Commons Sitting of 4 April 1963

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  UNIVERSITIES OF DURHAM AND NEWCASTLE UPON TYNE BILL
  Read the Third time and passed.
PETITION

  British Museum
  The Secretary of State for the Home Department (Mr. Henry Brooke): I have been asked by the Trustees of the British Museum to present a Petition, which they have to submit to this House each year, explaining their financial position and praying for aid. The Petition recites the funded income of the Trustees, and points out that the establishment is necessarily attended with expense far beyond the annual produce of the fund and the Trust cannot with benefit to the public be carried on without the aid of Parliament. It concludes with this Prayer:
  Your Petitioners therefore humbly pray your Honourable House to grant them such further support towards enabling them to carry on the execution of the Trust reposed in them by Parliament, for the general benefit of learning and useful knowledge, as to your House shall seem meet.—[Queen's Recommendation signified].
  Petition referred to the Committee of Supply.

ORAL ANSWERS TO QUESTIONS
  HOME DEPARTMENT

    Victims of Crimes of Violence (Compensation)
    Mr. Dribergasked the Secretary of State for the Home Department if he will now make a statement on the introduction of legislation to provide for compensation, by the State and by those convicted of crimes of violence, to the victims of the crimes.
    Mr. C. Johnsonasked the Secretary of State for the Home Department when his Department first embarked upon the study of a possible scheme of compensation for the victims of crimes of violence; and when he will announce Her Majesty's Government's intention to introduce such a scheme.
    The Secretary of State for the Home Department (Mr. Henry Brooke): A Working Party of officials of the Departments concerned was appointed in Februrary, 1959, to examine the practical problems involved. Its report was published in June, 1961, with a view to eliciting further opinions. The Government are now studying this important question in the light, among other things, of the various reports by other bodies which have been considering the matter, the latest of which was published last November, and also in the light of further proposals made in the course of a recent debate in another place. I hope to be able to make a further statement before long.
    Mr. Driberg: Is it not the case that most of the public opinion which has been elicited broadly supports this kind of proposal? Could the right hon. Gentleman say a word about the Private Member's Bill introduced by my hon. Friend the Member for East Ham, North (Mr. Prentice)? Are the Government prepared to give some assistance to that Bill?
    Mr. Brooke: I am aware of that Bill. The hon. Member who introduced it will no doubt wish to take into account the terms of any statement that I may be in a position to make later on behalf of the Government. I certainly am aware

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    that, as the hon. Gentleman says, public opinion seems generally in favour of action on these lines. Nevertheless, it is rather embarrassing that the four authoritative bodies which presented reports on the subject all differed as to their recommendations. Therefore, it takes some time to work out a scheme which may be generally acceptable.
    Mr. C. Johnson: Would the right hon. Gentleman be good enough to answer the first part of my Question? Is it not a fact that more than seven years ago his Department was seeking statistical evidence from chief constables on this very matter? The subject has therefore been under consideration for a very long time. Moreover, in support of what my hon. Friend the Member for Barking (Mr. Driberg) has said, is it not a very real indication of the widespread public concern about this matter that within the last few weeks the two leading evening newspapers in this country both carried leading articles protesting against the Government's procrastination and seeking immediate action in this matter?
    Mr. Brooke: There is no question of procrastination. The Government have already made it clear that it would be impossible to legislate on this matter in this Session. The hon. Gentleman has referred to a period seven years ago. I was at that time Financal Secretary to the Treasury, so I could not say exactly what was happening then, but in my reply I sought to answer the first part of the hon. Gentleman's Question when I said that a working party was appointed in 1959.

    Prisoners (Wages)
    Mr. Dribergasked the Secretary of State for the Home Department what further progress has now been made in enabling prisoners to earn adequate wages for work done while they are serving their sentences, in order that they may help to compensate the victims of their crimes and be able to leave prison with fully stamped National Insurance cards.
    Mr. Brooke: I have nothing further to add to the full Answer which I gave to the hon. Member on 7th February.
    Mr. Driberg: Was not that only an interim Answer? Can the right hon.
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    Gentleman say when some real progress is likely to be made which he can report to the House? In particular, now that the Prison Commissioners no longer exist, will he try to prevent under-cutting of the kind practised by the Prison Commissioners, as reported in today's Daily Mail, in tendering at less than one-eighth of the price required by the Birmingham Blind Workshop for a War Office job?
    Mr. Brooke: Perhaps the hon. Gentleman would table a Question on the latter point. As to my previous reply being an interim one, I have more than once explained to the House that I am very anxious indeed that a greater number of prisoners should be able to work a full working week, but the bottlenecks are at present lack of workshop space and shortage of prison officers. We are doing everything we can to make good both of these deficiencies.
    Sir J. Langford-Holt: Would not my right hon. Friend agree that this underlines the point raised in the first Question asked today—that it is highly desirable that, in the first place, this compensation should be paid by the guilty party and only in default of their ability to collect should the State itself become liable?
    Mr. Brooke: That is one of the matters to which consideration has to be given in relation to the subject of the first Question.
    Miss Bacon: Apart from the payment of adequate wages, would the right hon. Gentleman make a statement about the main purpose of the Question concerning fully stamped National Insurance cards, the lack of which militates against a prisoner getting work when he leaves prison?
    Mr. Brooke: I am not sure about the latter point, because I do not think that it should be concealed from any employer that a man has come out of prison. For the purposes of insurance, the National Insurance Scheme presupposes the existence of wages and a contract of service. Neither of those exist, at any rate at present, in prisons, so it would be anomalous to stamp prisoners' cards.

    Experiments on Living Animals
    Mr. Burdenasked the Secretary of State for the Home Department whether

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    any monkeys, dogs, cats, horses, donkeys or mules have been used in trying to induce lung cancer through the inhalation of tobacco smoke.
    The Joint Under Secretary of State, Home Department (Mr. C. M. Woodhouse): No, Sir.
    Mr. Burden: Would my hon. Friend not agree that had he made it perfectly clear that no other animals, apart from those which had been indicated as being used on 7th February, were, in fact, used, this Question would have been unnecessary?
    Mr. Woodhouse: I agree that that was so and I am sorry if my Answer on that occasion unwittingly misled my hon. Friend. I referred then to the animals being so used, including those which I listed in my Answer on that occasion. I did so because I was not at that time quite certain that no other animals, besides those I listed, had been used. I am now certain.

    Prisoners (Reconviction)
    Miss Quennellasked the Secretary of State for the Home Department what proportion of those prisoners who have served sentences of one year or more subsequently suffer a further conviction.
    Mr. Woodhouse: The information available about reconvictions of Star prisoners is given in a table on page 174 of the Prison Commissioners' Annual Report for 1961. I regret that similar information for other prisoners is not available.
    Miss Quennell: But would not my hon. Friend agree that in the study of criminology and its treatment the compilation of statistics of this nature would be very helpful to his Department?
    Mr. Woodhouse: I agree that statistics can be very useful, but one must place some limit on the quantity of statistics collected. Those which the Prison Commissioners published in the Report to which I have referred include the information which my hon. Friend seeks, though not in the detail for which her Question asks.

    Prisoners (After-care)
    Miss Quennellasked the Secretary of State for the Home Department if
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    he will now consider the need to establish a service for the after-care of prisoners, especially those released after serving long sentences, to help them in the first few months in resuming normal civilian life.
    Mr. Brooke: The after-care of discharged prisoners is at present the responsibility of the Discharged Prisoners' Aid Societies or the Central After-Care Association, according to the class of prisoner, with the assistance of a Government grant. I am looking forward to an early report from my Advisory Council on the Treatment of Offenders on the whole organisation of after-care, because I want to consider this very important subject with a fresh mind in the light of whatever that report may say.
    Miss Quennell: I express my appreciation of the work the voluntary societies mentioned have done in this connection, and I am delighted to hear that my right hon. Friend hopes to receive this report fairly soon. Is there anything he can do to expedite his Advisory Council in its deliberations and in the preparation of its report?
    Mr. Brooke: I do not think that the Advisory Council needs any prodding. It is as concerned about this subject as I am—and, I believe, as the House is—and I hope that we shall have a report of great value, because I attach exceptional importance to this subject.
    Sir G. Nicholson: Is my right hon. Friend aware that there is a slight gap which could easily be filled in that the representatives of the National Assistance Board do not usually see a discharged prisoner until the day of his release? If arrangements could be made so that these representatives could see prisoners 10 days or a fortnight before release, it might save a good deal of trouble.
    Mr. Brooke: Yes, Sir. That point has been brought to my attention and I have certain other points in mind, but I hope that my hon. Friend will excuse me if I do not commit myself on any of them until I see the report.

    Street Offences Act
    Mr. Fitchasked the Secretary of State for the Home Department how many women have been sent to prison

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    under the Street Offences Act, since the Act came into operation; and if he will make a statement on the working of the Act.
    Mr. Brooke: The number of women sentenced to imprisonment for offences under the Street Offences Act from 16th August, 1959, the date on which the Act came into operation, to 30th September, 1962, is 1,185. In addition, 1,129 women were committed to prison in default of payment of fines.
    The main purpose of the Act was to deal with loitering or soliciting by prostitutes in public places. It has been successful.
    Mr. Fitch: Would not the Home Secretary agree that since the Act came into operation there has been a considerable increase in the growth of undesirable clubs—places of organised vice and crime—and would he not agree that while the Act may partially have got rid of unorganised vice in the streets, it has encouraged organised vice in the clubs? What does he propose to do about it?
    Mr. Brooke: I know that the hon. Member was opposed to the Measure when it was going through the House. I must say, however, that it appears to me that the Act has accomplished its main purpose very effectively. There are, of course, other evils and vices, not necessarily arising from this legislation. I certainly am not blind to them, but I do not think that at the moment a case for further legislation is made out.

    Male Prisoners (Working Hours)
    Mr. Fitchasked the Secretary of State for the Home Department what is the average number of hours worked per week by male prisoners in Her Majesty's local prisons.
    Mr. Woodhouse: At a recent date, of 10,000 men working in workshops in local prisons, about 3,000 worked for 17 hours or less, 4,400 between 18 and 25 hours, 1,500 between 25 and 30 hours, and 1,100 for more than 30 hours.
    Mr. Fitch: Would not the hon. Gentleman agree that part of the reformative training of prisoners should be a hard day's work? Will he tell us a little more about the statement his right hon. Friend the Home Secretary made in reply to an
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    earlier Question asked by my hon. Friend the Member for Barking (Mr. Driberg) about the various schemes which are now being considered for increasing the number of hours that prisoners work? Surely the hon. Gentleman would agree that prisoners should work at least as long in prison as they would be expected to work in industry outside?
    Mr. Woodhouse: I certainly agree with the first point in the hon. Member's supplementary question. On the second point, I hesitate to add to what my right hon. Friend has already said. I recognise that the low figure of hours worked in the case I gave of 3,000 prisoners is unsatisfactory. It occurs in the large local prisons where the shortage of workshop staff and other demands on the staff, to which my right hon. Friend referred, are acute. But we are thinking of ways in which this can be remedied.

    Probation Service, London
    Mr. Compton Carrasked the Secretary of State for the Home Department what considerations he is giving to the future of the probation service in London.
    Mr. Brooke: I hope shortly to be in a position to circulate proposals to those concerned, for their comments. Meanwhile I wish to express my gratitude to Judge Aarvold for accepting my invitation to become chairman of the London Probation Committee, which advises me on the administration of the London Probation Service under present arrangements.
    Mr. Carr: Is my right hon. Friend aware of the very great pleasure his announcement will cause among the members of the probation service in London?
    Mr. Brooke: I am obliged to my hon. Friend.
    Mr. C. Royle: Can the hon. Gentleman say if there has been any improvement in recruitment following the improved salaries for probation officers?
    Mr. Brooke: Yes, Sir. As the hon. Member probably knows, I am extremely glad that it was possible to reach that settlement on probation officers' pay. We are, of course, still short of probation officers, so if the hon. Member can help me in increasing recruitment I should be grateful to him.

    Legal Aid (Criminal Cases)
    Sir E. Erringtonasked the Secretary of State for the Home Department whether, in view of the doubts that exist, he will draw the attention of all concerned to the rules and regulations relating to the conditions under which legal aid in criminal cases can be given by magistrates' courts; and if he will make a statement.
    Mr. Brooke: I am not aware of any general difficulties, but I would gladly consider any particular difficulty that my hon. Friend may have in mind.
    Sir E. Errington: In view of the considerable extensions under the new Regulations which came into force on 1st April, and the potentially considerable cost this involves, may I ask my right hon. Friend whether he will draw the attention of all concerned to Section 18 (3) of the 1949 Act, which requires a written statement, with appropriate punishment for false statements? I do not think that the attention of magistrates has been called to that.
    Mr. Brooke: The courts have been informed of the changes, which took effect on 1st April, in the conditions under which legal aid may be granted. I shall consider the points made by my hon. Friend, but I hope that his public-spirited action in calling attention to this in the House may have the requisite effect.

    Jury Service (Departmental Committee)
    Sir B. Jannerasked the Secretary of State for the Home Department whether he will now give the names of the departmental committee inquiring into the law and practice relating to jury service.
    Mr. Brooke: I would refer the hon. Member to the answer which I gave to him on this subject a week ago.
    Sir B. Janner: When does the Home Secretary expect to be able to set up this committee? Is he aware that in reply to a Question that I put to the Prime Minister I received an Answer that in some 740 cases of committees being set up, the average length of time that it took for each was 19 months? In view of the feeling about the absurd position of the jury system, is the right hon. Gen-
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    tleman prepared to do something straight away, to see if it can be remedied, as it can be if he puts people on the register in the regular list?
    Mr. Brooke: Because some committees take a long time, I am particularly anxious to choose and appoint an exceptionally good committee on this occasion. I have appointed a first-class chairman and I hope very shortly to be able to send out invitations in respect of the other members.

    Prisoners, Durham (Suicide Attempts)
    Mr. Greyasked the Secretary of State for the Home Department how many attempts have been made to commit suicide in Durham prison during the past three years.
    Mr. Brooke: Among the 12,000 prisoners who have passed through Durham prison since 1st January, 1960, there have been 32 apparent attempts to commit suicide in the prison, of which two were successful.
    Mr. Grey: Will the Home Secretary tell us how these figures compare with those for the rest of the country? Will he say that these incidents will be the subject of the inquiry now taking place, how long it will take before the inquiry has completed its findings, and whether he will publish its report?
    Mr. Brooke: I have asked the visiting committee to conduct the inquiry and I do not think that I should now interfere with the way in which it is carrying it out. I hope that it will report as quickly as possible. I can say to the hon. Member that the proportion I mentioned is not excessive, compared with prisons elsewhere.
    Mr. Grey: Will the report be published?
    Mr. Brooke: I should like to see the report first.

    Criminal Justice Administration Act, 1914 (Section 14)
    Mr. van Straubenzeeasked the Secretary of State for the Home Department whether he will introduce legislation to extend the jurisdiction of magistrates' courts under Section 14 of the Criminal Justice Administration Act 1914, by raising from £20 to £100 the amount

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    the court can order in payment of the amount of the damage caused in addition to any other penalty.
    Mr. Woodhouse: My right hon. Friend has noted this point for consideration when a suitable opportunity for amending legislation occurs.
    Mr. van Straubenzee: I am obliged to my hon. Friend for that answer. May I urge on him that this requires more than consideration? Will he bear in mind that in modem conditions the imposition of a fine of £20 for offences of this nature is far too low, and will he particularly bear in mind the case arising at Hurst, in my constituency, which I recently placed before him?
    Mr. Woodhouse: Yes, Sir. We are aware that there are anomalies in the present provisions, and I shall certainly give consideration to the case to which my hon. Friend has drawn attention.

    Dangerous Drugs
    Mr. N. Pannellasked the Secretary of State for the Home Department how many convictions there have been for being in possession of dangerous drugs since 1st July, 1962; how many of those convicted were Commonwealth immigrants; and how many such immigrants could not be recommended for deportation because they had been resident in the United Kingdom for five years or more.
    Mr. Brooke: The number of convictions is 416. Of those convicted, 272 originated from other parts of the Commonwealth, and of these I estimate that nearly half had been resident in the United Kingdom for five years or more.

    Immoral Earnings
    Mr. N. Pannellasked the Secretary of State for the Home Department how many convictions there have been for living on immoral earnings for the Metropolitan Police District since 1st July, 1962; how many of those convicted were immigrants from the Commonwealth or the Republic of Ireland, respectively; and how many such immigrants were immune from deportation through having been resident in the United Kingdom for five years or more.
    Mr. Brooke: In the Metropolitan Police District between 1st July, 1962,
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    and 16th March, 1963, 123 persons were convicted of living on immoral earnings, 52 came from Commonwealth countries and 15 from the Irish Republic. Of these 67, 51 were not liable under the Commonwealth Immigrants Act for deportation because they had been resident in the United Kingdom for at least five years.
    Mr. Pannell: Do not the replies to these two Questions indicate quite clearly not only that Commonwealth citizens are particularly prone to these serious offences but that the majority of them escape the penalty of deportation on the ground of residence? Does not my right hon. Friend consider that there has been sufficient experience of the operation of the Commonwealth Immigrants Act to indicate this serious defect, and will he consider amending legislation to correct the position?
    Mr. Brooke: I am not sure from what source my hon. Friend draws his inference that Commonwealth citizens are particularly prone to these offences because, as I have said, out of 123 persons convicted in the Metropolitan Police District for living on immoral earnings, 52 came from the Commonwealth. I cannot hold out hope to the hon. Member that at any rate in present circumstances we should amend the Commonwealth Immigrants Act in the direction he desires.
    Mr. Fletcher: Would not the right hon. Gentleman agree that when Parliament discussed the Commonwealth Immigrants Bill it was felt by hon. Members on both sides of the House that it would be quite wrong to give the courts power to deport anyone who had been resident here for more than five years?
    Mr. Brooke: I did not take part in those debates, as the hon. Gentleman did. I know that there is a feeling shared by numbers of people besides my hon. Friend that in the case of certain offences deportation powers ought to exist, even though the person has been in this country for a long time. However, my hon. Friend knows well, I think, the difficulties that there would be in the way of amending the law in that direction.
    Mr. Pannell: In regard to the remarks of my right hon. Friend that Commonwealth immigrants are not particularly prone to these offences, the numbers given

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    should include 15 Irish immigrants, which makes a total of 67 Commonwealth immigrants coming under the Act. That is more than half the total and is quite disproportionate. With regard to those being in possession of dangerous drugs, 272 out of 416 is more than 50 per cent. Surely this indicates action, and will my right hon. Friend again consider action in this regard?
    Mr. Brooke: It is a very serious matter that there are these cases of convictions both for being in possession of dangerous drugs and living on immoral earnings, but I think that Parliament would have to consider the matter very carefully before legislating to the effect that somebody who had been in the United Kingdom for five years should, nevertheless, be liable to deportation.

    Hawkers Act, 1888
    Commander Keransasked the Secretary of State for the Home Department in how many counties in England and Wales the Hawkers Act, 1888, operates at the present day; and how many prosecutions have taken place in the last five years to the latest convenient date.
    Mr. Woodhouse: The Act operates throughout England and Wales. For the years 1957 to 1961 inclusive the number of prosecutions was nil, 7, 2, 1 and 2, respectively.
    Commander Kerans: Will not my hon. Friend agree that this Act, which is 75 years old—in the days of the horse and cart—is a little archaic to say the least, and that the application of this law hinders certain mobile traders in their business? Will he review the working of the Act in this modern age?
    Mr. Woodhouse: In view of the extremely small number of cases that I have listed in my original reply, it does not seem as if the Act is working too badly.

    Wage Robberies
    Sir C. Osborneasked the Secretary of State for the Home Department if, in view of public concern with the increasing number of wage robberies and their greater violence, he will introduce legislation to impose flogging for such crimes; and if he will make a statement.
    Mr. Brooke: I continue to believe that the reintroduction of corporal punishment as a judicial penalty would not be a right or effective remedy for these or other crimes.
    Sir C. Osborne: Is my right hon. Friend aware that the majority of people in this country think otherwise—[HON. MEMBERS: "No."]—despite what the "softies" opposite think? Since it is impossible to make the thugs pay, why cannot we flog them?
    Mr. Brooke: I hope that my hon. Friend is not implying that I am a "softy", because that has not been alleged against me before. The maximum penalty for the crime of armed robbery or of robbery with violence is already life imprisonment, and if that is not a sufficient deterrent I doubt whether corporal punishment would be.

    Impact of Television on the Young (Committee)
    Mr. V. Yatesasked the Secretary of State for the Home Department what discussions he has had with the British Broadcasting Corporation and the Independent Television Authority concerning the inquiry into the impact of television on crime; what form the inquiry is taking; who have been appointed to take part; and what progress has been made.
    Mr. Brooke: I have consulted the British Broadcasting Corporation and the Independent Television Authority about the scope and organisation of the research which the Authority has generously agreed to finance into the impact of television on the young. Following on these consultations, I have decided to appoint a committee to plan and co-ordinate research in this field. I will circulate the terms of reference in the OFFICIAL REPORT. The Vice-Chancellor of Leicester University, Mr. T. A. F. Noble, has accepted my invitation to be chairman of the committee, and I am grateful to him for his readiness to undertake this important public service. I shall proceed as quickly as possible with the appointment of the other members.
    Mr. Yates: I thank the Home Secretary for that reply, but as he and his predecessor promised an inquiry a year ago, has there not been a rather regrettable delay? Will he give some sense of

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    urgency to this inquiry, especially as, in the last fortnight, a young boy has been convicted by the Edinburgh High Court of murdering his mother, and it was stated clearly in court that he had been watching television and acting again scenes on television? This is urgent. Can the right hon. Gentleman really speed up the inquiry? How long is it likely to last?
    Mr. Brooke: I attach immense importance to this inquiry, and I am very glad to have had the opportunity to make the announcement today. Certainly, I have never promised to set up an inquiry of this kind, and I did not know that my predecessor had. I am happy indeed, that it should now come to fruition, but I must say to the House that we shall not get reliable results by a quick inquiry into these matters. Serious research must be made. That is why I am glad to have the vice-chancellor of a university willing to take charge of the committee that will guide it.
    Following are the terms of reference:
    "To initiate and co-ordinate research into the part which television plays or could play, in relation to other influences, as a medium of communication and in fostering attitudes, with particular reference to the ways in which young people's moral concepts and attitudes develop and the processes of perception through which they are influenced by television and other media of communication; and to administer any funds made available to it for such research".

    Dartmoor (Assaults on Prison Officers)
    Commander Courtneyasked the Secretary of State for the Home Department what representations he has received from the Dartmoor branch of the Prison Officers' Association regarding the substitution of psychiatric treatment for birching in the case of recent attacks on prison officers; and what replies he has sent.
    Sir T. Mooreasked the Secretary of State for the Home Department what action he will take in response to the representations made by the Prison Officers' Association about his refusal to allow the prisoners who had attacked prison officers at Dartmoor to receive the sentence ordered by the visiting magistrates.
    Mr. Brooke: I have received no such representations.
    Commander Courtney: May I draw to my right hon. Friend's attention a very interesting letter in The Times from a former prison commissioner which dealt with the problems of command as opposed to those of administration in H.M. Prisons? Can my right hon. Friend say whether the governor of this prison was wholeheartedly in support of his action in this matter?
    Mr. Brooke: I read that letter with great interest. I do not propose to answer questions about whether my officers are or are not wholeheartedly in support of what I have decided. I have no doubt whatever about the rightness of my decision.
    Sir T. Moore: Is my right hon. Friend aware that many of us, including the prison officers, find it very difficult to understand his action on this occasion? Is it his policy to withhold from prison officers this last protection against the brutal thugs whom they are supposed to try to control? Psychiatry does not take every place in our life.
    Mr. Brooke: I think that there may be a misapprehension that psychiatric treatment is being used as an alternative to corporal punishment. My decision was that these two men should be the subject of psychiatric examination because there were certain facts known to me that seemed unquestionably to need further investigation. I think that I am right in saying that of the last 24 recommendations for corporal punishment in such cases, 15 have been confirmed. There is therefore no question of each of these recommendations not being considered strictly on its merits.
    Miss Bacon: Is the Home Secretary aware that some of us feel that his action on this occasion was his most courageous since he has been Home Secretary?
    Sir T. Moore: Fear the Greeks when they bring gifts.
    Sir H. Studholme: Although I agree that this is not nearly such a simple question as it may at first sight appear, may I ask whether my right hon. Friend would agree that the best way of dealing with these dangerous criminals is to let them know that if they attack prison officers they will be sent for a long time

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    to some place where they will be segregated under the most rigorous and strict discipline?
    Mr. Brooke: I think that prisoners who are in full command of their faculties do know that very serious consequences may ensue if they attack prison officers.
    Mr. K. Robinson: Despite the pressure from his hon. Friends, will the right hon. Gentleman continue to rely on responsible medical opinion in dealing with cases of prisoners who are psychiatrically ill?
    Mr. Brooke: I shall take into account all the evidence available to me, and I shall then reach my own decision without fear.
    Sir H. Studholmeasked the Secretary of State for the Home Department what reply he is sending to the petition he has received from wives of Dartmoor prison officers, asking that a stronger line of action be taken against prisoners found guilty of assault on prison officers; and if he will make a statement.
    Mr. Brooke: I will, with permission, circulate in the OFFICIAL REPORT a copy of the reply which has been sent to the petition on my instructions.
    Sir H. Studholme: In view of the interest taken in the matter by a number of constituents, I beg to give notice that I shall attempt to raise the question on the Adjournment.
    Following is the reply:
    Home Office, Whitehall, S.W.1.
    3rd April, 1963.
    DEAR MADAM,
    The Home Secretary has now given careful consideration to the petition on behalf of the wives of Dartmoor prison officers which was enclosed with your letter of 23rd March. He sympathises entirely with the feelings of the wives of prison officers who are exposed to the danger of assaults by prisoners, but he cannot accept the criticism of his actions which the petition implies. The facts are that out of 24 awards of corporal punishment made by boards of visitors and visiting committees since the beginning of 1960, 15 have been confirmed. It would not be right for the Home Secretary to give an undertaking, as the petition requests, that all future awards will be confirmed, since it is his duty to consider each case on its merits.
    Yours faithfully,
    Signed: A. H. TURNEY,
    Private Secretary.
    Mrs. D. Goodier.

    Juvenile Delinquency
    Mrs. Butlerasked the Secretary of State for the Home Department if he will launch a scheme for the prevention of juvenile delinquency, inviting the cooperation of parents, teachers, youth leaders, doctors, social workers and magistrates in a general campaign to tackle the problem.
    Mr. Brooke: There is no simple answer to this problem. We need much more information about the underlying causes of delinquency, and I am supporting research to this end. I welcome local and personal initiative of the kind suggested and am already in touch with areas and organisations in which it has been taken, and I am also considering what further initiatives might be taken centrally.
    Mrs. Butler: Does not the root of this problem lie in the failure of our educational provision and our whole social environment to encourage the idealism of young people, both girls and boys, and to provide worth-while outlets for their energies, particularly in the large towns? Should we not be urgently trying to find the answer to this in terms of national social policy on the lines suggested in my Question, which is a far bigger task than any purely personal or local initiative can undertake?
    Mr. Brooke: Without ascribing failure to anyone, I think that there is a great deal in what the hon. Lady says, but the subject is not as simple as she suggests. I believe that we have to be prepared to put in hand most careful research in order to obtain hard information on which we can proceed.
    Mr. P. Noel-Baker: Will the Home Secretary look again at the very important observations made on this problem by Sir John Wolfenden in his Report on physical education and recreation, and will he consult his noble Friend, Lord Hailsham, about implementing those recommendations?
    Mr. Brooke: I am ready to look at anything in this field. As I have said in public this is just about the most difficult and important task of a Home Secretary, and I shall welcome the assistance of anyone from either House of Parliament or elsewhere who can give me helpful advice and support in the campaign

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    I am seeking to wage against juvenile delinquency.

    Litter Act
    Mr. Leaveyasked the Secretary of State for the Home Department if he will instruct the Metropolitan Police to treat as an offence under the Litter Act the attaching of circulars to the outside of parked cars.
    Mr. Woodhouse: Prosecutions under the Act of 1958 may be undertaken by the local authority or the police, and my right hon. Friend has no power to instruct them what constitutes an offence.
    Mr. Leavey: I am obliged to my hon. Friend for that reply, but does he not recognise that it is an increasing practice to use this method for the distribution of circulars, and that is a palpable evasion of Parliament's intentions as embodied in the Litter Act, since all that happens is that the circulars are put on the bonnets or windscreen wipers of the cars and, a few minutes later, fall on the street? Could he not use his good offices to ensure that, especially in this respect, the Act is more vigorously enforced?
    Mr. Woodhouse: I think that it would be improper for my right hon. Friend to give directions to the prosecuting authorities. The question whether this particular practice would constitute an offence is one that could be settled only by the courts. I do not think that any case has yet been tested.
    Mr. Speirasked the Secretary of State for the Home Department how many prosecutions under the Litter Act took place in each of the last four years.
    Mr. Woodhouse: The numbers of persons prosecuted under the Act were 2,450 in 1959, 2,599 in 1960 and 2,395 in 1961. I regret that the figures for 1962 are not yet available.
    Mr. Speir: While thanking my hon. Friend for that information, may I ask whether he is aware that a growing body of opinion feels that the provisions of the Act are not being sufficiently well observed? In view of the fact that the Act has now been in operation for five years and that we are approaching the holiday season, may I ask my hon. Friend whether he does not think that it would be reasonable for his right
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    hon. Friend to appeal to the police, the courts and the public to observe this Act more stringently?
    Mr. Woodhouse: It is principally for the local authorities to bring proceedings under the Act, and my right hon. Friend has not the power to give directions on this matter. If the law is thought to be inadequate, it would be a matter for my right hon. Friend the Minister of Housing and Local Government and I will convey the points made by my hon. Friend to him.
    Mr. Dodds: Will the hon. Gentleman bear in mind that many of the local authorities are at fault far providing fiddling little baskets on trunk roads where holiday-makers stop and also for the long time that elapses before the baskets are emptied? Is the hen. Gentleman aware that conditions in some places are disgraceful where litter is left in the baskets waiting to be taken away and the local authorities do not take the job seriously?
    Mr. Woodhouse: I am sure that the local authorities will take note of what the hon. Member has said.

    Betting Shops
    Mr. Sorensenasked the Secretary of State for the Home Department how many betting shops have been opened in England and Wales since they became legally permissible; what information he has in respect of the increase in betting because of those facilities; and what recent representations he has received in respect of keeping the number of betting shops within reasonable limits.
    Mr. Woodhouse: The number of betting office licences in force in England and Wales on 1st June, 1962, was 11,558. My right hon. Friend has no means of assessing the volume of betting either before or after betting offices were lawfully established, Apart from Questions by hon. Members and the Motion which stands on the Order Paper in the name of the hon. Member for the Western Isles (Mr. Malcolm MacMillan) and others, my right hon. Friend has received representations in favour of amending legislation to provide additional control over the number of betting offices from one association of local authorities and in a few letters from members of the public.
    Mr. Sorensen: May I ask whether the hon. Gentleman has not received communications from public bodies interested in the ethical side of betting? In view of the fact that there has been a considerable increase in the number of betting shops, would not the hon. Gentleman agree that whatever may be said on the ground of the public desire or need for the lesser of two evils, to increase the number of betting shops is likely to increase betting as a whole to the detriment of the nation? Cannot the hon. Gentleman therefore inquire more fully into the whole matter?
    Mr. Woodhouse: It is true that apart from the representations to which I referred in the original Answer we have had some letters from members of the public protesting against gambling generally rather than specifically referring to betting shops. The number of betting shops in existence does not exceed and is in fact a bit below the figure which was expected at the time when the Act was passed. That expectation was based on experience gained elsewhere, particularly in the Irish Republic, from the practice of betting shops.
    As for looking at the legislation again, it has been in force for less than two years and my right hon. Friend has already indicated in Answers on earlier occasions that he regards it as premature to re-examine the whole Act.
    Mr. A. Lewis: In his original Answer the hon. Gentleman quoted the figure for June of last year. Why cannot he give a later figure? Is he not aware that since June of last year there has been a spate in the setting up of these shops? Can he not show the figure at least to the end of last year?
    Mr. Woodhouse: I am sorry that I cannot give a more recent figure because returns under the Act are due only after 1st June each year. The current figure will not be available until the summer. While it is true that new shops have been opened since June last year, it is also true that there have been closures.

    Prisoners (Footwear)
    Mr. Boydenasked the Secretary of State for the Home Department if, in view of the need to improve the employ-
    622
    ment situation in the boot and shoe industry, he will increase his Department's purchase of boots and shoes so that all inmates of penal institutions can be provided with hygienic and comfortable footwear.
    Mr. Woodhouse: Prisoners' footwear is made in prison workshops. It would be wasteful to provide every short-term prisoner with a new pair of shoes, but part-worn shoes are not issued unless they are serviceable, and the present arrangements do not constitute any danger to health.
    Mr. Boyden: That is a very complacent answer. Has the hon. Gentleman ever inspected the sort of footwear which a great many prisoners are compelled to wear? If not, will he do so?
    Mr. Woodhouse: This is not a complacent Answer. It is a factual Answer to the Question as put.

    Tobacco (Consumer Protection Act, 1961)
    Mr. F. Noel-Bakerasked the Secretary of State for the Home Department what requirements he has imposed upon tobacco products, including cigarettes, under Section 1 of the Consumer Protection Act, 1961, in order to prevent or reduce the risk of death and injury by diseases, including bronchitis and cancer, caused by these products.
    Mr. Woodhouse: None, Sir.
    Mr. Noel-Baker: In view of the fact that the Act gives the Home Office specific power to require tobacco manufacturers to indicate on each packet of cigarettes the risks run by the smoker consuming them, why does not the Home Office take advantage of its power? Is this not an indication that the Government did not take seriously the campaign to warn smokers of the dangers that they run?
    Mr. Woodhouse: No, Sir; that is not the implication. As the hon. Gentleman well knows, the Government's policy was stated in a reply to him by my right hon. Friend the Prime Minister on 21st March. I have looked carefully at the possibilities of the Consumer Protection Act, but, of course, it was not devised in order to prohibit any article altogether, and I cannot myself see what

    623
    requirements could be imposed under that Act which would serve the purpose the hon. Gentleman has in mind.
    Mr. Noel-Baker: Section 1 of the Act lays down clearly that the Home Secretary has power, in order to reduce risk of death or personal injury, to require manufacturers to put a warning on a package. What is the difficulty in applying this to cigarettes? Will he look at the Act again?
    Mr. Woodhouse: I shall look at the Act, but it cannot be said that tobacco would be "safe" if the yield of the various noxious contents of the tobacco were reduced below any particular level.
    Mr. Lipton: In view of the vast sums of money derived by the Chancellor of the Exchequer from the sale of tobacco, would it not be suitable for the Government to ask cigarette manufacturers, as a quid pro quo, to print on each packet, "Cigarette smoking causes lung cancer"?
    Mr. Woodhouse: Judging by the form in which the hon. Gentleman put that supplementary question, I think that it would be better put to the Chancellor of the Exchequer.

    Borstal Training (Minimum Age)
    Miss Baconasked the Secretary of State for the Home Department when he intends to lay the order reducing the minimum age for borstal training from 16 to 15 years.
    Mr. Brooke: Provision for lowering the minimum age of eligibility for borstal training from 16 to 15 years was made by Section 1(1) of the Criminal Justice Act, 1961. In accordance with the intention which I announced on 7th February in reply to a Question by my hon. Friend the Member for Bridgwater (Sir G. Wills), I have now made an order bringing this Section into operation on 1st August. It does not require to be laid before Parliament.
    Miss Bacon: This is a very important matter. In reply to a Question I asked him last week, the Home Secretary said that nearly 2,000 boys aged 16 and 17 had spent periods of imprisonment while awaiting borstal sentence or awaiting removal to borstal, and that of these 461 had spent a period of over a month in a local prison awaiting sentence and
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    494 had spent a similar period awaiting removal to a borstal. In view of these figures, is it not shocking that the right hon. Gentleman has made an order which will now mean that 15-year-olds will spend these long periods in a local prison?
    Mr. Brooke: I agree about the importance of these matters, but I hope that the hon. Lady will approve of my taking action which is designed to make possible the total abolition of imprisonment for offenders under 17. Surely, that is something which the whole House should welcome. As soon as we have enough remand centres, there will no longer be the need for boys who are remanded with a view to borstal sentence to be detained in prison. As the hon. Lady knows, we are pressing forward as rapidly as possible with the provision of more remand centres.

    Summer Time
    Mr. Shepherdasked the Secretary of State for the Home Department if he will now make arrangements to harmonise Summer Time in the United Kingdom and Europe.
    Mr. Woodhouse: The possibility of having the clocks one hour in advance of Greenwich Mean Time throughout the year, so that they would accord with those in other countries in Western Europe in the winter as well as in the summer, was considered when it was decided to make a limited extension in the periods of Summer Time in the years 1961 to 1963. The disadvantages of extending the period throughout the winter have so far seemed to outweigh the advantages, but the question is examined afresh every year.

    Chief Enahoro
    Mr. Swinglerasked the Secretary of State for the Home Department if, when he first considered Chief Anthony Enahoro's request for political asylum in Great Britain, he was in possession of a copy of the affidavit submitted by Crown counsel to the British courts concerning the charges being made against the Chief and the penalties attached thereto.
    Mr. H. Brooke: Yes, Sir. This affidavit formed part of the documents which were

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    submitted to the magistrate at Bow Street and were before both the Divisional Court and the Appeal Committee of the House of Lords when they considered the case. It was sent to me, with the other papers, after the case had been disposed of by the courts. A copy was also included among the documents appended to Chief Enahoro's request to me to be allowed to stay in this country.
    Mr. Swingler: That being so, and since it is said quite clearly on page 3 of the affidavit that count two of the charges against Chief Enahoro carries the death penalty, why did the Home Secretary suggest that his only source of information on the subject was the Nigerian High Commissioner who had assured him that there was no death penalty connected with the charge against Chief Enahoro, quite contrary to the affidavit submitted to the courts by the Nigerian Government themselves?
    Mr. Brooke: No, Sir. The hon. Gentleman is completely misinformed about the contents of this affidavit. There is no reference in the affidavit to the death penalty being a penalty for any of the charges on which Chief Enahoro's return was sought. If there had been, I have no doubt that counsel for Enahoro would have raised the matter in the Divisional Court when he was seeking to persuade the Lord Chief Justice that it would be too severe a punishment to return him to Nigeria.
    Mr. Turton: Has my right hon. Friend referred to the previous treason trial in Nigeria in which Mr. Tarka was charged in 1961 with a number of offences, including conspiracy to commit treason? If so, has he noted that it was made clear in the course of those proceedings that that charge carried the death penalty?
    Mr. Brooke: What I can say with assurance—and I am sure that the Attorney-General would confirm this—is that the charges on which Chief Enahoro's return to Nigeria was sought do not carry the death penalty.
    Mr Wade: When will the right hon. Gentleman be making a statement on Chief Enahoro's request for political asylum? Is it not highly desirable that there should be a final decision on this as quickly as possible?
    Mr. Brooke: Yes, Sir, but it is not for me to announce the future business of the House.
    Mr. Fletcher: In coming to his original decision, should not the Home Secretary have noticed that, in view of the contents of the affidavit filed at the magistrates' court, there were charges in Nigeria which might involve the death sentence? In view of that possibility, should not the Home Secretary have taken that into account, and should not he have come to the conclusion that, in those circumstances, this man should not be sent back?
    Mr. Brooke: No, Sir. I took everything which was before me into account, and I reached the same conclusion about the risk of Chief Enahoro being liable to the death penalty as his counsel in the British courts apparently reached.
    Mr. D. Smith: Has my right hon. Friend yet seen a document which arrived from Nigeria today from the leading defence counsel in the treason trial, Mr. Akintoye, which is addressed to the Prime Minister, the Leader of the Opposition, and various other right hon. Members, and in which he puts forward a reasoned argument that Chief Enahoro certainly faces the death penalty on count two? If my right hon. Friend has seen it, will he bear it in mind? Does not he feel that, after three temporary reprieves, justice would now be done if this man were set free?
    Mr. Brooke: I have not seen that document. I think that questions on the legal interpretation of the affidavit should be put to the Attorney-General.

  NUCLEAR TESTS
  Mr. A. Hendersonasked the Prime Minister whether, in view of the new deadlock at Geneva, he will propose to President Kennedy and Mr. Khrushchev that the three Foreign Ministers should again participate in the 17-Power Conference in order to reach a nuclear test ban agreement.
  The Prime Minister (Mr. Harold Macmillan): We are in constant touch with the United States Government on all matters connected with the nuclear tests negotiations, and in particular on how the present deadlock might be

  627
  broken. If it seems to us that the time is ripe for another meeting of the three Foreign Ministers at Geneva, we shall not hesitate to propose this.
  Mr. Henderson: Is it not a fact that the three Foreign Ministers have not participated at the Geneva Conference for more than 12 months? Would not the right hon. Gentleman agree that certain major and clear points of difference have emerged at the conference which should now be negotiated by the Foreign Ministers? Will the right hon. Gentleman consider suggesting to President Kennedy and Mr. Khrushchev that the time has now come for the Foreign Ministers to return to the conference?
  The Prime Minister: I will bear that in mind. I repeat that I am in very close touch with the President on the best method of handling the situation now.

  SCOTTISH TRADES UNION CONGRESS
  Mr. W. Hamiltonasked the Prime Minister if he will seek a meeting with representatives of the Scottish Trades Union Congress, in order to discuss the implications of the policy proposals suggested by him in recent correspondence with the Trades Union Congress on Scotland's economic problems.
  The Prime Minister: I am sure that if the Scottish Trades Union Congress would like another meeting with me it will let me know.
  Mr. Hamilton: Does the right hon. Gentleman recognise that the Scottish T.U.C. is deeply disappointed and indeed angry at the nature of the proposals which he communicated in his letter? Is he aware that he is now being charged in Scotland with being guilty of a confidence trick perpetrated on those men who came down to see him?
  The Prime Minister: That is not in the least my impression from the way we held either this discussion or previous discussions. I have always had the most courteous and friendly relationship with the Scottish T.U.C.
  Mr. Hamilton: Does the Prime Minister recognise that many of the points
  628
  in the original memorandum from the Scottish T.U.C. were ignored by him when he replied?
  The Prime Minister: Many of them were dealt with yesterday.
  Mr. Baxter: In view of the statements yesterday by the Chancellor of the Exchequer that a different fiscal policy should apply to areas of high unemployment, may I ask the Prime Minister whether he would consider altering the whole fiscal policy of Scotland to come in line with the newly declared policy of Her Majesty's Government?
  The Prime Minister: This matter will no doubt be discussed today and during the remaining stages on the Budget, and of course I will take into account with my colleagues what the hon. Member has said.
  Mr. W. Hamiltonasked the Prime Minister if, following his consultations with the Scottish Trades Union Congress, he will now publish in the OFFICIAL REPORT details of the projects, outlined in his letter to them dated 15th March 1963, designed to solve the problem of unemployment.
  The Prime Minister: I would refer the hon. Member to the reply I gave to the hon. Member for South Ayrshire (Mr. Emrys Hughes) on 2nd April.
  Mr. Hamilton: Does the right hon. Gentleman regard the proposals in that letter as the short-term palliative as opposed to yesterday's long-term solutions? Can he tell us, for the enlightenment of the House, who will have the greater impact on the Scottish economy—Beeching or Maudling?
  The Prime Minister: On the subject matter of the Question, I repeat that I think we had a very useful meeting. Many of the short-term things were dealt with as well as I was able before the Budget, and much of the long-term policy was developed yesterday.
  Mr. Lawson: Does the right hon. Gentleman not agree that if a sensible policy towards Scotland had been followed over the past 12 years the situation which now exists need never have arisen? Will he take steps to see, even at this late hour, that there are radical rectifications?
  The Prime Minister: We shall try to do better during the next 12 years.
  Mr. Brewis: Is my right hon. Friend aware that the proposals in the Budget, and particularly the loan for the new Fort William pulp and paper mills, will be very greatly welcomed in Scotland?

  NORTHERN IRELAND-GREAT BRITAIN (COMMUNICATIONS)
  Mr Brewisasked the Prime Minister what communication he has had from the Prime Minister of Northern Ireland regarding the effect of the proposed closing of the railways linking Belfast and London and Belfast and Glasgow via Stranraer on employment and industry in Northern Ireland.
  The Prime Minister: The Northern Ireland Minister of Home Affairs has discussed the question of communications between Northern Ireland and Great Britain with my right hon. Friends the Home Secretary and the Minister of Transport.
  Mr. Brewis: Is my right hon. Friend aware that about 3 million members of the Armed Forces used these lines during the war years and that about 20 per cent. of Ulster's tourist traffic uses the crossing? Would it not be folly on defence, tourist and social grounds to accept Dr. Beeching's proposals?
  The Prime Minister: As my hon. Friend knows, on this as on all the other points there is the whole procedure of examination and eventual responsibility for the Minister concerned.
  Mr. W. Hamilton: Does the Prime Minister recognise the conflict between what the Chancellor proposed yesterday for the Scottish economy and what Dr. Beeching has proposed for the railways?
  The Prime Minister: No, Sir; they are very much in harmony.

  FOREIGN SECRETARY (STATEMENT)
  Mr. Rankinasked the Prime Minister if the public statement made by the Foreign Secretary at his Press conference in Tokyo on Friday, 29th March, on trade with the State-trading countries represents the policy of Her Majesty's Government.
  The Prime Minister: Yes, Sir.
  Mr. Rankin: I welcome that continued policy of expansion, but does the Prime Minister recognise that one of the reasons for the smallness of our trade with China, which the Foreign Secretary regretted, is China's difficulty in acquiring sterling? Does he realise that that trade would be increased if he would take the necessary steps to give to China the terms of trade which have been given to Japan and which are much more favourable than those which China now has?
  The Prime Minister: No, Sir. Our trade with China was expanding and will, I think, expand again, but there has been a reduction during recent years owing to the situation of near-famine in China which forced the Chinese to spend a very large proportion of their foreign currency on the purchase of wheat. This has, of course, had a corresponding effect on their ability to purchase other forms of material from this country.
  Sir A. V. Harvey: In considering the sale of second-hand transport aircraft to China, will my right hon. Friend take into account the feelings of the Indian Government in the matter?
  The Prime Minister: All these matters are taken into account. What my noble Friend said in Tokio repeated the situation as regards our trading arrangements as they now stand with the bloc countries.
  Mr. P. Noel-Baker: All recent visitors to Japan will warmly welcome the Foreign Secretary's encouragement of Japanese trade with China, but will the Prime Minister give consideration to what my hon. Friend has proposed in regard to British trade with China?
  The Prime Minister: Yes, Sir; but the facts are as I have given them. Trade was going up until about two years ago. The Chinese, of course, have difficulty in finding sufficient foreign exchange to meet their requirements, and they had to spend a very heavy amount on purchases from Australia, Canada and other countries in order to feed their people.
  Mr. Shinwell: Does the right hon. Gentleman realise that the statement made by the Foreign Secretary was the most sensible statement made by a Member of the Government for some considerable time? In view of this, will

  631
  he take active steps, even dynamic steps, to implement the content of the policy formulated by the Foreign Secretary
  The Prime Minister: I am very glad to hear this tribute from the right hon. Gentleman. I remember so well what he said three years ago when the Foreign Secretary was appointed.

BUSINESS OF THE HOUSE
Mr. H. Wilson: May I ask the Leader of the House to state the business of the House for next week?
The Chancellor of the Duchy of Lancaster (Mr. Iain Macleod): Yes, Sir. The business for next week will be as follows:
MONDAY, 8TH APRIL—We shall continue the general debate on the Budget Resolutions and the Economic Situation, which will be brought to a conclusion on Tuesday, 9th April.
At the end on Tuesday, Motions on the National Insurance (Earnings) Regulations, and the Housing (Payments for Well-Maintained Houses) Order.
WEDNESDAY, 10TH APRIL.—Report stage of the Budget Resolutions.
Remaining stages of the Local Government (Financial Provisions) (Scotland) Bill.
Second Reading of the Fort William Pulp and Paper Mills Bill, and Committee stage of the Money Resolution.
Motion on the Police Pensions (Amendment) (No. 2) Regulations.
THURSDAY, 11TH APRIL.—It is proposed that the House should meet at eleven a.m., that Questions be taken until twelve noon, and that the House adjourn at five o'clock, until Tuesday, 23rd April.
Mr. H. Wilson: Is the Leader of the House yet in a position to say when we can expect to debate the Beeching Report and if so, how long it is proposed to allocate to that debate?
Mr. Macleod: I hope that the debate on the Beeching Report and, if I may take the right hon. Gentleman's point a little further, the debate on the Radcliffe Report, which we have not yet
632
received, but which we hope to receive in a very few days' time, will take place very soon after we come back from the Easter Recess.
Sir G. Nicholson: Can my right hon. Friend say what is the business with which we shall deal after we resume?
Mr. Macleod: No, Sir. I will, of course, make a statement on that before the House rises.
Mr. Swingler: Can the right hon. Gentleman say when the Prime Minister will make his promised statement on the case of Chief Enahoro? If necessary, we shall have to resume debate on this case.
Mr. Macleod: The House will realise that the Budget debate will take two days next week. It cannot be debated next Friday, because that is Good Friday, and Thursday will be devoted to Adjournment debates.
I am sure that the House will realise that the business which I have announced for Wednesday may be subject to alteration. There certainly will be a statement on the immediate question of Chief Enahoro, and perhaps we can consider the possible rearrangement of Wednesday's business in the light of that. The legal aspects of the case would probably be dealt with in a statement by my hon. and learned Friend the Attorney-General.
Mr. H. Wilson: Quite apart from the narrow legal point, I take it that the Leader of the House will confirm that there is no question of Chief Enahoro being deported before the House has had a chance to debate and vote on the Resolution before it?
Could the right hon. Gentleman answer the question which I put to him earlier, about the length of time which will be allocated to the debate on the Beeching Report?
Mr. Macleod: Of course, there is no question whatever of Chief Enahoro being sent back until the House has had an opportunity of disposing not just of the legal point, but of the whole issue of deportation involved in this case.
I think it likely that two days will be devoted to the debate on the Beeching Report, but I am sure that we can come

633
to an arrangement on that through the usual channels.
Mr. Webster: Since my right hon. Friend has given indications on the Radcliffe and Beeching Reports, can he give one on the Rochdale Report?
Mr. Macleod: No, Sir. I have given an undertaking that we will debate the Rochdale Report, but the first two big debates which the House will wish to have after we come back from the short Easter Recess will be on the Beeching and Radcliffe Reports.
Mr. G. Brown: The Leader of the House said that the legal aspect of the Chief Enahoro case will be dealt with by a statement from the Attorney-General. As I understand, the Attorney-General's view of the law is disputed by other distinguished lawyers. I take it that the right hon. Gentleman therefore understands that that will form part of the debate which we shall have subsequently?
Mr. Macleod: Yes, I do, but I merely have very much in mind the undertaking which my right hon. Friend the Prime Minister gave to the House, and repeated at the end of the debate in response to the hon. Member for Eton and Slough (Mr. Brockway), that, apart from the arguments about whether the second charge or any other charge carried the death penalty, an opportunity would be given to the House to consider the
634
matter. I undertake that we will meet both those points.
Mr. Lipton: Can the right hon. Gentleman say when the Report of the Vassall Tribunal is likely to be made available? Various statements about its imminent publication have already appeared in the Press.
Mr. Macleod: As far as I know, those statements are unfounded, but I have said to the Leader of the Opposition that we expect to receive it within a very few days—three or four days' time. We will publish it as soon as we possibly can, and that, I hope, will enable the House to have a very early debate on it.

BILL PRESENTED
  FORT WILLIAM PULP AND PAPER MILLS
  Bill to authorise the Board of Trade to make advances to Wiggins, Teape & Co. Limited in connection with the construction and equipment of pulp and paper mills in the neighbourhood of Fort William, and to make grants to that company in respect of interest on such advances, presented by Mr. Erroll; supported by the Chancellor of the Exchequer, Mr. Noble, and Mr. David Price; read the First time; to be read a Second time tomorrow and to be printed. [Bill 94.]
ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee [Progress, 3rd April].
  [Sir WILLIAM ANSTRUTHER-GRAY in the Chair]

  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Question again proposed.
    That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description or for all goods to which any of the several rates of tax at present applies.

  BUDGET RESOLUTIONS AND ECONOMIC SITUATION
  3.40 p.m.
  Mr. James Callaghan: I should like, first, to express my thanks to the Chancellor of the Exchequer for a clear and lucid exposition yesterday. It was one which we found interesting the whole way through. He certainly avoided the scramble that usually takes place at the end of a Budget debate, when we have heard the distribution of the largesse or the penalties, whichever it is to be.
  It was not, of course, the first time that the Chancellor has batted on a Budget wicket, although it was the first time that he has opened the batting. He usually goes in first wicket down, when the shine has been taken off the ball, but he managed to play the ball very well indeed right in the centre of the bat. He even ignored the rather menacing figure at deep third man—or perhaps he is in the pavilion. At least, we hope that we will hear the right hon. and learned Member for Wirral (Mr, Selwyn Lloyd) during the course of the debate—
  Mr. Selwyn Lloyd Mr. Selwyn Lloyd (Wirral) indicated assent.
  Mr. Callaghan: —subject, of course, to you, Sir William—because I trust very much that we shall hear what he has
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  to say about the complete reversal of his policies by the present Chancellor of the Exchequer.
  The change in presentation of the Budget has many advantages, most of which we readily acknowledge. This rearrangement had one other advantage which has not been commented upon, that in the course of over a 100-minute speech the Chancellor was able to dismiss the miserable record of the last twelve months in half a column of HANSARD. Instead of starting, as we usually do, with a review of the events of the last year, we had no more than 300 words or so on what must have been one of the most catastrophic post-war years in the development of the country's economy.
  The Chancellor shares the well-known Tory capacity for drawing a veil over their own crises. As the late Aneurin Bevan once said, the Tories have an infinite capacity for putting flamboyant labels on empty baggage. If he were here now, he would say that they could not even change the labels. It is the same old stuff again, and the Chancellor knows it. He has said it himself before on many occasions, when he has appeared at the Dispatch Box to put forward the case for the Government on various Budgets.
  In any event, the Government supporters, I understand, are well satisfied with the Budget.
  Hon. Members: Come on, cheer.
  Mr. William Shepherd: Does not the hon. Member realise that he is far too subtle?
  Mr. Callaghan: Perhaps hon. Members opposite are not very well satisfied with the Budget. I do not know which it is. We shall wait with interest to find out. Although they cheered the Chancellor when he sat down yesterday, they cheered the right hon. and learned Member for Wirral a year ago for doing the very reverse of what the Chancellor did yesterday, either ignorant or careless of the fact that it was entirely different.
  Let us take some of the differences. The policy of the right hon. and learned Member for Wirral was based upon the premise that home demand must be held down so that we should get exports first. The Chancellor said yesterday that we must have growth at home to stimulate

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  exports as soon as possible. Hon. Members opposite cheered both statements. The right hon. and learned Member for Wirral based his Budget on the need to safeguard the £ abroad, which, he said, meant restricting demand at home. That was the whole case for the pay pause. Yesterday, however, the Chancellor told us that a healthy expansion of home demand and a strong £ go hand in hand. Hon. Members opposite managed to support both these statements at different times.
  In his resignation letter to the Prime Minister, the right hon. and learned Member for Wirral said:
  "you are well aware of my concern"
  about
  "the growth of public expenditure."
  The Chancellor's reply is to spend another £500 million this year.
  The right hon. and learned Member for Wirral, in his strong desire to limit public expenditure, kept down borrowing in his last Budget to £74 million. Under the heading, "Borrowing Requirements", the present Chancellor proposes to raise £700 million, which is ten times that sum. In every major respect, the Chancellor of the Exchequer has said that his former colleague in the Cabinet was wrong. Not merely the whole of budgetary policy, but the philosophy which underlies that policy, has been reversed. The Prime Minister, who, unfortunately, has left us, said in his letter to the former Chancellor:
  "Your courageous policies … have always commanded the support of your colleagues. You can rest assured that we intend to continue on the path that you have prepared."
  We might have known that, when the Prime Minister said that, the very reverse would happen very soon.
  Whether the right hon. and learned Member for Wirral was right or wrong in his philosophy about exports and home demand, about the need for keeping the £ strong and, therefore, keeping down home demand and the rest of it, perhaps he will settle with his right hon. Friend the Chancellor. One grave difference which I have with him, however, and which everybody outside of Government supporters has with him, is the grave error of forecasting that he made a year ago about the state of the economy.
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  The right hon. and learned Gentleman convinced himself that the economy would grow and that consumer demand last year would increase by 4 per cent. without any help from him. He went to the Sheffield Cutlers' feast and rebuked all his critics. He said "Do not believe these prophets of woe. There will be no recession this year." Nothing like this had been heard since Mr. Chamberlain said that he thought there would be no war—or was that the Prime Minister? No, Hitler missed the bus—the same thing.
  The right hon. and learned Member for Wirral said that there would be no recession this year and that there was no need to pump in Treasury help. Everybody unitedly told him that he was wrong—the trade unions, industrialists and the Opposition. Hardly a voice was raised in favour of Government policy—except, of course, that the sheep went into the Lobby in support of him.
  At the conclusion of the Budget debates, the right hon. and learned Gentleman's last words were:
  "I am convinced that the general balance of my Budget is right."—[OFFICIAL REPORT, 12th April, 1962; Vol. 657, c. 1630.]
  The whole of the Government supported him, including, of course, the President of the Board of Trade, who is to follow me in this debate today. A year ago, in the corresponding debate to today's, the President of the Board of Trade said:
  "we can look forward to a period of steady and healthy expansion, in which the growth of exports will take the lead."—[OFFICIAL REPORT, 10th April, 1962; Vol. 657, c. 1189.]
  The Minister of Education, who has the misfortune to be extremely lucid and articulate, so that there is never any misunderstanding of what he says, said:
  "Our whole object is, rather, to create conditions in which exports lead the growth of the economy…"—[OFFICIAL REPORT, 11th April, 1962; Vol. 657, c. 1336.]
  He said that it would be wrong, and that it was not borne out by experience, that a deliberate stimulation of home demand would be an effective means of encouraging exports.
  Did the Chancellor of the Exchequer listen to all that? How does he reconcile his differences with the Minister of Education? The Economic Secretary to the

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  Treasury had not then been promoted, but he was, nevertheless, a strong supporter of the Budget. They were all strong supporters of the Budget, and they were all wrong. This is why there is considerable indignation amongst those who took a different view a year ago that the unemployment that we have suffered, the unused men, materials and machines, and the unfilled order books, are due to a mistake in which all members of the Government shared an error of forecasting which has cost the country hundreds of millions of pounds. Now, we are asked to trust them again. This time, the Chancellor tells us, the Government have the National Economic Development Council to help them; they have accepted the 4 per cent. per annum growth target fixed by the Council.
  As the Chancellor did not give a review of last year, let me give a short review of the year's activities and put it alongside what the National Economic Development Council says, because the Chancellor is its chairman and has accepted the 4 per cent. target. N.E.D.C. said that it was quite possible for our economy to expand at the rate of 4 per cent. per annum. So does the Chancellor, but in the last year our production was stationary. There was no growth at all. N.E.D.C. said that our exports should grow at the rate of 5 per cent. per annum. Last year, they rose by 1·5 per cent. N.E.D.C. called for an increase in the total of investment, in new plant, new machinery, etc. of 8 per cent. per annum. In fact, total investment fell by 2 per cent. per annum, and in the case of private investment in manufacturing fell by as much as 7 per cent.
  N.E.D.C. told us that all this could be achieved with a low level of unemployment. In fact, as we all know, unemployment rose to record levels for any consecutive period of twelve months since the end of the war. N.E.D.C. says that the balance of payments should be £300 million in surplus. In fact, it was £67 million in surplus. Just to add to the record, last year, in which in every case we fell far, far short of targets which the Government accepted, prices continued to rise at home, and we had to borrow £80 million from the central banks abroad in order to keep sterling steady. Altogether, 1962 was a miserable year, a mixture of incompetence and weakness. I am not
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  surprised that the Chancellor forgot to review it in his Budget speech.
  Now for the new watchword, the new label, "Expansion without inflation. Expansion which can be sustained". This is to be the slogan. Of course, the case is overwhelming. Everyone knows this. We have pressed it upon the Government for much longer than it has been accepted as official Government policy. Of course, it is not the first time that we have climbed on the expansion bus. We have been there before—and it stopped long before we reached our destination. We did it in 1959 and we did it in 1955.
  Now, in 1959 the then Paymaster-General made a speech in the course of the Budget and he told us there was a case for substantial expansion and it started from the record surplus of our balance of payments, a very great strengthening of the £, a great improvement in the reserves, a record level of fixed investment, and unemployment lower than in most European countries and so, said the Paymaster-General of the day, the Chancellor had gone as far as he could without threatening the balance of payments. I wonder what the right hon. Gentleman the Member for Barnet (Mr. Maudling) has to say to the Paymaster-General, or to the Chancellor of the Exchequer.
  Does the right hon. Gentleman believe that he started off with his expansion with a record surplus of balance of payments, with a great strengthening of the £, improved reserves and levels of fixed investment, or low unemployment? He is starting off with the very reverse of these. Let us take what happened when he started to expand—I forbear to say what year that was—when the Government gave away £360 million and by the end of the next year the record surplus of 1958 in our balance of payments which had stood at £312 million had turned into a deficit of over £300 million. Of course, that was followed by the pay pause and the right hon. and learned Gentleman the Member for Wirral had to clean up the mess which was left by his predecessor.
  But the Chancellor of the Exchequer does not escape responsibility here. He has been in and around the Treasury for most of the last twelve years during which the Government have been in office,

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  either as Economic Secretary, or as Paymaster-General, or as President of the Board of Trade, or as Chancellor of the Exchequer. This is no new broom coming to sweep the Augean stables clean—merely an old hack put out to grass once more. In 1955, the Chancellor of the Exchequer was the right hon. Gentleman the First Secretary of State, who was the deputy Prime Minister, and he had a word for it, too. Then it was called expansion and stability. That was our watchword then.
  It could almost have been yesterday that we heard the speech of 19th April, 1955:
  "… the Budget proposals must constitute, before all else, a fresh incentive to the forces of"—
  what?—
  "growth and expansion."—[OFFICIAL REPORT, 19th April, 1955; Vol. 540, c. 58.]
  And:
  "During this last year we have learned much about the problems which we must face if we are to succeed in combining expansion and stability …"—[OFFICIAL REPORT, 19th April, 1955, Vol. 540, c. 35,]
  The Government had learned so much that they gave away £155 million—I for bear to mention what year that was—and, of course, it was followed by a crisis in the autumn.
  The present Chancellor of the Exchequer spoke in that debate, too, on 21st April:
  "My right hon. Friend"—
  he said—
  "will concentrate on a policy of expansion, freedom and incentives, which has throughout been his policy and has throughout been a successful policy."—[OFFICIAL REPORT, 21st April, 1955, Vol, 540, c. 365.]
  Well, it was certainly successful in winning the General Election, but I do not wonder that my right hon. Friend was a little cynical yesterday.
  Mr. Harold Wilson: Oh, no!
  Mr. Callaghan: Well, I withdraw that. Shall I say that he found it a little difficult to understand why it is that there happens to be this fortunate coincidence that in a year when it is necessary to give away so much in tax reliefs there happens in that year to be an appeal to the electorate?
  I understand that it amounts to this: that certainly 70 per cent. of all the reliefs
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  given away in taxation and otherwise by the Government during the period they have been in office have been concentrated in the two General Election years, plus this year, when we are running up to an election. We do not know when it will be. I am sure that the Prime Minister does not, either. It depends on how long he can keep a tottering Government and party together. At any rate, the Chancellor has helped him. He has done his best.
  Now we have him starting again. We are going through a period of expansion and stability. The reformed drunkard is coming to the penitent's stool once more. He is going to sign the pledge for the third time. Unfortunately, he has still got the taint of whisky on his breath. He really must forgive us if we are a little disbelieving about the motives and the consequences of the Government's sudden conversion to a policy of expansion.
  As I said earlier, the case is overwhelming. In my view, the Chancellor has been too cautious. I believe that there is a need for greater incentives if we are to get industry running full out. I do not believe that we can maintain it, but I think that there would be a case for arguing economically that we should have a relatively sudden spurt for a period of twelve months before we settle down to a steady rate of growth of about 12 per cent.—[HON. MEMBERS:"What?"] I means settle down to a steady rate of 4 per cent. I realise that 12 per cent. is outside the comprehension of anybody in this Committee. But it would not be outside the comprehension of the Japanese. It would not be outside the comprehension of other countries which have managed to get periods of growth of that order for a short time.
  I say this to the Chancellor, in all seriousness. I believe that there is a case this year for doing more if he is to lower unemployment, if he is to get the economy growing. He could not keep up that pace in the economy in which we are living, but I think that he has been too cautious in what he has done. Subject to what happens in the rest of the world, which will always be a preoccupation of any Chancellor, I think that he ought to get his 4 per cent. this year, but that will not relieve unemployment, which will last in many

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  parts of the country. Unemployment will go down; it is bound to do in some parts of the country; but I believe we shall still have high levels where there is structural unemployment at the present time.
  Corning back to this question of growth, I think that it is humiliating, when the O.E.C.D. reports are produced year after year on the policy of economic growth, to see where we stand. Let us take the most recent report which came out last month, and the table on page 16, showing what the major countries, the 20 major countries in O.E.C.D. in this group, and the rate of growth from 1950 to 1960, and in the whole list we see we are last but one. Only Ireland has grown at a slower rate than Great Britain, and right hon. and hon. Gentlemen opposite have been responsible for our destinies during the whole of that period.
  Everybody has grown faster than Britain and I believe that the Chancellor of the Exchequer has now set his targets too low. Even the United States, after the Kennedy Administration were returned, grew at a rate of well over 8 per cent. from the first quarter of 1961 to the first quarter of 1962. Their economy is in many ways similar to our own. They have the same degree of sluggishness, the same difficulties with balance of payments, the same difficulties with exports, and the difficulties of too great a rise in wages as against productivity, yet they managed to grow at a rate of 8 per cent. The Chancellor has fixed his target for only 4 per cent.
  I wish that the right hon. Gentleman had said more about exports. Why did we not do better last year? Perhaps the President of the Board of Trade will tell us. His speech last year was a confident forecast of the success that lay to our exporters. The right hon. and learned Gentleman was keeping the way open for his success. He was keeping home demand down so that the right hon. Gentleman and the exporters could step in, and there was every reason why they should, because whilst our home demand was so low, Europe was still running full out. Our competitors were still supplying at as high a rate as they could their own domestic markets and yet they did better in exports than we did.
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  Why did not we take advantage of all this? Perhaps the President of the Board of Trade will tell us. Perhaps he will review 1962 and tell us why he thinks that we failed last year. Perhaps he will tell us why the Government's policy was such a failure and we grew at a rate of only 1·5 per cent. in exports when he confidently expected something very much higher.
  The Chancellor says that British goods must be competitive in price, quality, and date of delivery. He is right. We have said it before, and it is none the worse for hearing it from him again, but I do not think that this is all the trouble. I do not know whether the Committee has read the remarkable article which appeared in The Times yesterday, by Professor T. Barra, headed, "Export growth retarded by technical backwardness". I ask my colleagues to take five minutes to read this article, because it is one of the most penetrating analyses that has been made of our export policy.
  Perhaps I might quote some extracts from it. Professor Barna analyses the export position of Britain, the United States and Western Germany, but he does it according to categories of exports rather than to total volume, or total value. He divides his categories into fast-growing exports and others. The fast-growing exports include office machinery, scientific instruments, metal-making machinery, electrical measuring instruments, plastics, and synthetic fibres. Comparing our performance with that of the United States and Western Germany, he says that the surplus of the United States is four times, and that of Western Germany three times that of Britain's export surplus in this category.
  Professor Barna goes on to say:
  "In fact, Britain's position is inferior in each product group in this category",
  and his conclusion is that the shortfall in Britain's net export manufactures compared with either the United States or Western Germany can be accounted for only by the shortfall in the fast-growing machinery and chemical products. He says, in fact, that the faster world demand expands in any product group the more inferior becomes Britain's share of that market, and that we hold our position best in the export products which are in the slow growing class.

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  This is a severe indictment of Britain, of British industry, and of Government leadership, because these are the exports and this is the field where, clearly, we should be getting into a position where we ought to have world leadership as we had at the turn of the nineteenth century and at the beginning of the twentieth century. It is this field on which the Chancellor of the Exchequer and the President of the Board of Trade must concentrate, and I should like to hear from the President of the Board of Trade his proposals for ensuring that there is a more rapid rate of growth in these industries where the fast-growing manufactures find a ready market overseas.
  I therefore say to the Chancellor that it is not just a question of price. It is not just a question of quality. It is not just a question of after-sales service. All these things are important, but they are only as important as the capacity to sell the right type of goods which other countries are seeking and for which the markets exist. This is the lesson to be drawn from this article, on which I hope the President of the Board of Trade will comment.
  The Chancellor of the Exchequer said that he was against an added value tax. Mr. Gordon Richardson has been given the task of changing the Chancellor of the Exchequer's mind, if that is the right thing to do. It is an odd way to run the Government, but, knowing Mr. Richardson, I am satisfied that there could be nobody better qualified to change the Chancellor's mind if it needs changing. I am sure that he will bring expert knowledge and judgment to this task, but I ask that we should have an early report and decision on this matter.
  We on this side of the Committee have been going into these questions of taxation. We have made our own studies about them and at the moment I am inclined to agree—I am rather changing my mind from what I thought a year ago—that there is not so much in these fiscal incentives as I had originally assumed. I think that if we go into these incentives we would need such a drastic overhaul of the taxation system that the administrative inconvenience could outweigh the benefit to be achieved. That should not prevent us, if we believe it to be right, from reforming the taxation system, for
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  which I have many proposals, most of which are taken out of context and not put against their full background; but I should be out of order if I were to go into that now.
  On the question of expansion, I have one or two points to put to the Chancellor. I believe that in respect of growth he is in a very much inferior position compared with 1959, because although he said that the stock ratio to output was really not too bad, nevertheless, if he is to get the level of growth that he wants there will have to be a substantial increase in stocks of imports. From that will follow what he proposes to do. Obviously he must be concerned about the position of sterling.
  If we have unlimited imports—perhaps he will not want to look ahead—and they endanger the balance of payments position the Chancellor will have to make up his mind what to do, and I hope that he will tell the Committee which he believes comes first. Does he really place expansion above everything else? If he does, if, at last, after two false starts in the earlier years, we are placing expansion first, he may have to take some uncomfortable decisions which will be opposed to the ideology of his own supporters.
  Let us consider these decisions. Import control is such a one. Last year, the President of the Board of Trade tried to get me on a Morton's fork. "Ha, ha," he said. "Is the hon. Gentleman proposing import controls?" I declined to rise to the bait. I am not the Chancellor, and it is the Chancellor who has to answer that question if the level of stocks builds up to the point where it endangers continued expansion. Until we have a clear answer to the question whether, in the event of trouble of this sort, he proposes to go ahead with expansion, businessmen will continue to remain sceptical.
  I am surprised at the number of letters which I have had. The right hon. Gentle. man did not convince some people in industry that he really means to go for a policy of expansion and to subordinate other considerations to it, and I think that the Committee would like further guidance from the President of the Board of Trade about the Government's intentions this time. Are they ready to put

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  aside ideological prejudices which they may have to ensure that expansion continues?
  I turn now to the problem of sterling. The Chancellor of the Exchequer has, in my view quite rightly, ruled out any question of devaluation, but it cannot be a comfort to him to know that there were tremors in the £, even though they were speculative and did not represent the real position, even before expansion gets going. I believe now—as I did when proposed it last July in the censure debate—that the Chancellor was right to put up his plan for increasing world liquidity and in trying to get some alterations in the key currencies at the Washington meeting. Unfortunately, perhaps because of the rapid change, it was a half-baked plan and did not get the response it warranted. Perhaps it was because there was not enough time to prepare it. There might have been better preparation.
  It is my information now, however, that there would be a much better response for proposals of this sort now than there was a year ago. I think that it is an encouraging factor for Britain that many of the difficulties we have experienced over the years are now being shared increasingly by the United States. I was very interested in the letter written by the hon. Member for Halifax (Mr. Maurice Macmillan) about this, a short while ago. For a long time we have carried a heavy overseas burden which has never been recognised by others. Now, the Americans are doing the same thing.
  I doubt that they will get their balance of payments really under control. I believe that they will go through the same phase as we have been through. That gives us identity of interest. The dollar is not the currency that it was ten years ago. That is one considerable identity of interest. Both countries are financing, between us, 60 to 70 per cent. of world trade. That is another identity of interest.
  The Chancellor should follow up as quickly as he can the ideas he scouted yesterday about the position of sterling in order to try to remove the strain from it. It is absurd that, when sterling and the dollar are facing heavy balance of payments difficulties, France and Germany—and, indeed, Italy—should be
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  piling up surpluses. These surpluses should be, and could be, called into use. I hope that there will be a development along these lines, but it is too technical a matter to go into now in detail.
  I want to ask the Chancellor about one matter in particular. It concerns a speech by Lord Hailsham, who always manages to combine very high morality with very good politics. He said recently:
  "Can you wonder that foreigners speculate against the pound? How can a General Election remove uncertainty when it is want of confidence in the declared policy of the Opposition which is causing the alarm?"
  This really is a very serious matter. Are we to start playing party politics with the £? [An HON. MEMBER: "That is not."] Well, this article is. Three weeks ago there were tremors in the position of the £—in my view, quite unjustifiable. I gave a long interview then to two German and Swiss newspapers in which I came out strongly on the side of the Chancellor—no, on the side of Britain—against devaluation. I am glad to say that these two interviews were widely reported in the German and Swiss Press, and I have had official intimation—not from the Government, but from other quarters—that the fact that we were taking this strong line had an impact in steadying speculation.
  If Government spokesmen are to abuse their position by saying that it is the possibility of the election of the Opposition that is causing the run on the £, then I can assure the right hon. Gentleman that he will be in serious trouble not because of us but because of speeches by his own colleagues in the Cabinet.
  I want to repeat as emphatically as I can what I have said constantly, as the right hon. Gentleman and his colleagues know. There is no case for devaluation. It was also made clear by my right hon. Friend the Leader of the Opposition in Washington this week that a unilateral devaluation of the £ would be an antisocial step of the first magnitude. It could have only a damaging effect on world trade.
  I believe very strongly that we must not yield to this temptation. I ask the Chancellor, in all seriousness, to speak to Lord Hailsham about this matter, because we do not want this sort of thing.

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  I must say that the Chancellor will make things extremely difficult if he starts approving such speeches.
  Sir Cyril Osborne: I entirely agree with the hon. Gentleman that the position of sterling ought not to be a party political matter. He puts expansion as priority No. 1, however, Where would he restrict expansion if it started an inflationary process and a risk to sterling?
  Mr. Callaghan: I shall not say any more on that question at the moment. Let the hon. Gentleman ask the Chancellor. I have my own answers, and have written about them. I am ready to go into them again later.
  I believe that the Chancellor has to consider some of the matters which he touched on yesterday, such as getting large backing from the International Monetary Fund. I prefer that to short-term loans across the exchanges from the bankers of Europe. I am sure that is one way to start. He must also be ready to consider the question of import controls.
  There are a number of matters into which I could go. Above all—and this is probably the difference between the hon. Member for Louth (Sir C. Osborne) and me—I think that Britain must have a long-term plan to relate our resources to our capacity and that we must put the efficiency and expansion of our industry side by side and above all else. These should be the major objectives of any Government. They would certainly be the major objectives of a Government from this side of the House. If we did that, we could transform the country in ten years. That is why I am so anxious to hear the right hon. Gentleman tell us the Government's plan to deal with the difficulties when they emerge in consequence of the expansion programme.
  Now I want to turn briefly—because I have already taken up so much time—to the problems of taxation. I think that the reductions the Chancellor has made are in the right places. How could I say anything else? We proposed them. In my corresponding speech to this a year ago, I spent a great deal of time showing, I think for the first time, what effects there have been on the small taxpayer. Our case was widely disbelieved and we had to go through the whole Finance Bill, proving it time and
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  again, before it was recognised as being true.
  I believe that the increases in the old-age exemption limits and the personal allowances are the result of the fact that the Government have at last recognised the truth of the case that the small man has not had a fair deal over the last few years, certainly since 1955. Last night. the Chancellor said en television that his concession was equivalent to a 2 per cent. rise in wages for a man on £800 a year. That was a dangerous figure to use and a dangerous way to proceed.
  After all, a married man with two children on £2 a week or under will get no rise because he gets no relief from taxation. For a man with £13 a week it means a 1 per cent. rise in the Chancellor's terms. What is the Chancellor advising employers to do in wage negotiations? Does he want them to adjust the extent of wage increases to the amount of relief given in tax? I assure him that if ha hopes to have an incomes policy he will run into as much trouble as his predecossor did if he pursues that course. He cannot find the right answer in that direction.
  If the right hon. Gentleman says that it was an illustration which he thought was interesting at that level, then that is all right. But if he 'wants the employers and the unions to take this into account, then he is making a great deal of trouble for himself over the next few months. In agriculture, textiles, clothing, furniture and local government there are many people with well under the average increase of 2 per cent. that is supposed to have come to those people mentioned by the Chancellor.
  Last year, I took a number of figures into account in discussing National Insurance. They were disputed by the Government, but I still stick to the point, which is that it is right, when considering what burdens of taxation are placed upon people, to take account of increases in National Insurance contributions. As a simple illustration, I quote the case of a man on £700 per annum with two children. In 1956–57, he paid £17 6s. in tax and he pays no tax now. But in the same period his National Insurance contributions have gone up by £18 6s. Thus, he is actually paying more. One has to take the whole burden of taxation into account. It is the regressive effect

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  of much of these National Insurance contributions which is setting off any benefits in direct taxation which the Chancellor may be giving.
  For example, a young single person, perhaps in his early twenties, earning £12 a week will pay 1s. 9d. a week less in tax from 4th July, but 1s. 1d. more in National Insurance contributions from 3rd June. He will be 8d. a week better off. That is not a relief which will appeal to him when he takes into account the increase in fares, the worst that Dr. Beeching can do, and so on.
  Where do we get to? The Chancellor says that he has exempted 3¾ million people from paying tax. That is jolly good. We asked him to do it; it is one of the things we pressed. I warmly congratulate him—he has now got back to the number of exemptions which existed during the last days of the Labour Government. Over the last twelve years, the Government have allowed the exemption limit to remain too low, with the consequence that, despite rises in the cost of living, people have been brought into taxation, called upon to bear taxation, which was extremely unjust.
  There are a number of industries which are hard hit by Purchase Tax—furniture, knitwear and others. The Chancellor doubled the taxation of household goods a year ago. Here, as in family allowances, is a case for the Chancellor to consider whether those who do not secure the Income Tax benefits should not have some advantage.
  I am very glad that the Chancellor has picked up and adopted our suggestion for local employment area allowances. His proposals are eminently sensible and none of them is novel. What he has done, very sensibly and wisely, is to dredge the net. He has caught a lot of shrimps. They are useful, and nice eating they will be, I am sure, but to look for anything novel in the Budget would be a futile occupation. However, this is a useful proposal which he has picked up and incorporated in his Budget and which has been put forward on many previous occasions.
  We are bound to agree that more positive action will be needed in Scotland and Wales and the North-East. One of the things which will arise from the new allowance is that people will
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  look much more carefully at the areas which are covered. The definition of the boundaries will mattter a great deal. Some areas which are not in will want to came in. For example, what is to be the position of Cornwall? My hon. Friend the Member for Falmouth and Camborne (Mr. Hayman) is constantly making the case that 70 per cent. of the workers in Cornwall take home less than £10 a week. If we are concerned about the Distribution of Industry Act, this is an area which would justify its inclusion, and its permanent inclusion, in these areas.
  What about the word "permanent"? What will happen to an area if its unemployment falls below a certain level? Will firms which have already started to put in new pieces of machinery find themselves blocked from getting the allowance, or will a new firm which is going, and which is exactly the same as another firm, find that it will not get the allowance although the other firm will? There are many complications about this, and my suggestion to the Chancellor—I will not make it a proposal at this stage—is that local employment areas should be much more widely defined on a regional basis than they now are. If we are to carry out the Distribution of Industry Act properly and get rid of what is happening in London and the South-East, or, at any rate, lessen its effect, we can afford to make regional differences in taxation provisions of this sort.
  We are all glad to hear that the Government are so far overcoming their inhibitions that they are willing to make a loan to Wiggins Teape for a pulp and paper mill near Fort William. Private enterprise cannot do the job and it is left to public enterprise. It is all public enterprise up there, the railways, the hydro-electric schemes, the forests, and so on. But why a loan and on what conditions? I realise that the Government have come only half-way and that we may carry them the whole way yet. I am delighted to see so many of these Socialist notions gradually overtaking the Chancellor of the Exchequer. When can we hope that he will get his courage high enough to insist on having a share in the equity so that the public can share in the profits of this concern instead of getting just a fixed return on the loan?

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  Would the President of the Board of Trade care to give us the answer to that this afternoon? This is a gambling age and although he may say that he does not like gambling, everybody else does. Let him take a shot and take up some equities in Wiggins Teape pulp mill and see whether we cannot get a good return for the public advantage. If not, will he explain his ideological objection to doing some good for the public?
  We shall return to the subject of retraining in the course of the debate. Some of my hon. Friends will want to say a great deal about it.
  I have tried at various times during the last few months to stimulate some intelligent discussion of questions such as taxation reform. We have now reached the "silly season" and it may well be impossible to have much intelligent discussion of these things, because anything that is said will be just picked up and made into party points, and so I suppose that we shall have to wait until after the election.
  This is a great pity, because there is a great deal to be done in taxation, not by taking out one item and saying what needs to be done, but by reforming the whole taxation system. I have a fixed view—which I think is right for Britain in the 1960s—that taxation should be an energiser and not a penaliser, that we should bear less hardly on earnings than we do on capital, that the creation of capital has gone into such particular forms that it is not energising the economy and, in certain ways, may be holding it back.
  I am afraid that discussion of that sort will probably have to await the result of the General Election, because hon. Members opposite are so short of ammunition that they will pick up anything that is said and twist it out of context as much as they can. Indeed, we have passed long since into the arena where we shall have a Government of only two things—bribes and bogies. We had the bribes yesterday afternoon. The bogies will be trotted out as the election period develops.
  4.28 p.m.
  The President of the Board of Trade (Mr. F. J. Erroll): We have listened to a very agreeable speech from the hon. Member for Cardiff, South-East (Mr. Callaghan). In his more light-hearted
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  moments I thought that he was on his way to becoming a kind of one-man "That Was The Week That Was". Certainly, his style owes a good deal to David Frost in his better moments. Many of the things that he said in his more serious moments had been answered by my right hon. Friend the Chancellor of the Exchequer in his Budget statement yesterday, and I hope that during the course of my own speech I will be able to deal with some, if not all, of the matters which the hon. Member raised.
  As the Committee knows, it is customary for the President of the Board of Trade to open for the Government on the second day of the Budget debate, because it is a debate not only on the Budget but on the economic situation. The Committee usually likes to hear about economic matters from the point of view of the Board of Trade.
  There is one fact of which I remind the Committee and which we are apt to take for granted in this country. It is that in many countries there are two separate departments for industry and commerce, one dealing with domestic matters and the other with foreign or external trade. In Britain, the two interests are combined in one department, the Board of Trade, for the very good reason that our national prosperity is so dependent on world trade and on our success in the world and, conversely, that we can succeed in world trade only if our domestic industries are modern, efficient and competitive. I intend, therefore, to tell the Committee what the Government are doing to help these objectives at home and I shall then have something to say about our commercial prospects overseas. I shall deal, in particular, with exports, as the hon. Member invited me to do.
  At home our objective is sound growth, based on the full and efficient use of resources, and a strong balance of payments, derived from commercial success throughout the world, in the broadest sense of the term. Expansion, and its possible consequences, to which the hon. Member referred, were very fully dealt with by my right bon, Friend in his Budget statement yesterday, so I will not go over that ground again. The Budget will contribute to sound growth twice over—directly, through the changes in taxation, and indirectly, by creating greater business confidence. Businessmen

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  can plan ahead, knowing that the Government will do their part to achieve the steady expansion of the economy and the fulfilment of the broad objectives of the N.E.D.C. programme.
  The changes in taxation and the other measures which my right hon. Friend announced yesterday, will provide a firm base for a sustained increase in national output. They follow and supplement the wide range of measures which the Government have taken in recent months both to strengthen the competitive position of British industry and improve the efficiency of the economy generally.
  These measures include the improved allowances for investment and research which the Chancellor announced last November. They cover all that we are doing to modernise the roads and railways, the ports, and other basic services on which the economy relies. They also deal with the human problems, and in particular the new arrangements for handling the problems of industrial training and redundancy which are so often brought about by the very growth and change we know to be necessary, and which will be discussed fully in the Committee on Monday.
  One of the most important things to do is to get a more even spread of economic growth throughout the various regions of the country. In this way we shall grow faster and more surely. The Chancellor yesterday announced measures to help the regions with special economic problems, and these are a central feature of our plans. I will now explain them in rather more detail.
  As the Committee knows, Parliament has given the Board of Trade the responsibility for what is described in the Act as
  "the proper distribution of industry"
  over the country as a whole, and the further responsibility for promoting employment within the development districts and providing special financial inducements to that end.
  Mr. Walter Monslow: Inasmuch as development districts have a percentage unemployment figure of about 5 per cent., although my own area has a figure of approximately 6 per cent., do I understand that, nevertheless, it will have to come within the
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  ambit of a development district before it is entitled to have the allowance which has been proposed for the purpose of creating further employment?
  Mr. Erroll: I know that the situation in Barrow is a difficult one. My hon. Friend the Parliamentary Secretary and are watching it very carefully.
  Several Hon. Members Several Hon. Members rose—
  Mr. Erroll: I am sorry, but I cannot give way. I must continue with the theme of my speech and not get into a discussion of a series of constituency points. If hon. Members are raising the same point there is no need for me to listen to it a second time.
  Briefly, my task is to ensure that prosperous industries, whether in development districts or in the Midlands and the South, continue to prosper. I must, at the same time, insist that growing industries in the more fortunate areas contribute a substantial part of their growth to the development districts.
  Although many of the development districts are places where industry first became established, they are far from being the blighted areas which were so exaggeratedly depicted in the Press and on the radio during the winter, when there was so much loose talk about the so-called "Two nations" concept. In these areas the existing industries are already being modernised, and new dynamic growth industries are being introduced. At the same time, new factories, houses and schools are being 'provided, and communications are being improved.
  I would like the Committee to have this concept of a development district. It is a place where firms—those already established and newcomers alike—receive special benefits to assist their development and growth. At times, we in Parliament have been apt to think that the provision of new jobs in development districts depends mainly upon the entry of firms from outside. This contribution by new entrants, although essential, is far from being the whole story. I want to correct this impression, because the expansion of industry already in these districts contributes, in practice, a great deal towards the provision of extra jobs. A study recently made by my Department showed that in the five years from 1958 to 1962, inclusive, half

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  the jobs arising from approved industrial developments in the development districts came from expansions of companies already in those districts. This gives the lie to those—some of them industrialists—who say that by setting up in a development district an enterprise will not prosper and grow.
  The point is well illustrated by this year's experience on Merseyside. Since Merseyside again became eligible, on 21st January, for financial assistance under the Local Employment Act, we have received 27 applications for assistance. Of these, no less than 20 were for local expansions. Movement is important, and the time to bring it about is when a firm in a prosperous or congested area is ready to expand its premises, or to modernise in such a way that some rebuilding is necessary. This is where my power to refuse an I.D.C. is so important and also so effective.
  I am often told, both here and outside the House, that I ought to follow a tough I.D.C. policy. I can assure the Committee that I do this very thing. No I.D.C. is granted for any project which, in the opinion of the Board of Trade, could be moved to a development district. If hon. Members are in any doubt about this they should consult industrialists in the Midlands and the South. They will soon learn from them how tough the policy is.
  Mr. Douglas Jay: Since the right hon. Gentleman has made that protestation, has he noticed that the Ford Motor Company is proposing a large expansion in Basildon? Will he direct his attention to that?
  Mr. Erroll: I am aware of the Ford case. I do not want to detain the Committee on this point, but I must point out that it does not represent an expansion; it is largely a bringing together of existing facilities, and it will be within the jobs ceiling agreed with the Ford Motor Company at the time of its big move to Halewood.
  Mr. Jay: The right hon. Gentleman will have noticed that according to the Ford Company this will involve between 2,000 and 3,000 people in Basildon.
  Mr. Erroll: I accept that, but it is within the jobs ceiling already agreed with the company for that part of the country.
  Mr. Godfrey Lagden: is it within my right hon. Friend's knowledge that these will be technicians and not ordinary working people? It is technical building and not a factory that is referred to.
  Mr. Erroll: Yes. I appreciate that it is a building of that nature, but a large part will still require an industrial development certificate.
  In some cases a firm refuses to reorganise in such a way as to place part or all of its expansion in a development district and prefers to carry on in its existing cramped and perhaps old-fashioned premises. But this occurs in a minority of cases, because of the work of my officials who meet the representatives of these firms. Thanks to the patient, careful and understanding work of those officials, many firms do move part of their production to development districts, and in the end they are usually very glad that they did so.
  I intend to continue this tough policy, and I shall not grant a certificate for any project which could reasonably be expected to go to a development district.
  Mr. William Warbey: The right hon. Gentleman is announcing a very important point of principle. He seems to be working upon the assumption that the country can be entirely divided into two halves—areas of high unemployment and areas of low unemployment. But this is not the case. There are very important intermediate areas where there is—
  The Chairman: Order. If the right hon. Gentleman sits down it is in order for an hon. Member to ask a question, but it is not in order for him to make what amounts to a speech.
  Mr. Erroll: I think that—
  Mr. Warbey Mr. Warbey rose—
  Mr. Erroll: I think that the Committee knows that I am very willing to give way when points are raised by hon. Members. But I have a long speech to give and some news to announce, and I feel that I must continue, as I have already given way to a number of hon. Members. I think that I am aware of the point which the hon. Member for Ashfield (Mr. Warbey) wishes to make.
  Mr. Warbey Mr. Warbey rose—
  Hon. Members: Sit down.
  Mr. Erroll: I think that the hon. Member for Ashfield is being very unreasonable, in view of the number of times that I have given way already. I should like to try to deal with his point, of which I think I am aware. It is that there are areas which are neither one nor the other. There are a good number of developments which cannot be moved to a development district. For these, industrial development certificates are granted, and many of those developments are in areas of the type which the hon. Gentleman has just suggested.
  I wish now to refer to what my right hon. Friend the Chancellor told the Committee yesterday about the standard benefits we are proposing to introduce for new plant and new factories or extensions. I should like to say straight away that the Local Employment Act has proved to be an effective means of encouraging the introduction and expansion of industry in the development districts, thus providing much-needed employment there. In the first three years' operation of the Act, the Board of Trade has undertaken to provide total assistance of £81 million—£29 million by way of providing Board of Trade factories and £52 million in the form of financial assistance. The projects that we have so assisted are estimated to provide about 90,000 new jobs.
  Our assistance has gone to large projects and small in development districts throughout the country. In short, we have achieved encouraging successes under the Local Employment Act. We now want to improve the Act still further. Hitherto, the benefits have been entirely tailor-made, to suit the circumstances of the individual project. Some firms would prefer fixed rates, known in advance, which would simplify their planning. This should prove particularly attractive also to overseas firms who may be thinking of setting up in Britain.
  What we now propose is to make the building grant a flat 25 per cent. of the actual cost. Under the present system it is necessary to make a separate computation for each new building or extension and the size of the grant has varied with local values. On average, it has worked out at 17 per cent. of the actual cost. Under the new flat-rate scheme we shall reckon in the cost of the building the
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  provision of any essential services, and such things as special foundations for heavy plant.
  The grant will be subject only to the exclusion of items which are so lavish that they ought not to be contributed to out of taxpayers' money. Broadly, the cost will include the building itself and any permanent fixtures that are reasonably required for the purposes for which the building is intended. I hope that this new grant will encourage industrialists to build their own factories and not just rent factories from us.
  Mr. Jay: Will this require legislation?
  Mr. Erroll: Yes.
  Now a word about plant and machinery. Hitherto, Board of Trade Advisory Committee loans have been the only means by which we could help with the cost of plant and machinery. We want to go further than this. I am proposing that a grant should be made of 10 per cent. of the cost of plant and machinery installed in industrial undertakings, provided that employment is likely to arise for the benefit of the development district as a result. I intend by administrative action to exclude certain things which, by being readily movable outside development districts, could frustrate the intention of this grant. As an illustration, I have in mind lorries and certain types of office machinery, such as typewriters.
  The statutory obligation to consult B.O.T.A.C. about the viability of the project before making a building grant will continue. But I do not propose that there should be a similar obligation for the grant on plant and machinery. I propose, however, in administering this new grant to consult B.O.T.A.C. on the larger cases, and on those where we are in any doubt about the position of the company seeking a grant. These grants will not replace the other benefits of the Local Employment Act, which will continue. For instance, B.O.T.A.C. loans and grants under Section 4 of the Act will still be available when the Committee recommends them. But when assessing need the Committee will of course take into account that fixed grants will be payable.
  In view of the criticism of B.O.T.A.C., I should like to take the opportunity to pay a tribute to the work of B.O.T.A.C. which, over three years, has considered

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  no fewer than 600 applications and recommended assistance for about half of them. The fact that we have bad some bad debts shows that the Committee has taken some risks within the spirit of the Act. In general, it has secured an admirable balance between the needs of the development districts and proper safeguards for public expenditure. In any case we do not want "dud shows" going to development districts. We want them to be good ones, with a fair prospect of success.
  To give effect to these proposals, a Bill will be introduced as soon as possible. In the Bill I am making provision for these new benefits to be available with effect from 3rd April—yesterday. The grant on plant and machinery will apply to expenditure incurred on or after that date. Regarding building grants, while offers made before 3rd April will not be affected, applications now under consideration or received from now on will be dealt with under the new provisions.
  Mr. Jay: Presumably these new concessions will be available for firms in the areas as well as firms moving in from outside? Can the right hon. Gentleman say whether agriculture is included both in this and in the depreciation allowances announced by the Chancellor yesterday?
  Mr. Erroll: Firms already in the development districts will qualify equally with new entrants. I should like to study the point about agriculture rather than give an "off-the-cuff" answer.
  These new standard benefits, in common with the existing financial inducements of the Local Employment Act, will be linked with the general policy of the Act, that is, the projects concerned must create employment. In the case of plant and machinery, for example, the grant under the new Bill will not be available for simple replacement. We shall have to put a ceiling, as we do at present, on the total assistance available under the Act for individual projects where the cost to public funds is too high in relation to the number of jobs to be provided. But we shall ensure that, with the exception of projects which are obviously capital intensive, any ceiling that we put on an individual case will be high enough to accommodate these new standard benefits. In the majority
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  of cases there will also be room for B.O.T.A.C. loans and grants available under Section 4 of the present Act.
  As the Committee will remember, yesterday my right hon. Friend announced that industrial firms in development districts will be able to write off for tax purposes the cost of new fixed plant and machinery at the rate of their own choosing—free depreciation, he called it. This facility will be available for replacement and modernisation and, unlike the new standard grants under the Local Employment Act, will not be related to the provision of employment.
  Mr. William Baxter: Will buildings come under the free depreciation provisions?
  Mr. Erroll: No. The free depreciation provisions relate solely to plant and machinery and not to buildings which will come under the new increased depreciation rate also announced yesterday by my right hon. Friend.
  The combination of these new types of benefits should be a powerful aid to further growth in development districts.
  Dr. Jeremy Bray: May I ask whether the right hon. Gentleman has considered to what extent these depreciation provisions will reduce employment in development districts?
  Mr. Erroll: Well, it can, of course, be argued that when a firm modernises it may reduce employment. But the fact is that where the modern industries are we usually find there is the greatest prosperity and usually the highest level of employment.
  Mr. Douglas Marshall: I wish to make certain about one thing. Where a firm goes to a development district, and it is a question of building a factory and providing machinery, is the land also included?
  Mr. Erroll: The grant relates to the building and the free depreciation relates to the machinery and, of course, the machinery grant also relates to the machinery. The land must be considered separately. The combination of these two new types of benefit should be a powerful aid to further growth in development districts. The development district thus becomes a locality in which special fiscal reliefs and predictable cash grants are available to existing and new industry.
  Mr. H. Rhodes Mr. H. Rhodes(Ashton-under-Lyne)
  rose—
  Mr. Erroll: I am sorry. I cannot give way again as I have given way so much.
  The Committee may well ask: how does all this look to the industrialist in, say, Birmingham? I think that the industrialist in a prosperous or any other area first looks at the cash outlay in relation to the expected return. What will be the difference between his expanding in Birmingham, provided that he could get an I.D.C. to do so, as compared with a development district?
  I have worked out a straightforward hypothetical case which the Committee might look at, taking a project costing £1 million of which £250,000 is for buildings, £450,000 for plant and £300,000 for working capital. That is a typical proportion in present circumstances. Assume that the business is already earning profits sufficient to enable it to use in one year all the tax allowances available under free depreciation and that the management decides to do so. In a development district the grants available as standard benefits would amount to about £100,000 and the first year tax saving to about £300,000.
  If the project were not in a development district there would be no standard benefits and the tax saving would be about £160,000. So, in a development district the Government will be contributing by these combined benefits nearly 60 per cent. of the cost of the building and plant as compared with less than 25 per cent. elsewhere. Moreover, if the project were in a development district, the company might be able to finance some of the rest of the cost, including working capital, from funds borrowed from the Board of Trade.
  Of course, the advantage in the development district would be reduced in subsequent years, but the company would have the benefit of the use of the capital released by the earlier granting of tax allowances as a result of free depreciation and by the standard benefits. So that hon. Members may be able to see the full computation, which I have no time to set out here—it runs into three foolscap pages—I am having a copy placed in the Library and I can send copies individually to hon. Members who ask me to do so.
  Mr. Eric Lubbock Mr. Eric Lubbock(Orpington)
  rose—
  Mr. Erroll: No, I cannot give way again.
  If our measures succeed, as I am confident they will, then a development district will not remain a development district for ever. We shall deschedule in the future just as we have in the past. On descheduling, the standard benefits and other benefits under the 1960 Act will no longer be available. Perhaps even more important, free depreciation will no longer be available either for expenditure undertaken thereafter. Prudent industrialists, I suggest, will have this in mind when making their plans.
  We must look to industrialists to make full use of these improved facilities and so bring more work to the development districts, but I am not going to sit back and wait for them to read HANSARD, still less for them to apply for an I.D.C. and be refused. Starting on Monday next, I shall be inviting the chairmen of leading companies with growth prospects to discuss with us at the Board of Trade the possibility of their establishing new projects in the development districts of Britain and in Northern Ireland.
  I am proposing to start this series of meetings before the end of this month and during the next two months we hope to meet the chairmen of over 100 major companies. In this way we shall seek to impress upon an important section of industry the many advantages to be gained from taking work to these areas.
  At this point, I wish to refer to the advance factories which the Board of Trade are building in a number of development districts. We have encouraged firms to go to development districts by providing Government factories and by giving financial assistance. Many industrialists want factories built to suit their particular requirements. We are always willing to consider building in the development districts for such firms. Other firms prefer to set up in standard factories all ready for occupation. At the moment, we have a programme of 19 of these so-called advance factories in England, Scotland and Wales. They are of various sizes up to 50,0000 sq. ft. and all are to be completed this year. We have no tenants yet, but there have been many inquiries so far.

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  We have also in hand a substantial programme of clearance and development work on our industrial estates which will make them more attractive and provide more sites ready for building. In addition to all this, we are planning a further programme of advance factories to follow on after the present one. This will comprise another 11 factories, all fairly small but of a size which should attract expanding firms. These factories will be planned for completion in the second half of next year. I hope to give the Committee or the House further details shortly.
  I shall now say a word or two about Wiggins, Teape and Company. As my right hon. Friend announced yesterday, there is one project which will require special legislation—the proposed new pulp and paper mill at Fort William. A Bill is being introduced today to empower the Board of Trade to make loans to the company for this purpose up to a total not exceeding £10 million, representing about half the total cost. The great contribution of this project will be to provide a new point of lively and developing industrial activity in the West Highlands. It will take advantage of local supplies of timber. It will create in the forests and in transport even more jobs than those created directly in the mill itself. The site for the mill has been chosen as being the most advantageous possible from the point of view of timber and water supplies and of transport.
  The United Kingdom paper industry has been at some economic disadvantage compared with its competitors in the forest countries which have been able to operate fully integrated mills based on indigenous supplies of timber. For the Fort William project the timber is there in the Scottish forests, both those owned by the Forestry Commission and by private interests, and the supplies will be expanding steadily over the next few years. This project aims to use these forest resources in a way not previously possible in this country. To help the flow of material to the mill, the Forestry Commission will accelerate its programme for the construction and improvement of its forest roads within the area of supply.
  It is, however, in some ways a pilot undertaking for our paper industry. Nothing on these lines and of this scale has been done in Scotland before. It is also
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  a very large undertaking. To be efficient and competitive a mill of this kind must be very large and, inevitably, it takes a very considerable time to erect and bring into production. We have satisfied ourselves that the company could not find the finance for such a novel, large-scale and long-term project entirely from normal resources. In the special circumstances we are satisfied that there is a very strong case for a Government loan to get the project off the ground.
  Hon. Members interested in the method of financing—by equity as distinct from loan capital—would perhaps prefer to wait to debate the matter on the Second Reading of the Bill which, I understand, will be on Wednesday next, so I shall not deal more fully with the subject at the moment—
  Mr. Jay: Why does it need legislation? Why could it not be done through B.O.T.A.C., like other schemes?
  Mr. Erroll: There are a number of reasons for that. One is that the mill itself would not provide sufficient employment to qualify for facilities under the Local Employment Act to see the project through. On the other hand, if we get the project going it will provide a great deal of employment in the forests and ancillary transport industries. This point can be fully developed on the Second Reading of the Bill. If we could have done this under the Local Employment Act, we would have done so. I am sure that the Committee will endorse the Government's action in assisting a project which is calculated to have an invigorating and permanent effect on the economy of the Highlands.
  I turn to world trade. As I said when began, Britain's economic growth depends on the success of our export trade. We cannot achieve the high rate of growth which we need unless we step up very considerably the rate of growth of exports. We need to ensure that British industry is fully competitive and we need a steadily rising volume of international trade on which to base the growth of our own exports.
  The hon. Gentleman asked me to refer to exports in 1962. I am very glad to tell him how our exports fared last year. In the first half of 1962 our exports rose sharply. By the autumn they were 5 per cent. higher than at the end of the previous year. In October they stood at

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  a higher figure than they had ever been before, £336 million on a seasonally adjusted basis. It is quite true that since then this increase has not been sustained, as I and other observers had expected that it might be. This was due to a marked slow down in the growth of world trade and production, especially in Europe, and not to any weakening of British industry's competitive position.
  I believe that just now British exports are, in general, particularly competitive. It is important, that they should be, particularly since world trade is not expanding at the moment as fast as we should like. But we shall lose all too easily any advantage that we may have gained through the more rapid rise of some of our competitors' costs unless we are successful in preventing the rise in domestic incomes from outstripping the growth of productivity. Our export performance will, of course, depend to a large extent on the course of world trade, and there are uncertainties about the pace of its expansion this year. I have in mind particularly the great industrial centres of Western Europe and the United States, whose economic well-being is so important for much of the world.
  In the United States the authorities are concerned about the sluggishness of the economy and the level of unemployment. The encouraging thing is the vigour with which President Kennedy is tackling these problems, and I hope very much that the measures which the Administration propose meet with success. There are also some problems on the Continent. I am glad to see that the forecasts of the European Economic Commission indicate a reasonably satisfactory pace of expansion this year. These forecasts are themselves based on the assumption that there will be no adverse influences from outside the Community, and this, I think, serves to underline the great degree of economic and financial interdependence throughout the free world which exists today and the paramount importance for Britain that world production and world trade should continue to expand.
  Mr. Lubbock: Will the right hon. Gentleman give the figures for the E.E.C. and the United States, so that we can compare them with our own targets?
  Mr. Erroll: I have some figures relating to our own exports to various parts of the world, which I should be glad to give, but if the hon. Gentleman wishes to have figures of those countries' exports I suggest that he should put down a Question, which I will do my best to answer.
  I now have something to say about several of our most important markets, of particular interest at the present time. First, Europe. We were, of course, greatly disappointed at the breakdown at Brussels, but this breakdown is really a challenge to us to pursue, even more energetically than hitherto, a trade policy aimed at the general expansion of world trade. It is fortunate that the Kennedy round of tariff negotiations now provides a great opportunity for progress in this direction, which we for our part are determined to do all we can to exploit.
  We have repeatedly made it plain that we have no intention of turning our backs on Europe. We hope to keep closely in touch with the European Economic Community. We want to avoid developments of policy which would damage each other's interests, or increase those differences between us which might make future membership more difficult; and we have good reason to know that most of the members of the Community share these objectives with us. We shall improve our relations by more frequent bilateral discussions with member countries, by strengthening our Permanent Delegation in Brussels and, where possible, through our common membership of the O.E.C.D.
  Our exports to the member countries of the Community have grown dramatically during the last three years, from over £520 million, or 15 per cent. of our total world exports in 1960, to £720 million, or 19 per cent., in 1962. This shows that determined salesmanship can surmount the obstacle of tariff disadvantages. If, as we expect, economic expansion within the Community continues, there will be ample scope for developing this great market still further. I see no reasons, therefore, why our trade with Europe should not continue to expand.
  Turning now to E.F.T.A., £517 million, or over 14 per cent., of our total exports go to the E.F.T.A. countries. These

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  countries constitute rapidly expanding markets for our goods. Between 1960 and 1962 our exports to them showed an increase of just over 20 per cent. and all member countries, including ourselves, of course, should achieve further substantial benefits as the tariff barriers continue to come down. We and our partners are urgently studying the possibility of speeding up that process.
  At the February meeting in Geneva of E.F.T.A.'s Ministerial Council it was agreed that a programme should be worked out by the permanent representatives for eliminating all the tariffs in the course of 1966. Ministers will consider this programme when we meet again, at Lisbon in May, and in the meantime there will be further discussions on other aspects of the E.F.T.A. arrangements.
  Now a word about trade with the Commonwealth, which remains of the greatest importance, although its makeup is changing all the time. There will be a meeting of Commonwealth Trade Ministers in London, to begin on Monday, 13th May. Commonwealth Governments welcome this initiative. The meeting will take place shortly before the G.A.T.T. conference in Geneva, due to start on 16th May. The G.A.T.T. conference could be of the greatest value to all Commonwealth countries in promoting the expansion which we hope to see in international trade over the next few years.
  In our talks with the Commonwealth Trade Ministers we shall also take the opportunity to discuss ways and means of expanding our trade with other Commonwealth countries to our mutual advantage. We must recognise, of course, that there are limits to what Governments can do in this way. Other Commonwealth countries already enjoy unrestricted duty-free access for nearly all their exports to the British market and we already receive, in many Commonwealth markets, valuable tariff preferences.
  Mr. McEwen, the Australian Deputy Prime Minister and Minister for Trade, will be in London a few days earlier for preliminary discussions about the future of the Anglo-Australian Trade Agreement. Whatever happens elsewhere, the Commonwealth will continue to be a major customer of ours, and a major supplier.
  Mr. Callaghan: Will the right hon. Gentleman consider putting on the agenda of the Commonwealth Trade Ministers' conference a discussion on G.A.T.T. and its effectiveness today, and how far, as an instrument, it meets the needs of the Commonwealth at the present time?
  Mr. Erroll: I should be very glad to consider the hon. Gentleman's suggestion and to see what can be done about it. But I am sure that he will not expect me to say more than that just now.
  Many opportunities for increasing our trade in Commonwealth countries exist, but they are mainly in the field of what I may call ordinary commercial endeavour. The Government will continue to give every support to British exporters in this field, and we are doing a great deal, particularly in Australia. I think that it might interest the Committee to know what we are doing to help there. We have, for example, recently launched a major exports promotion campaign in Australia in collaboration with the Federation of British Industries and the Australian Association of British Manufacturers. The campaign opened last month with a highly successful British Pavilion at the Melbourne Trade Fair, which was by far the largest national exhibit in the show.
  British Trade Weeks will be held in various Australian cities this year and next. The climax of the campaign will be the British Exhibition in Sydney in the autumn of 1964. This will probably be the most important of its kind which Britain has ever organised overseas.
  I have a particular point to make to the Committee about India and Pakistan. Up to now, E.C.G.D. has not been authorised to guarantee a longer period than five years' commercial credit for exports to India and Pakistan, because of the long-term aid that we have been giving to these countries. This has impeded the traditional trade, in a valued market, of some of our exporters, including those in industries with surplus capacity which could well be used. I am glad to say that we are prepared, in present circumstances, and in the special case of India and Pakistan, for E.C.G.D. now to give longer-term cover for selected cases, on lines similar to the existing matching and financial guarantee schemes.

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  I want to say a brief word about Japan, because I am sure that the Committee will be glad to know that the Commercial Treaty which we concluded last November has today been ratified in Tokyo during the Foreign Secretary's visit there. It will come into force on 4th May. The Treaty will put commercial relations between the two countries on a settled basis. I hope that our exporters will take full advantage of this, because Japan has a rapidly expanding industrial economy starting from a much lower level than ours—a point the Opposition very rarely make—and still has a long way to go before it catches up with our high standards. Most of the market is now open to imports. I hope to see the expansion of orderly trade in both directions.
  Mr. Julian Snow: By the right hon. Gentleman's remark about Japan and its much lower standard, is he not running into the danger of giving a false impression, in the sense that Japan's wage levels, including all benefits, are now beginning to equate to those of the lowest element in Western Europe? Therefore, the danger is decreasing from the point of view of competition.
  Mr. Erroll: I agree that the danger is decreasing, but it serves in part to explain—one cannot go into the whole of the Japanese economy in a debate like this—why the percentage increase seems to be so dramatic compared with our own.
  I cannot do justice to the great United States market in the course of a speech of this sort, but I must point out to the Committee that at present this immense market takes only 8 per cent. of our exports, although it is still our largest single market. I am convinced, particularly from my recent visit to Washington and New York, that there is great scope for a big expansion of our sales there, and I hope that British industrialists will pay special attention to it so that we may have a really concentrated effort there to improve our export performance.
  Before leaving what I may call the geographical part of what I have been saying, I should like to say a few words about East-West trade, because this is so very much a subject of discussion at the
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  present time. I believe that the Committee would be making a mistake to suppose that our export problem can be solved simply by selling more to Russia, Eastern Europe and China. These countries certainly offer an important market for our exports of capital goods, a particularly valuable export because of their high content of skill and "know-how". Strategic goods apart, we shall do our utmost to promote sales to the bloc countries. In this connection, I was very glad to welcome Mr. Lu, the Chinese Vice-Minister for Foreign Trade, when he arrived in Britain a few days ago.
  The practical limitation on this trade is the capacity of the bloc countries to pay for their purchases. Clearly, there is no point in giving our goods away or extending excessively long credits, which after all have to be paid off sooner or later. Even so, our sales to the Soviet bloc have been increasing steadily, from £45 million in 1958 to £110 million last year. I have no doubt that it will continue to devlop. However, at present the Soviet bloc takes no more than 3 per cent. of our total exports. Even a doubling of this figure would not solve our export problem. Further, the other countries would have greatly to increase their earnings of sterling, which would be a formidable task for them.
  In his speech yesterday my right hon. Friend the Chancellor of the Exchequer referred to the question of export incentives. I think that I ought to say a few words about this, because there is now, as there has been in the past, a choice between only two possible policies. Either we can go all out to increase exports by subsidies and by special tax reliefs, realising that others will do the same, or we can seek to have such export incentives outlawed internationally.
  The Government have been guided in this not by theory, but by our own national interest. We rely more heavily on overseas trade than do most countries and, if we were to enter an export incentives race, we would stand to lose as against other countries with a lesser stake in exports, because they could afford bigger incentives. We believe that Britain would be a certain loser in an incentives race, so we do not intend to start one up. Our policy is, indeed, just the opposite. It is to secure

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  international agreement prohibiting such incentives and it is now bearing fruit.
  The G.A.T.T. Declaration on this subject came into force last November, by when 16 countries, including most of the major industrial countries, had agreed to give up subsidy and direct tax relief as export incentives. Japan has also now agreed to come into line. Our international agreements, therefore, are not standing in our way. They are helping us to secure a world free of such artificial aids to exports.
  Mr. Warbey: What about Eire?
  Mr. Erroll: Eire has one or two small export incentives, but she is not a member of the G.A.T.T.
  Our agreements do not, of course, affect reliefs from internal indirect taxes, like Purchase Tax.
  Since tax incentives and subsidies for exporters are ruled out, the Committee may ask me: what incentive is there to export? The most important incentive is that our prices should continue to be competitive in world markets. This the Government are determined to ensure, as my right hon. Friend explained to the Committee yesterday.
  The other incentive is self-interest. The biggest firms in this country must secure a large volume of export sales in addition to home orders if they are to maintain an economic through-put in their factories. Medium and small-sized firms, which are so frequently said to be content with the sheltered home market, are increasingly finding that they cannot expand their share of it because of domestic competition. Their only hope of expansion, therefore, lies in going into export markets.
  Further, as tariffs come down so will the home market become less protected and therefore less "safe", as it is called, and should not be solely relied upon. Then there are the vast multitude of small firms. Many of them are making components and assemblies, and they already see their products exported in the finished goods of direct exporters.
  All this is well understood by British industry, and I believe that the majority of British firms, capable of exporting, neither seek nor require further incentives of the type so frequently canvassed. I have studied with care all the argu-
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  ments in recent months over the advantages and disadvantages of a value added tax. Its effectiveness as an export incentive is, in my view, very much subject to doubt, and it cannot be judged solely with this in mind. I was very interested in what the hon. Member for Cardiff, South-East said on this subject today. I am glad that my right hon. Friend has decided to ask Mr. Gordon Richardson to preside over a group which will make a special study of this complicated matter, of which the question of an export incentive is only one aspect.
  Nevertheless, although the Government are not prepared to make a move in the direction of subsidies or export incentives of that sort, there is a great deal of help which we can and do provide in other directions. The Government pride themselves on their services for exporters, and rightly so. Certainly, they are the envy of those businessmen in other countries with whom I have talked from time to time on my own travels abroad. I am glad to see the hon. Member for Lichfield and Tam-worth (Mr. Snow) nodding in agreement. But that is not to say that we are complacent about them. I am always delighted to hear constructive suggestions about how we can improve them even more. From time to time hon. Members write very helpful and useful letters to me on this subject.
  I particularly want to mention what we are doing in the matter of trade fairs, because the past year has seen a big expansion in the Board of Trade's participation in trade fairs, both on our own account and in co-operation with British industry. The score in 1962 was 46, from Amsterdam to Osaka, and the goods shown ranged from garden plants to prefabricated buildings. In 1963, 37 have been arranged so far, with eight months of the year still to go.
  Both the Western Hemisphere Export Council and the Export Council for Europe are playing a leading part in "British Weeks" and British store promotions. I would like to pay a tribute to their invaluable work on export promotion generally. Along with the newly-formed Council for Middle East Trade, which is just getting into its stride, they play a very special and important role in our export effort. I must also say

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  a special word about the personal contribution of the Lord Mayor of London, who has made "exports" the theme of his year of office. It is a very apt theme for the holder of this great traditional office at the heart of the commercial and financial life of this country.
  I turn to another support of the exporter—[HON. MEMBERS: "Oh."] I was asked to deal with exports, so I am dealing with them—the Export Credits Guarantee Department. Two years ago we introduced some significant developments. We introduced E.C.G.D's new financial guarantees, putting our industries in a position to undertake large projects overseas on long credit with the necessary long-term finance assured. Projects worth £45 million have so far been covered, and a further £82 million worth are under active negotiation now. We also made this new facility available for large ships and it has proved helpful to our shipbuilders, covering £6½ million, with a further £60 million under negotiation.
  At the other end of the scale we introduced the Small Exporter Guarantee, a way of encouraging and assisting export "beginners" and also of demonstrating E.C.G.D. facilities to them in a simple way. At the same time, in April, 1961, we made a substantial reduction in premium rates by 20 per cent. overall.
  Since those changes of two years ago—and we have made a number of others—last year the full percentage facility was introduced whereby trouble-free contracts which have run two years from completion can enjoy, without extra charge, a full 100 per cent. insurance cover. At the beginning of this year we announced, in respect of short-term business, the grouping—this is an extremely technical and specialised matter and I must get it right—under a single premium rate of the various lengths of short-term credit—credit up to six months—that is, 30 days. 60 days, and up to six months. This change not only gives a useful simplification of procedure, but provides also a cash benefit equivalent to an average reduction of premium of 8 per cent. on no less than four-fifths of our turnover.
  The several premium reductions I have already mentioned have, of course,
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  had their impact on receipts and have lessened the scope for further concessions. Nevertheless, the volume of business has increased, revenues remain buoyant and the accumulated reserve from past transactions has continued to grow, further reinforced as it has been by the interest credited on it in its Commercial Account. The E.C.G.D. Advisory Council has considered the position and has taken all these factors into its calculations.
  I can now announce—and I have kept this item of news until the end—that the Department will be making a further reduction of 10 per cent. in its charges for insuring export risks. This reduction will be effective immediately for all business transacted from the beginning of this month and the Department will be sending new premium schedules this month to all holders of comprehensive guarantees so that they can apply the new rates to their April business. This reduction will lower still further the costs of exporting and will, I hope, induce still more exporters to make use of the E.C.G.D. facilities.
  Apart from credit insurance, industry needs to secure finance for exports on the best terms. The facilities available in the City and through the banks are, perhaps, not as well known as they might be, and the Minister of State is studying ways of making this information more widely known. As regards the cost of such finance, I look to the financial institutions to respond to the lead we have given in reducing E.C.G.D. rates.
  I have been able to touch on only some of the aspects of Government policy.
  Mr. Callaghan: Before the right hon. Gentleman leaves the question of exports, may I say that we shall want to study what he has said, but, in the meantime, can he tell us what increased target of exports he is hoping for as a result of his announcement?
  Mr. Erroll: I am not in a position to commit myself to a target at present, because I know that I would only be giving the hon. Gentleman a hostage to fortune; and I do not intend to do that.
  Mr. Callaghan: The National Economic Development Council has announced a target of growth of 4 per cent., which the Chancellor of the Exchequer has said he accepts. N.E.D.C. also says

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  that to secure that target we will need an increase of 5 per cent. in our exports. In view of this, it seems fair to ask the President of the Board of Trade whether the Government expect to get a 5 per cent. increase in exports this year?
  Mr. Erroll: I would like to put it the other way and say that if we fail to reach a target of 5 per cent. then we will not have the other growth figure of 4 per cent.
  As I say, I have been able to touch upon only some of the aspects of Government policy affecting our domestic economic activities and our overseas trading position which are so relevant to the Chancellor's Budget proposals. In summing up, I submit that we are in no sense complacent about our achievements or about the prospects in the year ahead. It will be a testing year and the aims we have set ourselves will not be achieved without resolute action, not only by the Government but by all sections of society.
  The Budget proposals and the further measures which I have outlined present a twofold challenge to industry to bring prosperity to the development districts, particularly in Northern England and Scotland, and to win the increase in the country's export earnings that we must have for our economy to grow, as it can and should. The Government are doing their part and I believe that we can go forward confident that industry will respond to the opportunities of the year ahead.
  5.26 p.m.
  Mr. H. Rhodes: I am always somewhat shocked when I am called upon to speak, and even after all these years I still get the jitters.
  The right hon. Gentleman the President of the Board of Trade spoke about the development districts. Were it not for the fact that I have spent several months on the Estimates Committee—where this matter has been considered—I would have taken what the right hon. Gentleman said on its face value. Knowing what I do, I cannot do that because right up till the last bit of evidence we received, and that was only about a month ago, the Board of Trade estimated that it would have spent about £81 million from 1st April, 1960, to 31st January, 1963, and would thereby have provided about 90,000 jobs.
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  I say this because up to a month ago neither the Board of Trade nor the Treasury knew whether or not a single job had been provided. The reason for this is the weakness of the Local Employment Act and the fact that accountability is not called for regarding the number of jobs provided for the amount of money spent. I challenge the President of the Board of Trade to get to his feet and say, now that the Act has been in operation for nearly three years, how many jobs have been created for the amount of money spent up to date.
  Mr. Erroll: In the early part of my speech I gave an estimate of 90,000.
  Mr. Rhodes: That is absolute nonsense, because that figure is nothing more than an assessment, an assumption, and I still challenge the right hon. Gentleman, or even a Treasury spokesman, to give me the figure. They cannot do it; or at least they could not give me one a month ago. As I say, £81 million is involved and I want to know how many jobs have been provided.
  Mr. Erroll: I find the hon. Gentleman's point rather difficult to follow. If he will go to Bathgate he will see that whereas there were green fields less than three years ago 3,000 people are now working there. That represents 3,000 jobs having been created. Here are 3,000 people drawing pay packets; people who did not have jobs before.
  Mr. Rhodes: I have never heard such nonsense. The Board of Trade could not in cross-examination say how many jobs have been created. It is no use the President of the Board of Trade drawing a red herring across this. If he will consult the officials of the Board of Trade he will find that I am right.
  Concerning the question of Wiggins, Teape & Co., it was stated that we should require a new Act for this. As a matter of fact, we do not. Under the Local Employment Act, the motor car industry, with the support of the then President of the Board of Trade who is now the Chancellor of the Exchequer, received in the case of Scotland £10·73 million for one project and £10·33 million for another. Those are the Board of Trade's own figures. I am quoting figures that have been given to me. Why could that not have been done sooner? Why rely on

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  putting through an Act of Parliament which will take some considerable time? Why could it not be got on with?
  Now to the Budget implication. A few weeks ago I was speaking in the Come Valley by-election, and one of the questions addressed to me at a factory was, "Why is it that this firm's quotation on the Stock Exchange is now 20 per cent. higher than it was last September? We are not any busier than we were last September; in fact, we are less busy." I said, "It is because the investors are expecting that the Government will step in and do something to boost trade." My questioner said, "Does that mean that the investor is getting his cut before Government action, because, if it does why cannot we put in our wage claim before as well?"
  Sir C. Osborne: Did the hon. Gentleman not tell him that South Durham steel shareholders in the last two years have seen their shares come down from 63s. to 11s. 3d. and they are getting no dividends; that one has to be put one against the other?
  Mr. Rhodes: I have no doubt that the hon. Member when he comes to speak will have some criticism of his Front Bench because the Government have not given him an opportunity to line his pocket with increasing values of shares. [HON. MEMBERS: "Withdraw."] All right, I will withdraw it. Let me say to the hon. Gentleman that he has had experience of this subject for a long time, and he probably is of the opinion that unless growth is of such a nature that it will give a fillip to the Stock Exchange the Budget proposal will not succeed. That is precisely what my questioner at Slaithwaite was getting at. If Government action will increase the value of the shares on the Stock Exchange, he wanted to know why he could not have his cut beforehand as well.
  Yesterday, the Chancellor went a tremendously long way towards making the climate of opinion for the introduction of an incomes policy. If ever a Chancellor gave a hint to institutions such as the Stock Exchange that it could not expect another 1958, 1959, 1960, it was yesterday. I think that he went some way towards creating a climate of opinion where he could start again with his in-
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  comes policy, because I am certain that unless we have an ordered incomes policy in an expansionist economy we cannot succeed in our aims.
  There are two or three principles involved in this. There is the principle of automatic compensation for rises in the cost of living. No one could disagree with that. Another is that differentials should be maintained. Where the difference arises is what labour receives as the fruits of productivity. My personal view is that if we could get down to an understanding and arrangements for an agreement on this, irrespective of a looming General Election, it would go a long way towards saving this country in the struggle that lies ahead. Anybody who does not assist in this endeavour is not doing what he should to help the country through its difficulties.
  I admire the way in which the Chancellor put over his speech yesterday. He stated certain desirable objectives on which both sides are agreed. We may differ on how the proceeds of prosperity should be divided, but we are agreed on such fundamentals as the stability of the £, the avoidance of substantial inflation, full employment, a high standard of living now and a rapid rate of growth. We agree that a fluctuating exchange rate would be bad and that periodical devaluations are disastrous, but the status of the £ and the avoidance of substantial inflation go together. If we assume that we have no control over the flow of goods, and over prices and incomes, we are left with fiscal and monetary action as the two main instruments of policy.
  For many years we have not been able to keep the £ stable or inflation within bounds without sacrificing growth and full employment. There is an inconsistency here. It seems as though, when we go for one objective we lose out on another. We have sought compromise in moderate inflation, fairly full employment and a moderate rate of growth, but the status of the £ has always been a stumbling block. The £ has remained vulnerable. As a result, one or more of the objectives that both sides of the House agree are desirable has had to be discarded according to the economic or political state of the country, and the Government have had to act.
  We remember the incentives given to the economy in 1958–59. As I have

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  repeatedly said, those incentives were a fraud. They were not dependable, and they made many people in industry, particularly in the north of England, suspect that we are approaching the time for a "phoney" boom. That is what they call it. We have to do a lot before we can restore confidence, because businessmen are looking cynically at what the Government are doing. I will not detail all that the Government did in 1958, 1959 and 1960—that has been done before by myself and by others more competent. Suffice it to say that the result of the stimulation given in 1959 and 1960 was one of the most catastrophic drifts into wage increases that the country has ever known.
  Many people again expect a release of purchasing power and a boom, but I do not think that the Government will get it this time. Many of today's factors are quite different from those of 1959. For instance, we will not have the banks going into the hire-purchase business as they did then for the first time in a big way.
  Will the Chancellor's measures be successful or not? He has made it clear that he accepts a rise of 3½ per cent. per annum in terms of income increase. He has accepted the growth rate of 4 per cent. Whether he will postdate the 4 per cent. target to 1961 as the N.E.D.C. did he did not say, but it is certain that if he wants to achieve what he seeks by 1970 the growth rate must be more than 4 per cent. from now on.
  If we doubt whether the Chancellor's measures will be sucessful, it is only fair that he should state why. I think that the right hon. Gentleman is vulnerable on two points. He is vulnerable, first, in regard to manufacturing industry. As a result of the spending boom in 1959–60, investment by manufacturing industry on capital equipment amounted to £1,195,000. There has been a large decline in 1962. Unless the Chancellor can get a correspondingly high investment in the private sector of manufacturing industry he cannot possibly get his growth figure, because the two are tied together.
  Some experts say that the money spent in 1960–61 has been largely wasted. Have we had a return for it on the basis of profits? No. Have we had a return on
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  the basis of growth? No, because growth has been comparatively stagnant, with much plant idle. As profits have gone down so this has directly affected the decisions that managements are likely to take to reinvest and to take the inducements offered by the Chancellor in the shape of investment allowances last autumn. The figures show that a colossal release of purchasing power—more than, has been injected by this Budget—has been needed in the past to get substantial investment under way. The lesson of a balance of payments crisis preventing manufacturers from using all the resources has been learned.
  The machinery makers are left frustrated, their development is discouraged, and they very often just tick over until the next boom will enable them to sell their old models. We cannot afford this, and the only way to avoid it is a steady flow of capital investment so that machinery makers can carry the cost of development all the time. Whether we like it or not, this is where central planning will have to come in.
  Thought is being given to this problem. For instance, the machine-tool industry is waking up to the fact that it needs something like this in order to make progress, and it has suggested that, in fat times, there should be a syphoning of its profits into a reserve, as in Sweden, so that in lean times it can take advantage of what has been saved.
  N.E.D.C. has assesed the growth prospects of 17 industries. That is first-class as far as it goes, but why cannot the Council now proceed to an investigation in depth of the industries that supply the manufacturing industries with their machinery, in order to make certain that the productivity of the machines supplied over the next decade is well in advance of growth targets? An investigation like that will give us some shocks, but unless we make it we shall not be sure that our resources are used to the best advantage. We want, too, to know whether the development of the machines in which manufacturing industry invests and on which it depends will be channelled to the growth industries on which the country will depend as a spearhead in the export trade.
  Let me give an illustration. The wool trade is a first-class export industry. It exports £160 million worth of goods a year, and will continue to do so. It has

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  10,000 looms which run at a rate of 96 picks a minute, but the best looms in the world run at speeds ranging from 138 picks to 250 picks a minute.
  Is it not the Government's concern that this should be remedied? Is not the N.E.D.C. the instrument to find out why this is not done, and is it not up to that body to provide the answer and say how it should be done? This illustration can be multiplied many times over the face of British industry. In terms of manufacturing industry, investment should now be on the basis of quality and productivity rather than in terms of capacity, as it was in the boom years of 1959, 1960 and 1961.
  I have lately been to Japan and have had the opportunity of studying what the Japanese do about their export trade. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) drew our attention to an article published in The Times this week. I should like to say to him and the Committee that what the professor was advocating in The Times this week the Japanese have been doing for ten years. If any advanced country has a new industry or a new technique, the Japanese want it. The Government, workers and everybody in Japan are enthusiastic about going forward.
  When the Japanese hear of a new product or patent in any part of the world applications for licences to manufacture are applied for. The Japanese know precisely what the shape of their export drives will be for the future. In 1953 they began their planned exports. The British Government will have to do the same if they are to succeed in the efforts announced this week. The Japanese are switching over from light industry to heavy industry all the time. The authorities there show very little interest in industries which, although they are exporting successfully now, are likely to decline in the future.
  The cotton industry in Japan is not regarded as in the forefront of their exporting industries. The Japanese have already stated publicly that they expect the under-developed countries to take on the job of making cotton and other textiles. The way in which the Japanese get down to the assessment of trade figures is ingenious. They take the percentage
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  of world trade in a commodity and then assess their own share of that world trade and give themselves a rating. If world trade in the commodity is rising, then Japan's index must rise, too. If their specialisation index is high and world demand is not rising they just do not care about the industry concerned.
  Now a word about aids. The Japanese give exemption from corporation tax on profits on a new product. They give freedom to import "know-how" in growth industries. They provide tight protection for infant industries. They give low rates of interest in connection with goods for export. They provide low discount rates for bills of exchange. They give 80 per cent. relief of Income Tax on export profits. If any firm exports 50 per cent. of its products it qualifies for 80 per cent. relief of taxation as well.
  Just as the Japanese know the precise shape that their export trade is likely to take, there is no reason why we should not know the same here. What is to prevent us from getting down to this task and finding out which industries will be the exporting industries of the future and stimulating them? We have had too much "stop and go" and action afterwards because palliatives are needed.
  It is up to the Board of Trade to show that it has some ideas which are out of the rack of platitudinous repetition given to us this afternoon. It must show this by generating energy in planning our export policy. If it does not, then all we have to say today of yesterday's. Budget speech is that it was just another waste of time. It is up to the Board of Trade to prove that it can perform this task.
  5.54 p.m.
  Sir Cyril Osborne: I am always pleased to follow in debate the hon. Member for Ashton-under-Lyne (Mr. Rhodes) because he has great personal experience in trade and he usually knows what he is talking about from the practical point of view. It is true that at times he says one or two extravagant things and I am glad that he withdrew one of those comments today on second thoughts.
  The problem for the country and the Committee is simply how we as a Government can help a nation of 52 million to earn a living in an increasingly competitive

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  world and give the people a high standard of living and full employment. This problem will not be solved by throwing party points from one side of the Committee to the other. On the Chancellor's speech I should like to make three short points. First, I congratulate my right hon. Friend on what I consider to have been the hest Budget speech I have heard since I became a Member of Parliament in 1945. Secondly, we should remember that the nation, the House of Commons, and my party in particular, owe a special debt of gratitude to my right hon. Friend's predecessor, my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) because reflation in this Budget would not have been possible but for the stern and unpopular measures taken by him.
  Mr. Arthur Lewis: And so they sacked him.
  Sir C. Osborne: I am not the boss.
  Thirdly, I should like to warn my colleagues, who I wish were here in greater numbers, against over-optimism as a result of the Chancellor's proposals. My right hon. Friend has not played a kind of pantomime fairy godmother part, waving a wand and taking all our troubles away. The economic problems which faced the nation on Monday are still here on Thursday.
  Steel production today is only 70 per cent. of the industry's capacity. Shipbuilding is only half employed. I had lunch today with one of the big shippers. He told me that the shipbuilding capacity of the world is twice what the world needs. This is one of our problems. We have to fit our economy in with that of the rest of the world. The Lancashire cotton trade still faces the problem of Hong Kong imports and, regrettably, we still have nearly ¾ million unemployed. These difficulties and concrete problems still face us despite yesterday's Budget. For hon. Members, particularly on this side of the Committee, to go away cheering blindly over one speech is, in my opinion, the height of folly.
  I say to my right hon. and hon. Friends on the Front Bench that unless an incomes policy is accepted by both sides of industry nothing that the Chancellor of the Exchequer does can succeed. This is the key to everything. The leaders of
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  industry and the leaders of the great unions must themselves play their difficult parts, for without their co-operation whatever the Chancellor proposes will not succeed.
  I put the Budget proposals to three practical tests. First, will they help exports? Secondly, will they help to check inflation? Thirdly, will they help the unemployed'? I admit that if they did all three it would be a miracle, but I have been in the House too long to expect miracles.
  I take exports first. In my view, this is priority No. 1 for, unless exports go well, the whole fabric of our economy will fall to pieces. Everything depends upon it. We have to import 50 per cent. of our food and practically 100 per cent. of our raw materials, and these have to be paid for by exporting roughly one-third of all we manufacture. No Government of any party can compel the foreigner to buy British. He will buy British only if our goods are cheaper, better or more attractive, or are sold better, not just because they are made here or because we have a Conservative Government, a Socialist Government or even, perhaps, a Liberal Government. We have not the power to compel other people to buy our goods. Our goods must be sold abroad if we are to pay our way.
  Either we export or we go hungry. Let hon. and right hon. Members opposite remember that if exports fail, and if they are so sure that they will win the next election and be the next Government, it may well fall to their lot to have to impose bread rationing as a previous Labour Government had to do in 1946. These are the prospects I want burned into the hearts and minds of our people.
  Furthermore, as the under-developed countries industrialise themselves in order to raise their own standard of life, so the United Kingdom's problem of selling in world markets will grow. Let us face it. Any fool can give exports away. Exports must be sold, and sold at such a price as will cover all our costs of production and leave a profit in order to maintain the Welfare State. Otherwise we go bankrupt.
  London's financial pre-eminence and England's prosperity were built upon our being the centre of one world economy. The old Jewish prophet said that we are all bound up in a bundle of life together.

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  This is true economically as well as spiritually. No country suffers so much as ours from the division of the world through the cold war. We stand to gain more than any other nation from an ending of the cold war and the increase of East-West trade, of world trade. London was the centre of finance, insurance, banking and the entrepôt trade of the whole world. By cutting the world in half we suffer far more than anyone else.
  I make this plea to my hon. Friends on the Front Bench. We ought to make a double effort, certainly double the American effort, to come closer to Mr. Khrushschev, who, I believe, has made a special effort, even at his own risk, to get understanding between East and West. I should like to see it done especially in trade.
  From my own experience I know that exports are not fun. I find, as most of my friends do, that they are damned hard work. It is human and understandable for manufacturers to sell in the easy, more profitable home market rather than take all the trouble necessary to go into the more difficult and less profitable export markets.
  Hon. Members opposite sometimes toy with the idea of comprehensive planning for export, industry by industry, as far as possible within the framework of our free competitive society. I confess that, from time to time, I am tempted to go half-way with them because, if industry will not export, sooner or later the Government must say, "Either you do it or else". However, I remind hon. Members opposite of this, which is what worries me when I am tempted to agree with them. In the iron and steel industry the Board has the power to control production, but, in spite of that, the iron and steel industry today is running at only 70 per cent. of capacity. The cure to our problem of production for the home market and the export market lies not merely in some form of planning. Other things are needed. There is a world surplus of steel producing capacity, and the other parts of the steel producing world also are running at less than capacity.
  Industries which have to import a lot of raw materials in order to do their business should, in my view, be com-
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  pelled to earn their own foreign currency by exports. They have no right to expect other industries to earn the foreign currency which will enable them to buy raw materials to keep themselves going.
  My summary of the export situation is this. I think that it will be increasingly more difficult for us to sell, and, if the Chancellor will allow me to say so, I do not think that this Budget will do an enormous amount to help exports.
  Mr. R. Gresham Cooke: I am following my hon. Friend's argument with great interest, and I agree with much of what he says, but what is the position of the building industry, for instance, which uses a lot of imported raw materials, timber and so forth? How can that industry export to buy its own raw materials?
  Sir C. Osborne: I am obliged for that interruption, but I do not think that there is much in it since I do not agree that the building of houses uses a lot of imported raw materials.
  Mr. Gresham Cooke: It does.
  Sir C. Osborne: I do not wish to keep the Committee long, and I have two other points to develop.
  I come now to my second test. Do the Budget proposals help to check inflation? I am very pleased to see my right hon. Friend the Minister of Defence here because I recently read again the speech which he made from this bench after he resigned as Chancellor of the Exchequer. With almost all that he said I agree, and I shall use one of his arguments, if he will forgive me for stealing it from his speech. I do not think that the Budget proposals will help to check inflation at all. I think that they will make inflation worse.
  From July last year, the Chancellor released £681 million extra spending power. The present Budget proposals will release another £250 million. About £1,000 million extra spending power will have been released in the last nine months. Unless not only home production but exports rise in some relationship with that £1,000 million extra spending power at home, there must be inflation. I hate inflation. It is our duty to do our best to check it. I warn

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  the Committee that there is a terrible danger of hon. Members on both sides thinking that somehow we can spend ourselves into prosperity. We cannot. An artificially buoyant home market without a sound export basis is the worst of all dangers, and it is folly to put more purchasing power into the home market without having the corresponding exports to support it.
  To my mind, there are two chief causes of inflation. The first is that wage and salary increases are not linked with extra production. The greatest modern economic fallacy in our country which has arisen since the war is that the workers have a divine right every year to an increase in wages. It is a dreadfully stupid concept, and unless production increases it must produce inflation.
  Mr. A. Lewis: The hon. Gentleman has not said a word about the right hon. Member for Woking (Mr. Watkinson), who never puts in an appearance here but who is now on £24,000 a year plus another £3,000 or £4,000 in allowances. Is not that inflationary?
  Sir C. Osborne: That is not quite fair.
  I believe that the British people—including myself—have no idea, unless they go abroad regularly, how lucky they are in their standard of living. I asked the Treasury only last week what was the annual income per capita in this country and in Pakistan and India. I was told that the figure for this country was roughly £400 and for India £25 and Pakistan £20. I was told that an average of those figures is £56—£56 for everyone, Front Bench Members as well as back bench Members, and old-age pensioners as well as Members of Parliament, less than 25s. a week. The British worker would say he could not live on that. The Indian worker lives on much less, and has to do so. Yet here we are demanding more and more money for less and less work.
  This is what is wrong. Because of the fear of losing votes, neither side of of the Committee will tell the people the truth. We say, "Do not frighten the people or they will vote against us." This is what I protest about. People may say, "But you are talking about the Asiatics." It was reported in the
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  Economist last Saturday that the minimum wage in Spain had just been raised from 4s. 6d. to 7s. a day—less than £2 a week. Yet we are telling our people that they can have more and more money, whether or not they do more work or produce more wealth. This is the greatest cause of inflation.
  I well remember sitting on the Opposition benches with the late Sir Stafford Cripps sitting on the Government benches when we sat in the Chamber in another place. He pleaded often and earnestly that there should be no increases in salaries, wages or dividends unless we increased production. What a strong position our nation would be in today if only we had followed his advice.
  Mr. Snow: What encouragement would the hon. Member's party give?
  Sir C. Osborne: Forget party politics for a moment and consider the matter in the national interest.
  What an immensely strong position we would be in today if our wage rates were anything like what they were twelve years ago. The German miracle would be nothing compared with ours. We should have no unemployment and no export problems. Though we did not have the wisdom to accept Sir Stafford Cripps' wise advice, for goodness' sake let us act wisely and accept it today. Instead of talking about a 2½ per cent. increase in wages each year, why does not my right hon. Friend the Chancellor of the Exchequer put in the public mind the idea of stability of paper incomes and a 2½ per cent. reduction every year in the cost of living? That is a much better idea, and all the country would be better off if it were achieved.
  My right hon. Friend the Minister of Defence said in 1958 that the Government were trying to do far too much. He said that we cannot have terribly expensive nuclear rearmament and, in addition, conventional forces, and that we cannot have on top of that a Welfare State and make great loans abroad and have a shorter working week at the same time. We are trying to do too much with our limited resources, and I repeat the plea which my right hon. Friend made in 1958 that we should get our priorities right and cut out some of the things which are beyond our resources.

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  May I remind my right hon. Friend the Minister of Defence—and I am glad that he is here—that in 1951, when our party came to power, Government expenditure was £3,800 million a year. In 1956 it went up to £4,800 million, and the present Prime Minister promised that he would reduce it by £100 million a year. Today, Government expenditure is nearly £7,000 million. Is there no hope of reducing Government expenditure and of restoring honest money? Because of what I have said, I do not think these Budget proposals will help to check inflation at all. I think the danger is that they will make it worse.
  The third question which I wish to ask is whether the Budget proposals will help the unemployed. I do not put this question last because I think that it is the least important. It is important, along with the other questions. I do not think that these proposals will help the unemployed to any great extent, and I think it is a cruel fraud for hon. Members opposite to suggest that they can, by political means, guarantee full employment for all time and a high standard of living. That is just a nasty, cheap political fraud. Every week we have Questions in the House from hon. Members on both sides demanding that the Government shall create full employment in their areas. No Government can guarantee full employment for all time for everyone, not in a free society. It is a nasty, cheap swindle for us as politicians to tell our people that we can do it, or to pretend that we can do it.
  I wish to quote something which the Deputy Leader of the Opposition said last month. I wrote him a note telling him that I would refer to him, so I cannot be accused of discourtesy if he is not in his place. A report in The Times of 22nd March said:
  "Mr. George Brown, deputy leader of the Labour Party … said he had had a popular make of car for the past fifteen months and during that time, 'every single wire fell off and every screw and bolt that could fall off fell off'.
  It goes on to quote him as saying:
  "in that time"—
  that is, in the fifteen months that he had had this popular car—
  "we came to hate every sound of it, and had I been an overseas buyer it would have been the last I should have bought of that make."
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  What I want to ask the Opposition is this: if their Deputy Leader says this, how can they guarantee the jobs of the men who make those cars?
  Mr. A. Lewis: What about the executives?
  Sir C. Osborne: Since the Deputy Leader of the Opposition says that if he were a foreigner he would not buy British goods, and since 5 million jobs depend on those exports, how can hon. Members opposite honestly say that they will guarantee full employment? What would the right hon. Gentleman do to people who make these cars, management as well as labour? What sort of discipline would he impose? These questions must be faced. The right hon. Gentleman said that if he were a foreigner he would not buy another British car. Then he goes out to the country saying that Labour will guarantee full employment when he, as an individual, is doing his best to see that there is unemployment in the motor trade. [HON. MEMBERS: "Oh."] Here is his statement—
  Mr. Douglas Houghton: I am sure the hon. Member does not wish to misrepresent my right hon. Friend. The hon. Member read out the extract from my right hon. Friend's speech, that if he were a foreigner it would be the last car of that make that he would buy. A moment ago, however, the hon. Member represented that to be a declaration that if my right hon. Friend were a foreigner, he would not buy another British car. The two are very different statements.
  Sir C. Osborne: To the extent that I exaggerated, I withdraw, but in so far as this concerns, I understand, one of our greatest motor manufacturing organisations, employing hundreds of thousands of men, it would jeopardise their jobs. This is not encouraging foreigners to buy the cars upon whose purchase depends the whole of our Welfare State as well as the jobs of the men who make the cars.
  Mr. Sydney Silverman: The hon. Member is doing a great injustice to my right hon. Friend the Deputy-Leader of the Opposition. My right hon. Friend's point was that the firm in question would sell more cars if it took steps to put right the

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  faults of which he was complaining. I do not know why anybody should consider that amusing. I thought we were all interested in seeing that British products were the best in the world in order to have their share of the foreign market. If there are faults, surely they should be pointed out.
  Sir C. Osborne: That intervention did not help the Deputy-Leader of the Opposition, to whom I gave notice that I would refer to him. He has not troubled to defend his view, because it cannot be defended. This was what the right hon. Gentleman said:
  "… had I been an overseas buyer it would have been the last I should have bought of that make".
  Is that helping British exports? Is that helping the workers who make the cars? Can they be promised full employment on evidence like this? I, too, do not regard it as anything to laugh about, and neither would the men whom the right hon. Gentleman would wish to put out of employment.
  Both sides of the Committee must look at the question of unemployment from an entirely new point of view. I am convinced that if we had full co-operation between management and labour and both were efficient, and if all the available labour-saving equipment were fully used, we could produce 25 per cent. more goods with the same labour. The problem is, what are we to do with the labour that it no longer required to produce a given quantity of goods? It is not, however, a problem which faces only this country. It faces the whole Western industrialised world.
  Let me give just three examples. In 1946, Britain's agriculture employed 976,000 men and women. Last year, the number was down to 633,000 and yet this smaller number of people produced 50 per cent. more food. In 1948, British Railways employed 648,000. Last year, the number was only 474,000. In 1947, the nationalised coal industry employed 711,000 people and last year, only 551,000, and yet this much smaller labour force produced exactly the same amount of coal as the much bigger labour force of more than ten years earlier.
  Sir Robert Cary: Mechanisation.
  Sir C. Osborne: Of course. This is the problem that faces the whole of Western industry. Fewer men can produce more and more wealth. How are we to find jobs for the men who are displaced by automation? On the other hand, we cannot afford a Luddite attitude to the newly-developed countries.
  What are we to do for the men now employed if the scheme introduced by my right hon. Friend for the North-East, introducing much labour-saving machinery, puts them out of work? This is a problem which both sides of the Committee must face.
  I am convinced that in British industry there is a lack of confidence and an unsettling uncertainty that hampers possible development. It is my right hon. Friend's job to try to dispel those fears. There is ahead of us real danger of a great slump, equal to the inter-war slumps, unless we are careful. I beg my right hon. Friend not to take this too lightly or too cheaply. It is not often I agree with the absent Leader of the Opposition, who earlier this week, in New York, warned the Americans that in his opinion there could be a 1931 slump back here again in a year or two's time.
  To support the Leader of the Opposition, I make two final references. On 3rd March, the New York correspondent of the Daily Telegraph wrote:
  "The spectre of 'disaster' for the American economy was conjured up in Washington today by President Kennedy .. .. Mr. Kennedy, who spoke some weeks ago of the need to spur the economy, is now talking darkly of the dangers of another recession. His own economic advisers do not see one in prospect this year, though they concede one is conceivable next year."
  As the late Aneurin Bevan said to us so many years ago, if the Americans catch a cold, we catch pneumonia.
  Finally, in the Sunday Times of 24th March, Mr. William Rees-Mogg said:
  "Yesterday in Chicago, President Kennedy warned that the U.S. might face 'ten years of recession' and chronic economic troubles unless Congress passed his proposed tax cuts."
  I beg Ministers to face these possibilities and to do something to reassure the business world and to encourage the trade union leaders, who have a difficult task. And in his difficult task, I wish him luck.
  6.27 p.m.
  Mr. Anthony Crosland: During the course of his half-hour speech

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  the hon. Member for Louth (Sir C. Osborne) gave three criteria of what he considered to be a reasonable Budget, and by each one of them he condemned the Budget and his right hon. Friend the Chancellor of the Exchequer. It is not clear why the hon. Member would not go into the Lobby against the Budget and will not do so whenever opportunity arises. His speech was the most sweeping condemnation of the Budget that we have heard today.
  I am not surprised at the hon. Member, who represents the constituency next to mine, being worried about the state of the motor industry, because if Dr. Beeching has his way neither of us will be able to get near our constituencies by train. Therefore, I share some of the hon. Member's worries about the state of efficiency of British cars.
  The hon. Member was certainly unfair to my right hon. Friend the Member for Belper (Mr. G. Brown), who had merely tried to do precisely what the hon. Member was doing in the whole of his speech. My right hon. Friend was trying to improve the competitive efficiency of British manufacturing industry by making constructive criticisms. The whole of the hon. Member's speech consisted precisely of that.
  Following the Chancellor of the Exchequer yesterday, we have today heard the President of the Board of Trade. The debate has become slightly soporific at this stage, partly because the Budget was less exciting than some people expected and partly because the President of the Board of Trade tends to breathe a mood of drowsy euphoria among his listeners. He rattles through an enormous number of detailed points, exuding good humour and amiability all the way round. This tends to have the effect of emptying the Chamber and of diminishing interest, particularly as after one has thought about what the right hon. Gentleman has said, one realises that he has said extraordinarily little.
  The right hon. Gentleman reminds me of a well-known story told by Harold Nicolson that when at school he was reproved by his tutor for a minor misdemeanour and was compared, to his chagrin, with an odious school prefect named Marston, who, his tutor told him, had never had a mean or nasty thought. "It was six years," said Harold Nicolson,
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  "before I realised that he never had a thought at all." That is what one sometimes thinks after hearing speeches by the President of the Board of Trade. The right hon. Gentleman was complacent in what he said about British exports. Some of the minor matters which he raised would, no doubt, be helpful, but his whole tone was complacent.
  Before coming to the main question of competitive exports, I want to register a protest against what I think is the very dangerous habit of saying that countries like Japan are only growing faster than we are because they started from a point further behind. I think that this is both a very fallacious and a very dangerous argument. I think it impossible to reconcile with the fact that one or two European countries with practically the same standards of living as we have are still going ahead a great deal faster than we are, and I find it impossible to reconcile with the fact that we never catch up with the United States. After all, we are well behind the United States in standards of living, Why do we not catch them up, since we started from a point further behind? I think that this is an argument which proves a great deal of complacency which is very dangerous.
  As far as the Budget is concerned, I should like to start by echoing one thing that my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said, that there was a striking omission in the Chancellor's speech, namely, that there was no serious inquest on last year. Surely the one thing which 1962–63 proved once for all, beyond any shadow of doubt, was that the traditional Conservative and. indeed, Treasury policy that cutting imports and domestic expenditure is a cure for balance of payments without inflation is disastrously wrong; and from the Chancellor's speech I hope that this lesson has been finally learned.
  I say that I hope it has been finally learned, because the doctrine that if we hold back home demand we solve the balance of payments and the export problems, and we prevent wages from rising faster, has been the doctrine and the policy for the last twelve years, and last year's economic record shows it to be erroneous. Certainly, last year was an excellent test of this doctrine and we see that the doctrine was without any foundation of any kind.

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  As far as imports are concerned, they did not fall because we did not get deflation. We had deflation all right and 2½ per cent. unemployment, even excluding the seasonal. This conceals the fact that the labour force could have been very much greater, and there was unutilised capacity—30 per cent. less steel, and a good deal less also in most of the metal-using trades.
  We had deflation all right, but what went wrong was that deflation did not do the job it was supposed to do to help the balance of payments. It did not reduce imports, which went up by 4 per cent. during the year; and imports of manufactured goods went up by 12 per cent. in the year, although our industries producing those goods in this country had a great deal of spare capacity. Demand certainly did not solve our exports problem.
  Exports, as the President of the Board of Trade told us this afternoon, rose during the first half of the year, but fell during the second half while world trade manufacturing as a whole was increasing, while wages were going up more rapidly in most European countries, particularly in Germany.
  I think that this all amply proves that periodic cuts in home demand are not the way to cure the balance of payments. It is true that the balance of payments did improve somewhat, but the reasons for that had nothing to do with cuts in domestic demand. All that this policy does is to slow down the rate of growth, and it means waste of capital and waste of labour in this country. All that it does in addition is to reduce the rate of investment, thus making our whole industry less competitive and very much more insecure. I hope, from the Chancellor's speech and firm statement about expansion and a strong £, that this policy has now been buried once and for all.
  As to what the Chancellor has done this year, it is very hard to take up any dogmatic view whether he is giving away too much or too little or not quite enough. Anybody who dogmatises in this field is, clearly, an imbecile. This in the end is a matter of judgment and one cannot state statistical proof. Nevertheless, there is something to be said for what my hon. Friend the Member for Cardiff South-East said, that the Chancellor has acted on the cautious side.
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  He has certainly given away less than most outside commentators thought necessary.
  I should like comment on this matter later, but it appears likely that what he has given away will not be sufficient to bring us properly back to full employment and full utilisation of capacity, and it also seems unlikely that the amount he has given away in this year will give us the rate of growth which will bring us back to the N.E.D.C. target. I am not clear what the Chancellor's view about this is, and perhaps it could be explained.
  I understood him to say that this concession of £250 million would give us a 4 per cent. rate of growth this year, but if that is the case, since we are already nearly two years behind the N.E.D.C. target of 4 per cent. in 1961–62, this implies that we must achieve a faster than 4 per cent. rate this year to achieve the N.E.D.C. target by 1966. However, it is a matter of judgment whether he has been somewhat too cautious or not.
  What I want to discuss mainly in my rather brief speech is the question of the balance of payments, the question to which the hon. Member for Louth addressed himself, the question of making our exports competitive, because, whatever the right figure, whatever is the precisely correct figure for the Budget this year, the major limiting factor of our economic policy under any Government is our balance of payments.
  As far as the short run is concerned, the Chancellor, clearly, is intending to take a risk, and I am certain he is right, with exports this year. He reckons, presumably, on a moderate surplus in the balance of payments even if imports go up rather faster than they otherwise would have done. He reckons that he can cope with a certain amount of borrowing, and I am sure that he is right to take a risk and right, if necessary, to borrow to do this.
  But this policy does not solve our long-run problem and certainly there is no possible prospect of solving it in 1963. This surplus of £400 million is not within miles of the N.E.D.C. target. The surplus is necessary not only for reasons connected with economic aid, exports and imports, defence expenditure abroad, and everything like that; it is also absolutely essential if we are to reduce the

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  vulnerability of sterling. The speculation against sterling which would occur if we had a surplus of anything like that size is, of course, less than the amount of speculation which occurs with a comparatively small surplus such as we have at the moment. Therefore, to achieve that surplus must be the first priority of any Government's economic policy.
  Why is it that it is apparently so hard for the country to achieve this surplus? After all, it must be ten years since the Chancellor first set a target something like this, and yet we are as far away from achieving it as we were then. According to N.E.D.C. we have to achieve a 5 per cent. increase in exports every year. Why do we not achieve this? Basically, we do not—and here I come much nearer to the view of the hon. Member for Louth—because our goods are not competitive. When it can be shown year after year what a huge increase in manufactures there has been, and that industrial production has increased abroad, it is surely hard to suggest otherwise.
  If we look at exports we find year after year that our share of the trade in manufactures has declined. This seems to me to suggest beyond any shadow of doubt—and it was confirmed in the N.E.D.C. Report—that our goods are not competitive.
  What is to be done about this? Let us assume, for the sake of argument, that we rule out devaluation. But let me say something about devaluation—though not to advocate it—and the exchange rates. One of the curiosities of the change in thinking over the last few years is that the wartime hopes of how we would organise international trade have completely disappeared and no one apparently holds them any longer.
  I recall the plans drawn up during the war, in which Lord Keynes and many others played promient parts, Then, it was practically taken as axiomatic that if a nation was faced with difficulties in its balance of payments after the war, instead of being forced to deflate, as was the case before the war, or forced to restrict imports—both of which measures have great disadvantages—it would change the exchange rate. This theory underlay the
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  Bretton Woods Agreement and all that Lord Keynes ever wrote about the postwar world.
  But, through various subterranean moves of opinion over the last few years, we find ourselves now almost wholly attached to rigid exchange rates. That is one of the ways in which our postwar hopes have disappeared. Let us assume, therefore, that adjustment of the exchange rate is ruled out for us. What are we to do about the basic problems of making British goods competitive?
  I agree with the hon. Member for Louth that this is the No. 1 criterion which should be applied to the Budget. But by that very criterion the Budget is an extreme disappointment. There is practically nothing in it which helps towards solving the long-term problem of the competitiveness of our goods. I believe that only two things in the Budget have relevance to our general industrial efficiency.
  The first one consists of the measure to help solve regional unemployment. Naturally, if we can increase employment in these regions we shall help national production. But I am certain that we shall never solve the problem as long as we treat this as a matter of local unemployment and not as one of regional employment. The problem is insoluble on the basis of small development districts, but only when seen in larger regional terms.
  The other relevant factor is the halving of Stamp Duty. I am utterly opposed to this. The only justification for not having a proper capital gains tax over the last few years was the 2 per cent. Stamp Duty. It was an argument consistently used by Tory Chancellors of the Exchequer that we did not, therefore, need a capital gains tax.
  The reduction in Stamp Duty for Stock Exchange securities is a pure gift to the property-owning class and nothing else. I gather from the Sunday Times colour supplement last week that the Chancellor is given to dancing barefoot on the Riviera. This may be a pleasant past-time and good for his figure, but it is not the slightest excuse for doling out large sums to his Riviera companions.
  Another argument is that we need to reduce Stamp Duty to encourage foreign portfolio investment here. But I have

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  grave doubts about this. Such investment is invariably volatile. What flows in easily can flow out just as easily. I do not think that we want our balance of payments to depend on a great measure of portfolio investment from the United States or anywhere else.
  To claim that we have to depend on a continuous flow of this portfolio investment implies that we are some backward, primitive, country, being kept by rich foreign investors. We must rely on our own exertions and not try to attract volatile capital from other countries. The halving of the duty is not really justified, but it is the only measure which bears on the whole question of competitive efficiency.
  Otherwise, the Budget is distinguished only for a series of omissions. It is to be condemned mainly because of the omissions. I want to list five things which most hon. Members will agree are necessary to increasing our efficiency and not one of which is in any way sustained by the Budget.
  The first concerns incomes policy. On the whole, I believe in an incomes policy. I do not think that it is the sort of panacea that the hon. Member for Louth seems to think, nor that it is mainly necessary because wages here have gone up faster than wages in other countries. They have gone up at roughly the same pace. The trouble is that our productivity goes up slower. Nevertheless, an incomes policy has some rôle to play, although I doubt whether it is a major rôle, in increasing competitiveness. From the point of view of encouraging that, the Chancellor should have done two things.
  The right hon. Gentleman should have made some concessions not in the form of concessions on Income Tax, but in the form of concessions on indirect taxation in order to reduce prices and diminish pressure for wage increases. It is very unfortunate that he has not done this. Nor has he been bold enough with tax reform. His extreme caution about it is one of the depressing features of the Budget. He has turned down practically every major suggestion. Had he adopted the single corporation tax, he would have made it easier to control the level of profits, which would have had a sensible part in the exercising of an incomes policy. The right hon. Gentleman has missed a big opportunity there. He has
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  shown extreme timidity and, indeed, slackness over the last few months.
  Secondly, the President of the Board of Trade talked about export incentives in terms which bore no relation to what anyone is proposing. He said that we must not enter a race for export incentives. No one has suggested that we should. The whole discussion has hinged on an added value tax, and that would be a matter of adopting a tax which, within a short time, has been adopted in most countries of the European Economic Community.
  My own view of the added value tax is that it is a matter of acute disagreement as to whether it is an export incentive. Whether it is or not depends entirely on the highly controversial question whether the tax is offset by the fact that manufacturers, at previous stages, have passed the tax on in their prices. I accept that there is extreme disagreement on this.
  It is appropriate, therefore, to have an inquiry into it. What is extraordinary is that the inquiry should be announced only now, when the tax has been the subject of acute argument for months, and, indeed, years. We have had the long Report on it from the E.E.C. Commission. It was grossly neglectful of the Government to leave the inquiry until now. It should have been put in hand a year ago. Certainly, it should not be left to a single merchant banker, however eminent and devoted he is. On such a controversial matter, the Chancellor should have appointed a small committee, including not only the merchant banker but also tax experts, accountants, economists, and the rest. That would have been a far better way of going about it. He has missed yet another opportunity.
  The third major omission relates not so much to the Budget itself, but to the whole of the Government's economic policy over the past year. The Government have allowed private manufacturing investment to fall to a level nearly one-fifth lower than that of a year ago. We can disagree as to how important this investment is to growth, but no one, and certainly not the Government, says that we must not have higher investment in order to attain a higher rate of growth. To have allowed private manufacturing investment to fall to a level 18 per cent.

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  below that of a year ago is an extraordinary condemnation of the Government's entire economic policy.
  Fourthly, the right hon. Gentleman should have been more forthcoming for education, which is a particular form of investment. The people who write about economic growth cannot avoid reaching the conclusion that it depends very much on the amount spent on higher technical education. There was an O.E.C.D. Report on this very matter. This showed that any given level of investment is very much more productive in some countries than in others. This appears to be very much due to what is spent on education, especially, as I say, on forms of higher and technical education.
  The Chancellor is right in saying that our education spending is on a quite rapidly rising curve. But he should have bullied the Minister of Education a little more to spend less time on breaking down the settled bargaining procedures in the teaching profession and more time, if only to escape future strictures by the Robbins Committee, on producing a more rapid spending on all forms of higher education. That was another big omission in the Budget.
  The next missed opportunity was that the Chancellor made practically no reference to the rôle of N.E.D.C. He referred to N.E.D.C.'s targets more than once, but he made practically no reference to its rôle, and that was quite astounding in a speech which took an hour and forty minutes and of which a large part was devoted to general economic expansion.
  I would have liked to have heard a great many things from the Chancellor about how he sees N.E.D.C.'s rôle. For example, there is now an argument about whether it should or should not have a whole series of industry commissions. This is an argument of great importance and one would have liked to have had the Chancellor's views. There are many things which come within the purview of N.E.D.C. and which are still very controversial and on which the Chancellor, as chairman of the Council, should have given his views. That was a very serious deficiency in his speech.
  My general view is that although the Budget is acceptable as a short-term method of getting expansion this year, and although we may get there and I
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  hope that we get through this year and have temporary expansion without a balance of payments crisis, the Budget contributes practically nothing to the solution of the critical long-run problem, which is that of getting a 5 per cent. annual increase in our exports. It comes out with complete clarity from the N.E.D.C. Report that one possible serious obstacle to the 4 per cent. growth rate to which we are all committed—I hope that we all are—is the danger of not getting the annual 5 per cent. increase in exports. Looked at from the point of view of that overriding economic priority, I find the Budget extremely disappointing.
  I very much doubt whether the Chancellor of the Exchequer is the right man to get this large increase in exports. He seems to be becoming more and more a Baldwin-esque figure, so far as I can judge from the publicity which he is getting. He made one alarming remark which was quoted in the colour supplement of the Sunday Times last week, when he said that he used to keep chickens, but that every time he looked at them they became extremely sick. I fear that every time he looks at the British economy it becomes extremely sick. He is building up the figure of a comfortable, portly, family man very much on the Baldwin model. The only trouble is that this is a time when we need not a Baldwin as a leader, but a much more dynamic and audacious man.
  6.52 p.m.
  Mr. William Clark: I welcome the opportunity of joining in the debate. It is always a pleasure to follow the hon. Member for Grimsby (Mr. Crosland), although I did not altogether agree with what he was saying. There was an element of prejudice which I will probably pursue later.
  I should like to congratulate my right hon. Friend—my hon. Friend the Member for Louth (Sir C. Osborne) is rather worried about what I have to say, but I am speaking on the Budget for the moment—on the presentation of the Budget. I think that both sides of the Committee accept that it was a very good change from the precedent of a rather long and dreary rigmarole of what happened last year, with the Budget proposals then brought in at the last moment.

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  While congratulating my right hon. Friend, I welcome the Budget in the sense that at last we have a piece of Tory policy put into effect with the abolition of Schedule A. The property-owning democrats of the Conservative Party have advocated the abolition of Schedule A for many years, and I have to admit that so have some hon. Members opposite. The second thing I am pleased about is that my right hon. Friend has given help to the lower income brackets and to married men with responsibility. We should not overlook that and the Chancellor should be given the widest possible credit for having grasped the opportunity to direct part of his Budget to the benefit of the married man.
  I do not agree with the hon. Member for Grimsby when he says that the Budget is a little too cautious. I know, as he and other hon. Members know, that the National Institute suggested a figure of £400 million, although the National Institute never made it perfectly clear whether the figure of £400 million was for this year or for a full year and never made it absolutely clear whether it was intended to include the measures on Purchase Tax which my right hon. Friend took in November last year.
  To the £260 million which has been relieved from taxation in this first year, which is only a partial year, must be added the £80 million which was relieved of Purchase Tax on motor cars and television and radio sets in November. That gives a figure of £340 million. While I agree that one cannot be dogmatic about whether the figure of £340 million or £400 million is right, that is only for a partial year and the present Budget proposals will cost the Exchequer £579 million in a full year, to which must be added the figure of £80 million for last November's changes, giving a figure of more than £600 million. Again, while one cannot be too dogmatic, I would not have thought that this was a cautious Budget in the sense which the hon. Member was trying to imply. I believe that it is a Budget in which the Chancellor will he successful in his policy of expansion without inflation.
  When we speak of expansion without inflation—and the hon. Member for Grimsby brought this out in his speech—we must consider our rate of investment in this country. The figures published on 1lth December were that fixed
  706
  investment as a percentage of the gross national product in 1961, the latest year for which figures are available, was 19 per cent. In West Germany the corresponding figure was 29·1 per cent. The 1961 figure for Japan is not available, but that in 1960 was 34 per cent.
  Between 1957 and 1961, our investment rose from 17·4 per cent. to 19 per cent., which is a good increase, but I accept that we are working on the wrong base for the simple reason that while we are investing only 19 per cent. of our gross national product, our overseas competitors, who are often held up to be the top of the league of which we are the bottom, are investing far more of their gross national products. I should have liked more emphasis to have been placed on investment in this country.
  However, the Chancellor has emphasised investment by the differential rates of Income Tax which have now been introduced into our tax system. I do not wish to recapitulate the arguments about whether the differentials should be widely defined or narrowly defined, or defined on an industry or regional basis, but the crux of the matter is that the Chancellor has given tax relief of £240 million in a full year for increased capital allowances in development areas, and this cannot but do good. This is one way in which we can instil confidence into businessmen, and I cannot emphasise sufficiently the importance of getting business men in this country to have confidence in the future. I think that both sides of the Committee will accept that.
  Over the past two years, businessmen have suffered from some hesitancy through no fault of the Government, but simply because of the prolongation of the Common Market negotiations. We were waiting for the Common Market, but it so happened that the Common Market did not come to fruition. With the collapse of the Common Market negotiations, during which businessmen did not know whether to expand here or go to the Continent, businessmen were then looking to the Budget and wondering whether it would give incentives. This uncertainty has played a tremendous part in the difficulties.
  Confidence will now be given to businessmen by the capital allowances—I

  707
  agree only in development districts, but we must remember that capital allowances outside the development districts have also been increased—coupled with the facilities already given by the Government—cheap factories and establishment grants and putting Government contracts as far as possible into development districts and the restriction of industrial development certificates.
  I have the greatest respect for the economic views of my hon. Friend the Member for Louth, but I did not altogether agree with him. If I may put his argument back on him: if what the Deputy Leader of the Opposition said was a disservice to the British motor car industry—and I do not want to recanvass that argument—it is equally true that if people get up in the House of Commons, or outside, and they say that there is a danger of a recession, that will kill that confidence which we are trying to instil into the public.
  I hope that my hon. Friend the Member for Louth will not misunderstand what I am about to say. We can talk ourselves into a recession. I know some people can make a speech about the dangers of a recession and nobody takes the slightest notice. I have no doubt that no matter what I say, people will take not the slightest notice. But when my hon. Friend the Member for Louth makes such a speech, from his wide experience in these matters, people are inclined to listen to him. I know this personally. This matter must be handled very carefully.
  Sir C. Osborne: My hon. Friend will remember that I quoted the Leader of the Opposition, who had said this in New York at the beginning of this week. I also quoted President Kennedy.
  Mr. Clark: I agree, but we ought not to bring in President Kennedy. He made his speech in order to get his tax proposals through Congress. I should not think for a moment that he believes that there will be a world recession. To my mind, the difference between the post-war years and the inter-war years, is that America has ceased to be isolationist. She has taken her part in Western democracy. This means that she cannot possibly allow a world recession. She will pump money into the underdeveloped countries as we have done since the end of the war. It is
  708
  not fair to bring in what President Kennedy said, when he was making a political point for consumption by his own Congress
  The Government must do more to increase investment over the whole range of industry. The Finance Bill will provide opportunities for us to put down Amendments to help small savers. Much more incentive should be given to savers. According to N.E.D.C., we should have a personal savings rate of about 12 per cent. Last year, it was only 10½ per cent. There is a great margin for increased personal savings, which help investment.
  I welcome the reduction in Stamp Duty on shares and transfers of property. I do not agree with the hon. Member for Grimsby that all that this does is to put money into the pockets of the property-owning classes. During the last six years the number of people investing on the Stock Exchange has increased from 1¼ million to 3½ million. These are not all men who run Rolls-Royce cars, or yachts, or who go dancing on the Riviera, with or without shoes. These people include the small savers of this country. We must remember London's position as a money market as compared with money markets abroad. Foreign countries do not have Stamp Duty.
  This fact must operate as a disincentive to foreigners to invest here through the money market. We must not assume that such people come here only to use the London money market to buy shares. They take part in the market, and from that market we obtain much of our invisible earnings, including our invisible exports. The 2 per cent. Stamp Duty ought not to have been introduced, and the reduction to 1 per cent. is very welcome, although I should like to see it abolished entirely.
  Mr. Crosland: Without a capital gains tax?
  Mr. Clark: During my short experience in this House one thing that has always stood out in the Budget debates to which I have listened has been the attitude of the Opposition to the achievements of the Government. I know that it is the duty of an Opposition to oppose, but I wish that when they did so they were constructive. Everything that the Conservatives do cannot be

  709
  wrong. Some of the things may be wrong, but not everything.
  Investment in this country is vital to our survival. I am sure that there is no difference between the parties on that point. Why, then, does the Socialist Party intend to bring in a wealth tax? If we agree that we must instil some confidence in our businessmen to persuade them to increase investment and, as a consequence, to make our country more competitive, I cannot see why the hon. Member for Cardiff, South-East (Mr. Callaghan) should advocate a wealth tax. What does he mean by a wealth tax? A wealth tax on what?
  Mr. G. R. Mitchison: I am interested in whatever may be coming. We did not object to everything in the Budget. On the contrary, there were many things we did not object to, because we suggested them first and the Tory Party has taken them up.
  Mr. Clark: It is always difficult to discover to whom second-hand clothes belonged in the first place. So many people say that an idea was theirs first. But the intervention of the hon. and learned Member for Kettering (Mr. Mitchison)—for whom I have great respect—shows that he is considering my remarks out of context. It is true that the Opposition must oppose, but they should be constructive. If they are as anxious as the Government to instil confidence in businessmen, those businessmen and the investing public should be told what they mean when they talk about a wealth tax.
  Hugh Dalton did not impose such a tax. Sir Stafford Cripps did, but he said that it could not be done annually; he did it once for all. Mr. Gaitskell had the opportunity to impose it, but he did not do so. How does it come about that after all these years this idea has returned, apparently as part of Fabian thinking? Is it that the Fabian Society has some new members, who think the same as their predecessors thought fifty years ago?
  We cannot link these two matters; we cannot tell the investing public that they must have confidence and increase investment and, at the same time, hold the sword of a wealth tax over their heads. The Opposition ought to let the public
  710
  know what they mean by this tax. They ought not to shield behind the claim that they will do it when they become the Government, because they may not have the chance. They may always be pushing forward this idea of a wealth tax without ever getting it on the Statute Book, they may never form the Government.
  The public also ought to be told more about the social benefits that they will get if there is a change of Government. Let them know more about social security, at which the Opposition have had four attempts. In 1957, they brought out a graduated pensions scheme—half pay, and this, that and the other. Somebody re-read it and found many arithmetical errors, so they brought out a revised edition in 1958. That was dropped after the 1959 General Election. In 1961, they produced Signposts for the Sixties. They should have made it clear to which century they were referring, because people are rather confused, not knowing whether it is 1860 or 1960. Then they said that they would bring out a graduated form of tax, and a few weeks ago they came forward with their new proposals. But however much we question the Opposition about this we never get detailed figures.
  We have been talking about the importance of exports, and of keeping down our costs, but here is another sword hanging over the heads of the electorate, and especially the industrialists. Who will pay the contributions of this new scheme of the Opposition? How much will those contributions be? As compared with 1951, double the amount of money is now going into the National Insurance Fund. It was then £109 million; today, it is £221 million.
  How much do the Opposition say that the Exchequer will have to find for this new social benefit? This is germane to the whole argument about our economic survival, costing, exports, and the rest of it. The whole emphasis must be on exports. We lost a golden opportunity from 1945 to 1951. The world markets were open to us, yet all we did was to indulge in domestic politics. We lost that golden opportunity, and in 1951, when the Conservative Party came to office, the sellers' market had ended. Japan was rising, West Germany and

  711
  Europe were rising. Let us never forgot—
  Mr. Crosland: The hon. Gentleman will forgive me for interrupting him, but I have refrained until now under the extreme provocation of his highly inaccurate remarks about a wealth tax and many other things. He should have been in the House to see the performance of the Conservatives in opposition from 1945 to 1951. If the hon. Gentleman imagines that the Conservative Party gave figures about what they would do, he must be out of his mind. In view of what he has said about exports, is he aware that by the time the Labour Government left office in 1951, exports—contrary to the most most gloomy expectation—were double what they were before the war, and they have scarcely risen since?
  Mr. Clark: This is an extraordinary philosophy. The Conservative Party has been accused of many things. If the economic situation was as rosy as the hon. Member for Grimsby says, why did his party abdicate?
  Mr. Geoffrey Hirst: Scuttle.
  Mr. Clark: We cannot have it both ways. We cannot say that in 1951 we were in a strong economic position and, at the same time, there had been devaluation, with the gold and dollar reserves running away like sand. What happened was that the Labour Party went to the country and gave the succeeding Tory Government the job of clearing up the mess.
  I do not think that we need to worry about what has happened in the past. But I am serious when I refer to these promises which are being made by the party opposite about what is to happen to our economic life. The industrial public deserves more consideration than it is being given by hon. Members opposite. If they have some things to put forward as part of their next General Election programmes, they should indicate what will be the cost, because that will determine whether we shall continue exporting or whether our exports will decline and we go back to the position in which we were some years ago.
  I am partially grateful to my right hon. Friend the Chancellor for the reference
  712
  in the Budget statement to exports. Mr. Gordon Richardson is to look into this question whether it would be possible to provide a tax incentive. That is not in violation of G.A.T.T., or anything like that. All we want to establish is a tax reform and this is an important part of it. We want a tax reform and the turning of part of the system over to T.V.A. which is far more popular than a turnover tax. If T.V.A. is a built-in export incentive, we should know about it and our exporters ought not to be put at a disadvantage.
  The French and the Germans are operating T.V.A. They get the export advantage, if there is an advantage. I agree with the hon. Member for Grimsby that it may be a controversial question. It may be debatable whether there is an advantage. My information is that it is an advantage to the exporter. The French and the Germans think that it is and have changed over from a turnover tax. They are going for T.V.A. and our exporters should get the same relief.
  I regret that the proposed inquiry was not started a year ago when, during a debate on the Finance Bill, we debated exports incentives. My right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), who was then Chancellor, said that he would look into the whole question of export incentives. I am sure that the hon. Member for Grimsby did not mean it, but I think it was unfair to say that this is being done by only one man. Mr. Gordon Richardson will be the leader. But he will get all the help he can.
  I wish to refer to the question of fuel tax. This tax has borne heavily on some industries. I accept the argument regarding the National Coal Board, but if the fuel tax is a burden on industry and is acting against exports, what would happen were it halved or abolished? It would merely mean that those industrialists who, at the moment, are "oil-fired" would be able to reduce their costs. No one would swop over from oil to coal simply because the fuel tax remains. It would be only on new machinery that the Coal Board could possibly lose any business. Although I accept the importance of getting the coal industry into a more viable economic position in order to show a profit, and so on, I regret that the fuel tax was not reduced or abolished.

  713
  While I am on the subject of exports, I recall that in November last year the Chancellor gave a boost to the car industry by a reduction in Purchase Tax which, I am sure, has been of immense benefit. Since then, car exports have gone up. But there is no incentive for heavy industry. People are not buying our heavy industrial goods. It also needs an incentive.
  I welcome the reference to world liquidity. I sincerely hope that the Americans will be convinced of the necessity for improving facilities for world liquidity. I accept the Kennedy Round as being extremely useful. But I wish that as much energy could be put into improving world liquidity as has gone into the Kennedy Round. It is obvious that people want to buy our goods, but they have not the money because of the inadequate reserves and we must do something about increasing liquidity. I regret as much as other hon. Members that the Maudling plan did not get the reception which it deserved.
  The hon. Member for Cardiff, South-East inferred that this was an election Budget. From time to time the Conservatives are accused of introducing election Budgets. I cannot really accept this and I should like the Committee to bear with me for a moment while we consider it. Our costs and prices are, in fact, competitive over a large section of our industry. This is so for two reasons. One is that the reserve of labour available on the Continent has dried up. Europe has had a hidden unemployment figure for many years, while we have had full employment. Obviously, it could be more efficient. Its cost and prices have been kept down.
  The hon. Member for Cardiff, South-East—the Leader of the Opposition did so yesterday—made rather a cheap gibe about the difference between what was done by my right hon. and learned Friend the Member for Wirral and the present Chancellor. I do not think that either of those policies are compatible, for the simple reason—[Laughter.] It is very easy to laugh at an argument before one has heard the argument. It is much more difficult to laugh after one has heard it, knowing that one has no come-back to it.
  714
  If possible, we should have had the pay pause earlier. It is well known that as a nation we have been paying ourselves far too much for too little work. In 1961, we paid ourselves 32s. 5d. a week more for 12s. 7d. a week more work value. Obviously, that cannot go on. I think that my right hon. and learned Friend the Member for Wirral did a great service to the economy in halting this and narrowing the margin between incomes and productivity.
  When speaking about election Budgets let us not forget that all Budgets must either take more in taxation or give more relief from taxation, unless there is to be a Budget which does nothing. Invariably, a Budget does something, even if it gives only £1 million or takes £1 million away. It should be emphasised to hon. Members not only on this side of the Committee, but opposite, that since 1951, whatever is said about Conservative Budgets, we have reduced taxation from 32 per cent.—[An HON. MEMBER: "Nonsensical."] An argument cannot be declared as nonsensical until it has been propounded—to 27 per cent. of the gross national product.
  Hon. Members opposite may not agree, but I could guarantee to prove these figures. Obviously, I should not give a figure like that unless I was absolutely certain of it. That reduction from 32 per cent. to 27 per cent. was before this year's Budget. That is the measure of what Conservative Budgets have done. We are taking less of the gross national product and giving far more benefits. I am not making a party point in saying that it is nonsensical for anyone on either side of the Committee to say the opposite. Everyone knows from evidence in his constituency that this is the truth.
  I reiterate what the Chancellor said yesterday. The whole of our economic survival depends on our export position, our balance of payments, competitiveness, and so on. No one side of the nation is responsible for that. It has to be a general effort. I hope that very careful note will be taken of the words used by the Chancellor. We are all in the same boat and if we do not all pull together the boat will sink. Management, trade unions and Government must pull together. If that message gets over to the country there should be no fear that we shall not pull ourselves out of the

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  slack in industry and go forward to prosperity.
  7.23 p.m.
  Mr. Eric Lubbock: Unlike the hon: Member for Nottingham, South (Mr. William Clark), I am much more interested in 1966 than in in 1946. I do not propose to follow him into the realms of ancient history with which he took up so much of the time of the Committee. I have very seldom heard a speech of such great 'length with so little content. I listened carefully but I heard him enunciating only one principle, that it was the function of the Opposition to instil confidence into British industry.
  I do not want to go into numerous questions relating to history which the hon. Member introduced and I shall touch on only one point of his speech. That is what he said about investment. I entirely agree with him in thinking that increased investment in British industry is an essential concomitant of growth, but I point out that it is living an another world to imagine that investment opportunities for British industry depend on going into the Common Market or not.
  Mr. Gresham Cooke: The hon. Member does not know what he is talking about.
  Mr. Lubbock: If the hon. Member wishes to make an interruption I shall give way.
  Mr. Gresham Cooke: If one has surplus money to spend and there is the possibility of going into the Common Market, there is every incentive to take plant over into Europe, or in the long term one may decide to spend at home. One has to make these decisions.
  Mr. Lubbock: The hon. Member is talking about the huge mammoths of British industry like I.C.I. He ought to know that 80 per cent. of British industry is composed of firms with less than 100 employees, who could not from their own resources invest in setting up factories on the Continent even if they wished to do so. The investment decisions of people in British industry are based on a much more complex set of factors than the hon. Member seems to appreciate.
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  I do not wish to waste more time on the content of the speech of the hon. Member for Nottingham, South because there was very little in it. I wish to make a few remarks about what the President of the Board of Trade said this afternoon and what the Chancellor said yesterday. In the speech of the President of the Board of Trade there seemed to be no greater realisation than in that of the Chancellor that the past year has been a disastrous one from the point of view of the British economy. He told the Committee that Britain's economic growth depends on our export trade. I should have thought we all knew that by now. He blamed poor export performance at the end of 1962 on to a slowing up of world trade as a whole rather than on shortcomings in Government policy in this direction.
  I think we can leave the electorate to be the best judges of that, but before they make up their minds they should compare our performance in this country with the performance of other major industrial nations. I think everyone in the Committee agrees that exports are vital to achieve the 4 per cent. growth target which has been accepted by the Government and was proposed by the N.E.D.C. It is particularly important for that reason that the President of the Board of Trade should in turn accept the implications of that target which have been enunciated by the N.E.D.C. The Council, in paragraph 272 of its Report, says:
  "It is estimated that a rate of increase of about 5 per cent. per annum from 1961 to 1966 is required. …"
  That is, to achieve the 4 per cent. growth rate overall.
  When the President of the Board of Trade was questioned about this and asked if he adhered to this figure, he was not prepared to commit himself. He said that he would not give a hostage to fortune by going nap on that 5 per cent. figure. Yet it is absolutely vital, as hon. Members opposite—including the hon. Member for Louth (Sir C. Osborne)—have made quite clear, that unless we can achieve that 5 per cent. rate of growth in exports we shall not be able to see the 4 per cent. growth in our gross national product which the Government have accepted.

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  It is worth emphasising that the Chancellor said in his Budget statement yesterday that it should be made clear—I think "crystal clear" were the words he used—that the theme of the Budget was expansion without inflation He asserted his belief in the proposition that the N.E.D.C. target of 4 per cent. could be achieved without danger to the £. Considering that in the past our rate of growth has been slower than in every major industrial country, that is a pretty modest target. It can be seen as exciting only by contrast with the stagnation of the last decade. If one looks at the two graphs in the Economic Survey, taking 1958 as 100, one sees that our industrial production has grown to just under 115. In the next graph the growth in the E.E.C. countries has been to nearly 140, and in the world to over 130. So our performance is very poor in comparison with those other countries.
  It should be pointed out that in order to catch up with the N.E.D.C. target we need year a growth rate of at least 8 per cent. to make up for the stagnation of last year. The Chancellor ought to make clear when talking about the achievement of this target whether he means that we are to have a rate of growth of 8 per cent. this year or that we have lost forever the 4 per cent. which we ought to have had in 1962. The year 1962 was the year in which the gross domestic product not only showed no increase at all but actually fell back slightly. In 1961 the figure was £22,225 million. In 1962 it was £22,179 million. These are the figures at 1958 prices taken from the Economic Report for 1962, page 17.
  It still remains to be see whether the very fine words about expansion used by the Chancellor of the Exchequer yesterday mean a change in the Government's attitude. We have heard this speech many times before. I had hoped that the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) would intervene in the debate this afternoon, because it would have been interesting to hear what he had to say about the contrast between this Budget and the previous one. In his speech last year the right hon. and learned Gentleman said this:
  "The theme of the Budget is the maintenance of a firm base for sound expansion."—[OFFICIAL REPORT, 9th April, 1962; Vol 657, c. 994.]
  718
  That only paraphrases what we were told many times by the Chancellor of the Exchequer yesterday.
  Where all Chancellors since the war have failed is that their cautious obsession with the health of the £ has always halted the take-off of the economy just at the critical point when it was beginning to get into its stride. Yet I think that the history of these years should have shown that restrictions on demand and profits at home are not the right way to encourage the exports which are essential to an expanding economy.
  What I think is needed above all is for British industry and for foreign holders of sterling to have full and absolute confidence in the Government's determination to make growth the prime and overriding object, not only of their Budget, but of their whole economic policy. We certainly welcome the indications that the Chancellor has grasped this elementary fact, which we have been trying to put across for so many years, and the assurance that he will make full use of our external borrowing powers to combat any short-term depletion in the reserves which might be caused by the stocking up process which will inevitably accompany reflation is particularly valuable.
  It is important to emphasise at this stage that one Budget speech, however good it may have been, will not be enough to undo the mistakes of twelve years which are now admitted, at least by implication in the Chancellor's speech. Is this miraculous conversion which we have witnessed a permanent one? Has the whole of the Tory Party, including the right hon. and learned Member for Wirral, repented? We might have had more confidence that this has happened if the Chancellor in his Budget speech had admitted frankly that the last Budget was a grave error of judgment.
  I come to the proposals in the Budget. I think that we are all agreed that at this stage the stimulation of demand by some reductions in taxation was essential. The only question in my mind is whether the figure of £270 million fixed by the Chancellor is large enough. The Economist and various other informed sources have put the figure at £400 million tax relief. They have said that this was required in the light of the estimates of industrial production which came out

  719
  quite recently. This is open to argument. I would not be at all dogmatic about it. I think that in considering this figure, whether it should be £270 million or £400 million, one must take into account what are the medium-term possibilities rather than look at this particular year in isolation. One must see then that the scope for reductions in taxation is inevitably limited by projected increases in Government spending to which we are already committed. Some components of these increases are welcome, such as those on education, and they can be looked at, as one hon. Member has said, as part of our investment programme.
  I think that if the Government are really serious in their endeavour to meet this 4 per cent. N.E.D.C. target, they have to pay just as much attention to their own housekeeping as they do to that of the private sector. They must ensure particularly that all Government expenditure is designed to encourage growth. Nearly 27 per cent. of all Government expenditure goes on defence alone. It is particularly vital to ensure that lack of control there will not vitiate any gains which may be secured in the rest of the economy.
  The N.E.D.C. Report postulates an annual growth in defence expenditure of 4 per cent. in money terms. The rise between the 1962–63 outturn of £1,766 million and the 1963–64 estimate of £1,838 million amounts to more than 4 per cent. It in fact comes to 4·2 per cent. If one then assumes that the outturn for the current year exceeds the estimate by the same amount as it did last year, it will be another £45 million on top of that, making a total increase in defence expenditure between the two years of no less than £111 million. That is far above the N.E.D.C. limit.
  I am nervous that this is going to happen when I look at some of the words which have been spoken recently by the Minister of Defence. I think that he is already busy working out his alibi in case defence expenditure does exceed the target by such a large amount. In the Defence debate on 4th March the Minister of Defence said this:
  "While we shall and must attempt to keep spending at around 7 per cent. of the gross national product, it must be remembered that the costs of research and development in all
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  countries are rising faster than the increases in the gross national product. It is that single factor more than any other throughout the world that is tending to force defence cots upwards …"—[OFFICIAL REPORT, 4th March, 1963;Vol. 672, c, 31–2.]
  Thus, I believe that a danger exists, to which we ought to be alive, that inflationary processes will arise from this grandiose defence policy which has been adopted by the Government and that this could wreck any short-term good done by this Budget and those which follow it over the next few years. It is as well that one should bear that in mind when discussing the Chancellor's detailed proposals.
  I welcome, as everybody does, the fact that the Chancellor of the Exchequer has at last gone some way towards meeting our proposals for additional assistance to the development areas. It is about time that we had some admission from the other side of the Committee that the Local Employment Act has been a complete failure. Are we certain even yet that the inducements now being offered to industry to go to these areas are large enough? Are they, for example, big enough to solve the persistent unemployment in Northern Ireland? I do not believe that the Chancellor can give us that assurance. I do not believe that he could honestly say that these inducements are going to wipe out the unemployment in Northern Ireland which has persisted ever since the war.
  I should have liked to have seen the Chancellor take additional powers beyond those which he has taken in the Budget. For example, if he could have taken powers to waive or reduce the National Insurance contributions in these development districts, it would have been an extra measure which he could have used if these measures were not successful in their application. I would also agree with those hon. Members who have said that it is not enough to consider only development districts. We have to think in terms of regions from now on. We have to think in terms of regional planning to get population to go into certain areas. That means that we may have to give the same concessions as we have in the Local Employment Act to areas and districts where the unemployment may not reach the figures which are calculated as the minimum for this aid under the Act,

  721
  That is essential if we are to have a long-term policy for the distribution of industry in this country.
  The President of the Board of Trade spoke about the marvellous inducements which are given to industrialists to go to these areas. I want to make one comment about the example that he quoted. He said that if a factory was set up for a total expenditure of £1 million, divided as to buildings £250,000, plant £450,000 and working capital £300,000, that would attract grants totalling £100,000 and a tax saving of £300,000 in the first year. I wish the right hon. Gentleman would tell me what type of business it is that can set up and start operations and make a profit which would be large enough to have such a large sum to set against taxation in the first year of its operations. I would certainly like to get in on it.
  While on this subject of National Insurance contributions, there is a contradiction in the right hon. Gentleman's Budget proposals. We are about to be asked to pay increases in our National Insurance contributions, yet the avowed intention of the Chancellor in reducing taxation is to spread purchasing power as widely as possible over the economy as a whole. To illustrate what I have in mind we might take a little example. A London bus driver, with two children aged between 11 and 16, earning nearly £14 a week including overtime has hitherto been paying about £3 a year in Income Tax. He is now relieved of that entirely but, correspondingly, he will lose £2 8s. by having to pay an extra 11d. a week in National Insurance contributions. I do not suppose that that bus driver is exactly leaping for joy, having realised the full implications of the Budget proposals.
  I had hoped—because we heard so much about this Chancellor being a radical thinker who was contemplating large reforms in the taxation system—that he would have looked at the whole contributory principle once again. It would certainly be much fairer and more simple to finance the whole social services out of direct taxation and abolish altogether the employees' contributions in this context. It is time that we swept away all this ridiculous paraphernalia of stamps and cards which must be a terrible time waster to people in industry. However, I suppose that that was
  722
  too much to hope for. And since it has not happened, I urge hon. Members opposite not to try to pretend, as some of them are doing, that everyone will be better off under the Budget proposals.
  Even for those who will benefit from the tax changes more than they lose under the increased National Insurance contributions—and they have to be earning more than £700 a year to do that—in many cases they will find that whatever benefits they get those benefits are swallowed up by rates increases.
  Mr. Gresham Cooke: Have not the rates in Orpington gone up by 4s. 1d. under the Liberal Council?
  Mr. Lubbock: If the hon. Member wants me to explain why there has been this increase in rates in Orpington I will be delighted to do so. I have explained it to my constituents and they understand that the increase is due entirely to the Tory Government. In this connection, many of my constituents—and this goes for the people who the hon. Member for Twickenham (Mr. Gresham Cooke) represents—will find that any benefits they get out of the tax changes in the Budget are nullified by increased rates.
  I would like to know why the Minister of Housing and Local Government was so resistant to the suggestion that some benefit should be given to people suffering this increased rate burden because we now know that the Chancellor had about £270 million at his disposal to hand back to the taxpayers. Perhaps it is not too much to hope that if people continue to vote Liberal at by-elections in sufficient numbers we may get some satisfaction in this direction as well. It is obvious that a good part of the Budget consists, from the individual's point of view, of handing back some of the money already taken away from them by other Ministers.
  I notice that another technique has crept in; and I intend to expose it as well. I refer to the practice of making promises in Budget speeches which will be fulfilled at a future date and which, of course, cost nothing immediately. This technique has been used extensively by this Chancellor following, I suppose, the example of the previous one in regard to Schedule A. If the present Chancellor really means what he says about Schedule A I wonder what has justified the Government keeping it on as part of their policy

  723
  for so many years. Why has it taken them so long to get rid of it?
  It is interesting to note some of the many things which this Chancellor has said will be done at some indeterminate date or this year; things about which we have been given promises but nothing more concrete. There will, he says, be some unspecified improvements in the arrangements for dealing with redundancy. That is a requirement which we in the Liberal Party have already spelled out in detail. There are to be further investigations into the feasibility of a corporation tax—"further investigations" I emphasise—although last year we were told in the Budget speech of the right hon. and learned Gentleman the Member for Wirral:
  "We have got beyond the stage of general talk about the desirability or otherwise of a single tax and can now look at a possible scheme."—[OFFICIAL REPORT, 9th April, 1962; Vol. 657, c. 972.]
  It seems that we have left that position and are now not looking at a possible scheme but are indulging in general talk. I suppose that the idea was peddled round the City of London, as my right hon. Friend the Leader of the Liberal Party strongly advised against. My right hon. Friend knew that once it got lost in that jungle nothing would come of it.
  We are told that there will be consideration of an added value tax of the type which my party has advocated. Mr. Gordon Richardson is to conduct an investigation on behalf of the Government, so they are once again sloughing off the responsibility on to someone else for making a decision. The Chancellor has said that there are some doubts as to whether such a tax would be feasible and of assistance to our exports. On the Continent they are in no doubt about it and if the Chancellor had listened to the speech of his hon. Friend the Member for Willesden, East (Mr. Skeet) yesterday he would have seen a thorough explanation of how this T.V.A. tax operates on the Continent, for he said:
  "Further, when we find that the Common Market countries have decided to harmonise turnover taxes on France's T.V.A. system, I should have thought that the evidence was overwhelming."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 561.]
  724
  It is certainly overwhelming on the Continent although, once again we have not yet caught up with them.
  To give further examples of my earlier remarks, there is the promise of relief on the duty on light hydrocarbon oils. This is something that could have been easily incorporated in the Budget and a subject which the Chancellor should know has been a critical disincentive to some industries with outstanding export performances—industries to which relief should have been given long ago, particularly the paint and plastics industries. There is a vague undertaking that he will consider the removal of the duty on fuel oils, provided Lord Robens gives him permission to do so some time next year. The Chancellor admitted that the removal of the duty would help, among others, the steel industry—and we all know that that industry is grossly underemployed at the moment. It is operating at 70 per cent, of its capacity and I would have thought that this would have been one way to have quickly increased its capacity.
  We have all these promises of reforms to come as a substitute for any real policy. Even in respect of gambling, which the Chancellor agrees should make a contribution towards the rising cost of social expenditure, the only suggestion he has made is that the Customs and Excise should compile a list of one-arm bandits and other gambling machines.
  In a Report published yesterday by the Churches' Council on Gambling, it is stated that gambling turnover last year reached a record £853 million—not £700 million as the Chancellor said—and the Churches' figure does not include the notorious gaming clubs which are springing up everywhere and the turnover of which it is impossible to estimate. While we are waiting for a reform of gambling taxation, nothing is being done to relieve certain parts of the betting industry from the discrimination which has operated against them for many years. While we would all agree that gambling should make its contribution towards our social expenditure, it is wholly unfair that the Government should single out certain parts of the industry for heavy discrimination, as has been done on the dog racing industry, as a result of which dog racing is contracting all the time and the money is going to other spheres.

  725
  Stamp Duty on stock transfers and house conveyances is reduced from 2 per cent. to 1 per cent., so we have to maintain the same expense for collection while halving the revenue, and we believe that it should have been abolished altogether. I must make it clear that we should have accompanied that by a full-blooded capital gains tax, because everyone knows that for people with large private investments capital gains are treated as if they were income, and we see no reason why they should be excluded from the tax network. Therefore, I couple those two proposals together. An hon. Member said that one should not consider abolishing the Stamp Duty without introducing a capital gains tax, and I agree with him that these two measures should go together. If we had a full-blooded capital gains tax, we think that it would have enabled the Chancellor to give more reliefs to earned income where they are really required if we are to reward opportunity and not speculation.
  Finally, in my list of examples of what we would have done had we had the opportunity, we would have replaced Estate Duty by a legacy duty to encourage the splitting up of large estates, and this would bring about a much wider distribution of property. This would have had to be accompanied by a similar tax on large gifts to prevent the avoidance of tax by people who give away their property more than five years before the date of their death.
  To sum up, I think that the presence of some good things in the Budget—we admit that there are some good things in the Budget—is tempered by disappointment that the Chancellor has dodged all the major issues of tax reform that we have been demanding, and that bolder measures to secure the expansion of the economy, which he himself said is so necessary, have not been forthcoming. The Guardian editorial hit the nail on the head this morning when giving reasons for this. It said
  "Perhaps it was a vain hope that a Government so weak politically would embark on an adventurous course at this stage."
  When we come to look at this Budget in retrospect, I think it will be seen to have failed in its main object, that of securing the expansion of the economy. To do that, a much more dynamic approach was necessary to this question of stimulation, and it should
  726
  have been accompanied by a reform of the taxation system as a whole. More than the expression of will was needed. We should have put the emphasis on the creation of a real partnership between the Government, on the one side, and industry and the trade unions on the other. Pious exhortations to co-operate will not be enough. The Government have so far lost the confidence of the people of this country and made so little effort to win it back that no single Budget, even if it were far better than the present Budget, could remedy the damage that has already been done.
  The Financial Secretary to the Treasury (Mr. Anthony Barber): I have listened with great interest to an obviously thoughtful speech, but I should like to put one question to the hon. Gentleman. He has given the views of the Liberal Party on certain traditional cuts in taxation which it would like to see adopted, and certain traditional taxation proposals, but he has not expressed his opposition to a single one of my right hon. Friend's taxation proposals. I wonder whether he would tell us whether the Liberal Party is opposed to any of the taxation proposals, and if so which.
  Mr. Lubbock: I thought I had made it clear that the proposals do not go far enough. We should have liked to have seen a much more radical reform of the taxation system as a whole. It may be that if we had the corporation tax which we have been asking for, and the T.V.A. tax, this would have meant certain consequential changes in other parts of the taxation system. But we all know what has happened. If we had a T.V.A. tax, it would enable us to reduce either Profits Tax or some of the indirect tax on purchases. Although I am not quarrelling with individual proposals in the Budget, I feel that if there had been an overall look at the taxation system we should have come to some different conclusions about how the reductions in taxes could have been distributed.
  Mr. Barber: This is very important. The hon. Gentleman is speaking on behalf of the Liberal Party, and may I take it that he is not opposed to any of the taxation proposals put forward by my right hon. Friend?
  Mr. Lubbock: I think that I said that. I said that we would have gone further

  727
  in certain respects than the Chancellor has done in his Budget.
  Mr. Barber: Which one?
  Mr. Lubbock: The hon. Member says "which one", but it is impossible to pin this down to one detail. As I have explained, if we were to recast the whole of the taxation system we might want to give more away in some respects and less in others. For example, I thought that I had made it clear that we would have given the 1 per cent. Stamp Duty away in exchange for a full-blooded capital gains tax.
  7.56 p.m.
  Mr. Geoffrey Stevens: At the beginning of his speech, the hon. Member for Orpington (Mr. Lubbock) said that be did not wish to go into ancient history. I think that is a very good maxim for this debate, so I shall make no reference to the Liberal Party, not even to the ghost of the future of the Liberal Party.
  I will start by referring to an observation made by the hon. Member for Cardiff, South-East (Mr. Callaghan) in his very interesting opening speech this afternoon. He said that the Budget contained nothing novel. It seems an awful pity that the Shadow Chancellor of the Exchequer should make a main Budget speech for the Opposition without having read the Budget proposals. If there is one thing about the Budget which is absolutely certain, it is that it contains more novel proposals than any that I have listened to, and I have listened to sixteen. No doubt in earlier Budgets there have been more original touches.
  Let us take an example. The right hon. Member for Battersea, North (Mr. Jay) knows very well that one of the reasons why previous Conservative Chancellors, and previous Labour Chancellors, did not increase the personal allowances for Income Tax was because to increase the single allowance by £10 and the married allowance by £20 would be so vastly expensive. That was one of the main reasons. I do not know whether the right hon. Gentleman was making an interrogatory gesture, but he knows that perfectly well.
  The novel thing that my right hon. Friend has done is to increase those two
  728
  personal allowances very substantially but to reduce the effective cost by changing the reduced rate bands. I think that is distinctly novel, and it also has the novel effect of giving the largest amount of tax reduction to the lowest income groups—a thing that does not always happen in those circumstances.
  With regard to the higher quality motor cars, I share my right hon. Friend's view about the good that the Rolls Royce motor car and the Rolls Royce engine do to British trade as a whole, and the way in which he has provided a capital allowance for expensive motor cars in this Budget is highly original. If the hon. Member for Cardiff, South-East can show me its equivalent in any other capital allowance in the whole range, I will stand him a very large whisky and water.
  I have been quite fascinated by a good many of the speeches from the benches opposite today on the subject of how disastrous Tory policies are. The hon. Member for Grimsby (Mr. Crosland), with whom I cross swords with bated breath, waxed furious about that: "1962 was a disastrous year—ah! these terrible Tories!" Why not stick to the facts, and remember that when the Brussels negotiations broke down the pound remained strong? Admittedly, there was some selling, but, because of sound Conservative financial policies and the underlying strength of our economy, sterling remained firm.
  It was only people like the hon. Member for Grimsby and Mr. Nicholas Kaldor who spoke about devaluation—
  Mr. Gresham Cooke: And helped to make the pound rock.
  Mr. Stevens: Yes, and helped to make the pound rock—
  Mr. Jay: I do not know whether the hon. Member for Portsmouth, Langstone (Mr. Stevens) said that my hon. Friend the Member for Grimsby (Mr. Crosland) talked about devaluation, but I do not remember that my hon. Friend did. I thought that it was Mr. Kaldor.
  Mr. Stevens: I certainly heard the hon. Member talk this afternoon of the possibility of devaluing the pound. I do not say that he advocated it, but he spoke of talk of it and rumours of it.
  Mr. Jay: But the hon. Gentleman would not suggest that what my hon. Friend said this afternoon led to weakness of the pound in February.
  Mr. Stevens: No, he said that Mr. Nicholas Kaldor wrote to The Times suggesting devaluation. That did not help to strengthen the pound at all. But it is only from that side of the Committee, not from this—and from Mr. Kaldor, who is certainly not a supporter of this side—that talk of devaluation comes. The pound has been hard in recent months, because we were confident in the results of Conservative policy.
  I want to pass to some of the good things in the Budget. I certainly welcome the "free depreciation," as my right hon. Friend called it—the 130 per cent, capital allowance for plant and machinery in the development districts. I know that my hon. Friend the Member for Dover (Mr. Arbuthnot) will be pleased to see that, because that is a principle—and, incidentally, it is a brand new principle—for which he has been fighting for some time.
  I also welcome the depletion allowance for United Kingdom minerals. Here is another novel aspect. My right hon. Friend flies in the face of the Royal Commission, which recommended that depletion allowances should be limited to land being worked at the appointed day. My right hon. Friend has taken the courageous course of making the allowance cover reserve land as well. It is not every Chancellor who flies in the face of a Royal Commission recommendation.
  The hon. Member for Orpington regretted that in the Budget there were so many promises of what was to happen later, but we know that as long as the promises are made by a Tory Chancellor they will be redeemed. I welcome the undertaking, as I think it is, to remove the 2s. 9d. a gallon duty on light hydrocarbon oils. The Economic Secretary seemed to nail that pretty firmly last night. This will be of help to exporters of paint, surgical gloves, and things like that.
  Many hon. Members on all sides of the Chamber have had many letters and visits from constituents who will suffer an increased rate charge. That is not primarily a matter for my right hon. Friend, but I want to refer to the report of a speech made by a former Member
  730
  of this House, Mr. Angus Maude, in which I first saw the suggestion that rates on private dwellinghouses should be allowed as a charge for Income Tax purposes. There are certainly precedents for such a procedure. Businesses are allowed to charge their rates against income both for Income Tax and Profits Tax purposes. The reason for that may be that their rates are held to be expenses wholly and necessarily laid out for the purpose of the business, but one could not say that the rates on a private dwellinghouse were wholly and necessarily laid out for the purpose of earning a notional income.
  In parenthesis, it may not be novel but it was certainly a good thing for my right hon. Friend to abolish Schedule A, which takes me to the second precedent for giving consideration to the idea I have just mentioned.
  Ever since there has been Schedule A there has been a statutory allowance for repairs. Where the actual cost of the repairs exceeds the statutory allowance one can charge that cost against the slice of income assessed under Schedule A, but one cannot say that those repairs are incurred wholly and necessarily for the purpose of earning that portion of income. Surely, in that sense, rates can just as legitimately be charged against the whole range of income as against the notional income for the purposes of Schedule A.
  I can see two drawbacks to the proposal, and one of them is financial. If the proposal were to be adopted, I should imagine that the loss to the Revenue would be very considerable. I have not done much research into this, and the figure I mention is not an estimate but a pure guess. I think that the cost would be well over £100 million a year, and that would have to be recouped by some other form of tax.
  The second drawback is that such a procedure would bring no relief to the very people whom we want to help most—the old people on small incomes and the young people who, thanks to successive Conservative Governments, are probably below the Income Tax level already. On the other hand, I saw in the same Press report to which I have referred that Mr. Angus Maude said he had experience of the system in

  731
  Australia and that it worked well there. Perhaps it would work well here, and I wonder whether the Government have looked at that possibility.
  There is one omission that I have mentioned before. Nothing has been done to raise the starting point of Surtax in respect of what is commonly called unearned income. That is a term I do not like—I prefer to call it investment income, savings income, or whatever it may be. I entirely agreed with my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) when he effectively raised the starting point of Surtax on earnings, but I do not think that it is sufficiently realised that a very large number of people with investment incomes are people who have worked all their lives in jobs to which no pension was attached. Therefore, during their working lives they had to save from the income, the profits or the salaries that they had. When such a person retires, he may have exactly the same income—£2,500 or £3,000—as the man next door, but because the chap next door worked with a company that had a "top hat" and other pension schemes his £3,000 a year is treated as earnings, while the other man still pays Surtax on the excess over £2,000. It is time that something was done for these people.
  I want to refer to the continued absence of a tax on betting and gambling. I find it extremely difficult to follow my right hon. Friend the Chancellor's figures and logic. Yesterday, he said:
  "No one can say with any certainty what is the total turnover on commercially organised betting still less on gaming, but figures in the region of £700 million a year or more have been suggested."
  He then went on to say:
  "Most of this money, however, is returned as winnings which may in turn be restaked over and over again."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 465.]
  He gave a net expenditure on betting of only £100 million, but, as the hon. Member for Orpington has said, the Churches' Council on Gambling has put the figure for 1962 at £850 million, as compared with £760 million in 1961.
  I do not follow this logic of such a large proportion of winnings which are restaked. It is an awfully nice principle
  732
  which I think we should apply to the short-term capital gains tax. If one reinvests gains made within six months, then, by the same argument, one does not pay the short-term gains tax. Surely it makes no difference whether or not the amount invested derives from previous winnings. It is all betting money and should be taxed, if taxation is possible. I accept the difficulties and the social issues involved, but, on the other hand, the advantages of such a tax seem to me from the national point of view considerable. There is no extra charge on the cost of production and no hardship on people living on small fixed incomes. Such a tax is justifiable on most grounds.
  The principal feature of the Budget is that no new tax is introduced and that there is no increase in existing taxes. On the contrary, there is a net reduction of about £270 million. I think that it is the duty of all of us on this side of the Committee to hammer home that message not only in our constituencies but throughout the country, because there is not the slightest doubt that if the Labour Party gets back into power as a result of the next General Election higher taxation will follow.
  I want to say something about the wealth tax which the hon. Member for Cardiff, South-East (Mr. Callaghan) talked about a week or so ago. [HON. MEMBERS: "Not now."] I have not seen any report recently of eulogies poured on that idea by his right hon. Friend the Member for Huyton (Mr. H. Wilson). I wonder why. Perhaps the right hon. Gentleman does not know about it yet. If the hon. Member for Cardiff, South-East is the Shadow Chancellor, then presumably, or, if that is too strong a word, then possibly, he will be the real Chancellor if the Labour Party wins the next General Election. The hon. Member claims that that wealth tax levied at the 1 per cent. rate which he has in mind would yield £200 million each year. Does the party opposite believe in the need for saving? I think that it does, but is this a good way of encouraging saving?
  Let hon. Members consider for a moment the sort of people whom the tax would hit. They would be the rich, because the starting point is £20,000.

  733
  These people, from the upper slices of their incomes, pay 17s. 9d. in the £ even under a Tory Chancellor, leaving only 2s. 3d. in the £ for spending and saving. If we make it very difficult for these people to save within their income and then, in addition, take £200 million a year out of existing savings, not to create a Budget surplus, which is a form of compulsory saving, but to give additional tax reductions to the lower-income groups, the £200 million must be made up in some other way. In other words, there would have to be an additional tax somewhere to produce the £200 million, because the people to whom the £200 million was transferred would be most unlikely to save 100 per cent, of the tax remission. There is no doubt that very heavy additional taxation would be required.
  My hon. Friend the Member for Nottingham, South (Mr. W. Clark) mentioned the Labour Party's graduated social benefits schemes. I make no criticism of that scheme at the moment. I think that The Times called it "A plan for a plan". We have not enough of the details yet to criticise. One difficulty would be the cost. It would be very expensive, but no doubt it is coming in due course. It could be financed only either out of the weekly stamp or out of national taxation, and that again would mean an additional burden of taxation. There is not the slightest doubt that if the Labour Party succeeds at the General Election and we have a Labour Chancellor of the Exchequer severe increases in taxation will be inevitable.
  It should be our duty on this side of the Committee. to make that position perfectly plain to the people. The Tories at the moment are in the trough. There is no doubt about that, whatever one may or many not think of public opinion polls, but, speaking of the contrast between Socialist and Tory taxation policies, I say without fear of contradiction that if his Cabinet colleagues can match up to the Chancellor's performance yesterday the Tories will have their fourth successive electoral victory.
  8.14 p.m.
  Mr. Ernest Thornton: I hope that the hon. Member for Portsmouth, Langstone (Mr. Stevens) will forgive me if I do not follow him in his
  734
  detailed argument, although I would point out to him that in the second half of the twentieth century, when the community is becoming more highly literate and educated, it is not likely that that community will long stand for a position in which 2 per cent. of the population own 50 per cent. of the country's privately owned wealth. This is a position which must change with the times, and it is only a question of time before the change comes about.
  Mr. Stevens: I do not dissent in any way from what the hon. Member has said, but I did not argue the case from that point of view or on those merits. I argued it merely on the basis that surely a wealth tax would mean a reduction of savings of £200 million a year and that that reduction would have to be made good by increased taxation. Does the hon. Member dispute that?
  Mr. Thornton: I quite appreciate that, and I thought that my observation would merely put the matter in proper perspective. I repeat that this is a problem which will have to be faced and that as we become a more highly educated community these differences of wealth will not be tolerated.
  I want to pay a compliment to the Chancellor of the Exchequer. I think that his Income Tax reliefs are as fair as they possibly could have been, but 1 noticed that on the other side of the Committee any enthusiasm shown for the Budget has been at a rather tepid temperature. [HON. MEMBERS: "No."] The leading article in The Times today says:
  "On gambling, he is not yet certain of his ground. On the question of introducing a turnover tax he is far from convinced and wants more information. On redundancy he awaits talks with industry. This adds up to too much procrastination."
  It is on some aspects of that procrastination that I want to base my comments. In the present state of the country there is a great danger that the right hon. Gentleman is attempting too little too late.
  If there is time, I want to deal with three issues which I hope are highly relevant to the Chancellor's speech and to the economic problems now confronting the country. The first relates to redundancy, the second to exports, and the

  735
  third to managerial efficiency. In varying degrees the Chancellor attached importance to these in the comments he made on them in his speech.
  I am glad to see from column 478 of the OFFICIAL REPORT that the Chancellor said yesterday that he intends to tackle the problem of redundancy and of making proper provision for those made redundant. To use his own word, he intends to tackle this problem "vigorously". Why have the Government left the problem for so long? Have not they been aware that there was a problem? Have they just been converted to realisation of it within the past few months? This cannot be so. They had to make provision for compensation to redundant operatives in the Cotton Industry Act, 1959, nearly four years ago, but only now are they suggesting that the matter is one of urgency.
  Fours years ago, when the Cotton Industry Act was passing through the House, the Government and the House as a whole accepted the justice of the principle of operatives' compensation when industries contracted, as the cotton industry has done. I have a lifetime's experience of a contracting industry, and I know what some of the problems mean in human terms.
  I am sorry that the President of the Board of Trade is not in his place. I wanted to ask him whether he was aware of what is alleged to be happening—which I have good grounds to believe is, in fact, happening—in Lancashire now, that is, very important secret negotiations for a widespread merger in one section of the industry. If this merger is effective, it will mean that three-quarters of the productive capacity in that section will pass under one financial ownership and control. It is being done with the co-operation of the merchant banks.
  I do not say that such a merger would necessarily be damaging for the industry or for our national economy. Indeed, in certain circumstances, it could be good. But I must warn right hon. and hon. Members opposite that, if one reaches a point where 75 per cent. of what is, in effect, an industry within an industry—is under one financial ownership, the case against public ownership is very seriously weakened.
  736
  The fact must be faced that a merger of such a size controlling three-quarters of one section of the industry is fraught with dangerous possibilities and repercussions, not least that many more mills will be closed, and closed without proper provision for compensating operatives who suddenly lose their jobs.
  I should have liked to have asked the President of the Board of Trade whether he was aware that, as recently as 22nd March last, the Cotton Employers' Association, of which all the firms involved in the merger are members, emphatically rejected the trade unions' claim for a redundancy compensation scheme on the ground that a national scheme would be forthcoming. But, of course, arranging any legislation for a national scheme takes time. There is bound to be considerable delay. What will be done about those who fall by the wayside in the meantime? I suggest to the Government that to deal with this matter in its immediate urgency they might well consider affording facilities for the quick passage of the Bill introduced by my hon. Friend the Member for Gloucester (Mr. Diamond), the Redundant Workers (Severance Pay) Bill, which would help to mitigate some of the problems which are with us now and which will be with us in the very near future.
  I should like to know from the President of the Board of Trade whether he will consider the effect on the industry of such a merger as I have described. The Government's contention in their reorganisation proposals was that they wanted to make it more vertically organised, but this merger, which I have reason to believe is being negotiated, would tend to make even more rigid its horizontal stratification.
  So much for my comments on the cotton industry. I appreciate that the House has from time to time been very tolerant towards me in the troubles I have had cause to raise. I turn, now, to exports.
  I agree entirely with my hon. Friend the Member for Grimsby (Mr. Crosland). The Chancellor did not lay sufficient emphasis on this vital matter. Our poor showing in exports has probably been the basic cause of Britain's poor economic performance in recent years. Our poor export performance really reflects the uncompetitiveness of British

  737
  industry as a whole. The Government attempt to put the blame, or nearly all the blame, on inflation, that is, the growth of incomes faster than productivity; but I believe that this is only part of the story. I suggest in all seriousness that, when right hon. and hon. Members opposite talk about an incomes policy, they are not really thinking about all incomes. They are thinking about wages and the lower and middle salary grades. I think that they really believe that their system would work if we could have income restraint from 90 per cent, of the population and freedom for the top 10 per cent. But, of course, they are not likely to get that.
  It is not sufficient to put the blame for Britain's failure in exports mainly upon inflation. Let us remember that inflation, during post-war years, has not been peculiar to Britain. France, Italy, Japan and Sweden have all had their inflation problems, yet they have all had a much better export performance in recent years than Britain has had.
  How uncompetitive is British industry today? I have done a little research into trade between the United Kingdom and Hong Kong. Hong Kong, of course, is a free market, quite undistorted by quotas and tariff arrangements. We have performed very badly in recent years in this free market. I ask the Committee to bear with me while I give a few figures.
  On 14th March last, in a Written Answer, the President of the Board of Trade told me that, in the four-year period 1955–58, our exports to Hong Kong represented 59 per cent, of the total visible trade between Hong Kong and the United Kingdom. In the following four-year period, 1959–62, our exports to Hong Kong represented only 48 per cent, of the total visible trade between the United Kingdom and Hong Kong—obviously, a relative deterioration in our position. Let me hasten to add that the nearly 60 per cent, represented by exports in the 1955–58 period may appear to be exceptional, but it is not, because for the last ten or twelve years Hong Kong's visible external trade has been fairly evenly in the proportion of 60 per cent, imports and 40 per cent, exports. Therefore, in the first four-year period, 1955–58, we were taking about our share of the trade which was going. In the
  738
  last four years, our share has deteriorated very much.
  I now come to the competitiveness of our industry. On 26th July last year, the Colonial Secretary gave these figures in a Written Answer. In 1955, of the imports of non-electrical machinery into Hong Kong, 42 per cent, came from the United Kingdom. In 1961, the percentage had dropped to 33. The non-electrical machinery industry should be one of our expanding industries. In 1955, 64 per cent, of the imports of electrical machinery into Hong Kong came from the United Kingdom, but by 1961 the figure had declined to 45 per cent.
  These are supposed to be among our most efficient industries. These are industries for which other industries—for example, cotton—should be allowed to contract. There appear to be some shortcomings in the performance of these and other supposedly efficient and expanding industries. It is lack of productive efficiency? It is a question of marketing, delivery or after-sales service? I do not know the answer, but we must find it and rectify the situation if we are to demonstrate that United Kingdom industry is really competitive in its so-called expanding sectors.
  My third and last point is on managerial efficiency. Yesterday, the Chancellor of the Exchequer referred to
  "The amount that could be achieved, and achieved rapidly, by better management and better deployment of our resources … "—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675. c. 487.]
  I wonder whether he attaches sufficient importance to the rôle of management. The right hon. Gentleman's priorities, as I interpret them from a close study of his speech, would appear to be, first, an incomes policy, secondly, a higher level of investment, thirdly, better labour deployment, and, fourthly, better management. I would put the priorities in a rather different order. First, and equally important I think, are a higher level of investment and better management. There is bound to be wastage if a high standard of capital equipment is not matched by really first-class and competent management.
  There is a growing belief that one of the main handicaps of our country today is that somehow there is very faulty selection in our community as a whole, and

  739
  I think that this is particularly true of management. I wonder whether sufficient importance is being attached to ensuring that correct selection is made. To what extent nepotism still enters into it and to what extent it is a matter of faulty judgment I am not prepared to assess, but I believe that this is one of the really important issues which Britain has to face if she is to resolve her problems and to improve her competitiveness and industrial efficiency in order to increase exports which are vital to her advancement and survival.
  8.35 p.m.
  Mr. Peter Walker: Members of the Committee always listen with interest and respect to the remarks of the hon. Member for Farnworth (Mr. Thornton). We know that he is a great authority on subjects connected with the textile industry. The case which he has put in connection with exports was, possibly, a little overstated and there are several advantages which our economy enjoys but which are not shared by our competitors. These are often forgotten in discussions concerning export incentives.
  For example, the heavy subsidisation of our transport system is of general assistance to the exporter. The fact that by means of a system of agricultural subsidies we pursue a cheap food policy enables us to have a control upon the price of food which has effects in preventing inflation and preventing increases in our export prices. I have frequently been abroad and have heard foreign businessmen discussing what are called the wicked subsidies which this country employs in assisting the exporter in that way.
  The particularly interesting aspect of the hon. Member's speech, and one which I find of interest about the whole of today's debate, is the change of emphasis in the attitude of hon. Members opposite today as opposed to yesterday. Yesterday, the Leader of the Opposition made one of his witty, interesting and amusing contributions to our debates, the whole context of which was that there was a wicked Tory manoeuvre to produce an electioneering Budget. I do not know why the right hon. Gentleman did that. I do not know whether it was because,
  740
  as he told us, he had lost his sleep the previous night. I can imagine the right hon. Gentleman, returning in his aircraft from the United States, pencilling a few notes about what he would say next day and thinking of all the witticisms that he could produce if the Budget was a good and popular one. Then, having listened to it, he decided that it was a rather good and popular Budget and that as he had prepared all his splendid remarks he must deliver them.
  Then, however, came the afterthought. One visualises the meeting this morning when the shadow Cabinet gathered together to discuss future tactics in the debate. Hon. Members opposite must have said that if they were taking the line that it was a popular, electioneering Budget, they could not in the next breath say that the Government had not done enough, because that would imply that the Government were over-cautious and irresponsible and the Budget could not, therefore, be an electioneering manoeuvre. Thus, we had the delicate and witty speech of the hon. Member for Cardiff, South-East (Mr. Callaghan), who did not follow the line taken yesterday by his right hon. Friend the Leader of the Opposition. Obviously, on further reflection, the Opposition decided that their tactics of yesterday were bad. Consequently, in contrast to yesterday, we have had today the theme that the implication of what my right hon. Friend the Chancellor of the Exchequer has done in his Budget is not to attempt to gain popularity but that he has not done enough.
  We have had the usual auction by the Opposition parties, with the Labour Party making its suggestions a little cautiously, that perhaps the Budget was not enough, and the Liberal Party, more flamboyantly, saying that it would improve upon most of the tax benefits and concessions which are being given.
  The fact that there is some degree of caution goes towards exposing the generally popular attitude today that we are all in favour of expansion and must not be too concerned about mere things such as the value of the £, but must forge ahead with expansion irrespective of the cost. This is a rather irresponsible attitude to develop within the country. It is why I unapologetically cheered vigorously the speech of my right hon. and learned Friend the Member for

  741
  Wirral (Mr. Selwyn Lloyd) last year and why I cheered the speech of my right hon. Friend the Chancellor of the Exchequer this year. I do not regard the two as contradictory. Last year ray right hon. and learned Friend the Member for Wirral provided policies which were right at that time. Likewise, I consider that my right hon. Friend the Chancellor has this year produced the right policies for this moment in our history.
  If one examines the facts as they were when we met for the Budget debates last year, we had the position that there was likely to be an improvement in our economy. There was every indication that exports throughout the world would improve. Nobody on the benches opposite suggested that the conjectures of my right hon. and learned Friend that the American economy would show considerable expansion in 1962 were wrong. Nobody on the benches opposite suggested that there would be a considerable depression in our Canadian trade. No hon. Member of the Committee was able to predict these things at that time. My right hon. and learned Friend produced policies that were right in assuring that we remained competitive in the export markets. If these policies had not been produced we should not have had the good export record we enjoyed last year, and the fact that last year exports went up at all was associated with the fact that my right hon. and learned Friend the Member for Wirral was successful in preventing the inflationary trend which developed in the economy of that time.
  Mr. S. Silverman: Then why did you sack him?
  Mr. Walker: I did not sack him. I think my right hon. Friend the Chancellor has made perfectly clear in his speech, and in the policies he has been developing since he became Chancellor, that they are the natural sequel of the steps taken by my right hon. and learned Friend the Member for Wirral.
  Mr. Lubbock: If it was correct to restrict demand at home and profits last year to encourage exports, why is it not equally correct to do so today?
  Mr. Walker: For the very simple reason that at the time those measures were introduced last year there were indications of wage inflation setting in in
  742
  the economy. There were many areas of over-demand, in the Midlands and the South, and a strain on the available labour resources, and this was creating a type of wage inflation which was disastrous to our competing in overseas markets. Certainly I believe that what the Chancellor has done is the natural sequence of those earlier policies.
  The other feature of the debate today has been the complete failure of hon. Gentlemen opposite to develop a coherent policy of their own towards the economic needs of this country. I question why this is. I ask hon. and right hon. Gentlemen on the Opposition French Bench, whoever opens on their behalf on Monday or winds up this debate on Tuesday, to develop a little upon the policies which the Labour Party would apply to our present position. As far as one can see, looking back at the traditional policies of hon. and right hon. Members opposite in the years from 1945 to 1951, in all fairness I think they can be said to have been, in the main, advocates of a cheap money policy, advocates of import control and advocates of the policy of extension of public ownership. I do not think that that is an unfair interpretation of some of the fundamental principles which hon. and right hon. Gentlemen opposite employed when they were in power.
  I wonder, are these still the basic principles of their policy? Are they still to be applied today? Or are there somewhat different principles? If there are somewhat different principles, may we hear about them? There is an incredible coyness and shyness about their latest proposals.
  The shadow Chancellor of the Exchequer made a few remarks about the wealth tax by which he would take £200 million out of the economy, but yesterday when hon. Gentlemen opposite started making speeches about it they said they would not go into the details of the tax at all till after the General Election. That is an incredible thesis for the Labour Party to propound. If hon. Members opposite believe in their wealth tax, let us hear all the details and let us have all the information about it and about their other policies of cheap money and extension of public ownership which they operated when they were in office.

  743
  Unless they can provide the details of those policies they will not deserve the support of the people of this country.
  Let us recall that when they were in office, in 1947, there was an unemployment situation due to the weather, but we have had a similar winter this year, and yet we have not reached the levels of unemployment which were reached when hon. and right hon. Gentlemen opposite were in office at that earlier period. In 1949 they devalued the £. In 1951 they scuttled out of office because the whole economy was going bankrupt. Do not let them be the people to talk about stop and go. With them it was stop, stop, stop and very little go—and a major devalution in between.
  I should like now to make one or two comments on the proposals made by my right hon. Friend, and first in connection with the proposals he has made to extend the theme of ownership. I certainly support the manner in which he has abolished Schedule A. This is an extension of several operations which we have carried out to encourage home ownership. I welcome the manner in which we have destroyed Stamp Duty upon the purchase of houses. Now, a young married couple purchasing a £3,000 house will no longer have to pay the £60 duty. Having purchased it, they will no longer have to pay Schedule A tax. This is a major step forward.
  The hon. Member for Grimsby (Mr. Crosland) opposed the halving of the Stamp Duty on shares because he considers that it benefits those who go dancing on the Riviera. But I suggest that this proposal could have an important effect upon the expansion of ownership. I say "could have". I do not think that it necessarily will have. It depends on the attitude and the reactions of the Stock Exchange to my right hon. Friend's proposal.
  For many years the Stock Exchange and the City have said that this duty is one of the barriers against widening share ownership. Now they have had a substantial reduction in it. I hope that, as a result, the Stock Exchange itself will adopt a far more vigorous method of providing and offering its services to the public at large than in the past.
  744
  In recent years, it has extended the knowledge that people have about its activities. But there is still much to be done. It could, for example, agree to open branch offices throughout the country and to the expansion of advertising. If it really is enthusiastic to widen the scale of share ownership, it has been given a lead now by the Government and I hope that it will proceed with it.
  I am glad of this proposal for its effect on investment from abroad. I was shocked by remarks made by the hon. Member for Grimsby. He said that it was deplorable that we should try to attract money from abroad because it made us look rather like an underdeveloped country. That is contrary to my own view, which is that we should endeavour to encourage foreign investment.
  Throughout the Common Market negotiations, many people in favour of our entry said that one of the advantages would be the attaction of foreign investment to this country. I disagree with the hon. Gentleman about this. There are many attractions for capital to come here. For instance, there are Imperial Preferences and the preferences within E.F.T.A., quite apart from our great consumer market. I hope that the measures proposed by my right hon. Friend will encourage foreign capital to come here.
  Now I want to deal with overseas earnings, particularly invisible earnings. This is a feature which I am afraid that the Board of Trade and the Treasury tend to neglect. It is one of the mystiques of modern finance. People comment on the fact that our balance in terms of invisible earnings has improved or has declined, but they give little detailed reason as to why it should improve or decline.
  We enjoy substantial earnings in terms of shipping, insurance, banking and finance. Something much more positive could be done to extend these earnings. Let us remember that at this moment our invisible earnings are equal to more than half our total visible exports. This is an important feature in our economy.
  Last year I visited Australia and New Zealand and was shocked by the pressures that were building up there—pressures of prejudice against the substantial sums of

  745
  money that the United Kingdom earns in the form of earnings from insurance companies, banks and shipping companies. There is much more to be done in seeing that these companies earning from Australia and New Zealand, and other countries, bring to their attention the benefits that this brings them. For example, substantial investment in Australia has been provided by British insurance companies and British banks, and the manner in which they have offered their services has benefited the economies of those countries.
  At the moment, little is being done for public relations in terms of our invisible earnings. Recently I suggested to my right hon. Friend the President of the Board of Trade that he should inquire into the possibility of setting up an organisation—for instance, an invisible earnings council or some similar body—to look into the problem of good public relations and of promoting more invisible earnings.
  I also suggest to my right hon. Friend the President of the Board of Trade that he should find ways of encouraging the great retail organisations of this country to open up abroad. I think of companies such as Marks and Spencers who have methods of "know-how" in retailing far better than methods employed on the Continent. There is no reason why these organisations should not be encouraged by positive Government means to extend their activities abroad and, through their organisations abroad, to sell great volumes of British merchandise and thus make a valuable contribution to our export trade.
  This Budget at this time probably hits the right level, and I agree that it should result in a period of expansion. I hope that throughout the coming financial year my right hon. Friend will not hesitate to give further encouragement to expansion if he thinks that that is the correct thing to do, considering the strength of the £. Likewise, if he finds that these measures, together with those he has already taken, lead to inflation, I hope that he will not lack the courage immediately to take measures to see that the strength of the £ is protected.
  8.51 p.m.
  Mr. Sydney Silverman: I had not intended to make any
  746
  contribution to today's debate. A great many years ago, I confess, I was described by my university tutor in economics as a first-rate economist. I have never believed in the science of economics since. The assessment made by that gentleman so many years ago has been repeated by others and every pronouncement I have heard by any economist has been contradicted by some other economist at the same time, or shortly afterwards. Therefore, I no longer take part in these esoteric mysteries.
  What prompted me to intervene in the debate—I am sorry that he is not here to hear me say so—was what I thought was the gross discourtesy of the President of the Board of Trade in refusing to give way during his speech when there had been only one interruption before, and that for less than half a minute, and when, thereafter, he proceeded to give way to every Member on his own side who wished to make any intervention of any kind.
  The Economic Secretary to the Treasury (Mr. Edward du Cann)The Economic Secretary to the Treasury (Mr. Edward du Cann)rose—
  Mr. Silverman: I shall not give way. I shall show the same standard of courtesy as the President of the Board of Trade showed in not giving way.
  I wanted to deal with that matter, but I am not sure now that I shall, because he is not even courteous enough to be here, nor is there any representative of the Board of Trade on the Government Front Bench. That is a shocking thing on the first day of the Budget debate which, as the right hon. Gentleman himself said, is the traditional day for discussing Board of Trade affairs.
  I should like for a short time to deal with some of the more obviously fallacial party political points to which we have been treated in the course of the last hour or hour and a half by hon. Members opposite. I have every sympathy with them. They are in a difficult position. It is their duty to back up their Government as best they can however inauspicious the circumstances. Perhaps the more inauspicious the circumstances, the more it is their duty to try, but they ought not to be allowed to get away with it, and I should like to expose one or two of the fallacies.

  747
  The first is the oft-repeated legend, in which not even those who utter it believe, that domestically and economically the Labour Government between 1945 and 1950 was a failure, or that its methods or policies did not succeed. In 1945, the war was just over. The right hon. Member for Woodford (Sir W. Churchill), in a sentence which was recorded in his diary by Mr. Morgenthau. of the United States of America, said that he was afraid of what the returning soldiers would have to come back to in this country.
  Lord Woolton—Minister of Reconstruction in the interim Cabinet between the breakdown of the Coalition Government and the General Election—said that this country was virtually bankrupt. That was not a reproach to anybody. We took pride then—and we should take pride now—in our having driven ourselves so near to bankruptcy in order to rid the world of the Nazi and Fascist set that we had fought so hard for six years to overcome. All I say is that that was the situation which the Labour Government took over.
  We are now, were then, and always will be, a country which lives, if it lives at all, by its export trade. In 1945 we had no export trade. We had sacrificed the whole of our export markets all over the world in order to convert the factories which used to supply those markets for war purposes, allowing our competitors, who were also our allies, to make headway in the overseas markets which we had abandoned in order to fit ourselves to play a proper part in the war. Everybody in this Committee at this moment knows that that is true, and we are all, presumably, proud of it.
  That is where the Labour Government started—with Britain a long way behind her competitors, bankrupt, with no export trade and no factories to make goods for the export trade. We had very little skilled labour available. But within less than four years—in fact, scarcely more than three years—we had increased our production to a figure that was no less than 180 per cent, above the best pre-war figure. This is what the right hon. Member for Woodford described as paralysis.
  I am not dealing with what followed. All sorts of things followed, and the
  748
  fruits of their success in those years were not available to us by the time we had to go to the country. Hon. Members opposite may think that that is a good reason or a bad reason for what followed. I do not care what they think. But I do ask them, in spite of their anxiety to defend the Government in a difficult situation, to remember that when they attack what the Labour Government did between 1945 and 1950—and I suppose that I attacked them as much as anybody in those years—they ought not to attack them on the ground of their economic policy, because their economic policy was a triumphant success—and everybody knows that it was. That is the first point. I hope that nobody disagrees with it.
  I see that the hon. Member for Louth (Sir C. Osborne) is present again. I sat through his speech, and I enjoyed it, as I almost always enjoy his speeches. I do not always agree with him. I do not think that I have ever agreed with all that he has said in any one speech. But I recognise him as a man of great intellectual integrity and of great courage. He looks at things for himself and forms his own opinions, and he gives them to the House frankly, whether they are popular with his hon. Friends, popular with hon. Members on this side of the House, or unpopular with everybody.
  I like Members like that, and I like listening to their speeches. But he said one thing that was surely unfair. He described Sir Stafford Cripps's austere policies. I think that I am right in saying that he described them sympathetically. He wanted us to believe—as I do believe—that he himself agreed with them, and thought that they were right at the time. Indeed, if I understood his speech correctly, he thinks that we ought to be following similar policies now.
  It seems to me important to recall how his friends, or the hon. Member himself, treated Sir Stafford Cripps' policies at that time. Sir Stafford was sneered at on the basis that Socialism would always spread misery—as though there were any better thing that could be done with inevitable misery than to share it with everybody, instead of piling it on to the weakest shoulders and leaving them to bear it alone. But that was what was said.
  If the Labour Party lost the General Election which followed, it was at least

  749
  as much due to the unpopularity of those austerity measures, however necessary, as to any other single cause. The hon. Gentleman—I do not remember what he said about it—will agree with me, I know, that all the Members of his party squeezed the last ounce of political capital out of them in order to win the General Election against the Labour Party who had supported those measures—for reasons which the hon. Gentleman says were virtuous reasons, and not reasons that ought to have been condemned.
  Sir C. Osborne: I am obliged to the hon. Gentleman for the kind things that he has said. If he looks at the OFFICIAL REPORT, he will see that in this Chamber, on more than one occasion, I defended Sir Stafford Cripps against the attacks of his own back benchers.
  Mr. Silverman: I do not know about the attacks of his own back benchers. I think that all hon. Members on this side of the Committee were behind Sir Stafford Cripps at that time. I do not think that there were any exceptions at all.
  Naturally, I accept what the hon. Gentleman says about the attitude he took. But he will realise that he was then in an even smaller minority in his own party than sometimes I am in mine, so we have a fellow feeling about that. But when next the hon. Gentleman talks about Sir Stafford Cripps and his austerity policies, which he has supported so much, would he please have the grace to admit—and not wait for it to be pointed out from the other side of the Committee—that he was alone on that side of the Committee in that opinion?
  The hon. Member for Worcester (Mr. Walker) thought that he was making a wonderful and unanswerable point when he thought he had caught out my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). He said that my hon. Friend was talking nonsense and contradicting himself when in one breath he said that this was an election Budget, and in the next that the Chancellor was not doing enough. He asked how could both things be true at the same time? If the hon. Gentleman will make the effort, he will see that not merely can both things be true at the same time, but that they are true. What my hon. Friend did today, and what the Leader of the Opposition did yesterday, was to recognise that, how-
  750
  ever inadequately and inefficiently the Chancellor on this occasion had put forward his Budget, it was intended to be an expansionist Budget.
  My hon. Friend was saying that the Government had put forward an expansionist Budget only two or three times before and that, by some quirk of history, it just so happened that whenever a Tory Government put forward an expansionist Budget a General Election was either immediately ahead or just round the corner; and that in all the periods in between they did not pursue expansionist Budgets but restrictionist Budgets. That was the point that was being made.
  I am not asking the hon. Member to agree with it. I know that he dare not. All I am asking him to do is to understand it, and to understand, too, that it is quite intelligent to say that and to say, at the same time, that even now it is not expansionist enough. That is all that has been said.
  Mr. Walker: Surely the point of the argument is that the right hon. Gentleman the Leader of the Opposition said that in the past the Tories have introduced over-expansionist Budgets and then have had to recoup the money. This was the point which the right hon. Gentleman made yesterday. It is now argued that the Government have not done enough and could have given more away and still have got away with it.
  Mr. Silverman: The hon. Member is mistaken. He should read my hon. Friend's speech in HANSARD today.
  Mr. Walker: I have read it.
  Mr. Silverman: Then the hon. Gentleman should read it again. I do not think that he will find any passage in my right hon. Friend's speech in which he accused any Conservative Government of having been over-expansionist. I concede at once to the hon. Gentleman that if my right hon. Friend said that, then he has a point. On the other hand, if, when he rereads HANSARD, he finds that there is no such accusation of over-expansionism in the past, I shall expect him to accept that he has no point at all on that score, and he will no doubt take a suitable opportunity to put the matter right.
  Next, the hon. Member said that there was no discrepancy at all between the

  751
  Budget placed before the House yesterday afternoon and the last Budget put forward by the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd). That is an astonishing proposition. I admit that in today's debate the hon. Member perhaps did not have enough time to elucidate that as clearly and persuasively as he is no doubt capable of doing. But I assure him that at the moment he is in a minority of one. Not even the Chancellor of the Exchequer would agree with him, not even the former Chancellor of the Exchequer would agree with him. Those two right hon. Gentlemen know quite well that whereas one of them said that the only way to save the situation was to have a restrictionist Budget, the present Chancellor of the Exchequer says that the only way to save the situation—although he does not clearly define what is the situation which he wants to save—is to have an expansionist Budget. An expansionist Budget is one thing and a restrictionist Budget is the exact opposite.
  The hon. Member for Louth appreciates that clearly, and he devoted his whole speech to a restrictionist policy. But it requires a mind much more subtle than mine even to contemplate the possibility of reconciling the Budget for which the right hon. and learned Member for Wirral was sacked with the Budget of the present Chancellor of the Exchequer, in which he wishes to win a General Election, if not before the next Budget then after the next Budget, when perhaps he will pump into the purchasing power of the nation the £100 million or whatever it is that he kept back on this occasion.
  I turn to the Budget itself. The most astonishing thing of all is that the Chancellor said that the theme of his Budget—and an admirable theme indeed—was to get expansion without inflation. I wonder when he thought of that. Over the 12 years during which the Tories have been responsible for the economy of this country, so far as any Government in our system can be responsible for the economy, they have been doing the exact opposite. It has not been expansion without inflation they have been securing. They have been securing inflation without expansion. That has been the whole history of the matter since they took
  752
  office a dozen years ago. Is there anyone who denies it?
  They admit that it is now necessary to do something to expand the economy. This involves, at least by implication, the admission that it has not been expansionist so far and that it is necessary to do something more. It has to be stirred up. Incentives have to be given. Purchasing power has to be poured in. There have to be all kinds of expansionist devices to rescue the country from its present stagnation. It is, therefore, clear that they have not been expanding the economy during these 12 years. I think that we can all agree on that.
  Sit C. Osborne: No.
  Mr. Silverman: Does the hon. Gentleman think that we have been expanding during the last 12 years? We have been at the bottom of the league table every year.
  Sir C. Osborne: I said in my speech that in 1947, when the Labour Party was in power, there were 977,000 people employed in agriculture as against 633,000 today. Agriculture has expanded its productivity in that period by 50 per cent. Is not that expansion?
  Mr. Silverman: If the hon. Member will apply his arithmetic accurately, which we all know he is capable of doing, he will realise that 1947 is a lot longer than twelve years ago. I am not talking about 1947. I would not blame or praise the hon. Gentleman or his party for anything that happened in 1947. I am talking about what has happened since his party took over power. I invite the hon. Gentleman to agree with me, if he will be so kind—I have already paid a compliment to his intellectual intergrity, so it is with every confidence that I invite him to agree—that during that twelve years we have been a largely stagnating economy. There has been an occasional exception—I do not deny that—especially just before elections. Apart from that, the economy has been stagnating the whole time. It is admitted that it is stagnant now.
  The next question I ask is whether anybody denies that there has been a very rapid, continuous and progressive inflation over the whole of that twelve years. Is that wrong? What the Tory Party has succeeded in doing is not getting what

  753
  the Chancellor of the Exchequer now says he wants, namely, expansion without inflation. What he has been getting is inflation without expansion.
  I hope that this time the Chancellor will succeed better. For my part, I do not think that he will. I think that he will succed to a certain extent in expanding the economy. I know that he wants to. When an economy is expanded under our uncontrolled and unplanned system, inflation inevitably comes with it. What the right hon. Gentleman will do is what the present Government have always done. When the renewed inflation reaches a certain point, they will decide that the inflation has gone too far and, at that point, if they have to choose between expansion and inflation, they will choose to abandon the expansion rather than allow the inflation to continue, because they are incapable, under their system, of having expansion without inflation all the time. That is the cause of the trouble.
  I see that the right hon. Gentleman the President of the Board of Trade has returned to the Chamber. I do not intend to deal at length with a point I would not now need to make had the right hon. Gentleman been courteous enough to allow me a gracious intervention in his speech earlier in the day. I have known the right hon. Gentleman for many years. I know him to be as kindly, good-humoured, courteous and well-meaning a Minister as he was all those things when a back bencher.
  When the right hon. Gentleman behaves with gross discourtesy—which is not often; just now and again—it is because he knows that he does not have an answer to the point which is to be put to him. He thinks that it is a lot safer for him not to allow the point to be put. Whether or not that is good strategy I would be inclined to doubt, because it only produces a longer speech. But, as tactics, it may achieve a certain momentary, though illusory, success.
  I think that the right hon. Gentleman already knows the point I wish to put. The theme of this year's Budget, said the Chancellor, was expansion. To achieve it he would do certain things and put the emphasis on those parts of the country where unemployment was most serious. He announced a number of
  754
  proposals. I do not know how useful the powers under the Local Employment Act were to those who benefited by them—or, at any rate, had the chance of benefiting if there was any benefit to be derived; and there are two views about that—but there is no doubt that what the Chancellor will do now will enable the President of the Board of Trade to do useful things in areas of that kind.
  I beg him not to leave north-east Lancashire in the lurch. I beg him not to neglect it, not to ignore it. I beg him not to refuse to listen to it and I beg him not to keep it halting between hope and despair. This district was for a short time a special area under the old Distribution of Industry Act. It was made one for the first time three or four months before the 1959 General Election. Hardly were the ballot papers locked away when the then President of the Board of Trade, the present Chancellor of the Exchequer, repealed the Act altogether and brought in the new one which proceeded on the false principle of picking out isolated spots instead of treating areas as units.
  In the list he put down, the whole of this north-east Lancashire area was omitted—and he is still refusing to put it back. He knows that there are special problems. He knows about the contracting cotton industry. He knows about the slum derelict mills which the Chancellor made a big point of. One of the things that the right hon. Gentleman has taken power to do is to provide more money to rescue them. Where are there more mills of this kind than in the cotton belt of Lancashire? Yet we will not get a farthing out of the proposals in the Budget.
  The right hon. Gentleman knows about the contracting cotton trade and the heroic efforts made on their own initiative and at their expense by the local authorities there to help them to help themselves to help the industry to survive. He knows, from any true consideration of the matter, that the percentage of unemployment is almost as high as the worst of the areas he includes, yet he still keeps us waiting for answers which we have been asking for for years. Lancashire is in its present plight because it has been for too long the Cinderella of the Tory Government.

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  Social capital is being wasted. The population has been and still is drifting away.
  Now we have a new gimmick for the railways, the result of which—if it is implemented; and I agree that there has been no decision about it yet—will mean that we will lose the only railway that connects us with Manchester—this, a cotton area. It really is too bad. I think that the right hon. Gentleman would have been better to have allowed me to make this point more shortly by intervention in his speech so that he could have answered it. I have made it now, and I do not propose to continue.
  Mr. Erroll: As the hon. Gentleman has been courteous enough to give way, I should like to say that in the press of making a speech with a number of interventions, I felt that I could not accept every intervention, and I intended no discourtesy to the hon. Gentleman whose interventions I am always delighted to receive.
  Mr. Silverman: The right hon. Gentleman had the eye of the Chair. He had the Floor. He was entitled to address the Committee as he thought fit. If he did not choose to give way, that was a matter for his discretion and not mine. All that I am saying is that I think it would have been better if he had done so. Since he has heard the point now, I hope that he can give me some assurance that the matter will be considered again, and that there will be some opportunity of our getting the advantages which are open to other areas of high and persistent unemployment.
  9.16 p.m.
  Sir Henry d'Avigdor-Goldsmid: When the hon. Member for Nelson and Colne (Mr. S. Silverman) got up he told us that he was going to intervene for only a short time and I was preparing myself to congratulate him on being a happy exception in the prevailing note today. We have listened to a number of interesting but extremely lengthy speeches. The hon. Member for Grimsby (Mr. Crosland) was the exception. The hon. Member for Nelson and Colne may not have made the longest speech of the day, but I think that if we compare content with length it was certainly the
  756
  emptiest. I do not think that he got on to anything more recent than 1959, and most of his time was spent in the middleforties.
  This is a day appropriate for back benchers to convey their congratulations to my right hon. Friend the Chancellor. I think that very much the general view, although I am not quite certain whether my hon. Friend the Member for Louth (Sir C. Osborne) shares it to the full. Nevertheless, I think that the general view throughout the Committee has been that this has been a successful Budget. It has been criticised as being a rather dull one. I have heard that expression used, and it rather supports the view of my hon. Friend the Member for Worcester (Mr. Walker) that it was very far from fulfilling the conception of what would normally be an electioneering Budget. I think it can be said to be a play without a hero.
  Mr. Mitchison: It certainly had several gravediggers.
  Sir H. d'Avigdor-Goldsmid: I have no doubt that they will in the course of the debate have played their part, but I should like to say that the one particular person cast as the villain of the piece is my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd). We have been able to focus most of the darts of criticism and antagonism, which cannot be indefinitely taken away from our debates, on his body. What is his crime? His crime—I think that the hon. Member for Cardiff, South-East (Mr. Callaghan) mentioned this particularly—was to go very wrong in his forecasts last year.
  Even though hon. Members may not believe what the Economic Survey says, they will accept the Economic Report as a truthful and reliable guide. Paragraph 7 of the 1962 Economic Report stated:
  "In the first part of 1962 there was a brisk rise in demand and output which corresponded closely to the general trend forecast in the Budget speech. Exports rose rapidly and all the other main kinds of demand, apart from fixed investment, rose too … consumers' expenditure rose because there was some recovery in net borrowing from the banks and on hire purchase and so in expenditure on durable goods, mainly cars. Industrial production more than regained the ground lost in the second half of 1961, and by the middle of the year was a little higher than the previous beak in the middle of 1961."

  757
  The Budget is presented in April of each year, so that my right hon. and learned Friend, when making his Budget speech, had no more information available to him than that, and that information was completely accurate. My right hon. Friend the President of the Board of Trade said today that October, 1962, was a record month for exports. I think that he said that, seasonally adjusted, exports were the highest ever for that period.
  On 13th July, my right hon. and learned Friend lost his job. He was made the scapegoat for policies that were not at all popular in the country, but in thinking this over one must realise that he has suffered very severely because, had he remained in office, he could have done a number of things which his successor could not do, for the best reasons, for a month or so while he was settling in. The blame that attaches to my right hon. and learned Friend, which has been very freely laid on him, might easily go to some extent to his advisers.
  I know that it is not customary for Ministers to mention their advisers, but no one can have failed to notice that several of my right hon. and learned Friend's leading advisers made their departure very soon after his. It must be implicit in that that he was the scapegoat for the bad advice he received on that occasion. I am firmly convinced, as I believe many of my hon. Friends are, that British industry would not today be so competitive both as to price and delivery had it not been for the very unpopular measures that my right hon. and learned Friend took in 1961 and 1962—measures of unpopularity for which he suffered.
  The right hon. Member for Huyton (Mr. H. Wilson) said yesterday:
  "Of course, the £ a year ago was at least as strong as it is today …"
  and added:
  "… and some say stronger, than at present."—[OFFICIAL REPORT, 3rd April, 1963; Vol. 675, c. 509.]
  That was not an entirely considered remark from the right hon. Gentleman, whose judgment in these matters I fully respect. Had he taken the temperature of the patient, he would have found it a great deal more feverish this time last year than it is today. It is not a thing that can be proved, but it is the con-
  758
  sidered opinion of most people in the City of London, and elsewhere, that the £ was, in fact, not as strong in 1962 as it is today, and credit for that must to a great extent go to the measures of my right hon. and learned Friend.
  I think I am right in saying that after the end of the 1914–18 war Field Marshal Earl Haig made a special pilgrimage to Lord Haldane—who had been Secretary of State for War at the beginning of the First World War, and who lost his job because he became unpopular—to thank him for all the preliminary groundwork that had eventually led to the victories of 1918—[Interruption.] I know that, in a sitting position, the hon. Gentleman the Member for Nelson and Colne (Mr. S. Silverman) is an eminent expert in the art of war. When the successful generals of this engagement are counting their laurels they might remember one who cleared the way for them, and who also paid the penalty for having stuck his neck out.
  I thought that we had the keynote speech from the right hon. Member for Huyton. I think that I can summarise it quite fairly as saying, "I cannot criticise the Budget because we thought of it all first." This is not a verbatim quotation, but I do not think that it is an unfair paraphrase.
  The right hon. Gentleman quoted in his speech discriminatory tax relief, industry going to development districts, depreciation allowances, abolition of Schedule A, for which he claimed credit, and various Income Tax concessions. I, for one, was not greatly surprised at this claim because, after all, the right hon. Gentleman and his hon. Friends have had a lot of practice in opposition. They have had eleven or twelve Budgets to which to put down Amendments, and it is not at all surprising that in the course of them they have thought of some quite good ideas. They are not at all lacking in diligence. The ideas do not always come at the right time, but still they try. They have also been rather clever in a way in that they have been able to hedge their bets.
  In April, 1961, my right hon. and learned Friend the Member for Wirral introduced a heavy oil duty. The right hon. Member for Huyton, as reported at column 987 of the OFFICIAL REPORT

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  for 18th April, 1961, said that the Opposition welcomed the tax on fuel oil. On 15th May last year, on page 2214 of the Order Paper, there was an Amendment in the name of the hon. Member for Cardiff, South-East, then the official spokesman, and many of his hon. Friends, to the effect that the rebate on heavy oil should be restored to what it was before the duty. That really is hedging the bets. It is true that the Amendment was not called, but whether that was on your judgment, Sir William, or whether it was second thoughts on the part of the right hon. Member for Huyton, I do not know. Whatever it was, it seems to me that if my right hon. Friend the present Chancellor, as many of my hon. Friends and I wished him to do, had repealed the heavy oil duty, the hon. Member for Cardiff, South-East would have said, "Look what we said last year." As it was, there was no change there and so it is a case of "We stand by the views of the right hon. Member for Huyton."
  I understand that the hon. Member for Cardiff South-East is making a broadcast tonight and I hope, therefore, that it will not be taken amiss, since he opened the debate, though that seems a long time ago, if I comment on some of the things he said and perhaps on things which he did not say. I know that the hon. Member has been having lessons from some of the most highly skilled economists in the land. We are told that at the seminars he absorbs and digests the frequently conflicting views of these eminent gentlemen. I do not think that these tutors would have given him very high marks for this afternoon's performance. Perhaps they would have given rather higher marks for his article in the Financial Times of 12th April under the title "The Budget I should like to see". I am not clear whether it was the Budget which he would like to bring in or the Budget which he would like to see a Conservative Chancellor introduce. The hon. Member, however, advised my right hon. Friend to concentrate on "reversible measures". There has been talk of "stop and go" but that at least presupposes movement in one direction. "Reversible measures" suggest moving in two directions.
  The hon. Member for Cardiff, South-East, in the course of his remarks today,
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  referred to taxation proposals which he and his hon. Friends have been considering but which he said would have been out of order for him to introduce in the debate. I wonder whether they would have been out of order under our rules, or whether perhaps this is a case where the rules of touch football, which the right hon. Member for Huyton has recently been practising in the United States, would specially apply.
  My right hon. Friend the President of the Board of Trade today mentioned that famous television programme without which no debate in this Chamber seems complete—"That Was The Week That Was". Naturally here we are all greatly in admiration of the star, Miss Millicent Martin, but this charming lady does not seem to study the papers quite so closely as some of her colleagues. An interview with her was published in the Daily Mail on 28th March. This charming lady has recently received a film contract under which she will be paid a very large sum, and she is reported in the Daily Mail as having said: "I want to invest my money in property. Security is essential. That is why I am rather thrifty". Very good. She will do much better, having earned this money, under the present Government than she would if the hon. Member for Cardiff, South-East and his friends had had their way and the Surtax reliefs for earned income had not been allowed.
  I wonder whether she realises what the hon. Member for Cardiff, South-East has in store for her. The hon. Gentleman said that he would welcome an intelligent discussion on taxation but only after the election. I thought that that was a most peculiar thing to say. I do not see why we should have to "Wait for Godot". We can have a quite reasonable discussion on taxation in this Committee. It does not seem to me to inhibit intelligence. It is not inappropriate that we should discuss the great new discovery of the seminars, the wealth tax.
  First, we should clear our minds of cant. Many hon. and right hon. Members would be subject to it, by no means all of them on one side of the House. We can discuss this rationally, like any change in Excise Duties or taxation which affects us all. Hon. Members opposite should not deceive themselves and imagine that this is a tax which will

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  affect only Conservative supporters. In fact, more than 1 million people, who are far from wealthy in the accepted sense of the word, would be caught. I can prove this figure. It could have a very important effect on the fortunes of this country, and it merits a moment's serious consideration.
  It is difficult to ascertain the true doctrine on this tax because we can glean only rather numinous comments. On 11th February, the hon. Member for Cardiff, South-East said:
  "I should be willing to reduce taxes on earnings … if I could get permission to tax capital and wealth as well. This would be one way of … encouraging earnings and those who wish to move ahead."—[OFFICIAL REPORT, 11th February, 1963; Vol. 671 c. 1131.]
  Then, in an address to, I think, the Young Fabians—unfortunately, I am not in touch and I have not a copy of his remarks there—the hon. Gentleman suggested, so I understand, that a wealth tax should be introduced by my right hon. Friend the Chancellor of the Exchequer, and he advised him to consider a tax "on all wealth". This, in fact, was confirmed by his article of 1st April in the Financial Times. The three principles the hon. Gentleman is reported as having mentioned are these. It should apply to people whose ownership of capital was more than £20,000. It would catch only one person in every 100. It would bring in about £200 million annually.
  His colleague, the hon. Member for Dearne Valley (Mr. Wainwright), has been doing a little research on his own. He also is doing some homework about a wealth tax. On 14th March, the hon. Member for Dearne Valley put a Question for Written Answer to my right hon. Friend the Chief Secretary asking what amounts a tax on a graduated scale would bring in. I shall not weary the Committee with the whole scale, but it starts at ½ per cent. on fortunes from £20,000 to £50,000, rising finally to 5 per cent. on fortunes of over £400,000. My right hon. Friend replied, that the tax would bring in £225 million in a full year.
  We can see that this wealth tax which is to bring in £200 million will be at a fairly steep rate. I think that that must be accepted.
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  My right hon. Friend the Chief Secretary has estimated that 400,000 estates would be caught by it. He is on record to that effect. Presumably, the 400,000 taxpayers would have some dependants. They would not all be bachelors. Most of them would have a dependant or two. Therefore, a round total of 1 million people would be affected by this tax. I am sure that the hon. Member for Grimsby will accept that that figure is not unreasonable.
  When we come to apply this tax, all sorts of extraordinary anomalies arise. Mr. Rees-Mogg, in the Sunday Times, produced all sorts of startling theories to show that almost any farmer caught by the tax would be ruined and forced to sell his implements and fields. There is also the case of the man with his fortune in a private business and owning a house. These people would seem to be caught by the tax. I do not wish to go into detail, because I know that hon. Members opposite prefer to play this by ear, rather like the hon. Member for Coventry, East (Mr. Crossman) in dealing with insurance problems. Figures are liable to be misleading, but the figures which I have given come from unimpeachable sources and therefore have to be taken into account.
  As I say, many anomalies would arise Party, with a General Election before it, exceptions, because clearly the Labour Party, with a general election before it, would not impose a crippling tax on farmers. Owner-occupiers obviously would be let off. We know from the figures which my right hon. Friend gave in answer to the hon. Member for Dearne Valley that the net revenue would amount to less than £250 million.
  How would this tax be treated? We had a very good example of this in the debates on the speculative gains tax last year on the Finance Bill. Hon. Members opposite—and I suspect that the fine Italian hand of the hon. Member for Sowerby (Mr. Houghton) was involved in this—put down a succession of very complicated Amendments to the speculative gains tax which the hon. Member for Cardiff, South-East described as
  "a useful peg on which to hang this debate, because it serves as an illustration of how a capital gains tax could be devised."—[OFFICIAL REPORT, 22nd May, 1962; Vol. 660, c. 242.]
  Obviously, the hon. Member would not have to stick to the figures which he

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  gave, but the net result of the Amendments tabled by hon. Members opposite—I do not ask them to stick to them, but I refer to them merely to give an indication of how their minds were working—was that this tax would be turned into a capital gains tax, so that, after ten years, profit on any land transaction would be caught as to 70 per cent. and profit on any other form of transaction as to 45 per cent. I am sure that hon. Members opposite will admit that these figures are correct, based on their Amendments last year.
  The right hon. Member for Battersea, North (Mr. Jay) said:
  "I do not believe that the tax will be temporary."
  Then he cited Income Tax and Purchase Tax as evidence of taxes which were introduced as temporary measures but which became permanent. The right hon. Gentleman also referred to it as a tax
  "which will have to be converted in the future into something much more substantial and much more effective."—[OFFICIAL REPORT, 22nd May, 1962; Vol. 660, c. 311–2.]
  I suggest that if this wealth tax is introduced it will be treated in exactly the same way as the speculative gains tax was treated by hon. Members last year.
  I see that the hon. Member for Sowerby is now present and therefore I shall not raise any questions about the difficulties of administration of such a tax. After all, he knows much more than I do about the Inland Revenue and probably more than anyone in the House of Commons. If he tells me that the Inland Revenue is capable of taking on this extra burden without reinforcement, then I naturally will accept what he says. The hon. Gentleman does not seem to wish to intervene. I have not noticed him advocating this particular measure himself. Perhaps it will come later.
  Mr. Douglas Houghton: Since the hon. Gentleman is provoking me, I will say that the Inland Revenue can perform miracles.
  Sir H. d'Avigdor-Goldsmid: I have no doubt that when the hon. Member was active in the Inland Revenue it did perform miracles.
  764
  A special miracle is required here, because if a wealth tax were brought in there is a notional idea that about 19 million estates will have to be assessed. About 400,000 estates and, perhaps, another marginal 100,000 estates, making a possible 500,000 estates, will have to be assessed annually. This would present quite a problem. Even the advisers of the hon. Member for Cardiff, South-East might find it difficult, without greatly increasing the bureaucratic farce of the Inland Revenue, to assess 500,000 estates annually. I shall not raise questions about household possessions, the assets of a business or pictures. These go by the way. It is the principle that we want.
  Mr. Houghton: Would the hon. Member care to tell the Committee which Budget he is discussing?
  Sir H. d'Avigdor-Goldsmid: As the hon. Member very well knows, I am having a discussion on taxation, which is entirely proper to this debate. All I can say in conclusion on this aspect is that despite what the hon. Member has told me about the Inland Revenue being able to work miracles, because of the difficulty for the staff without greatly increasing its numbers, I prefer to rely on slightly amending the old poem, written same 100 years ago,
  "Let laws and learning, wealth and commerce die,
  But leave us still our old bureaucracy."
  One of the ridiculous things is that we already have four forms of taxation an investment—Estate Duty, Stamp Duty, which is now reduced, the speculative gains tax and the discriminatory taxation rates on investment income. Furthermore, if hon. Members opposite have their way, we have in the pipeline a tax on gifts inter vivos and a capital gains tax. Therefore, there will be six forms of capital taxation to cope with before even we come to this.
  I need not deploy the argument further. All I would say about it is that in the 1930s there was much talk about the capital levy, but the electorate did not like it. It became a sort of smear word and it was dropped. In the 1940s, we had Sir Stafford Cripps' special contribution, which was a quite different matter. It was, in Sir Stafford's words, a once-for-all. It had the special purpose of reducing the debt and it was

  765
  relatively easy to collect, being based upon the Surtax payer and his return. Even so, it was not popular in the country. Then, we had four consecutive general elections, fought by hon. Members opposite with increasing unsuccess. Now, we are back to where we were. The capital levy was a smear word and was forgotten. Now, the wealth tax becomes the O.K. word of the 1960s.
  The hon. Member for Cardiff, South-East rather gracefully compared my right hon. Friend the Chancellor of the Ex-chequer to an old hack put out to grass. As the hon. Member is so keen on equestrian metaphors, I give him a new one. His wealth tax is no election winner. It would not win a donkey race. It has been foisted on the public without guarantee of soundness by a cheapjack auctioneer and the catalogue entry runs: Dark horse by Pink Seminar out of Capital Levy. In the words of the famous Lord Birkenhead: it is begotten by a rogue sire out of a dam that roared.
  I thought that at that stage I could sit down, but I am standing up only because the hon. Member for Grimsby referred to devaluation. We had, I thought, reached the stage in our thinking where devaluation was as much a dead subject as bimetallism. I do not think that in dealing with a complex twentieth century State of the most complicated kind, devaluation is a policy or anything but a confession of complete and total failure. We are unique in the sense that any other country can devalue its currency and simply do damage to the poor, the old and those who live on fixed incomes. If we devalue, however, we do it also at the expense of those who trust us abroad.
  Mr. Crosland: I did not urge devaluation on the part of the British Government. I was making a general proposition that one of the curiosities about the last fifty years was that we have moved from the idea when we thought that flexible exchange rates were a good thing to the stage when we thought that they should be ruled out of court. I did not say that devaluation was a good thing.
  Sir H. d'Avigdor-Goldsmid: I am sorry that anything I said would suggest that I did think that the hon. Gentleman had urged devaluation. I was referring to
  766
  devaluation because he referred to it, and all I said was that he preferred bimetallism, an equally dead concept.
  When people talk about a floating £ we know very well they must mean a sinking fund, and it means sinking it very far, because if we were in a position where the £ was floating it would have to be so reduced in value that those who had to balance it here would not think it worth transferring through the exchanges. Therefore, it is no good thinking of exchanging it at its present level but at 40 per cent. or 50 per cent. lower.
  This has been an interesting stage in the debate. We have had some very long speeches and I am sorry to have added to them in a speech even longer than that of the hon. Member for Nelson and Collie though, I hope, with slightly more content. In the circumstances I should simply like to say to my right hon. Friend the Chancellor that I think that he and his colleagues have done a superb job. I think that the speech by the President of the Board of Trade today was really the most constructive thing this or any Government have ever done for the areas of heavy industry. I am confident that it will meet with the success it deserves.
  9.51 p.m.
  Mr. E. L. Mallalieu: The hon. Gentleman the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) invariably makes a speech, if I may say so with great sincerity, which interests us. This evening it was a notable speech, first, for his very eloquent tribute to his right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), who sits behind him, and, secondly, I think, for the nature of the second part of the speech, because in this he did two things.
  The hon. Gentleman frivolled very entertainingly and raised bogeys, and I think that both these things are an indication of the uneasiness which hon. Gentlemen on the other side of the Committee must feel at this time, because, of course, they have to bolster up their spirits in view of the things for which this Budget has really been designed.
  I want to say something about the speech of the Chancellor of the Exchequer. I am very glad that he is here to listen to it rather than that I should have to say it without his presence.

  767
  I want to say that his speech nauseated me—[HON. MEMBERS: "Oh."] That, as I think he will believe, is nothing whatever personal to himself, because invariably, whether a nauseating speech or a thrilling speech, or an inspiring speech, he delivers it with the greatest charm and erudition.
  There is nothing, that is to say, personal to him in my remarks, other than that those remarks might be personal to every hon. Member on the benches opposite, because he knows perfectly well that the policies of his right hon. Friends and himself over the last ten years have really been taking up the putrefying corpse of party advantage and trying to clothe it in sweet-smelling garments of economic respectability. This strikes me as being a very unfortunate thing to do.
  Unfortunately, the right hon. Gentleman claims that this particular moment is propitious for doing things which we on this side have argued for a very long time should be done and has given no reasons whatever for thinking that exactly the same considerations did not apply a year ago or even more. That, it seems to me, is a fraud upon the electors.
  The fact that it is a fraud upon the electors worries the right hon. Gentleman not at all. That applies to almost every other right hon. and hon. Member opposite. In their own personal lives I feel absolutely certain that each one of them is entirely honest and honourable. But bring them to that Box as Ministers of Her Majesty and they are prepared to deceive the electorate to any extent they feel they can get away with. That is a very sad state of affairs.
  They have raised taxation throughout their twelve years of office. They say that they have not, but when one takes into account the whole economy—for instance, the National Insurance Contributions—the fact remains that people who can ill afford it are paying more than ever before. The party opposite has claimed to be reducing taxation all this time while, on the contrary, it has been doing nothing of the sort.
  Invariably, a move towards expansion has been trotted out just as Members opposite are "coming into the straight" and when they think that they can see the General Election post in the distance.
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  It is not surprising that in these circumstances the Prime Minister should have let slip the other day the remark that he made about diplomatic courtesies in order to explain a singularly sordid piece of deceit in which he had been caught.
  Some of us spend time going abroad trying to convince people in Africa, India and elsewhere that the system of Government we have evolved here, the parliamentary democracy of which we think so much, is a really good thing both in its achievements and in its possibilities. I suppose that that is an excellent thing to do. It has been done by Members from both sides with great assiduity, and, I believe, with great effect.
  I have no doubt that many of us will go on trying to do this thing, but, although the right hon. Gentleman may think me sanctimonious and lecturing and, if he likes, puritanical—I may be all these things—I say to him that those of us who do go abroad to try to extol the virtues of this most sophisticated of civilised systems of government will do so in future with a heavier heart because we believe that, in this country of ours, under this system, there are far too many people who should know better who wilfully set out to deceive the electorate for party gain.
  Whereupon Motion made, and Question, That the Chairman do report Progress and ask leave to sit again.—[Mr. McLaren]—put and agreed to.
  Committee report Progress; to sit again Tomorrow.

BRITISH ARMY (GUARDSMAN TILL)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. McLaren.]
10.0 p.m.
Mr. Leo Abse: In 1961, British law followed the French law of 1790 and at last abolished suicide as a criminal offence. Thus, a dead man dead by suicide was declared at last not to be a criminal. It followed that attempted suicide also ceased to be an offence by English law.
The pathetic case of Guardsman Till, which I am raising tonight, would seem to indicate that the War Office, with an attitude which I regard as extraordinarily

769
callous, apparently decided to ignore the change in the law. This lad, serving in the Coldstream Guards, barely 19 years of age, obviously sick in mind, was gripped, equally as obviously, by a severe depression, with the result that he made a serious attempt on his life.
With a razor blade, he slashed his wrists no fewer than 30 times. He probably swallowed scores of codeine tablets and is known also to have swallowed a quantity of denim buttons. Everyone, except, it seems, the Army authorities who have duties to young serving men which are certainly no less than that which the serving man has to the Army, should recognise that this was the classic suicide attempt and, like all such attempts, a plea for help, a desperate plea.
When the House of Commons abolished suicide as an offence, recognising that the police and the courts might no longer be able consequently to steer some of the 25,000 attempted suicides which take place annually to hospitals for treatment or supervision, the Ministry of Health caused a considerable number of circulars to be sent to regional hospital boards to ensure that the provisions of the Mental Health Act were known and applied so that, in short, succour could be given to those people and be given rapidly.
For the Army, however, it seems that time stood still. No attempt, apparently, was made in the case of this young man to have placed at his disposal the psychiatric attention which the Ministry of Health and all civilised people believe should be given to someone who finds himself or herself in such a melancholy and depressive condition that he or she would do what Guardsman Till clearly did do.
This wretched boy, instead of being given help, was hauled before a court and sentenced to 112 days' detention. If the facts are as reported, and as I am stating them, this conduct is little short of being barbaric. I am informed that no oral evidence was given, that the lad, doubtless in the gloom and apathy which characterise a depressive, pleaded guilty. As I understand the position, apparently he has been sent for punishment and not, as he should have been, for treatment.
I want to ask a few questions. Was there any psychiatric opinion received, or was it merely some medical officer giving
770
written evidence and without the appropriate psychiatric qualifications? Is it correct that the defence statement was that this poor lad had broken his spectacles and was in a state of fear which was so great, that he was so fearful of the "bull" of the regiment, that he was frightened that without his spectacles he would be unable to have sufficient vision to lay out his kit?
If this was said by the defence in mitigation at that hearing, as I understand it was, and it is not accepted that there was this excessive discipline which could bring a young lad to this condition, why is it that no treatment was immediately administered and why is it that he was not given the obvious aid he required? If there was no real reason, no external reason, no objective reason which caused this lad to take such a desperate act, then, clearly, anyone with a modicum of common sense would recognise and acknowledge that he was in need of psychiatric help.
Perhaps no less important is the principle. I understand that this boy, who had inflicted at least 30 wounds upon his wrists, was charged not with attempted suicide—for this is not possible—but with malingering. Presumably he must have been charged under Section 42 of the Army Act, which says that
"Any person subject to military law who … injures himself with intent thereby to render himself unfit for service … shall be guilty of malingering and shall, on conviction by court-martial, be liable to imprisonment for a term not exceeding two years …"
Quite clearly, anybody who makes an attempt upon his life must be rendering himself unfit for service; he is seeking to render himself unfit for life.
If the Army is not seeking, through the medium of this Section, to sidestep the express wish of Parliament, I should like to know what is being done to distinguish genuine cases of malingering—in which some act is performed of the kind we know to have occurred in cases of mutilation—from cases of attempted suicide. I should have thought that on the facts as reported, if a boy of 19, for no apparent rational reason—if there was no intimidation caused by excessive discipline—decides to take scores of codeine tablets, slash himself in the way that I have described, and swallow denim buttons, it was abundantly clear that he was making an attempt upon his life.

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If, on each occasion that this occurs in the Army, there is to be a distinction between what happens inside the Army and what happens outside, a very serious situation will exist. In this country there are 25,000 attempted suicides annually, and I do not doubt that by the simple fact that that number is so large there must perforce, unfortunately, be some people who, within the Army, will make similar bids to commit suicide. I hope that I may have some satisfaction in being told that it is clearly understood by the Army authorities that Parliament has willed that attempted suicide is no longer to be regarded as triable as an offence. Surely there should be no less humanity inside the Army than there is outside it.
I am no less concerned than any other hon. Member in seeing to it that the image which the Army presents is one that is informed with passion and humanity. As a result of recent events the Army has received a somewhat unfortunate image in this respect. We have heard of men complaining bitterly, with or without justification, about the treatment that they are receiving inside the Army. It will be a most unfortunate day if the opinion is spread abroad that if someone is in such a wretched condition as this young guardsman clearly was, the treatment that will be meted out to him is 112 days' detention or two years' imprisonment. It will be a sorry day if that image of the Army is presented to the nation and the world.
I hope that I may be told what is happening to this lad at this moment, and whether he is receiving psychiatric attention. I hope, equally, that I shall hear that some steps are being taken to ensure that cases of attempted suicide in the Army are clearly distinguished from cases of genuine malingering.
10.9 p.m.
The Under-Secretary of State and Financial Secretary for War (Mr. James Ramsden): I could not normally congratulate the hon. Member for Pontypool (Mr. Abse) upon having raised this case because, as I shall seek to show presently, I think that he has taken the wrong view of it. But perhaps I may congratulate him upon having had the opportunity to raise a matter on the Adjournment this week and express
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my condolences with him for not being able to speak yesterday.
The case which he has been trying to make out is that this was a young soldier with a grave psychiatric disturbance—so grave that he made attempts to commit suicide, and, with great hardness of heart, the Army charged him with malingering, court-martialled him, and finally punished him. This is a travesty of what actually did happen, as I hope to show the hon. Gentleman. I cannot begin to accept the construction which he put on the series of events on which he touched.
Before I come to that, perhaps I may say a word about the general legal position with regard to the law on suicide and its implications for those who are subject to military law. It is true, as the hon. Gentleman said, that suicide or attempted suicide is no longer a civil offence, and the hon. Gentleman had something to do with that state of affairs. But it is not a military offence either, and no disciplinary action can be taken against a person subject to military law for committing suicide—obviously not—or even for attempting to commit suicide. I can give the hon. Gentleman the assurance for which he asked. That is the position today.
It sometimes happens that a soldier tries to do himself some injury in the sense that he may deliberately try to make himself unfit for duty. Anyone subject to military law who injures himself with intent to avoid service is liable to be charged with the offence of malingering, under Section 42 of the Army Act, 1955, which was correctly quoted by the hon. Gentleman. The fact that this is so is in no sense side-stepping the wishes of Parliament or the law in respect of genuine suicides. It is recognising a state of affairs which may come up in the Armed Services and which, in the interests of discipline, clearly cannot be allowed to exist.
There must be a clear difference between a suicide attempt and what amounts to malingering. It is equally clear that in the Armed Forces we cannot have a state of affairs where people can deliberately shirk their duty by doing harm to themselves. The hon. Gentleman asked how is this distinction valid and how does it operate in practice. I have had figures looked up from which

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it appears that at present in the Royal Victoria Hospital, Netley, which is where psychiatric cases are treated, out of 140 cases in the first two months of this year 13 had an element of suicide about them. While this is not a precise figure for the Army as a whole, the number of cases with a suicide aspect may be about 100 in the course of the year, that is, attempted suicide. I emphasise that all these are cases where on medical grounds no action of a disciplinary character is taken; they find themselves subject to treatment in Netley or elsewhere.
Against these figures, since December, 1959, in a period of nearly four years, I have been unable to unearth more than nine cases where attempts by the soldier to harm himself were judged to be malingering and where disciplinary action was taken. Typical instances include wrist slashing, as in this case; a soldier drinking a tin of Brasso and that kind of thing. We are all glad to know that the number of these cases in relation to the numbers in the Army is not very large. But none the less I have indicated a fairly wide field and within this category the practical distinction which the hon. Gentleman asked about has been made very often, and in such a way as not to give any ground for complaint.
I come, after these generalities, to the case of Guardsman Till. On 21st November, Till complained of a headache. He was given some Codeine tablets and told to go sick. The next morning, when he did so, it transpired that he had taken all the tablets—30 of them, and not "scores" as the hon. Gentleman suggested. He told the medical officer that he did so with a view to putting an end to his life. I am being completely frank with the hon. Gentleman and giving him all the facts, and he will see that at various times Guardsman Till did give various reasons for doing what he did do. The medical officer arranged for psychiatric advice to be taken. In the meantime, on 27th November, Guardsman Till again went to the medical sergeant in his unit. He said that he had cut his wrists, and again, that it was because he was fed up and wanted to do himself in.
Mr. Abse: When was the first incident?
Mr. Ramsden: On 21st-22nd November.
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The day after the wrist-slashing on 27th November, he was again seen by the medical officer. The cuts, which were on the outside of his wrists, were superficial and required no dressing, let alone stitches. Guardsman Till again said that it was a suicide attempt. The medical officer had him put in custody where he could be kept under supervision.
The hon. Member asked me whether a qualified psychiatric opinion was taken. I come now to the question of the psychiatric advice which we took and this, as the hon. Member indicated, is crucial to the whole question. But I am in a difficulty because, for reasons which he will appreciate. I cannot quote this advice. By general agreement advice of this nature is confidential. I therefore cannot quote it.
I hope that the hon. Member will accept from me that, having studied everything which is relevant to this case in great detail and after a careful study of all the facts—I hope that the hon. Gentleman understands what I am saying—my conclusion is that Guardsman Till was an immature personality, that he regretted his original decision to join the Army, that he had no intention of trying to soldier properly, and that he meant to go on making a deliberate nuisance of himself in order to work his discharge. One thing which has coin out of this is that he had a job lined up to go to after his discharge, which he hoped to get, had been obtained. This in itself discounts the idea of the suicide attempts being very genuinely conceived.
The evidence is that the so-called suicide attempts were no more than rather childish exhibitionist displays and that there were no medical grounds for not taking disciplinary action. On the evidence which I have seen, including technically qualified evidence, I cannot accept that this is what the hon. Member called a classic suicide attempt, and I cannot accept that there were grave emotional disturbances in the case of this young man. Put into plain words, Guardsman Till was not an attempted suicide but what we call in the Army a malingerer. He was remanded on custody by his commanding officer and disciplinary proceedings were started and subsequently carried through.
Mr. Abse: Will the hon. Member be kind enough to deal with the third

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incident in which I understand this boy was swallowing denim buttons? In his reply will he bear in mind that in recent surveys, for example in Wales, of 8,000 suicides, it was found that four out of five had affected this type of suicide attempt? They had been to doctors. There were people who subsequently, unfortunately, committed suicide.
Mr. Ramsden: I have not yet finished with the history of this case. I will come to the two incidents of swallowing buttons and the outcome, when I reach it, will reassure the hon. Member.
I said that disciplinary proceedings had been started. While he was in the guardroom, Guardsman Till again cut his wrists, this time on the inside. Most of the wounds were scratches, five of them described as deep enough to have damaged superficial blood vessels, but none was deep enough to need stitches. He had also swallowed some button rings. The only evidence which came out of this incident was that when the N.C.O. took him to be X-rayed after the incident of the button rings, he said to the N.C.O. accompanying him that he had done this in order to get out of the Army.
Eventually the soldier was sent to the Military Corrective Training Centre at Colchester. He arrived there on 13th February, after conviction on 14th January. The hon. Member said that Guardsman Till was not given the help that he should have been given. I commend to the hon. Member—I say this seriously—the Military Corrective Training Centre at Colchester, because it is an extremely fine institution in every way. I will not attempt to describe it. Time would not suffice. I should like the hon. Gentleman, and indeed any other hon. Members interested in this field, to go and see it some time, because an excellent job is done there. They have an impressively high rate of success in making good soldiers out of young men who have got off to a shaky start in the Army and found difficulty in adjusting themselves to Army life. Incidentally, while Guardsman Till was there he happened to be near his family home. His family were able to visit him while he was there. I understand that no complaint has been made from that direction about his treatment,
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how he was looked after, and how be was helped.
I have had a full account of Guardman Till's progress during the time he was at Colchester. It is significant that this confirms in every respect the view of him which the authorities of his unit had already taken. I am afraid he did not come along very well with his subsequent training at Colchester. In spite of professing on more than one occasion an intention to do better and get down to Army life, he did not find himself coping with life any better and when he was had up for not getting on parade he again cut his wrists with a razor blade. Again, what he did produced no more than slight scratches on the outside of his wrist.
Mr. Abse: Was this the fourth or the fifth time?
Mr. Ramsden: This was the third time. The psychiatric advice which was taken did not differ from that which had been already received. The hon. Gentleman has asked me how many times. He is using a slightly emotive term in the sense of wrist slashing. These were very slight scratches, none of them severe enough to require a stitch to be inserted. They were done, in our view, and in the view of qualified advisers, in an attempt to attract attention and in pursuit of the individual's intention to call attention to himself and make a nuisance of himself. There was also another incident when Till swallowed some more buttons.
The Commandant at Colchester has been to a great deal of personal trouble with Guardsman Till, as indeed it is his duty to do and as I know he does with all his cases. But I am afraid he concludes that the soldier has not sufficient determination or stability to make a satisfactory career in the Army. His intentions are good, but when he is faced with having to get down to make a serious effort he tends to lose control of himself, and in these circumstances he does these rather foolish things.
He was released yesterday from Colchester at the expiration of his sentence, but he went out with an unsatisfactory conduct assessment, and he has now been discharged—that is, today—under Queen's Regulations, on the ground that his retention is no longer desirable in the interests of the Service, because of these frequent petty breaches of discipline.

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I hope that I have convinced the hon. Gentleman—
Mr. Abse: The hon. Gentleman has not convinced me.
Mr. Ramsden: —that the Army has handled this case correctly. I have drawn the distinction which I think must be made between a genuine suicide attempt, in respect of which anybody under military discipline is in no different position from any other member of the community, and a case of malingering, which is a crime by no means unknown throughout the annals of the Service, though not, I am glad to say, very common, and a crime which has to be seriously treated and properly dealt with if proper conditions of military discipline are to be preserved. Guardsman Till was not—this was confirmed by all the evidence I have seen, professional and otherwise—a would-be suicide. He was trying to work his way out of the Army by taking refuge in doing the things he did.
Such conduct on the part of any one under military discipline cannot be overlooked in the interests of discipline. The punishment which followed, I submit, was no less than could have been expected. It was combined, as punishment of this kind rightly is for a young soldier, with a chance for him to make good. I very much regret that it did not work, that the outcome was not what we would have wished and that Guardsman Till has not turned into a satisfactory soldier.
None the less, I believe that he was fairly and correctly treated and that he was given every chance by the Army authorities to make good. I am only sorry that he was not able to avail himself of it.
Mr. Abse: With the leave of the House, may I suggest that if, in the
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first instance, this boy had been treated—from what would appear to me from the clinical history we have been given—as a boy in very deep and serious difficulties, the situation might have been different? Instead, as has clearly been proved, through a mistake on the part of the Army, they treated him as a malingerer should be treated, by punishment. Had they treated him differently we may have had a healthier individual who could have been either integrated into the Army or into civilian life.
I would have thought that the hon. Gentleman would agree that there has been an incorrect diagnosis from the start and that it was assumed by whoever were the advisers that punishment could put it right. That punishment lamentably failed, precisely because the boy has not received from the word "go" the psychiatric help and attention which I am sure in civil life—or, earlier, in the courts in similar circumstances—he would inevitably have received. It is not a very pretty picture; the idea of a boy of this kind being punished. It has clearly been proven that the punishment has been a complete and absolute failure from the point of view of the Army and the boy.
Mr. Ramsden: With the leave of the House, I hope that the hon. Member will read carefully what I have said. He suggests that the treatment was inadequate. I was at great pains to say that there was no grave emotional disturbance diagnosed and that therefore—in the sense meant by the hon. Member—there was nothing to treat. I am afraid that the hon. Member for Pontypool takes his view and I take mine. I would remind him that my view is based on the best advice available to me and I regret that, over this, we must disagree.
Question put and agreed to.
Adjourned accordingly at twenty-eight minutes past Ten o'clock.