mediocrity is better than a hotch-potch of excellences. I do not know what we have got at the moment, but I do know that if there is one newspaper which is supposed to reflect Government thinking it is the Daily Telegraph and the Sunday Telegraph group.

We occasionally have "leaks" in our party. We do our thinking aloud. Apparently there was a "leak" from the Conservative Party last weekend, and this is what it said: … a number of Conservative back-benchers have told me "— that is, the Sunday Telegraph's lobby correspondent— that Mr. Butler has been emphasising in private conversation last week that he knew nothing of the Prime Minister's plans until a day or two before they were announced. I can imagine the few disloyal words that he scattered around. This view is not, however, shared by some of the victims. One deposed Cabinet Minister gave me this account of his impressions of the events; 'Rab has been in it, behind it and yet detached from it. His main current rival for the succession, Mr. Selwyn Lloyd, is now out and he has achieved what he fought for in the Cabinet changes a year ago, recognition as Deputy Prime Minister. I doubt if he and Iain Macleod threatened to resign, they are not the resigning sort. Two things played a decisive part in precipitating the dismissals, the leakages into the Press of the Premier's intentions and his miscalculation of Selwyn Lloyd's reaction.' I only want to say this about the reaction of the right hon. and learned Member for the Wirral. He was the figure more than any other whom we watched with interest and sympathy this afternoon. Sometimes he smiled when the Prime Minister was speaking and at other times he nodded, but when the Prime Minister got into his dissertation on the Ministry of Labour Vote, I thought that the right hon. and learned Gentleman would fall asleep.

Everybody who knows this business knows that it will unfold itself with time. People in politics will not be proud of what has taken place. I happen to be proud to be a politician. I do not apologise for it in the American sense. I do not believe with the Americans that the straight politician is a politician who is fixed and stays fixed. I happen to believe that politics is the essence of power. It is the exercise of power. It calls forth from all the hundreds and thousands of people who send us here, on both sides of the House, a great fund of voluntary service. I am never one of those who sneer at people in political life when they get an honour, on one side of the House or the other, because we have to bear the heat and burden of the day. We have to face the electorate because, fundament- ally, in this House of over 600 extroverts, a few megalomaniacs and no introverts, we believe, in the main, that we do things for others rather better than they do for themselves.

I am rather proud of my trade. Looking across to the other side of the House of Commons, I hope I have a House of Commons sense in the sense that I like to feel proud even of those Members on the benches opposite who do their duty as they see it. Not one hon. Member opposite can look into his mind during the past weekend, certainly no one from the benches opposite who has spoken to me in the Lobbies, can be proud of what has been done by his Front Bench. It has been a mean and paltry thing. In the main, it will only lend currency to those organs of the Press who suggest that this is a mean place, full of mean people who are meanly housed, meanly paid and meanly esteemed. Recent events will give an image of the House of Commons that only a Labour Government can blot out.

8.13 p.m.

Sir Alexander Spearman (Scarborough and Whitby)

When I read the severity with which the Opposition couched their Motion of censure, I thought that we would have a powerful, if misguided, attack upon the economic policy of the Government. Instead of that we have had a series of quips on personalities.

Mr. C. Pannell

That is what it is all about.

Sir A. Spearman

When they are uttered by anyone who has such a light touch as the hon. Member for Leeds, West (Mr. C. Pannell), it delights the House, but I do not believe that it will cut much ice in the country. I think that in two or three months' time the country will be not as interested in the changes that my right hon. Friend the Prime Minister has made, but in the result of the policies from the Government. Even the Leader of the Opposition spent nearly all his time and nearly all his wit on personalities.

Mr. C. Pannell

That is what it is all about. There would have been no debate, but for this clash of personalities. Does not the hon. Member know that one-third of the Cabinet has been kicked out for some reason? There must be a reason for it. The hon. Member should not try to be so high-minded about this sort of business.

Sir A. Spearman

I have no more responsibility than has the hon. Member for the changes that the Prime Minister has made, but for policy we all have some responsibility, because we can vote and sometimes speak. Therefore, it is the policy that we should talk about and not the personalities. It would almost look as if the Opposition, like the proverbial lawyer with a weak case, who shouts loudest, have nothing to complain against in the Government's economic policy.

However, the right hon. Member for Huyton (Mr. H. Wilson) made a semi-serious attack in The Times the day before yesterday and the Leader of the Opposition today began by implying that the Government's economic policy was not entirely to his liking and had, perhaps, been rather too deflationary. If the policy of the Government had been too deflationary, if the last Budget had not been right, would we not have mass unemployment? The unemployed figure is today 370,000, which is much less than in 1959, when the country gave the Government an overwhelming vote of confidence. The amount of overtime worked in February this year was 14.1 million hours, which is a good deal more than the year before, and the latest figure is 14.3 million hours.

Production has never been higher. During the last quarter, it has risen by two points, representing an increase of about 7 per cent. a year. As has been said in this debate, exports are rising steadily and substantially. In fact, the financial measures taken by the Government have not caused heavy unemployment. What they have done is to bring about acute competition. The result has been that it is much more difficult for employers to raise their prices, so that they have to give wage increases either out of profits or by releasing men they do not need.

It is the job of trade unions to push as much as they can to get better wages and terms for their men. I make no complaint of that. It is the job of employers to make profits. These two can well go together. It was, I believe, the first Henry Ford who said, "I pay higher wages than anyone in industry, I sell cheaper cars than anyone else in industry and I make bigger profits than anyone." It is the Government's job to see that the attempt of trade unions to get higher wages and of employers to make big profits does not harm consumers by raising prices. There is a vested interest in inflation in both trade unions and employers. This was made clear in the remarkable speech of my hon. Friend the Member for Oswestry (Mr. Biffen), who today made one of the most penetrating maiden speeches that I have ever heard in this House.

For the last twenty years, ever since the war, industrialists have been living in a hot house. Now that they have had to come out into a healthy atmosphere, they do not like it and they are feeling the draught. The result has been that the efficient ones have cut their costs. I know two of the largest companies in the country who have made drastic reductions in their costs and are far more able to compete than they were.

Today, we are much better able to compete abroad and much more able to expand at home than we have been for a very long time. Professor Paish, who, I believe, has a record of being more right in his forecasts than anyone else I have known during the last few years— I hope that the right hon. Gentleman the Member for Orkney and Shetland (Mr. Grimond) is nodding his head in agreement—says in the forthcoming issue of the Westminster Bank Review: In a number of ways the present economic position of the United Kingdom justifies more optimism than at any time since the end of the war. So much for the past. Now to the present. We have now got a certain amount of surplus capacity, too much in certain directions, and perhaps too little in others, but, by and large, I would have thought just about right. I would accept that it is about 5 per cent. or 6 per cent., which is just what it was in the period 1958 when, for eighteen months, we had stable prices. But all the time there is a growth in the economy which I reckon is about 3½ per cent., which means that we can expand from this level.

The Chancellor's problem as I see it is this. If there is no increase in demand, then there will be waste and unemployment, unless he stimulates the economy, because the surplus capacity we now have will automatically get greater, owing to the growth which takes place annually; but if, on the other hand, we are to get the increase in spending which was anticipated in the Budget, then, if he were to stimulate the economy as well, we should get inflation, and we should be back with rising prices and balance of payments problems in as bad a position as ever.

I personally should like to say to him that I believe that we shall get an increase in demand without any further stimulation by him, and for these reasons. First, there is quite certain to be a considerable increase this year in Government expenditure on goods and services, however determined and skilful my right hon. Friend the Chief Secretary may be. We shall go on getting increases in Government expenditure so long as almost every Member of the House, how ever much he may call for economy, presses the Government to spend more on his particular fancy. It is very probable that we shall get an increase in demand through exports which appear to be running about £150 million to £200 million higher than this time last year.

It is likely—I think more than likely —that we shall now have price stability as a result of the measures which my right hon. and learned Friend took. Incomes have been rising steadily this year, but they have been mopped up by a rise in prices. Incomes will, of course, go on rising, but if prices are stable, then, unless there is some revolutionary change in the saving habits of the country—that one has no reason to expect—demand must go up. Therefore, I hope that my right hon. Friend will give an assurance that demand will go up to the extent of the automatic growth of 3½ per cent., but that he will not take any action to stimulate it at this time.

Now for the future. I accept completely—and this is said very often on the other side of the House—that it is only by increasing growth that we shall raise the standards of living, and by increasing growth we shall, of course, make the incomes policy far easier. If we can get so much growth that it is practicable without inflation steadily to increase incomes every year there will be much less friction.

I believe that it is an absolute myth that we have to choose between growth and stability. I would go further and say that it is only possible to get maximum growth in conditions of stability when there is no excess demand. It is often suggested, particularly by those Who, dm industry, like an easy time, that it depends entirely on the amount of investment, and that industrialists will only invest if they can sell everything they make. Of course, investment is vitally important. We cannot get growth without it, and the Conservative Government's record on that is fairly good.

In real terms, it is 80 per cent. higher than ten years ago. In 1951, we were spending 15 per cent. of the gross national product, now we are spending 19 per cent. of it, on investment; but— and this is not, perhaps, always agreed —I am quite sure that investment by itself is not a panacea for all our troubles. I have heard that point made by the hon. Member for Grimsby (Mr. Crosland), who so often interests us in economic debates. I repeat that I believe that it is quite impossible to get maximum growth in conditions of excess demand.

First, we are getting the wrong sort of investment. We get industrialists investing in that sort of machinery which will maximise their profits, instead of machinery which will minimise their costs and release skilled labour which is so urgently needed elsewhere. So much of the new machinery today does not release labour, and is not, therefore, in the country's interests.

Secondly, excess demand and conditions of inflation must discourage the mobility of labour, on which so much depends. I entirely support my hon. Friend the Member for Mitcham (Mr. Carr) when he urges that the Government should spend money not in propping up declining industries, but in encouraging expanding industries by helping redeployment and facilitating the retraining of men. I have often wondered whether the Government have done all that they should have done in that direction.

Thirdly, excess demand encourages the efficient people to stay in business. The hon. Member for Derbyshire, West (Mr. Crawley) talked about our failure in human relations causing a slowing down of productivity below what we could achieve. He did not tell us why it happened. I believe that it happens very largely because of excess demand, because at is easy to make profits and to keep jobs when there is not sufficient competition to stimulate them to the effort that will get the results.

In conclusion, I should like to give my very best wishes to my right hon. Friend the Chancellor of the Exchequer. Since the war, Chancellors of the Exchequer have had the heavy responsibility—unlike any of their predecessors —of regulating the speed of the economy with weapons which, perhaps, were not altogether adequate for the job. In the time I have sat in this House, I have known eleven Chancellors. I believe that my right hon. Friend, because of the condition of the economy as a result of the courage and determination of his predecessor, and because of my right hon. Fniend's own talents, which, as he must know, I have admired for many years, has the opportunity of being one of the great Chancellors of our time, and I wish him well.

8.28 p.m.

Mr. G. A. Pargiter (Southall)

There seems to be a conspiracy on the other side of the House to turn this debate into a sort of super-economic debate, not to go too much into what may have happened in the past, which is the reason for the Motion which we have submitted, but rather to raise the tone and get a nice, calm sort of atmosphere far away from the facts of life. It is just as well Chat we should come back to the facts of life, and come back to what has been happening to the Tories throughout the last few years.

I recollect that when the present Prime Minister took office he was not very popular for quite a long time. He used to say, "What have I done? Where have I put a foot wrong?" He has got past that stage now. He has reached the stage in which he has not just put one foot wrong, because he realises that he has jumped in with both feet, and, therefore, to avoid the consequences, he has to think up, from time to time, a new gimmick. That is, perhaps, the best thing that we can say about him.

Why is it that the Government have lost popularity? Let us take a look at recent history. Over the last three years, the cost of living, in spite of the fact that import prices have remained relatively stable, has gone up by 10 per cent. Over the last five years, the cost of living has gone up by 15 per cent. It may be argued that wages have also gone up; in other words, that those people able to fight and look after themselves can get something back. But what about the other classes who are not able to help themselves? It is about these people that the Prime Minister and the Front Bench opposite have been shedding crocodile tears. This does not mean that they have any great interest in them, because if they had, they would have shown it long before this. It is because they see the writing on the wall and say to themselves, "How do we now get out of this?" We are told that we are to have an incomes policy, a Commission, and so on.

I can imagine the Prime Minister sweating over this at Chequers and saying to himself, "What sort of story can I put over, something which will carry me over to the next election?" When it comes to getting his own supporters behind him, he has only to say, "Well, boys, you know the answer. If you do not like it you can have a General Election." That is enough to bring Tory Members to heel. At present, not many of them are prepared to face a General Election. Therefore, the Prime Minister is bound to get a vote of confidence in any policy put forward, whether it is Tory Party traditional policy or a new look.

As I listened to the Prime Minister, I could not help thinking that the old walrus was dressed in a new coat. I thought that the coat looked a little threadbare, but it might just about last out to the next election. But in view of the way in which by-elections have been running against the Tory Party, I do not think the Tories will get away with it to the extent they think. Talking about a national incomes policy to deal with wages and salaries will no longer satisfy people. They want not only a salaries and wages policy but a real incomes policy if this country is to do anything.

The Prime Minister says that the Chancellor will have the necessary means to the end. But the Chancellor had them previously. He raised the incomes of Surtax payers very substantially. That is the sort of "brake" that the Tories have been able to apply. In trying to rectify the situation in this case, they merely imposed more taxation upon those who could not afford it. These are the sort of things which have built up, and there is nothing which the Tories can do which will save them.

It is easy for the Prime Minister to say to the Leader of the Opposition, "We have not heard much about your policy". This is not the occasion for a statement of Labour Party policy. When right hon. Gentlemen opposite were sitting on this side of the House and attacking the policy of the Labour Government, they put nothing before the House but merely said, "You have got the country into a mess. We are the people to get it out of it." What have they done? What was the cry of the Conservatives when the Labour Government were trying to hold down home consumption in order to build up exports, at which we were fairly successful? Our exports then ran at a rate not achieved under a Tory Government. We put Britain ahead of the world in the exports race, but the Tories have been steadily losing that race all the time they have been in office.

Sir A. Spearman

Surely that is hardily a fair comparison. After the war we were exporting to a devastated Europe.

Mr. Pargiter

If we were able under the Labour Government to get away to a flying start, why have the Tories not followed it up? They have failed, and that is because of their fundamental belief in free enterprise. They are now being forced to plan because their policy of free enterprise has consistently failed and they are in trouble. When the Labour Government tried to plan, it was constantly under attack. When the Labour Government tried to hold down home consumption, the constant cry of the Tories was, "The people deserve better than this". All the time they were trying to force the Labour Government into expanding the home market at the expense of the export market. They said, "Under a free economy we should be able to do all this. Everything will be all right."

Yet, what have they done? Under the Conservatives we have staggered from crisis to crisis, and the crises have been greater than those under the Labour Government. Now the Government say that we are to have an incomes policy. Having been a member of a trade union for a good many years, I can tell the Government that the unions will not accept a policy to deal with only one part of incomes. They will not accept a policy which will leave the property owner free to profiteer and the rentier class free to charge what rents it can get, irrespective of ability to pay. We are not going to stand for these things, which are beloved tenets of Tory Party policy.

If the Government want an incomes policy, then let them "come clean" and give us one. But they must not ask us to accept an incomes policy which will not also squeeze many people who have done well out of the Tory Party. It is no use the Prime Minister asking the unions to talk to him about an incomes policy under which wages and salaries will be affected while dividends are left to the vagaries of the wind and the desires of the Chancellor of the Exchequer.

I am surprised that we have not heard today about a property-owning democracy. Evidently, that has gone by the board, Which is not surprising in view of the interest rates and the price of land. No doubt we shall hear about it later, however, as the General Election comes nearer.

We have heard eulogies of the former Minister of Defence. Apparently he was a very good Minister—he maintained that we had a fully independent nuclear deterrent fully integrated into the American system. I am not surprised that he got the sack, but he applied himself to his job. Apparently he was so good at the Ministry of Transport that he had to be shifted to the Defence Ministry.

We have heard hon. Members opposite speak of education. Yet, in proportion to our population, we are training far fewer graduates than are either Russia or America. That is not the way to put us on top. We have heard about expanding our universities and the teacher training colleges, but we are as short of teachers as we have ever been. There are still many classes with between 40 and 50 children.

These are the things that really matter. They are the sort of things that the public is beginning to understand and to lay the blame where it lies—at the door of the Tory Party. That is why I shed no tears for the Ministers who have been axed. I shed tears only for the fact that the Prime Minister, having done what he did, did not sadly look around him and then go to Her Majesty and say, "It is time I axed myself." The sooner he does that, the sooner the country can give its verdict on the policy it wants for the future. The sooner that happens, the sooner we will get back to some degree of sanity.

The Government produced the European Free Trade Association, which was to be the answer to everybody's ills. That was the way that we were going to counter the Six. But E.F.T.A. was found to be a weak reed, so then the Government told us that we must get into the Common Market. The hope is that a lot of advantages will come to us. But Europe is in a more competitive economic position than we are. Many of its factories are far better equipped than ours. Far more investment has been put into them, proportionately. In addition, the owners are content with lower rates of profit than are owners in this country.

It seems that the Prime Minister is calculating that, with a bit of luck, there will be the glamour—perhaps—of our joining the Common Market without the economic consequences which may flow from that. The Government's attitude is that if the Commonwealth is sold down the river by our joining, that will be too bad. Yet all that will be just one more act of the cynicism which we have grown to expect from the Prime Minister, and the country has had enough of it.

8.40 p.m.

Mr. R. Gresham Cooke (Twickenham)

I was sorry to hear the hon. Member for Southall (Mr. Pargiter) casting some doubt on whether trade unions would co-operate with the National Incomes Commission, for if the Commission works as outlined today, it will be of great benefit. Although we have yet to hear the full details, when we do I hope that both sides of the House will think it something with which we can be satisfied.

Mr. Stan Awbery (Bristol, Central)

Is the hon. Gentleman aware that for twelve months the Government have done all they could to destroy trade union negotiating machinery and to nullify the awards of arbitration courts and conciliation committees? Does he think that trade unions will now have any confidence in the suggested Commission?

Mr. Gresham Cooke

I shall deal with some of those questions as I go along.

I have the honour to represent the constituency of Twickenham, a constituency of business people, of administrative clerical workers and public servants, not an industrial constituency. I have been interested to analyse the reasons for the loss of popularity of the Government, albeit transient, in the Home Counties, and to see whether it has been justified. One interesting factor is that the fall in popularity of the Government dates back to February and March, 1961, if the Gallup polls are to be believed, when there were increases in the National Health Service charges and contributions. That was a decision which was the responsibility of the whole Government. It was a perfectly correct decision and one which the public now accepts. It will be a sad day for the the British public when it thinks that it can get something for nothing, or get all the benefits of the National Health Service from general taxation without being personally involved.

The next watershed was the little Budget, or the pay pause, again promulgated by the whole Government but put forward and defended by the then Chancellor of the Exchequer with great courage, for which we were all grateful. It certainly had my support at the time. But, being an Anglo-Saxon people, the British people have one great characteristic which we must not overlook and which is their keen appreciation of social justice.

If instead of falling, as it did in the early stages, on school teachers and public servants and to some extent on clerical and administrative workers, the pay pause had been introduced by an Act of Parliament and had imposed a pause on all industrial wages and all salaries and all dividends and all rents —if that could have been done physically, and I do not think that it could—the whole operation would have been seen to be more fair and therefore more acceptable to the country. There might have been a more immediate outcry, but in the long run it would have been more popular.

The business community reacted against the little Budget, because it thought that it was a manifestation of the stop-go policy. We know that the increase in the Bank Rate at that time greatly improved our balance of payments and that the hire-purchase and credit restrictions damped down imports, to the benefit of the country and all of it economically essential. But trade and industry like to plan two yearns ahead and alterations in hire-purchase and Purchase Tax rates are always most disturbing whenever they are put on. For instance, while I defend the 15 per cent. Purchase Tax on sweets and soft drinks and so on, imposed in the last Budget, I am bound to admit the great disturbance throughout those trades which was caused. For instance, I believe that there are thirty-seven different wholesale prices for ice-cream powders and that even such a thing as Pepsi-Cola has nine different wholesale prices.

All those things are calculated to cause annoyance in the business community, however good they may be for the community as a whole. Therefore, if we are to obtain the co-operation and confidence of the business community, these changes in Purchase Tax, and so on, must be made as sparingly and as infrequently as possible. But having said that, I must add that the little Budget of July, 1961, was unfairly criticised, and criticised beyond its deserts, and much of its unpopularity was undeserved.

The central problem which we have to face is that industry and the trade unions are not only expansionist in spirit but inflationist at heart. All industrialists like to see larger turnovers and larger profits which they can plough back to expand their businesses, and as a corollary trade unions naturally like to see that because it creates more jobs and makes it easier for their officials to ask for higher wages. When the Ford Motor Company increases its profits from £15 to £20 million, it makes the task of the trade union officials so much easier.

On one side of industry, in the trade unions, we have perhaps 15 million people who do not fear inflation, but on the other side we have pensioners, public servants, nurses, probation officers, and so on, who do actively fear it, and the problem therefore is how to prevent certain rapidly expanding industries getting out of step with the rest of the community. The problem with regard to what I call the underpaid classes—probation officers, nurses, service personnel, and I am using this phrase in the sense of ancillary industries—is to get them an increase without the industrial classes claiming to keep the differential between themselves and the service personnel.

To put it crudely, if the nurses get an increase of £1 or 30s., the stoker at the hospital must be content with that and not claim that because his differential has been narrowed he should automatically get an increase.

Mr. Awbery

Why not?

Mr. Gresham Cooke

Because we agree that many of these classes, nurses, and so on, are underpaid in relation to the rest of the community and ought to be given an increase without everybody else claiming that the differential should be maintained.

Having done that, the second phase of the operation would be to give the service personnel a share of the increasing cake from time to time. My solution was to put this problem on the plate of the National Economic Development Council, but as my right hon. Friend said, perhaps it would be more correct to place it before the National Incomes Commission, because it has to give positive guidance. We must accept as a principle that ancillary workers should get, as a percentage increase, the average increase in the industrial wage. I am not suggesting that this should be done every year, but they should keep in step with the increase in industrial wages, and the unions must accept this. The whole snag to this is that if there is to be an overall increase of 4 per cent. in the community, if somebody gets 8 per cent. one year other classes have to go without any increase in that year if we are to keep the figure down to 4 per cent., as we hope to.

Another reason why the Government have suffered somewhat from unpopularity among the middle classes in the last few months in that they have not grappled with the problem of industrial relations. There have been strikes, both official and unofficial, and I was therefore particularly pleased to hear that the Government intended to tackle by legislation what I think is a fundamental problem in industry, that of the period of notice under which employees work. It is absolutely wrong that some men should be on hourly notice, or even on weekly notice, especially if they have been employed in an industry for a long time. Weekly notice has been a bugbear for years. It has meant living from hand to mouth, and with the fear of sudden changes. I suggest that employees in industry should start on a basis of one week's notice in the first year, working up to four weeks' notice, say, after ten years' service.

Mr. Awbery

It is reasonable that when a man becomes redundant he should be given an adequate period of notice. No doubt the Prime Minister will put that into operation, but we must remember that on the very day that this was suggested the Prime Minister sacked one-third of his Cabinet for doing what he himself had decided was right. Will the hon. Member answer that point?

Mr. Gresham Cooke

The hon. Member has no understanding of politics whatsoever. If he has read the book by my right hon. Friend the Member for Woodford (Sir W. Churchill) he will know that Prime Ministers have to be ruthless from time to time.

If men work on a basis of receiving more than one week's notice is will provide a way of dealing with redundancy in future. I hope that it will also give the men a feeling of increased responsibility, and a greater incentive to stick to the agreement which are made on their behalf by trade unions.

As part of these arrangements I should like to see trades unions voluntarily rewrite their rule books—

Mr. Jack Jones (Rotherham)

What the hell has it to do with you?

Mr. Gresham Cooke

I should like to see them insert a provision for the holding of secret ballots before strikes are called. The bishops are revising the Prayer Book 300 years after the Act of Conformity, and I do not see why the old and out-of-date rule books of many unions should not also be brought up to date. Incidentally, it is time that agreements made between employers and employees for the settlement of disputes were also revised. They are very vague and long-winded.

If we are to advance with confidence into the 'sixties we should positively encourage the amalgamation of trade unions. At present we have 350 of them, whereas there are only twelve main unions in Germany. Industry is making itself more efficient by mergers and amalgamations, and a similar tendency should be operating throughout the trade unions.

Mr. Harry Randall (Gateshead, West)

Why do not you mind your own business?

Mr. Gresham Cooke

Because I happen to be a Member of Parliament, and I have to take some interest in the affairs of the nation. The organisation of trade unions and the settlement of trade disputes is a matter of the greatest importance to the whole community. Following what my right hon. Friend the Prime Minister said today, I suggest that there is a great chance for one man in industry to take the lead, as has happened in Sweden and Switzerland. I would look for an industrialist—someone like Sir Alfred Mond, thirty years ago, who showed how to improve industrial relations.

As for the wider economic field with which the Chancellor has to deal, some industries are now beginning to move into a depression—steel, radio and television, bicycle manufacturing, and so on. Without encouraging over-stretched industries, such as the building industry, to expand any further, we have to find ways of giving selective treatment to those industries that might be on the verge of a depression this autumn.

The economy is distinctly patchy at the present time. When the Daily Mail asked fifty stockbrokers what they thought of the future, twenty-five of them said that shares would go up and twenty-five of them said that they would go down, which exactly reflects the public's impression of what will happen in the next few months.

It is easy to be wise after events and one might have put forward some of these ideas earlier—although my hon. Friends and I have from time to time put some of them to the Government, and it is satisfactory to note that they are now being adopted. As a supporter of the Government, I must say that I think that the Government have made mistakes, some of them being sins of omission, such as not tackling the problem of trade relations, but there are three fundamental questions before us tonight.

First, we are in the middle of Common Market negotiations which must be brought to a conclusion one way or another. Secondly, the Prime Minister has told us today that he has a new incomes policy. I want to see how it works out, and I want to play my part in developing it. Thirdly, if the Government were to resign, and if, by any mischance, the party opposite were to take over, there is no doubt that that Socialist Government would bring about devaluation of the £. For those reasons, despite what I have said, I shall continue to give my support to the Government.

8.57 p.m.

Mr. James Callaghan (Cardiff, South-East)

I congratulate the hon. Member for Twickenham (Mr. Gresham Cooke) on managing to get through his speech without once saying that he had any confidence in the Government which he supports. That is what the Motion is about. That he has not confidence in the Government is quite clear from what he says. He supports them because he thinks that that is the only way in which he can preserve his seat and the seats of other hon. Members on the benches beside him.

That underlines a very great deal of the support that the Government hope to get tonight, but not a single Conservative speaker in the debate has expressed confidence in them. Indeed, the debate has been noteworthy for the way in which they have all endeavoured to turn it from a debate on whether they believe in the personalities and policies of the Government into a discussion on the economic weaknesses which they believe the Government should correct. Rarely can there have been a debate in which less has been said in favour of the Government.

I agree with those of my right hon. Friends who have said that this should not be a debate on personalities, but on policies. It is fair to say 'that the electors now have no confidence in the present Administration. Since the pay pause was introduced by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) there have been 16 by-elections, in which 535,000 votes have been cast. The Tory Party has managed to get 154,000 of them—29 per cent. It is true to say that at any time when the people can find an excuse for voting for anybody but a Tory—not matter whom —they will do it, and they have been doing it regularly during the last twelve months.

Those who heard the Prime Minister this afternoon will agree that, in essence, his plea was that of the convicted criminal. What he said was, "Give us another chance. Give us a reprieve. We shall try to do better. We have a number of new ideas that we propose to introduce, and when we introduce them you will see that we are reformed characters and have turned over a new leaf."

I do not know where the Prime Minister is. He does not have to account to me for his whereabouts, but I hope that he has not resigned yet. The debate is not concerned with the personalities involved in the Home Minister's purge. The retail issue is that there is a general lack of confidence in the Government's policies. There is a feeling that the Government are tired and that since they have been with us for so long and have so far failed in their policies they should go. In none of the speeches made by hon. Members opposite was anything said to dispel that impression.

In a number of simple, human ways the Government have failed the people. The Prime Minister boasted about (he record of the Government over the provision of houses. Any hon. Member who conducts a "surgery" in his constituency knows that countless thousands of people are living in misery because they are either unable to purchase a house or to get on to a council housing list so that they might live normal married lives. Everyone knows this.

We have had eleven years of Tory rule and we are entitled now to say that if, at the end of this period, the housing situation is as serious as we know it to be—and I know from the cases which have come to my attention that it is this serious—they have failed the country and should go. Everyone knows the genuine hardship that has been caused by the Rent Act to countless thousands of citizens. Everyone knows that much remains to be done about housing, despite the boasts of the Prime Minister about the Government's record.

My right hon. Friend the Leader of the Opposition spoke about schools. Everyone knows that whatever the Government may claim to have done, their efforts have been inadequate. They have not been able to solve the problems of overcrowded classrooms, of getting an adequate number of teachers, of securing adequate apprenticeships for our young people when they leave school and sufficient university places for all those capable of making use of them. They have been an office for eleven years and since there is no denial of their shortcomings on these issues they must accept that they have failed the nation and that they must go.

Prices are rising faster than wages and since the pay pause was introduced the standard of life of the average family has gone down. Wages have not risen as fast as prices and I am sure that that is agreed between us. In that sense, too, the Government have increasingly lost the confidence of the public both in respect of their capacity to keep prices down and to maintain a steadily rising standard of living, equally and fairly distributed among the people as a whole.

As for industry, everyone knows the loss of confidence in the Government that has taken place. A questionnaire issued by the Federation of British Industries is in itself a damning indictment of the Government's record in this matter. There was a suggestion that the resignation of the Prime Minister was already in hand. I am glad to see him in the Chamber, at any rate until the end of the debate. The questionnaire to which I referred asked: Excluding seasonal factors, is your present level of output below capacity? The answer "Yes" was given by 64 per cent. of the country's industrialists, an increase of over 20 per cent. on the number the previous year.

To the question, If you are working below capacity, have you more, or less, unused capacity now than four months ago? 23 per cent. said that they had more unused capacity than four months previously, and the figure is steadily increasing. To the question, Do you expect to authorise more, or less, capital expenditure in the next 12 months than you authorised in the past 12 months on plant and machinery? it was stated by 43 per cent. that they expected to authorise less than they had in the previous 12 months. In this field, too, there is no doubt that the Government have lost the confidence of industry. That is on one front.

On the national front there is deep-seated concern, doubt, mistrust about the Government's behaviour. I take a number of examples. Whatever the arguments that may be adduced for or against the Common Market, there is one argument that, I think, betrays a basic mistrust by the Government in the British people. It is the argument that is advanced that we cannot expect the people to discipline themselves and to face the competitive world unless they are faced with the disciplines of going into the Common Market. A Government who discuss the problem in these terms, in my view, are refusing to face up to the challenge of the people because they are trying to slide off on to another authority the problems that we ourselves must face in this country if the people are to continue to be great.

There is a deep-seated mistrust— indeed, it is a conviction—that the Government are favouring some sections of the community at the expense of others. The Surtax concessions have bitten more deeply than hon. Members opposite have ever cared to acknowledge. There is a conviction that the Government are much too tender to the land and property speculators. There is a loss of confidence in the Government because of that. There is a feeling that big business is getting too big for its boots and that there is no restraining hand on the part of the Government on its activities. There is a feeling in the country that the Government are too subservient to the Americans and that, instead of sharing a partnership with them, we tend to follow their lead much too often.

It is on these issues, quite apart from the simple failure of the provision of basic human needs that the people have begun to entertain a deep mistrust of the Government, which is reflected in the 16 by-election results to which I have referred. There is a feeling of lassitude about our rôle in the world. The Government have disposed of the Colonies. They have utterly failed to replace the disposal of the Colonies and of our Empire by any positive idea or adherence to the idea of the Commonwealth.

Without discussing personalities, there are two former members of the Government to whom I wish to refer: first, the right hon. and learned Member for Huntingdonshire (Mr. Renton). I very much regret that he has left the Government to be replaced by Earl Jellicoe. It seems to me that during his term of office he did a very great deal and carried a very heavy burden of legislation, much more than a junior Minister ought to have been expected to carry. He carried it with courtesy and with skill, and I say to the Deputy Prime Minister that I believe that if he had reached out his hand he could have saved him and his place in the Government.

I have only one other personal reference to make, and that is about the former Chancellor of the Exchequer. I very much regret the blow that fell on him unexpectedly. But I would be hypocritical if I were to pretend that I am sorry he has gone. My complaint is not that he has gone, tout that the others have not gone with him. Let me be quite clear. I do not speak personally— the right hon. and learned Gentleman knows that—but I believe that his policies were disastrous. They were ill-conceived. I do not believe that they have had the results that the Prime Minister has claimed for them.

However, they were supported by the whole Government. Indeed, it is fair to say that they were the child of the present Prime Minister. It was not the right hon. and learned Member for Wirral who was the author of the pay pause or of the concept of holding back production. It was not he who invented this policy of damping down the economy. It was the Prime Minister, when he was Chancellor. What the former Chancellor was doing was carrying on the policy invented by the Prime Minister when he himself was Chancellor. I have no doubt that the Prime Minister is right when he says that he fully supported the Chancellor of the Exchequer in all that he did. I have no doubt at all about it. Just as I believe that the former Chancellor was disastrously wrong, so I believe the Prime Minister will be disastrously wrong if he adheres to the policies which he himself adumbrated and says he supported.

Look at the difficulty in which the new Chancellor is placed. I believe that these policies were wrong. I believe that there should be a relaxation at the present time and that At should have come some time ago. I believe that there should be a stimulus to the economy.

Sir William Robson Brown (Esher)


Mr. Callaghan

Perhaps I may be forgiven for not going into that now. We have had a whole series of debates on the Finance Bill in which we covered all these points. The right hon. and learned Gentleman, at least, must be weary of hearing of what we would do on this subject, so I would prefer not to go into that now.

I come to a more serious point. The new Chancellor has been put in a most invidious position. If he starts to relax the economy, as in my view it should be relaxed, no one will know whether he is doing it because it springs out of a genuine economic conviction that it is right or whether it is part of a pre-election boom. No one will know.

The problem that he will be faced with is this. If the Chancellor adheres to the existing policies, he knows perfectly well that we are in for a continuing depression in industry. He must depart from them, and if he departs from them he will be accused immediately of doing it for electoral reasons. What is worse is not whether we shall think this, but whether overseas bankers will think this. [Interruption.] The right hon. Member for Flint, West (Mr. Birch) has always been very particular and concerned about the opinions of overseas bankers in this matter. He knows as well as anybody else in the House that the flight from the pound last year and the loss of our reserves was caused by a feeling of lack of confidence in sterling in this country, arising out of the policies of Her Majesty's Government.

The present position of our economy and our reserves—and the whole House should face it—is that we are so much in the hands of the central bankers today that if they got the feeling that the relaxation is for electoral reasons we shall get another run on sterling. Hon. Members opposite should recognise this; they know that it is true.

I say to the new Chancellor that, in my view, one of his major tasks is to take advantage of the existing strength of sterling in order to try to enter into more favourable arrangements for our reserves. It is ironic that when the dollar is under attack sterling is strong. Sterling is strong today because of the activities of the dollar speculators and because interest rates in this country are much higher than in the United States. If the position is changed and the attack on the dollar ceases, or eases off, sterling will come under strain again.

If sterling comes under strain again, we start to get into balance of payments difficulty. It is these balance of payments difficulties which lie at the root of our failure to get our economy growing at a steady and regular pace. When the Labour Government, after the Second World War, proposed to the Americans that we should endeavour to get some international monetary mechanism, their Government repudiated it. Now, with the dollar under pressure, it may well be that they will be more amenable to entering into arrangements of this sort.

I believe that the Chancellor now has an opportunity of trying to create a situation in which the two major trading currencies in the world are not subject to the speculators, and that runs on them are not the consequences of what the speculators think is the relative weakness or strength of the domestic policies in each country. I hope that the Chancellor will take up that point.

I now come to the pay pause. Last year, despite what we on this side suggested, the Government practically destroyed the fabric of mutual confidence in which wage negotiations are woven. We told them that they were running into difficulties on this but we got no response from them at all. If the Prime Minister really wanted to be ruthless, he should have changed the occupancy of the Ministry of Labour. In my view, the advice which the Ministry gives today is bad and its strength is poor. The Government seem to know nothing about the fabric of wage negotiations. I do not know where they get their advice, and I do not know what responsibility the Minister of Labour has for the policies which are adumbrated.

I can only say, on the experience we have had of the pay pause and of the feelings of deep resentment which were aroused among millions of white collar workers and public servants in every walk of life, that the Government cannot have had good advice before it was rushed in a year ago.

Today, we have another half-baked notion. I hope that everyone will do what the Prime Minister asked, that is, look at the issue carefully, but I must say that it would have been far better if this suggestion had not been introduced as a gimmick at the opening of a debate on a Motion of censure.

I do not believe that the collective bargaining system is perfect. I know of very few people who do. Obviously, it has not reached the full peak of development which it should reach. However, if we are to replace it by something else, or if we are to modify it, this can be done only with the consent of those who are actively engaged in wage negotiations. The Government cannot impose these things. They must learn the lesson, and they ought not, as a reaction to electoral considerations and in response to governmental difficulties, to produce half-baked notions of this sort out of the hat—kittens out of the bag, or whatever the phrase is. They will raise a great bow tide of resistance because the ideas they bring forth have not been properly worked out or adumbrated. By introducing the idea at this stage, and in this way, the Prime Minister has done a great deal of harm to the prospect of getting any reform in the collective bargaining system.

Of course there is a case for an incomes policy. Of course there is a case for relating production and productivity to the increase in incomes. But there is a case for relating all incomes to these things. Why does the Prime Minister, in his proposal, separate wages and salaries and think of sending them to the new National Incomes Commission while retaining profits for examination and consideration by the Government themselves? Does not he realise that he is laying himself open to the charge, which has already been made, that he is trying to shuffle off on to other shoulders the difficult part of the Government's policy, trying to create an organisation which will "carry the can" for the Government?

There would be a very good case, if a National Incomes Commission is to be set up, for sending the profitability of a number of companies to it for examination. It would be a good thing if there were an exposure of their trading practices. We might learn a great deal about the way they conduct their affairs and maintain efficiency. But none of this is proposed. All this sector is kept for profits taxation by the Government themselves.

The Prime Minister is quite wrong in assuming that profits go up after wages have risen. Every trend and every statistic shows that wage rates rise after profits have risen. If he wants to do something about profits and if he wants to convince the trade unions that he is in earnest and serious about this, he should adjust the Profits Tax in advance on the basis of the forecasts of profitability which can be made and which are pretty accurate.

The Government's economic policy has been based on strength through stagnation. It has been a failure. Above all, their basic failure has been that have not selected their priorities and have not assembled the means of fulfilling their priorities and therefore our social and economic system has got into the present chaotic state. We cannot solve our transport problem, we cannot build hospitals that are necessary, we shall not clear the slums and we shall not build the schools unless we select priorities and fulfill them. The Government regard planning only as a gimmick, and they will utterly fail because they refuse to take the idea of central planning seriously. I have no doubt—and I believe that this view is increasingly held in the country—that the concept of central planning and the selection of priorities and their fulfilment has come to stay and will need to be practised if the Government are to succeed. Because they have failed to do this, their policies cannot succeed.

I come to one or two other matters which the Prime Minister selected this afternoon, some of the other gimmicks. There is this question of consumer interest. The Weights and Measures Bill which we are promised was first introduced into the House of Lords on 22nd November, 1960. It came to the House of Commons on 14th February, 1961. On 28th June, 1961, the Government made a statement to the effect that they would not proceed with the Bill but would introduce a No. 2 Bill to take account of further views and proposals. This No. 2 Bill had its First Reading on 17th July, 1961. It lapsed when the last Session of Parliament finished, and it has never seen the light of day since.

On 11th December, 1959, my hon. Friend the Member for Greenwich (Mr. Marsh) introduced an Offices Bill, which we were promised by the Prime Minister this afternoon. That Bill was passed by this House on 1st April, 1960, and it was to become effective in January, 1962. The Government said that they would consult the T.U.C. and would prepare and lay regulations by January, 1962. The First Secretary of State made a statement in July, 1960, saying that the Government proposed to introduce a Bill of their own and that no steps would be taken to lay the regulations. The then Minister of Labour said on 1st November, 1961, that there was no time for proper parliamentary examination and that a new Bill would be introduced the following Session.

Why should we assume that the measures which the Prime Minister announced this afternoon will be legislated on and will become effective? Why is the country entitled to assume that the Government mean any more now than they meant when those statements were made?

I have here the "Industrial Charter". It says: To the worker we offer a new charter giving assurance of steady employment, incentive to test his ability to the utmost and status as an individual personality. To the consumer we offer the ultimate restoration of freedom of choice and protection from restrictive practices. To the owner and the shareholder we offer confidence in the future and a share in Britain's prosperity. I agree that the last is true, but what is the date of this document? It is July, 1947. Fifteen years later, the stale, hoary ideas are trotted out as part of the new deal by a tired and defeated Government.

Why should the Government feel that they are entitled to the confidence of the country when they can only reproduce, fifteen years afterwards, ideas that they adumbrated as long ago as 1947? I do not know whether hon. Members opposite have any confidence in the Government. I have no doubt that the Prime Minister will get their votes, but does he have their confidence? [HON. MEMBERS: "Hear, hear."] As far as I could tell from those cheers, he has the confidence of about one-third of the Members of the House.

There is a case for a dissolution of Parliament and the Prime Minister knows it. The case for a dissolution of Parliament rests not merely on the fact that the Government and or the Prime Minister can command a majority in the House. It also rests on the fact that there is a good constitutional case for dissolution when the Prime Minister can show, and it is shown to him, that the opinion of Parliament and the Legislature is out of line with opinion in the country.

It could be argued that at the beginning of a Government's life they are entitled to say, "We need a period in which to fulfil our policies and, therefore, any temporary unpopularity is something that we can withstand." But the Government have been in office for eleven years. If one thing is clear, it is that the opinion of the Legislature as it will be expressed tonight in the Division Lobbies is out of line with the opinion of the country.

I do not know how long the Prime Minister will remain in office. It may be thought by hon. Members opposite that if they support him tonight, they can spirit him away quietly during the Christmas Recess. [HON. MEMBERS: "Now."] No, not during the Summer Recess. They will leave it for six months. The Christmas Recess is the danger point for the Prime Minister. Let us watch and see what happens. I want the right hon. Gentleman to remain as Prime Minister of this Government. He is a great electoral asset to us.

I warn the Prime Minister, however, of what Stanley Baldwin said about the Tories, "They can be merciless." The Prime Minister came to power on the votes of the Tory Right wing. He was selected because it was thought that the Tory Right wing would not make as much trouble as the Left wing if he were selected. Does the Tory Right wing believe that the Prime Minister has upheld the causes in which they believe? He has betrayed the Right wing of the Tory Party. He has betrayed the Chancellor of the Exchequer. He is against the Right wing of the Tory Party now. He is the Prime Minister; he can afford to throw them overboard and he has done so consistently.

Everybody knows that it was the Deputy Prime Minister who was tipped confidently as the new Prime Minister when Lord Avon went, but because it was said that the Suez rebels would make trouble the Prime Minister got the job and he has betrayed the Tory Right wing ever since he got it.

I would say one further thing to the Prime Minister, and it is this: we need a Prime Minister—and we need a Government—who will command moral authority in his party and in his country. He has no moral authority in his party, he has no respect in the country. The Government as a whole are believed to be tired, to have been with us too long, and to have failed.

I say one final thing, in conclusion— [HON. MEMBERS: "Time."] I shall wait till hon. Members have finished shouting. The Prime Minister and the Government will get their majority tonight, and, by a really ironical twist of fate, the bigger the majority they get in the Lobby tonight the bigger will be the discredit which the Tory Party will suffer in the country tomorrow.

9.31 p.m.

The Chancellor of the Exchequer (Mr. Reginald Maudling)

I should like to start by congratulating my hon. Friend the Member for Oswestry (Mr. Biffen) on a very remarkable maiden speech. We all hope that we shall hear from him often again. Then I should also like to congratulate my hon. Friend the Member for Derbyshire, West (Mr. Crawley) on has second maiden speech.

We have had from the Opposition Front Bench two very vigorous speeches in the course of today. They had one element in common, that they contained nothing positive whatsoever from start to finish. There the resemblance ended. The right hon. Gentleman the Leader of the Opposition contented himself with mere quips about personalities—not quite so good as the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) usually makes, not as good as those by the hon. Member for Leeds, West (Mr. C. Pannell); but he confined himself to personalities. At least the hon. Gentleman the Member for Cardiff, South-East (Mr. Callaghan) confined himself to policies, which is surely what we are dealing with, and that is what, unlike hon. Members opposite, I intend to deal with in answer to the hon. Gentleman.

He talked about schools, for example, and how little we were doing about schools. In fact, in the last ten years expenditure on education has more than doubled. In fact, we are spending a greater percentage of our national income on education than any European country except Sweden. I have very good confirmation today from a newspaper cutting, "Britain takes front place for schools". It says: Experts from 53 nations met yesterday to pool ideas on building schools more quickly and more cheaply. The country they chose for their meeting was Britain because it is now in the world's front rank for school building.

Hon. Members: Then why sack the Minister of Education?

Mr. Maudling

The hon. Member for Cardiff, South-East made a serious speech to which I should like to reply. I hope I get a chance of doing so. He dealt also with the relation between wages and prices. He said that in the last few months prices had been going up faster than wages. This is true just marginally, but it comes after ten years when wages have been rising a good deal faster than prices, in contrast to the days of the Labour Government when they went the other way. He talked about investment in industry and a lack of confidence, but investment in industry in real terms is 80 per cent. above ten years ago and in manufacturing industry 60 per cent. [Interruption.]

Hon. Members: Then why sack the Chancellor?

Mr. Maudling

There are many people on the benches opposite who think that noise is a substitute for argument.

The hon. Member for Cardiff, South-East talked about a remarkable failure in the provision of basic human needs. What rubbish. Look at the figures of living standards, of consumption and the increased levels of pensions and National Assistance. In every case, they are up by 50 per cent. or more on ten years ago. That sort of argument is not worthy even of the Opposition we have got, and that is saying a lot. The hon. Member talked about the present state of the economy, and I want to say a word or two about that, and how I see the prospects at the moment.

Mr. Ross

How did you come to lose a deposit in West Lothian?

Mr. Maudling

I feel that West Lothian, important as it is, is less important than the national economy. My predecessor predicted this year a substantial expansion in the economy. This was based upon an increase in exports, an increase in public expenditure, a restocking movement and the growth of consumption over the year of about 4 per cent. The present position is that exports are rising, and rising well, that public expenditure is also rising, and rising vigorously. In regard to consumption, the rise which we have anticipated has fallen a bit behind what we thought. [Interruption.] The reaction of the Opposition to the facts is what one would exact of them.

There is, at the moment, and it is quite clear, spare capacity in industry, and a lack of confidence in some parts of British industry. It is unwise to exaggerate either the degree of spare capacity or the effect of a lack of confidence. Spare capacity cannot be measured solely in physical capacity. What is also of vital importance is the supply of skilled labour, and I think that that is a good deal closer to the total demand than the physical capacity of our factories. As for the absence of confidence, the point is not whether it arises from increased competition, as some of my hon. Friends say, or to difficulties at home and abroad. If there is an absence of confidence this is bound to influence the level of investment and through that the level of total demand. We have to weigh these factors, and my own judgment is that it is still by no means certain that our estimates will be falsified.

It may well be the case that the growth of consumption in the second half of this year and the arrival of the re-stocking movement will produce the vigorous expansion in the economy for which we are looking. If that does not happen, we shall do something about it. [Interruption.] It is always the policy of the party opposite to do what is necessary before it need be done. In fact, it is their desire to act too soon. I have no intention of putting more impetus behind the economy until I am convinced that that can be done without prejudicing the prospects of steady growth in the future, particularly in exports.

We are facing considerable difficulties in the international field today. The hon. Gentleman referred to these, and I want to answer some of the things he said. There are, certainly in America and in many Western European countries, business activities which are growing, but there are difficulties. Commodity prices are worryingly low, and the performance of Wall Street recently clearly gave rise to concern. These are matters which are not entirely within our control, but there are some things that we can do about them. For example, there are commodity markets. In the past, we have been prepared to take part in international commodity schemes based in each case upon the particular problems of any individual commodity—the Wheat Agreement, the Tin Agreement and the Commonwealth Sugar Agreement, all of great importance to our economy.

But we have reached a time when we must look at the whole problem again and make a fresh attempt to secure new and revised agreements on commodities. The work is going on in respect of coffee in New York, and projects for a cocoa agreement are being considered. I hope that we shall make a new advance and a new approach to the general problem of commodity agreements because the low price of commodities certainly threatens the balance of international trade, and is a very serious problem for many underdeveloped countries.

The other problem is the availability of means to finance international transactions. I want to answer the serious point made by the hon. Member. The fact is that under present arrangements there is heavy dependence upon the two key currencies of sterling and the dollar, and if these two reserve currencies are to fulfil their rôle of expanding international trade they must be held to an increasing extent by other countries, and external liabilities on them will, therefore, grow. If this happens quickly, it can create distrust over the future value of the reserve currencies, with difficulties that we can all foresee. We know from experience the constraint that this danger can impose on our domestic policies. The United States is now experiencing something of the same constraint. If it is to be alleviated and world trade is to expand as we wish, it is desirable to improve and extend the arrangements that already exist for international co-operation in support of the key currencies.

We have also done a great deal in past years by extending the resources of the International Monetary Fund through increases in the quotas and through the borrowing schemes, and these additional resources and support for the Fund are of great value to the reserve currencies. But I have a good deal of sympathy with the view, which the hon. Gentleman shares, that what has already been done is not in itself sufficient. We must continue to look for some method of settling international deficits without either promoting world inflation or throwing an undue burden on the reserve currencies. In this there are financial, technical and political difficulties. But it is my intention to take the initiative in discussing with representatives of the other main countries involved what positive measures we can take in this field and related fields, including aid, which is of great importance, to ascertain whether more can be done to share the common burden.

Those are the main international problems. The other great international problem which is bound to create uncertainty in our economy and in investment is our relation with Europe. The basic fact is that the creation of the European Common Market has brought to our economic prospects and policies something which is permanently and profoundly different The creation of a new economy across the Channel on the scale of the United States but with our levels of wages is something entirety new.

Whether we go in or stay out, things will never be the same as they were before the creation of the Market. If we succeed in reaching an agreement which will enable us to enter the Market, as I emphatically hope we shall succeed —[Interruption.]—the difference between me and the Liberal Party is that, whereas it wanted to join the Common Market first and try to change it afterwards, I want to see safeguards for our vital interests before we join.

But if, as I hope, we do succeed in joining the Common Market, then we shall face a new wave of competition and a new surge of opportunity on a scale that we have not seen before. It is of vital importance that our economy should be enterprising enough and flexible enough to face that competition and to accept the opportunity.

If we should not succeed in joining the Common Market, however, we shall still survive. We have the whole of the rest of the world to make our living in. Nevertheless, even if we remain outside the Common Market, we shall still face an adjustment to our economy—to our trading conditions, to our whole business outlook—on a major scale with the growing competition in new world conditions. Whichever way it goes, there will be great effect on our economy, and it is clearly in the interests of business confidence and of investment in this country that this matter should be brought to a head as soon as possible, as my right hon. Friend the Lord Privy Seal is so valiantly trying to do.

Now I turn from overseas problems to problems at home. They centre on the difficulties that lie in the way of expansion without inflation. This is, after all, the basic argument. It is the basic criticism of us that we have not succeeded in achieving a system whereby we can have steady and rapid expansion of the economy without inflation. This is true. We have not found the answer, but nor has any other free democracy that I know of.

It is, indeed, the challenge to our whole democratic system that, whereas Communist countries can apparently achieve a fairly steady advance in their output and production, none of us in the West has yet succeeded, under conditions of freedom and democracy, in finding how to ensure steady expansion without inflation. That is the problem to which we are addressing ourselves now.

Fundamental to this problem, and to the solution upon which so much of our future depends, is the problem of incomes policy. One thing which we in this House and this country have learnt in the last ten years is that without an incomes policy we cannot have expansion and growth without inflation. The main inflationary element in our economy for years has been the fact of incomes growing faster than production —and I include in "incomes", wages, salaries, dividends, and profits. This is the main inflationary element still remaining.

If we cannot deal with that, we cannot deal with our real problem. If we can deal with it, we shall establish a basis on which we can build a better life for our people and, what is perhaps equally important, play the part which we should play in the immense task of ridding the world of the poverty which is so terrible.

I do not regard an incomes policy as something negative but as something positive. That is the fundamental point to make. The purpose of an incomes policy is not to keep incomes down but to ensure that they rise only as fast as the national economy can bear. If they rise faster, the result is disaster. If we do not have some safeguard against inflation, if we have income competition leading to rip-roaring inflation, it means that incomes will not rise in real terms as much as they possibly could. The purpose of an incomes policy is not to restrain but to ensure steady growth commensurate, and fully commensurate, with the capacity of the economy.

Wages and salaries are the biggest single element in this problem. I will deal with profits and dividends later. It is, I think, universally accepted now that the general rise in incomes must be kept in line with the rise in output. How can this be done in a free society in a way which recognises the just claims of some people to go above the average without destroying the average itself and our purpose? The problem is now to reconcile the interests of individuals with the interests of the community. That is. after all, the basic problem of political organisation.

Some form of discipline is clearly essential. There is the old discipline of deflation and unemployment effective on the total level of wages, but wholly unfair to individuals and completely contrary to prospects of national economic growth. That is the old discipline which we have discarded and which no one. wants to see come back again.

Then there is the discipline of Government dictation. One or two hon. Members on both sides of the House have said that the Government must take decisions. Do they want us to take decisions about the level of wages in one industry or the other? I do not believe it?

Mr. W. Hamilton

But they have done it.

Mr. Maudling

If they want us to take decisions about the level of incomes in the private sector of the economy, while that might be effective in theory—it works in Communist States—it would be intolerable in the free society which we are trying to preserve while achieving growth and avoiding inflation.

There is only one alternative. If we do not have the discipline of deflation and unemployment, and if we do not have the discipline of Government dictation, the only alternative is the self-discipline of a mature democracy. [Interruption.] If the party opposite will not face this, it will not face the 1960s, and it has never faced them. We can have only one of four things—no incomes policy and inflation followed by deflation and stop and go and the rest of it, permanent deflation, Government control of wages, or a system whereby the self-discipline of a mature educated democracy works itself to ensure that wages and salaries and incomes as a whole keep in line with the productivity of the nation.

This is what we are aiming at. This is the purpose of the Commission. If this process is to succeed, it cannot be left solely to the interested parties to a particular dispute, who have their duty to their own people, for the unions and the employers have the duty to put their own peoples' point of view. Somewhere there must be some forum where the interests and views of the public and the nation as a whole must be put forward, not merely in general teams, but in dealing with particular wage claims. The purpose of this Commission is not to impose any new discipline on an industry, but to allow self-discipline to work on impartial advice in the light of a fully-informed public opinion. Surely this is the way for our democracy in tine 1960s to deal with this fundamental problem.

The Commission will be considering not only the interests of the community, but the interests of individual claimants. I hope that it will help in resisting in the national interest excessive claims based solely on crude bargaining power. I hope that it will protect the just claims of other people with less bargaining power who might otherwise be swamped by the crude application of a general average or general deflation. In this way we have an opportunity of reconciling, as we have not reconciled, the claims of individuals with the claims of the community, and doing it on a basis acceptable to a free society. That will be the Commission's main purpose.

Its second purpose will be to conduct ex post facto, retrospective, examinations into settlements which have been reached —except by arbitration—which may appear to be contrary to the public interest, to inquire whether they are contrary to the public interest, whether prices will rise, whether a sheltered industry which has given a particular wage increase ought to be subject to more competition, whether an industry is efficient enough, or whether there are too many restrictive practices on both sides of the industry. All those things should be brought before public opinion and made known to the people. That is the purpose of the National Incomes Commission.

I come now to the very important question of profits and dividends. The principle that incomes should not rise faster than national productivity of course applies to all incomes, including profits and dividends. Equally it is true that the method of application will vary, and I will explain why. Sometimes, profits may have to rise faster than wages because sometimes, as at present, profits are falling while wages are rising. Wages are fixed in advance by negotiation. Profits depend on results achieved in the market.

Wages are by and large fixed over certain industries as a whole, but within industries, whereas wages are consistent, profits and dividends are not. We want to see bigger margins between successful and unsuccessful firms. We want to see efficient firms getting higher profits and paying higher dividends, so long as the less efficient firms got less and pay less. There is a margin or differential which does not exist in wages.

Finally, and most important, I think that hon. Gentlemen opposite are a little mistaken in talking about the National Incomes Commission in this connection, because the Government have power over the total level of profits and dividends which they have not over the total level of wages. Through profits taxation we have a direct power to impinge on excessive levels of profits. Does the party opposite want the same to apply to wages? Does it want wages and profits to be treated on the same basis? Does it want the Government to have the same power of taxation over wages?

My right hon. Friend has made it clear that the processes of collective bargaining, the freedom of man to hire his labour, and the freedom of man to employ and to pay wages, are not affected by our policy. The purpose of the National Incomes Commission is to ensure that public opinion is focussed clearly and closely on this vital problem. The purpose of the Commission is to see that the claims of individual interests and the claims of the nation are put together and looked at together in a single forum. The treatment of profits and dividends must be on the same principle as that of wages. The principle that applies to one, must apply to the other, but the method clearly is different, and the direct power of the Government over the level of profits is far more stringent than their direct power over any level of wages.

I have endeavoured to deal with most of the problems raised—so far as any problems were raised by the party opposite. The other factors for combating inflation are the credit policy and the level of Government expenditure. As regards credit policy, I am sure that we have done much to eliminate the demand-pull type of inflation. We must have a credit policy that permits expansion but does not encourage inflation. We have had one experiment too many in the process of bringing down long-term interest rates by artificial inflationary means.

I am convinced that Government expenditure must be treated on a more positive basis. Government expenditure is essential, but it must be limited to what the economy can carry, and to a proper proportion of the national income. Within that we must concentrate expenditure on what yields the biggest return to the nation.

These are the main purposes of our policy. We have been presented with a Motion of censure backed by witticisms about personalities, backed by much culling of the gossip columns of newspapers, but with an absolute absence of any solid arguments, and no reference whatever to what the party opposite would do. I am sure that the House will reject this Motion, just as the country will reject the party opposite, because fundamentally there is not much joy in Socialism in Leicester at the moment. The party opposite will be rejected because fundamentally it is out of date— because hon. Gentlemen opposite still try to solve the problems of the forties with the ideas of the 'twenties. They have not seen that the 'sixties have crept up on them. The country will reject the party opposite because it presents no possible alternative, just as I am convinced that the House will reject this Motion.

Question put:

The House divided: Ayes 253, Noes 351.

Division No. 261.] AYES [9.59 p.m.
Abse, Leo Griffiths, Rt. Hon. James (Llanelly) Monslow, Walter
Ainsley, William Griffiths, W. (Exchange) Moody, A. S.
Albu, Austen Grimond, Rt. Hon. J. Morris, John
Allaun, Frank (Salford, E.) Gunter, Ray Moyle, Arthur
Allen, Scholefield (Crewe) Hale, Leslie (Oldham, w.) Mulley, Frederick
Awbery, Stan Hall, Rt. Hn. Glenvil (Colne Valley) Neal, Harold
Bacon, Miss Alice Hamilton, William (West Fife) Noel-Baker, Francis (Swindon)
Baird, John Hannan, William Noel-Baker, Rt. Hn. Philip (Derby, S.)
Baxter, William (Stirlingshire, W.) Harper, Joseph Oliver, G. H.
Beaney, Alan Hart, Mrs. Judith Oram, A. E.
Bellenger, Rt. Hon. F. J. Hayman, F. H. Oswald, Thomas
Bence, Cyril Healey, Denis Owen, Will
Bennett, J. (Glasgow, Bridgeton) Henderson, Rt. Hn. Arthur (Rwly Regis) Padley, W. E.
Benson, Sir George Herbison, Miss Margaret Paget, R. T.
Blackburn, F. Hewitson, Capt. M. Pannell, Charles (Leeds, w.)
Blyton, William Hill, J. (Midlothian) Pargiter, G. A.
Boardman, H. Hilton, A. V. Parker, John
Bottomley, Rt. Hon. A. G. Holman, Percy Parkin, B. T.
Bowen, Roderic (Cardigan) Holt, Arthur Paton, John
Bowles, Frank Hooson, H. E. Pavitt, Laurence
Boyden, James Houghton, Douglas Pearson, Arthur (Pontypridd)
Braddock, Mrs. E. M. Howell, Charles A. (Perry Barr) Peart, Frederick
Bradley, Tom Howell, Denis (Small Heath) Pentland, Norman
Bray, Dr. Jeremy Hoy, James H. Plummer, Sir Leslie
Brockway, A. Fenner Hughes, Cledwyn (Anglesey) Popplewell, Ernest
Broughton, Dr. A. D. D. Hughes, Emrys (S. Ayrshire) Prentice, R. E.
Brown, Rt. Hon. George (Belper) Hughes, Hector (Aberdeen, N.) Price, J. T. (Westhoughton)
Brown, Thomas (Ince) Hunter, A. E. Proctor, W. T.
Butter, Herbert (Hackney, C.) Hynd, H. (Accrington) Randall, Harry
Butler, Mrs. Joyce (Wood Green) Hynd, John (Attercliffe) Rankin, John
Callaghan, James Irvine, A. J. (Edge Hill) Redhead, E. C.
Castle, Mrs. Barbara Irving, Sydney (Dartford) Reid, William
Chapman, Donald Janner, Sir Barnett Reynolds, G. W.
Cliffe, Michael Jay, Rt. Hon. Douglas Roberts, Albert (Normanton)
Corbet, Mrs. Freda Jeger, George Roberts, Goronwy (Caernarvon)
Craddock, George (Bradford, S.) Jenkins, Roy (Stechford) Robertson, John (Paisley)
Cronin, John Johnson, Carol (Lewisham, S.) Robinson, Kenneth (St. Pancrae, N.)
Crosland, Anthony Jones, Rt. Hn A. Creech (Wakefield) Rodgers, W. T. (Stockton)
Crossman, R. H. S. Jones, Dan (Burnley) Ross, William
Jones, Jack (Rotherham)
Cullen, Mrs. Alice Jones, Jack (Rotherham) Royle, Charles (Salford, West)
Dalyell, Tam Jones, J. Idwal (Wrexham) Shinwell, Rt. Hon. E.
Darling, George Jones, T. W. (Merioneth) Short, Edward
Davies, G. Elfed (Rhondda. E.) Kelley, Richard Silverman, Julius (Aston)
Davies, Harold (Leek) Kenyon Clifford Silverman, Sydney (Nelson)
Davies, Ifor (Gower) Key, Rt. Hon. C. W. Skeffington, Arthur
Davies, S. O. (Merthyr) King, Dr. Horace Slater, Mrs. Harriet (Stoke, N.)
Deer, George Lawson, George Slater, Joseph (Sedgefield)
Delargy, Hugh Ledger, Ron Small, William
Dempsey, James Lee, Frederick (Newton) Smith, Ellis (Stoke, S.)
Diamond, John Lee, Miss Jennie (Cannock) Snow, Julian
Dodds, Norman Lever, Harold (Cheetham) Sorensen, R. W.
Donnelly, Desmond Lever, L. M. (Ardwick) Soskice, Rt. Hon. Sir Frank
Driberg, Tom Lewis, Arthur (West Ham, N.) Spriggs, Leslie
Dugdale, Rt. Hon. John Lipton, Marcus Steele, Thomas
Ede, Rt. Hon. C. Loughlin, Charles Stewart, Michael (Fulham)
Edelman, Maurice Lubbock, Eric Stonehouse, John
Edwards, Rt. Hon. Ness (Caerphilly) Mabon, Dr. J. Dickson Stones, William
Edwards, Robert (Bilston) McCann, John Strachey, Rt. Hon. John
Edwards, Walter (Stepney) MacColl, James Strauss, Rt. Hn. G. R. (Vauxhall)
Evans, Albert MacDermot, Niall Stress, Dr. Barnett (Stoke-on-Trent, C)
Fernyhough, E McInnes, James Swain, Thomas
Finch, Harold McKay, John (Wallsend) Swingler, Stephen
Fitch, Alan Mackie, John (Enfield, East) Taverne, D.
Fletcher, Eric McLeavy, Frank Taylor, Bernard (Mansfield)
Foot, Dingle (Ipswich) MacMillan, Malcolm (Western Isles) Thomas, George (Cardiff, W.)
Foot, Michael (Ebbw Vale) MacPherson, Malcolm (Stirling) Thomas, Iorwerth (Rhondda, W.)
Forman, J. C. Mallalieu, E. L. (Brigg) Thompson, Dr. Alan (Dunfermline)
Fraser, Thomas (Hamilton) Mallalieu, J. P. W. (Huddersfield, E) Thomson, G. M. (Dundee, E.)
Gaitskell, Rt. Hon. Hugh Manuel, Archie Thornton, Ernest
Galpern, Sir Myer Mapp, Charles Thorpe, Jeremy
George, Lady Megan Lloyd (Crmrthn) Marsh, Richard Timmons, John
Ginsburg, David Mason, Roy Tomney, Frank
Gooch, E. G. Mayhew, Christopher Wade, Donald
Gordon Walker, Rt. Hon. P. C. Mellish, R. J. Wainwright, Edwin
Gourlay, Harry Mendelson, J. J. Warbey, William
Greenwood, Anthony Millan, Bruce Watkins, Tudor
Grey, Charles Milne, Edward Weitzman, David
Griffiths, David (Rother Valley) Mitchison, G. R. Wells, Percy (Faversham)
Wells, William (Walsall, N.) Williams, Ll. (Abertillery) Woof, Robert
White, Mrs. Eirene Williams, W. R. (Openshaw) Wyatt, Woodrow
Whitlock, William Williams, W. T. (Warrington) Yates, Victor (Ladywood)
Wigg, George Willis, E. G. (Edinburgh, E.) Zilliacus, K.
Wilkins, W. A. Wilson, Rt. Hon. Harold (Huyton)
Willey, Frederick Winterbottom, R. E. TELLERS FOR THE AYES:
Williams, D. J. (Neath) Woodburn, Rt. Hon. A. Mr. Bowden and
Mr. G. H. R. Rogers.
Aitken, W. T. Dance, James Hopkins, Alan
Allan, Robert (Paddington, S.) d'Avigdor-Goldsmid, Sir Henry Hornby, R. P.
Allason, James Deedes, Rt. Hon. W. F. Hornsby-Smith, Rt. Hon. Dame P.
Amery, Rt. Hon. Julian de Ferranti, Basil Howard, Hon. G. R. (St. Ives)
Arbuthnot, John Digby, Simon Wingfield Howard, John (Southampton, Test)
Ashton, Sir Hubert Donaldson, Cmdr. C. E. M. Hughes Hallett, Vice-Admiral John
Atkins, Humphrey Doughty, Charles Hughes-Young, Michael
Balniel, Lord Drayson, G. B. Hulbert, Sir Norman
Barber, Anthony du Cann, Edward Hurd, Sir Anthony
Barlow, Sir John Duncan, Sir James Hutchison, Michael Clark
Barter, John Eden, John Iremonger, T. L.
Batsford, Brian Elliot, Capt. Walter (Carshalton) Irvine, Bryant Godman (Rye)
Baxter, Sir Beverley (Southgate) Elliott, R.W.(Nwcastle-upon-Tyne, N.) Jackson, John
Beamish, Col. Sir Tufton Emery, Peter James, David
Bell, Ronald Emmet, Hon. Mrs. Evelyn Jenkins, Robert (Dulwich)
Bennett, F. M. (Torquay) Errington. Sir Eric Johnson, Dr. Donald (Carlisle)
Bennett, Dr. Reginald (Gos & Fhm) Erroll, Rt. Hon. F. J. Johnson, Eric (Blackley)
Berkeley, Humphry Farey-Jones, F. W. Johnson Smith, Geoffrey
Bevins, Rt. Hon. Reginald Farr, John Jones, Rt. Hn. Aubrey (Hall Green)
Bidgood, John C. Fell, Anthony Joseph, Rt. Hon. Sir Keith
Biffen, John Fisher, Nigel Kaberry, Sir Donald
Biggs-Davison, John Fletcher-Cooke, Charles Kerans Cdr. J. S.
Bingham, R. M. Forrest, George Kerby, Capt. Henry
Birch, Rt. Hon. Nigel Foster, John Kerr, Sir Hamilton
Bishop, F. P. Fraser, Rt. Hon, Hugh (Stafford &Stone) Kershaw, Anthony
Black, Sir Cyril Fraser, Ian (Plymouth, Sutton) Kimball, Marcus
Bossom, Clive Freeth, Denzil Kirk, Peter
Bourne-Arton, A. Galbraith, Hon. T. G. D. Kitson, Timothy
Box, Donald Gammans, Lady Lagden, Godfrey
Boyd-Carpenter, Rt. Hon. John Gardner, Edward Lambton, Viscount
Boyle, Rt. Hon. Sir Edward George, J. C. (Pollok) Lancaster, Col. C. G.
Braine, Bernard Gibson-Watt, David Langford-Holt, Sir John
Brewis, John Gilmour, Sir John Leather, Sir Edwin
Bromley-Davenport, Lt.-Col. Sir Walter Glover, Sir Douglas Leavey, J. A.
Brooke, Rt. Hon. Henry Glyn, Dr. Alan (Clapham) Leburn, Gilmour
Brooman-White, R. Glyn, Sir Richard (Dorset, N.) Legge-Bourke, Sir Harry
Brown, Alan (Tottenham) Godber, J. B. Lewis, Kenneth (Rutland)
Bryan, Paul Goodhart, Philip Lilley, F. J. P.
Buck, Antony Goodhew, Victor Lindsay, Sir Martin
Bullard, Denys Gough, Frederick Linstead, Sir Hugh
Bullus, Wing Commander Eric Gower, Raymond Litchfield, Capt. John
Butcher, Sir Herbert Grant, Rt. Hon. William Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Butler, Rt. Hn. R. A. (Saffron Walden) Grant-Ferris, Wg. Cdr. R. Lloyd, Rt. Hon. Selwyn (Wirral)
Campbell, Sir David (Belfast, S.) Green, Alan Longbottom, Charles
Campbell, Gordon (Moray & Nairn) Gresham Cooke, R. Longden, Gilbert
Carr, Compton (Barons Court) Grosvenor, Lt.-Col. R. G. Loveys, Walter H.
Carr, Robert (Mitcham) Gurden, Harold Lucas, Sir Jocelyn
Cary, Sir Robert Hall, John (Wycombe) Lucas-Tooth, Sir Hugh
Channon, H. P. G. Hamilton, Michael (Wellingborough) McAdden, Sir Stephen
Chataway, Christopher Hare, Rt. Hon. John MacArthur, Ian
Clark, William (Nottingham, S.) Harris, Frederic (Croydon, N. W.) McLaren, Martin
Clarke, Brig. Terence (Portsmth, W.) Harris, Reader (Heston) McLaughlin, Mrs. Patricia
Cleaver, Leonard Harrison, Brian (Maldon) Maclay, Rt. Hon. John
Cole, Norman Harrison, Col. Sir Harwood (Eye) Maclean, Sir Fitzroy (Bute &NAyrs.)
Collard, Richard Harvey, Sir Arthur Vere (Macclesf'd) McLean, Neil (Inverness)
Cooke Robert Harvey, John (Walthamstow, E.) Macleod, Rt. Hn. Iain(Enfield, W.)
Cooper, A.E. Harvie Anderson, Miss Macleod, John (Ross & Cromarty)
Cooper-Key, Sir Neill Hastings, Stephen McMaster, Stanly R.
Cordeaux, Lt-Col. J. K. Hay, John Macmillan, Rt. Hn. Harold (Bromley)
Cordle, John Heald, Rt. Hon. Sir Lionel Macmillan, Maurice (Hallfax)
Corfield, F. V. Henderson, John (Cathcart) Macpherson. Rt. Hn. Niall (Dumfries)
Costain, A. P. Hendry, Forbes Maddan, Martin
Coulson, Michael Hicks Beach, Maj. W. Maginnis, John E.
Courtney, Cdr. Anthony Hiley, Joseph Maitland, Sir John
Craddock, Sir Beresford Hill, Dr. Rt. Hon. Charles (Luton) Markham, Major Sir Frank
Crawly, Aidan Hill, Mrs. Eveline (Wythenshawe) Marlowe, Anthony
Critchley, Julian Hill, J.E.B. (S. Norfolk) Marples, Rt. Hon. Ernest
Crosthwaite-Eyre, Col. Sir Oliver Hirst, Geoffrey Marshall, Douglas
Crowder, F. P. Hobson, Sir John Marten, Nail
Cunningham, Knox Hocking, Philip N. Mathew, Robert (Honiton)
Curran, Charles Holland, Philip Matthews, Gordon (Meriden)
Currie G. B. H. Hollingworth, John Maudling, Rt. Hon. Reginald
Dalkeith, Earl of Hope, Rt. Hon. Lord John Mawby, Ray
Maxwell-Hyslop, R. J. Redmayne, Rt. Hon. Martin Temple, John M.
Maydon, Lt.-Cmdr. S. L. C. Rees, Hugh Thatcher, Mrs. Margaret
Mills, Stratton Rees-Davies, W. R. Thomas, Leslie (Canterbury)
Miscampbell, Norman Renton, Rt. Hon. David Thomas, Peter (Conway)
Montgomery, Fergus Ridley, Hon. Nicholas Thompson, Kenneth (Walton)
Moore, Sir Thomas (Ayr) Ridsdale, Julian Thompson, Richard (Croydon, S.)
More, Jasper (Ludlow) Rippon, Rt. Hon. Geoffrey Thorneycroft, Rt. Hon. Peter
Morgan, William Roberts, Sir Peter (Heeley) Thornton-Kemsley, Sir Colin
Morrison, John Robertson, Sir D. (C'thn's & S'th'ld) Tiley, Arthur (Bradford, W.)
Mott-Radclyffe, Sir Charles Robinson, Rt. Hn. Sir R. (B'pool, S.) Tilney, John (Wavertree)
Nabarro, Gerald Robson Brown, Sir William Touche, Rt. Hon. Sir Gordon
Neave, Airey Rodgers, John (Sevenoaks) Turner, Colin
Nicholls, Sir Harmar Roots, William Turton, Rt. Hon. R. H.
Nicholson, Sir Godfrey Ropner, Col. Sir Leonard Tweedsmuir, Lady
Noble, Rt. Hon. Michael Royle, Anthony (Richmond, Surrey) van Straubenzee, W. R.
Nugent, Rt. Hon. Sir Richard Russell, Ronald Vane, W. M. F.
Orr, Capt. L. P. S. St. Clair, M. Vaughan-Morgan, Rt. Hon. Sir John
Orr-Ewing, C. Ian Sandys, Rt. Hon. Duncan Vickers, Miss Joan
Osborn, John (Hallam) Scott-Hopkins, James Vosper, Rt. Hon. Dennis
Osborne, Sir Cyril (Louth) Seymour, Leslie Wakefield, Sir Wavell
Page, Graham (Crosby) Sharples, Richard Walder, David
Page, John (Harrow, West) Shaw, M. Walker, Peter
Pannell, Norman (Kirkdale) Shepherd, William Walker-Smith, Rt. Hon. Sir Derek
Partridge, E. Skeet, T. H. H. Wall, Patrick
Pearson, Frank (Clitheroe) Smith, Dudley(Br'ntf'd & Chiswick) Ward, Dame Irene
Peel, John Smithers, Peter Watkinson, Rt. Hon. Harold
Percival, Ian Smyth, Rt. Hon. Brig. Sir John Webster, David
Peyton, John Soames, Rt. Hon. Christopher Wells, John (Maidstone)
Pickthorn, Sir Kenneth Spearman, Sir Alexander Whitelaw, William
Pike, Miss Mervyn Speir, Rupert Williams, Dudley (Exeter)
Pilkington, Sir Richard Stanley, Hon. Richard Williams, Paul (Sunderland, S.)
Pitman, Sir James Stevens, Geoffrey Wills, Sir Gerald (Bridgwater)
Pitt, Dame Edith Steward, Harold (Stockport, S.) Wilson, Geoffrey (Truro)
Pott, Percivall Stodart, J. A. Wise, A.R.
Powell, Rt. Hon. J. Enoch Stoddart-Scott, Col. Sir Malcolm Wolridge-Gordon, Patrick
Price, David (Eastleigh) Storey, Sir Samuel Wood, Rt. Hon. Richard
Price, H. A. (Lewisham, W.) Studholme, Sir Henry Woodhouse, C. M.
Prior, J. M. L. Summers, Sir Spencer Woodnutt, Mark
Prior-Palmer, Brig. Sir Otho Talbot, John E. Woollam, John
Profumo, Rt. Hon. John Tapsell, Peter Worsley, Marcus
Proudfoot, Wilfred Taylor, Sir Charles (Eastbourne) Yates, William (The Wrekin)
Pym, Francis Taylor, Edwin (Bolton, E.)
Quennell, Miss J. M. Taylor, Frank (M'ch'st'r, Moss Side) TELLERS FOR THE NOES:
Ramsden, James Taylor, W. J. (Bradford, N.) Mr. Chichester-Clark and
Rawlinson, Sir Peter Teeling, Sir William Mr. Finlay.