ECONOMIC SITUATION

HC Deb 05 November 1962 vol 666 cc604-738

3.35 p.m.

Mr. James Callaghan (Cardiff, South-East)

I beg to move, at the end of the Question to add: but humbly regret that the Gracious Speech proposes no adequate policies for lifting Great Britain out of the prolonged industrial stagnation from which the country is still suffering, or for getting rid of the heavy and growing unemployment especially in Scotland, the North of England, Wales and Northern Ireland. The background to this debate is twofold. First, there has been a failure on the part of the Government, who have now enjoyed about eleven years of office, to promote an expansion of the economy of the country which is either adequate to our needs or comparable with that of other nations. The measures which they have relied on, particularly in the monetary sphere—the cost to us of high Bank Rate and of credit restriction—have resulted in a state of affairs in which the economy was no sooner able to gird up its loins and to get going than it was halted. That is the long-term indictment of the Government, and every hon. Member, on whatever side of the House he sits, knows it to be true.

The second and more short-term indictment of the Government is that, because of their own miscalculations and mistaken financial policies and forecasts during the last twelve months, they and they alone are responsible for a degree of unemployment which is unnecessary and which could have been avoided.

Let me deal with the second indictment. I am glad to see the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) here, because he bears a heavy responsibility for this, although the fate differs, apparently, according to the Minister, because he defended his policies in an honest way and was sacked whereas his Economic Secretary, who defended them with great passion and even greater erudition, was promoted. I am not sure where the justice lies. However, as I say, the right hon. and learned Member for Wirral bears the major responsibility here, because it was his Budget.

During the right hon. and learned Member's Budget and in the preceding speeches by him, who has lost his job, and by the President of the Board of Trade, who has clung to his, we were told that the economic forecasts for the present year warranted a degree of restriction and financial restraint because expansion was coming anyway. I think that this is a fair analysis of what they told us. Therefore, the Chancellor did what I described in the Third Reading of the Finance Bill. He proposed to collect £289 million more in taxation this year. He increased taxes. Every indirect tax was increased through the consolidation of the regulators, something which had not been done for years, instead of relying on the natural increase in the Revenue. He went to the length of increasing the level of taxation, and every tax except one was increased.

Another £81 million in Purchase Tax is being taken out of the pockets of the people this year. Sweets will yield £39 million extra, hydrocarbon oil duties £59 million extra and beer and spirits £43 million extra. Only one tax is yielding less this year than it yielded last year, Surtax. Every other tax is yielding more.

We attacked this Budget as soon as it was opened by the Chancellor. We told the Government that it was too deflationary. Our views were ignored; indeed, they were rebuffed. Who was right? Hon. Members opposite need not think that they can escape. They trooped into the Lobby in support of the Chancellor's policy when we moved Amend- ments which would have put greater purchasing power in the hands of the people.

Unfortunately, not all our debates on the Finance Bill are well attended. Let me remind hon. Members opposite of some of the things that they voted against. They voted against an Amendment to reduce the duty on hydrocarbon oil. They voted against a succession of Amendments to reduce Purchase Tax. They voted against Amendments which would have increased the personal allowances. They voted against Amendments which would have exempted from the payment of Income Tax people earning less than £8 5s. a week if they were married, or five guineas a week if they were single They voted against Amendments which would have increased investment allowances for the installation of new plant and machinery.

All these proposals were rejected. Hon. Members opposite voted us down. During the succeeding months nearly every one of them, certainly every Member opposite who is an industrialist, has been calling for a relaxation of the Government's financial measures which they went into the Lobby to defend three months ago.

The Government are not ignorant of these things. They know that the criticism that they are getting is not only from this side of the House, not only from the financial journalists and the economic pundits who write at the weekend. Their own friends in the City have left them in no doubt about their attitude and their disenchantment with the Government's financial policy at the present time. The general cry is, "Why get rid of Selwyn Lloyd? Why exchange honest blundering for courteous indolence?"

We can be quite sure that the Cabinet rejects, who have so swiftly jumped from Whitehall to Threadneedle Street, have carried the message back, because I must say that the range of directorships they have picked up covers a very wide field —heavy engineering, armaments, insurance, investment, banking, chemicals, man-made fibres and electrical engineering. [An HON. MEMBER: "Is the hon. Gentleman jealous?"] I am not jealous. I promise the hon. Member that he will not catch me in the City drawing fees of £15,000 a year.

Mr. Gerald Nabarro (Kidderminster)

What about the Daily Mirror?

Mr. Callaghan

Perhaps the hon. Member will try to contain himself. I must confess to some feelings of slight distaste when I see this jump-in being made so quickly. The Lord Chancellor is provided with a very handsome pension, but he found it necessary to give it up in order to go to a large company and draw fees of £37,700 per annum, according to the newspapers, plus, presumably, a chairman's fee at a later date.

We all know that there is a close connection between the City and the Government Front Bench. They jump from one to the other quite easily; they always have done. But I think that they might be a little more discreet in the pace at which they jump. The directors' boardrooms of the City companies are the top people's "National Assistance Boards ", although rather better upholstered. Any Minister who feels that he may shortly have to resign need not worry about the future. He will be very well cared for. There is, in my view, a decent discretion that ought to be observed in some of these cases, and I think that we are getting perilously close to the limit of that discretion.

What has been the effect, apart from the blood-bath that we went through in July, of the change in the occupancy of the Chancellor of the Exchequer's post? The new Chancellor has certainly decided to release post-war credits. He has decided to release some restriction on credit, but, on the whole, there have been quite inadequate steps taken by him to meet the needs of the situation. If he doubts that, let him look at the Order Paper. The Amendments on the Queen's Speech —quite apart from the Questions this afternoon—are from groups of hon. Members from every quarter of the country, except one.

Mr. Nabarro

Kidderminster.

Mr. Callaghan

The Ulster Unionist Members of Northern Ireland have not thought it necessary to put down an Amendment to the Queen's Speech. Unemployment in Ulster is worse than anywhere else in the United Kingdom. But although Scottish and Welsh Members, and Members from the North and North-West have all expressed their anxieties, none of the Ulster Unionists has thought it necessary to put on paper what he believes to be necessary to deal with it in Northern Ireland.

I should like, therefore, to say something about Northern Ireland myself. It seems to me that the recent Report that was made on Northern Ireland by the Hall Committee was a great disappointment to everyone there. Unemployment in that part of the United Kingdom has now reached the level of 31,144, or 6.4 per cent. of the working population. The Report forecasts that unemployment there will increase during the next two years and may well be higher by 1965 than it is today.

The only remedy that the Ulster Unionist Government suggested was a wages subsidy to be given to employees in particular industries in Northern Ireland. This policy was rejected. I admit that it was a group of civil servants who made the Report and that no doubt they were operating under the policy laid down by the Ulster Unionist Government, but it seems to me to be absolute folly that they should put into the Report a sentence which reads: The purpose of Government policy is to stimulate and encourage private enterprise to do what needs to be done, rather than to undertake the commitments itself. If ever there was a need for public enterprise to be introduced into an area, it is certainly so in the case of Northern Ireland, but because of doctrinaire, almost Victorian Toryism, we find that necessary measures are not to be taken because of ideology. I would have thought there was every case for setting up a development corporation for the introduction of public enterprise and for ensuring, as the Government could do if they wished, that capital was made available for the establishment of new industries.

We know that part of the policy is migration, and that this is not only limited to Northern Ireland. We have heard this afternoon about the speech of the Minister of Pensions and National Insurance on the North-East Coast, and the Report on Northern Ireland says that migration may have to be the answer; that we should encourage people to leave. The Minister of Pensions and National Insurance owes the House an explanation and I trust that it will be forthcoming. I hope that he will tell us what the policy is as he is reported to have expressed it on the North-East Coast last Friday, when he spoke about heavy industry and its decline and suggested that it might be better for people to move away.

Are we going back again to the 1930s? Is this the new Tory policy, expressed in Northern Ireland and hinted at on the North-East Coast? Is this what we are to look forward to? Are the people of Scotland and the North and North-West to be told that the real remedy for their difficulties is to move away, because, if that is so, the people as a whole will repudiate the party opposite neck and crop.

I do not wish to dilate this afternoon on the social consequences of such folly. It is absurd to suggest that migration from the North and Northern Ireland into the Midlands and the South—

Mr. Sydney Silverman (Nelson and Colne)

Or from Lancashire.

Mr. Callaghan

In speaking of the North I intended to include Lancashire. Let us say, a line drawn from Mersey to the Humber. The migration of people from these areas to the Midlands and the South will create more problems of congestion in the South and South-East, and in London and the Midlands, than it will solve. I hope that when the Chancellor of the Exchequer speaks this afternoon, we shall hear a complete repudiation of that doctrine.

Leaving Northern Ireland for the moment, let us turn to the general situation. At 10th October, the unemployment figure was 501,263. That is a substantial increase on the figure for 10th September—an increase, in fact, from 329,000. The increase from September to October is twice the normal seasonal increase.

In London, there is an increase of 20,000; in the north-west area, 33,000. On Merseyside alone, the percentage unemployed is 5.2, with a total of 33,000 men out of work, or, as I saw it put yesterday, 30 men searching for one job. I am not surprised that tomorrow we are to have an invasion from Mersey-side to press upon Ministers the need for urgent action in that area.

In the northern area, unemployment has increased from 1961 to 1962 by 23,000 and now stands at 4.9 per cent. In Scotland, it has increased by 20,000 and stands at 4.5 per cent. In Wales, it stands at 3.5 per cent. These are serious figures. So far, however, unless the Chancellor makes up for it this afternoon, we have heard no expression of concern by Ministers in public speeches about what is taking place. Indeed, they seem to regard it as inevitable. It is inevitable so far as it follows from their policies, but it is not an inevitable consequence of the situation in which the country is placed.

The Federation of British Industries recently conducted an inquiry into 700 member firms. Since July, the general impression is that there has been no improvement in the state of order books and that there is more unused capacity. Seventy-five per cent. of the firms which replied state that shortage of sales and orders limit output. The heavy majority of firms expect to spend less on new capital plant and equipment next year. The only note of optimism is about exports. Apart from that, it is a dull and dreary report of the future. If hon. Members opposite had not supported the Government in the restrictionist and deflationary Budget that was introduced, we would not have been in this position today. It is hon. Members opposite who carry the responsibility for where we stand.

In the areas of which I have spoken, however, unemployment is not the sole test. There is the loss of population, especially among younger men and women, which is taking place already as a result of the migration to which the Minister of Pensions and National Insurance has referred. I have heard, for example, that in the Merseyside area—I had a letter this morning from the Merseyside Development Association—in the case of overspill housing, in a certain area factory development is being refused because it is not in a development area. To me, this is absolute folly. How can we set up overspill housing without, at the same time, giving permission to people to take factories there? I ask the Chancellor to look into this matter as one of urgency. I have not since this morning had time to check it, but it comes from a responsible body which is concerned with this problem on Mersey-side.

Another factor which is brought out is that in one Lancashire town—Bolton was taken—50 per cent. of the families who moved left Lancashire altogether to come south. In Scotland, as my hon. Friend the Member for Motherwell (Mr. Lawson) said today at Question Time, there are 30,000 jobs less after two years. Thirty thousand people have been lost by migration from Scotland during the last two years.

What is happening is that we are getting distorted development which is denuding part of our country, and a valuable part of it, whilst we are getting increasing congestion in the South and the Midlands. We are finding, too, that quite apart from this, the loss of confidence which is overtaking industry is now resulting in less expected investment in new capital equipment next year. There is a rundown and industrialists expect to spend less in the next twelve months than they spent in the last twelve months.

I notice that the steel industry is questioning whether it has not over-expanded. There was a long article in the last review of the steel industry, wondering whether, in putting up the new steelworks, the industry had not over-committed itself. It is natural that people should ask that question at a time when the industry is working at only 70 or 75 per cent. capacity, at a time when Llanwern is coming into production, when Ravenscraig will come into production in the not too distant future and when, possibly, we are about to enter the Common Market and competition from the Dunkirk steelworks will undoubtedly be severe in London and the South-East.

People in the steel industry are right to ask that question, but this would be my answer to them, "No, you have not over-expanded. Your expansion was based on an increase in the national income at the rate of 3½ per cent. per annum. It is not you who have over-expanded. It is the Government who have failed to live up to their undertakings to expand the economy." It is because our economy over the last decade has crawled miserably along in second gear most of the time that the steel industry is having these doubts about its own expansion programme.

This is bound to affect not merely the steel industry, which is a large and vast concern of people who are able and accustomed to take a worldwide view. This affects other firms, too. I know a South Wales firm which, a year ago, invested upwards of £1 million in new plant in South Wales, hoping to employ up to 300 workers when it got into full production. It got as far as 90 workers and then closed down, in September. The managing director does not know when it will reopen. There is an absence of orders. The managing director cannot tell when his investment will be used again. To him, the failure to use £1 million of capital investment is, naturally, a serious matter. To other people, it is a failure to use their skill. It is a failure to use the livelihood that they have devoted to occupations of this sort.

There is a growing lack of confidence generally. What the Chancellor has failed to do in the four months that he has been in office has been to take the action that is necessary to restore confidence. I do not know whether he thinks that his measures are likely to be sufficent. The Banker—an organ which, I suppose, the right hon. Gentleman reads occasionally—has this to say about it in the light of the restrictions on which he has let up a little: On the face of it, any large increase in bank lending seems improbable. I believe that in the long run, as distinct from the short run, the failure to pursue resolutely and boldly a distribution of industry policy lies at the root of many of the troubles that we have today. Jobs lead housing; they lead the provision of education facilities and they lead the creation of the community. What we are doing now, as has been said more than once, is to recreate two nations. The uneven distribution of unemployment and the uneven distribution of new industry is leading to a growing gap in the level of earnings in different parts of the country.

The House may be interested to know what is the gap in earnings in different areas. In London and the South-East, average earnings last April were £16 l1s. 6d. a week. This was about 15s. a week higher than in Wales, 30s. a week higher than in the north of England, 47s. higher than in Scotland and £4 4s. a week higher than in Northern Ireland. What is more important, however, is not merely the gap in the earning power of workers according to where they happen to live, but the fact that the gap is becoming wider.

Looking back a couple of years, one finds that only two years ago, the gap between earnings in Wales and in London was only about 5s. a week. Now, it is 15s. In the north of England, two years ago the gap in earnings was £1 a week. Now, it is 30s. Two years ago in Scotland, the gap in earnings was 34s. a week. Now, it is 47s. In Northern Ireland, only two years ago the gap was 64s. a week and now it is 84s.

These are very serious figures. People doing the same jobs in different parts of the country, according to where they may be, are getting rewards which are quite different in their relationship. What is quite clear from this, as we have always known, is that high unemployment leads to low wages and full employment leads to high wages, and people will continue to get low wages in areas like the North as long as there is an absence of full employment there.

Now I turn to the present position. There seems to be some suggestion that we are doing a little better. The Treasury's Bulletin for Industry, which was issued last weekend, seems to be fairly optimistic. I hope that the Minister Without Portfolio—I do not see him here—is not taking over control of this bulletin. It is likely that there will be enough brain-washing by the Tory Party over the next two years before the General Election without having this sort of bulletin taken over.

It has always been relied upon as being at least fairly objective. I am a little surprised to see it quoting with such optimism the development in the economy. I am surprised not because I doubt it particularly. It merely makes me doubt the figures which are relied upon. I am surprised because it conflicts with the experience of hon. Gentlemen, I suppose on both sides of the House, in their constituencies and wherever they may travel up and down the country. I do not find that optimism in the country at present. I do not find industrialists anywhere who believe that the economy is picking up.

It was this mistake which the right hon. and learned Gentleman made in the spring and which led to the introduction of his Budget. The Treasury's Bulletin for Industry is apparently still taking the same view about the state of the economy. I hope that the Chancellor will give us the statistics and will use them with very great care, not as a crutch, but will throw them away if he thinks that they are not in tune with the general expectation and experience.

What is the state of production generally today? I read in the newspapers only during the last seven days that at Rootes 7,000 workers are losing a day a week—this is all in the last seven days— and that in Coventry, Whitworth-Gloucester men have gone on short time, and that at Oxford, 7,000 workers in the Pressed Steel works have gone on to short time. These are but three illustrations out of scores which can be taken up.

If we look at the figures of production for the first eight months of this year and compare them with those of the first eight months of last year we see that there is no real improvement. Coal is slightly up; cars up; nylon up; home engineering up; housing up slightly—just about the same but slightly up. But down are pig iron, steel, commercial vehicles, shipbuilding, cotton, woollens and worsteds, and industrial building. The net result is that industrial production has really not increased to any substantial extent during the first eight months of this year in comparison with last year.

I do not understand what the Chancellor of the Exchequer had in mind when he said at the Mansion House recently: Looking at the broad trend underlying the monthly figures, industrial production has been rising at an annual rate of about 7 per cent. This is not true. I do not know how the Chancellor of the Exchequer gets his figures. I have tried all ways I can to do the sums.

Mr. Nabarro

That is the trouble.

Mr. Callaghan

Well, we know the phenomenal intelligence of the Chancellor of the Exchequer. He did the Daily Mirror test in less than 40 minutes and apparently he succeeded in getting it all right.

The right hon. Gentleman has, of course, a phenomenal intelligence, but it, does not need a phenomenal intelligence to work out the average industrial increase over the last 12 months. In 1960, it was 112.4; in 1961, it was 113.9."Neddy", of course, talked about our having an increase of 4 per cent. per annum, and the O.E.C.D. figure was that we were to have an increase of 5 per cent. per annum. In 1960 to 1961 we had an increase of 1½ per cent per annum and we have been going on like that for the last decade. In January, industrial production sank to the lowest level for some years. It went back to 111. It has now reached 117, and the average for the first eight months of this year is 115, which is 1 per cent.— one point, and 1 per cent., too—higher than it was a year ago.

What is this statement that Looking at the broad trend underlying the monthly figures, industrial production has been rising at an annual rate of about 7 per cent.? I know what the right hon. Gentleman has done. He has taken the figure for January, the lowest figure he could possibly find, and, having taken the lowest figure he could find, to which industrial production sank in one month, he says it has risen at this annual rate and that this is the underlying trend; he says it is rising at an annual rate of 7 per cent. per annum. It is rising at the annual rate of 1 per cent. per annum.

Really, the Chancellor of the Exchequer, if he talks to the workers like this and treats statistics like this, will find himself in trouble, because people expect from the right hon. Gentleman a more sober approach to the use of statistics than that. It really is not worthy of him to produce figures of this sort. It is clearly unjustified. I repeat, in 1960 industrial production was 112½ in 1961 it was 114, in 1962 it is 115. How can one say that the broad underlying trend is rising at the rate of 7 per cent. per annum? It is an utter and complete misuse of the figures which are provided for the Chancellor of the Exchequer.

I am glad to say that exports have done a little better. Here the President of the Board of Trade can pat himself on the back. He foresaw it coming true. He said in February or March that with the increase in world trade there would be an increase in exports, and he is right. They have increased in the first six months of this year at an average rate of about 4 per cent. per annum. Wonderful. Only 2 per cent. per annum less than "Neddy" said is necessary, and this increase of 4 per cent.—that is all that it is—is better than we have done over the last five years.

I hope that hon. Gentlemen opposite will recognise the task that "Neddy" is setting the Government and that they are ready to do whatever will be necessary to achieve that task, for if we look at the average increase in exports over the last five years we see the average is something like 2 per cent. per annum, and if we want the economy to expand on the basis adopted by the Government we need an expansion of exports of nearly 6 per cent. per year, three times what we have been getting during the past few years. Is there any hon. Gentleman opposite who feels confident that with the present methods and with the present Ministers we are likely to get it? Because there are very few people in the country who share in that optimism.

The question of growth in the economy and expansion of the economy is of supreme importance. The National Economic Development Council emphasised one of the measures which will be necessary, a growth rate of 4 per cent. per annum, but we have got nowhere near it over the last decade. As for exports, so for gross domestic product: our total increase over the period of about ten years is less than 2 per cent. per annum. We have got to more than double that if we are to achieve out target. The Government have failed during the last ten years to combine three necessary things, full employment, stable prices, and growing expansion of our industry. At no time have they ever come within reach of combining those three targets, at no time in the ten years they have been in office.

Indeed, our position, in relation to 10 major countries, has worsened over the last decade. Compared with 10 other major countries since the period 1950–51, Britain has the lowest average rate of installation of new plant and machinery; we have the second lowest 'increase in industrial production; we have the lowest increase in exports; and the second highest increase in prices. If we had had growth at the rate of 4 per cent. per annum since the Government have been in office that would have yielded us an extra £3,000 million per annum by today.

If the target which the Government now say they are adopting had been adopted then and applied, it would have yielded an extra £ 3,000 million per annum. This sum would have paid for the whole of the Civil Estimates— the cost of housing, health, education, unemployment pay and the rest of the social services. All of these, which are thrown on the Budget, could have been borne out of the extra income we could have had if the country had applied itself to a target of this kind ten years ago. As someone said the other day, every wage-earner in this country could have been enjoying a wage at least 23s. a week higher than at present.

That is the measure of the task which the Government have failed to achieve. It is also a measure of the task to which they say they will now apply themselves. They have failed over the last decade to do what other Governments have done for the people, and on that they stand condemned. The right hon. Gentleman the Chancellor of the Exchequer has had a great build-up over the weekend. We are told that he is to tell us of a number of measures today. I shall put my own suggestions forward as to What he should do, and I shall do so in summary form.

This economy of ours needs a short-term and immediate tonic, and the tonic should take the following form. The Tight hon. Gentleman should immediately reduce Purchase Tax. A 10 per cent. reduction all round would immediately release about £60 million of purchasing power. I would also increase Income Tax reliefs, if necessary by a second Budget, and I would certainly exempt from taxation all those people at the bottom of the income scale, earning less than £8 5s. a week, or less than £5 5s. a week if single. I am not saying that all these things should be done, I am offering a number of alternatives. [HON. MEMBERS: "Oh"] Why not? I would use all or any of these measures where necessary. I suggest that the hon. Member for Kidderminster (Mr. Nabarro) might now stop doing his nails.

Another matter which has become of first-irate importance is the growth of unemployment. I hope that everyone is seized of the fact that at present there about 170,000 men who have been out of work for more than two months. That situation is wrong. Many of these men are in their 40s and 50s, and it is wrong that a man and his wife should have to exist on 92s. 6d. a week. There is a case here for increasing unemployment benefit so that these people may have a fair chance.

Other measures to give a short-term tonic are the placing of Government orders, an increase in Government investment, and, of course, hire-purchase relaxations. I do not mind which of all these measures the Chancellor chooses to select, but I do say that among them there are some which could provide an immediate tonic for the economy, and I recommend him to take them.

In the long term, what is needed first is a firm location of industry policy, a revision of the policy which underlies the Local Employment Act. That is absolutely vital if we are to reverse the drift to the South and bring hope to Wales and the North as well as to Northern Ireland.

Secondly, there is the currency situation. The right hon. Gentleman must aim at the reform of the key currency position. He tried when he went to Washington in September and was rebuffed. That was hardly surprising. What is the point of trying to get the United States interested in the reform of the key currency situation if, at the same time, the Government say that they intend to try to get into the Common Market as quickly as may be? One cannot ride these two horses at once, as the right hon. Gentleman was trying to do.

The United States is not interested in revising the key currency position of the dollar-sterling relationship if it believes that, in a short period, we shall be inside the Common Market, presenting all the differing problems that this will entail for the future of sterling. For instance, M. Marjolin is producing a number of plans and proposals for having a common European currency within a measurable distance of time. All these problems must be debated, but the right hon. Gentleman cannot ride both horses. That was why he failed in September at the International Monetary Fund. Nor will he succeed until the path of the Government is clear.

If he wants the United States to be interested in this he will not be able to do it once we are in the Common Market, except as part of the organisation. But it is essential for this country, whether in or out of the Common Market, to reform the key currency position. Until we do so, then, as far as the balance of payments situation and the permanent expansion of our trade and industry are concerned, we shall be constantly brought up against the "stop and go" troubles of the last decade.

Thirdly, the right hon. Gentleman must relegate monetary policy as a means of stabilising the economy. The doctrinaire adherence of right hon. and hon. Members opposite to monetary policy over the last ten years has cost the country far too many millions of pounds.

Fourthly, in dealing with the balance of payments situation, I would, if I were the right hon. Gentleman, expand the economy and, if necessary, take protective measures in order to secure an improved position. The right hon. Gentleman may ask, "Import controls?" Why not, if this is the price of an expanding economy? If we can expand the economy there is no reason at all why there should not be import controls if they are necessary for so doing. The right hon. Gentleman should be willing to look at unorthodox methods to achieve his ends.

Fifthly, we need a sensible and energetic transport policy, and also a policy for energy, over which the Government are getting into a muddle. It is fantastic that the problems as between oil and coal should not have been worked out and that neither industry yet knows where it stands. Meanwhile, the Minister of Transport attracts publicity like a lightning conductor attracts lightning, but he is becoming the laughing-stock of the country because everyone knows that he has no policy for co-ordinating road and rail transport.

Sixthly, there are investment allowances. They are "chancy". Sometimes they act far too slowly. I would not use them for a quick tonic, but there is a very good case, as we said during debates on the last Finance Act, for increasing investment allowances especially in certain areas.

Those are all long-term measures which the Government could take. I have not referred to incomes policies. It is astonishing that if we have enough unemployment we shall have an incomes policy anyway, but we never heard of such a policy until full employment came along. One way to find an incomes policy is to have sufficient unemployment. I believe in both full employment and a fair incomes policy, but that would involve a great many measures which the right hon. Gentleman and his right hon. and hon. Friends are not willing to countenance. I have outlined long-term measures which the Government should take, but perhaps the best of them all would be for them to resign.

4.18 p.m.

The Chancellor of the Exchequer (Mr. Reginald Maudling)

The Amendment makes three main points. First, it refers to "stagnation", a word which is so popular on the benches opposite and which, of course, I do not accept. Secondly, it refers to … heavy and growing unemployment especially in Scotland, the North of England, Wales and Northern Ireland.

Hon. Members

Do you accept that?

Mr. Maudling

If hon. Members will wait a little while, they will find out. I will say clearly to the hon. Member for Cardiff, South-East (Mr. Callaghan) that the Government, and anyone else, must feel concerned at this situation.

The third point of the Amendment is that the Gracious Speech contains "no adequate policies "I believe it is true that the Gracious Speech normally contains proposals for legislation. When we come to proposals for administrative action—tax changes, for example—these are normally announced by the Chancellor of the Exchequer in the House of Commons. That is precisely what I intend to do this afternoon.

The hon. Member for Cardiff, South-East referred a good deal to his criticism of the Government. He spent over half-an-hour of his agreeable speech attacking us, and less than ten minutes putting forward positive suggestions. I propose to reverse that ratio and—[HON. MEMBERS: "Oh"] I cannot spend time attacking the policies of the Opposition, because they have not got any. What I am going to do is to outline our proposals for dealing with the present situation.

I am sure that every hon. Member in the House agrees that what we want to aim at is a more rapid and more consistent rate of economic growth. But in looking at the problems involved it is foolish to ignore the real difficulties. There are, and have been in past years, as the hon. Member recognised, certain very clear difficulties facing us. There is, for example, the position of sterling as a reserve currency, to which the hon. Member referred. I think that it is wrong to regard that as an obstacle to growth. I am convinced that we can combine strong sterling with a more rapid rate of growth. Indeed, the two hang together.

But the fact is— and no Government can ignore it, and certainly the Labour Party could not ignore it when it was the Government— that sterling as a reserve currency is often exposed to ebbs and flows in the world situation which are completely outside the control or influence of this country. Also, we must recognise a simple fact which the House should not ignore, that the relation of our reserves and of our liabilities, so different from pre-war, restricts the room for manoeuvre that we have in our internal policy. We cannot deny that.

Secondly, there are financial difficulties. We have seen time and again how expansion, if it goes too fast, can overrun itself on the narrow margins that we have and turn into inflation, which once again has to be checked. The problem in previous years used to be more what is called a demand pull problem. Now it is a cost push problem, and on this the right hon. Member for Huyton (Mr. H. Wilson) is an expert, though I do not see him here today. We have seen recent improvements. If the economy goes ahead rapidly the push of cost becomes too extreme, prices rise and we run into the old balance of payments difficulties with which we are so familiar.

Thirdly, there are the physical limitations on our expansion. It is only fair to recognise that our manpower is not expanding as fast as that of, for example, Germany and France and the other countries which have been quoted. We have not a reserve of people coming across our boundary like the Germans have, and we have not got, as some of these countries have in their agriculture industry, a very large reserve of manpower that can be transferred to industry and thereby in- crease the total level of productivity. All these are real limitations on our powers of expansion which no sensible person would endeavour to ignore.

I turn now to the immediate situation, to the developments of recent months and to what I propose for the immediate future. Since my predecessor's measures last year, the external position has greatly improved. The record loan that we drew from the International Monetary Fund was repaid within twelve months. The strength of sterling is really remarkable. When we consider what has happened in the last few weeks, with the Cuban crisis, and so on, the strength of sterling is really very outstanding. The balance of payments position is much better, though it is true that recent export figures show the need for constant vigilance.

At home there was in the second half of last year a setback to the level of production. At the turn of the year, that altered again and the level is now moving upwards at the rate which I had given and which is statistically accurate, though the hon. Gentleman did not seem to understand the statistical performance. [HON. MEMBERS: "Explain it."] The simple fact is that production has been rising since the trough at the end of the year at an annual rate— [HON. MEMBERS: "What are the figures?"] I gave details in my speech at the Mansion House, if only hon. Members would read it; it is perfectly simple. Also, with greater competition, profit margins have been falling. This has led to reduction in costs, also important, and has had its effect on industrial investment, which is equally important.

Since the turn of the year, production has been increasing. In the heavy industries experience is disappointing, but in a wide range of industries— chemicals and lighter industries— production has been rising and is rising steadily. Profit margins are showing a sign of improving again. Consumption is certainly rising, and rising vigorously. The latest retail trade figures, which are being published today, show that once again this is happening. People are spending more and more and buying more and more in the shops day by day. Public expenditure on both consumption and investment is continuing to rise.

So, in general, the level of demand is increasing and the level of production is increasing. At the same time, we have an increase in unemployment, to which the Amendment refers. This is a matter to give concern to anybody, but the deduction is clear. If one has, as we have at present, increased production with increased unemployment, it means that productivity is rising substantially and that businessmen are finding that they can make as much as, or more than, they did in the past with a smaller labour force. This means— it is a very salutary process indeed— examination of costs and of efficiency and so on. This shows that we have more slack in the economy than we calculated on, and it justifies further measures to stimulate the economy, to which I now intend to turn.

It seems to me that any measures to stimulate the economy should be based on two principal considerations. In the first place, they should be of a nature that can endure. After all, reductions of taxation and increases of expenditure usually create lasting commitments. One of the advantages of the post-war credit release is that it does not create a lasting commitment. But in introducing any new measures, I must be confident that, while they will help to stimulate the economy at a time when it contains some slack, they will not subsequently overload it at a time when demand is high.

The second consideration is this. We need not so much a stimulus to demand generally as special encouragement to investment and to the exporting industries, and to employment in areas where unemployment is above the national average. The unused resources are not so much in the consumer goods industries as in the heavy industries and in sections of engineering, and it is these resources, human and material, that we must seek to bring into use.

My first concern is for investment in manufacturing industry, which has been declining recently, and recent reports, as we all know, suggest the danger of a further decline. There is a definite limit to what Government action can do in this field. The main reasons for the decline in investment in manufacturing industry lie, in my judgment, in the current reduction in profit margins and uncertainties about our future relations with the European Economic Community and uncertainties about the course of the United States economy. Uncertainties on the latter two points are bound to persist, but we shall do all we can to limit them where it lies within our power.

Profitability, which is the other governing factor in investment, will depend on the general course of the economy. I stress again that a healthy growth of profits is essential to an adequate level of investment. The principal factor that determines investment decisions is the prospect of a market for the goods which are to be produced. Government actions to stimulate investment by, for example, changes in depreciation allowances vary very much in their effect according to whether we are working with the tide of demand or against it. Therefore, what we need are measures which will work in either circumstance.

I turn, first, to the capital allowances, or depreciation allowances. It is true that changes here may not have an immediate effect on the expansion plans of the very large firms. But in the long term they certainly will; and in the meantime they can achieve much by helping the medium and smaller firms, by encouraging modernisation— which may be just as important as expansion — in all firms up to the biggest, and by creating confidence in a policy of sustained and deliberate expansion.

I do not believe that our present system of capital allowances is adequate to the changing needs of the 1960s. The recent Report of the N.E.D.C. has stressed once again that we must raise our whole level of investment and keep it at that enhanced level. Therefore, action to stimulate investment now seems justified not only against the background of present circumstances, but also as a requirement of long-term policy.

Alterations in the system of capital allowances involve complicated legislation whose proper place is in the Finance Bill. It would be unusual and unorthodox to act in between Budgets, but there is a case for being unorthodox on this occasion. I want to make it clear that I intend in next year's Budget and Finance Bill to make certain changes in the system of capital allowances. The effect of these changes will apply retrospectively to capital expenditure on new assets which becomes due and payable after today. I think that my hon. Friends will agree that this is a form of retrospection which can be welcomed.

I have considered several possible ways of speeding up depreciation rates. Some relate to the initial and investment allowances and some to the annual allowances. At first, I was much struck by the idea of giving businessmen discretion to take their depreciation allowances for lax purposes at the time of their choosing, but, since there is little connection between the terms of depreciation in a firm's tax assessment and its own commercial accounts, companies could take their full allowance for tax purposes without having to reflect an equal increase of depreciation in their commercial accounts.

Few of us want to pay tax any earlier than we have to pay it, and the practical effect of this free depreciation might be that businessmen would take the maximum available as quickly as possible. If this were the result, the extra cost to the Revenue in respect of one year's expenditure could be about £700 million and, clearly, that is impossible. The alternatives seem to be an increase of the initial or investment allowances.

These two allowances have both their advantages and their disadvantages. Both of them provide more cash for investment. The initial allowance is criticised because it is only an anticipation of the future. The investment allowance, on the other hand, is criticised by purists on the ground that allowing depreciation at 120 per cent. of the cost of the asset is in the nature of a subsidy. I have never myself accepted this argument. I do not think that one can talk about a subsidy to industry when industry as a whole is paying large sums in taxation, including the special tax on profits. Investment allowances should be regarded not as a deduction from this burden, but as a reallocation in favour of those who invest at a high rate.

I am satisfied that, from the point of view of encouraging investment, the investment allowance is a good deal more effective than the initial allowance. At present, it stands at 20 per cent. on new plant and machinery and 10 per cent. on industrial buildings. I propose that plant and machinery and other assets, which at present get 20 per cent., should in future get 30 per cent., and that industrial build- ings and other assets now getting 10 per cent. should in future receive 15 per cent. The cost of this change is likely to be some £8 million next year and about £50 million the year after. Thereafter, the annual amount will increase, depending on the level of investment. This is money to stimulate investment which, I think, is precisely what the party opposite wants to be stimulated.

There are some further changes which I propose to make. I turn next to the position of heavy capital plant. There are two factors here. The heavy engineering industry is in the short term facing considerable difficulties, as the hon. Member for Cardiff, South-East rightly said. Moreover, in the long term I do not believe that the lowest of the present rates of annual depreciation, that is, those which apply in general to the heavier plant, are in line with modern conditions. They relate the period of depreciation to the assumed life of the plant. This principle can be pushed too far and I propose to make certain changes.

It will take until the next Finance Bill to work out the details of the scheme, but I have already decided to propose that for new plant and machinery the lowest actual annual rate of depreciation on the reducing balance basis should be 15 per cent., corresponding to a 12 per cent. basic rate. This is a very complicated matter, but the effect of this will be to reduce very substantially, in some cases by more than a half, the nominal working life of a wide range of types of plant at present assumed for depreciation purposes to have working lives of periods up to forty-five years. I do not think that forty-five years makes any sense in the context of modern industry.

The significance of this change is shown by its cost, which, though in the first year it will be small and in the second year will be £15 million, may rise in some years' time to as much as £55 million a year. The exact amount will depend on the level of future investment. This change, like the change in the investment allowance, will be applied to plant on which expenditure becomes payable after today.

These changes in investment and annual allowances for new plant acquired after today will be of considerable benefit to industry. In the case of plant benefiting by the new minimum annual allowance of 15 per cent., that is, plant at the lowest rate of depreciation, the total tax allowances in the first year will be 55 per cent. of the expenditure. The cumulative allowances in the first five years will be 91 per cent. and at the end of the first ten years 113 per cent. Of the total of 130 per cent. allowed, all but a residual 10 per cent. will have been allowed by the end of fourteen years.

The minimum actual rate for plant on the straight line basis will be 6¼ per cent. and this will benefit, for example, the shipping industry which uses this form of depreciation and whose normal rate on that basis is now 5 per cent. In general, the products of the heavy engineering industry should gain most from this change and I have had their difficulties particularly in mind.

Mr. J. Grimond (Orkney and Shetland)

I am not in the least attacking this proposal, but I want to get this quite clear. Do I understand that the Chancellor of the Exchequer is giving an absolutely firm undertaking to industry and that it may go ahead on the assumption that his measures will become law, even though he is not taking any steps to get the approval of the House to make them law until the Finance Bill next year?

Mr. Maudling

There is a precedent for this move and I think that it is justified in the situation. I give this firm undertaking that I will, if I have the power, introduce legislation to this effect in the next Finance Bill. If the party opposite would say that it would not do it, it is welcome to do so.

I have one more proposal in this field which relates to research and development. I am greatly impressed with the need to encourage research and development in industry and I want to do all I can through the tax system to provide further encouragement. At present, buildings and plant used for scientific research qualify for the investment allowance of 20 per cent. and the whole cost can be written off over five years. This is a special category and I propose that in this category capital expenditure should in future be written off for tax purposes 100 per cent. in the first year, as well as qualifying for the increased investment allowance of 30 per cent. The cost of this change in the first full year is likely to be £4 million, but I think that it is well worth paying. I can say quite frankly that this is a case in which I shall be happy if the cost goes higher, as that will be a reflection of a vigorous development of industrial research, which is something which we very much need in this country.

Mr. Callaghan

We are all interested in the proposals coming from the Chancellor today, but can he tell me why he and his colleagues voted against similar proposals only four months ago?

Mr. Maudling

I thought that I had explainued why I was introducing these proposals at this stage.

So much for the changes in the system of industrial depreciation. Together they offer substantial encouragement to more rapid investment of the type we need. They also meet the criterion of being changes which are designed to endure.

I turn now to indirect taxation. As I said earlier, consumption generally is rising quite vigorously and it should continue to rise as incomes increase and public expenditure expands. The retail trade figures which, as I have said, are being published today, confirm this trend, especially in the case of clothing. I do not consider, therefore, that at this time I should use the regulator to reduce taxes across the board. Incidentally, more than half of the tax reductions involved would arise on tobacco and alcohol. I do not think that anyone would accuse me of being an ascetic or austere Chancellor, but I do not think that there is a strong case at this moment for reducing the price of drink and tobacco, even if, indirectly, this would mean increasing purchasing power. But, on the principle I have outlined, of seeking to give a stimulus where it is most needed, with a particular eye on investment and exports, I have come to the conclusion that there is one very important special case.

The motor car industry is a fundamental part of our whole engineering complex. Apart from the direct employment offered by the great motor car companies, the activities of their many suppliers from sheet steel from Llanwern to the smallest electrical components have a marked effect on the whole level of business activity in this country. It is, moreover, an industry with a fine export record. Its large-scale capital investments have added considerably to its total capacity, and by its location in Scotland, in the North-West and South Wales, it is making a very substantial contribution indeed to the employment problems of those areas.

I believe that the B.M.C. works at Bathgate, Standard Triumph on Merseyside, and Rovers at Cardiff, are already in operation, and next year should see the first production from Rootes at Paisley, Fords on Merseyside, and Vaux-halls at Ellesmere Port. This is an industry where the scale of production has a very significant influence on costs. The industry is making great efforts in the export market and achieving notable successes, particularly in Europe. The quality of its products is generally recognised, and it is highly competitive.

I am satisfied that this is a case where a stimulus to the home market by a reduction of Purchase Tax will both bring into use resources that at present are under-employed and provide the basis for an even more vigorous export drive. In the representations which the industry has made to me I have been assured that any reduction in Purchase Tax would not be allowed to divert cars from the export market but would be used by the industry to strengthen even further its competitive position abroad.

I propose, therefore, to make an immediate cut in the Purchase Tax on motor cars, and I have made an Order to this effect under the existing statutory powers, which comes into force at midnight tonight. At present, they are in the highest bracket— 45 per cent. I considered what reduction I should make, and came to the conclusion that it would be unwise to proceed by stages. A limited reduction might well be taken by the public as foreshadowing further reductions in the future, and the net effect might be not to stimulate home demand, but to encourage further holding back.

I have, therefore, decided to take the simple step of transferring cars from the 45 per cent. rate to the standard rate of 25 per cent., which seems to me reasonable treatment for them in the long term. This should reduce the average retail price of a car on the home market by about one-eighth. Its cost is difficult to estimate accurately, because one cannot be certain what increase in home consumption will follow, but in a full year it is likely to be in the neighbourhood of £50 million to £60 million.

I believe that I am fully justified in singling out the motor car industry for this treatment because of its outstanding importance to the nation. I equally believe that I am justified now in saying to the motor industry, management and workers alike, that they should seize this opportunity together, and by hard, fair, and friendly work, make the most of the prospects for their own industry.

Mr. Frank Allaun (Salford, East)

On a point of order. What we are now receiving is virtually a second Budget. It is not yet the time at which the Stock Exchange closes. These announcements—

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

Order. No point of order arises. The right hon. Gentleman is perfectly in order in his speech.

Mr. Allaun

Further to my point of order.

Mr. Deputy-Speaker

Order.

Mr. Archie Manuel (Central Ayrshire)

Hear it first before you give a Ruling.

Mr. Deputy-Speaker

Order. I am sufficiently seized of the point which the hon. Member is making, and I do not regard it as a point of order.

Mr. Maudling

Naturally, I have in mind the point made by the hon. Member for Salford, East (Mr. Frank Allaun) and I think that he will find that it is well covered, because what I am proposing is not in the nature of an autumn Budget. I am not proposing a general review of taxation or a reallocation of burdens, which would be proper to a Budget. I am putting forward here and now proposals to deal with precisely the problem about which the party opposite has been talking. I thought that the right place and time for me to say this was in this House of Commons at this the first possible opportunity.

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

Can the right hon. Gentleman assure us that the motor industry generally had no pre-knowledge of his suggestion, bearing in mind that today increases have been announced in the price of cars?

Mr. Maudling

I thought that that might arise, and I saw the newspapers this morning. I assure the right hon. Gentleman that the motor industry had no fore-knowledge of my intentions, and that I had no fore-knowledge of its intentions.

I have been dealing with the measures I immediately propose to add stimulus to the economy. These should be considered in conjunction with what has already been proposed, because the measures I have already taken are not inconsiderable. Despite the speech of the hon. Member for Cardiff, South-East the release of 1 per cent. of the special deposits is already reflected in a more than seasonal growth of bank advances, and if a complete release of special deposits seems to be necessary in the near future, of course we can do that.

There is a downward trend of long-term interest rates which is much more important for industrial investment than short-term rates on which sometimes too much attention is focussed. There are to be released soon, I hope with the approval of the House, £40 million postwar credits which will be a substantial stimulus to demand, and there were decisions taken some time ago, and recently announced, to add another £70 million of public investment to the general public investment programme which is already increasing at a very rapid rate.

All these measures, taken together, seem to me to add up to a substantial increase in purchasing power now, with the prospects of further additions in the future. This is based on sound principles and on a rate of expansion which can be maintained. Investment and exports must come first because this is where the largest advances are undoubtedly needed, but, subject to this, home demand must not languish but be encouraged to expand.

A good deal was rightly said by the hon. Member for Cardiff, South-East about the problems of parts of the country where unemployment is higher than the national average. I think that the hon. Gentleman rather underestimated the enormous amount that has already been done under the Local Employment Act, 1960. It is as foolish to ignore what has been done as to acquiesce in inadequate action. So far, £75 million, the greater part of it in Scotland, has been authorised under the Local Employment Act to encourage employment in these districts.

Anyone who looks at the expansion of the motor industry in Scotland, on Merseyside, and in South Wales, and at the consumer durable industry in South Wales and Merseyside can see what has been done, and the hon. Member for Cardiff, South-East, who ignores the enormous change which has taken place there in the industrial picture, largely on Government money, is really ignoring the facts of life.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

The right hon. Gentleman made interesting proposals about the motor trade, and referred to Scotland. Can he say whether these concessions apply to the vehicles being made in the car factory in Scotland which produces lorries and not motor cars?

Mr. Maudling

As they do not pay tax, it is rather difficult to help them, but in the case of the product from the Rootes factory, which, I believe, is a passenger car, of course these concessions will help. All these measures which I have proposed to stimulate the motor car industry, and help to the heavy engineering industries, will help the industries of Scotland and the North-East, because it is the weakness of the heavy industries which is creating some of the problems there.

Mr. Hector Hughes (Aberdeen, North)

The right hon. Gentleman has made many interesting points about the motor industry and certain other industries, but he omitted any reference to a very important industry which is suffering from unemployment, not only in Scotland but in Northern Ireland and elsewhere, namely, the shipbuilding industry. Why has the right hon. Gentleman excluded it from his consideration?

Mr. Maudling

I specifically mentioned that the shipping industry would benefit, because it is entirely on the health of the shipping industry that the shipbuilding industry's prospects depend, so I think that the hon. and learned Gentleman has rather misled us on that point.

We should not ignore what has been done, but, as has been said, and I have said so myself, the Local Employment Act by itself is not the complete answer. The most important thing for these areas is the general expansion of the economy, particularly the expansion of investment, and the expansion to which I referred this afternoon, that of the motor trade, is playing a big part in those areas.

In addition, we shall continue the very tough policy of I.D.C.s that we have pursued for some years. It is nonsense to suggest that our policy has been other than tough. I had plenty of experience when I was at the Board of Trade, and I know that there comes a time when, if any industrialist is told, "You con-not expand where you want to expand; you must go to Scotland ",he replies, "Rather than go to Scotland I will not expand at all "[Interruption.]I have known cases. This is quite true. I have talked with manufacturers, and I could quote cases, although I cannot quote individual names. I know of cases where our I.D.C. policy has been so tough that people have decided not to expand at all. This is of no benefit to anyone— people in development districts or anywhere else.

Therefore, in applying this I.D.C. policy, which is right, and has been of great benefit to the country as a whole, we must exercise common sense and discretion and not push it to the point where, rather than help the people of Scotland and the North-East, we damage the country as a whole.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

Those in the North-East are very interested in hearing what the night hon. Member is going to say about our area. What he has announced about the motor oar industry and the easement of Purchase Tax will not materially affect the North-East. Is the Chancellor aware that during the last eleven years the increase in personnel in the Team Valley Trading Estate has been only about 2,000? Is he aware that his I.D.C. policy is penalising those people in the trading estates in the North-East who require development— because they are having to pay 50 per cent. of the cost of any development out of their own resources? What is the Chancellor going to announce about the North-East.

Mr. Maudling

If the hon. Member will give me time, I am coming to that. I share his concern about the North-East. When I was at the Board of Trade I tried to get some part of the motor industry to go there, but I was unsuccessful. The best way in which we can help the North-East is to provide and make preparations for the next wave of industrial expansion that comes along.

Time and again businessmen have told me that one of the difficulties about going to the North-East coast was the bad road communications there. That is why, in our present programme, we are doubling the rate of expenditure on roads in the North-East.

Mr. William Baxter (West Stirlingshire) rose—

Mr. Maudling

I am sorry. I have already given way too much. I have a certain amount more to say.

Hon. Members

Give way.

Mr. Deputy-Speaker

I hope that the House will give the Chancellor an opportunity to develop his speech without too many interruptions.

Mr. Baxter

On a point of order. The Chancellor said that certain industries had refused to go to Scotland.

Mr. Deputy-Speaker

Order.

Mr. Baxter

Let me finish my point of order.

Mr. Deputy-Speaker

Order. It is not a point of order at all.

Mr. Baxter

With due respect, Mr. Deputy-Speaker, you have not heard my point of order.

Mr. Manuel

On a point of order.

Mr. Deputy-Speaker

Order. Hon. Members must be fair. The question of the location of industries in Scotland cannot be a point of order for the Chair to deal with during this debate.

Mr. Baxter

I have not raised my point of order yet, Mr. Deputy-Speaker, I have merely mentioned to you, leading up to my point of order, what the Chancellor has said. I am now merely asking the Chancellor— because he should give the House more facts— what type of industry has refused to go to Scotland.

Mr. Deputy-Speaker

Order. The hon. Member is not fair. He is addressing a question to the Chancellor under the guise of addressing me on a point of order. That is not right.

Mr. Maudling

As I said, we are preparing for the next wave of industrial investment. One of the best ways: that we can do this is by increasing expenditure on roads, and another way is by advance factories. I understand that my right hon. Friend the President of the Board of Trade will, on Thursday, be announcing details of new advance factories in the North-East and in Scotland.

Also, in the long-term, importance must be attached to the setting up and the establishment of new towns, such as the new town of Livingstone in Scotland, in an area of great economic potential, which should be a considerable help in the general development of the location of industry policy.

Finally, I turn to a question at which I have been looking myself, namely, the organisation of the Government machine, and especially the new organisation of the Treasury. This is now much more modern and effective, in order to ensure that full use is made at all times of our national resources. I had in mind that when we have an enhanced programme— as we now have— for school building and house building, we should look specially at the areas where there are idle resources. When we are considering the housing problem, of course, we must bear in mind that in some areas there should be additional housing for workers who go there from other areas. I agree that we cannot wholly solve this problem by bringing industry to the workers. There must also be some movement of workers to areas where the industry is available.

Also, when considering overseas aid we should see what resources are available in our economy. We already provide a great deal of overseas aid. I hope that we can do more, but there is a limit to what we can provide, certainly in free exchange. I should be inclined to look a little more generously at a request for aid if the products that the people receiving the aid were going to buy were something that we could provide from our existing spare capacity.

In these fields of Government activity there is scope for helping the areas of higher unemployment. In building houses and schools, however, we must also consider where new houses and schools are needed. As for overseas aid, we must watch the question of unsound projects. We cannot shore up declining industries. Sometimes economists tend to exaggerate the flexibility of our industrial system, and they think that we can transfer men and machinery from one activity to another much more quickly than is in fact possible. We do not want to hold up the process of change; we want to stimulate it. There must be idle resources lying spare and unused, which, by wise administration, we should be able to bring more into use. Without in any way trying to exaggerate its effects, that should be a further contribution to the problem of general activity in areas of high unemployment.

Mr. Stanley R. McMaster (Belfast, East)

Has my right hon. Friend given any consideration to the problems of Northern Ireland?

Mr. Maudling

If my measures are of help to the heavy engineering industry, and possibly to shipping and shipbuilding, I believe that that help will be reflected in Northern Ireland. As for the building of advance factories, this is the responsibility of the Government of Northern Ireland rather than of my right hon. Friends and myself. Therefore, I cannot announce measures of that kind in this context.

I have been dealing with the immediate position and the measures that I propose to take to give a new stimulus to economic expansion. I believe that in this way we can launch a new policy of expansion. The next and very important problem will be to maintain this rate of expansion. There will be three problems facing us— first, the overseas position; secondly, the danger of inflation and, thirdly, the sheer physical limitation of our resources.

There are two main factors in our overseas position. We must have an adequate international payments system, and we need concerted action by the main industrial countries. I am not satisfied that the existing system, even with the very important recent improvements, is fully adequate to provide the necessary finance for world trade expansion without undue strain upon the reserve currencies. I thought it was a good time, when the reserve currencies are strong, and the international market is remarkably stable— as the Cuban crisis shows— to turn attention to this problem. I put forward in Washington the idea of a mutual currency account, as one suggestion. We would have been naive to expect an immediate acceptance to such a suggestion, because bankers— even international bankers— are fairly conservative people. But we are not wedded to any special form or plan in this field, and I am satisfied with the response that our ideas have so far received. In our discussions with our friends we are pressing on with these ideas, and with any other ideas aimed at the same purpose.

Then there is need for certain policies by the main investing countries. Mr. Per Jacobsson, of the International Monetary Fund, referred to this recently. In modern conditions no one country alone can carry the burden of modern expansion. It is more difficult for any one country to expand if other main industrial countries are contracting. It is desirable that we should all work together to expand as best we can, though some can expand at one time more than others. I think that at the forthcoming meeting of O.E.C.D. in Paris at the end of the month, with the position of sterling, the improvement in the balance of payments and these new measures to expand our economy, we shall be in a strong position to discuss with our colleagues in O.E.C.D. and to urge upon them the importance of direct co-operation in the commercial world and in the expansion of world trade.

The second danger to which I must refer is the danger of inflation. As we have seen in the past, expansion can often turn into inflation, with the result that we are forced back on policies of restraint in order to protect the position of our currency. To avoid this, two things are necessary. The first is careful control by the Government of the total volume of demand. This is exceedingly difficult in a democracy, and particularly difficult when we are trying 'to work at 98 per cent. plus of our capacity. In a free country, who can really predict how much of their incomes people will be saving in six months' time? Yet that may have a great influence on the level of industrial production. We must face the fact that in a free society it is difficult to make this prediction within the margins of error which are allowable at a 98 per cent. capacity level.

The other thing which we have to recognise— recent experience has shown this need— is that now the danger of inflation comes from an excessive rise in personal incomes as a whole. This also was referred to by Mr. Per Jacobsson in his recent speech. Hence the importance attached by the Government to the National Incomes Commission as an integral part of our policy of an expanding economy. I believe that the N.E.D.C will help greatly with the problem of a steadily expanding demand, and that the N.I.C. is an essential complement of N.E.D.C. in that it will apply to individual cases the general principles which will be discussed at N.E.D.C. Individual application is essential. We cannot get our general policy working unless it operates in individual cases.

The N.E.D.C. report— this subject was referred to by the Leader of the Opposition the other day— shows clearly the importance of limiting incomes to a proper relationship with the rise in productivity if we are to have the rate of expansion at which we are aiming. If the average is to be preserved there must be exceptions, but those exceptions must remain exceptions. I think this is the real key to the problem of an incomes policy. If we are to have a general rate of increase, some people are entitled to more and to be treated as exceptional cases. But, if the exception is to set the average, the whole policy is undermined.

The Government cannot decree the level of wages in all industries. Nor can we leave it to the parties themselves. They are rightly concerned with the interests of the people whom they represent. Hence the need for impartiality which it is the purpose of the National Incomes Commission to provide. The purpose of N.I.C. is not to keep down incomes and wages. Its terms of reference are being published this afternoon in a White Paper and they show clearly that the Commission will not be concerned solely with wages and salaries. In the references made to it, the Council will be concerned also with such things as dividends policy, profit margins and so forth, and with the general level of profits in line with the undertakings which have been given by the Government. As I see it, the purpose of the incomes policy is not negative but positive; not to keep incomes down but to ensure that the rise is as fast as the economy can stand. In real terms incomes cannot rise any faster. I hope that the Commission— its composition and terms of reference are being published today— will enable us to avoid the blind application of a crude average to incomes and help us to ensure that incomes and wages are based on merit and not solely on the brute strength of a monopoly either of capital or labour. I regard the National Incomes Commission as an essential and integral part of the whole policy of expansion on which we are now embarking.

Finally, we must recognise the limitations imposed by the physical capacity of the country and particularly the limitations on our manpower. As I said earlier, we cannot as can some countries, draw on reserves of manpower or secure people easily from overseas—

Mr. John Diamond (Gloucester) rose—

Mr. Maudling

I am sorry, but I cannot give way to the hon. Member. I have given way a great deal—

Mr. George Brown (Belper)

May I ask one thing? Did the right hon. Gentleman say just now that the terms of reference of the Incomes Commission and the composition of the Commission are being announced this afternoon?

Mr. Maudling

In a White Paper, to be available this afternoon.

Mr. Brown

The composition?

Mr. Maudling

The membership, yes. The membership and terms of reference. I am announcing four names. The name of the chairman and three other names. We cannot be certain of the amount of work that the Commission will have to do, and it may be that the number of members will have to be enlarged and further names announced. But those I have referred to are being announced this afternoon.

To return to the point I was making about physical limitations, the main limitation is certainly that on manpower. I think it essential to pursue a policy of avoiding limitations on output and try to develop skills in industry. When regarding what happens in this country one is sometimes led to wonder whether the need to get the absolute maximum out of the available labour force is fully realised by all concerned. We must have more vigorous policies to sweep away restrictions. Above all, we must have a mind and outlook which welcomes change and novelty.

As I said earlier in reply to an interjection, I do not regard what I have said today as in the nature of an autumn Budget—[HON. MEMBERS: "Oh"]— no or a general programme of financial reform which should await a Finance Bill. I am trying today—in response, as I understand it, to the appeals of the Opposition, and, indeed, to the response of the needs of the situation, which is far more important—to provide a stimulus to our economy which can launch us on a new phase of expansion by measures that make sense at present and will continue to make sense in the future; and give opportunities which, if fully seized by industrial management and workpeople alike, can launch us and keep us on a course that will enable us to secure that degree of expansion and steady rate of growth which all of us desire.

5.8 p.m.

Mr. E. Shinwell (Easington)

If the right hon. Gentleman the Chancellor of the Exchequer cherishes the notion that anything he has said will relieve the anxieties of those unemployed men and women represented by hon. Members on this side of the House, the sooner we disillusion him the better. Nothing that the Chancellor has said this afternoon will make any immediate impact on the unemployment problem in various parts of the country.

I do not dispute much of what the right hon. Gentleman has said, which, after all, is in the nature of a preview of the next Budget. Certain decisions which are already agreed are to be implemented, and the long-term suggestions he has made will make some impact on the general economy and on various industries in the country. But what we are concerned with at this time as our primary object is to ascertain from the Government what remedial measures they propose to put into operation in order to satisfy the needs of the unemployed persons and those who are about to be unemployed. What is to be done to help those people in their present parlous plight?

I agree with the right hon. Gentleman at once that there is need for change, but nothing that he adumbrated this afternoon indicated change. It was orthodoxy all along the line. Why, for example, the right hon. Gentleman's reference to increased depreciation allowances? Why, for another example, his reference to a reduction in taxation which will affect the motor car industry? Reductions in taxation, increased depreciation allowances or increased initial allowances are in line with the orthodox policies which have been formulated by the present Government in the last ten or eleven years. There have been ups and downs. Occasionally they have represented a shot in the arm. Occasionally, for various reasons that must be well known to the right hon. Gentleman, they have made no impact whatever.

Take, for example, the depreciation allowances which are to provide a stimulus for the shipbuilding industry. Surely the right hon. Gentleman is aware that the shipbuilding industry of this country requires more than a shot in the arm of the kind which he has suggested. The shipbuilding industry is affected by international trade. It is affected by the surplus volume of tonnage in all the maritime countries of the world, and all the depreciation allowances formulated and implemented by the right hon. Gentleman will have no impact whatever— certainly no immediate impact. And the shipbuilders and the shipowners will tell him so. Of course, there are some shipping companies which will benefit from depreciation allowances provided there are profits in the offing. But without any profits depreciation allowances will make no impact at all.

I am not concerned this afternoon— and I want to be quite frank with hon. Members about this—with the economics that have been argued, if I may say so with respect, by both sides of the House as far as the debate has gone. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) made an excellent speech, with most of which I agree. There was one omission, and to one thing I shall direct attention in a moment; it was something on which there is fundamental disagreement as far as I am concerned. We are concerned with the immediate nature of the problem, one of extreme urgency, but also, of course, with the general economy of the country. I say with respect and with some knowledge that nothing which the present Government can do and has been said this afternoon can do more than make an impact in the long term, and that will depend largely on the international situation. The right hon. Gentleman knows this.

I admit, of course, that we are inhibited by the international economic situation, by the possibility of further conflict and by a variety of other matters. I recall that when the Labour Party was in office, whenever we sought to excuse ourselves for omissions and commissions on the ground that we were inhibited by the international situation it aroused derision among the Tory Opposition. I recognise that we are subject to international factors, but we are not concerned with that problem now. My constituents are less concerned with the general economic situation, although we cannot ignore it, than they are with the impact on their lives of the present unemployment position.

That situation, of course, applies not only to my constituency— I make no special claim for it— but to the whole of the North-East. With certain limited exceptions it applies also to the North-West, to parts of South Wales, and, unfortunately, it is beginning to apply to certain pockets in the South and in the London area, as we learned this afternoon in the course of a Question put by my hon. Friend the Member for Brixton (Mr. Lipton). Indeed, the right hon. Gentleman, whether unwittingly, inadvertently or fortuitously, put his finger on the spot. He referred to increased productivity. That represents a change. The right hon. Gentleman referred to modernisation— a very welcome change.

We on these benches are the last people in the world to object to modernisation, to increased efficiency and to greater production with less labour involved. It is inevitable, anyhow. As I say, the right hon. Gentleman put his finger on the spot. One can reduce taxation on motor cars, which affects the motor car industry, and provide depreciation allowances, a stimulus, a shot in the arm, but, with increased productivity, rationalisation and increased mechanisation, what is the inevitable effect? It is that more and more workpeople are thrown on the scrap-heap. That is precisely the problem that confronts us, the problem of redundancy which is increasing all along the line.

I would not enter this debate at all this afternoon if I were not able to suggest some constructive proposals with a view to an amelioration of the present situation. I agree with everything that the right hon. Gentleman has said about the future. There is a great deal of speculation about it. But let us assume that the right hon. Gentleman is right, nothing that he has said today can have any impact at the moment even on the motor car industry. That was clear from the question put by my hon. Friend who sits for one of the Newcastle constituencies when he pointed out that only this morning it was announced in the Press that the Ford Motor Company has decided to increase its prices. I should not be surprised if that example were followed by other motor car manufacturers.

The reduced taxation will, therefore, be offset by increased prices. That is a natural capitalist device, and happens over and over again. When there is a reduction in taxation that reduction is swallowed up in increased prices. I am not sure which comes first. However, I am concerned with what is to be done now. Let us get the facts right. I have no doubt that the right hon. Gentleman has some concern— of course everybody has concern and anxiety for this— about growing unemployment. It affects those who are unemployed, those around them, their friends, the shopkeepers, the retailers. It is a national problem.

I have no doubt that the Government are seeking to prevent anything like a repetition of what we experienced in the dark days of the 1920s and 1930s. But the question is how are we going to provide a remedy and mitigate the hardship caused by increased unemployment? In the course of the Question which I ventured to put to the Minister of Labour this afternoon, I mentioned, as a result of information conveyed to me and to other hon. Members, that a firm in the County of Durham is going to close one of its factories and concentrate its production in the South, in the town of Rochester. Is this not a situation which calls for immediate action by the Government?

It occurs to me— I am not quite sure that this is a sound proposition— that we should say to firms which refuse to go to areas of high unemployment, "You will not get the advantage of depreciation allowances." If we offer financial inducements, as we do to many firms through the Local Employment Act, why not refuse to provide financial inducements to firms when they refuse to comply with the persuasive efforts of the Government in the matter of the direction of industry?

What is to be done in a situation of this sort? Nine hundred men are to be thrown out of work in Sunderland, and in an area in Which thousands depend for their livelihood on Imperial Chemical Industries, there is a possibility, indeed a probability, that very soon there will be contraction, greater productivity, greater mechanisation, more efficiency, but far less people employed. Suppose we stimulate shipbuilding and marine engineering? That can also be undertaken with fewer men. We have to face that problem.

What about the mining industry? I regard it not only as an honour but as a privilege, and that I am extremely fortunate, to represent a mining constituency in which we have perhaps the most flourishing and prosperous pits in the country. We are now gravely concerned with the probability, because of modernisation, that fewer men will be employed in future on the surface and below ground at some of these pits. Imagine the anxieties of these people. These anxieties are conveyed to hon. Members, and we are entitled to express our opinions in this House. This is the place in which we must express them. We expect the Government to respond with some practical proposals of an immediate kind, even if they are unorthodox— the right hon. Gentleman said that he would be unorthodox— in order to remove some of those anxieties.

Some time ago I made a suggestion by Questions to the Board of Trade and, I think, the Ministry of Labour and the Chancellor of the Exchequer who preceded the present Chancellor. I asked why we cannot receive more Government contracts in the North-East and other areas of high unemployment? Why should the majority of those contracts be placed in the South and the Midlands? Is there any reason why the Service Departments should not seek to find whether there are firms in the North-East which can undertake contracts for clothing, boots and shoes and a variety of requirements that they purchase from year to year?

Is there any reason why the Government, when building advance factories, should not use them, even temporarily, for the employment of men who are redundant? Much of the work could be done by unskilled or semi-skilled labour. If the Government want skilled labour, there is a great reservoir of it in those areas of high unemployment not yet properly tapped.

Is there any reason why in the North-East, in the North-West and in Scotland the National Coal Board should not place contracts for mining machinery and other requirements rather than outside those areas? Should not the Government see that in those areas firms are provided with an opportunity for tendering for such contracts? Should this not apply also to the electricity supply industry, the Gas Council and various nationalised organisations, for example, civil aviation or the Ministry of Aviation?

These perhaps are simple proposals, but they would help to remove some of the anxieties. Perhaps in due course such devices could be employed so that in the long term contracts could go elsewhere. I agree that if contracts are diverted from the South to the North-East, to Scotland, the North-West and South Wales there may be a little more unemployment in the South and the Midlands, but it is possible to take up the slack in the South and the Midlands more easily, because there industry is more versatile. I shall not argue that at further length, but these are matters which could be attended to.

I want to present some facts concerning the North-East. I have no doubt that some of my hon. Friends from Scotland will have a great deal to say, as will some of those from the North-West and from South Wales. Sir Mark Hodgson, chairman of the Northern Regional Board for Industry, has expressed grave concern. He has said that unemployment is higher there than at any time since April, 1947, and the position is likely to get worse during the coming winter. Provisional figures show that unemployment rose from 49,689 in September, to 55,927 in October, and in October last year it was 33,260. That is a vast increase.

Recently, local authorities and other authorities in the North-East decided to set up the North-East Development Council and a former hon. Member of this House became its director-general. This is what he said the other night. Of the £18½ million given to development districts— that is actually granted, not the amount in the pipeline to be advanced in the future, but actually conceded so far by the Board of Trade— only £438,000 went to the North-East, one of the worst-hit areas in the country. Why was that? Surely the North-East is entitled to a greater share than that? If it means that other areas will not gain, the whole amount should be increased.

Many figures have been thrown at us today. There was £ 55 million to be spent next year and more in the year afterwards. There is the amount to be gained by the motor car industry through taxation proposals. These figures are far in excess of those I have just mentioned. If the Government say they have no money, that is a different matter, but they have not said that. Is the reason fear of inflation? It is a remarkable thing that productivity increases unemployment and inflation increases unemployment. How are we to prevent it— by deflation? What is the remedy? Are we just to wait until something turns up, wait for international trade to improve and for expansion following capital investment and the like? We cannot wait.

I am very much tempted to go for the Minister of Labour, but he is such an affable person that I dislike doing so. That is the worst of having some people in the Government who show good will and one does not care to attack. When I was younger it was different. It would not have provided me with any difficulty, but now I am more mellow. Recently the right hon. Gentleman talked about 22,000 jobs which had been provided. Then the Board of Trade confounded him by saying there were only 18,000. He cannot get out of that. Who is right? Is there any co-ordination in the Government? I doubt whether there is. This is a job for the Leader of the House. Perhaps when he speaks at the end of the debate he will tell us who is right. How many jobs were provided— 22,000 or 18,000? If the Government were wrong in the past, they will be wrong in the future.

I am tired of the talk about jobs in the pipeline and despite the good will which oozes from me to the Minister of Labour, I am tired that when we ask Questions he says, "I will do the best I can. I am very much concerned. "What is the good of that when hon. Members talk with their constituents who say, "Look at our position; we are going on National Assistance". Hon. Members would be surprised at the number of requests I have in my constituency for increases to be made in National Assistance payments. I have had to make repeated application to the authorities in the North-East who decide National Assistance allowances and give a little more help. The letters are pathetic and the situation is tragic. I am sure that hon. Members do not like it; they would not like it if it affected them.

With all his good will, the Minister of Labour must not indulge in this sort of thing. I have been a long time in this House and I have heard much of this in the past. It is wrong in the present situation to indulge in that kind of namby-pamby talk. It will not help our constituents when they come to us and make their piteous and pathetic appeals.

I will put some suggestions to the Leader of the House and ask him to reply at the end of the debate, if he will be good enough. I hope I do not anticipate too much what is to be said by some of my colleagues on these benches. They will, no doubt, repeat some of the proposals I make. First, I agree that change is essential, but Government action is also essential in order to prevent hardship. By that I mean that if Government policy creates unemployment, and it does— it is not denied, as, for instance, instructions to the National Coal Board, to Dr. Beeching and so on— the Government must take some positive action to help those affected. That is a fair proposition. We cannot leave it to private enterprise or for something to turn up.

Furthermore, Government policy should be directed to prevent redundancy, not to wait until it happens and then say that these men will be assisted to emigrate or will receive redundancy payments, or that the Government will use their persuasive powers to induce industrial firms to provide assistance to men thrown out of work at the age of 50 or so. If there is a failure on the part of the Government to prevent redundancy, alternative action is required.

Now I come to the point which I mentioned earlier, when I said that I disagreed with my hon. Friend the Member for Cardiff, South-East; otherwise, I enjoyed his speech, which was very constructive indeed. It is on the question of the direction of industry. I say quite definitely that I am in favour of the compulsory direction of industry. Of course, I recognise that there are snags; I do not deny it. The Chancellor of the Exchequer, dealing with this point, said that if we try to induce industry to go to a particular area, it may refuse. All right; I suggest that the Government should not provide depreciation allowances in those cases.

There are cases, as, for example, that of the firm leaving Sunderland and going to Rochester. It ought to be told "You have no right to do that". We can also refuse to provide building licences for firms wanting to expand in the South or the Midlands, where already there is congestion and difficulties about transport. My hon. Friend the Member for Cardiff, South-East said all that is necessary about that, and I do not want to repeat what he said. If we cannot accept the proposition of some form of compulsion in the direction of industry, what is the alternative? It is to provide sufficient financial inducements to enable firms to go to areas of high unemployment.

More than that requires to be done. The Chancellor has spoken of the need to have more road development. Why, then, does his right hon. Friend the Minister of Transport refuse to accept our submission to improve, in Durham and North Yorkshire, the A. 19 road, which converges on some of the potential industrial areas, including the new town of Peterlee? Why does he do this? He says he cannot afford it; it may cost a few million pounds. Without these improved transport facilities, we cannot say to industrial firms, "Here you have all the amenities, all the transport facilities and labour ready to hand ". Something must be done about that.

Now I come to my two final points. The first is on the question of training men over 50. I put an Amendment on the Order Paper directing attention to men who become redundant after the age of 50. What is to be done about them? Nothing is more pitiable than the spectacle of men who have worked all their lives in the pit, on the railways, or in some other industry, from the age of 14, who find themselves without a job. It is very difficult to get one. No one wants them, not because they have not got skill or virility, not because they are not capable, but because of the assumption that if one has reached the age of 50 one is no longer of any value. I refuse to believe that myself. Something must be done about it.

If we are to have training schemes for younger people, and I accept that, then we must have training schemes for men becoming redundant who find it so difficult to get a job. They need proper allowances and to be treated rather differently from younger people, because they do not take kindly to that sort of thing. They can be trained to do very useful jobs, and I see no reason why in some parts of the country we should not have factories, as we have Remploy factories for the disabled, for the men who require training. Having got the training, they can then engage in some kind of skilled or semi-skilled work as capable and proper citizens in the full sense of the word.

Finally, public works. If the Government want to find a remedy, I will give them one. In those parts of the country where there is some unemployment, and certainly in those areas where there is far too much unemployment, let us have better roads and more housing. Why not? There has been a lot of talk by the Minister of Housing and Local Government about preparing housing schemes. Let us get busy. Let us say to the local authorities, "Go ahead. What allocations do you need? What are your capabilities? Have you got the labour? We will see that you get the finance to go ahead." Why not do that? The Minister of Housing and Local Government says, "We need more housing."Let us make a start. Let us give the local authorities their head. Let us build more schools, more hospitals; get ahead. I know that we have programmes; let them be speeded up. "Be dynamic"— that is my advice to the Government.

As I sit down, if I were thinking in terms of the next General Election, I should be delighted at the Government's failure in the sphere of unemployment. After all, there could be no better card for the Labour Party to play at a General Election than to point at the failures, blunders and omissions of the Government and to say, "Clear them out". It is very easy, but I do not like it, because of the facts and the tragedies and the hardships that are caused, and therefore because of that I am not in the least pleased. I am despairing. I want to see the Government doing something more than talking about the motor car industry, reductions in taxation, the national economy and the future of this country. We are concerned about all that; I do not ignore it for a moment, and I must not be misunderstood about it, but let us deal with first things first and help the people who need help. That is my advice to the Government.

5.40 p.m.

Captain L. P. S. Orr (Down, South)

I found a great deal with which I could sympathise in what was said by the right hon. Member for Easington (Mr. Shinwell), apart, naturally, from his peroration. I preferred him when "the good will was oozing out of him". But I have much good will towards the North-East and towards other areas in which unemployment is high, because this is a problem with which we in Northern Ireland have been only too familiar for a long time.

Like the right hon. Gentleman, I think that it would be better if I did not speak on the broad general subject, because many Members wish to speak, I do not want to take too long, and the problems of Northern Ireland are so serious in many ways that one speech in one debate is not sufficient to cover them. But I intervene in the debate on the subject of Northern Ireland, first because it is mentioned in the Opposition's Amendment, and secondly because we have just had the Report of a Working Party which was mentioned by the hon. Member for Cardiff, South-East (Mr. Callaghan)—the Hall Report upon the economy of Northern Ireland.

May I make one point to my right hon. Friend the Leader of the House? The fact that I am able in this debate to make a few preliminary comments upon the Hall Report does not mean that we do not want a full debate on the subject. Unemployment in Northern Ireland is very serious, and there is so much raised in this Report which ought to be examined that we from Northern Ireland— I speak for all my colleagues — feel that we ought to have a debate on the subject in Government time. Hitherto we have had to await the caprice of the Opposition or the vagaries of the Ballot for Private Members' Motions in order to debate the subject, and this simply is not sufficient, because the Opposition choose to debate it only when it has some particular political advantage to them— which seems to be very seldom—and the Ballot is much too uncertain for one to rely upon it for a debate on a subject of this importance. We, the Ulster Unionist Members, shall therefore be returning to my right hon. Friend the Leader of the House with a demand for Government time for a debate. Perhaps in his winding-up speech he will say something about that.

May I remind the House of the course of events which led to the appointment of this Committee? During 1960 it became apparent in Northern Ireland that our two major industries, upon which we depend— shipbuilding and the aircraft industry— were in such a position that the outlook for them was not encouraging. Up to then we had had high hopes that our new industries policy, which had been employed with great vigour by both Governments and which had been very successful, gradually would overtake the unemployment difficulties. But when the adverse signs appeared in these two major industries, it was quite clear that the new industries policy of itself would not be sufficient and that something further ought to be done.

In 1960 the Northern Ireland Government made approaches to the Government here to consider the whole Northern Ireland problem all over again. In March, 1961, I was fortunate in the Ballot for Private Members' Motions, and we debated the matter here at some length. I remember that the hon. Member for Cardiff, South-East and Lord Robens took part in that debate. We had a full debate upon the Northern Ireland unemployment problem. The two Governments met at the time and decided to set up this working party.

I should like to say something about the machinery involved in the setting up of working parties. During the debate in March, 1961, I suggested that what was wanted in the peculiar position in Northern Ireland was a joint committee of the two Governments at Ministerial level, and that it should be a permanent committee. I am still quite unrepentant in that view, because I think that that is what ought to have been done, ought to be done now and ought to be continued.

The vice in setting up committees, ad hoc committees of any kind, is that, first of all, as soon as we set up a committee, there is a period in which nothing happens. This Committee was set up in March, 1961, and nothing in particular, certainly nothing new, has happened between then and now. If one raises anything with Ministers or in any other way, one is told that there is a committee sitting. Secondly, the very fact of the committee sitting means that as it approaches the time when it should produce its conclusions, false hopes, indeed the most extravagant hopes, are raised. Everybody in Northern Ireland thought that the Hall Committee would produce a great panacea, and that the unemployment problem would be solved overnight. Consequently, when (the Committee reported— I think that here this was inevitable— there was an immediate feeling of disappointment when no panacea was produced. Anything useful and constructive in the Committee's Report— and there is much in this Report— is lost in the general feeling of frustration and disappointment.

I want to make it clear that I am not belittling what this Committee did, for it made a very valuable and useful analysis. A great deal of new light has been thrown upon the facts of our economy, and the Report will be extremely valuable. We are all, naturally, grateful to those who sat upon the Committee, for it was very useful work which they did. Nevertheless, I hope that in future when we are faced with unemployment difficulties in any area, particularly in Ireland, we shall not set up a committee. In Northern Ireland we have a Government of our own, but there are difficulties of deciding where responsibility lies between the Government over there and the United Kingdom Government. I think that this could be overcome by the appointment of a joint permanent standing committee of Ministers.

I suggested in the debate in March, 1961, that it should be a committee under the chairmanship of the Home Secretary, as the Minister responsible for Northern Ireland, and that it should include the appropriate Ministers— say, the Minister of Transport, the Minister of Aviation, a Treasury Minister and the appropriate Ministers in Northern Ireland. It need not meet very often; it need meet perhaps twice or three times a year. It could set up beneath it whatever working parties were required, but these should be set up without publicity and not in the manner of the Hall Committee and there should not be a feeling that because a committee has been set up, the whole position is frozen until the committee reports. Starting upon the basis of the Hall Committee, this would be the right way to proceed with machinery for the future.

The sad thing which comes out of the Hall Committee— and it is not confined to Northern Ireland, because the Toothill Committee for Scotland broadly came to the same conclusion— is that there does not seem in a free society to be any universal panacea for dealing dramatically with areas in which unemployment is high and chronic. It is a sad fact. The problem for the Government in their development district policy must be to try to overcome that difficulty, but it is a real difficulty in a free society.

The Hall Committee broadly said that if the trends continued as at present in shipbuilding, agriculture and the rest of employment; if our new industries policy continued as it had gone on hitherto; and if the labour force expanded in the same way, then unless migration increased or there were very considerable extra subventions by the central Government, the unemployment position was likely to remain more or less the same in the foreseeable future That is a very disappointing conclusion. But it is one which we cannot overlook.

I was saying that it was difficult in a free society to deal with the problem. The right hon. Member for Easington said that he would solve the problem of the North-East by direction of industry. Is that completely practicable in a free society? It would be perfectly easy to solve in a matter of a few weeks the problem of unemployment in Northern Ireland if one had a Fascist or Communist Government. It would be quite simple because one would either take the labour in great blocks to where one had the industry or one would take industry to where one had the labour.

Mr. Shinwell

The hon. and gallant Member had better not inform the electors about that or they might unseat him at the next election in favour of a Communist.

Captain Orr

I have a feeling that they have more sense than that. It is true that one could solve the problem almost overnight if one did not have to preserve the essential freedoms. One of the essential freedoms I believe to be the free movement of labour. Another is the free movement of industry. We are, of course, right to prevent industry from going into areas where there is a shortage of labour and to endeavour to induce industry to go where the labour is available.

Mr. W. Baxter

Has the hon. and gallant Member any experience of being unemployed and of living on the meagre amount the unemployed receive from the labour exchange? If he had had that experience he would have found that there was no very great freedom for the unemployed person. How would this great freedom which the hon. and gallant Member talked about help the unemployed? There is no freedom when a man is unemployed.

Captain Orr

I entirely agree, and I have in fact been unemployed.

Mr. Manuel

Unemployed? But not poor.

Captain Orr

I have been poor enough, but the hon. Member for West Stirlingshire (Mr. W. Baxter) has a serious point. It would be easy if one could take an unemployed man and direct him and move him willy-nilly to somewhere where there was work. We could cure his unemployment in that way, but there is the difficulty of reconciling freedom with the need to provide full employment. No one minimises the misery of the unemployed. I am not in favour of laissez-faire. I accept it as a duty on the Government to endeavour to provide conditions in which men can be usefully employed.

Mr. George Wigg (Dudley)

Will the hon. and gallant Member go a little further in his conception of freedom? During the Summer Recess, at my own expense, I went to Northern Ireland to look at the unemployment problem and industry in relation to defence. I went into the street and there on a wall I saw the slogans, "Keep out the Mickeys", "Remember 1691" and "Hang the Pope ".

Mr. Deputy-Speaker

Order. I think that it would be better to come back more closely to the Amendment which we are debating.

Captain Orr

I am so glad that you have made my point for me, Mr. Deputy-Speaker. Honestly, in a serious debate about unemployment, what use is it to make that sort of cheap, useless inter- vention? We are dealing with a serious matter. Unemployment in Northern Ireland is worse than it is in other parts of the United Kingdom and it is something to which we must put our minds seriously.

On the publication of the Report to which I have referred the extravagant hope was raised that there would be some sort of panacea. This obscured the fact that there is a good deal of useful information and some very good suggestions in the Report. I think that the Chancellor was right to emphasise that in the matter of unemployment we should not overlook all that has been done so far. Had we not had a recession in shipbuilding and in the aircraft industry the unemployment problem in Northern Ireland would have been almost solved by now. The policy of introducing new industry there has been very successful. I ask hon. Members to imagine what Belfast would have been like without this policy. There may be things there which offend the eye of the hon. Member for Dudley (Mr. Wigg) but if, with the shipbuilding recession, nothing had been done by either Government in the years since the war to diversify our industry there would have been very much more to offend him — in fact the situation would have been quite appalling. However, we must try to apply our minds to what we do now after receiving the Hall Report.

I should like to deal briefly with a few of the things in the Report. The Report suggested that the subsidy for industrial coal, which we now have and which is something unique to Northern Ireland, should be extended to oil at a cost of about £1,100,000 a year. We have the right in Northern Ireland to give this valuable subsidy to our power resources. It was suggested in the Report, and it has been agreed between the two Governments, that we should continue industrial derating at 75 per cent. which again is extremely valuable and should be an extra inducement to companies to come to Northern Ireland and set up factories. This derating concession amounts to £ 500,000 every year. We have managed to have a subsidy of £ 10 million for Short and Harlands to enable them to complete the contract for the Belfast Freighter. No doubt my hon. Friend the Member for Belfast, East (Mr. McMaster) will deal with the problem of the aircraft industry if he is fortunate enough to take part in the debate.

The Chancellor of the Exchequer spoke today about the provision of housing and other facilities. This Report on our economy in Northern Ireland also suggests that we should be allowed to expand the provision of housing. We are rather behind the rest of the community in this respect. It was suggested in the Report, and the two Governments have agreed, that housing should not be held up for lack of finance. We are allowed to subsidise houses in Northern Ireland but the difficulty is in expanding the labour force. The bricklayers' union will not permit us, and here the hon. Member for Dudley, when he next visits Belfast, might help us.

The union will not permit us to train adult persons in bricklaying courses. While we are willing to expand the housing programme and continue the subsidy in order to do so, and while there are painters, joiners and all sorts of people out of work we cannot expand the labour force because the bricklayers' union will not allow us to do so. If the hon. Member for Dudley is so keenly interested in our problem, as he professes to be, he might use his good influence in this respect.

Mr. Wigg

I should like, first, to use my good influence here to get the hon. Member to apply his mind to the problems of Northern Ireland. What has he done to face up to the fundamental point that more orders for the Belfast Freighter cannot be obtained until the Tyne V engine is obtained? Why come here and talk the kind of muck that the hon. and gallant Member talks today? Why not go back to Northern Ireland, and talk to the Government there?

Captain Orr

If the hon. Gentleman thinks that it is "muck" to suggest that we should expand our housing programme and our building labour force, he has got different standards from mine. I am certain that when my hon. Friend the Member for Belfast, East deals with the problem of Short Bros. and Harland he will deal with the hon. Gentleman as he deserves.

When I talk about the building industry in Northern Ireland and refer to the restrictionist attitude of the unions, this does not apply to all the unions in Northern Ireland. The Amalgamated Engineering Union has taken a very forward view and has permitted the training of adults and an expansion of the labour force there. This is to be welcomed.

There is so much that could be said about where we go from here, as a result of this Report. I think one of the most important things that have got to be done in Northern Ireland is to train our labour force. The Hall Report pointed out that in occupations to which it is customary to serve an apprenticeship there are some 4,000 unemployed men who could be termed craftsmen. The Report continued: There is, therefore, a balance of nearly 21,000 men— mainly semi-skilled industrial workers, clerical workers, farm workers, general labourers. There is a vicious circle here in that if a lot of money is spent on training and one is unable to provide employment for the men, we then have skilled men out of work. If, on the other hand, there is not a pool of skilled labour one finds it difficult to attract industry. When industry does come it brings a good deal of skilled labour with it, at any rate for a year or two. That does not seem to me to be the right approach.

What we have got to do is to set about a much more vigorous policy of training our labour, either through the courses run by our own Ministry or by grants to employers to run apprenticeship schemes. Employers should be encouraged to run apprenticeship courses not only for the apprentices they actually require but in addition to their requirements so that if firms are seeking expansion the skilled labour will be there and new firms to the district will have skilled labour available. Furthermore, if there happen to be enterprising young men who want to go elsewhere, to England and other places, they will be equipped with the necessary skills so to do. This would be helpful and I believe that the Government should find the necessary finance to enable this to be done.

In Northern Ireland we obtain in one way and another about £40 million annually in the form of subventions. It can be argued in the short term that a substantial increase in this amount of money— either in direct subsidies to employment or in some other way— might materially assist and dramatically improve the situation. Here I agree with the Hall Report. What one wants to see is the Northern Ireland economy ultimately standing on its own feet. We have got to do our utmost to attract growth industries into Northern Ireland rather than bolster up declining industries.

I believe that what the Chancellor of the Exchequer announced this afternoon may help, because a general expansion of the economy must do so. But I hope the Government will not regard the Hall Repoort as being the last word. I trust that having decided to extend the coal subsidy to oil, having decided to allow us to continue industrial derating, to provide finance for Short Bros. and Har-land and to let us expand our housing programme if we can persuade the union to support us, the Government will not regard these as the last word. I hope that, starting with the Hall Committee, the Government will seek to build upon this and with permanent consultative machinery will set us in the long run upon our own feet. I hope that my right hon. Friend when he replies will address himself to this matter and will give us a firm assurance that the Government do not regard this as the end and do not believe that everything possible has been done for Northern Ireland.

We in Northern Ireland, together with our Government, with employers and trade unionists, are conscious that we have to do a great deal for ourselves. The Hall Committee has produced a certain realism in the situation. We cannot always expect the United Kingdom Government, by some dramatic act, to solve our unemployment problems for us. We are willing to do a great deal for ourselves, but we wish to have the clear determination stated by the Government to continue to assist us in every way possible, until the time comes when we are on our own feet and have solved our problems.

6.7 p.m.

Mr. James H. Hoy (Edinburgh, Leith)

I will not follow the points made by the hon. and gallant Member for Down, South (Captain Orr), because it is a long time since I have heard a Member take so long to say so little. Certainly, all his statements about Northern Ireland will not provide many jobs for that part of the United Kingdom.

I want to direct the attention of the House, as shortly as I can, to the situation in Scotland. I agree with What was said by my right hon. Friend the Member for Easington (Mr. Shinwell) earlier this afternoon, that all the announcements which the Chancellor made this afternoon would have no immediate effect on unemployment in our part of Britain. I should have thought that that went for most parts of the country as a whole, because, after all, even if we get all that the Chancellor has promised, it will in no way reverse the present trend of unemployment in the North or in the South.

I do not want to appear churlish about what the Chancellor said, but the areas which will draw the greatest benefit will be those which are most prosperous at present, such as Birmingham and the South. When my right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Wood burn) intervened to ask what effect this would have on B.M.C.'S production in Scotland it was not good enough for the Chancellor merely to laugh it off and say, "If B.M.C. does not pay any tax it cannot get any rebate ". My right hon. Friend was pointing out that when the Chancellor included the development of B.M.C. at Bathgate in his reference to the development of the motor industry, the taxation only referred to private cars. Taxation does not affect commercial vehicles, and it is commercial vehicles which are built at Bathgate. We are grateful for much of what the right hon. Gentleman said, but do not let us hoodwink ourselves into the belief that what the Chancellor said this afternoon will make any impression in Bathgate.

What makes industry so uneasy is the fact that one can never tell from day to day when the Government are going to produce another Budget. Throughout the Session they are for ever announcing changes in taxation. Only a few months ago the Government put £40 million in taxation on people who were eating sweets and drinking certain soft drinks. I should have thought that it was a rather peculiar Government who took £40 million from children, amongst others, and then, a few months later, handed back £50 million to £60 million to people who buy motor cars. They have their priorities wrong. The Chancellor should look at the matter again.

In July, we debated the subject of employment and industry in Scotland. Conditions were bad enough then. We who represent Scotland on this side of the House— by far the majority in Scotland — are frequently accused of overstating the case, but I remind the Minister that when we began that debate in July his own hon. Friend the Member for Bute and North Ayrshire (Sir F. Maclean) said: I was glad to hear that the Secretary of State recognises the serious nature of the present crisis because, of course, crisis it is."— [OFFICIAL REPORT, 19th July, 1962; Vol. 663. c. 693.] Since July, things have got worse and worse, until we have today about 85,000 men and women unemployed in Scotland.

It is noteworthy that out of that total there are 3,500 boys under 18 and a little over 2,000 girls under 18 who have never yet found employment. This is one of the serious features of the situation. In the name of goodness, what is the use of criticising young people today when we have in Scotland about 5,500 young people under 18 who cannot find employment? Rather more than half of that number have been unemployed since they left school in June this year. This is an indictment of the present Government. There are thousands of young people eager and willing to work who have not yet, after all these months, been offered an opportunity to earn their living.

Turning for a moment to the overall figures for unemployment, I wonder whether the House appreciates that six out of every ten people unemployed in Scotland today have been unemployed for more than two months. This is not a transitory state of affairs in Scotland. There is a hard core of unemployment. Obviously, special action must be taken to cure it.

I do not want to go on dealing only with statistics, but I must remind the House that Scotland's share of the country's population is even less than it was ten years ago. Despite that, with less than 10 per cent. of the population, Scotland has 16 per cent. of Britain's unemployment. This is one of the fair shares which we do not like. The responsibility for it lies at the door of this Government. Ten years ago, when the Labour Government left office, we had just over 54,000 unemployed. As a result of the policies of successive Tory Governments, we now have 85,000. This has been very sad for Scotland.

In addition, of course, this is all reflected in Scotland's industrial production. Even the Government admit that Britain's industrial production compares unfavourably with that of the rest of Europe. If one contrasts Scotland's production, which is only half that of England, one sees just how stagnant our economy is. It is to this that the Government ought to direct their energies.

In view of all these facts— this is my charge against the Government— one would have expected them to take special action. Nothing of the kind. Quite recently, we have read speeches made by Ministers. One would have expected Scotland's tremendous growth in unemployment to have given them cause for concern. Not a bit. Within the last fortnight, we have had two speeches from Ministers which gave an indication of the way the Government's mind works. One speech came from the Minister of State for Scotland, who, to those who sit on these benches, seems much more like a paid hack for the Tory Party than a Minister of State. He goes round the country telling people how well off they are. Speaking at a meeting only ten days ago, the Minister of State said: Expansion is in the air. If we go in "— that is, into the Common Market— then England, the United States and Europe will find, better in Scotland than anywhere else in Europe, all the conditions necessary for expansion. Then we shall see the solid, unspectacular groundwork of the last decade really start to pay off. The roads, the bridges, the overspill movement, the new industrial estates, the careful forward planning of local authorities, both great and small, will all come into their own. What sheer nonsense and humbug. In other words, the Minister of State is telling Scotland that all this planning was not really to overcome our own economic difficulties but was done just in case we went into the Common Market so that we should be ready to meet that new situation.

Mr. William Ross (Kilmarnock)

No wonder he lost his seat at the last General Election.

Mr. Hoy

I was not surprised that he lost his seat if that is the way he faces Scotland's situation. I can well understand it. Of course, what the Minister of State said is quite untrue. All that groundwork— however else we may describe it— has left Scotland today with 85,000 unemployed.

In the middle of the year, I was chided from the benches opposite because I suggested that, as a result of the Government's policy, we should probably have 100,000 unemployed in Scotland before the winter had passed. Hon. Members opposite said that this was scare politics, exploiting unemployment just for party political purposes. How silly can they get? Just last weekend, the Secretary of State for Scotland, speaking at the annual meeting of his own constituency party, said that Scotland's unemployment figure was likely to rise to about 100,000 by Christmas this year That is a very nice Christmas card to send to Scotland.

The right hon. Gentleman went on to ask whether we should be really disturbed about it. He said: We are certainly sympathetic to those who are unemployed, but there is this other side to the question. What was this other side to the question? With 100,000 unemployed, he said, industrialists in Europe—in Germany and elsewhere—would be attracted to Scotland because here they would find a ready supply of labour to meet their needs. This was a shocking thing to say, to suggest that one of the great attractions in Scotland, after eleven years of Tory government, was that we should have 100,000 unemployed. There could be no worse justification for Government policy.

Because the right hon. Gentleman used somewhat similar words in the debate last July, I told him that he should be ashamed of himself. How much more ashamed should he be to use such words in November. This is the condemnation of the Government and their policies. They now say not that they will be able to do anything about our 100,000 un- employed, but perhaps they will be able to attract industrialists from Europe who will wish to come to Scotland and use our unemployed labour.

Scotland has much better things than this to offer the people of Europe or of any other part of the world. We have an industrious nation, good labour relations and a good labour record. The people of Scotland have great skills and are willing to use them for Europe and to play their part in building up the economic stability of their country, but they regard it as an insult that their unemployment position should be regarded as a recommendation for people to go to Scotland.

In these debates we on this side have made many suggestions about how the Government might tackle the immediate problem. Let us understand quite clearly that what the Chancellor of the Exchequer said this afternoon will make no contribution, or at least a very small contribution, to alleviating Scotland's unemployment problem. Although there may be some dispute about how industry can be directed, the Government have a great power of direction in their hands. They can place tremendous Government orders. They can direct Government Departments.

Together with local authorities, the Government can make an immediate contribution towards solving this problem because they can release certain moneys for this purpose, and local authorities are desperately anxious to get on with the job. The Government can offer bigger inducements to industrialists to go to areas where employment is required. We should not forget that when we speak, and speak generously, of the redistribution of the motor industry in Britain a great deal of it has come about because of the financial inducements offered by the Government. The industry has received quite substantial sums of money tax free, and we agree with this. This is what ought to be done.

In addition, however, certain other things which are within the control of the Government must take place. They can take immediate steps to meet the needs of the Scottish people and of their Working-class colleagues in the north-east and north-west of England, in Wales and in Northern Ireland. It is within the Government's power to take these steps, and I beg them to take them quickly.

This will not, however, provide a long-term solution to the unemployment problem. We will not solve it by dealing with little groups. We must have a Government who are willing to plan the economy of the nation as a whole and to allow certain areas to make the best contribution that they can. The Government can do this by offering special terms to people to go to these areas. In our programme "Labour in the Sixties "we say that the Government not only should do this, but should be prepared to go into partnership with industry. Perhaps this would not work, but it is for the Government to disprove it. They might set up joint establishments. One or two are operating at present. If private industry is not willing to do this, the Government must reserve the right to set up and create industries in these areas. They cannot write them off.

I wish to say a few words about the difficulties that we are facing in Scotland. We are to have superimposed on us 'the tremendous cuts in mines and railways. This we must face. But what is the use of asking firms to provide alternative employment for the people who will lose their jobs in the areas affected if the Government through their agent, Dr. Beeching, take steps to close down the transport which will carry industry and people to the areas?

Only today all Scottish Members received a communication from the Church and Nation Committee of the Church of Scotland, which says: Since the Committte reported to the General Assembly in May, ominous statistics for Scotland have been issued by British Railways. It has been made clear that Dr. Beeching has been given the restricted remit of producing a plan by which the railways can be made to pay, and to this extent he cannot be blamed. If considerations of profitability are to be decisive, 11,000 miles of line in Scotland and the jobs of 10.000 of our workers are threatened. In particular, there would be no railways north and west of Perth and north of Aberdeen, with the doubtful exception of the line between Perth and Inverness. Such widespread closures would involve considerable inconvenience for many communities, and make life in many others virtually impossible. The efforts to arrest the depopulation of the Highlands and to recreate their economy would be brought to nothing and this large area of Scotland would be in danger of becoming only a summer playground for tourists. Profitability can never be the sole consideration so far as the railways are concerned… The crisis in the Scottish railways underlines the urgency with which rail, road, sea and air require to be linked together in a co-ordinated transport service. We on this side have been saying that for many years. Indeed, we had partly established a co-ordinated transport service in the years following the war. The Tory Government wrecked our plan when they took road haulage out of the profitable part of transport and handed it back to its political backers irrespective of the consequences that that action would have on places like Scotland, Wales, and the rural areas of England. The Government are responsible for that.

We must have a planned economy. I understand that planning has become popular even with the Government. We must have integrated transport services in order to meet the needs of a planned economy which, perhaps, will not provide us with a superabundance but which will give every man and woman the right to earn a living under decent conditions. I believe that that can be achieved only by a Government who really believe in planning and that that Government will be found from among those who sit on this side of the House.

6.28 p.m.

Mr. Paul Williams (Sunderland, South)

I was delighted that today the Chancellor of the Exchequer recognised the fact that we are an island. We ignore this fact of our geographical life at our peril, since, whether there are profits in the British shipping industry or not— and regrettably there are not— we depend on this lifeline for our very existence. I trust that the measures which the Chancellor announced today will help to sustain this essential supply line of our economy.

If I use a few figures for a moment or two, I hope that I will not disappoint the House too much. I do so not merely to underline our geographical position as an island, but to show how essential and vital is a prosperous British shipping industry to our economy and future prospects. I propose to quote figures for 1961 because they are the latest estimated correct figures available.

I deal, first, with invisible exports— in other words, earnings from shipping. Freights, exports and imports, and the income from cross voyages, totalled £ 760 million in 1961, of which over £ 500 million was earned abroad. There can be added to that passage money and charter hire. The net figure of total receipts of British shipping from abroad in 1961 was £578 million. Naturally, against this income from shipping services must be set various costs and disbursements abroad last year, which totalled £526 million. Therefore, the net contribution to our invisible exports last year— in other words, the net income from British shipping— was £52 million.

I concede to the House that this appears to be a relatively small and, in terms of our national finance, a relatively unimportant figure, but the net income of shipping is, I believe, only one measure of the importance of shipping to us as an island. The total receipts from abroad are a much greater indication of the importance of our shipping service in our whole economy.

I go back to the sentence that I used just now and point out to the House that, in 1961, the total receipts of the British shipping industry from abroad were £ 578 million. If we— whichever party forms the Government— allow the British shipping industry to run down as it has been doing over recent years, the figure of £ 578 million will be whittled away, and, although I concede that not all that figure will become a charge on our balance of payments position, there is no doubt that the absence of the British mercantile marine will be, to put it mildly, a severe, grave and gross strain on our balance of payments position.

As recently as 1952, the receipts from shipping services were only £ 509 million. In other words, in the last nine years, the increase in receipts from shipping services sold abroad is about £ 70 million. I use these figures, with deference to the House, merely to show the essential nature of shipping in our national economy. This is why I heartily welcome the move of the Chancellor of the Exchequer today to try, in some small measure to restore the importance and confidence of our shipping industry. I do not know, at this stage, whether the House would dare say that these mini- mal measures would be enough to restore confidence, but, certainly, they will not be enough to restore prosperity to our shipping industry. Much more needs to be done. It is much easier to say that than to specify in detail. I believe, however, that the Government could well go a few stages further in this matter of the survival of British shipping.

I believe that it would be helpful if we could get an indication from the Government of the size at which they expect the British merchant fleet to stabilise itself. We have seen, over the years, a decline in tonnage to about 20 million tons today. Let us settle for that, if nothing else. If the Government could tell us that, in the national economy, our merchant fleet can play so vital a role that they are willing to secure it by one means or another at about 20 million tons, they will have gone a long way to restoring confidence in the shipping industry.

But more than that is needed; more is needed than mere words. In fact, action is needed, especially in this savage, subterranean jungle warfare of the ocean— if I may mix a few metaphors—on the issue of flag discrimination. I am told that some of our allies regard us as loyal friends. If that is so, then I think that loyalty is a two-way issue; and there are some of our allies who are showing no loyalty to us in this matter of shipping.

I know that the Prime Minister, in his visit to President Kennedy, eighteen months ago, left a memorandum at the White House. I suspect that it is well covered with dust. The result which has come out of that document and the conversations have been precisely zero for British shipping. I think that we need to say in this House that we expect the Government not just to leave documents, but to use words to the American Government, and, quite frankly, to threaten action. Unless we do this, I think that the Americans cannot be loyal, because they do not understand our point of view.

I think, also, that we can look with respect to words used by a senior Minister last week, at the Chamber of Shipping dinner. The First Secretary of State, speaking about the shipping industry, used these words: At the moment let me say this: no British Government could ignore serious threats to so vital an industry as shipping in which enormous quantities of capital have been invested. Let no one think that if pressed too far we will not take vigorous action to protect our own interests, provided that we are clear that such action really is in our own interests. We cannot allow the interests of the commerce of any country to take precedence over the interests of the commerce of the United Kingdom. With those words I heartily agree. But I wish that someone could tell me what they meant. If they mean what I think they are supposed to mean they are, for shipping, the beginning of a glimmer of light at the very end of a long tunnel. If they are only just words uttered at an annual dinner so as to get through a difficult situation, then they are more unfortunate than fortunate. If it really is the thinking of the Government that we may need very shortly to retaliate against nations who practise flag discrimination and are guilty of other malpractices of the sea, if these words are the beginnings of an indication of a policy, then I welcome them, but if they are not, then they are misleading and unfortunate

I believe that in this matter of shipping the Chancellor has today taken a few tentative steps in the right direction. May I urge him and the Government to go further along the right way? If they will pursue the logic of today's first tentative steps, then British shipping is in for a fair wind in the future.

I turn to the problems of shipbuilding. We have in the past been the shipyard of the world, but rising nationalism has led to a situation when new countries have developed their own merchant fleets, over-protected, and they have even developed their own shipbuilding facilities. I believe that today there is an opportunity here in these new nations for British shipbuilding. No one can doubt that over recent years the vast amount of capital that has been invested in British shipbuilding has brought it to a high state of competitive ability.

If I say something about the unions, it is not intentionally derogatory, but merely an attempt to encourage the unions to accept the modernisation of plant and carry it through in modernisation of practice. I quote some of the modernisation schemes that have been carried out over recent years. John Brown and Company, of Clydebank, spent £4½ million over the last ten years. Even in a capital goods industry like shipbuilding that "ain't hay." That is quite a lot of money and has helped to modernise that yard. At Cammell Lairds, of Birkenhead, the first phase of reconstruction programme was completed at a cost of £8 million. Har-Iand and Wolff are spending £ 3 million on modernisation. The Lithgow Group is spending £ 4 million. Lithgow's, at Port Glasgow, has spent another £ 3½ million, and another £1½ million is contemplated. Swan, Hunter, on Tyneside, together with Barclay, Curie, is spending a total of £ 15 million.

The House will forgive me if I mention a Sunderland yard—J. L. Thompson, which is spending £2 million. The new dry dock of Vickers-Armstrong (Shipbuilders), on Tyneside, has been completed at a cost of £4 million. This shows that the shipbuilding industry is investing vast sums, and risking vast sums, for its own survival. One could say that there is no alternative, but this has been carried out and this modernisation of plant must be matched by modernisation of practice, or these millions of pounds will have been wasted.

Why did I say a few moments ago that this situation, where new nations are demanding merchant fleets, creates an opportunity for Britain?

The reason is that many of these new nations do not have the cash with which to buy the ships. They can seldom get the credit that is needed. On the other hand, they have assets which they want to dispose of, such as coffee, cocoa, cotton and various other products. Surely, here is a role in which the merchant banker can come in and arrange the deal and act as the go-between to take the coffee, the cotton and the cocoa and, in place thereof, to supply the ship.

In this rather peculiar situation, in which young nations want their own merchant fleets, there may be an unrealised opportunity for British shipbuilders. I certainly hope that the recent delegation that went to Israel to investigate and discuss these possibilities has come back with this sort of view as its conclusion. If it has, it will be seizing upon the opportunities of supplying ships to these new nations, for which Israel, in many cases, manages the shipping lines. Therefore, I do not altogether regret these new nationalisms. We must accept them as being there and try to use them to our own advantage.

Dr. J. Dickson Mabon (Greenock)

Ought we not to face the interests of British shipping more squarely? Ought we to encourage these younger nations to develop their maritime facilities? Many of them do so only for prestige purposes and not on an economic basis. Ought we not internationally to settle the big problem of how to distribute the world's carriers before we start having British shipbuilding and shipping at odds on an issue like this?

Mr. Williams

If we wait until the nations agree on perfection, the hon. Member and I will no longer be in this Chamber. We should be waiting for ever if we waited until international agreement was reached. We should aim at international agreement, but in the interim we should take advantage of the situation for the British shipbuilding industry.

We have heard a great deal today about employment, especially in parts of the country such as that which I represent in the North-East. The situation is serious, and I hope that the measures being taken by my right hon. Friend the Chancellor of the Exchequer will begin so to stimulate the economy that the heavier industrial parts of the country will again start to expand.

I am not, however, altogether convinced about the co-ordination of policy within the Government. During the Summer Recess, I talked to a number of Ministers, who were kind, courteous and helpful on a number of different issues, whether they concerned roads, power stations, the Board of Trade or the Ministry of Labour. All these matters are discussed within the Government, but at the end of the process I have come away with the feeling that no one Minister is responsible for overall policy. Therefore, I have tabled a Question, which, I trust, my right hon. Friend the Prime Minister will be answering tomorrow, asking whether he will appoint an existing Departmental Minister to have oversight and total responsibility for coordinating Government effort.

I believe such a move to be necessary, because it would bring together the loose ends and would take work off individual Members. What is just as important is that it would take work off individual Ministers and channel the approaches of some of us through one level. I consider this to be worth while because one could then see in the House of Commons one Minister who was directly responsible for this problem.

I hope that if such a Minister is ever appointed he will prevail upon my right hon. Friend the Minister of Pensions and National Insurance to try to do something to correct the impression which he created last week in the North-East, when he was reported as saying that people in areas in the North-East hit by the closing of mines might find it better if they go away to other parts of the country. I regard that as being in direct conflict with the policy of the Government and altogether unhelpful in the present situation.

I make one recommendation to the Government about how to arrange their expenditures in this matter. A strong argument can be made that areas of high unemployment should have greater volumes of money spent upon them. I will not go quite as far as that. What I do ask the Government, however, is that in any new expenditure that is agreed, areas such as the North-East, Scotland, Clydebank, Merseyside and South Wales shall have the first crack of the whip rather than the last.

Let me make a comparison, which I take from the speech of the right hon. Member for Easington (Mr. Shinwell), who referred to the A. 19, a road which is vital in terms of industrial communication in the North-East. This road should have been improved before the M.l motorway was built. What I mean is that priority in time should be given to areas of high unemployment rather than to improving the communications of London and the South-East.

I drive in and out of London fairly frequently, and I swear like a trooper about the blockages on the roads, but I would rather suffer those blockages and see the industrial pipelines—not the Board of Trade pipelines—cleaned out so that the industrial communications were got right, so that new housing programmes, if they are to be achieved, shall take place in the more backward areas-backward, that is to say, in terms of employment and unemployment— so that hospital building programmes should start in those areas and the railway reorganisation programmes, which, one trusts, will lead to greater efficiency, shall help rather than hinder the development of areas such as the North-East.

The existing problem is that Birmingham and the South-East are the magnets. By advancing expenditure in the other areas, we would set up a countervailing magnet which would be the inducement to new industry to come in. This, in turn, might mean that the expenditure by the Board of Trade could be reduced, because the magnet to bring in new industry would be present. I urge the Government seriously to consider placing the first expenditure in the development areas rather than putting them last on the list.

I turn briefly to the problem of Sunderland. I do so because of a new turn during recent days. My right hon. Friend the President of the Board of Trade may know that a year ago I advocated that Sunderland be taken off the list of areas for Board of Trade help. I believed that to be right and that the Board of Trade was right to take that course. However, a new situation has arisen with the impending closure of the Thorn/A.E.I. factory. This new situation— I admit that it means a change of thinking on my part— demands a change of Board of Trade policy and a case can now be made for removing Sunderland from the stop list and making it available again for Board of Trade and Treasury support.

I come next to the question of the young people. At Question Time today, I suggested that firms should take on what I call "supernumerary apprentices" over and above the normal complement. I believe this to be one way in which industry and the trade unions could help to overcome the peak problem of the employment of school leavers. I understand all the natural hesitations of trade union leaders on this matter and I understand any resentment in the minds of industrialists at having to carry an increased wage and salary burden. I believe, however, that before the North-East and other difficult areas cry out for help from outside, they should do something, and be seen to be doing something, to help themselves. I consider this to be one way in which they can do it.

I do not often ask for a little more help, but I make a plea for special Government financial help for boys' clubs. Not so long ago, 50 per cent. of the money would be supplied by the Government. As a result of, I believe, the Wolfenden Report, the proportion provided by the Government was changed to 75 per cent. This appeared to be an advantage. The only trouble is that a county council is used as a co-ordinating authority, and councils, being what they are, tend to put their own plans first, so that although the volume of money to be raised locally for assistance to the voluntary boys' clubs is less the boys' clubs are now lower on the list than ever before. The chance of voluntary effort providing worth-while outlets here is worse today than ever before. I believe that there is something which can be done in this region by boys' clubs and other youth organisations to help provide, at the very least, a reasonable outlet for energy by taking young people off the streets at this difficult time. This should be looked into.

I return to the first point that I made on the question of shipping. Shipping is fundamental to our survival as an island nation. This is true whether we go into the Common Market or stay out. We depend on the movement of goods across the seas. At least 98 per cent. of our imports and exports move now, and will continue to move, across the seas. If this tentative move towards recognising the special position of the shipping industry is an indication of Government thought, then I welcome the actions and hope that the Government will continue this policy.

6.51 p.m.

Mr. H. Rhodes (Ashton-under-Lyne)

The Chancellor of the Exchequer has administered a soporific and has departed and does not appear to have any more interest in the debate.

I deal first with the increase in investment allowances. Figures show that when investment allowances have previously been introduced or raised to any major extent, it has taken at least twelve months before they have had any effect. The incentive to take advantage of investment allowances by a manufacturer is that he can see that he can get his present capacity going 100 per cent. and that he will make enough profit to be able to afford the machines to install after that.

The right hon. Gentleman said nothing whatever about many important things which he might have mentioned. What about the 17,000 new jobs which are being created in the City of London each year as a result of the new blocks of offices which are going up? That is the estimate of the Town and Country Planning Association. But this subject of drift to the South has been dealt with by hon. Friends of mine who understand the development district situation better than I do, and I leave it to them to develop it further.

With regard to incomes policy, I draw attention to the fact that during 1959 and 1960 the Stock Exchange values rose from the lowest in 1959 to the highest in 1960 by 100 per cent. If there is to be a stimulation of the economy now and the increase in Stock Exchange values for which Tory back bench members are looking, I would say that unless there is a more determined effort to put into operation an effective capital gains tax, the incomes policy will meet with no success.

There are scores of young people eagerly looking over the counter at the Ashton-under-Lyne and other employment exchanges. This has been said previously. It is a standing disgrace these days when young people cannot get a job. The Chancellor never said what he was going to do about that in his speech.

I turn to the situation in 1961 when the balloon had burst and it was necessary for the former Chancellor of the Exchequer to bring in his 10 per cent. regulator to damp down imports and the economy. When Stock Exchange prices began to fall and manufacturers started going slow on investment plans and morale was low, manufacturers, hoping that there would be reflation soon, were hoarding labour and waiting for the reflation which they were certain was to come as a result of Government action.

But there was one thing that did not go down at the end of last year, and that was the profits Which were being made in the property market. For instance, there is the example of a public institution, the Bank of England, selling the St. Luke's property to the Oddenino trust just before Christmas for £ 900,000 and the Oddenino trust selling it to the London County Council a fortnight after Christmas for £ 1,600,000. That is the sort of thing which is calculated to cancel out a good deal of effort on the part of the Government to get the confidence of labour.

In 1961 there were 200,000 new entrants to industry. In that year industry did less work than it did in 1960. A negative budget was brought in this year because the Treasury believed that industry was still expanding. Manufacturers then began to cut down on labour and there was very little investment. In the October bulletin mentioned by my right hon. Friend it seemed as though the Treasury was surprised by what had happened. Meanwhile, N.E.D.C. sets a target of 4 per cent. expansion, which means 5.7 per cent. increase in exports. That depends upon a 3.3 per cent. increase in productivity by workers and a 0.7 per cent. increase in the labour force.

Unfortunately, N.E.D.C. set the beginning of the five-year period in 1961 and as the economy has been stagnant, a growth of more than 5 per cent. per annum will be needed to reach the N.E.D.C. target. The Government have tried various incentives, such as the release of £ 45 million post-war credits and £ 70 million for development districts and the release of £ 80 million special deposits and the easing of hire-purchase restrictions. Just as they did twelve months before the election in 1959, they also say that they are to put into operation gigantic schemes for houses and hospitals and schools and so on. But they do not seem to have taken cognisance of the fact that the building industry is already fully booked up for a long time. It is fully employed and is the only industry with a long order book. Where do the Government expect to get the labour and how long will it be before these programmes are put into operation? The pundits in the financial papers are recommending buying shares in bricks and tiles and cement, relying on the 1963–64 boom to make such buying a first-class investment for those who speculate.

If there is an investment boom, such as we had in 1958– 59, we must suffer for it in terms of a sorry 1961– 62. Unbridled capacity investment in a boom means spare capacity immediately we run into a balance of payments crisis. The Government know that. The United States has had great difficulty getting its economy off the floor by the old-fashioned stimulus of the manufacture of consumer durable goods. Stimulating the economy by over-investment in the manufacture of consumer durable goods is out of date. European activity is levelling off because of that, and it will be more difficult in the future to get Western economies going again by stimulating the consumer durable goods industries as they have in the past.

With our present spare capacity estimated at 15 per cent., I believe that the Government will find it difficult to get it going. I do not believe that they know how much stimulus will have to be given to the economy to take up the slack of the 15 per cent in a fiercely competitive market. We do not even know whether the goods which the spare capacity can make will be suitable for sale. No doubt the Government are hoping that N.E.D.C. will provide the answers, and I am sure that it will.

Let the Government conduct their affairs in the next few months not with an eye on the election, but to ensure that our economy is properly set on its feet. N.E.D.C. should be encouraged to pursue its inquiries industry by industry, harnessing the research associations and machinery makers to help the industries under review to assess the productivity of the available machinery. The Government should then set up investment boards for each industry to appraise and approve any investment and to decide whether any proposed expansion would be in the interests of the country.

During the recess, I was in Malaya. In the civic hall of one large town I saw a large sign, "Inspector of pawnbrokers". It may sound amusing, but the reason was that in the hinterland there was a large agricultural area where poverty had been rife for years and where there were so many pawnbrokers that it had become necessary to have an inspector of pawnbrokers. There was poverty because of the fluctuations in world demand for Malayan commodities. There were complaints about rubber prices at that time.

If we are to have a planned and steady economy, the standard of living in countries where it is now low will have to be raised, and I strongly recommend that Mr. Grondona's scheme should be given a chance to work. If the expenditure of £90 million could prove its efficiency, let the Government get on with it. It would not be more than the cost of three groundnut schemes, or one-quarter of the cost of Suez. To try it would be a constructive act.

I also suggest the appointment of a Minister for exports and imports in a new department in the Board of Trade. There must be more co-ordination of exports and imports. In the recess, I also went to Japan and spent some time examining the Japanese method of dealing with imports and exports. Japan has a good record for energetic exporting, and it is interesting to note that only fifteen firms control the whole of the exports and imports which make up Japan's gross overseas trade. One exception is the famous Canon camera firm which has its headquarters in Geneva. Five of the fifteen firms are responsible for 65 per cent. of the exports and imports, the remaining ten carrying the remaining 35 per cent.

This suggests the need for planning here. These firms have offices in every major city in the world. The country has a target of a 100 per cent. increase in the standard of living in the next ten years, and this is how they intend getting it. I think it would as well if the Government thought seriously about our export organisation and whether we can sustain an export drive of 5.7 per cent. during the next few years with our present organisation. I do not think that we can. It is interesting to note that the Japanese, with their magnificent organisation, say they also need an added incentive for exports by way of tax relief. So we shall have to really get down to this problem.

If we were to establish an export corporation of a size which would be able to compete on equal terms with one of the large Zaibatsui firms of Japan, it would be one of the most forward-thinking efforts attempted here in recent years. It need not be a Government organisation, but it must be closely tied in with the Government. During the last few years, due to the Government thinking in terms of liberality, the Common Market, and that type of thing, there has been engendered in civil servants in the Board of Trade and in the Treasury an attitude of detachment from some British industries.

If we had a Minister for exports in charge of one large-scale export corporation which was tied in with the Board of Trade, in the sense that the civil servants in the Board of Trade would regard the export of British goods as paramount and give the corporation every help that was needed, this would help the country generally. If the N.E.D.C. is pursuing its inquiries into our industries in depth, it is of paramount importance that inquiries should be conducted into the export side as well.

I make those suggestions in the hope that the Government will get going on something constructive so that in the future we can look forward to a more stable economy than that to which we have become accustomed during the last few years.

7.14 p.m.

Mr. Kenneth Lewis (Rutland and Stamford)

It gives me particular pleasure to follow the hon. Member for Ashton-under-Lyme (Mr. Rhodes), as I seem to make a habit of following him. He defeated me in the 1951 General Election.

There have been a number of telling speeches today; and special pleas have been made by some hon. Members for their own areas. I do not wish to follow those speeches too closely, but I think that the right hon. Member for Easing-ton (Mr Shinwell) and the hon. Member for Edinburgh, Leith (Mr. Hoy) were somewhat unfair to the Government in failing to acknowledge that both by the proposals of the Chancellor of the Exchequer today and by their previous action of guiding industries to areas of under employment they have tried to help, though one agrees that much more needs to be done.

During the last few years our economy has suffered from the malaise of lack of confidence. First it was the foreigner who showed his lack of confidence by selling sterling and so depleting our reserves. Usually such lack of confidence by foreigners is a pretty fair assessment of our position in the world. World confidence in Britain has been restored now, and for this my right hon. Friend the Chancellor of the Exchequer has to thank his predecessor my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd).

Unfortunately, the steps that were necessary to re-establish the confidence of the world and investors abroad in our economy have meant (that a certain lack of confidence has set in at home. This is the present position, and I have no doubt that hon. Gentlemen opposite blame the Government for it, but it must be obvious that there was bound to be a certain lack of confidence at home following the imposition of restrictions which inevitably had to be imposed to deal with the position of our foreign exchange and our balance of payments. The slackness of our economy at the moment is a slackness of confidence, and it is now clear that the Government intend to right the situation.

How will this be done? First Ministers and hon. Members on both sides must talk confidence. Secondly the Government must get industry, both at management and workpeople's level, to be enthusiastic for change and willing to co-operate to get increased productivity. This may sound like stating the obvious, but it may be that we have to recognise the obvious and that we have been failing to do so for some months past.

Expressing belief in a rising economy does not lead to the achievement of it, but it certainly sets the climate, and there is no future for this country if we continually talk depression. It would obviously be a mistake just to talk and then drift, and I think that the Gracious Speech has the advantage that it does not merely talk but gives an indication of the action to be taken to deal with the present situation.

It must clearly be recognised that in our present economic situation we are not in a depression, and that we do not intend to get into one. Listening to some hon. Gentlemen opposite, one would think that we were almost back in the 'thirties, I spent my youth in the north of England in the 'thirties, and I do not for a moment think that anyone could imagine that the present situation approximates to the situation of those days. Nevertheless, the present rise in the unemployment figure is something about which no one ought to be complacent. If unemployment rises further and continues for any length of time expansion will inevitably become contraction.

The hon. Member for Cardiff, South-East (Mr. Callaghan) talked about the need for Government planning and the redistribution of industry. I wonder whether the hon. Gentleman would accept that such planning might mean, for example, that we would have to close down some railway workshops in the South in order to keep going the building of railway wagons and engines in the North, some of which might be under construction by private enterprise. This is the kind of situation that we get into when we go in for planning, and he must accept this fact.

This afternoon the Chancellor gave us some rather interesting proposals. He said that his speech was not a Budget statement, but I thought that it was a pretty good dress rehearsal. His proposals for a reduction of Purchase Tax on motor cars will be accepted as a valuable aid in all those areas where the motor car industry is shortly to open up, or where it has already newly opened up. It will be useful at a time when, under G.A.T.T., the industry is having to compete against a reduction in tariffs.

I was particularly interested in the proposals in the Gracious Speech concerning the Minister of Labour. These are refreshing. I believe that the right hon. Member for Easington said that the present Minister of Labour was such a refreshing character that he did not like to quarrel with him.

Mr. Shinwell

I did not say that he was refreshing; I said that he was affable.

Mr. Lewis

The right hon. Gentleman said that he was an affable character, and I certainly do not wish to quarrel with him. Hon. Members on this side of the House hold the same view. Some of us have felt that for some time the Ministry of Labour, as such, has too often had to stand in the valley of neutrality, between the mountain of employers on one side and the mountain range of trade unions on the other. This Ministry always finds difficulty in acting, or, rather, being seen to act. I say chat because a good deal of action does really go on, but it is perhaps not sufficiently obvious.

If a Conservative Government are in office it is said that the Minister of Labour must be careful in dealing with trade unions in case he should upset them, and in case it should be said that he is taking the side of the employers. If the party opposite come into office the trade unions say, "You are our Government ", or "You are our Minister, and we do not expect you to press us and to get us to do things that we do not want to do. "Somebody has to break out of this strait-jacket with a firm but friendly jerk.

The proposals contained in the Gracious Speech for initiating contracts of service, providing redundancy payments, improving shop and office accommodation, and so on, are desirable, and will be of great advantage. I hope, however, that the Minister will not shirk from including in new legislation the imposition of obligations commensurate with the security to be offered. For example, I should like to see it accepted as a principle that management has the right to consider a contract of service broken when its workpeople regularly indulge in unofficial strikes.

It may be that the T.U.C. deputation just returned from Sweden will have noted that contracts there work both ways; penalties are imposed for both sides when contracts are broken. I hope that the Minister will not shirk this issue, for fear of being charged with being anti-worker. No one who looks at th6 present Minister's record, or reads the Gracious Speech and examines the proposals put forward in it, could accept the validity of such a charge.

It is undoubtedly the failure of workpeople to meet their obligations, while taking all the advantage they can of good employment, that has prompted the Ford Motor Company, for example, to sign a letter asking its employees to promise to keep their contracts. That the company had to get to the state where it was felt necessary to send such a letter reflects very little credit either upon its own labour relations or upon the trade unions' ability to see that contracts are honoured. Too many shop stewards do not want to recognise contracts or obligations.

The irresponsible use of power by some shop stewards is a problem not merely for management; it is also one for the trade unions, since, if they do not stop the shop steward tail from too frequently wagging the trade union dog, sooner or later the trade union leadership itself will become sterile. It will lose, as it is already beginning to lose, more and more respect in the country, and will receive less and less support from its own members. None of us on either side of the House wants that situation to arise. I hope that the time will come when strikes will be outlawed. Then, justice and equity in industry will be established by negotiation and adjudication. But we must realise that we are not yet in that position. That situation is not likely to arise under a Government of either party in the near future.

The strike has nevertheless become the bogy of our time. When a bad, irresponsible management takes action which provokes employees and makes a strike inevitable, most of us regard the strike as justified, but if we accept the fact that a strike is justified in those circumstances we must also accept the fact that it is not always desirable to buy off an unofficial strike which is not justified. Action taken against many of these strikes is not only justified but is in the national interest.

Mr. Stan Awbery (Bristol, Central)

I have listened attentively to the advice that the hon. Member is giving to the trade union movement. Has he been a member of that movement? Has he worked in a factory in which a strike has occurred? Has he had any experience in that respect?

Mr. Lewis

I have not been a member of a trade union, but my father was for many years a shop steward and also an ordinary member of the A.E.U. I was once a labour relations officer in a very large shipyard. When what I have said is read tomorrow it will be seen to be fair and reasonable.

We must seriously consider the possibility of introducing legislation to ensure a proper constitutional vote being taken when strikes are called for. Many of those strikes which take place upon a show of hands would clearly not take place if a secret ballot were held. For a long time the Government have been trying to get the trade union movement to organise votes in this manner, but no progress has yet been made. I hope that my right hon. Friend will continue to press the unions to give serious consideration to the setting up of a system of deciding strike issues by ballot, whether such strikes are official or unofficial.

Mr. Awbery

Would the hon. Member agree to a strike if the ballot were in favour of it?

Mr. Lewis

I have said so. The Prime Minister has called attention to the need for a change. Change must come, not only in management but also at the trade union level. Of course, change can come too soon. It can be so fast that the result is a pile-up. Change can also come much too slowly; so slowly that the faster moving sections of the economy crash into those sections where progress is slower. Ever since the last General Election the Government have been discussing with the trade unions, and with managements in industry, a number of matters in respect of which we do not seem to be making any progress. For example, an Act was passed enabling wages to be paid by cheque; but, so far as I know, discussions on that matter are still going on. Ever since the beginning of this Parliament we have accepted the need for a reduction in the period of apprenticeship from five years to four. For the last two years this has been an urgent matter but only in a small section of industry has it been acknowledged that in order to obtain more apprentices the period of apprenticeship must be reduced.

We cannot afford to spend years discussing when such reforms are clearly urgent. The Government may find themselves in difficulty over forcing the issue. But having asked employers and the unions to make the change, I believe that the Government have a duty either to state clearly to this House that they cannot obtain the co-operation of the parties concerned, or to act themselves so as to make sure that such co-operation is provided.

The same applies in relation to management. I am continually surprised to note from the financial columns of the newspapers that some companies whose results have not been good continue to re-elect the same directors time and again, and these directors are often over the age of 70. This is done although there is a clear right to demand that such people retire.

I do not care very much what the age is of the directors of successful companies. But where a company has not been producing good results and where the directors are not forward-looking in their approach to new projects and techniques, the same men should not continue to serve. If they do, it can only prove detrimental to the industrial effort of the country, because in those companies there may be young men who should be given their chance. I hope that the Government will recognise that in respect of these important matters they have at least a duty to use their influence wherever possible.

Today the Chancellor has in some measure anticipated his Budget and so I shall be in order if I anticipate in the same way, and suggest that when my right hon. Friend provides for tax reliefs he should remember that when savings are high as they are at the present time— and there is every possibility that they will continue so— and when taxation on the broad front is bringing in a large amount of revenue, the economy is best stimulated by making money available to those groups within the economy which need to spend it. Young married couples building up their homes, and particularly parents who have young children to educate, should be given tax concessions when a loosening of the national purse strings is next contemplated.

A great deal is said from time to time in the House about the need for providing money for the old-age pensioners and other similar sections of the community. It is right that we should look after the old people, but we must remember that those who keep industry going are those who have to spend because they are building their homes, and sometimes it is those people who find that their incomes are insufficient to justify the amount of taxation which they are called upon to pay.

We were glad to note the reduction in the Purchase Tax on motor cars. There might have been a similar reduction over a range of household goods. There might have been a reduction in the Purchase Tax on radio sets, television sets and similar articles, so that people who might not require a motor car in the next few months, but who would wish to purchase one of these other articles, could enjoy the advantage of a similar reduction of tax.

For a long time members of the party opposite have tried to make the word "profit" a dirty word. We on this side of the House understand their point of view, because we realise that most of the sympathy of hon. Members opposite goes to the "loss-makers". In most of the vital debates which have taken place in this House, when the fury of hon. Members opposite has been at its greatest, it has been the nationalised industries which they have been defending, and these industries are losing a lot of money. I consider that the Chancellor of the Exchequer would be doing a great deal for the country were he to make clear that we believe in profits because the creation of profits proves an advantage not only to those who manage industry and invest in it, but also to those who work in industry. We want to see a new enthusiasm for profit and an intolerance of loss. I refer, of course, to profits resulting from efficiency and not to profits which are made easily by those who are unenterprising.

Money is being provided for industrialists who are prepared to renovate their machinery. I do not know whether it could be provided in the form of finance, but I should like to see encouragement given to industrialists who are prepared to renovate their skills, because it is by the provision of new skilled manpower, both at the ordinary worker level and at the higher technical levels, that we shall make progress and increase our productivity.

Expansion and confidence is created by an efficient industry. "Neddy" and "Nicky" wild doubtless provide the Chancellor with some figures, and indicate paths along which he may try to direct the economy. These organisations may be the "brain", but they cannot play the role of the "cart horse". The cart horses of industry, which have to do the work, are exemplified by management and by the workers. We shall delude ourselves if we think that "Neddy" and "Nicky" can haul us out of the bog in which we find ourselves. Only one thing matters in an industrial nation such as ours. It is that we shall produce the best goods at the best prices and sell them in the markets of the world. This means a partnership between management and workpeople, stimulated by the Government. It is in the interests of the trade unions that they should support management in making changes and introducing the new techniques which are required. It is also in the interests of management that they should see that when the cake is distributed it is distributed fairly—

Mr. G. Brown

Hear, hear.

Mr. Lewis

Yes— a share being given to those who work in industry as well as to those who make a profit. In the main that is so, and the right hon. Member knows it. The young people of this country want to see the country keeping up with the progressive expansion which is taking place in Europe and the rest of the world. They want to see it making history; they do not want us to be resting on it.

The young people in the north-east of England equally feel this. They are not in the least interested in being cramped and confined by methods which come from the past and have no relevance to the present day. It is up to the Government to give Britain a lead in this matter. We have had today some financial stimulus towards expansion. I have tried to show that the solution of this problem does not depend entirely on finance. I hope that the lead the Chancellor has given today will be simply a curtain-raiser for the changes that we have been told must take place.

Those changes depend on the trade unions, management and the Government, but we shall not get them by simply continuing to talk about them. They must be introduced and they must be put into effect. If we delay, the progress of the country will be delayed, and if we delay it for too long we might find that even the expansion and the confidence we want to get will escape us.

7.42 p.m.

Mr. Edward Short (Newcastle-upon-Tyne, Central)

I shall not comment on the speech of the hon. Member for Rutland and Stamford (Mr. K. Lewis), although a number of things he said call for comment, except to say that some of the points he made come oddly from the mouth of one who was brought up, as he told us, in pre-war Jarrow. Not quite like the Bourbons, he seems to have forgotten everything and learned nothing.

I wish to speak about the North-East and to confine myself to that because time is getting on. I wish to do two things: first, to explain quite clearly, at the risk of boring the House, what the position in the north-east of England is now; and, secondly, to say what I would do about it. We have approximately 50,000 unemployed in the North-East. That is the highest figure since the war, except for a short period during the fuel crisis. Of that total there are more than 8,000 young people under the age of 18. That gives us in the North-East a percentage which is exceeded only slightly by the percentage in Scotland and, of course, by Northern Ireland. We have areas with more than 8 per cent. unemployed. My city, which is regarded as a very prosperous town, has 1 per cent. higher unemployment than the national average.

What are the prospects for the people who are unemployed? When we talk about unemployed we ought to forget about statistics and remember that each one is a man or woman, very often with children who have to go hungry so that the rent can be paid at the end of the week. That is what unemployment means. What are the prospects for employment in the North-East? The placings for the last four-week period I can find, up to 5th September, were the second lowest in the whole of Great Britain. Over 3,360 people got jobs and there was only one region with a lower total than that.

What about the prospects for those who have not got jobs? What is the position about vacancies? There are seven boys unemployed for every vacancy for boys. There are three and a half girls unemployed for every vacancy for a girl. There are ten men for every vacancy for a man. There are two women unemployed for every vacancy for a women. This gives a deficit, that is, people for whom there are no jobs if we take into account all the vacancies in the Northern Region, of 40,000 men, women and young people.

I wish to say a word about young people. At the end of the summer term, 21,800 left school. The Government knew fifteen years ago that 21,800 would leave school in the summer term of 1962. Yet there are still 8,600 young people unemployed. That is a deficit taking into account the vacancies, of 7,000 young people in the North-East for whom there are no jobs and no prospect of jobs.

As a number of hon. Members have mentioned, we have had some very serious closures. The hon. Member for Sunderland, South (Mr. P. Williams) mentioned this and I agreed with almost all that he said tonight. One of the closures he mentioned, I learned through the Press, will put nearly 900 out of work in Sunderland. There have been others, I.C.I. at Prudhoe, and Hawthorn Stephenson, in my constituency. I have appealed to the Government over and over again to find a tenant for that factory Three years ago it employed 400 men. Today, only six warehousemen are employed there. The closure of Grays, at Hartlepool, will raise the unemployment percentage to well over 10 per cent. Those closures are known to the Government. Basically the trouble in the North-East is due to conditions in the coal industry, in steel, shipbuilding and the construction industry. I shall say a word or two about each of those.

In the coal industry there was a drop of 9,000 men in the labour force in the first half of this year. It has been estimated— I take the figure from the quarterly report of the Director of the North-East Development Council— that there will be 20 more pit closures in the next five years. It is forecast that the present labour force of 116,000 in the mining industry will drop to 65,000 by 1965 and to 50,000 by 1967. What planning are the Government doing now about this? I believe, and I think that my mining colleagues will agree, that apart from natural wastage we have almost reached saturation point in the absorption in the redundant pit workers. What steps are the Government taking to absorb probably 10,000 pit workers each year made redundant over the next five years in the North-East?

The steel industry in the North-East is working to about 7 per cent. of capacity. Like the shipbuilding industry, mentioned by the hon. Member for Sunderland, South, it has modernised itself and the steel firms there are now probably as modern and efficient as any in the world. They are awaiting an expansionist national policy. I welcome the reduction of Purchase Tax on motorcars, but that will make very little difference to the North-East. Indeed most of the other proposals which the Chancellor announced today will make no difference whatever to the North-East.

In shipbuilding, the labour force in the North-East between 1961–62, dropped by 2,000. Here, also, as in the steel industry, -there has been extensive modernisation. I should think that the shipyard of Swan and Hunter is now probably one of the most modern in the world, but yards in the North-East have less than 'two years' work in hand. Their output now is twice the new orders they are getting

At the end of June this year, 49 ships were under construction in the North-East, but the shipyards had only 38 orders which were not started—.approximately two-thirds of the present out-put. Here again, I support those hon. Members who protested about the action of the British Transport Commission in inviting tenders from 20 foreign shipyards in eight different countries for the B.T.C. ferry. If a body like the Transport Commission will not co-operate with the Government in a matter of this kind to help us in this difficult region, then it is a poor outlook for the future.

Have the Government any policy to help the shipbuilding industry? Why not some sort of "-scrap and build" policy? I am very much in favour of a "scrap and build" policy. It is far better to have that than to allow the very highly skilled labour force to be dissipated. I should have thought that, for strategic reasons alone, if not for social reasons, it was absolutely essential to keep the shipbuilding labour force intact.

The constructional industries, the men engaged in building and civil engineering, account for 10 per cent. of our population in the northern region. Unemployment among them is four times the national average, and the reason for this is obvious. It is because of conditions in the other basic industries, which effect the amount of capital work being done generally, and there is not nearly sufficient capital work being done in the North-East. This, in its turn, affects the attractiveness of the area, and that reduces again the capital work being done. The weary business goes on. We need more schools, more and better roads, and so on, not only to absorb the unemployed, but to rehabilitate the North-East and make it more attractive to industry.

I have said a word briefly about each of these basic industries, and all this has amounted to the rising unemployment which at present is almost twice the national average. The present Chancellor of the Exchequer, when President of the Board of Trade, came to the North-East and advised local authorities to get together and to engage in extensive and expensive self-help to try to attract industries to the area. They have done this. They have set up their own organisation, which is well staffed and well financed, to try to attract industries, but we cannot pull ourselves up by our stocking tops, and this is what we are trying to do in the North-East.

The latest Minister to come to the North-East— the Minister of Pensions and National Insurance— suggested migration as a way out. That is all that he could suggest, and, as one of my hon. Friends says, this is as great now as it was when the hon. Member for Rutland and Stamford was a boy at Jarrow. Migration from the area is as great as it was then. To advocate a policy of migration is to make absolute nonsense of all the social planning that has been done. What about the schools, the houses, the roads, the hospitals, and so on, which have been provided at great expense by local authorities in the North-East for the population?

Not only does it make nonsense of all that, but it creates problems at the other end as well. It creates physical problems in London and the South. I hope that the Minister will bear in mind that this sort of policy also accentuates the problem of inflation in the Midlands and elsewhere. When we have an inflation crisis in this country, it does not occur in the North-East, but in the Midlands and London. By a policy of migration, the Government are accentuating the problem with which they have had to deal for years. When inflation comes, it brings down on all our heads, rich and poor, the North-East, the Midlands and everywhere, the same kind of trouble, and we all have to take the medicine. As I said in the debate on the North-East Coast, one child in a family gets "tummy ache ", and all have to take the medicine. Is this the Government's policy? Will they tell us whether the speech of the Minister of Pensions and National Insurance represents Government policy?

What have the Government done? In 1962, they issued industrial development certificates for 4,000 jobs. We have heard a lot about the pipeline, and I should like to know exactly what the pipeline is. I am "fed up" with Ministers coming to the North-East. The Prime Minister sends one Minister after another to keep up the morale in the North-East, and all they talk about is the pipeline. What degree of certainty is there about this figure? Does it include only jobs "in the bag ", or does it include tentative inquiries from industry? How long is the period envisaged — one, two, three or five years? Will the Government tell us with more certainty what is meant by the pipeline?

There is some dispute between two Government Departments as to what is in the pipeline, but, anyhow, whatever it is, at the very most, it seems to amount to 4,000 or 5,000 jobs for the next four or five years. Perhaps the Minister can confirm whether this is the correct figure. I have been kind to the Government, because that is the top figure, but it is less than half the expected redundancy in the coal mining industry alone. The figure of jobs in the pipeline is half the redundancy figure in one industry, let alone men who will become redundant in the shipbuilding industry— the order books of that industry contain only two-thirds of its output— and let alone the increasing number of school leavers on account of the "bulge"; and the Government knew about that fifteen years ago.

Secondly, there is the question of the Local Employment Act. This was to be the Government's weapon. Let me tell the House what this has done for the North-East. According to the latest figures which I can get, and they come from the answer to a Parliamentary Question in July, it has provided 700 jobs against the sort of problem which I have been describing. In cash, it has provided less than £ 500,000 for the northern region, against £18½ million for the country as a whole. Twelve projects have been approved and 18 rejected. The cost of each job provided in the North-East has been £ 450, while it has been £ 810 nationally and over £1,000 in Scotland, though there is a special explanation for that. Actual building grants—and this is the most amazing figure of all—provided 160 jobs in the North-East, against a need of about 20,000 a year.

In my view, there are three things wrong with the Local Employment Act. First, the areas are too small. The local employment exchange area is ridiculously small. Secondly, the 4 per cent. criterion is nonsense. It means that the whole of the machinery of the Board of Trade can be brought into operation in the case of a rural district council on the South Coast, with 160 people unemployed, but that in my own city, with 5,000 unemployed, it cannot be brought into operation. I feel that the 4 per cent. criterion for scheduling an area is unfair. Thirdly, I feel very strongly, as I have said before, that B.O.T.A.C. is far too cautious. The provision of employment should be the first criterion, and the financial return to the Government, while it should certainly be a consideration, should come second and not first.

For example, taking the whole country, up to this summer B.O.T.A.C. had made 111 offers of assistance, but had turned down 124. One north-east firm was kept waiting for eighteen months, and was then given a loan of £2,000, attached to which were 30 very onerous conditions. I myself went to the Board of Trade to plead with the present Minister of Pensions and National Insurance, when he was there, for a firm for whose directors I was willing to vouch, and whom I knew very well. This firm had been turned down, although it was in a development area in Durham. The Minister said that there was nothing that he would or could do to assist.

What should be done to help the North-East? First, I suggest that there should be a regional plan, worked out by the National Economic Development Council, taking into account the expected changes in the industrial pattern of the area—these are known and require no research—and equating the jobs to he provided with the expected need, based upon the premise that migration from the area to other areas is extremely undesirable.

Secondly, there should be an expansionist policy nationally, and I suggest that if there is to be any kind of credit restriction the Government should try to make it selective. Surely it is not beyond their wit and ingenuity to have some sort of credit restriction in the Midlands, but not in the North-East. Scotland or Northern Ireland. Next. there should be a much more effective machine to steer industry into such regions as this. I agree with my right hon. Friend the Member for Easington (Mr. Shinwell)— I have come to this conclusion reluctantly— that if this is not effective then there should be direction of industry, which would be a far lesser evil than unemployment and migration. It could be done intelligently and, of course, it would not be done where a project would not be a paying proposition. It seems to me that in this field freedom is not working. If freedom for the industrialist means servitude for the working population, as it does now, then it is high time for the Government to intervene.

Next, there should be a revision of the Local Employment Act, especially of the B.O.T.A.C. machinery, both with regard to the criteria which it uses in deciding to recommend grants and with regard to its personnel. I do not think that B.O.T.A.C. should consist entirely of businessmen. There should be some trade union representatives and local authority representatives, too.

Next, there should obviously be more co-ordination among Government Departments— this comes under planning— particularly with regard to capital projects. What is to prevent the President of the Board of Trade or the Minister of Labour from calling in the Minister of Education and the Minister of Transport, and saying to the former. "Authorise more schools for the North-East "— and, heaven knows, we need them—and to the Minister of Transport, "Authorise more roads for the North-East "— and, heaven knows, we need them too. To the Ministries which allocate Government contracts could be said, "You must give more to the North-East and to Scotland "—and so on. Why cannot there be more co-ordinating among Government Departments?

Next, I believe that there should be a reversal of the B.T.C. policy on closures. B.T.C. closures not only of branch lines but of workshops should bear some relation to the social and industrial conditions in the area. As I see it, it would be monstrous if a publicly-owned corporation, as a result of a Government directive, paid off thousands of men in Darlington and Shildon, in an area where there are already twenty or thirty men for every vacancy. It would be monstrous if the Government continued with this policy in the North-East in face of the position which I have described.

Next, there should be more training schemes, in particular— I agree with my right hon. Friend the Member for Easington— for men over 50. Present training facilities are not nearly adequate. Nobody wants a fixed, rigid pattern in the economy. What we want is jobs and the ability to retrain if necessary.

Finally, what we want from the Government in the north of England— and I am glad that at long last we have a Minister from the North— is not complacency and the sort of lip-service which we are getting from the long procession of Ministers who come traipsing up to the North-East at the behest of the Prime Minister. We want some effective action based upon sound economic planning. The present economic facts of the North-East are well known. The general lines of the development of the basic industries for some years ahead are fairly well known. On these known facts about the economy of the region, the plan for industrial development should be based, with the assistance of the National Economic Development Council. Only by so doing, I believe, can we arrest the decline of this very important industrial area of Great Britain.

8.5 p.m.

Mr. Leonard Cleaver (Birmingham, Yardley)

I do not think that anything like enough congratulation has been given to the Chancellor of the Exchequer for the excellent statement which he made this afternoon. As a result of his statement, a great surge of confidence will go out into industry all over the country.

I should like to make my first remarks about his concession on Purchase Tax, particularly as it affects the motor industry. For very many years the motor industry has been feeling a sense of grievance. It has felt that it has been prejudiced because it has been carrying far higher Purchase Tax rates than other sections of the community. As my right hon. Friend knows full well, he has had representations from a great many people on this point. I am glad that he has taken note of the speeches, particularly those made in the House last week by my hon. Friend the Member for Birmingham, Edgbaston (Dame Edith Pitt) and my right hon. Friend the Member for Sutton Coldfield (Mr. G. Llyod). They put the matter far better and more strongly than I could have done.

When we were making a tour of Birmingham industry about a month ago we found quite remarkable the extent to which the ramifications of the motor industry crept all over the city. One could go into all sorts of factories and find some assembly or sub-part being made for this great motor trade. Not only in Birmingham and Coventry will this concession lead to an improvement, for the ramifications of the industry go all over the country and the effect of the concession will be felt in more places than one.

A great point about the concession is that it gives the motor industry a chance to widen its base. A greater number of units of home production can be produced, and advantage can be taken of mass production. The industry carries very heavy overheads, and it will be able to spread the cost over a far greater number of units and therefore reduce the cost of each unit.

May I say this to the House: the motor industry will not let you down. When Sir Stafford Cripps gave the industry a grant of sheet steel during the war on the condition that a certain amount of its output was exported, the industry beat the target which he set. You will find that, this sensible concession having been made, the industry will not let you down on this occasion.

In addition, in my view the Minister was extremely sensible and wise to make the new regulations in respect of investment allowances. The heavy industries are those which face difficulties in this country. The whole of the investment allowance will help them, as well as helping such trades as the machine tool industry and capital industries generally. But it is a great pity that in the Gracious Speech an undertaking was not given that taxation on companies would be reduced. I should like to see Income Tax and Profits Tax consolidated—and I see no reason why that should not be done— into a corporation tax. I know that the present method takes 53 per cent. of the profits of companies, but it is an unnecessary complication, and industries are continually looking over their shoulder to see what happens, because taxation affairs affect every conceivable transaction.

May I make a comment about depreciation? Why do we still have a system whereby when one is agreeing one's computation of profit with the inspector of taxes it is necessary to insert wear and tear instead of the ordinary depreciation which has been charged by the board? It seems peculiar. The directors have agreed it, and the auditors have passed it; it has been entered in the costs, it has been put before the annual meeting, it has been included in the accounts of the annual meeting, and the accounts have been published to the world. Yet the inspector of taxes solemnly says that it is not good enough for him and that one must take the rates which he lays down. The point is that often it does not make an enormous difference. We have the whole complication of agreeing rates with the inspector. When one has agreed them one must apply them to one's plant. A great many of our large companies keep double records in order to satisfy the inspector of taxes. It strikes me that it is a waste of time.

Why must our taxation harm our industrialists by going into direct cost? I take two examples— the fuel tax and the light hydrocarbon oil tax. The fuel tax goes straight into cost. It is almost ruining the cement industry where 10 per cent. of the cost is tax. Our competitors do not do that. The hydrocarbon oil tax goes into such things as surgeon's gloves, boot polish and tyres. It is a direct factor which goes into cost and makes it more difficult to sell against^*our competitors. This may be a small point to some people but to those who are engaged in industry the difficulty is that all the time they are looking over their shoulders to see how taxation will affect their ordinary everyday transactions.

I congratulate my right hon. Friend the Chancellor of the Exchequer on taking steps which will give a tonic to the whole of British industry and I hope that he will look into the whole question of the organisation of taxation when he presents his Budget.

8.11 p.m.

Mr. Emlyn Hooson (Montgomery)

The Chancellor of the Exchequer, in presenting his qnasi-Budget this afternoon, sought to stimulate the economy, but the very fact that he had to do so is itself an indictment of the lack of long-term policy in our Government. Once again we have been treated to the spectacle of the British economy being treated as a peculiarly sick patient. I say "peculiarly sick" because the patient is subjected to a number of treatments but very little effort is made to diagnose his trouble.

This time the doctor, in the form of the Chancellor of the Exchequer, has prescribed a rather heavy dose of stimulants and even the prescription form, we are told, need not be presented for another six months, until the Budget has been passed. The last doctor to treat the patient had apparently over-prescribed a dose of sedatives. So the patient, that is the national economy, varies from stagnation or stupor to intense activity under the influence of artificial stimulants. But what the patient surely needs is good steady nourishment and a (healthy atmosphere.

I want to deal particularly with the absence of any long-term plan in the Government for dealing with the British economy. I believe that for many years now the Government have failed to make full use of the economic and social resources at the country's disposal. I agree with those hon. Members who suggested that we have had a grossly unbalanced development, and it is not surprising that we have been unable to maintain as high a rate of industrial expansion as have most of our immediate competitors. I should like to refer to three particular factors which are seriously inhibiting the country's economic development.

The first point, and this has already been mentioned, is the lack of confidence in the country in our economic prospects. I should like to refer to some statistics which are quoted by the Wool Bureau of Statistics. Firstly, the consumption of wool, that is the raw material, by manufacturers in the United Kingdom in July-August of this year was about 10 per cent. less than it was in the corresponding two months of 1961. Secondly, machinery activity in the United Kingdom in the wool-using trade was 6 per cent. less in July this year than it was in July, 1961. Thirdly, deliveries of woollen manufacturers were 9 per cent. lower for July-August, 1962, than for the corresponding months of 1961.

Hon. Members may ask why I have selected the wool trade from which to quote figures. It is not because my constituency has any particular interest in the wool trade, but because I think that all hon. Members will agree that the wool trade is notoriously sensitive to the general economic climate of the country. Before buying a suit or a coat or a skirt most people weigh their own economic prospects. Therefore, the wool industry is very sensitive to this economic climate, and the figures show that there is a general lack of confidence among manufacturers in this country. The medium and small firms which are responsible for a great portion of the economy show a general lack of confidence.

The second point is the excessive concentration of our industry in the industrial coffin which lies about the London to Manchester axis. Linked with this is the gross neglect of our own under-developed areas in this country. The third point is that there is lack of confidence among our workers and especially among those in rapidly changing industries and more particularly in the basic industries.

If I may elaborate a little on my first point. In order to restore confidence we on this bench believe that growth becomes the top priority of policy. We believe that there must be a change of strategy as well as a change of tactics by the Government. "Neddy" has given the aim of a 4 per cent. annual increase in economic growth. Are the Government prepared to make this their first declared objective or will they allow it to remain merely as a pious hope or wish?

We should plan together for expansion in the O.E.C.D. and in the European Community. The only way we can persuade the Continent, and above all France, to co-operate is to be more radical and more European than the Government are at present prepared to be. For example, we would get massive support, without doubt, for proposals for pooling reserves in Europe. On the other hand, it is not surprising that we are not able to obtain political acceptance of pooling plans in the International Monetary Fund. We must be far more radical in our approach to this problem.

We also need a national plan for economic growth. Planning, unfortunately, has become a dirty word in our community. This is because our experience of it was at a time when it was very restrictive in its application. Nevertheless, I ask how many hon. Members opposite who are members of firms are members of firms which are without any plan for development. Any sensible businessman who has in mind the future prosperity of his business prepares, first of all, a broad development plan, though certainly elastic, to which he can refer. Then he will have more detailed plans to implement the broad plan; but do we have such a broad development plan for our country? Should we not have a broad, comprehensive plan, informing our people what as a nation we are trying to do and telling them what we can do?

There should be a great deal more open diplomacy about this. It is really time that we had a Government with trust in the people. It has been said of the Prime Minister that he moves secretly and slyly through the political jungle. No doubt there are times when this policy has paid him dividends, but these dividends are dearly bought. What we need is more trust of the people. We need to explain our economic conditions. We need to tell the people what we seek to achieve and how we seek to achieve it. Any country would lose confidence in a Government which had moved, as this Government has moved, from one expedient to another. And even now they do not seem to have the vaguest idea of where they want to go.

But to have a broad national comprehensive plan is not enough. To develop my second point, each region in our country must also have its own regional plan linked up to the national plan. Our industry at home is now succeeding in choking off its own development through its location and concentration in one vast industrial coffin. The unemployment figures, on the other hand, surely show how much certain areas are neglected.

Figures have been quoted today of various areas in the country. Let me quote some figures for various towns as at 13th August, 1962. On that day Slough had an unemployment rate of 8 per cent. of the working population, which is very low indeed. Milford Haven in Pembrokeshire had 10.4 per cent. unemployment; Greenock in Scotland had 7.1 per cent. and Hartlepools 7.4 per cent. There is from these areas and others a constant drift of population to the coffin area and particularly to London and the South-East of England. This is a situation which hon. Members must surely recognise is self-perpetuating in the absence of adequate Government measures to combat it. I am sure all hon. Members will agree that our country simply cannot afford the constant neglect of the economic and social resources of Scotland, Wales, the North-East, the South-West and and so on.

We hear a great deal of talk of the under-developed areas of the world, and quite rightly we pay attention to their difficulties, but it is time that our Government paid far more attention to the under-developed areas of our own country. It does not appear to me that the Government have any effective plans for remedying the situation in those areas which I have mentioned, and not unnaturally the Government have lost most of the confidence, if they ever had any, of their inhabitants as by-election results clearly show.

I should like to know whether the Government accept the need for decentralising population and employment from our congested areas. Do they accept it as a principle? Do they believe in taking effective action to develop our neglected areas? If they do, what plans have they to do so? We ought by now to have proper regional plans for development, with the creation of magnet areas to attract new industries— not only in our neglected industrial areas but also in our neglected non-industrial areas. Many of these areas have advantages which, if the Government assisted them, would attract industries there. For example, housing is much cheaper in some of those areas. There is an absence of road congestion and there is easy access to and from work. Also the cost of living is cheaper. What these areas need, both industrial and non-industrial, is Government interest and a Government policy to assist them.

We on this bench regret the absence in the Gracious Speech of any proposal for the establishment of a National Insurance redundancy fund or of adequate facilities for the retraining of workers declared redundant, so as to provide opportunities for new employment. We accept that it would be wrong for people to suffer a drastic fall in income because of redundancy. It is in the national interest that we accept that technological developments and desirable economic changes will lead to a certain amount of redundancy, but surely the country has a social duty to mitigate adequately the hardship that is so caused.

It has been estimated that if 200,000 people became redundant every year and if there were a total contribution of 1s. a week per employed person from the State, the employers and the workers, those redundant people could be provided with £ 10 a week each for twenty-five weeks. Under such a national redundancy fund a worker Who became redundant could at least be certain of receiving two-thirds of his earnings for twenty-five weeks after he became redundant. We should like to know what plans the Government have for providing adequate retraining facilities, above all for those young people who have just finished apprenticeships and who have become redundant, and those over 50 who find themselves out of work and out of a skill.

In conclusion, we have been told by the Government— though I must say it took them a long time to discover the fact— that great opportunities await this country in the Common Market. Negotiations, we have learned, are now at a stage when the country can look forward to taking this concrete and important step into what has been called "this continent of opportunity ". However, it is important that we should take stock and ask in what mood we are approaching this. How are we going in? Are we going forward, as one would expect if this is such a great opportunity, with an accelerated surge of new investment and new development? Are the less favoured economic regions of our country being prepared by schemes of regional development so that full advantage can be taken of the great opportunities of the Common Market? Not at all.

Our investment rate has been falling since 1960. We have an increasingly high rate of unemployment. We have no economic plans for developing any of our regions. We have the constant drift of population to the south-east of England and to London. Consequently, we are approaching this great adventure with our economic belts tightened and with a completely inhibited approach to the whole of our economic life. Therefore, it is not unnatural that the country is now counting the cost of Her Majesty's Government's failure to bring Britain up to scratch so that she can do full justice to herself in the Common Market.

8.27 p.m.

Mr. A. Bourne-Arton (Darlington)

I trust that the hon. Member for Montgomery (Mr. Hooson) will forgive me if I do not follow his general remarks or in his reference to textiles, much as I would like to have done, having the largest and most modern wool textile mill in the country in my constituency.

In view of the lateness of the hour, I only want to make two or three quite constituency points. They will, I think, be echoed, certainly by hon. Members who also represent railway towns and others who are in the peculiar difficulties in which we now find ourselves.

I would remind the House that I represent Darlington. I am not for a moment suggesting that we are worse off than anyone else. Indeed, we have many great advantages over other places, particularly our neighbours in the North-East. Our unemployment figure at the moment is only 2.7 per cent. But our railway shops are to close. I do not wish to rake dead ashes there, but no one will blame any of us for the bitterness with which we fought the battle to keep our shops. We are the birthplace of the railways. However, that battle is over.

What I am sure of is that those hon. Members who, in normal times, have noticed proudly standing on platform 1, at Bank Top Station, "Locomotion 1825," the first railway engine to run on a public railway in the world, will agree that Darlington would not have gone out into the van of the Industrial Revolution in this country, or have become great and prosperous, if our great grandfathers had continued to build engines like that. Darlington has in the past been great and prosperous, and has been out in the van of change because it has changed. In general, this process has gone on, and not only with railways. There have been developments by new, ultra-modern and sophisticated firms which are doing splendid export business. This we can do. But in the situation which suddenly broke on 19th September— though long awaited and long dreaded it came suddenly upon us — it was something we could not do by ourselves.

We wanted help. We got it the same day from Her Majesty's Government. As one who has made himself a more than average nuisance to my three right hon. Friends concerned during the three years I have been in the House, it is only fair that I should pay tribute to the decision taken by my right hon. Friend the President of the Board of Trade that Darlington should become a development district, and for the speed with which it was taken and for the demonstration that the Government Departments concerned were working together.

It is fair, also, that I should thank my right hon. Friend the Minister of Labour and his officers and the officers of the Board of Trade, particularly those working in the region, for the immense energy they are putting into the work they are doing for the whole North-East and for us. I pay a tribute also to a former colleague, Mr. George Chetwynd. All this is fine.

I have no doubt that, with the help which will be forthcoming and with all the tremendous attractions and advantages peculiar to Darlington—first-class communications, great attractions as a place to live in, and so forth—we shall get by in the long run. In the short run, however, as has been pointed out, notably by the right hon. Member for Easington (Mr. Shinwell), there will be a comparatively small number of men on whom great hardship may devolve even if all goes as well as I hope and believe it will in the introduction of incoming industry. These are men of an age whom incoming industry is, in the present climate, not too willing to retrain.

While thanking my right hon. Friend the Minister of Labour for what he has done in the past and what his officers are doing now, I earnestly beg him to give favourable consideration to the siting of a Government retraining centre in Darlington. I ask this for two reasons. First, the redundancies we are having in the railway workshops come after a long period during which the workshops have been running down. There are, therefore, many older men affected. I agree with the right hon. Member for Easington. I do not believe that people are finished at 50. In a few months, I shall have a personal prejudice in that connection. However, I know that a great problem does exist, and I beg my right Hon. Friend to act accordingly. There is another reason. It so happens that the level of owner-occupation of houses in Darlington is exceedingly high, one of the highest in the country.

I was greatly impressed with the Chancellor's reference in his speech today to co-ordination of effort between Government Departments in bringing work into development districts. I throw out two suggestions from my own town. No doubt, they could be reflected in many other places. If my right hon. Friend the Minister of Transport wants to help Darlington, as I am sure he does, then he should sanction at once the building of our new ring road, not just because it would mean money and work but because its construction would infinitely assist the splendid efforts which our town council is making to develop new factory sites. It is all tied up. Nothing my right hon. Friend could do would help us more than that. I have been pestering my three right hon. Friends for a long time for such things to be done.

Mr. Shinwell

Why does not the Minister of Transport do it?

Mr. Bourne-Arton

I am begging him to do it. If the right hon. Member for Easington begs him to do so, I am sure that that will carry great weight.

My right hon. Friend the Minister of Housing and Local Government has had the good fortune not to be on my mailing list during this period of anxiety, but I give him fair warning that he will be if, in these circumstances, he starts "mucking about" with our water supply. One of the great advantages we have in Darlington in attracting industry — people are very interested and seem to want to come and set up in Darlington— is that we can offer very cheap water and plenty of it. We can offer it ourselves. We do not have to send people down the Tees. I warn my right hon. Friend the Minister of Housing and Local Government to keep his fingers out of our water. These are things which matter to us, as, no doubt, they will matter elsewhere.

I am not, I trust, being over-confident about the future. I beg Her Majesty's Government to be appraised of the serious situation as regards the age of redundant workers and the need for retraining. In less than six months, one shop is to close. Of the 350 men employed there, 95 are over 50 years of age. I am assured by both management and unions that many of these men are absolutely first class. There is an unnecessary prejudice against retraining people of this age, but there is no doubt that industry generally, and industry from abroad, very often, has this prejudice. I beg my right hon. Friend to take this fully into account.

As my final word, if I may venture to give advice to any industrialist in an overcrowded and labour-hungry part of the country who wants to expand, my suggestion is that, if he will come and look at Darlington first, it will pay him to do so.

8.36 p.m.

Mr. Archie Manuel (Central Ayrshire)

I am sure that the whole House listened with great attention to the Chancellor of the Exchequer, particularly to his explanation of the steps he intends to take to put the necessary expansion into our economy. Not one of the measures of which he told us is new. We have heard before about investment allowances, capital allowances, relief for heavy and capital plant, and so on. It is easy enough to give £ 50 million here and £ 50 million there. What the House should be demanding to know tonight is whether expenditure of this size will bring the results which are necessary especially in Scotland, the North-East, Wales and elsewhere, where people are bogged down in heavy unemployment.

The measures are not selective. All private industry, whether it is making £ 100 million a year clear profit or not — and some monopolies are getting near that nowadays— will receive the same relief. A vast and profitable enterprise will receive the same relief as an industry which, during a period of stagnation, badly needs help by which it might be enabled to retain its present labour force and take in young school leavers at this difficult time.

There is no indication of such help being offered selectively. It is just £X million handed out ad lib to all industry in the country. There is no concentration of the necessary monetary help on the areas which have, time and again, been spotlighted in the House. There is no means test. Whatever rate of dividend a concern is getting on its invested capital it gets these reliefs just the same as poorer, struggling industries.

We are told, without any explanation, that the Purchase Tax on cars is to be reduced from 45 to 25 per cent. I welcome any action which will bring about the expansion in our economy which is necessary to take up the slack in unemployment, but I did not like the Chancellor saying, almost in the same breath, that we need to ensure that we did not get into a spiral of inflation too quickly and undo any good which might be done. He might have kept that for another day.

There has been no indication that action will be taken to ensure that a certain percentage of production will go to exports once the motor car manufacturers put this reduction in Purchase Tax into effect. Today, our roads are cluttered up far too much. The road programme is such that we have far too many vehicles on the existing roads. The Chancellor of the Exchequer did not tell us that car manufacturers will not increase the prices of cars, as Fords have done today. I should like to know whether any assurance has been received from the motor industry that it will not increase the price of cars consequent on getting this relief.

Although I am all for every measure which will bring about the necessary expansion, we must remember that all these reliefs have to be met from taxation. Therefore, other sections of the community will be taxed so as to inject into these limited sectors the relief which the Chancellor of the Exchequer indicated today. These are important points, and we should have an answer to them.

I wish to say a word or two about Scotland. I am not sure how much benefit will accrue to the areas in Scotland about which we are concerned from the measures indicated by the Chancellor. The Government are taking, through the agencies of the National Coal Board and the British Transport Commission, very important decisions which will materially affect the future of Scotland. I refer to branch line closures, train withdrawals and a huge number of pit closures.

The tragedy is that these decisions are being taken on the basis of an economy which is not buoyant and go-ahead, but which is in a period of stagnation. Surely the Secretary of State for Scotland agrees that this is not the time that the Government should be taking hard and fast decisions about our railway network in Scotland. If the Government's proposals go through on the basis of profitability the seven Highland counties will be completely denuded of railways and the rate of depopulation, which is already a significant feature of those counties, will be hastened.

But that is not the only yardstick that we can take when considering the stagnation of the Scottish economy. The slipback of the Scottish economy has been glaringly apparent for a very long time. In the four-year period from 1957 to 1961 there was an increase of 310,000 in the number of registered insured workers in the United Kingdom. During the same period there was a reduction in Scotland of 26,000. The trend is unmistakable, and the Govern-men should be thoroughly ashamed that they have let it continue so long without trying to correct the weaknesses in the Scottish economy.

The Government say to Scottish Labour Members of Parliament, "You are not doing a good job by talking about these factual things. You ought to be cheerful and bright, say that everything in the garden is lovely and be merry about it."But we have a duty, on behalf of our constituents, to talk about the facts. That is all that I am doing tonight.

The Government say that during the four-year period from 1957–61 they have created 51,400 new jobs. That sounds all right, but during that same four-year period we lost 85,150 jobs; in other words, 85,150 workers became redundant. Therefore, the Government's industrial certificate quota over that period is quite insufficient. Today, we have 85,000 unemployed in Scotland, and it is confidently predicted by trade union leaders and industrialists that the figure will be well over 100,000 at the beginning of 1963.

The Government must face up to the question of location of industry. I do not know whether the Scottish Office can help; I do not know just where it comes into this picture, but we always try to bring it into the picture. Areas are decaying in Scotland either because of rail services going out or because of pit closures; and do not let us forget that we have many pit closures to come. If the Government cannot get industry located in these areas, where a great amount of wealth has been sunk by the local authorities in providing schools, houses, hospitals, gas, water and sewerage— is this all to go by the board? — surely it is the duty of the Government to direct industry into them.

When we talk about the direction of industry I hope that the Government Front Bench will not play up and say, "We cannot direct people to go where they do not want to go."That is not necessarily the best way to direct industry. I would say that in these circumstances the Government should set up publicly-owned industry in order to retain life, vigour and production in the area. That is the course that we should be following — Government-sponsored industry in the necessary quantities to obviate further depopulation of Scotland.

I promised to sit down to allow an hon. Member for Northern Ireland to speak for five minutes. I have much more, Mr. Deputy-Speaker, which I should like to say, but I am complying with your wishes. I know that there is a high degree of unemployment in Northern Ireland. I hope that the Government will take some definite action to help those areas in Scotland which are becoming denuded of industry, that they will try to get private industry to go there, and that if they are not successful they will themselves establish publicly-owned industry which will take up the slack of unemployment in those areas.

8.49 p.m.

Mr. Wilfred Proudfoot (Cleveland)

I welcome the announcement by the Chancellor of the Exchequer today. He has again demonstrated my faith that the Conservative Government will not tolerate unemployment. I believe labour to be the most perishable commodity— and I spell it with a small "1". If one day's work is lost, it is lost to the whole of society and the world, and not just to our own country. When we hear pious hopes expressed in this House about bringing forward the backward countries, that should be remembered.

We all want growth without inflation. I am convinced that "Neddy" will succeed, and "Nicky" must succeed. "Neddy" will point out barriers to our economic growth so that we will not run into inflation. It has, however, the additional duty to point out areas of opportunity. I am certain that the areas which have been so much talked about in this debate will be areas in which we can obtain growth without inflation.

The North-East has an excellent record for absence of strikes. It has less congestion than other areas and it has great natural beauty. I am glad to hear the announcement of the speeding up of the road programme in the North-East, which also will help and will prepare the way for the new wave of industrial advancement which, I am sure, will follow.

I must qualify some of these remarks. Hon. Members opposite always seem to think that nobody works unless he works in a factory. That impression is quite incorrect. About one in twenty in our society is a productive worker, the remainder being made up of housewives, service workers, school teachers, grocers, and so on. This fact is frequently lost sight of.

Our society is constantly buying more services. I challenge any hon. Member, on either side, to check up in his constituency and find how many ladies' hairdressers shops are open and to check with his constituents to see how often they use them. An economy like ours buys more and more services. This gives it a greater degree of resilience. I hope that my right hon. Friends the Chancellor of the Exchequer and the President of the Board of Trade will be able to examine the industrial development certificate procedure and base it not merely upon an area and a factory, but also have regard to the number of people to be employed in the factory. This would be of real help in sending work to the areas which need it.

Although not one motor car is produced in the North-East, I welcome the reduction in Purchase Tax on motor cars, for the very good reason that when, a short time ago, I and several other hon. Members went to the motor car research establishment, we found to our amazement that 10,000 firms contribute to that establishment. This shows how many firms get into the car industry. It is about time that we started to think of the car industry as an assembler of parts which are collected from all over the country.

In July, I asked my right hon. Friend the Chancellor of the Exchequer to consider the investment allowances and I am pleased with what he is doing. I hope, however, that he will be able to react even more rapidly. On Saturday, in a speech I made, I asked him to get rid of the annual Budget, that old-fashioned process which we undergo which gives certain Members of the House an opportunity to attend in tribal costume. I am sure that in a modern society, this great, artificial season of the Budget is not necessary. Spring, Budget, summer autumn and winter. Why put an artificial season, which it truly is, in the way of production?

When we talk about investment allowances and modernisation, obviously we must be prepared for redundancy. This means retraining and new employment in the areas of the old industries. Perhaps "Neddy" will say that we are up against a barrier and that the unions will have to accept greater mobility of labour. I mean not merely geographical mobility, but mobility within trades. They will have to accept retraining and movement inside industry themselves. I am sure that modern unions will get down to that way of thinking.

As I said just now, I am sure that the Budget is an old-fashioned piece of machinery. It is like trying to drive a motor car and using the brake and the accelerator once a year. I am confident that the Chancellor's proposed use of the regulators when they are necessary will be carried out, and I am also confident that this is the way to maintain full employment and to keep inflation within check.

8.55 p.m.

Mr. George Brown (Belper)

We have just listened to an hon. Member clearly pronouncing the requiem on his present seat and, I thought, making a rather noble bid to his hon. Friends to find him a rather better one. He comes from Cleveland, an area I have visited recently. It is one of those areas of the country which have an unemployment rate in the region of 5 per cent. I thought the hon. Gentleman did his best for his right hon. Friend, but it will not sound very convincing up in Cleveland at the weekend. But no doubt the hon. Gentleman will move on.

We are now winding up not only today's debate on the industrial situation but also a week of debate on the Queen's Speech. There have been two outstanding debates since last Tuesday, and I want just to say a word about each of them. Each has been totally unsatisfactory to the nation so far as the Government's answers were concerned.

The first debate was that on housing. In it the new Minister of Housing became, I think, the third Minister in this Administration to discover the slums. We are, of course, very glad that Conservative Ministers should go on adding to their knowledge in that way, but the country as a whole has understood about this for a long time. The new Minister assured us that the Government were going to do three times as well as they have done in the past. Although I am no intellectual mathematician, three times nothing still is not an awful lot. The Minister left the housing situation in a pretty unhappy position for that part of our community which is at present not properly housed.

It is no good saying "The land will be found". Where is it going to be found, and at what price will it be found? Every hon. Member who serves on a local authority, or is associated with other persons who serve on local authorities, or in building societies, or in co-operative housing associations, knows that at the moment the problem is how one is to find the land and how one is to pay for it when one gets it. We have still to be told — maybe the Leader of the House will tell us tonight— how it will be done and how it will be financed without ruining the occupier of the house or the ratepayer or taxpayer who subsidises him there.

The other debate which ended in what I would regard, even for this Government, as a most unsatisfactory speech was that on Friday about what has come to be known as the Vassall case. The total inadequacy of the Minister of Defence in answering that debate has been noted not only by every Member of the House but by every commentator outside. This is a tremendously serious business. It leads one to believe that Ministers do not understand, as someone once put it, "the enemy within the gate "I have many reasons for not being over-friendly nowadays with my neighbour the hon. Member for Derbyshire, West (Mr. Crawley), as I have never quite got used to his defection, but I would tell Ministers that if they are as innocent as the Minister of Defence suggested they were, it is time they got together with the hon. Member for Derbyshire, West and let him give them some information and insight.

We cannot leave the Vassall case where it is. There are letters in existence, copies of which I and, no doubt, others have seen, the originals of which are in the hands of what are called "the authorities ", which indicate a degree of Ministerial responsibility which goes far beyond the ordinary business of a Minister in charge, being responsible for everything which goes on in his Department. The Lynskey Tribunal was set up to deal with a junior Minister for far less than is involved in this. Standards of Ministerial conduct were much higher when Lord Crathorne, whom I tremendously honour, gave up his post. Standards of Ministerial conduct and responsibility today seem to be about as low as they have ever been in all the years that I have been here.

I say to the Leader of the House that that is another debate which ended totally unsatisfactorily and I hope that we shall hear something tonight, or that the Government understand that, not for party advantage but for a national consideration, we will have to return to it.

Those were the two earlier debates which ended unsatisfactorily. Today, we have had a debate on the industrial scene. I still doubt whether hon. Members opposite fully understand the problem. I listened carefully to the Chancellor of the Exchequer and heard him twitting us by saying that the word "stagnation" was popular with us. With that Oxford Union debating phrase, he threw it out of the window. But this House is not an extension of a union debating society. This House is where the people meet, and "stagnation" is a sophisticated word for a real and deep-cutting human problem.

Can we get it clear that today we have the worst situation in terms of employment, production, exports and prices that we have had for ten years, ten years in which right hon. Gentlemen opposite have been totally and unchal-lengeably in charge? No wonder the Chancellor did that little trick— it was, not worthy of him— of picking a period in January and comparing it with another period this year. Statistics cannot lie, but all kinds of chaps can figure.

Let us have a look at the position for the special benefit of the right hon. Member for Flint, West (Mr. Birch). Let us take the period of ten years and consider the average rate of investment, which, I am told by those who, like the right hon. Member for Flint, West, are supposed to know, means the gross domestic fixed capital formation as a percentage of the gross domestic product. There could not be a simpler explanation, could there? What does one find when one looks at the figures? One can go from Canada at 23 per cent. down through the countries of Europe until one comes to Britain right at the bottom with 15 per cent. Looking next at the increase in industrial production— and I am prepared to omit Japan at 300 per cent. because there are special arrangements for her—one goes from Germany at 125 per cent. down to Britain at 34 per cent. with only Belgium, at 26 per cent., below us.

If one looks at the increase in exports over the same period, and I am talking only about the period for which the party opposite has been responsible, again omitting Japan, one starts with Germany at 230 per cent., down through all the members of the Six until one reaches Britain, again at the bottom, at 26 per cent.

Looking next at the increase in prices, here of course the position is reversed. We are almost at the top of the league. Only France is above us. From Britain with a 40 per cent. increase over this period, one goes through all the members of the Six until one reaches Belgium at the bottom at 12 per cent. I repeat these figures to show the House that the party opposite has not yet understood the size of the problem, though it is well understood outside the House.

The Prime Minister said that the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) was rather tired after his period in office, and of course we understand that and are therefore rather more charitable than we would otherwise be, but the measures he introduced last July have not changed the situation which has existed for the last eighteen months. He made the position worse for a little while, although we have done a wee bit in the first six months of this year to recover just a little from the, additional dip which he gave it.

Added to that situation, there is the picture of general unemployment— and I repeat general unemployment— which has developed in this country. I will discuss local unemployment in a moment, but hon. Members to whom I have listened have clearly concentrated their attention on the theory that there are some black spots in the country. There certainly are, but there has now been a dramatic change in the situation and we had better realise this because it affects the answer that one can get. It is not possible to talk about shifting work if there is unemployment in the areas from which it is proposed to shift it.

There has been a dramatic change in the situation. We now have general unemployment at the highest-ever figure before the start of the winter. As the Leader of the House, with his experience of the Ministry of Labour, will know, the present figure is the highest and most serious pre-winter figure that we have had for a very long time and we now have the prosperous South and the prosperous Midlands affected by this situation. Some of the sharpest increases have occurred in the areas which we normally regard as prosperous, and we are therefore faced with two things. First, we have this general picture of spreading unemployment. The other day I read a leading article in a newspaper which said that firms were no longer hoarding labour. It does not matter how one puts it. It simply means that people are coming out of work, and coming out of work is a serious matter. Secondly, in addition to this general picture of unemployment, we have this tremendous problem of the black spots, which continues to be extremely serious.

My hon. Friends have spoken for Scotland, for the North-East, for Wales, and for Northern Ireland. I was fascinated to hear the hon. and gallant Member for Down, South (Captain Orr)— County Down is not as good as County Cork but it is, nevertheless, a reasonable county— talking about the need to retrain people in Northern Ireland for skilled jobs.

I was in Northern Ireland recently. The curious thing is that Northern Ireland is not short of skilled labour. It has lots of skilled labour. It has very good facilities for shipbuilding and aircraft production. What it needs is some work to do. The only thing for which its workers can be trained is for unskilled work. They have the skills now. The hon. and gallant Member got it completely upside down.

At the risk of boring the House— and I repeal that this is not an extension of a union debating society— let us, for heaven's sake, remember what four, five, six, eight or nine people out of work in a community really means. It means absolute misery, not only for the people themselves but for their families, and for a whole part of the community. We have been watching this development for a long time. We have been giving sops to our consciences here every now and again, and saying how upset we are.' But all that happens is that it goes on and on— and now other areas are being affected. There will now be less chance of shifting work from one part of the country to the other.

This question of human misery is a tremendous business which, under this Administration, has gone on and on, and has become worse. There is not one hon. Gentleman or hon. Lady opposite who can get away without a share of the responsibility for what is happening.

There is also the question of the terrible waste of resources. We are a very tiny group of islands. We are living on very close margins. We cannot afford to waste skills, and factories, and machines. If it is not the misery that moves one, surely, faced with what the Common Market means— whatever the ultimate decision we make about it— we must understand that we cannot go on with this waste of human and physical resources.

The Minister of Pensions has been referred to many times today. He really does need a W.E.A. or a university extension lecture course if he is going up to Newcastle and the North-East and telling the people there that the thing they should do is to move somewhere else. All my early years, in the 'thirties, were concerned with dealing with the misery that was brought to Welwyn Garden Ctiy, Watford and Luton by the wholesale movement of young people from those very areas, and cynically to tell us today— thirty years later— that this is the right thing for them to do seems to me quite fantastic.

The right hon. Gentleman who is to wind up the debate for the Government is an old Ministry of Labur hand. I ask him: do the Government ever consider the effect that the present situation must inevitably have upon industrial relations? The hon. Member for Rutland and Stamford (Mr. K. Lewis) read us a lecture tonight about what the trade unions ought to do. What do the Government think that human beings will do when they know that jobs are becoming scarcer, and that there are now three vacancies for every applicant for work—[Laughter.]I am sorry— when there are three men for every vacancy? What do the Government think that human beings will do? Will they voluntarily work themselves out of a job? What would any of us do? We would begin to want work sharing. We would begin to want restrictive practices. That is how we would react in this situation, with families dependent upon us.

The effect of this atmosphere upon industrial relations and upon the willingness to co-operate in order to achieve greater productivity must be tragic, if not absolutely fatal. When the Chancellor was developing the point about manpower being down and productivity being up, I could only think that he ought to be awfully careful about this. Many responsible people on my side of industry are trying their hardest to hold things level, and if the right hon. Gentleman plays that argument too hard he will cut the ground straight from under their feet.

Of Course this does have a tremendous effect. It is no use reading us lectures about what trade union officials ought to do in the circumstances. We must remember that we are dealing with human beings, with all their rationalities and irrationalities. I would never work myself out of a job— if I knew that there were three others—[Laughter.]— maybe it is useless talking—[HON. MEMBERS: "Hear, hear."]— but constituents outside this House understand this. None of us would work himself out of a job knowing that there were two or three others ready to compete with him as replacements [HON. MEMBERS: "There is only one."]. This silly giggling only shows what I suspect, that hon. Members opposite even now do not understand the problem with which we are trying to grapple.

I come now to what we were told today. The Government were almost the last to see the problem. When he spoke in July, either out of exaggerated deference to his predecessor or out of blindness, the Chancellor still did not see the problem, or refused to see it. Now be does see it, and today he has tried to do something about it. But what have we got? We have a continuation of the "stop-go-stop" policy which we have had all through these last ten years. Now we have an unlimited "go" on a narrow area.

I take it that it has been calculated that the motor oar being the product of a long chain of engineering work, concessions to the motor industry would result in the spreading of a good deal of "jam" around. There is little evidence of any planning about this operation although planning has become, I gather, an accepted word even among hon. Members opposite. I wonder whether, before they announced this concession, the Government considered the consequences on consumer spending. I wonder whether they considered the consequences on the road programme. There is little evidence of them having done so.

I looked up what the Chancellor, who made the announcement today, had to say on this very point when he spoke in December, 1960. I see by the smile in the eyes of the right hon. Gentleman— if not on his lips— that he himself has some memory of what he said. I recommend hon. Members to read the tremendously dramatic denunciation which the right hon. Gentleman made on that occasion of anybody who thought this a good way to tackle the situation. It makes amusing reading now.

I will accept that the investment inducement and the stimulus to buy motor cars will have some effect, and that the need to get some investment in modernisation and to stimulate the consumer market is desirable. But I wish to ask the Leader of the House why that is limited to cars and why is it done so markedly with cars. What is the matter with using the regulator to spread consumer demand over a much wider range of goods? Many parts of the country will not obtain any benefit from a form of stimulation which is confined to motor cars and their accessories. If we had provided a similar stimulation over a wider area we might have stimulated many other industries—

Mr. S. Silverman

Textiles, for instance?

Mr. Brown

Yes, textiles. Why did the Government decide not to do that? I thought that was what the regulator was for. I am surprised and I shall be glad to hear the answer.

Regarding the investment inducement, let me say that no one will invest in greater modernisation if the product is not saleable. Giving a straightforward bribe, which is what the Chancellor is doing with a 30 per cent. free gift, in order to induce people to get more modern machines, will not work if the end-product remains an unsaleable one. For that reason I should have thought that a much wider spread of this £100 million or £60 million would be more sensible.

There is much more to it than these very narrow arguments, things which the Chancellor today has not dealt with at all. There is the question of the location of industry. I listened to the Chancellor describing to us the tough industrial development certificate procedure and the limitations, how he could not force people to go to certain areas and how they would say, "We shall not develop unless— "Of course there is a great trial of will in all this. My right hon. Friend the Member for Battersea, North (Mr. Jay) and I served on the Committee years ago. We know what a tough trial of will it often was, but I say to the Chancellor that it is very much easier if there is an atmosphere of expansion and growth over the whole country. It is very much tougher if there is tremendous expansion and prosperity only in the motor car areas. Everyone will want to go to Luton and Birmingham in those circumstances, but no one will want to go to other areas. That is precisely why the Chancellor should have looked for ways of spreading his new expansion and drive over a much wider area of the country.

Why do the Government become positive and active in the sphere which they themselves can influence? Here I return to Northern Ireland as an example. There are others, but I use that because I have been to Northern Ireland so recently. There, and no doubt in other parts of the country, the Government could themselves change the situation. In Northern Ireland they have a magnificent group of aircraft shops and some wonderful shipyards. The Government own the aircraft shops. The Government virtually control the orders and where they go. Why do the Government not themselves get active if they want the problem of that blackspot to be overcome? In the shipbuilding industry on the North-East Coast, Scotland and other shipbuilding areas, the Government have a tremendous amount of effort, patronage, whatever the right word is, in their own hands. Why do they not get positive and active in the areas which they can affect? Of course they do not. They take refuge in this rather wishy-washy ad hoc arrangement.

There is an area which concerns the Minister of Labour more than it concerns anyone else. That is an area in which, I tell him straight to his face, there has been a tremendous collapse. It is the area which deals with redundancy payments and the negotiating of agreements. It is not his business to lay down what should be done about redundancies, but it has been his business while this problem has been building up to talk to the trade unions and employers and get agreements about redundancies. What we have got is no more than one worker in seven covered by any form of private redundancy agreement. In a recent sample which was taken of 200 firms, no more than a quarter had anything whatever to do with redundancy agreements. The Minister of Labour has been an absolutely passive bystander. As things have developed he has made no contribution in this area at all.

Then there is the question of retraining people. What has the Minister done there? He has not been a passive bystander there; he has been an active dismantler of all the apparatus for retraining which existed. For the sake of a mere £800,000—and the Chancellor is giving away £100 million today to try to improve things—not long ago the Minister of Labour told us that he was getting rid of the Technical and Scientific Register. He was introducing charges for certain training in industry. He has closed the regional office of my own region at Nottingham—one of the regions with the sharpest increase in unemployment shown in October. He has shut down the office there. He has cut down the offices of the professional and executive register. He has closed two Government training centres—Kid-brooke in the South and Long Eaton in the Nottingham region—again two of the regions with the sharpest increase. His contribution to all this has been, not to do nothing about it, but, much worse, to dismantle the services which the Ministry of Labour used to provide.

Then, there is another question—that of mobility. Of course, labour has to be mobile. Sometimes, in this situation, there will have to be movement, but to be able to move, one must be able to go into a house, and a house which one can afford, whether one is buying or renting it. One must be able to rely upon transport. One cannot run double-decker buses down all the leafy lanes in England, but the Government are shutting our branch lines, and, of course, limiting mobility. We must also aid people to meet the expense of a move. Above all this, there must be real planning—not forecasting or guessing, which, quite honestly, is what "Neddy" is doing. The forecast or the guess is the basis on which one makes the plan. The stupidity of this Government is that they believe that the forecast or the guess is the plan. There is a world of difference between the two.

I heard today a description of—not "Nicky "; I prefer "Old Nick ". I heard the membership of this Commission announced. We have had the Three Wise Men. Perhaps the House has forgotten that they still exist; they are still around somewhere. There is no mention of them any more, but they were very distinguished, very substantial, men. Then we heard about "Neddy ". Now we have "Old Nick ". The House need not take my word for this, for they can look for themselves, but I speak deliberately when I say that I have never seen a body set up so far below the job which it is being asked to do as is this body. This is not meant to be any more than a bit of a cover. Worse: I wonder whether the House understands that everybody on this Commission, which is to deal with wages and incomes, which should be impartial, and which is said to have a lot of authority, is or was an employers' representative. What do hon. Members expect the trade unions and the workers to make of this?

Why did not the Chancellor tell us the names today? There are only four of them. Why did he merely say that the names would be found in the Vote Office7 Either because they did not stand up to being given in the House because they were not of a high enough level, or because he knew, as I have said, that every one of them has served—and many served until recently—as an employer's representative. [HON. MEMBERS: "Give the names."] There is Professor Kirkaldy, who was the iron and steel employers' representative for years, and Sir Harold Banwell, who was the municipal employers' representative for years. There is Mr. Hawkins. I do not say anything about them, but the point is that our people have to have some faith in the impartiality of this body. How can they?

This is not something which can be handed down from above. It has to be a joint effort. One has to carry the unions and the management with one. The Government have failed, and they are trying to impose their policy—and they will have total failure on that, too.

Clearly there are many other things which I should like to put to the House which I think are tremendously,important, but time will not permit. I believe that the Government have failed to understand the problem and to put forward constructive proposals which have any chance of being effective in dealing with it. Above all—a point which I should have liked to develop—they have failed to understand that social policy and social priorities are inextric—are totally bound up with this—[Interruption.]I repeat that for me this is not an extension of a university union debate. If I cannot find one word I will find another, and it will do. As I say, social policy is totally bound up with economic policies and economic consequences. The unfairness of the taxation system and of the social priorities is affected, too.

The Government have an obligation to recognise three things. The first is that time is not with us. [HON. MEMBERS: "Hear, hear."] Hon. Members giggle at their own peril. Outside people do not understand the giggling because they feel the problems. Outside they know that time is short and that the days of the affluent society, "You've never had it so good", "Pull up the ladder, Jack ", mentality are over. They expect us to be concerned about it and to seem to understand it.

Secondly, the margin with which we are fighting is very short indeed. What we are short of are not phenomenal intellects, as the Chancellor described it. It may help him to put that phrase in its proper perspective if I tell him that I was reading much about myself last week, and I understand that, broadly speaking, I am not regarded as having a great intellect. Let me tell him that I got the same result as he did out of it.

What we are short of is some commonsense, practical understanding of what is wrong, some guts to choose the right policies, and, above all, the necessary guts to put them into effect; and it is this which the Front Bench opposite lacks.

9.34 p.m.

The Chancellor of the Duchy of Lancaster (Mr. Iain Macleod)

Partly because by agreement we have kept the Common Market discussion for a separate debate, and partly because both the Prime Minister and the Leader of the Opposition—I am sure that this was the wish of the House—confined themselves almost entirely in their opening speeches in the debate on the Address to the crises in Cuba and India, this has been an unusual debate. It has really been a series of isolated debates.

Before I attempt to reply to this part of it, there are two points which I want to make, one of which was raised at the beginning by the Leader of the Opposition, who said that the Opposition wished at some stage to return to what is called the Vassall case. I note that. On Friday, my right hon. Friend the Minister of Defence said that when the report by the Committee of inquiry was ready the Prime Minister would discuss it with the right hon. Gentleman and that afterwards he would make a statement. The Leader of the Opposition then asked whether he would have full access to the Report. As he well knows, there are certain matters, this, above all, which are particularly within the Prime Minister's purview. My right hon. Friend the Prime Minister would like to deal, as he will be doing in reply to Questions this week, with this particular point.

The other point which I should like to make was put to me, again in Friday's debate, by the right hon. Member for Smethwick (Mr. Gordon Walker) and the hon. Member for Rossendale (Mr. Anthony Greenwood). It is about the question of the Government's attitude towards the threats to public order arising out of the activities of the Fascist or neo-Fascist organisations, a problem which, I am sure, concerns everybody in the House very deeply. I had thought of trying to answer that now, but I think that it would be for the general convenience if, instead, my right hon. Friend the Home Secretary, as he is very ready to do, made a more detailed statement to the House at an appropriate time. It would then be possible to put Questions to him on that, and would I think, be for the convenience of the House.

I must now try to answer the Amendment and the debate. The House will realise that I am speaking in part on behalf of the Minister of Labour, the President of the Board of Trade, the Secretary of State for Scotland, the Minister for Welsh Affairs, and the Home Secretary, as regards Northern Ireland. My responses may be perhaps rather staccato, but I will do my best.

Let us start with the facts. We know that there were 501,000 unemployed at mid-October, that is, 2.2 per cent. What I do not think has been said, and what ought to be said, because I do not wish in any way to minimise the gravity of this position, which caused me real concern, is that that figure includes 467,000 wholly unemployed. That is an unusually high figure, and means, in effect, that those people have been unemployed for six weeks or more.

Mr. S. Silverman rose—

Mr. Macleod

I cannot give way now. [have only just started developing a complicated argument.

This is 135,000 higher than at October, 1961, and is the measure of the deterioration since last year.

The right hon. Member for Belper (Mr. G. Brown) is not, with respect, right in saying that these are the highest figures we have had. Four years ago, in 1958—and this was not cause and effect I hope, but I was Minister of Labour at the time—the figures were slightly higher in mid-October, 2.3 per cent. as against the 2.2 per cent. now. More important perhaps, the deterioration from the year before, as hon. Members who took part in the debate will remember, had been much sharper. The hon. Member for Newton (Mr. Lee) will remember that it had been about 239,000. We then had the same sort of debate as we have had now on the Address, with the same two themes in the Opposition's Amendment. That was the first of many debates that we had on this matter.

One has to be cautious about making comparisons, because there are no doubt many different factors in the situation now, but it is sure to be true—and I want to make this absolutely plain—that these figures are bound to rise. We are now at the beginning of the winter movement in tourism, agriculture, various seasonal industries, and building, which has always meant that during the closing days these figures will go up. But I think it is right to point out that this happened very seriously indeed in the year to which I have referred and that afterwards the combined action by the Government and the turn of the year did see a better than seasonal trend develop.

There are two other changes which I think we ought to take into account, because I do not believe that we can plan for work properly unless we understand both of these. They come out quite clearly in the 1961 census. The first is the change that we hear about. We have heard about it many times today. That is the movement into the great conurbations of the South and the Midlands. The second one, the change that we do not hear so much about, is the movement from the centre of the cities outwards. In London, as hon. Members know, this has been happening for some time. There people have been moving not just to the suburbs, but beyond.

The 1961 census shows that this is happening in Glasgow, Birmingham, Sheffield, Belfast and Newcastle, and we are following in this respect what has happened in America, where the 1960 census showed a decline in the population of every great city with the exception of Los Angeles, itself a collection of suburbs. The trends would seem to show that this will continue.

One of the weapons that the Government have in relation to the use of work is the use of I.D.Cs. We are often criticised for not having a sufficiently tough policy. Let me make two points in reply to this criticism. First, any Member who has a seat, as I have, in one of the constituencies in the London area—and I imagine that this applies to the Midlands area as well—and who has tried to argue the case for some of his constituents to get an I.D.C. knows what tough going it is with the Ministries, and also knows, if my experience is right, how rarely one succeeds.

Secondly, I asked for the figures—this seems important to me—of the jobs created by I.D.Cs as a percentage of the numbers employed. This is over the last two years: for the Midlands, 1.1; for London, 1.4; for Scotland, 3.4; for the Northern Region, 4.5; and for Wales, 6 per cent. All that was achieved against pressure, as we know, the other way.

If I may take a particular instance from the speech of the right hon. Member for Easington (Mr. Shinwell)—and the identical case was referred to by my hon. Friend the Member for Sunderland, South (Mr. P. Williams)—the Thorn Electric case, in Sunderland, this firm has just announced that it is transferring its valve production from Sunderland to Rochester in the South-East. The right hon. Gentleman said that in some way we could stop this. With respect, I do not see how this can be done, because no I.D.C. is required—the firm is moving to its own premises—short of the proposition which he put forward—which I accept—but which I do not think is acceptable to the platform, as it were, namely, the direction of industry.

In response to my hon. Friend the Member for Sunderland, South, who expressed some anxiety about the position of Sunderland in this matter, I am told that the 700 workers—women, I think, almost entirely—who will be redundant as a result of this, are likely to be taken on by a radio firm, Perdio, for whom a factory is being built, but if not, the President of the Board of Trade is ready to consider the position of Sunderland in the light of what my hon. Friend said.

Mr. P. Williams rose—

Mr. Macleod

No, I would rather not give way now.

What is necessary is for the Government, both through their I.D.Cs and through many other matters, to show a continuing concern for this problem of unemployment and their determination to deal with it.

Let me give the House some instances of this. After all, the strip mill in Monmouthshire opened a few days ago and that at Ravenscraig is to open in a very short time. Let me deal with the decision to put the strip mill at Ravenscraig. The Ravenscraig site was, for economic reasons, neither the first nor the second which was considered. It was, in fact, the third. But we took a deliberate decision on the widest social grounds—on grounds that all hon. Members have been urging— that it was right for this strip mill to go to Scotland; and its success has been shown by the industries that have already been attracted to it.

As far as the Local Employment Act is concerned, the Chancellor gave some indication of the figures. I will give a breakdown of them. There are 336 projects in the two-year period amounting to £75 million. Of those projects, 50 are in Wales, 135 in England and 151 in Scotland.

The announcement made by my right hon. Friend the Chancellor today was not his first announcement to stimulate the economy. The White Paper on public investment is to be published on Wednesday, but the House will recall that, in the summer, the Government authorised an additional £70 million of work in the public service investment field to be started before the end of 1963–64. We cannot in all instances place that work where unemployment is greatest for the simple reason that much of it on schools, and so on, has to go where the need for the particular service is. However, wherever possible, the needs of these particular industries and areas are borne in mind To answer the specific question put to me about Government contracts— again, this is in reply to the right hon. Member for Easington—there are two schemes. If the right hon. Member would like details of them, perhaps he will put a Question down. I can tonight just give him an outline. There is the general preference scheme which provides that if price, quality and delivery date are comparable, contracts shall be placed with firms in the qualifying areas in preference to those elsewhere. That is operated by all Government purchasing Departments, and the nationalised industries have agreed to co-operate as far as possible.

But we go further. There is a special preference scheme—it is even more complicated to go into now—which provides that, even if, on competitive tender, these areas are excluded, a special chance shall be given to them, on re-offer as it were, to do part of the work. The places which qualify for the granting of preference are those development districts in which the full facilities of the Local Employment Act, 1960, are available and the whole of Northern Ireland.

I turn now to the more human side of the question, to matters of status and security at work. As the House knows, we propose to introduce a Bill on these matters. My hon. Friend the Member for Rutland and Stamford (Mr. K. Lewis) said, in effect—I think that the Leader of the Opposition made the point as well —" What took you so long?". I dare say that I have a responsibility in this. The fact is that both Lord Monckton, in 1953, and I, in 1957, tried to secure the principles of what I can call the industrial charter approach, and both sides of industry said—I do not blame them for it —that they would prefer to leave these matters to the ordinary flow of negotiation. We made a good deal of progress through voluntary methods. We feel that now is the right time to buttress it with legislation.

The right hon. Member for Belper said that my right hon. Friend was negligent over such matters as redundancy, sick pay schemes, and the rest. On the contrary. What the right hon. Member is preaching my right hon. Friend is already practising. My right hon. Friend said that it was his business to talk to employers and the trade unions. How did he do it?—through the National Joint Advisory Council. At its last meeting `24th October, the Council agreed a programme of work on redundancy, sick pay schemes and guaranteed wages, and it has decided to give priority to redundancy. My right hon. Friend has been acting exactly along those lines.

The right hon. Member for Belper made some play with the extremely important subject, referred to also by my hon. Friend the Member for Darlington (Mr. Bourne-Arton), of adult training. He referred, quite rightly, to the closing of two Government training centres at Long Eaton and Kidbrooke which took place in the spring of this year. But, again, this is nothing like the whole story. Before these centres were closed, only about 75 per cent. of the training places provided at all Government training centres had been occupied. Even with these reductions the number of places available today is still more than 500 in excess of the demand.

However, the right hon. Gentleman did not mention—and, to be fair, perhaps he did not know this—that my right hon. Friend has been consulting again the employers and unions in the engineering and construction industries —he has had a good response from them —with the idea of seeing that suitable and willing men who become redundant in the coal mines or on the railways are able to take short courses in certain skills at Government training centres. My right hon. Friend, therefore, is opening three new training centres, two of them in Scotland—one in Fife and one in Lanarkshire—and one in County Durham. He is also extending, in particular, the Government training centre at Glasgow. It is perfectly true that two Government training centres, both in areas of good employment, have been closed, but four are being provided in areas where they are needed.

I should like to say a word or two about the situation of Northern Ireland, which was referred to in the speech of the hon. Member for Cardiff, South-East (Mr. Callaghan) and in the speech of my hon. and gallant Friend the Member for Down, South (Captain Orr). They said that there had been some disappointment in some quarters, outside as well as inside this House, with the Report of the Hall Committee and, in particular, that the Committee was unable to agree on a remedy for the longstanding problem of unemployment in Northern Ireland. Unemployment in Northern Ireland, as the House knows —we have discussed this many times— has varied between 5 and 10 per cent. since the war. At present, it is about 6.4 per cent.

I agree with my hon. and gallant Friend that the Hall Report is a very valuable basis. It endorses the existing schemes which, in the last twelve years, have provided about 48,000 jobs, and another 6,000, if I may use the phrase, are in the pipeline. But all the same the figure for unemployment is far too high, and we have accepted the recommendations of the Committee on new measures to stimulate the use of industrial advisory services, to improve the training of labour, and to provide improved facilities for tourism. These measures are in hand.

We have agreed to sustain the existing measures of aid to industry, which cost more than £46¾ million in the last five years, and to extend the fuel subsidy to oil as well as to coal. The Committee recommended an increase in the housing programme and we have agreed that the present temporary subsidy of £11 a house, now financed out of a special Customs surcharge, should be continued as a charge on the Exchequer after the funds provided by the surcharge have run out.

In my view, my hon. and gallant Friend the Member for Down, South asked the key question, namely: is this enough? Is this the last word? Let me say quite flatly, no, it is not. We recognise that none of these additional measures will, of itself, solve the problem, and we shall not be satisfied until, in the closest consultation with all the Ministries concerned and particularly with the Northern Ireland Government, we have found a much better and, we hope, lasting solution to this intractable problem. My hon. and gallant Friend and his hon. Friends can be certain that we are not at all satisfied, and do not intend to be, with the situation as it is in Northern Ireland.

I said at the beginning that this was in some respects an unusual debate, and certainly not until now, presumably because we are about to vote, has the House been noticeably crowded. I am sure that hon. Members will agree that the debate was opened last week with excellent speeches by my hon. Friends the Members for Bury St. Edmunds (Mr. Aitken) and Coventry, South (Mr. Hocking). They were followed by the speech of the Leader of the Opposition. If the right hon. Gentleman will forgive me saying so, in one respect he is beginning to repeat himself. He said to my hon. Friend the Member for Coventry, South that he had a marginal seat, which is true, that he was a gardener, which I dare say is true, and that he would have plenty of time to enjoy gardening after the next election.

I have looked up the right hon. Gentleman's speeches. This is the fifth time in six years that the right hon. Gentleman has made that speech. Of the four Members to whom he has made it before, all of them are in the House, three of them are in the Government, one is a Minister of Cabinet rank. Perhaps, therefore, the right hon. Gentleman had better get a new script for he will have many years in which to make this speech. As for my hon. Friend the Member for Coventry, South, he can be sure that, on the contrary, it is not a kiss of death, but virtually a passport to the Front Bench.

This is the end of the debate on the Queen's Speech. We have had a series of good, even if inevitably, perhaps, rather isolated debates. What there has been little comment about is something that has been recognised universally in Press comment throughout the country. That is that the Quean's Speech represents a massive programme—[HON. MEMBERS: "Oh."] On all the great issues—the Common Market, London local government, or the whole attitude towards change and redundancy in our national life—the Opposition are a fuddy, reactionary party. If they do not know it, the people will have to tell them so once more.

Question put, That those words be there added:—

The House divided: Ayes 227, Noes 320.

Division No. 1.]	AYES	[9.58 p.m.
Abse, Leo	Hart, Mrs. Judith	Paget, R. T.
Ainsley, William	Hayman, F. H.	Pannell, Charles (Leeds, W.)
Albu, Austen	Healey, Denis	Parker, John
Allaun, Frank (Salford, E.)	Henderson, Rt.Hn. Arthur(RwlyRegis)	Parkin, B. T.
Awbery, Stan	Herbison, Miss Margaret	Paton, John
Bacon, Miss Alice	Hewitson, Capt. M.	Pavitt, Laurence
Baxter, William (Stirlingshire, W.)	Hill, J. (Midlothian)	Pearson, Arthur (Pontypridd)
Beaney, Alan	Hilton, A. V.	Peart, Frederick
Bellenger, Rt. Hon. F. J.	Holman, Percy	Pentland, Norman
Bence, Cyril	Holt, Arthur	Plummer, Sir Leslie
Bennett, J. (Glasgow, Bridgeton)	Hoosen, H. E.	Popplewell, Ernest
Benson, Sir George	Houghton, Douglas	Price, J. T. (Westhoughton)
Blackburn, F.	Howell, Charles A. (Perry Barr)	Probert, Arthur
Blyton, William	Howell, Denis (Small Heath)	Proctor, W. T.
Boardman, H.	Hoy, James H.	Pursey, Cmdr. Harry
Bottomley, Rt. Hon. A. G.	Hughes, Cledwyn (Anglesey)	Rankin, John
Bowden, Rt.Hn. H.W. (Leics. S.W.)	Hughes, Emrys (S. Ayrshire)	Redhead, E. C.
Bowen, Roderic (Cardigan)	Hughes, Hector (Aberdeen, N.)	Reynolds, G. W.
Bowles, Frank	Hunter, A E.	Rhodes, H.
Boyden, James	Hynd, H, (Accrington)	Roberts, Albert (Normanton)
Braddock, Mrs. E. M.	Irvine, A. J. (Edge Hill)	Roberts, Goronwy (Caernarvon)
Bradley, Tom	Irving, Sydney (Dartford)	Robertson, John (Paisley)
		Robinson, Kenneth (St. Pancras, N.)
Bray, Dr. Jeremy	Janner, Sir Barnett	Rodgers, W. T. (Stockton)
Brockway, A. Fenner	Jay, Rt. Hon. Douglas	Ross, William
Brown, Rt. Hon. George (Belper)	Jeger, George	Royle, Charles (Salford, West)
Butler, Herbert (Hackney, C.)	Jenkins, Roy (Stechford)	Shinwell, Rt. Hon. E.
Butler, Mrs. Joyce (Wood Green)	Johnson, Carol (Lewisham, S.)	Silverman, Julius (Aston)
Callaghan James	Jones, Elwyn (West Ham, S.)	Silverman, Sydney (Nelson)
Chapman, Donald	Jones, J. Idwal (Wrexham)	Skeffington, Arthur
Collick, Percy	Jones, T. W. (Merioneth)	Slater, Mrs. Harriet (Stoke, N.)
Corbet Mrs. Freda	Kelley, Richard	Slater, Joseph (Sedgefield)
Craddock, George (Bradford, s.)	Kenyon, Clifford	Small, William
Cronin, John	Key, Rt. Hon. C. W.	Snow, Julian
Crossman, R. H. S.	King, Dr. Horace	Sorensen, R. W.
Cullen, Mrs. Alice	Lawson, George	Soskice, Rt. Hon. Sir Frank
Dalyell, Tam	Ledger, Ron	Spriggs, Leslie
Davies, C. Elfed (Rhondda, E.)	Lee, Frederick (Newton)	Steele, Thomas
Davies, Harold (Leek)	Lee, Miss Jennie (Cannock)	Stewart, Michael (Fulham)
Davies, Ifor (Gower)	Lever, Harold (Cheetham)	Stonehouse, John
Davies, S. O. (Merthyr)	Lever, L. M. (Ardwick)	Stones, William
Deer, George	Lipton, Marcus	Strachey, Rt. Hon. John
Delargy, Hugh	Loughlin, Charles	Strauss, Rt. Hn. C. R. (Vauxhall)
Dempsey, James	Lubbock, Eric	Stross, Dr.Barnett(Stoke-on-Trent,C.)
Diamond, John	Mabon, Dr. J. Dickson	Swain, Thomas
Dodds, Norman	McCann, John	Swingler, Stephen
Dugdale, Rt. Hon. John	MacDermot, Niall	Taverne, D.
Ede, Rt. Hon. C.	McInnes, James	Taylor, Bernard (Mansfield)
Edelman, Maurice	McKay, John (Wallsend)	Thomas, Iorwerth (Rhondda, W.)
Edwards, Rt. Hon. Ness (Caerphilly)	Mackie, John (Enfield, East)	Thomson, G. M. (Dundee, E.)
Edwards, Robert (Bilston)	McLeavy, Frank	Thornton, Ernest
Edwards, Walter (Stepney)	MacMillan, Malcolm (Western Isles)	Thorpe, Jeremy
Evans, Albert	Macpherson, Malcolm (Stirling)	Timmons, John
Fernyhough E	Mahon, Simon	Tomney, Frank
Finch, Harold	Mallalieu, J.P.W. (Huddersfield,E.)	Wade, Donald
Fitch, Alan	Manuel, Archie	Wainwright, Edwin
		Warbey, William
Fletcher, Eric	Mapp, Charles	Watkins, Tudor
Foot, Dingle (Ipswich)	Marsh, Richard	Weitzman, David
Foot, Michael (Ebbw Vale)	Mason, Roy	Wells, William (Walsall, N.)
Forman, J. C.	Mellish, R. J.	White, Mrs. Eirene
Fraser, Thomas (Hamilton)	Mendelson, J. J.	Whitlock, William
Gaitskell, Rt. Hon. Hugh	Millan, Bruce	Wigg, George
Galpern, Sir Myer	Milne, Edward	Wilkins, W. A.
George,LadyMeganLloyd(Crmrthn)	Mitchison, G. R.	Williams, D. J. (Neath)
Ginsburg, David	Monslow, Walter	Williams, LI. (Abertillery)
Gooch, E. G.	Moody, A. s.	Williams, W. R. (Openshaw)
Gordon Walker, Rt. Hon. P. C.	Morris, John	Williams, W. T. (Warrington)
Gourlay, Harry	Moyle, Arthur	Willis, E. G. (Edinburgh, E.)
Greenwood, Anthony	Mulley, Frederlck	Winterbottom, R. E.
Grey, Charles	Neal, Harold	Woodburn, Rt. Hon. A.
Griffiths, David (Rother Valley)	Noel-Baker, Francis (Swindon)	Woof, Robert
Griffiths, Rt. Hon. James (Llanelly)	Noel-Baker, Rt.Hn.Philip(Derby,S.)	Yates, Victor (Ladywood)
Grimond, Rt. Hon. J.	Oliver, G. H.	Zilliacus, K.
Gunter, Ray	Oram, A. E.
Hale, Leslie (Oldham, w.)	Oswald, Thomas	TELLERS FOR THE AYES:
Hannan, William	Owen, Will	Mr. Rogers and Mr. Short.
Harper, Joseph	Padley, W. E.
NOES
Agnew, Sir Peter	Duthle, Sir William	Leavey, J. A.
Aitken, W. T.	Eden, John	Leburn, Gilmour
Allan, Robert (Paddington,S.)	Elliot, Capt. Walter (Carshalton)	Legge-Bourke, Sir Harry
Allason, James	Elliott,R.W.(Nwcastle-upon-Tyne,N.)	Lewis, Kenneth (Rutland)
Amery, Rt. Hon. Julian	Emery, Peter	Lilley, F. J. P.
Ashton, Sir Hubert	Emmet, Hon. Mrs. Evelyn	Lindsay, Sir Martin
Atkins, Humphrey	Errington, Sir Eric	Linstead, Sir Hugh
Balniel, Lord	Erroll, Rt. Hon. F. J.	Litchfield, Capt. John
Barber, Anthony	Farey-Jones, F. W.	Lloyd,Rt.Hn.Geo ffrey(Sut'nC'dfield)
Barlow, Sir John	Fell, Anthony	Lloyd, Rt. Hon. Selwyn (Wirral)
Barter, John	Fisher, Nigel	Longbottom, Charles
Batsford, Brian	Fletcher-Cooke, Charles	Loveys, Walter H.
Baxter, Sir Beverley (Southgate)	Forrest, George	Lucas, Sir Jocelyn
Beamish, Col. Sir Tufton	Foster, John	Lucas-Tooth, Sir Hugh
Bell, Ronald	Fraser,Rt.Hon.Hugh(Stafford&Stone)	MacArthur, Ian
Bennett, F. M. (Torquay)	Fraser, Ian (Plymouth, Sutton)	McLaren, Martin
Bennett, Dr. Reginald (Gos & Fhm)	Freeth, Denzil	Maclay, Rt, Hon. John
Berkeley, Humphry	Galbraith, Hon. T. G. D.	Maclean SirFitzroy(Bute&N.Ayrs.)
Bevins, Rt. Hon. Reginald	Gammans, Lady	McLean, Neil (Inverness)
Bidgood, John C.	Gardner, Edward	Macleod Rt. Hn. Iain (Enfield, W)
Biffen, John	Gibson-Watt, David
Biggs-Davison, John	Gilmour, Sir John	MacLeod, John (Ross & Cromarty)
Bingham, R. M.	Glover, Sir Douglas	McMaster, Stanley R.
Birch, Rt. Hon. Nigel	Glyn, Dr. Alan (Clapham)	Macmillan, Rt.Hn. Harold (Bromley)
Bishop, F. P.	Goodhart, Philip	Macmillan, Maurice (Halifax)
Black, Sir Cyril	Goodhew, Victor	Macpherson,Rt.Hn.Niall( Dumfries)
Bossom, Clive	Gough, Frederick	Maddan, Martin
Bourne-Arton, A.	Gower, Raymond	Maginnis, John E.
Box, Donald	Grant-Ferris, Wg. Cdr. R.	Maitland, Sir John
Boyd-Carpenter, Rt. Hon. John	Gresham Cooke, R.	Markham, Major Sir Frank
Boyle, Rt. Hon. Sir Edward	Grosvenor, Lt.-Col. R. G.	Marlowe, Anthony
Braine, Bernard	Gurden, Harold	Marples, Rt. Hon. Ernest
Brewis, John	Hall, John (Wycombe)	Marshall, Douglas
Bromley-Davenport,Lt. -Col. Sir Walter	Hamilton, Michael (Wellingborough)	Marten, Neil
Brooke, Rt. Hon. Henry	Hare, Rt. Hon. John	Mathew, Hobert (Honiton)
Brooman-White, R.	Harris, Frederic (Croydon, N.W.)	Matthews, Gordon (Meriden)
Brown, Alan (Tottenham)	Harris, Reader (Heston)	Maudling. Rt. Hon. Reginald
Browne, Percy (Torrington)	Harvey, Sir Arthur Vere (Macclesf'd)	Mawby, Ray
Bryan, Paul	Harvey, John (Walthamstow, E.)	Maxwell-Hyslop, R. J.
Buck, Antony	Harvie Anderson, Miss	Maydon, Lt.-Cmdr. S. L. C.
Bullard, Denys	Hastings, Stephen	Mills, Stratton
Bullus, Wing Commander Eric	Heald, Rt. Hon. Sir Lionel	Miscampbell, Norman
Burden, F. A.	Heath, Rt. Hon. Edward	Montgomery, Fergus
Butcher, Sir Herbert	Hendry, Forbes	Moore, Sir Thomas (Ayr)
Butler, Rt.Hn.R.A.(Saffron Walden)	Hicks Beach, Maj. W.	More, Jasper (Ludlow)
Campbell, Sir David (Belfast, S.)	Hiley, Joseph	Morgan, William
Carr, Compton (Barons Court)	Hill, J. E. B. (S. Norfolk)	Morrison, John
Carr, Robert (Mitcham)	Hirst, Geoffrey	Mott-Radclyffe, Sir Charles
Cary, Sir Robert	Hobson, Sir John	Nabarro, Gerald
Channon, H. P. G.	Hocking, Philip N.	Neave, Airey
Chataway, Christopher	Holland, Philip	Nicholls, Sir Harmar
Clark, Henry (Antrim, N.)	Hope, Rt. Hon. Lord John	Nicholson, Sir Godfrey
Clark, William (Nottingham, S.)	Hopkins, Alan	Noble, Rt. Hon. Michael
Clarke, Brig. Terence (Portsmth, W.)	Hornby, R. P.	Nugent, Rt. Hon. Sir Richard
Cleaver, Leonard	Howard, Hon. G. R. (St. Ives)	Oakshott, Sir Hendrle
Cooke, Robert	Howard, John (Southampton, Test)	Orr, Capt, L. P. S.
Cooper, A. E.	Hughes Hallett, Vice-Admiral John	Orr-Ewing, C. Ian
Cooper,Key, Sir Neill	Hughes-Young, Michael	Osborn, John (Hallam)
Cordeaux, Lt.-Col. J. K.	Hulbert, Sir Norman	Osborne, Sir Cyril (Louth)
Cordle, John	Hurd, Sir Anthony	Page, John (Harrow, West)
Corfield, F. V.	Hutchison, Michael Clark	Page, Graham (Crosby)
Costain, A. P.	Iremonger, T. L.	Pannell, Norman (Kirkdale)
Coulson, Michael	Jackson, John	Partridge, E.
Courtney, Cdr. Anthony		Pearson, Frank (Clitheroe)
Craddock, Sir Beresford	James, David	Peel, John
Crawley, Aidan	Jenkins, Robert (Dulwich)	Percival, Ian
Critchley, Julian	Jennings, J. C.	Peyton, John
Crosthwaite-Eyre, Col. Sir Oliver	Johnson, Dr. Donald (Carlisle)	Pickthorn, Sir Kenneth
Crowder, F. P.	Johnson, Eric (Blackley)	Fike, Miss Mervyn
Cunningham, Knox	Jones, Rt. Hn. Aubrey (Hall Green)	Pilkington, Sir Richard
Curran, Charles	Joseph, Rt. Hon. Sir Keith	Pitt, Dame Edith
Currie, G. B. H.	Kaberry, Sir Donald	Powell, Rt. Hon. J. Enoch
Dalkeith, Earl of	Kerans, Cdr. J. S.	Price, David (Eastleigh)
Dance, James	Kerby, Capt. Henry	Price, H. A. (Lewisham, W.)
d'Avigdor-Goldsmid, Sir Henry	Kerr, Sir Hamilton	Profumo, Rt. Hon. John
Deedes, Rt. Hon. W. F.	Kershaw, Anthony	Proudfoot, Wilfred
de Ferranti, Basil	Kimball, Marcus	Pym, Francis
Digby, Simon Wingfield	Kirk, Peter	Quennell, Miss J. M.
Donaldson, Cmdr. C. E. M.	Kitson, Timothy	Ramsden, James
Doughty, Charles	Lagden, Godfrey	Rawlinson, Sir Peter
Drayson, G. B.	Lambton, Viscount	Redmayne, Rt. Hon. Martin
du Cann, Edward	Lancaster, Col. C. G.	Rees, Hugh
Duncan, Sir James	Langford-Holt, Sir John	Rees-Davies, W. R.

Renton, David	Stodart, J. A.	Vosper, Rt. Hon. Dennis
Ridley, Hon. Nicholas	Stoddart-Scott, Col. Sir Malcolm	Wakefield, Sir Wavell
Ridsdale, Julian	Storey, Sir Samuel	Walder, David
Rippon, Rt. Hon. Geoffrey	Studholme, Sir Henry	Walker, Peter
Roberts, Sir Petar (Heeley)	Summers, Sir Spencer	Walker-Smith, Rt. Hon. Sir Derek
Robson Brown, Sir William	Talbot, John E.	Watkinson, Rt. Hon. Harold
Rodgers, John (Sevenoaks)	Tapsell, Peter	Webster, David
Roots, William	Taylor, Sir Charles (Eastbourne)	Wells, John (Maidstone)
Ropner, Col. Sir Leonard	Taylor, Edwin (Bolton, E.)	Whitelaw, William
Royle, Anthony (Richmond, Surrey)	Taylor, Frank (M'ch'st'r, Moss Side)	Williams, Dudley (Exeter)
Russell, Ronald	Taylor, W. J. (Bradford, N.)	Williams, Paul (Sunderland, S.)
St. Clair, M.	Teeling, Sir William	Wills, Sir Gerald (Bridgwater)
Sandys, Rt. Hon. Duncan	Temple, John M.	Wilson, Geoffrey (Truro)
Scott-Hopkins, James	Thatcher, Mrs. Margaret	Wise, A. R.
Seymour, Leslie	Thomas, Peter (Conway)	Wolrige Gordon, Patrick
Sharples, Richard	Thompson, Kenneth (Walton)	Wood, Rt. Hon. Richard
Shepherd, William	Thompson, Richard (Croydon, S.)	Woodhouse, C. M.
Smith, Dudley (Br'ntf'd & Chiswick)	Thornton-Kernsley, Sir Colin	Woodnutt, Mark
Smithers, Peter	Tiley, Arthur (Bradford, W.)	Woollam, John
Smyth, Brig. Rt. Hon. Sir John	Tilney, John (Wavertree)	Worsley, Marcus
Soames, Rt. Hon. Christopher	Touche, Rt. Hon. Sir Gordon	Yates, William (The Wrekin)
Spearman, Sir Alexander	Turner, Colin
Spelr, Rupert	Turton, Rt. Hon. R. H.	TELLERS FOR THE NOES:
Stanley, Hon. Richard	Tweedsmuir, Lady	Mr. Chichester-Clark and
Stevens, Geoffrey	van Straubenzee, W. R,	Mr. Finlay.
Steward, Harold (Stockport, S.)	Vane, W. M. F.

Main Question put and agreed to.

Resolved, That an humble Address be presented to Her Majesty, as follows: Most Gracious Sovereign, We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.

c738
1. SUPPLY 14 words
c738
2. WAYS AND MEANS 21 words