COST OF LIVING

HC Deb 20 July 1964 vol 699 cc57-177

4.34 p.m.

Mr. James Callaghan (Cardiff, South-East)

I beg to move, That this House, recalling the pledge by Her Majesty's Government in 1951 to mend the hole in the housewife's purse, regrets the failure of Ministers to honour this promise with the result that rising prices have reduced the value of the £1 sterling to 13s. 4d. during the 13 years of Conservative rule, thus endangering Great Britain's overseas trading position and causing hardship to all sections of the community. When I read that some commentators were saying that this was to be a rough and hard debate, I was somewhat sceptical because after 19 years in the House I have found it impossible to judge the atmosphere of the Committee of Supply in advance; and I have a feeling that I may well have been right. However, that does not lessen the Government's failure in this matter, even though the temperature inside the Chamber may not be as high as the temperature outside, at any rate at this moment.

Although I shall certainly have some stringent criticisms to make of the Government and of their record as opposed to their promises—and the Chancellor of the Exchequer, who rebuked me on the last occasion for not producing league tables, will be glad to hear that I have looked them all up for his benefit and propose to give them all to him—nevertheless I hope that the debate will not be left there, because in the present critical situation in which the economy finds itself it is just as important to know what the future course of policy should be and what the Government propose to do, as the economy is nearing flashpoint, as it is at present, and our overseas trade position is endangering the pre-election boom.

Although this is something which I hope to develop in my speech, I am sure that Government supporters cannot be sitting easy in their seats immediately before an election knowing that the value of the £ has steadily slithered downwards until it is now worth only 13s. 4d. compared with its value in 1951.

We debated this issue as recently as 11th March last. Since then a number of formidable price increases have been announced. I do not pretend that I am able to give all of them. I culled some of them from the Press. Petrol is going up by ½d. a gallon. Car insurance premiums will be going up by between 15 and 30 per cent. According to a survey made by a Sunday newspaper, it is estimated that house prices are likely to rise by 10 per cent. this year. Rents still continue to go up. The cost of building land continues to rise. Today, the 6d., 9d. and 1s. fares on the buses have been raised. Railway fares have been raised today. There is an additional 7½ per cent. on season tickets and on other fares within a certain radius of London. It is estimated that rates this year will increase by 7.8 per cent., according to the calculations of municipal treasurers.

The Chancellor of the Exchequer put a 1d. on a pint of beer and 4d. on a packet of cigarettes. His policy has increased the price of electricity through the returns which the electricity boards are required to make upon their capital assets. Road haulage rates are to go up by 5 per cent. The price of smokeless fuel is to be increased by £1 a ton in the autumn. This weekend beef prices had risen so much that it was cheaper to buy a turkey. The Minister of Agriculture has cast himself in the rôle of a twentieth century Marie Antoinette. So luxuries and necessities alike have gone up in price since 11th March. Every one of the increases to which I have just referred has been announced since our recent debate. Profits, of course, have gone up, too, and the Financial Times list of companies showed a substantial increase in the statement which was put out last week.

Some prices have fallen. I am glad to see that a number of bodies have undertaken not to raise their prices. That must bring a great deal of comfort to the Chancellor's heart. But, overall, the right hon. Gentleman knows that prices have been shooting up since our last debate on 11th March, and, indeed, since the beginning of this year. As the boom has matured, so prices have continued to rise.

Since January this year prices have been rising at the rate of more than 5 per cent. per annum. If the present trend continues during the rest of the year, of which we have had six months, 1964 will be the worst year for rising prices since the Korean War of 1950–51—but without the same cause.

Over the whole period of Conservative Government, prices have gone up by approximately 50 per cent. This is astonishing, because the Conservative Party won the 1951 General Election on an entirely different prospectus. Older Members of the House, but probably not the younger ones, will certainly remember the document "Britain Strong and Free". [HON. MEMBERS: "It was very good."] I know; it is so good I am going to quote it.

I was impressed by it at the time, but bitter experience has convinced me not to believe it. It contained eccentric proposals like forming a new Home Guard, ensuring that we had better relations with Egypt, strengthening our position in the Middle East—all good strong stuff, but the country does not believe it now. I particularly want to return to the subject of today's debate, which is the rise in the cost of living. What the Conservatives made as their central issue, according to this manifesto, was the continual rising cost of living. On page 14, they said this: Whatever the national importance of other issues "— no matter whether the Middle East, the Home Guard, or even university representation— it is no exaggeration to say that the rising cost of living is the main day-to-day worry of ordinary men and women. A Government will be judged according to the effect of its programmes upon rising costs and prices. They then set out their policy in very general terms.

I must say that in view of the pressure that is being brought to bear upon the Labour Party to state every jot and tittle of its proposals some commentators ought to read the very general nature of what is contained in this document. I learned a lesson from this very early on, and also from the Chancellor, who used to tell us that he certainly had no particular opinion of anything that was stuffed in a manifesto. "Stuffed" was the word he used.

Having set out their policy in general terms, the Conservatives were honest enough to say, "Of course, we shall not be able to check rising prices immediately. All this will take time". On page 15 they say: All these things will be achieved only by immense efforts and after some time but, carried into effect together, they will enable us to control, and then, as we are returned, to reduce the cost of living for all. That is what they won the election on.

The greatest national issue was the cost of living. They were going to check, stabilise and then reduce it. There was another thing on which they won it, also, as my hon. Friends will remember, and that was the pledge to reduce Government expenditure. I shall come back to that a little later, because I think that the Chancellor of the Exchequer will want to say something about it. But, of course, they know that they have no defence in reality against the substance of this charge. That is why their Amendment, which, I suppose, will be moved later, makes no reference either to their 1951 pledge. I am a little surprised that they should not want to repeat their pledge of 1951—are they ashamed of it now?

We begin our Motion by saying: That this House, recalling the pledge by Her Majesty's Government in 1951 to mend the hole in the housewife's purse,. … The Conservatives might at least have proposed to delete everything after those words and moved on, in their Amendment, to give their explanation. But they want to obliterate all memory of this from the OFFICIAL REPORT and Journal of the House of Commons when the vote is taken tonight and they get an automatic machine-made majority. I can understand it, but I am a little surprised that they should do this.

What they do in fact, knowing that they cannot possibly defend their failure, is to ring the changes on a series of alternative excuses. Here the first of my league tables comes in, the Chancellor will be delighted to know, because he used this argument last time. They say, "Well, we have done better than other nations in checking it." Let me go through the figures. In the world league of high prices there are nine major countries. Taking the period from 1951 to 1963, in the world league of high prices we are third from the top. Above us ranks France, whose price increases have been 68 per cent., and Sweden whose price increases have amounted to 51 per cent. Ours are 50 per cent. Below us come Italy with 37 per cent. price increase, Holland 32 per cent., Germany 22 per cent., the United States 18 per cent., Canada 17 per cent., and Belgium 16 per cent.

The Chancellor, I thought, fell below his usual standard of fair argument last time by taking a very highly selective period of 12 months from mid-March, 1962 to mid-March, 1963. He managed to show that over that period Continental prices had, in fact, increased faster than ours. I take it that even the Chancellor will not deny that he has been a member of the Government for 13 years and that it is over the whole period that we are entitled to judge what the comparisons should be. Over that period we are third in the league. There are six other countries below us—

Sir Henry d'Avigdor-Goldsmid (Walsall, South)

rose—

Mr. Callaghan

I am sorry, but I am not giving way. We have lost an hour of our time this afternoon. It was mainly lost because of the muddle, if I may say so to the Prime Minister, that the Government made over the VC10, in which two different sets of directives have been issued to Ministers at two different times. I shall come back to that.

Secondly, the argument that the Conservatives used is, "In the any case we are doing better than the Labour Government did." This is the hoary old chestnut that appears on Government platforms. I do not expect hon. Members opposite to acknowledge that a Labour Government were operating in the aftermath of war. I do not expect them to acknowledge that we were engaged in a process of demobilising over 4 million men and women, that we had to retool the factories and start from scratch with the export trade, that Lend-Lease was cut off within a matter of a month of the Labour Government being returned, that because of the Korean War the prices of raw materials doubled within a short time. The simple truth is that despite all this they have not done so well or much better than the Labour Government did. That is the remarkable thing.

I will give the figures. The price of imported materials from 1945 to 1951 more than doubled and they are substantial constituent of our total cost. But from 1951 to 1963 the price of raw materials did not more than double—it dropped—and in 1963 it was about 10 per cent. lower than in 1951. It has now picked up again, as the Chancellor was quick to remind us in our last debate. The Bank of England states that the price of imported raw materials is 8 per cent. higher; other authorities say that it is 6 per cent. higher than a year ago. But even if it is all square with the 1951 position, the Government do not have so much to boast about in terms of rising prices. It was a substantial and uncovenanted benefit which they enjoyed.

Despite, however, the doubled price of raw material imports in the period from 1945 to 1951, the retail price index increased faster in a number of countries than it did in our own. I will now give the figures, the league table for which the Chancellor asked me and which he rebuked me for not producing last time. In Switzerland, price increases from 1945 to 1951 were 8 per cent.; in Denmark 22 per cent.; in Norway 22 per cent.; in Britain 27 per cent.; Sweden 30 per cent.; the United States 44 per cent.; Holland 45 per cent.; Canada 53 per cent.; Italy 117 per cent.; and France 447 per cent.

I do not know what conclusions hon. Members opposite draw from that, but if I were a member of a Conservative Administration I should not be too proud if, after 13 years, I had to acknowledge that we could not do any better than this. As this record shows, the Labour Government can be proud of the fact that, despite the difficulties which they inherited—and every fairminded man outside an electioneering atmosphere knows that they did inherit them—we kept the increase in the cost of living down to such reasonable levels.

In the league of high prices from 1945 to 1951, we were seventh from the top. In 1951 to 1963, we were third from the top. This, unlike most league tables, is a table in which the higher one goes, the worse one is doing. Our position relative to other countries has worsened between 1951 and 1963 by comparison with the 1945 to 1951 table which I have given.

Mr. William Yates (The Wrekin)

Let us have the earnings table.

Mr. Callaghan

Hon. Members opposite need not worry. I am facing all their arguments head on. None of them is worth very much.

The next argument on which the Government ring the changes if they are beaten on both of the others, and in case somebody knows what has happened, is to say, "In any case, we are steadily slowing it down. Over the last 13 years, we have been reducing the pace of increase and now we are getting to the stage when, if you give us a bit longer, we will have started to stabilise, if not to reduce."

Let us look at the position. From 1951 to 1955, the period of the first postwar Conservative Government, prices increased by 15 per cent. During the time of the second Conservative Government, from 1955 to 1959, they increased by a further 11 per cent. The Government had slowed down the increase from 15 per cent. to 11 per cent. From 1959 to 1964, however, the increase was between 14 per cent and 15 per cent. From this point of view, the most successful period of Conservative Government was the second one. In the latest period, however, they are back to where they started and by the time of the election I have no doubt that the increase in prices to which the British people are being subjected will be quite as high as it was in the first period of Conservative Government from 1951 to 1955.

Nor, I add, for it is another argument that the party opposite sometimes uses, have they increased the social benefits as much as Labour did in the aftermath of the war. I never know whether hon. Members opposite have forgotten, or whether it is a deliberate tactic on their part to forget the level at which old-age pensions started. Many of us on this side, however, remember that when we came into the House of Commons, the old-age pension was 10s. a week and that when we left office, in 1951, it was 30s. a week. What the Conservative Government have managed to do over the whole course of 13 years is to raise it from 30s. to 67s. 6d. a week for a single person. That is nothing very much to boast about in this period of unprecedented prosperity of which the party opposite speaks.

Next, the party opposite says, "It may be that we have not kept prices down, but, at least, the standard of living has gone up." That is the argument upon which they always fall back in the end. I do not think much of it as an argument. It is certainly not a complete answer, certainly not to many of the constituents and supporters of hon. Members opposite, especially those who have invested in National Savings Certificates or in gilt-edged, or who have set aside money for a pension in their old age, and who find that the cost of living has eaten it away.

Anybody who bought a National Savings Certificate in 1951 and who continued to hold it, as he is entitled to do, for 17 years, of which 13 have now elapsed, would find that his certificate, together with the accumulated interest, was worth less today than the 15s. which he gave for it. That is not a very proud record, or one to be offset by saying, "Prices may have gone up, but, on the other hand, look how the standard of living has gone up, too" Even by this test, the Government have done very poorly indeed. By comparison with other countries, they come out of the whole range of figures very poorly.

I want to rely heavily in this matter on the comparison with other countries, because that is of great importance. The trouble is that our economic expansion rate has been so low—2½ per cent. per annum on average over the whole period of Conservative Government, whereas other countries have been growing at a rate of 5 per cent. or 6 per cent. or even higher. European workers', standards have gone up much faster than the British.

That is shown in these figures of the increase in private consumption per head. Nine countries are included in the O.E.C.D. figures published in November, 1962. I put the tables together. Of the nine countries with increases in private consumption per head in housing, washing machines, telephones, television and all the rest, we are seventh. That is the Government's record, seventh out of nine. I propose to give hon. Members the figures. In West Germany, the increase in private consumption per head from 1951 to 1961 was 85 per cent. In Austria, it was 68 per cent. Whilst I am giving these figures I will give our own so that hon. Members may keep it in mind. Britain comes seventh at 22 per cent.

I will start again. In West Germany, the increase in private consumption from 1951 to 1961 was 85 per cent.; in Austria, 68 per cent.; Italy, 51 per cent.; France, 38 per cent.; Holland, 36 per cent.; Sweden, 32 per cent.; Britain, 22 per cent.; Belgium, 17 per cent. and the United States 17 per cent.

Mr. William Clark (Nottingham, South)

rose—

Mr. Callaghan

I am sorry, I am not giving way to anybody. [HON. MEMBERS: "Give the base figures."] Hon. Members will not put me off this way [Interruption.] When the base figure is asked for, I take it that what is meant is where we start the table from. We start it from 1951. This is the increase which has taken place since 1951, taking 1951 as 100. Of course, it is true that Italy started off much lower, but the United States started off much higher. It does not make any difference to the end figure. [Laughter.] Of course not. The comparison is the same.

As a result of this, it was said recently by Dr. Balogh that the German workman's living standards are now higher than the British workman's living standards for the first time since the days of Henry Tudor, nearly 500 years ago. I hope that hon. Members opposite are proud of 13 years of Conservative Government. Moreover, at the rate at which the table is moving, the French will soon overtake our living standards. The French working man will have as high a standard of life as that of the British working man.

It is true that recently, for the last 12 months, our living standards have been growing at 4 per cent. per annum, which is getting a little closer to the growth in the eight or nine other countries of which I have spoken. I also draw the conclusion that if this increase of 4 per cent. per annum, which the Government have now assumed and on which they are basing their programmes, had begun to operate in 1951, the British working man's wage packet would now be worth £3 10s. a week more, the German worker would not have overtaken him, the Frenchman would not be treading on his heels and the Italian would be much further behind than he is even today.

What is undoubtedly true is that postwar experience has shown the difficulty of combining a fast expansion rate in the economy with steady prices. Both these things come into play, as the Chancellor constantly reminds us. The full use of the nation's resources—in men, in scarce materials, in capacity in industry and in skill in manpower—all these things combine to drag costs upwards. There is no doubt about this. It is agreed on both sides of the House. But in the combination of the two Germany has undoubtedly been most successful in having a fast rate of expansion, as I have shown, in terms of increased private consumption, and also in keeping a steady price level.

There are reasons for it, known to hon. Gentlemen on both sides. Some countries have sacrificed a steady level of prices in order to get a fast rate of expansion. France is one example; Italy is another. Admittedly, their prices have gone up, but their economic expansion has gone ahead even faster. Some countries have kept a steady level of prices at the price of a low expansion rate. The United States and Belgium are two examples of those.

But there is one major country which at the same time has managed to combine a high rate of increase in prices and a low expansion rate, and that is Great Britain, and that is the real indictment against the Government. They could argue successfully if they had Italy's record in terms of expansion of the economy of Germany's record. They could argue then successfully. What they cannot escape from is the fact that they have both allowed prices to increase and have failed to make the economy grow.

All too truly, we have had the worst of both worlds—a snail's pace economy and a depreciating currency. That is what the Government leave us at the end of 13 years.

Mr. W. Clark

And low unemployment.

Mr. Callaghan

I know the hon. Gentleman has been promoted and is now Chairman of the Finance Committee of the Conservative Party.

Mr. Clark

No, I am not.

Mr. Callaghan

I congratulate him on it. Now that he has achieved high office, I have no doubt that he will be able to make his own speech in due course.

I was about to refer to an editorial in The Times this morning. I want to say a word to the editor of The Times, if he intends to read this debate. I think that he takes too despairing a view both about the House of Commons and the debate and the problem itself. I put it this way. A fast rate of expansion in the economy would at least make high prices endurable, for the nation would then be able to afford to have the resources to aid those who were injured by the process of fast expansion. Till we can find the means of achieving both those desirable ends, namely, a steady level of prices and a fast rate of expansion, without creating large pools of unemployed—if we cannot do one, then at least let us do the other—I invite the editor of The Times to consider which he believes to be the least of the three evils which I have outlined.

Moreover, with a fast rate of expansion such as other countries have had since the war we would have been able to finance the social infrastructure which has become so decayed. The country needs modernisation. Is that not generally agreed? City centres, housing, transport, roads, schools, hospitals—the needs are well known and generally admitted; but this requires additional Government expenditure, and when some Tories—I do not see them present this afternoon—and the editor of The Times gird and rail against additional Government expenditure they have to answer this question: how do they think this modernisation would be achieved if the Government themselves do not undertake it?

The Government have committed themselves. The Chancellor has committed himself to an extra £2,000 million of expenditure in four years. In four years' time there will be £2,000 million more for these purposes and they have had to embark on a crash programme for electoral reasons to try to overcome the arrears which have accumulated because of the slow rate of growth of the economy. The result has been as we have seen in the hospital programme, a programme both belated and botched, as most crash programmes usually are. But their crash programme, together with the additional commitments the Chancellor has taken on, is based on a figure of a rate of expansion of 4.1 per cent. per annum for at least five years, although we have never maintained a rate of expansion of that rate for a period longer than 18 months. So they are really making a gesture of faith based on an inadequate hypothesis so far as they are concerned.

To sum up this part of what I am saying, the Government who were returned to power in 1951 with a mandate to cut Government expenditure and pledged to reduce the cost of living will leave office having achieved a record increase in the cost of living and having pledged themselves to record increases in expenditure. So does the wheel go full circle for the Tory Government.

There is another argument. I can see that the hon. Gentleman is impatient for me to come to it, and I am now coming to it. That argument is that it is all the fault of the trade unions.

Mr. W. Yates

rose—

Mr. Callaghan

No.

This argument is not so nakedly expressed in this Chamber as it is on the doorsteps and in the canvassing by Conservative supporters and in public meetings where it cannot be answered. It is the argument that it is all the fault of the trade unions—if only they would not put in these wage claims, if only they would allow us to do what the Germans do, we would be able to solve all these problems. My hon. Friends have heard this argument, and we have heard it time after time, and it is widely believed, and skilfully propagated, and still goes on, and it suits the book of the Tory Party that it should be believed. It is quite unjust, as everybody who has studied the matter knows to be the case.

I take, against, a comparison with other countries. There is an interesting pamphlet which has been written by Mr. Colin Clark. I do not agree with all his conclusions—

Mr. Harold Davies (Leek)

I am glad my hon. Friend does not.

Mr. Callaghan

—but at least I can accept his statistics. I do not think that my hon. Friend need quarrel about them, because he has assembled on page 23 a series of international statistics concerning the rate of increase of earnings of 19 countries from 1953 to 1957 and from 1957 to 1963 and they are set out in this table. What it shows is this, that out of 19 countries we stand twelfth in the average annual rate of increase of earnings. Earnings have increased literally faster in Austria, Denmark, Finland, France, Germany, Italy, Japan, the Netherlands, Norway, Portugal and Switzerland.

The simple truth is that our present position arises from a combination of increasing earnings with low productivity and one cannot isolate one factor from the other. The two must go together in every discussion which takes place. And for low productivity the responsibility lies both with industry and with the Government, and that is why I say it is unjust to isolate the trade unions in this particular matter.

So of our present position I must say that it is extremely disappointing, after an increase in productivity which we secured last year, a latent increase arising out of the stop-go in 1961–62, productivity seems to have stopped rising for the time being, and moreover, the high levels of employment in London and the South-East and the Midlands are resulting in increasing costs to industry at the present time. Raw material prices are going up. I know I carry the Chancellor with me at least in this little section of what I am saying. Fourthly, retail prices are rising. Fifthly, on the other side of the coin—this is a problem which must worry the Chancellor very considerably—industrial production has been stationary, according to the tables, for nearly five months and seems to be very sticky indeed. And, even more worrying for him, exports are stodgy; while world trade is increasing our share is not, and it is still declining. And imports are too high.

We are today bringing into this country materials, manufactures and semi-manufactures, which we cannot afford, and which at the moment we are not paying for. Let us be quite clear about this. Whatever conclusions we may draw from it, this is the position, and as the Chancellor knows, it is getting worse and not better. The balance of trade figures came as a thunderclap to a number of people. I do not know whether they came as so much of a surprise to the Chancellor of the Exchequer, because he knows that he is at the moment running a dreadful race between the date of the election and the date on which he will have to make major decisions of policy, and the question is: which will come first?

The Chancellor is gambling on the election date coming first, but the incoming Government will be required to handle an external position in which we are running deeper into debt every month, and an internal position—and this is a new feature—an internal position in which the economy is not running all out, not working to capacity, except, perhaps, in building and construction in some parts of the country. Of course, the normal remedy of the Government in the past, faced with a situation which the internal deficit has coincided with the economy moving full out, has been the slamming on of the brakes. This time such a solution is not applicable.

I do not envy the Chancellor of the Exchequer his colleagues, flanked as he is by the Lord Privy Seal, on the one hand and the Minister of Defence on the other, both of whom returned to the classic stop-go method of halting the economy. I am bound to say that the right hon. Gentleman is going to be in bad spirits with these two right hon. Gentlemen. I read what Lord Kilmuir said about the present Lord Privy Seal. It is only too clear that this appointment was a mistake. There were few indications that he had thought deeply on the great problems of our time.

The right hon. and learned Gentleman's first Budget gave the impression of being based on a detailed forecast of the future, but it was proved wrong on every matter of importance and Ministers were confronted with an economic crisis as astonishing and urgent as it was unexpected. What were virtually panic measures to meet the drain on our resources were called for as a necessity.

Lord Kilmuir has something to say also about an ex-Chancellor of the Exchequer, Lord Heathcoat Amory. It was evident that he had lost his grip on economic matters and it was with some relief that we heard of his determination to resign as soon as the Finance Bill had passed through the Commons.

When I read about the shortage of talent on the Labour side I comfort myself with these comments by Ministers who lived with them and so I do not envy the Chancellor his present difficulties with his colleagues. Indeed, we are in a difficult position because the expansionists among those in the country who want to see us moving ahead are terrified about telling the truth about the serious nature of the problem because they are afraid that they will wake the Lord Privy Seal and alert the Minister of Defence once again. [An HON. MEMBER: "What about the right hon. Member for Wolverhampton, Southwest (Mr. Powell)."] The right hon. Member for Wolverhampton, Southwest is not in the Cabinet, thank goodness, but the Lord Privy Seal and the Minister of Defence are. They have cost this country some £5,000 million per annum in lost production, production that would have enabled us to build the schools and would have enabled us to avoid the crash programmes for housing and hospitals. If their remedies were adopted once again—and they are still prominent members of the Cabinet—then industry will be thrust into despair, we shall cripple our social progress and wreck our prospects of additional exports.

Under the Tories this country faces the prospect with these men who have learned so little in the last 13 years that the present current boom will peter out once again and will end in a pay pause, a credit squeeze and unemployment. We must also be grateful that the Secretary of State for Industry and Trade did not carry us into the Common Market on the terms then proposed.

I wonder if the House has paused to think what would have been the effect on our import situation today. How much more would bread have gone up when we look at the price that has to be paid in the Community for a ton of wheat in comparison with what we pay our farmers and even the guaranteed price which we are laying down? The plain truth is that we have suffered from a great deal of muddled thinking, not only on the VC10. It is the same sort of muddled thinking in the Cabinet as led to the B.O.A.C. controversy in which Government policy has been pulling in two different directions at once.

Of course, the Chancellor today must operate in the international rather than in the domestic field and in the present weakness of our overseas trade position he is right to seek a credit of 1,000 million dollars from the International Monetary Fund. We should all be careful in discussing this position because everyone, I hope, wants to see the expansion continue even though some may not think it possible, though I do. But that does not relieve the Prime Minister of the obligation to tell the country what the facts are. There is far too much soothing syrup being put about today concerning the overseas trade position which is as bad today as it was in 1961, and which then led to the pay pause, even though some of the short-term defences can shore up the position for a little.

I refer to the I.M.F., to the B.O.P. arrangement with the United States, and so on. But the Chancellor must take the measures open to him to deal with his balance of payments problem—I will not use the word "crisis" yet. The right hon. Gentleman should give exports encouragement, and measures are available to enable him to do this. More flexible prices in exports would be a very great help. If there is one thing which has been analysed in recent researches it is that British prices are far more sticky and far less flexible than those of our competitors in the export field.

The right hon. Gentleman should discourage imports, and measures are open to him to do that. What we need above all are improved liquidity arrangements especially for the developing countries and in order to take the strain of the two major reserve currencies of the dollar and the £. In Tokio we can expect little progress represented as we shall be by a Government with no authority and a Government that are expected shortly to be defeated at the polls. [Interruption.] Hon. Gentlemen opposite can take their own comfort. I am saying what internationals think about it. Hon. Gentlemen opposite may or may not like it, but certainly there will be no authority behind the Chancellor when he goes to Tokio a month before the election, and I expect him to make little progress. It would have been far better to have had the election before the conference.

The main difficulty with which the Chancellor is confronted is that we should maintain our rate of expansion. We have managed to get an expansion rate of 4 per cent., but for the third time we have run into the balance of payments problem. This time the expansion of industry must go on. Is this the united objective of the Government? Does the Chancellor believe this, and do the Lord Privy Seal and the Minister of Defence, one of whom was rejected from the Government and the other who resigned from it? Does the Chancellor carry a united Government with him in the expansion of British industry even despite the present balance of payments difficulties?

If this is the right hon. Gentleman's objective, how is he going to do it? I think that we are entitled to ask the right hon. Gentleman how he is going to do it and he should feel bound to give us the answer. Faced with these difficulties and faced with the objective which he says he has of an expansion rate of 4 per cent., how is he going to achieve this objective? What measures is he going to take concerning our balance of payments problems, both in the long run or in the short run? Is he going to take drastic steps similar to those taken by his colleagues in the past? It will be insufficient to refer to the short-term arrangements in the International Monetary Fund or the B.O.P. arrangements.

The Prime Minister frequently says in the country, "Look how irresponsible the Labour Opposition are." The right hon. Gentleman says that the Labour Opposition are going to take over a programme of social benefits, housing, school and hospital building which is larger than that of the present Government. The Prime Minister frequently makes this criticism. It is true, of course, that our programme was for a long time larger than that of the Government, because in the 1950s we based our programme on a growth rate of 4 per cent. whereas the Government have been jog-trotting along at 2½ per cent.

We believed that if the expansion rate could be put up to 4 per cent. we could contain the increase which was necessary to modernise Britain. That was why the right hon. Member for Bromley (Mr. H. Macmillan) was able to poke fun at us in 1959 and say in the course of the election, "Look, they are going to have another £1,000 million of expenditure, and yet they will not increase taxation." That is what the Tories are now doing and what they are proud of doing. They have at last discovered the merits of putting the growth rate up to 4 per cent.

Since they have committed themselves to a 4 per cent. growth rate and since they have committed themselves to the dividend that will arise from that—a £2,000 million increase in Government expenditure—it has become clear that, although this addition will make a substantial improvement in our housing, road and hospitals programmes and so on, it is nothing like sufficient for the needs that we have in modernising the country. This is where the difference comes out.

An examination shows that the target of £2,000 million extra falls short of the needs that we have if we are to achieve modernisation in a reasonable period of time. That is why a number of my hon. Friends have been pressing for more. We on this side of the House certainly cannot be permanently satisfied with an expansion rate of 4 per cent. per annum. The arrears on 4 per cent. per annum would take too long to clear off. It is the probable maximum that the Chancellor can hope for in 1964, and maybe in 1965, because of the balance of payments troubles. However, 4 per cent. should be to this nation a base camp and not a mountain peak. It should be the base from which we move forward. We should be aiming in the latter part of the 1960s for a 5 per cent. and then a 6 per cent. growth rate. Only then shall we attain the programme of social expenditure that is both necessary and desirable.

I want to make it clear that on this side of the House we recognise that our programmes cannot be achieved until we are maintaining a growth rate of 5 per cent. or 6 per cent. The 4 per cent. has already been fully committed by the Government. We shall have to strive to move to a higher rate of expansion in order to fulfil these programmes. They can be attained by a combination of factors—by planning our resources, by fixing our targets, by new investment in industry to stimulate expansion, by using more scientists and technologists and engineers in industry, and by ensuring that our industry, especially our export industry, is customer-based and not product-based—and if we had had regard to this some years ago in the early stages of the VC10 controversy, perhaps changes would have been made in the policy then which would have obviated the great loss which has been sustained today.

Next, there should be import substitution through new industries at home and an all-inclusive and fair incomes policy which would include earnings, dividends and rents. There should be continuous pressure on prices and especially on monopolies and restrictive practices, and there should be flexible export prices. By more competence and less waste in Government we could ensure that there would be fewer Blue Streak and Ferranti projects for us to hold inquests on.

A society in which tax avoidance and Stock Exchange gains more than six months old and three-year land speculation go scot-free—which does not augur well for an incomes policy—while the P.A.Y.E. taxpayer pays on every penny and the postman has to ban overtime in order to get the ear of the Government, means that we cannot in this country have a true or a fair incomes policy. This is the legacy that the Chancellor has inherited.

The weakness of the Government is that millions of our citizens no longer believe in the Government's fairness or competence; they do not believe that the Government are just, and they certainly have little reason to believe that Her Majesty's Ministers show compassion except in the face of the electorate. That is why the Government have reached the end of the road.

5.25 p.m.

The Chancellor of the Exchequer (Mr. Reginald Maudlin")

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: supports the economic and financial policies of Her Majesty's Government designed to secure growth without inflation, and welcomes the greater stability in prices of recent years and the high level of employment and living standards as evidence of the success of these policies". The Motion and the Amendment deal with rising prices, and I intend to devote the greater part of my speech to that subject. But perhaps I might start by saying one or two words about the general economic situation, as it has been raised by the hon. Member for Cardiff, South-East (Mr. Callaghan). I do not accept the hon. Gentleman's rather gloomy forecast of the situation that we are facing. We have seen in the last year or so a very rapid expansion of the economy. I think I am right in saying offhand that the production index, even though recently it has flattened out, shows an increase over the last 12 months, seasonally adjusted, of about 8 points overall and about 10 points in manufacturing industry, a very large advance, though the hon. Gentleman and his colleagues said at the time of the 1963 Budget that it would not happen.

I said quite clearly in the 1964 Budget that my purpose was to moderate the rate of growth, which at the turn of the year was probably proceeding at about 6 per cent. overall, to something like the 4 per cent. growth rate that we can sustain over a period. That was the purpose of the 1964 Budget. I was criticised on balance for not having done enough to slow things down. I think there is now quite clear evidence that things are going the way I predicted at the time. If one looks at the figures of production, employment and sales, the trend clearly is of moderation of the rate of advance. If one looks at the returns from industry, goes to the F.B.I. or talks to people in industry and business who know the facts and prospects, one learns that the expansion is continuing but continuing at a healthy rate. We are not running into the inflationary problems of the tear-away boom that we have sometimes in the past experienced. I put the domestic economic position as developing as I thought it would be developing at the time of the Budget this year.

The external position, of course, gives rise for concern. No one would deny that. The current trade position shows a deficit, and on top we have the capital outflow, which this year is high. But, once again, both these things I have said clearly and in advance. I said that we should be facing a current deficit as the inevitable accompaniment of the early stages of a period of expansion. I also said in the Budget speech that 1964 would show a probably unusually high level of capital outflow. Therefore, the current strain on the balance of payments is neither unexpected nor a cause for alarm. It is a cause for concern, and for careful watch, and for realising how much we have to do, but I do not think it should be described in any way as a cause for alarm.

Certainly I would not accept, if I may be political for a moment in reply to the hon. Gentleman, the point of view that I am gambling on the timing of the General Election and the timing of measures that need to be taken. This is what the hon. Gentleman's colleagues did in 1951. In 1951, with clouds gathering all that year against the balance of payments, they did nothing more than cut the dollar cheese ration—nothing more whatever. I have increased the Bank Rate in the early part of this year with all the consequences, political and economic, and imposed £100 million additional taxation in the Budget. Hon. Gentlemen opposite did not do that in 1951. I made clear that if I think that any further measures are required to maintain the position of sterling or the health of the balance of payments. I will take them, and take them as soon as I think they are necessary, whatever the political consequences. It does not lie in the mouth of the hon. Gentleman to accuse me of what his colleagues did in 1951. [HON. MEMBERS: "That was 13 years ago."] It may have been 13 years ago, but the principle is the same.

The subject of the debate is the cost of living. The hon. Gentleman said that he would deal not with the past but with the future course of policy. But I did not hear much about the future, nor about what the Opposition would do about rising prices. I heard a great deal about prices but I shall not embark on the contest with the hon. Gentleman about the past. I will, however, quote one figure.

We have been in office about twice as long as the Labour Government. They were in office for over six years and we have been in office for over 12. In their six years of office, prices were rising at 6½ per cent. a year. In the first six years of Conservative Government, the rise was 4½ per cent. per year, while in the last six years it has been 2½ per cent. The further we get from the policies of Socialism the better we do. [Interruption.] Hon. Members can read these figures for themselves in the published statistics. They are correct. I shall not now deal any more with the past. The facts are on the record and we shall not let people forget them.

I shall deal, as the hon. Gentleman said he would do, with the present situation, and problems of rising prices and the alternative means of dealing with them. This, surely, is the fair way in which things should be set out what are the problems and what are the alternative policies of Government and Opposition for dealing with rising prices? These problems, as we all admit, are, both socially and economically, amongst the most serious facing the country and amongst the most serious in a democracy in modern conditions.

The experience we have of rising prices is not exceptional to us and I want to establish the facts about them—first, to strike away some of the special pleading we hear from time to time and, secondly, to try to isolate the two elements in rising prices. These are the pressure of rising costs and the pull of rising demand. The two influences working on prices—economists can argue which is the more important at any given time—are rising home costs and rising import costs on the one hand and rising and excessive demand on the other hand. These are the two related factors affecting prices.

I want first to talk about quotations of rising prices. The hon. Member has a tendency to argue from the particular to the general—to quote one or two examples as if they were an indication of the general trend. He did it again today. I do not carry in my head all the exact figures but I have looked up what he said last time we had a debate on this. He then quoted a sample of rising prices experienced by the Cardiff City Council as if they were typical. After all, if they were not thought to be typical, there would be no point in quoting them.

I have, however, taken the trouble to compare the increases he quoted with the average experience at the time. He quoted meat prices as going up 20 to 25 per cent. The general experience at the time was 12 per cent. for meat and 1 per cent. for food as a whole. He quoted blankets as going up by 29 per cent. The general experience in furnishing and soft furnishing was a 3 per cent. rise. He also quoted uniform jacket prices as having risen by 14 per cent., whereas the general clothing average was 1 per cent.

Mr. Callaghan

rose—

Mr. Maudling

The hon. Member did not give way to me and I shall not give way to him.

Mr. Callaghan

rose—

Hon. Members

Sit down.

Mr. Callaghan

I am much obliged to the Chancellor. I shall not interrupt again.

Hon. Members

You did not give way to the Chancellor.

Mr. Callaghan

That is quite true and it was very unusual for me. Surely the right hon. Gentleman is now showing the fallacy of averages. I was quoting actual figures given to me about the cost, for instance, of uniform jackets bought by Cardiff City Council. The right hon. Gentleman now gives an average. I cannot know how accurate it is.

Mr. Maudling

The "fallacy of averages" is what people talk about when averages disprove their case. The figures I quoted of the average were not based on some purchases by one local authority but on experience of a whole range of goods throughout the country. That gives a clear picture of how selective quotations of individual items that happen to suit the hon. Gentleman's case really distort argument and cloud counsel.

The other distortion of this practice is to ignore the seasonal factor in the cost of living. Everyone knows that June or mid-summer is the peak of the cost of living index and particularly the peak of food prices. They always rise at that time of the year and fall in the second part of the year. To quote, as the hon. Member did, a 5 per cent. rise in the first half of the year and talk about that being doubled in the second half is a complete distortion of figures. I might as well refer to summer reductions in coal prices, which knock about four points off the index for fuel, as though that were a true movement in the cost of living for the year as a whole, when it is a fairly seasonal statistical factor.

To get a fair comparison, one must compare seasonal peak prices with seasonal peak prices of an earlier year or a seasonal trough with an earlier seasonal trough.

Mr. Douglas Jay (Battersea, North) indicated dissent.

Mr. Maudling

I know that the right hon. Member for Battersea, North (Mr. Jay) does not like that argument but it is difficult to refute. The simple proposition is that one compares like with like. If one compares the cost of living index of June, 1964, with that of June, 1963, one sees that there was an increase of 3.4 per cent. and this was the trend of that year. Nearly 1 per cent., admittedly, was an increase in the duties on tobacco and alcohol. But surely it is clear that indirect taxes are on a different footing from general price increases because, if one puts more tax on a piece of meat, for instance, or on a vacuum cleaner, the customer is still getting the same article for more money but is making a contribution by higher taxation to increased social services which do not figure in the cost of living index, although the indirect tax itself does. Therefore, any addition to the cost of living index which comes from increased taxation is misleading unless one takes into account the increased social services financed by that taxation.

It is important to remember that Income Tax, although it does not feature in the cost of living index, features in the cost of living, and, therefore, that measures to increase Income Tax have as much effect upon people's living standards as measures that more directly affect prices. We had these increases in the cost of living index during the past year, and I want to examine one or two factors, one or two particular items, to show why price increases have come about. The hon. Gentleman said that he would do it but he made little reference to reasons behind prices, and I want to correct the balance.

Mr. Walter Monslow (Barrow-in-Furness)

Including land?

Mr. Maudling

Yes, of course. First, however, I will deal with food prices, which are by far the biggest item in the whole index. As I have said, June tends to be the month when they are at their highest. If we compare June, 1962, with June, 1964, we find that the 1962 index figure was 106.4 and the 1964 was 109.1—an increase of 2.7 per cent. in two years, or an annual increase of 1.35 per cent. This has been measured in the index for food prices on the proper basis of seasonal comparison over the last two years.

At a time when food import prices have risen by about 17 per cent., this seems to me to be a fairly substantial contribution to stabilising the cost of living. The price of imported foods rose between the first quarter of 1962 and the first quarter of 1964 by 17 per cent. Despite that, we have held the increase in retail food prices to only 2.7 per cent. over the same period. These figures will, I hope, be commended because they are an accurate reflection of the situation.

Mr. Jay

I hope, in that case, that the right hon. Gentleman will remember in future to add that, in 1951, import prices rose 40 per cent.

Mr. Maudling

That is a matter the right hon. Gentleman often refers to, but he forgets it when he discusses our position. I have already quoted what happened in the six years of the Labour Government and the first and second six years of the Conservative Government. I am saying now that import prices for food have risen by 17 per cent. while the food index has risen by 2.7 per cent.

People are concerned about the actual movement of prices—bread, meat, bacon, sugar and butter, which represent the biggest increase in the cost of living, and manufactured foods, another item about which we have heard a good deal in previous debates. I am told that two-thirds of the final delivered price of the loaf is represented by wages in various stages of manufacture and distribution. This is probably the main reason why there has been some increase in the price of bread over these two years.

As everyone knows, there is an international shortage of meat, combined with increased consumption of meat on the Continent of Europe. It is an interesting commentary on our meat prices that one of the reasons why meat goes from this country to Europe is that its price in Europe is substantially higher than it is here.

The same is true of sugar and butter, where increases of prices reflect—as we must realistically recognise—a world shortage of both those commodities which we cannot cut out simply by saying that we do not like it.

In our last debate on this subject, the hon. Member for Cardiff, South-East quoted a number of increases in the prices of manufactured foods. I have often heard hon. Members say that a particular item of grocery has gone up by a 1d. or 2d. or 2½d. I agree that this is an important matter, but let us consider how these things happen. It is true that in the last six months "other foods", as they are called in the index, mainly manufactured foods, have risen by four points, but in the previous 18 months they had fallen by one point. Prices of manufactured foodstuffs are not constantly adjusted, but costs are absorbed until the stage comes when some increase must be made. But over the whole period of the two years, if my mathematics are correct, there has been a modest increase of about three points.

Have the Opposition no suggestions to make about how to bring down food prices? One would have thought that that would emerge from this debate this afternoon. If they are criticising the level of prices and if they say that food prices are the biggest constituent in the index and are too high, what are their proposals for bringing down those prices? We have not heard a single word about that this afternoon. Our system is providing the best level of food prices in Europe and the proposals and policies of the party opposite would put prices up and not down.

Let us consider the experience with food prices in Europe—I shall now have a few figures of my own. Between 1952 and 1963 our food prices went up by 33 per cent., about the same as in Italy and the Netherlands, more than in West Germany, but less than in Denmark, France and Sweden. As we got away from the days of Socialism, the record got much better. Between 1956 and 1963, food prices in the United Kingdom went up by 11½ per cent. They went up by 17 per cent. in Germany, 15 per cent. in Italy, 22 per cent. in the Netherlands, 23 per cent. in Denmark, 47 per cent. in France, and in Sweden—which has so long enjoyed the benefits of a Socialist Government—by 34 per cent. This, surely, is conclusive proof, if proof be wanted, that our system of food importing and our agricultural support system are producing food at prices which compare extremely well with those of Europe.

The only suggestion of the party opposite is a return to bulk buying. Although we have heard nothing about bulk buying today, it sometimes bulks large in the speeches of the Leader of the Opposition. If a return to bulk buying is such a good thing and will bring cheaper meat and cheaper farm produce, why did we not hear about it? The reason, as we all know, is that bulk buying was hardly a success in the days immediately after the war, in the days of inconvertibility—at a time when world markets were easy and when food was not short in the rest of the world—and a return to it now would result in paying more for our food.

It is extraordinary that the party which raises this issue of the cost of living and which attacks us and which says that we should do better about the cost of living should not have said a single word about how to improve on the present level of food prices. On the whole, that is a confession of the wholly bankrupt nature of the Opposition in this respect—

Mr. George Brown (Belper)

I am—[Interruption.]—we expect that kind of rudeness from hon. Members opposite. I am not quite clear whether the right hon. Gentleman is making the case that prices have not increased or that they have increased for good reasons and cannot be brought down. Which of those two points is he making?

Mr. Maudling

The point I am making is that our system of food prices and agricultural support has meant that food prices in this country have risen very little in the last few years compared with those of our European competitors and that to introduce the type of system which hon. Members opposite have in mind would make them go up rather than bring them down. I think that that is a fair argument. I am sorry if I was impolite to the right hon. Gentleman. I did not mean to be, but he interrupted me in the course of a sentence.

Mr. Brown

I shall get much more than that tonight.

Mr. Maudling

That remains to be seen.

Having dealt with food prices, a major item in the index, I now turn to housing prices about which, again, the hon. Gentleman had very little to say, although his party often has. It is quite clear that the price of housing is a matter of considerable concern and it is equally clear, I accept, that among the items in the cost of living which have risen the price of housing has been one of the largest. But we must get the argument right in this question of housing costs and land costs.

It is the price of houses which affects the price of land rather than the other way round. The price a developer will pay for land depends upon the price at which he can sell the houses when he has built them. That is something we must never forget. The price of housing determines the price which may be paid for the land. Of course there may be special features in certain areas where there is a particularly high demand for houses. That special situation can arise in a special locality, but in general it is the balance of supply and demand which affects the level of housing prices.

I cannot see how the party opposite, or anyone else, can make an assault on the level of housing costs other than in one of two ways—either by stopping people who are trying to get houses, or by getting more houses built. I take it that there is no proposal from the party opposite to impose a licensing system, for example, on private house building. I take it that the party opposite is not proposing and does not wish to reduce the demand for housing by preventing people who want to buy their houses in present circumstances from doing so.

If that is so, the only practical way of getting housing prices down is by building more houses and so generally increasing the supply. This is where I can make some interesting figures available to the House. I will start by recalling that in our last debate on the cost of living the hon. Member for Cardiff, South-East said that it would be irresponsible to aim at a target of more than 800,000 houses—

Hon. Members

400,000.

Mr. Maudling

I meant to say 400,000; these things do get inflated. I think that 400,000 houses is regarded by hon. Members opposite as the maximum target.

The total number under construction at the moment, public and private together, is more than 421,000, which compares with a corresponding figure of 226,000 at the end of 1951. The number of houses started in Great Britain, public and private, in the first half of this year was 214,000. Hon. Members opposite think that 400,000 is the maximum which can be achieved. It is right for them to aim at such a target, and it is clear that they are not proposing to build more houses. But unless more houses are built against current demand, which is very strong in this modern affluent Britain, they will not find a way of bringing down the price of housing.

I am surprised that once again there was no mention in the hon. Gentleman's speech of Labour Party policy for dealing with land prices or house prices.

Mr. Monslow

Will the right hon. Gentleman deal with this aspect of land prices? I will give him one example. In Bishop's Stortford 170 acres with a market value of £42,500 became worth £1,700,000 when the land became available for residential purposes. Can the right hon. Gentleman explain that?

Mr. Maudling

The price of land varies with the price at which houses can be sold by the developer. What are the proposals of the party opposite for bringing down the price of land other than by making more land available, and for bringing down the price of houses other than by making more houses available by building them? Their ideas for a land commission seem to have been riddled in the last few weeks and months. That is why, no doubt, we heard very little about them this afternoon.

I am taking the increases in prices one by one deliberately to deal as factually as I can with what I thought was the subject of the debate this afternoon. The big items are rates, fuel and light, and transport. The House is aware of the difficulties of the rating problem. The rising burden of rates is due to the rapidly increasing total expenditure on public services. In a public speech the other day I quoted some figures which showed the immense range of rating assessments in this country. Whereas the average is about £32, one gets averages in some areas varying from £11 to £99.

It is clear that any revision of the rating structure, or of the financial relations between local and central Government, needs to be based on the studies of the Allen Committee; needs to be based on a clear assessment of where the burden really falls, because the simple transfer of a block of expenditure from rates to taxes, as I believe some people, and possibly the Opposition, have proposed, might result in an overall relief on ratepayers of a very small amount—quite inadequate for those most affected—while at the same time transferring a very large burden to the taxpayer. I must emphasise again that taxation, be it direct or indirect, falls on the cost of living in one form or another.

Fuel and light prices have risen. I think that the hon. Gentleman called attention to the financial targets which we have given the power industries. These targets are essential if we are to get realism and maximum efficiency in the conduct of these nationalised industries. So far as I know, the establishment of these targets of earnings on assets are accepted by those in charge of the industries as a challenge which they have to meet as an incentive to economy, and from the point of view of the public, the cost of living, and total expenditure, it is essential to have targets of this kind if we are to avoid the vast misuse of capital which could take place if nationalised industries were based on other than proper commercial propositions.

The other big item is transport. The big items are the railways and bus fares, particularly in London. The railways are not earning a profit. They are, thanks to Dr. Beeching's vigorous steps, reducing bit by bit the burden on the taxpayer, and reducing bit by bit the burden of the railways on the cost of living. They are making this progress and at the same time they are paying substantially increased wages, as are London Transport. In these circumstances, it is not surpising that the effect of these moves, the effect of these wage increases, the effect of trying to eliminate this deficit, should be felt in the charges made by the transport systems, both rail and road.

Mr. Harold Davies

I beg the right hon. Gentleman not to make such a broad generalisation. He said that the railways, by Dr. Beeching's plan, are helping to keep down the cost of living. Surely he knows that even before the war in London a survey was made of the result of the stoppages of transport in London with the internal combustion engine. It cost £30 million a year. What does the congestion on the roads cost the taxpayer in terms of lost petrol, and lost dollars? It costs millions of pounds because that Government have no plan for transport at the moment.

Mr. Maudling

By increasing efficiency and eliminating wasteful operations Dr. Beeching's plan is reducing the deficit of the railways which otherwise falls on the taxpayer and on the cost of living. With that there cannot be any demur.

I turn from those particular items to the general factors which affect prices, and I want to end my speech by dealing with the broad factors to which the hon. Gentleman occasionally referred.

It is obvious that the major problem is to ensure that the load we put on the economy is not higher than production can carrry. This is a commonplace, and is accepted by both sides. The pressure of demand on resources is what pushes up prices. Therefore, we must examine our respective policies in the light of the effect that they will have on the demand for resources, and the effect that they will have on the increase in efficiency and production, and that is what I want to do now.

I deal first with Government expenditure, to which the hon. Gentleman referred. This is one of the largest features. The pressure of Government expenditure on the economy is a very serious problem. It is bound to affect prices, and the effect of taxation, both direct and indirect, is bound to be felt throughout the economy. As the hon. Gentleman reminded the House today, our programme of expenditure is a large and ambitious one. The White Paper of last year showed an average increase of about 4.1 per cent. a year in public expenditure, and since then it is fair to admit that the pressure has risen.

I have never disguised from the House, or from the country, that to finance this expenditure, which I am convinced the country wants and needs, we will need additional tax revenue, but this will be tolerable if public expenditure is kept within bounds, and if savings are maintained. My fear is that under the policies of the party opposite neither condition will be fulfilled. Public expenditure will not be kept under control and savings will be undermined.

The hon. Member for Cardiff, South-East fights a noble but losing battle against his colleagues in the matter of public expenditure. He honestly and fairly admits that the commitments that we have undertaken are all that can be undertaken by a responsible Government. As I say, it is a losing battle. He received the coup de grâce the other night on television from the Leader of the Opposition who talked about the first 100 days and the great immediate drive. Incidentally, we heard this afternoon that nothing more could be done until they got production up to 5 per cent. or to 6 per cent. but on television last week it was the first 100 days, an immediate drive on pensions, housing, education—[HON. MEMBERS: "Poor stuff."] I have heard a certain amount of party propaganda from the other side and I should be entitled to make a little now.

I want to know, because the country ought to know, whether the policy of the party opposite is to contain Government expenditure in the limits that we have set, or whether they intend an immediate drive on pensions, housing, and education, which to every listener can mean nothing other than higher pensions, more houses, more schools, and therefore more expenditure. What is the policy of the party opposite? They cannot get away with trying to do both. If they attempt to carry out a fraction of the promises that they are making, the effect on the cost of living will be serious.

The same is true of savings. There has been a dramatic increase in the level of savings in the last 10 to 12 years. We heard nothing about that this afternoon, and, as the House is aware, any decline in the level of savings means an increase in the level of taxes to counter-balance it. We have seen savings rise many times over under a Conservative Government. I cannot believe that the same will happen—in fact I think that the opposite will happen—if there is a Labour Government, with their general attitude on the taxation of capital, on a gifts tax, and a wealth tax. All these proposals, which are inimical to savings, are bound to push up the cost of living.

Another factor is interest rates. I am troubled about what the party opposite mean by interest rates. They once talked about giving loans to local authorities for housing purposes at specially subsidised rates. This was swept aside by the Leader of the Opposition in his letter to the Building Societies Association when he said that he was not … proposing to introduce through the public sector some special or discriminatory form of subsidised loans for house purchase". Another example of driving the hon. Member for Fulham (Mr. M. Stewart) under the rug.

One is driven back to the argument of the Leader of the Opposition that, if the party opposite intends anything at all in interest rates, it intends to drive interest rates down by rigging the gilt-edged market. The only way in which the party opposite can drive long-term interest rates down is by driving the gilt-edged market up, and we remember what happened to the gilt-edged market in those days.

I heard the hon. Member make some comment about the value of investment in gilt-edged securities. Perhaps he will recall what happened when Daltons came out in early 1947. In less than five years they had fallen by 35 points, to 65. These are the consequences of attempting to rig the market in order to create artificially low interest rates. Before the right hon. Gentleman commits himself and his party to this sort of policy he should consider the consequences of becoming an island of artificially low interest rates in a world of high interest rates. An island of inflation in a non-inflationary world is a very dangerous thing for this country to be.

Finally, I come to the question of increasing production and productivity. I can summarise our policies in this respect under a few heads. I have tried in the last two Budgets—and especially the Budget of 1963—to encourage productivity by encouraging education and providing the funds for it; encouraging training and retraining, for which we have an ambitious programme, and particularly for bringing in resources to areas of relatively high unemployment. We have ambitious schemes for tax depreciation, and we have standard grants, and so on. In all these ways we have been increasing the efficient use of our national money.

Our other main task has been to stimulate investment in industry, not only for the expansion of industry but also in labour saving and cost cutting—because if prices are to be brought down it will come more than anything else from the installation of machinery and equipment and the adoption of methods which will lower costs, with the consequent passing on of the benefit to the public. Here again, there is a distinction between our policy and the policy of the party opposite—between our policy of encouraging investment by expanding capital allowances and the policy of the party opposite, which talks about ruthless discrimination between one taxpayer and another and which adopts strange devices to encourage investment, such as a differential Profits Tax, about which the Leader of the Opposition was at one time so keen, although I notice that that one has now been lost as well.

The Leader of the Opposition has been in the habit of putting his colleagues' bright ideas to bed. Now I am happy to see that one of his colleagues has done the same to him. In a recent number of the Investors' Chronicle dealing with the question of a differential Profits Tax, it was not so much a case of "diamond cut diamond" as "Diamond cut Wilson". Once again we have an example of complete confusion on the part of the party opposite. The proposals that they are putting forward, in so far as they are in any way detailed, are either wholly self-contradictory, or will have an effect opposite to that which is intended, and are bound to push up the cost of living.

I shall not say much about an incomes policy, because the House has heard me often on the subject. I do not apologise for this. I am sure that the House will agree that an incomes policy, with all that it means, is fundamental to tackling the question of rising prices. I am told that of the increase in prices in the last year or two about two-thirds came from increased wages and salaries and about one-eighth from increased profits. Clearly, both for wages and salaries on the one hand and for profits on the other, the principle must be the same. It must be our endeavour to keep them in line with the increase in productivity, because without that there is no chance of keeping our domestic costs at such a level as to restrain a rise in prices.

With a General Election coming up I hope that the question of an incomes policy and the need for it will not become a matter of controversy between the parties. I do not think that it will, because both parties are agreed that an incomes policy is essential. We may disagree about the way of creating it, but I know that the broad policy of keeping incomes on the right lines and dealing fairly with the various categories of receiver, if I may so put it, is accepted by hon. Members on both sides of the House.

I hope that the next Government—and I trust that it will be a Conservative Government—will be able to find a solution to this problem. It is a national problem, and the party opposite will finally have to tackle it as a national problem and a national necessity.

Mr. J. J. Mendelson (Penistone)

So far the hon. Member has said that prices have risen. He obviously accepts that. He has offered no measures designed to see that they do not rise further, but he has asked the Opposition what they will do. I hope that he will not conclude his speech without telling us his proposals to stop rising prices.

Mr. Maudling

The hon. Member cannot have been listening to what I have been saying.

Mr. Mendelson

I have been listening very carefully.

Mr. Maudling

What the hon. Member has just said was a fair description of his hon. Friend's speech. For almost all my speech I have concentrated on the problem of prices, which is the problem mentioned in the Motion and in the Amendment. I have dealt with prices generally and with important individual elements—food, housing, fuel, lighting, transport and rates. I have dealt with them first after getting the facts straight, which is necessary in order to make the actual movement of prices clear to people, and after cutting away some of the fog of special pleading that is hung over the question by hon. Members opposite. I have tried to put things in a proper perspective.

I have made it clear that rising prices must be a matter of concern to any Government—both from the internal and the external aspect. I have made it clear that the way in which prices may be contained is the exact opposite of the proposals of the Party opposite. I have said that it can be done only by holding public expenditure, and not falling for the silly bribes which the party opposite is dragging around the electorate. It can be done only by encouraging production, and not trying to drive interest rates down to an unnatural level. It can be done by encouraging the proper use of labour resources, investment in new machinery, and by competition.

These are the ways in which we have been tackling the problem, which I believe bear favourable comparison not only with the methods of the party opposite but also with those of other countries. These are the lines that I have taken in the matter. I believe that socially and factually our policy will compete favourably with that of the party opposite, and on that I rest my case.

6.7 p.m.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

I have always had a great respect for the economic ability of the Chancellor and for his capacity to debate, but today he has taken his speech right out of court by not sticking to the facts. By misrepresenting the facts, he has discounted the whole of his speech. Every bit of it must now be suspect. He used the year 1951 dishonestly for the purpose of comparison. He knows that two things occurred in 1951 which make that year an improper one to take for any purpose of comparison.

First, there was the crisis that arose out of the Korean war and, secondly, the fact that the Labour Government then had to buy in stocks of goods in case a world war broke out. They had to buy in to the extent of £600 million above the necessary imports. The Chancellor was quite dishonest in ignoring that fact, and the fact that the Government which came in in the following year inherited £600 million in stocks that they did not need to buy and when prices came down they benefited.

When he compares Conservative Government with Labour Government he must discount these matters in coming to any calculations on the benefits that may have been derived from Conservative Governments. He knows far better than that, and the fact that he has chosen to use such tricks in his speech discredits all his facts. It is obvious, therefore, that nobody can trust any of the figures and facts used by the right hon. Gentleman, so it is rather useless trying to discuss them. The Chancellor went on to say that the Labour Party's programme represented the building of houses, hospitals and all sorts of things in 100 days.

Mr. Maudling indicated dissent.

Mr. Woodburn

The right hon. Gentleman implied that; but it is nonsense. He knows that buildings take time, not only to build but to begin to build. Building programmes for hospitals and universities often take years to formulate. He even knows that his own party's building programme is in many respects beyond the capacity of the building trade. I suppose that it is only window dressing for the coming General Election.

Whenever an election has been coming the Conservative Party have immediately launched enormous programmes, merely to create difficulties for the party coming into office. Then they are able to say, after the election—as they will say to the next Labour Government—"That was in our programme" and "The Labour Party is merely carrying out what we began". There is practically nothing that a Labour Government could do about which the Conservatives could not say "We started that" simply because they have made promises about virtually everything in the last few years.

This all goes to prove that the remarks of the right hon. Gentleman were humbug. Building depends on the building trade; how soon its output can be increased, the capacity to increase the goods used in the industry, and so on. All these things must be tackled before more buildings can be erected. It is not enough to increase the number of building trade workers and say that more buildings can, therefore, be built. The whole of industry is geared to produce a certain amount of, say, glass, a given number of bricks, a certain amount of stone and the iron and other materials used in building. It is not easy to increase the production of these goods without there being a great deal of planning.

The Chancellor cannot deny that he was dishonest in the facts he gave. He knew them to be untrue and was, therefore, being dishonest. He made a dishonest comparison between 1951 and now, and he knows as well as I do that when he made that comparison he was making a false and a dishonest one.

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

Order. So long as the right hon. Gentleman restricts himself to a general use of the word "dishonest" it may be legitimate, but to call an hon. Member or a right hon. Member dishonest himself is not in order.

Mr. Woodburn

If I implied that the right hon. Gentleman was personally dishonest, I withdraw that unreservedly. I am saying that his comparison was dishonest.

Mr. Maudling

I know exactly what the right hon. Gentleman means, but, with respect, he is completely wrong. I did not say anything that I did not know and I did not say anything which I cannot prove. The comparison I made with 1951 was made as a result of his party's Motion, the wording of it and the speech which was made from the Opposition Front Bench. I was pointing out that, the housing industry being fully occupied, it was wrong for the party opposite to make tremendous claims about the building of even more houses.

Mr. Woodburn

I was not referring specifically to the question of housebuilding in 1951; just to the fact that the right hon. Gentleman made comparisons with that year which he should not have made. For example, he referred to the cost of living in 1951 and pointed out how it had risen during the term of the Labour Government. He completely ignored the vital facts. The right hon. Gentleman, who is an able economist, made some dishonest comparisons.

There can be no doubt that the problems facing the country are great. No hon. Member, on either side of the House, is suggesting that increasing productivity does not carry with it the risk of inflation. The Conservative Government have deliberately inflated the currency on several occasions, just prior to a General Election, and they are certainly taking the risk of doing that now. Just prior to the 1959 election the then Chancellor of the Exchequer gave a free rein on hire purchase, one of the fastest ways of stimulating purchasing. He encouraged the banks to give personal loans in a way never known before. The result was that the hire-purchase companies lost about £60 million—and, although the Conservatives regarded that as part of the cost for winning the election, that money was lost as a result of the hire-purchase companies taking risks to return the Conservatives to power.

If the Chancellor now suggests that currency is not being inflated, he must be the only person to believe that. It is being inflated and it is obvious that everything is going up in price. More wages are being sought, and the right hon. Gentleman is being less than fair, because nobody has yet discovered whether wages chase prices or prices chase wages. One method of dealing with this problem is to reduce expenditure on goods at home. When we were in power we had to face this difficulty, because at that time the motor car firms were prepared to sell all their cars at home and none abroad. We had to press and persuade them to export more vehicles and sell less at home so that the industry could pay for the steel it was using.

It is obvious that there must be a balance between the amount of goods consumed at home and those exported, bearing in mind our imports. The purchase of new motor cars in Britain has reached the point when the Government have an important problem to solve. Not only are we bringing on to our roads more vehicles than the roads can carry, we are having to spend vast sums to improve the roads and make more room for the extra vehicles. Common sense suggests that many people are buying new cars when their old ones are not necessarily worn out. There is a lot for saying that older cars should be run for an extra year or so. I do not want to give the impression that I would prevent people from having new cars. Nevertheless, we must do something to increase our exports.

The Secretary of State for Industry, Trade and Regional Development is setting up commissions to develop the exporting of goods, and I gather that one of the principal ones will be concerned with the export of whisky. From my travels abroad I have long realised the popularity of our whisky in other countries. Its consumption abroad has been rising steadily and it is without doubt an excellent export. It does not involve a great deal of labour in its manufacture, nature doing a great deal of the work in terms of fermentation and so on. Whisky production is a profitable business and, although the State does not get the lot, it collects a large amount. From the point of view of the Chancellor and the whisky industry, I can understand the enthusiasm for developing the export of this commodity.

The Chancellor did not say very much—and I have particularly in mind the proposed exports council—about exports to E.F.T.A. countries. Although those countries have been increasing trade with one another, they have not been buying very much from Britain recently and we are certainly not getting our share of their imports. As the right hon. Gentleman must know, the Scottish Council concerned with the development of industry and exports has been doing a great deal to make inroads into the E.F.T.A. countries from the exports point of view. I think that its efforts will be relatively successful. It has also been negotiating with Canada and the United States. I mention this because I would like to know whether the proposed new Council will either duplicate the efforts of the Scottish Council or compete with it, or co-operate with it, because there can be no doubt that it would be a good idea if more money were placed at the disposal of the Scottish Council, which has had considerable success.

It should also be remembered that there will be a great industrial fair in Scotland in the autumn. I hope that the Government will stimulate interest in that event, because the more people from abroad who can be attracted to it, the more our exports will be increased. I am not pushing the Scottish Nationalist Party in this connection, but a very important factor in industry is that there are 20 million Scots abroad who, whether or not they ever come back, have a nostalgia for their native country. Even from the purely business point of view there is no question that it is advantageous to use all this friendship that exists in other countries. The Scottish Council is able to do that in the United States and Canada, and in other countries, and I hope that something more can be done in that direction.

If we want to increase out exports we must try to reduce wasteful expenditure, of which there is a good deal. More and more people are being employed in gambling shops, casinos, and the like, as a result of recent Government legislation, and there is a great deal of other labour wasted on unnecessary work. A lot of that could be done away with to the advantage of really vital work.

Some inquiry will eventually have to be made into the distribution of rates between Government and local authorities. A wholesale investigation into the rating system is becoming urgently necessary. In Scotland, during their years of office, the Government have increased this financial load on local authorities from about £37 million to over £100 million. This expenditure is an element in the cost of living, and something will have to be done to adjust what is called the "burden", although I do not myself believe that rates are a burden or that taxation is a burden.

I believe that people get very good value for their rates and taxes, and if we eliminate the cost of war and of preparation for war it will be seen that everything spent by the Government—even by a Conservative Government—and by local authorities represents very good value for money for those who receive the services. If these same services were performed by any other agency the cost of living would rise much more rapidly. Nevertheless, I hope that the Government will see whether something can be done about this problem of rates.

The Chancellor of the Exchequer wound up by talking about national expenditure rising. We can reduce a lot of national expenditure if we make people pay privately. All we then do is to shift it from ourselves to the public. The reason why the Government spend our money is that they are doing it, I hope, more economically than otherwise would be the case. I am sure that the right hon. Gentleman will not say that during the last 13 years the Government have been wasting money, and if he says that the money has been spent wisely it means that the public have had a better advantage than they otherwise would have done.

The National Health Service is an example. Our expenditure on the Health Service is less than that of any other country. Drugs and everything else cost more in the United States and in nearly every other country. In other words, people get a better service here for less money than they would get anywhere else. Yet there is a great deal of nonsense talked about burdens; people are buying at wholesale prices and getting these drugs and services more cheaply than they would outside the service, but it is very difficult to make this clear.

People do not like paying taxes. One of the sad things of life is that people will rather pay more on cigarettes, beer and whisky and pay a much smaller Income Tax, with the result that much taxation has to be imposed by indirect rather than by direct means. We have to express our thanks to those who smoke and drink for their great generosity in making such a valuable contribution to the upkeep of the country and the national expenditure.

It is a pity, as I say, that so much of it has to go on war and the preparation of war, but we hope that by the time the next Government come in the world situation will have so altered that even that expenditure may be reduced and the saving put to better purpose.

6.25 p.m.

Sir Alexander Spearman (Scarborough and Whitby)

We have had a stirring electioneering speech from the hon. Member for Cardiff, South-East (Mr. Callaghan). It will give great pleasure to all those who for a long time have been quite determined to vote Labour; I am not sure that it will give much encouragement to those who, in recent months, have been becoming increasingly doubtful about voting Labour.

I want to try to examine as objectively as I can the cause of prices rising, and what can be done about it. We are all committed to a full employment policy. We all agree that it would be quite intolerable to return to the inter-war years of mass unemployment. That means that spending must be up to just below full capacity to produce. A wise and strong Government have to regulate the economy so that there is neither a glut of goods—and, therefore, unemployment—or, on the other hand, excess demand. But for this full employment, as for most other good things, we have to pay a price.

One price, as I see it, is that there must be unpopular and inconvenient variations in taxation rates and interest rates. No Government—and I certainly do not claim a Conservative Government to be an exception—composed of men is infallible. In addition, many things occur that are quite outside Government control—are external—so that there must be a constant varying of the pace of the economy.

A price we also have to pay is the probability of a slight degree of inflation. It is no coincidence that it is in America, where unemployment is much higher, and in Germany, where there have always been reserves of labour, that price rises have been much the smallest and the inflationary pressures much the least.

An unwise and weak Government could bring about an absolutely disastrous inflation with the full employment policy. I recognise that during the last 12 years there has been a material rise in prices—and a rather more severe rise in the previous six years. That has not, I think, cause a great deal of hardship, because it has been largely offset by a much greater rise in wages, pensions and benefits, but I accept at once that there has been some suffering, though nothing on the scale of what has happened in the past in Europe.

Those of us who visited Germany just after the war know the appalling suffering by starvation that existed there. It was only cured when the present chairman of I.C.I., Mr. Paul Chambers, brought in currency reform. The conditions in Germany then are well illustrated by the story of the unhappy shopkeeper whose job was selling nails. He was very pleased at the beginning of the inflation when one day he found that he had sold every nail in the shop. He was not so pleased next day when he found that with the proceeds he could only buy back half as much stock, but when he sold that stock again at a satisfactory profit he cheered up. But every time he sold his stock he was able to buy fewer and fewer nails in replacement. The story goes that he finally ended up with only one nail, which he used when he hanged himself.

The late Mr. Hugh Gaitskell once warned us against complacency, and said that that sort of inflation could happen here. We should bear that warning in mind. Inflation is serious, either if it is here and only here and not in other countries, so that we have a balance-of-payments crisis, or if it degenerates into galloping inflation, as it could do. Inflation is a very insidious disease, because in its first stages it is so very agreeable. As demand rises, so do wages—and so does employment. But production rises also, so that prices are not at first much affected.

Therefore, the workers are pleased. They get more work and more wages. Employers are pleased. They get more profits, and the consumers are not much hurt. In the second stage, inevitably, incomes not only go on rising, but they rise at a much faster rate, but production cannot go on rising at faster rates when the reserves capacity is used up; then comes the crisis.

It is absolutely vital, therefore, that a Government should regulate spending so that it is in balance with production. I believe that this is the most important and most difficult thing that a Chancellor has to do. It is the most difficult because he almost always has to act before it appears obviously necessary. He has to do unpopular things before it is recognised that he needs to do them and because nearly always, for some reason or another, his advisers over-estimate the effect of restrictive measures and under-estimate the effect of expansive measures.

During the debate on the Finance Bill, Opposition Front Bench speakers, as was put by my right hon. Friend the Chief Secretary to the Treasury on 20th April, all took the view that the burden must be shifted from the consumers on to profits. The right hon. Member for Battersea, North (Mr. Jay), on 16th April, spelt it out very clearly when he said: I say emphatically that in present circumstances he should have raised not consumer taxes, but profits taxes."—[Official Report, 16th April, 1964; Vol. 693, c. 615.] When right hon. and hon. Members opposite say that sort of thing, I wonder whether they begin to understand the economic situation. Increasing Profits Tax can have no possible effect on the economic situation in the current year. It cannot possibly cut down expenditure or regulate the economy so as to have spending in balance. It can only have an effect on spending at a later stage if it means reduction of dividends, but more probably it will mean reduction in industrial investment, and surely none of us wants to see that.

Hon. Members opposite sometimes seem to be living in the past. In the days of Gladstonian finance it was believed that the job of the Chancellor was confined to raising enough money to pay the bills. They seem to have the illusion that wealth consists of money and stocks and shares and that a fair and wise Government could redistribute all that and make everyone happy. But wealth consists of the production of goods, and it is on production that the whole of this debate should hang.

Are the Opposition really capable of foreseeing what would happen so as to be able to plan the economy? When the 1963 Budget was made, some people thought that the Chancellor did exactly right, and some thought that taking into account what he had given away outside the Budget he had given away a bit too much. I do not think that any responsible person now thinks that my right hon. Friend gave away too little, but let us look at what was said in that debate.

The hon. Member for Cardiff, South-East (Mr. Callaghan) said, on 4th April, 1963: In my view, the Chancellor has been too cautious."—[OFFICIAL REPORT, 4th April, 1963; Vol. 675, c. 642.] Even the hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), who, some of us think, is perhaps the brightest jewel in a rather moderate crown—and I hope that he will not think that compliment too damaging—said, on 8th April, 1963: … I remain unconvinced that the Budget has done as much as it should have done this year in the circumstances that confront us …"—[OFFICIAL REPORT, 8th April, 1963; Vol. 675, c. 999.] Finally, the right hon. Member for Battersea, North said, on 9th April, 1963: … on his own showing, the Chancellor is budgeting for continued unemployment … At that time, the unemployment figure was 3.5 per cent. In the next quarter it was 2.4 per cent., in the next 2.1 per cent. and now it is 1.4 per cent. It was, therefore, not a wise prophecy.

Later, the right hon. Gentleman said: This timid Budget, I believe, is not enough to give us real steady expansion …."—[OFFICIAL REPORT, 9th April, 1963; Vol. 675, c. 1208–14.] Production was running then at 113. In the next quarter it was 118, in the next 120 and in the next 124, and now it is 126. I do not think that the right hon. Gentleman who made that statement could be given good marks for accuracy and foresight.

Mr. A. E. P. Duffy (Colne Valley)

I am most interested to hear that production is now 126. How long has it been standing at that figure?

Sir A. Spearman

I should have thought for about two or three months. We must look at the Monthly Digest of Statistics.

Mr. Duffy

Is the hon. Gentleman encouraged by this?

Sir A. Spearman

Yes, because I think that we can push up production quickly when we have great reserves of capacity. It is often said by hon. Members opposite that the Government pushed up production in 1959 to win the election, but they will find that that was not in 1959. It was in 1960 that there was the exceptional increase.

We have to keep down incomes or raise production to get the balance. In this, at any rate, I shall have everyone with me when I say that the right course is to secure a balance not by pushing incomes down, but by pushing production up; and I believe that to push up production savings are essential. If everything is spent on social services and on consumption there can be no resources for new capital and new plant. Shall we get those savings under a Labour Government? We certainly did not get personal savings in 1951, and the proposals for taxing wealth cannot encourage savings. I find it hard to understand what hon. Members opposite mean. They seem to say, "To save is good, but to have saved is wrong."

Mr. Arthur Lewis (West Ham, North)

When did any of my right hon. or hon. Friends say that?

Sir A. Spearman

Time and again from the other side of the House we have had proposals for taxes on the accumulation of savings.

Mr. Woodburn

No.

Sir A. Spearman

We have been told that savings must be taxed more and more, but I am sure that the greater the accumulation of savings the stronger our position will be.

Mr. Woodburn

The hon. Member seems to think that savings and profits are the same thing and that taxation of profits is taxation of savings, but profits are not necessarily saved. They are often spent, and spent wastefully. Surely the hon. Member will not suggest that wasteful expenditure should not be taxed.

Sir A. Spearman

I am talking of many reports lately that the Opposition, if they came to power, would tax savings and wealth.

Mr. Woodburn

No.

Sir A. Spearman

I am glad to hear an ex-Minister repudiate that. We must have a high rate of production, and to have it we must have competition. In dictator countries—

Mr. Woodburn

I must put this matter right. It is assumed that wealth and savings are the same thing. But some people make wealth from speculation or by gambling, by intelligence, or by rigging the markets. Many people have lost their savings with Mr. Bloom. These things do not necessarily come about because of hard work. Wealth and savings are not synonymous, any more than savings and profits are synonymous.

Sir A. Spearman

All I said is that a general tax on wealth, on what people have saved in the past, is likely to discourage savings.

As I was saying, there must be competition. In a dictatorship country the authorities are the driving force and they try to get efficiency by police methods, but in a democratic country competition and the incentive of reward must be the driving force. If there is enough competition, managements must, in the national interest, make the best use of their resources or release them to other people who will do so. If there is enough competition employers cannot put the cost of inefficiency or of extra wages on to the price of the goods they sell because they will not sell them for higher prices. They have got to do it by being more efficient or cutting profit margins.

Do the Opposition really want competition? They pay lip-service to it, but I suspect from so many of their speeches that, in fact, they would bolster up inefficient and declining industries. They would subsidise or direct industries to areas where production would be lower and less economic in the cause of saving temporary hardship.

Mr. Duffy

Am I to take it that the hon. Gentleman is opposed to the attraction or direction of new industry to Whitby? I know Whitby as well as the hon. Gentleman does. He cannot have it both ways.

Sir A. Spearman

I do not know whether the hon. Gentleman knows Whitby as well as I do. If he does, he will know that it may very well benefit from a vast potash development, involving an expenditure of £15 million, which can be produced in Whitby and nowhere else.

Mr. Duffy

It has got to retain its railway as well.

Sir A. Spearman

As I see it, there are only two alternatives to regulating the expenditure of a country to be in balance with production. One is the impossible situation of a catastrophic inflation, which is unthinkable, and the other is price control by decree. Price control means rationing. Rationing means black markets and all the unfairness of black markets. It means inefficiency and waste, because things are produced which are not wanted. No Government can foresee what a dynamic society will want in the future. Therefore, in such circumstances a Labour Government would try to make people buy not what they wanted, but what the Government thought they ought to want. Previous speeches from the benches opposite have had a certain amount of electioneering in them.

Everyone on this side of the House knows, and I suspect that a great many on the other side rather think, that there has been a big swing to the Conservative Party during the last few months.

Mr. A. Lewis

Faversham!

Sir A. Spearman

There are two reasons for this. One is that there is a growing realisation amongst the voters as a whole that we cannot maintain, let alone raise, the standard of living unless we can push up production. The other is a growing realisation that under a Labour Government, for reasons that I have given, we shall not get higher production.

6.43 p.m.

Mrs. Harriet Slater (Stoke-on-Trent, North)

After listening to the speeches from the Government benches, I begin to wonder what sort of world we are living in. The hon. Member for Scarborough and Whitby (Sir A. Spearman) asked, "Do the Opposition really want competition?" He said, "If there is enough competition in this country, managements will make the best of their opportunities."

The other day we had a debate on monopolies. We live in a country where more and more commodities are produced by monopolies and fewer are produced in competition. One only needs to read an article on monopoly in the New Statesman about a fortnight ago to realise that this is true. The article referred to the preserves of Unilever. If a woman buys toothpaste for the family she finds it is made by Unilever. She buys fat, margarine and other commodities with a fat content—Unilever; sausages, ice cream for the children—Unilever; MacFisheries—Unilever. Then hon. Members opposite have the cheek to tell us that if we had more competition we would have fewer increases in prices and that we would live in a different and better world.

We on these benches have been asked to do some straight talking. The Government must do some straight talking, too. The hon. Member for Scarborough and Whitby referred to expenditure on social services, the inference being that if we have another Tory Government we must spend less on the social services and make people pay more—

Sir A. Spearman

I said that if all the resources of the country were spent on consumption goods and social services, we would not have the resources for expanding industry with new factories and plant.

Mrs. Slater

I am quoting what the hon. Gentleman said. He said that if everything was spent on the social services there would be little left for expansion. What I want is a straight answer. Do the Government imply that if they were returned—which they will not be—there would be less spent on the social services or, as the doctors have suggested at their conference, they would make people pay more for the social services?

Sir A. Spearman

If the hon. Lady will look at the White Paper published by the Government a few months ago, she will see that they contemplate spending in the next four years £2,000 million more on the social services.

Mrs. Slater

I have no faith in what the Government contemplate in their White Papers. We have had several examples of this—their programmes for hospitals, roads and all kinds of expansion. What they contemplate and what they have shown they can do are two different things. I have very little faith in Tory contemplation.

The Chancellor spoke of the Government, through Dr. Beeching, having rationalised transport and having reduced expenditure on it. My hon. Friend the Member for Colne Valley (Mr. Duffy) mentioned Whitby to the hon. Member for Scarborough and Whitby. I have an idea that hon. Members representing rural areas and seaside towns in particular, like Skegness, have been pressing the Government not to allow the Beeching plan to be implemented. On the question of what the Government call uneconomic railway transport, during the last few weeks road hauliers have announced that they are going to increase their prices by 10 per cent. from 1st August. The reduction in the amount of rail freight carried has meant an increase in road freights. That will have an effect on the price of every bit of food and coal produced, for the Beeching plan has cut down a number of coal depôts and has pushed the business on to the roads. It has put 13 miles on to every journey. Who is going to pay? It will be the consumer every time. When the road haulage rates go up by 10 per cent. on 1st August, the road hauliers can regard that as a present from the Government through Dr. Beeching. Freight which ought to be carried by the railways is being pushed on to the roads.

In their Amendment the Government say that they welcome "the greater stability in prices of recent years". Are we living in 1964 or are we living in a fool's paradise when the housewife every week finds that the price of some article or other has gone up? This Amendment will be carried, of course, because the Government have the weight of numbers. Housewives will read in tomorrow's newspapers that prices have not gone up and that there has been price stability in recent years.

What are the facts? Since August last year, the Index of Retail Prices has risen ten successive times. In the first half of this year, the total cost of living rose by more than the total rises of the two previous years. Where is the stability of prices in that? Are the Government trying to "kid" the people of this country? At the time of our last cost-of-living debate in February, the index stood at 104.7. Since then it has gone up 2.7 points.

The Chancellor tells us that things are all right and the index always rises in June. If we had asked Questions about it, the Government would have told us that in the summer months the cost of living would come down because lettuce, fruit and vegetables would be cheaper. Now, when they want an excuse, they tell us that the price of meat has gone up. In fact, the cost of almost everything has gone up.

I take a short quotation from a newspaper which is not by any stretch of the imagination a Socialist publication. On 11th of this month, the Financial Times had a banner headline Second wave of retail food prices raised and the article said that Britain's £2,000 million-a-year retail food trade, which was swamped by a flood of small increases for over 1,000 products in January and February, is now coping with a second wave of higher prices". Let us look at some of the prices. When a woman went for her detergent last week, she found that all detergents had gone up in price by 1d. That may not sound much, but, of course, it is a good deal if one has a family and one has to do a good bit of washing. This is the second time that detergents have gone up in three months. What does the industry do? It advertises and it tries to persuade women that prices have not gone up. All sorts of gimmicks are used—a plastic flower with every packet, for instance, a daffodil in the spring and a rose just now, or, perhaps, there is a free coupon which can be sent off for a half a dozen glasses at a reduced price, though by the time that the housewife gets the glasses she could have bought them for the same money in any shop, including Woolworths.

Mr. John Stonehouse (Wednesbury)

And cheaper at the co-op.

Mrs. Slater

Yes, cheaper at the co-op. Other gimmicks are for getting a refrigerator at a reduced price. At Christmas time one firm will offer a coupon so that the housewife can buy a pair of scales at a reduced price, but, of course, if the housewife looked around she would find that she could get similar scales in the shops for the same price. Then there is all the business about "Mr. Omo" or "Mr. Tide" calling tomorrow and if the housewife can say the right words she can have £5. The price rises are so often disguised by all manner of devices of this kind.

The week before last, Lever Brothers put up the price of toilet soaps. We like to think that cleanliness is next to godliness, but the price of toilet soap is by no means low today. We have all these gimmicks, but toilet soap is never cheap.

Within the last 12 days, 25 manufacturers selling branded goods through the grocery trade have revised their retail prices. The prices have gone up on jams, on Chivers marmalade, on Crosse & Blackwell baked beans, and even on corned beef. The price of custard powders, of biscuits and even of chocolates has risen. Nearly all frozen foods have been increased in price over the past few days. To counteract some of these price increases one big firm, Westons, for instance, has tried to disguise what has happened to a large extent by special offers of lines like tea, soap powders and margarine. Only one commodity has come down in price during the past few weeks, and that is "instant" coffee. I have a list here of prices which have gone up during the past few months, all since our last cost-of-living debate.

Every day, the ordinary housewife is confronted by the continual rise of prices. If we had had a Labour Government, we should have had a revival of the old Housewives' League, who yelled and screamed about the rising cost of living.

Mr. A. Lewis

Wearing their mink coats.

Mrs. Slater

Yes. I saw a mink coat advertised in the paper last week at 966 guineas, a special offer. I wondered how many of my constituents could find the 66 guineas, let alone the 900.

The Chancellor's own figures show that there have been considerable increases over this time last year. The right hon. Gentleman told us about transport. Before today's rise in fares, fares had gone up 11 points. I am taking the June figures. The price of bread and all confectionery has gone up, and we were warned last week that another rise in the price of bread is expected. The price of meat is up 11 points since this time last year. The price of sugar is up 20 points, and we all know what the usual answers are about that. The price of other household goods such as furniture and floor coverings has gone up 7 points over this time last year. So one could go on, even down to mentioning a rise of 7 to 11 points for having one's hair done, for laundry services and things like that.

The Chancellor said that we would have to control or hold public expenditure. One thing this Government have done during the past few years has been gradually to push more and more expenditure on to the local authorities, and this, of course, is reflected in the rates which people have to pay. One instance is care for the old. Because people are now living longer and we are beginning to realise, at long last, that we have some responsibility for the old, more and more local authorities are providing better Part III accommodation. The cost of this has gone on the local authorities. Another instance is the provision for children in care. The Bill on this subject which we had recently before the House gave the opportunity to help problem families, and the expenditure for this is pushed on to the local authorities. More and more is being pushed on to the local authorities, and the rates are reflecting the trend.

I agree entirely with my right hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Woodburn) in not begrudging any money which I pay for local authority expenditure. We get very good value for money, and, of course, if we had to depend on private enterprise for the emptying of our dustbins, the making of our roads or the provision of electric light, we should be paying very much more. Nevertheless, those who are most seriously affected by the rise in rates and the increase of local authority expenditure are the very people who can least afford it.

I will give the House an example. More and more local authorities are establishing smoke-control areas, and a good thing too, particularly in our industrial centres. Last week, on my local health committee, we discussed the question of grants to people who, because they live in a scheduled clean-air zone, will have to put in new grates and heating appliances. The local authority pays 70 per cent. of the cost and 30 per cent. falls on the householder, but there is power to reduce this amount if we find that people cannot afford that much. Case after case was reported to us, and after making allowance for rents, rates and other things we found that one family had 1s. 5d. a week left. Their bill for their clean air was £16 10s.—that was their 30 per cent. cost. That did not allow for the renewal of household linen, clothes or shoes. How can we expect people like that to measure up to the cost of putting in the necessary appliances for clean air? Others had 6s. 7d. and 5s. 3d. a week left. We gave them the whole amount, 30 per cent.—6s. 7d., 5s. 3d., or whatever the amount might have been. Those are extra costs on people.

We send people to housing estates in areas outside the towns. We have to do this because the cost of land in the town centres is too much to enable houses to be built there. As soon as we move people to the outlying areas we condemn them either to staying in that area for everything that they want or paying 1s. 2d. or 2s. 0d. in bus fares to enable them to get into the towns to see their relatives.

To listen to the hon. Member for Scarborough and Whitby one would think that the question of profits did not matter and that it was not a factor which had to be considered. I wonder what the housewife and old-age pensioner, or the person about whom the hon. Lady the Member for Tynemouth (Dame Irene Ward) is always talking, the person with a small income, thought this morning when they read the story of John Bloom and compared it with their own income. I wonder what the postman striking for better pay and taking home £12 a week out, of which he possibly pays £2 10s. in rent, thought when he read about John Bloom today?

How is it that prices and the cost of living can continually rise and yet one man and his friends can suddenly make the money which they have made? The answer is, first, because the Government have allowed to continue for a long time such things as switch buying and advertising a machine at 39 guineas with people finding, after they have seen the 39 guineas machine, that it was not what they thought they were buying and so bought the 59 guineas one. There is also the question hire purchase and the way in which people are persuaded to have more and more of it.

Possibly it has not dawned on many people yet, but the Ferranti concern can make more money out of one piece of armament than a whole crowd of people can make in their lifetime, even if they work every day that God sends. There is no sense or reason in the kind of society in which we are living.

I do not know whether the Government think that we are "mugs" in asking us to go into the Lobby in support of their Amendment concerning the stability of the cost of living. I believe that our Motion is absolutely right. It refers to the Government's pledge that they would mend the hole in the housewife's purse. I think that it was the editor of the Financial Times, or of one of the Sunday newspapers, who said that they have not mended it but keep making the hole bigger. That was not one of the Labour Party's newspapers. It was neither the Sunday Citizen nor the Daily Herald. The Government are making the hole bigger all the time.

The latest poster of the Tories is, "Trust the Tories and have a better standard of living". [HON. MEMBERS: "Hear hear."] I consider that a better standard of living is when housewives, when they do their shopping on Fridays or Saturdays, are not worried by increased prices for coal, fuel, lighting and transport and everything else they want. I consider that a better standard of living is due, not to us in this House or to people in professional jobs, but to the old, to the man who takes home less than £12 a week, to the widow who is compelled to live on her low fixed income and to the woman whose children are going to grammar school for the first time this year, who is faced with a bill of about £20 or £30 for uniform and who gets a grant for her children from the Government of £5 until her children are 15.

I do not measure the standard of living by cars or television aerials. I measure it by what goes on in the ordinary household and the amount of worry which the ordinary man and woman have to endure in wondering whether they will be able to rear children properly and live a comfortable life. We are right to draw attention to the fact that over the last 13 years the Government have allowed the cost of living to increase and have brought about no stability in prices. Not only has there been an increase in the cost of living, but the Government have pushed on to local authorities and taxation the burdens of some of the things which they should bear.

I hope that tonight every one of us will go into the Lobby feeling that we are speaking to the ordinary people and not to the Ferrantis, John Blooms and other people in that class.

7.7 p.m.

Sir Henry d'Avigdor-GoIdsmid (Walsall, South)

The hon. Lady the Member for Stoke-on Trent, North (Mrs. Slater) ended her eloquent speech by asking what we meant by a higher standard of living. I am pleased to give her the answer. One thing which hon. Members on both sides of the House agree is that the standard of living of the defenceless part of our population is the most important consideration. This is the problem which affects us most, and particularly the retired pensioners.

In July, my right hon. Friend the Minister of Agriculture, Fisheries and Food said: The consumption of carcase meat among pensioners has risen by about 55 per cent. over this period."—[OFFICIAL REPORT, 13th July. 1964; Vol. 698. c. 828.] That was since 1951—under 12 years of Conservative rule. I make this point not because I want to indulge in a great political oration, but because there are some realities which must be faced. To my mind, the fact that pensioners, instead of eating bread and potatoes, are eating 55 per cent. more carcase meat than they were 13 years ago shows a definite improvement in the standard of living which nobody can deny.

I do not personally enjoy these very statistical debates. The right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) got very angry with my right hon. Friend the Chancellor of the Exchequer because he started with the wrong base year in making some comparison. I tried to interrupt the hon. Member for Cardiff, South-East (Mr. Callaghan) when he spoke about league tables. I listen to the hon. Gentleman's speeches far more frequently than he listens to mine, but I am pleased to see him here now. This fact is not very surprising, because my speeches take place at a less fashionable hour than his.

The hon. Gentleman said that only France and Sweden showed a higher increase in the cost of living than this country. I have here figures from the O.E.C.D.'s statistical bulletin, which I imagine is fairly accurate. I tried to interrupt the hon. Member to say that the increase in the cost of living in Italy was higher than it was in this country.

I quote this en passant because it shows that debates on statistics tend to be unconvincing. I am reminded of an Indian friend of mine who, many years ago, when praising the British Press, said that it was so much better than was the Indian vernacular Press. "At least", he said, "your Press does not 'cook' the cricket scores."

Mr. G. Brown

I thought that the hon. Gentleman said "frigate".

Sir H. d'Avigdor-GoIdsmid

I said "cricket scores".

As I say, we can bandy statistics across the Floor of the House with neither side getting satisfaction and perhaps Members, like the right hon. Member for East Stirlingshire, getting very angry because the statistics do not bring out the exact point which they seek to make.

It is rather curious that we have had two debates on the cost of living within the last three months. I say "curious", because usually the cost of living is a subject over which both Parliamentary parties prefer to draw a veil. There is a sort of tacit agreement that it is a subject which does not do much credit to either side; a subject which, perhaps, can be used, as it has been today, by the hon. Member for Cardiff, South-East and his hon. Friends as a platform for making splendid electoral speeches, but which, on examination, shows that so far as the individual resident in this country is concerned neither side has been of much help to him in his battle with the cost of living.

I see the representative of the Liberal Party pricking up his ears, but I do not think that his party had any better record if we go back over the 60 years when it was last in office. The fact is that in this country we see one evil as the greatest that can face our industrial democracy, and that is mass unemployment. That is in the forefront of all our minds. All of us who are elected know perfectly well that if we told our electors that a measure of unemployment was in the national interest, we should be very unlikely to be returned. I was deterred from attempting to come into Parliament before 1945 because I felt that Parliament was not sufficiently interested in the mass unemployment of the 'thirties. But that is only a personal view.

The fact is that mass unemployment is, to us, the greatest possible evil. We put into a lesser category the threat of inflation. Countries on the Continent have known inflation and the ruin and the betrayal that inflation brings. Cerainly, Germany has it absolutely clear in its mind that inflation is the worst evil. I think, having been in Germany in the 1920s and having seen the destruction of family life and of everything that people hold decent simply by a deliberate act of the then German Government of inflating the currency to a ridiculous degree, that that is really the greatest evil.

We in this country have preferred to adopt a creeping inflation and think that it does not matter. But it does, because it is a dishonest way of meeting one's obligations. We are borrowing money from the public and repaying them later with a slightly less valuable coin. There should be no exaggeration about this. The hon. Member for Stoke-on-Trent, North, for whom I have a great personal regard, made us feel that prices were jumping like frogs. I quote the Index of Retail Prices. In 1962 the monthly average was 101.6 and on 12th May this year it was 107. In other words, it has gone up by 6 per cent. in 2½ years, i.e., at a rate of 2½ per cent. per annum. This is nothing to be proud of, but it is not the dramatic and staggering thing which many hon. Members seem to suggest that it is.

We in this House bear a great measure of responsibility for this matter. In an economy such as ours which is so closely balanced and where, as my hon. Friend the Member for Scarborough and Whitby (Sir A. Spearman) pointed out, the margins of error are so very slight, we must maximise our productive power to paying our way in the world. The moment we divert our production not to paying our way, but to laying up treasures for the future—for instance, our educational programme of which we are all of us very proud—we have to realise that every single stone that is laid and every desk that is put into a school is something which we pay for out of current earnings, but does not put anything back into current earnings.

I know that we feel that in a number of years' time the result of our educational programme will be that the nation will have an increased earning power. But we must also bear in mind that at the moment the educational programme makes very great inroads into our national product, so we can certainly tell our constituents that we want to see them better educated in every way but it is no good pretending that the money for this educational programme will come from somewhere else. It will have to come from the rates or the taxes. We may argue whether it should come from the ratepayers or the taxpayers, and I am glad to think that there is a study being done on this point, but it has to come out of the productive capacity of this country and can come from nowhere else.

I am simply saying that wherever we are devoting current earnings to something that does not produce anything immediately we are doing something which is putting a strain on our cost of living. The cost of living is governed to some extent by the cost of imports, although to a much lesser degree than formerly, and on that point I do not think that we are behaving sensibly in an adult world if we grumble too much about the additional cost of imported raw materials.

We must all recognise the fact that most of these raw materials come from the poorer quarters of the world, which we are striving and hoping to do something for, and it is better for this country to buy their goods even at a slightly better price for them, than it is to send them medical missions or aid in other ways. So if there is an increase in the cost of living we should not grumble at the cost of imports. In this House, where we divert the product of our industry and earnings into projects which are not directly revenue-earning, we are putting an extra burden on the cost of living. In the past it has sometimes been carried by imports, and the fact that commodity prices have been weak has helped us to maintain a higher standard of living at the expense of the Africans based on the products of Africa. Now the Africans are getting a very much higher price for their products, and we should not begrudge this.

But we in this House have the responsibility for the economy of the country and for the country's savings. This is essentially because we are a nation of savers. The savings movement has done marvels in the past and is doing very well now, but it could not achieve these results if people were not in a position to save and, secondly, if they did not have confidence in the money that they were saving and that its purchasing power was safe.

It has been sometimes suggested that if we really felt like this we ought to introduce into our savings system what is known in other countries as the index-linked bond. I am opposed to that. The index-linked bond guarantees the saver against the erosion of his capital by inflation. My view is that this is a national responsibility and that we should not give either rich people who want to contract out of our system or anybody else the chance of contracting out of our system. We are all in this system together. I think that it is good for us as Members of Parliament to get constituency letters on points such as the hon. Member for Stoke-on-Trent, North mentioned, where we see the very great poverty that exists and in which we can to some extent help. We do our best. I am quite certain that the best service that we can render to our constituents and to the poorest people is to preserve the purchasing power of their money.

In the past, hon. Members opposite preserved the purchasing power of money artificially by subsidising every form of food. That is a quite undiscriminating exercise. Everybody got the benefit of the food subsidies regardless of income. It was a wasteful way of producing the right object.

Mr. E. Fernyhough (Jarrow)

Now, nobody gets any benefit.

Sir H. d'Avigdor-Goldsmid

We need to bring people to realise that we are all in this together and that we must accept that it is no good expecting the schools, armaments or any other important programme to drop from the sky for us. These are things which we must work for and pay for out of production. Unless we do this, we will see our standard of living completely eroded.

I want to say one more thing about the comparisons which have been made with other countries. We in this country have not known the catastrophic inflation of Germany, France and Italy and, therefore, we ignore it. Those countries have wiped out the savings of their citizens and by wiping them out have established their countries free of debt and ready to take every form of industrial opportunity. We, on both sides, have thought it more honourable not to do that.

We must also be clear in our minds that we have responsibility for preserving the purchasing power of our money. It is a responsibility that falls upon all of us as Members of the House of Commons and we cannot shy away from it. I am, therefore, satisfied that, in the circumstances, the Government have done as well as was possible to prevent the erosion of purchasing power by more than 2 per cent. per annum, although that is a bad rate and it is one that I should like to see removed altogether. At the same time, with 12 years' experience behind us, we can look forward confidently to another five years of office.

7.23 p.m.

Mr. Arthur Lewis (West Ham, North)

I was amazed at the speech of the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). He seemed not to have taken the opportunity to read the Motion and the Amendment. The hon. Member must have forgotten all those Tory promises that were made and some of which are mentioned in the Motion. He referred, in passing, to food subsidies. I have no objection to his being of the opinion that food subsidies were wrong, or to his saying that they should be abolished, but I would rather him say that during a General Election instead of promising faithfully, as his party did, that it would not abolish food subsidies, and then coming into power and abolishing them.

I have no objection to the hon. Member saying that his party will not introduce measures to decontrol tenancies and to force up rents, but they should say so during the time of a General Election. What happened, however, was that prior to the 1959 election, the party opposite said that they would not decontrol tenancies or abolish rent control, whereas, in fact, it did.

I do not mind any Government finding themselves in difficulties or explaining them away. What I object to is that not only during the 13 years the Government have been in office has the £ fallen to its lowest level ever in peace or war, and not only is the cost of living higher than ever in the history of the country, but that the Government promised faithfully, not once, but dozens of times, on big posters and on radio and television, that they would reduce the cost of living, make the £ worth something and would see that the Tory Party would not increase, but would reduce, taxation.

What has happened over the years is that by direct legislative action, the Government have deliberately increased the cost of living. The official figures which I am about to quote can all be referred to in HANSARD in answers to Questions to Ministers. Let us look, first, at National Insurance contributions. From October, 1951, until June, 1963, there has been a 173 per cent. increase in National Insurance contributions. At the same time, there has been a 100 per cent. increase in prescription charges, a 25 per cent. increase in the charges for optical treatment and an 18 per cent. increase in the charges for dentures.

The Government said that they would not increase taxation, but would reduce it. What are the facts? Taking the datum line in October, 1951, as 100, by July, 1961, there was a 47 per cent. increase in the fuel tax. That is direct Government taxation. Similarly there were increases of 23 per cent. in the tax on spirits, 19 per cent. on wines and 33 per cent. on tobacco, as well as the tax on sweets. I have no objection to the Government increasing these taxes. What I object to is that whenever the Tories contested elections, it was they who promised faithfully that they would reduce the cost of living and would not increase taxation.

Mr. W. Clark

rose—

Mr. Lewis

I usually give way, but I am not doing so now.

The Chancellor of the Exchequer spent a lot of his time this afternoon in going back over what happened between 1945 and 1951. There is, however, nothing about that in the Motion or in the Amendment and I should be inclined to suggest that, strictly speaking, the right hon. Gentleman was not in order. He then conveniently forgot that during that period import and world prices rose astronomically, particularly because of the Korean War. As my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) pointed out, notwithstanding that steep rise in prices, the cost of living rose far less drastically and rapidly during that period than in most major European countries.

Let us look at the Government's record, of which I have figures month by month from 1951 onwards. There has been hardly a time when the price of imports generally has not declined. Taking 1951 as 100, by 1964 the cost of our imports had declined by 14 per cent. The terms of trade had moved 31 per cent. in our favour. It is true that the cost of imported food, drink and tobacco rose by 5 per cent.

Let us consider what happens here at home, which reflects upon what the housewife has to pay. We will take food for example, bearing in mind what I have mentioned, that since October, 1951, import prices have gone up by 5 per cent. for food, drink and tobacco; I think that in the main the increase is in tobacco. Up to May this year the retail price of food has gone up by 56 per cent. What was the reason for the 51 per cent. differential? I do not know, but last week I asked the Minister of Agriculture a question.

I asked the right hon. Gentleman to what extent these prices had gone up through Government action. I have not his words with me, but they are on record in the OFFICIAL REPORT. I am speaking from memory, but he referred to the fact that this was due to Government action in abolishing food subsidies. It was promised by Lord Woolton on the radio, and the Tory Party said, that the Tories would not abolish food subsidies, but this 51 per cent. increase in the price of food, according to the Minister of Agriculture, was due in no small measure—I speak not of the Minister, but of his party—to lying deliberately to the electorate.

On the question of general prices, I want again to refer to the fact that import prices generally have dropped 14 per cent., but up to May this year the Index of Retail Prices has increased 49 per cent.—since October, 1951, and over the whole period in which the Tory Government have been responsible for our national affairs. As for purchasing power, the value of the £, as is said in the Motion, has gone down from 20s. to 13s. 4d. I want to emphasise and to keep on emphasising that this has been directly due to Government action. It cannot be due to world prices, because they have gone down, and it cannot, of course, as has been suggested, have been due to any action which the Labour Party has taken.

The Chancellor proudly boasted of the improvement in housing, but here again, one of the greatest causes of the increase in the cost of living is rent and rates. The right hon. Gentleman touched upon rates, but he did not go into the question of rents of houses in detail. If he had he would have told the House that while the Tory Party promised 400,000 houses, and though he may have been able to show that more houses have been built—and I accept that—there are about 50 per cent. fewer council houses being built than in 1947, two years after the war. This affects those with limited incomes, and those in the most urgent need, and those at the poorer wage levels, who, unfortunately, have recourse to local authority housing.

As is on record in HANSARD, I have asked a question about this. I have not the exact figures with me, but hon. Members will find the Written Answer in HANSARD for 10th July. I picked out a number of solidly Tory areas on the periphery of London, Ilford, Hornchurch, Wanstead and Woodford, and Chigwell and it was astonishing to find that whereas, in 1947, they were building 100, 200, 300, 400 houses, these numbers have dropped now to 15, 52, 100 respectively. Apply that throughout the country.

This is the picture of what I am trying to emphasise, that the Tory Party, by its housing policy, has deliberately increased the cost of living by making it virtually impossible for those on limited incomes to get council houses, and, by bringing in the Rent Act, has increased rents. Such people as postmen find that they cannot manage to pay £2 or £3 a week in rent when they are getting only £11 or £12 in wages. I can assure hon. Gentlemen opposite that it is not very easy for those persons—and there are thousands of them—having a total income of anything from £12 to £15 a week, to pay £2, £3 or £4 a week rent—because they cannot get council houses, because the councils are not building so many of them. These are the sorts of things which help to increase the cost of living.

We have heard a lot of talk about the trade unions. I am proud to be a trade unionist. I think that the trade unions do a wonderful job. I can tell hon. Gentlemen opposite the sort of thing that happens, when an engineer, a bricklayer, a carpenter, or a postman goes home and gives his wage to his wife. She says, "The rent has gone up another 5s.," or, "The price of beef has gone up another 3s.," or the price of something else has gone up another 1d., or 2d., or 3d. And this is happening every week. [HON. MEMBERS: "Every week?"] Every week the price of some item, some commodity, goes up.

It is announced this morning that the price of bread, cakes and confectionery is the next on the list. So his wife says to him, "You must go round to your union and see that they get you an increase, because I just cannot manage on this money." And, of course, she cannot manage, and it is due to the fact that the Government themselves are responsible for these increases, because they are directly attributable to Government policy.

The hon. Gentleman the Member for Walsall, South was referring just now about electioneering speeches being made in the House. Of course there are. I remember that the Prime Minister, almost the first week he took office, said that every speech from now on must have the election in mind; and he has spent most of his time touring the country making electioneering speeches and refraining from answering questions here. I understand that he is to make a tour this week.

It is rather funny to my hon. Friends and me, who represent East London constituencies, that he is going, so it is said, to make a tour of the East End of London. I find that he is going to Chigwell, Billericay, and Epping. He is not going to Stepney, Whitechapel, Poplar, Bow, and West Ham, the places which, I thought, were the East End. No, he is going to Chigwell and Hornchurch. I hope that he will ask, when he is there, why it is that Hornchurch is now building only 14 council houses compared with the hundreds that it was building in 1947.

I hope that hon. Members opposite will make electioneering speeches. I hope that they will make them here and in the country, and will discuss with their constituents the question of the cost of living and why it has gone up. My hon. Friend the Member for Faversham (Mr. Boston) made it one of his points in the Faversham by-election. There were a number of people there buying their houses. He increased our party's majority there, even over that which the previous Member for Faversham had, and he, I believe, was the only Member on this side of the House who had an increased majority in the 1959 election.

I feel that our party has done right in bringing this Motion forward today. We should explain it to the people. We should go to the country and tell them that not only have the Government not implemented their promises to reduce the cost of living, to mend that hole in the purse, to mend that hole in the pocket, but that, by their own economic and legislative programme and policy, they have been directly responsible for this high cost of living and for the depreciation in the value of the £.

7.40 p.m.

Mr. J. M. L. Prior (Lowestoft)

The hon. Member for West Ham, North (Mr. A Lewis) has made no bones about making an election speech. As far as I am concerned, the more he makes in that vein the better it will be for the Tory Party. He has shown himself, as so many of the Opposition are, to be completely divorced from what we know to be the facts of today. After all, if our record had been anything like as bad as the hon. Gentleman has tried to make out, why were we re-elected in 1955 with an increased majority and again in 1959 with a bigger majority? There is no doubt that the record of the present Administration since 1959 has been the best of the three Administrations of the last 12 years. So we can say that the hon. Member's speech bore no resemblance to reality.

It was really the right hon. Member for Clackmannan and East Stirlingshire (Mr. Woodburn) who showed up the weakness of the Labour Party's economic policy when he talked about the necessity for controlling the home market in cars to leave more for export. That shows plainly that he is living in the years 1945 to 1951 when it was the easiest thing in the world to export goods because markets all over the world were crying out for consumer goods. Now we find that in order to export cars we must subsidise the export trade by a very large home market, and without that very large home market it would not be able to sell anything like the number of cars abroad that it does. Now we need a strong home market to help us sell more abroad. The position is completely the reverse of what the right hon. Gentleman was trying to make out.

It has also been said that the Tory Party does a great deal of this before a General Election in order to put the new Government in a mess when it is over. It would be very unlikely that the Tory Government would do that. If it had done that in 1955 and in 1959 we should not have been in the strong position we are today. If anything has made the position difficult for a Tory Government after an election, it is the upsurge of confidence throughout the economy at the thought of five years of Tory government, which has caused people to throw their hats in the air and go out and buy things. This has caused more inflation and more strain on the economy than anything else. The one thing that has dampened down the economy, fortunately for the Chancellor, in the last few months has been the thought that there might in October be a Labour Government. From that point of view, the Labour Party has been helping the Chancellor a great deal during the last few months.

Mr. Fernyhough

Has the hon. Member looked at the latest figure for hire purchase? There is not much damping down there.

Mr. Prior

I am really quoting what was said by the hon. Member for Cardiff, South-East (Mr. Callaghan), that in the last five months the economy has been stagnant. I do not believe this to be true, but I believe that it would have got out of control to a much greater extent if there had not been some fear six months ago of a Labour Government coming to power. Happily for the country, that fear is now being fast removed.

Many hon. Members have compared our record at home with the record of other countries. I think we can say that our record in production and inflation has not been as good as that of Germany and possibly not as good as that of the United States. I agree with my hon. Friends who have said that Germany has had recourse to an expanding labour market, drawing from East Germany, Greece, Italy and other countries, and that the United States has had a level of about 6 per cent. unemployment throughout the post-war years. The interesting thing about the United States is that, despite all the efforts made by the late President Kennedy to expand the United States economy in order to reduce unemployment, although the economy may have expanded, the United States has failed signally to reduce unemployment.

I believe that we at home have only been moderately successful in keeping our prices stable because we have a certain reticence in accepting any unemployment, rightly so, and also because we believe that we should always try to be fair, and, being fair, we never like to see anyone earning less than the average earnings of the nation as a whole. There is an amusing letter on that subject in The Times today. We find that in pay postmen and agricultural workers, in whom I have a great interest, are at the bottom end of the scale, and we want to do better for them. But as soon as we put them a little higher someone else goes to the bottom of the scale, and we then feel that we have a duty towards him. There is little doubt that some of our troubles since the war have arisen because we have been paying ourselves too much and not producing enough. It is not that we want to stop people earning.

Mr. A. Lewis

The Government do.

Mr. Prior

The Government do not want to stop people earning more money, but they have a responsibility to keep the economy in balance. Our problem has arisen because we have been trying to pay ourselves a little more than the work that we do deserves. If we do not face up to this problem, we shall not face up to any problem at all. The hon. Member spoke of housewives telling their husbands that they must earn more money because prices have risen. My experience is that on the whole housewives understand the problem far better than the men do and are trying to be a restraining influence on their men in many ways. They tell them, "Do not go for such high wages because that only forces up prices."

Mr. Duffy

Is the hon. Gentleman aware that since 1961 wage costs in Britain have declined by 10 per cent. compared with 20 per cent. in France, Germany and Italy, and that company profits last year rose twice as fast as income from employment?

Mr. Prior

I have carefully tried to avoid giving a lot of figures because I felt that in this debate many contradictory figures had been bandied about which did not really mean anything.

Mr. Duffy

I think that at the beginning of his speech the hon. Member said that, unlike my hon. Friend the Member for West Ham, North, he would show a scrupulous regard for facts.

Mr. Prior

I could quote figures to the hon. Gentleman, if he wants them, to show that in the last 12 years average earnings have risen by 98 per cent. at a time when the cost of living has risen by 48½ per cent., which plainly shows that the average man is 33 per cent. better off in his earnings now than he was in 1951. But that is not the real argument before us today.

If we accept that Germany has had the best record of any country in the last few years, we must look at Germany and see what we can learn from her in order to improve our own position. There are two fundamental factors. The first is that the Germans have recognised the dangers of inflation to a greater extent than we have. Secondly, they have shown a much greater desire to get the work done and to produce goods than we have. It may be that Germany felt the impact of losing the war more than we felt the impact of winning it, but the fact is that in the last ten years Germany has produced a record to which we cannot possibly fail to pay some attention. If, in the next few years, we are to keep our cost of living stable and also enjoy higher production, we must be prepared to show a greater sense of urgency in the way we conduct our affairs than we appear to be showing at the moment.

I was glad that my right hon. Friend paid tribute to our food industries and the way in which we have managed our agricultural support system in the last few years. The contribution to stability of prices made by British agriculture is too easily forgotten. In the last year, however, we have seen a sudden change in the pattern of world agricultural production. Within the last five months beef supplies from abroad have fallen by about 40,000 tons. Yet, despite that fall, we have paid a little more than we paid last year, when the total imports included the 40,000 tons. If our imports had not fallen by 40,000 tons this year, we would have paid about £10 million extra.

Beef prices have risen very substantially against us this year. We have paid £82 million more for food imports since January than we did last year. At the same time, however, our subsidy for beef is 2s. 9d. a cwt. compared with 2s. 6d. a cwt. last year. My hon. Friend the Financial Secretary should be able to save a good deal again on agricultural subsidies.

The tendency for world prices of food to increase is a sound and good thing both for this country and the world in general. Over the last few years, we have not been paying the primary producers anything like enough. As a result, food production has not increased at the rate we want to see, particularly in this country, and we have been living off the backs of the agricultural producers of the world. Thus, the rise in food prices is a good thing for us all.

The policy of the free market, which the Government have adopted, must be the right policy. The Leader of the Opposition said a few weeks ago, when the beef crisis was at its height, that he wanted a return to long-term agreements with the Commonwealth and other arrangements with foreign countries. If we had such agreements with the Commonwealth, the chances are that we should have to pay a pretty high price for them because no Commonwealth country would agree to send its food at anything other than a good price. Similarly, if we had had a long-term agreement with the Argentine, we could not in any case have avoided the problems of the drought.

Last time we had these long-term agreements and commodity agreements was between 1948 and 1952, when food prices rose more sharply than at any other period since the war—about 10 per cent. per annum. I am not in favour of a return to long-term agreements. If our importers had thought that such agreements were in their interest, they would have taken them out before now. There is nothing to stop them doing so.

Mr. John Mackie (Enfield, East)

The Chancellor of the Exchequer taunted the Opposition, saying that we had no plan to reduce the price of food for housewives. The hon. Member for Lowestoft (Mr. Prior) talks about the price of food to the farmer and to the importer. He agrees that we import about £1,500 million worth of food annually and produce about the same in value. But by the time that food gets to the housewife it costs about £7,800 million. Does not he agree that his Front Bench should be doing something? The Prime Minister, the Chancellor of the Exchequer and the hon. Member himself are all members of an organisation which has been pressing for something to be done on the ground that there could be a huge saving.

Mr. Prior

I do not believe there are great savings to be gained in the chain between producer and consumer because the main cost in the chain is wages. For example, the price that the producer gets for a pint of milk works out at 5½d. to 6d., but it sells in the shop for 9d. If the public wants milk delivered on the doorstep, as apparently it does, then someone has to be employed in the early hours and at great expense to get it there, and it is in this sort of job that wages are high and costs mount.

The hon. Lady the Member for Stoke-on-Trent, North (Mrs. Slater) spoke of the cost of frozen food. That has recently gone up in price, and it is true that, while the farmer probably gets 5d. a lb. for peas from the factory, by the time the peas have been frozen and put into boxes the price may be 1s. 6d. or 2s. a 1b.—I do not know the price. But I am quite certain that there is little room in the middle where prices can be cut. Where farmers have gone into the business of selling their own food products, either through a butcher's shop or an organisation like the Livestock Marketing Corporation, or by selling from a stall in the market place, they have very quickly come unstuck.

Mr. Mackie

The hon. Gentleman is confirming the point I have just made. He has quoted the example of milk, which is marketed by the Milk Marketing Board, a public monopoly which saves a tremendous amount of money.

Mr. Prior

I think that the hon. Gentleman may be making the opposite point and showing up the great divergence between what the producer gets and what the consumer has to pay. I do not think that his statement about the saving is correct. The profit margin of an organisation run by a marketing board is no smaller than the profit of one run by private enterprise. Indeed, the hon. Lady the Member for Stoke-on-Trent, North talked about the great hold that monopolies have on prices and the lift they are always able to give them.

Surely the little man, selling in his own shop in close competition with others in trying to keep down prices, is far more effective. My right hon. Friend quoted the prices of meat imports as having risen by 16 per cent. this year. But the price of meat in the shops has not risen by as much as that. That is an example of where competition is keeping prices down.

Mr. A. Lewis

Where does the hon. Member buy his meat?

Mr. Prior

The hon. Member is a great one for interrupting from a sitting position. I buy my meat from a butcher's shop in a village.

Mr. Lewis

May we have his address?

Mr. Prior

I have had a long talk with that butcher and I am satisfied that he is not making any profit. Competition from other butchers is keeping his prices down. The public have the freedom to shop where they like and do not buy meat if they do not want it. What did more than anything else to reduce the prices of meat over Whitsun, when we heard a great deal about how high prices of meat would go, was that housewives stopped buying beef, with the result that prices fell. That is the way the market should work.

We all have to admit that we have not been able to stabilise prices as we would have liked. The hon. Member for Cardiff, South-East talked about "mending the hole in the purse" and said that it was now a big hole. It is a little hole and far more goes into the purse than comes out of the bottom. The result is that the people of Britain are better fed, better housed and better looked after than ever before in their history.

The Opposition speak about poverty and bitterness, but my experience is exactly the opposite. The great benefit which the Tory Government have brought to the nation over the last twelve years has been to take the bitterness out of politics. One can now go into the worst areas of towns and to housing estates and be certain that one will get a good reception. This is why I am certain that we shall be re-elected, because we have served the nation and served it jolly well.

8.3 p.m.

Mr. A. E. P. Duffy (Colne Valley)

The hon. Member for Lowestoft (Mr. Prior) said that he would have a greater regard for facts than did my hon. Friend the Member for West Ham, North (Mr. A. Lewis), but I do not think that he did. He must agree that although my hon. Friend applied himself with great robustness to his assessment of the behaviour of our economy under a Tory Government, none the less he dealt with all the important economic indicators. His treatment of them amounted to one long indictment of the Government's management of our economy.

My hon. Friend barely allowed himself an opinion. He did not have to do so, for he allowed the facts to speak for themselves. The hon. Member for Lowestoft allowed himself much more opinion. In a sense, I agree with him that it is very difficult to get to grips with the facts in a debate like this. It is so easy to take those facts which suit one's argument. It is not the facts themselves which matter so much as our treatment of them. What is more important is that we should draw the right conclusions.

On reflection, I think that my hon. Friend the Member for West Ham, North was wiser than any previous speaker in that he allowed the facts to speak for themselves. I hope that I do not fall too much into the error if I take my own periods for comparisons of prices. I shall follow the example of my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), although the Chancellor of the Exchequer took him to task for it. The Chancellor preferred to consider movements of prices over the last year. I shall consider the first half of this year, comparing it with the corresponding periods of the previous two years.

The Chancellor said that prices had gone up only 2 per cent. during each of the last two years. However, they have risen by 3 per cent. so far this year. I know that the Chancellor would not agree that I should be entitled to draw from that the conclusion that prices will rise 6 per cent. this year, but that depends on whether one is as optimistic as he is and believes that we have our prices under control and that they will continue to go up at the same rate. Nobody can be sure of that and it is quite on the cards that prices will spurt and, far from going up only 6 per cent. this year, will go up more than 6 per cent.

The Chancellor also took my hon. Friend the Member for Cardiff, South-East to task for his treatment of taxation increases on tobacco and alcohol. However, the Chancellor was less than fair to my hon. Friend, because there are many qualifications to be made. The Chancellor qualified the rôle of tobacco and alcohol as factors in the cost of living, but he might have added that while one must give due weight to their rôle in providing for social benefits, they were overweighted in the cost-of-living index. In the period 1961–63, alcohol represented only 3.9 per cent. of household expenditure, although weighted in the Index at 6.3 per cent. Tobacco is similarly overweighted. It is assumed to represent 7.4 per cent. of average expenditure, but the sample recorded shows it at 6.4 per cent. and in the period 1961–63 it represented only 6.7 per cent. of total consumer expenditure.

I should have liked to comment on what the Chancellor said about savings, but my hon. Friend the Member for West Ham, North and my hon. Friend the Member for Cardiff, South-East delivered a long, searing indictment of Conservative management of our economy over the last 13 years, and the Chancellor's only answer was a series of quibbles.

I want to follow the Chancellor, however, and push his analysis of the cost-of-living index and the factors influencing it a little deeper. Most of us believe that the forces pushing up the index are milk, the rating demands of local authorities, rents and houses generally, services, fuel and food. Some of these are not subject to seasonal influences, which somewhat reduces the Chancellor's argument that the present increase may have reached its peak because last month happened to be June.

While tobacco and alcohol are overweighted, some important elements in the index, which have an important impact on the increases in the cost of housing, services and transport, are under-weighted. If they were not under-weighted, the index would show an even faster rise. Moreover, if we add the latest fares increases to these factors of housing, fuel and food which have risen more than the average for all items, it becomes clear that the prices of necessities since January, 1962, have risen faster than the prices of other goods. The poorer one is, the more heavily these price increases bear—this is a point which has not been made in the debate so far—because the higher the proportion of one's income these prices take up.

It is the poorer people who are suffering much more than the mere 3.9 per cent. which the Chancellor said the cost of living had risen by in the last year, or more than the 3 per cent. which I insist it has risen by in the first half of this year. When we probe a good deal deeper than the Chancellor did and give due weight not merely to the different elements in the index, but to the way in which they bear on different income groups, we can take a much more serious view of the present increase in the cost of living.

I am reminded of another point made by my hon. Friend the Member for West Ham, North. It was a good point, and it had not been made before. I agree with my hon. Friend that the cost-of-living index would go up even more if it gave any place to National Insurance contributions. When one remembers the tremendous increase in contributions which has taken place under a Tory Government, one is entitled to wonder why place is not given to that in the index.

The Chancellor did not say so, but I thought that he conveyed the impression that because prices had reached their peak they would not rise any more, but one can fairly ask whether the rise is likely to continue. The right hon. Gentleman was right when he said that they usually fell from now on because of reduced fruit and vegetable prices, and this year he will be helped by the weather, but it is possible that these reductions will be offset by beef prices. They may very well be offset by rising costs in industry. I shall have more to say about this later, because I agree with the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) that this is the most important question that we should be discussing this afternoon. I agree that we should be discussing the quality of our productive power, its efficiency, and just how capable it is likely to be in the foreseeable future of sustaining the vast expenditure on public services on which both parties are now agreed.

Before I do that, however, I think that we should look a little more closely at the possible causes of present price increases. There has been a tendency—perhaps this is inevitable—for blame to be flung from one side of the House to the other. When I was listening to the opening speeches, I thought that I heard the hon. Member for Nottingham, South (Mr. W. Clark) say—I hope that I am not misjudging him—that wage increases were playing a disproportionate rôle in the movement of prices. I thought that he, or his hon. Friend the Member for Coventry, South (Mr. Hocking), thought that the present pricing policies of the nationalised industries were again largely to blame, and I should like to look at both those factors, as well as at profits.

As I said to the hon. Member for Lowestoft, since 1961 the wage costs in this country have declined by 10 per cent. relative to France and Germany, and by more than 20 per cent. relative to Italy. It is very interesting to look at the Economic Report for 1963. This Report is not up-to-date, but it is the latest that we have. Back benchers have to face the difficulty of always being months behind with facts that matter. I hope that hon. Gentlemen opposite will not take me to task for quoting from this Report, because I do so in good faith.

On page 16 of the Report we see wage costs per unit of output began to decline in the autumn of 1961, right through 1962, into 1963. I do not know how far they have moved since then, though I have done my best to find out. At the same time as wage costs per unit were going down, the wholesale prices of output, as well as the wholesale prices of materials, were going up. I find, too, that the percentage increase in profits in 1963, compared with 1962, was 6.7, whereas the percentage increase in income from employment for the same period was 5.1. Though income from employment went up by 10.4 per cent. in the fourth quarter of 1963 compared with the first quarter—which, again, is the latest information that I have, having obtained it as late as this afternoon—company profits went up by twice as much, by 21.3 per cent., and I should be surprised if company profits slackened off in the first half of this year.

So much for the possible influence of demand on prices, or inflation as the hon. Member for Scarborough and Whitby (Sir A. Spearman) said. I am glad that the hon. Gentleman has now returned to the Chamber. I thought that his speech was a little inconsistent. I could, of course, use a stronger term. The hon. Gentleman expressed himself in opposition to subsidies, and to the conscious location of industry. He knows that the Whitby half of his constituency can survive only if it receives both. The most heated objections have been made by his constituents to the possible cuts by Dr. Beeching of their railway link. The hon. Gentleman knows the area better than I do, but I know it well enough to say that it is unlikely that it could get on in future without rail links. The hon. Gentleman also knows that Whitby needs, and demands, the conscious location of industry, yet he expressed himself in opposition to both.

So far as I followed the hon. Gentleman's speech, I thought that he was accusing my hon. Friends of living in the past. Many of us on this side of the House think that he is doing just that. So far as I was interested in anything that he said, I thought that he gave all possible weight to the impact of demand on inflation, although I think that he will agree that that is not the only influence. There is, as the Chancellor of the Exchequer pointed out, the influence of cost, and I want to look briefly at that.

Sir A. Spearman

Whitby's railway link may not be relevant to the debate, but I agree with the hon. Gentleman, and I spent two days at the T.U.C.C. inquiry last week making four speeches to that effect.

As regards the location of industry, Whitby depends primarily on the tourist holiday business. It will be one of the first towns in the country to suffer if we do things which are bad for the economy as a whole.

Mr. Duffy

I know that the hon. Gentleman supported the demands of his constituents for the retention of the rail link, and their resistance to Dr. Beeching's cuts. That is why I thought that his speech was inconsistent when he declared his opposition to subsidies. No doubt when his constituents read HANSARD, and the Evening Gazette, they will want him to define his attitude.

What is the influence of cost on prices? In the light of the information that is available to us, I think that one can say that it cannot be assessed in terms of trade. One is irresistibly driven to the conclusion that it is due to the strain on the economy, and this is where most hon. Members will come together. Hon. Gentlemen opposite have expressed the same concern as we have, but although most of them feel it in their bones they are not prepared to accept that the management of our economy is not in good hands. After only a year of expansion, our economy is already under strain. There is no blinking one's eyes to this fact. The storm signals are already flying over our economy. It is constantly under strain, and the present increase in prices is only one sign of it.

I asked the hon. Member for Scarborough and Whitby how long the index of production had stayed at 126. He thought that it was three months. He may be interested to know that it has stood at that figure for six months. In its latest survey, the National Association of British Manufacturers has confirmed that production has levelled off.

Who would have thought, only a year ago, when employment began to rise, or 18 months ago, when production began to rise, that already, in July, 1964, we would be thinking of putting on the brakes and damping down demand? I do not know what measures the Chancellor will use, but this afternoon he did not convince my hon. Friends and I when he took a complacent view. We know that our economy is in a bad way, and his handling of the economy is highly questionable.

Now I want to concern myself with efficiency. The hon. Member for Walsall, South is absolutely right. It is the quality of our productive power that should be exercising our minds now. Even within the assumptions of hon. Members opposite they could have done much more to improve competition within our economy, and in this way protect the consumer. As my hon. Friend the Member for Stoke-on-Trent, North (Mrs. Slater) said, they could have increased the countervailing power of the consumer. They could have done something to control advertising. They could have insisted on more information in company accounts. As the hon. Member for Huddersfield, West (Mr. Wade) has said, they could have employed unilateral tariff cuts, with balance of payments safeguards. But no; they have not done any of these things.

Instead, they ask us, in the Amendment, to continue to support their economic and financial policies. When I look at those policies I ask why the Conservative Government have been so half-hearted in recent years in the adoption of policies for growth and efficiency. One could have fairly said that a Conservative Government and Chancellor of the Exchequer would do their best with such policies.

Sir A. Spearman

If the hon. Member will look at the Economic Report to which he has referred he will find that in the last year of the Labour Government output per man hour was rising at about 2 per cent.; now it is rising at just under 4 per cent.

Mr. A. Lewis

What was it in 1950?

Mr. Duffy

The hon. Member for Scarborough and Whitby may be right. I do not know whether his figures are absolutely correct, but an increase in productivity of about that amount has taken place. But one can still ask whether it has been enough.

There is a widespread feeling that the present increase in productivity is unlikely to make possible and to sustain the 4 per cent. growth rate which we all agree to be necessary.

Mr. Charles Loughlin (Gloucestershire, West)

If my hon. Friend accepts the figure given by the hon. Member for Scarborough and Whitby (Sir A. Spearman) as progress it presupposes that there is no increase in productivity by virtue of technological change.

Mr. Duffy

Yes. The features of Government policy that have disheartened me so much in the last two or three years have been their seeming conflicts. Let me give two or three illustrations. I was interested in the pledges that five industries gave only this year that they would not put up their prices. Most hon. Members are aware of the identity of those industries, but how many are aware that they are all highly concentrated, and, with the exception of one—the coal industry—are certain victims of the Government's monopolies legislation, as foreshadowed in the White Paper published a fortnight ago? There we have one such conflict of policy.

I supported the legislation on resale price maintenance early this year. I agree that it is important to modernise our economy. I welcome that legislation just as I welcome the White Paper on Monopolies, Mergers and Restrictive Practices. But I wonder, just as many of my hon. Friends have wondered, whether the Government have introduced these two measures early enough and in the right order.

If we look more closely at what the Government are trying to do through their monopolies legislation we see that they are trying to promote greater competition in general—which I welcome. But the Government will have to exert specific influence in steering the economic behaviour of industry in markets where competition will not practically prevail. In other words, they must restore conditions of classical competition in a modern developed economy where various forms of oligopoly are the characteristic market structure.

The Government are pursuing an impossible policy, if not trying to ride two horses at the same time, because they are also trying to exert more pressure through N.E.D.C., which puts the emphasis not on competition but on business co-operation and co-ordination, rather than on sheer self-interest. In other words, on the one hand, the Government are opting for the old-fashioned ways of providing a spur to business efficiency, while, at the same time, fostering the newer methods of co-ordinating the national economy. The Government should ask themselves how far their nineteenth century outlook on industry squares with modern trends, such as planning for innovation and pooled development programmes—how far their economic romanticism ties in with modern consultation in long-term economic growth.

We are also entitled to ask—and this is the most important question of all—how far hon. Members opposite appreciate the fact that the real problem that confronted the Chancellor earlier this year, when he introduced his Budget, was not the question of recovery towards full employment, but, rather, the expansion of our economy once full employment had been reached. That is the big question. We have reached this point now. Are we to damp down demand and go back to a policy of "stop-go" or take underlying economic expansion from here? Are we to go on to a 4 per cent. growth rate and sustain it?

Like my hon. Friend the Member for Cardiff, South-East, I am an expansionist. We must not go back. But if we are to continue to expand we must accelerate the expansion of capacity. We must convert the country from a low to a high investment economy. When one studies the figures for the last three years, whatever the Chancellor and other right hon. hon. Gentlemen opposite may say, the picture is dismal. Manufacturing investment continued to slide, through 1961 and 1962 well into 1963.

Indeed, if it had not been for public investment in the nationalised industries the economy would be in an even weaker state than it is. Fortunately for the Government and the country, the sustained boom earlier this year was due to the rising investment which was brought into being in the public sector. This is a vital point to bear in mind. Unhappily, there was not enough investment, even in the nationalised industries, and not enough new productive capacity brought into being. Much more efficiency and productivity is necessary if we are to achieve and sustain the boom we expect.

When I saw the Secretary for Industry and Trade on television recently, I was saddened to him say that he would resist the extension of nationalisation into manufacturing industry. For, if we had been dependent on investment in manufacturing industry, the economy would indeed be weaker. It is investment in the nationalised industries which has been responsible in the last few years for sustaining the private sector of the economy.

Britain's policies for growth and efficiency must, whichever Government is in power, include the removal of obstacles to growth, such as obstacles in the way of increasing training, educational facilities and incentives. We must alter our whole thinking towards the structure of industry, stimulate rationalisation, encourage innovation and promote dynamism.

When the Chancellor said that while it was all very well to look back on the past 13 years it was equally important to look forward, he is only repeating what my hon. Friends and I have for long been saying. My hon. Friend the Member for Cardiff, South-East spent a considerable time in his speech dealing with possible measures for achieving greater growth and efficiency. He put forward two definite policies for achieving it. I have put forward some suggestions for achieving what might be called medium-term growth, based on selective stimuli, rather than global demands, which appear to be the main weapon of the Government and which they unfailingly fall back upon.

Undoubtedly, to achieve growth it is necessary to increase productive capacity. Unless we steadily expand our economy and ensure real increases in income, and increase our rate of growth, we will not achieve conditions for a national incomes policy. Such a policy will be achieved only by selective stimuli and purposive planning. The methods adopted by the Government, even in cooperation with N.E.D.C., in the last few years have been too indicative, when there is a much greater need for imperative action, such as I have outlined.

The suggestions my hon. Friends and I have been making go far beyond the assumptions on which the Government normally proceed. It is for this reason I now feel inclined to do a little electioneering, in which several hon. Members have indulged, for I can properly say that after 13 years' management of the economy by this Government the people are entitled now to consider the case for a change. They are entitled to wonder whether our economy will be improved only if there is a change, preferably to a Government with the right sort of policies to secure growth and efficiency.

The Labour Party has such policies. Particularly important is the need, for any Government who are in power, to give businessmen the impression that even when the going is hard, and there are difficulties, expansion will continue. It is because of these considerations that the electorate are entitled to a change.

8.33 p.m.

Mr. William Clark (Nottingham, South)

I will not comment on the specific points raised by the hon. Member for Colne Valley (Mr. Duffy), except to say that it was rather unfair of him to accuse my right hon. Friend the Chancellor of the Exchequer of being complacent. Whatever might be said, I cannot see how anyone can suggest that he has been complacent. He has many times pointed out that we are on a razor-edge economy, but it was rather ungenerous of the hon. Member to suggest that my right hon. Friend had or is being complacent.

I was Somewhat interested in the argument of the hon. Member for Colne Valley to the effect that the nationalised industries have been responsible for our prosperity. The burden of his argument seemed to be that nationalisation was the only way to bring prosperity. I hope he realises that the nationalised industries contribute only an infinitesimal amount to our export drive. His comments about businessmen would, I should have thought, be apt to work in reverse; that the very things he spoke about would urge businessmen to return a Conservative Government.

I cannot think that anyone could be sufficiently naïve to think that, having known this Government for 13 years, they would be willing to place in office the Opposition, the only alternative to the Government. I cannot think that anyone would be sufficiently naïve as to say, "Let us have a change for the sake of a change". I do not believe that the electors are sufficiently stupid to elect any Government or Opposition and at the same time to give them a blank cheque, as it were.

I am rather sorry that the hon. Member for West Ham, North (Mr. A. Lewis) is not at present in his place, because he accused this present Government of having done nothing about reducing taxation over the last 12 or 13 years. He recounted increases in fuel tax, wine tax, and the rest, but he did not for one moment suggest a reduction in taxation. Hon. Members opposite should remember that if the same rate of taxation operated today as operated in 1951 when they were in office—[Interruption.] This is a fair point to make.

The hon. Member for West Ham, North accused this side of doing nothing about reduction in taxation, and I am merely trying to prove that his argument is fallacious. If, as I was saying, taxation remained today exactly as it was in 1951, my right hon. Friend the Chancellor of the Exchequer would be extracting an additional £1,200 million or £1,300 million a year from the taxpayer. I should have thought that reductions of that order were something that should not be misrepresented in the country.

The hon. Member for West Ham, North also spoke of rent control. This Government gave a pledge about the Rent Act before the 1959 election, and said that they would not allow rent decontrol to be extended beyond that existing at that time—

Mr. A. Lewis

The Government started it.

Mr. Clark

It would be as well for the purposes of clarity in all these debates if hon. Members were to say what they really meant and not later make out that they said something else—

Mr. Lewis

rose—

Mr. Clark

No—time is getting on. And I would remind the hon. Gentleman that unlike my right hon. Friend the Chancellor, who gave way four or five times, the hon. Gentleman, when I sought to interrupt him on two or three occasions, said, "No, we have already lost an hour. I will not give way." I appreciate that the House listens with bated breath to anything the hon. Gentleman says—[Interruption.]

We have had inflation in this country for many years. Only on a very few occasions when we have had periods of extreme recession has inflation been stopped. Sometimes it has gone on quickly, and sometimes it has been controlled and gone on more slowly. As the Motion refers back to 1951 it would be as well to see what happened between 1945 and 1951 and compare that with what happened between 1951 and 1964.

If we take 1938 as a base year with prices at 100, in 1946 the figure had gone to 164 and in 1951 to 223—a rise of 59 points. The hon. Gentleman the Member for Cardiff, South-East (Mr. Callaghan) said that this rise was mainly due to the Korean War. Again, let us take the value of the £. If in 1945 the £ was worth 20s., by 1951 it had gone down to 14s. 3d. This, presumably, was due to the Korean War—a drop of 5s. 9d. in the value of the £ in six years of Socialism. Of course, we had difficulties after the war, but we must realise that in the six years to which this Motion refers—six years of Socialist Administration—the value of the £ fell by about 11½d. per year.

I accept, and my right hon. Friend would accept—no one can deny it—that there has been a further fall in the value of the £. If the value of the £ was 20s. in 1951, it is now down to 13s. 4d. That is a fall of 6s. 8d. in the £ in 13 years. I will try to collate these figures later, but my only comment at the moment is that while in the years from 1945 to 1951 the £ fell by 11½d. a year, in the years from 1951 to 1964 it fell by just over 6d. a year.

Mr. Monslow

Is the hon. Gentleman aware that at the time of the Korean War we paid £1,000 million more for the same volume of goods than we did in the preceding year?

Mr. Clark

I thought that earlier in the debate the figure quoted was about £600 million more, but let us for the sake of peaceful argument accept that the Korean War was the bugbear of the Socialist régime. Let us also remember that between 1945 and 1951 we had a little thing called devaluation, due no doubt to the Korean War, though in fact it happened before it, and between 1945 and 1951 we incurred overseas debt, particularly the United States loan, of £2,000 million which this country will be paying back until the year 2,000. Presumably we could say that this also was due to the Korean War.

I am prepared to accept, as I am sure is every fair-minded person, that after the Second World War there was a tremendous amount of work to be done which was not necessarily productive and to bring back our industry into full play and into a full exporting position, but with the wildest stretch of imagination I do not think that one can attribute the fall in the value of the £, the devaluation, and the American loan as all due to the Korean War. Something might have been, but let us also assume that it may possibly have been that some of the Socialist policies were wrong and contributed towards the economic situation.

The Motion refers to the cost of living. Here again, one should compare the period 1945 to 1951 with 1951–64. I shall not give percentages. The hon. Member for Cardiff, South-East gave them, no doubt extremely accurately, but he knows as well as I do that a percentage depends upon a base. An increase from 5 to 10 is a 100 per cent. increase, and an increase from 10 to 12 is only a 20 per cent. increase. Therefore, we must be clear that the bandying about of percentages does not tell people very much unless one provides the base figures.

Let us take an increase of 1s. in prices between 1945 and 1951 and an increase of 1s. between 1951 and 1964. The true comparison then is the average earnings in those two periods. Between 1945 and 1951 the average increase in earnings was 9d., yet prices rose by 1s. and consequently the wage-earner was worse off in real terms. Since 1951 earnings have gone up by 1s. 6d. for every increase of 1s. in prices. This cannot be refuted and it brings the matter down to a simple level which everybody can understand.

The Motion also implies that we are living under reduced standards. Nobody on either side of the House can suggest for a moment that our standard of living has been reduced in the last 12 or 13 years. One could quote the number of television sets, washing machines, motor cars and the rest, and we all know that the figures for these goods have gone up. One of the most notable things, and my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) touched upon this, has been the increase in savings since 1951. In that year £100 million were saved by the small saver, but the figure for 1964 will be something like £2,000 million. This is not a sign of a poverty-stricken nation or of a people who are feeling the reduced circumstances of their living.

The Motion also refers to exports and says that the actions of the Government endanger great Britains overseas trading position. What is the position? In 1951, we were exporting, in round figures, £2,700 million worth of goods. Today the figure is just over £4,000 million. It may be said that this is not very great, but it is an increase. The House should remember that we are starting from a fairly high base—£2,700 million. It should also be remembered that it was only in about 1950–51 that the markets of the world were changing and when our former competitors, particularly West Germany and Japan, were industrialised. Everybody knows, whether he was in the House or not, that in 1951 we were living in a seller's market. We have not been living in a seller's market since 1951.

Hon. Members opposite should remember that there is no point in criticising our export record and saying how small it is, when in 1951 Germany and Japan, to say nothing of other countries, were not really engaged in the export field. Any industrialist will confirm that statement, and I am sure that many hon. Members opposite know it, too.

It is said that our balance of payments is being endangered. Let us see what the position is. Between 1945 and 1951 we made a loss on our balance of payments, due to various circumstances, and I do not mind to what circumstance hon. Members care to attribute this loss. We had a deficit of £650 million. Since 1951 we have made a surplus of about £1,200 million.

Hon. Members opposite must be fair. If they are criticising the present Administration for lack of foresight or lack of planning, however they like to put it, let us see how much better they could have done. The only comparison we have is the 1945–51 Socialist régime. The international league is occasionally bandied about and we are told that we are third or tenth in the league but never top. Never once in talking about this international league do hon. Members opposite say that we in this country have had full employment since the end of the last war. My hon. Friend the Member for Walsall, South mentioned this fact, and we should always remember that unemployment is one of the greatest fears of the ordinary man and woman. We in this country have maintained full employment since 1951, and if that fact is taken in conjunction with the international league table it will be found that we have not done too badly.

Of course, the cost of living increase has not been halted. My right hon. Friend the Chancellor of the Exchequer gave figures showing that the cost of living has increased. But it has increased at a much slower rate—at the rate of 2 per cent. That increased rate of 2 per cent. is the price we pay for full employment, and I should not have thought it was a high price. I should have thought it much better for the country to be assured of full employment, even though it may mean a slight inflation. Obviously we could not do with huge inflation, but 1 per cent. or 2 per cent. should be all right.

One danger arises from the question of getting a realistic incomes policy. My hon. Friend the Member for Lowestoft (Mr. Prior) said that when we tried to help people on the lower range of the scale and increased their wages there was a leapfrogging effect. We must get some realism into this matter.

On the question of the advent of automation, I welcome the measures for industrial retraining announced by the Government, and I hope that this will be accelerated. There is no point in having automation in this country if we do not take advantage of it. There is no point in having under-employment in the automated industries in order to be able to say that we have full employment. We must have industrial retraining on an accelerated scale.

The hon. Member for Colne Valley, towards the end of his speech, said that the N.E.D.C., concept was, at present, indicative and he thought that it should be imperative. Presumably, this means that there should be no persuasion but direction. Here lies the essential difference between the two parties on this issue. On this side, we try to set the scene wherein the businessman, the wage earner, the income earner, whoever he may be, can earn his living. We say that by persuasion the scene is set and by persuasion we will try to get people to do this and that. Right hon. and hon. Members opposite, as I understand them—I think that this was indicated in the speech of the hon. Member for Colne Valley—would say, "You will do this, that and the next". We have had all this before. We had it between 1945 and 1951, and it did not work then.

Mr. G. Brown (Belper)

Will the hon. Gentleman explain how the Government are persuading land speculators to moderate their demands?

Mr. Clark

The right hon. Gentleman will not have overlooked that there is a capital gains tax in existence. In his opening speech, my right hon. Friend dealt with land fairly comprehensively, I thought. But my real point in talking about persuasion by the Government was to refer to incentives. One can go to the development districts, to the North-East, for instance, and see what is happening. The right hon. Gentleman may laugh, but it is working in the North-East. Let hon. Members opposite go to the development districts and try laughing at them and say that the Government's methods mean nothing.

Ours is the method of Government by persuasion, and in this sense much is happening. Of course, it is easy to sit here and say to a firm that it must now move to Newcastle or somewhere else. What the Government are doing is to give an incentive, and this is the persuasion I am speaking about.

In putting down this Motion and in talking about the cost of living, the Opposition are on very thin ice. They never like to have their own record compared with ours, and this, of course, is all we can do. We can only compare records and find out which is the best of the two Governments. When all has been said, the fact is that over the past 12 or 13 years the standard of living has risen by about 40 per cent. All the argument back and forth cannot detract from that. I am certain that when October comes and the opportunity is given to renew the Government's mandate the electorate will realise from whom they get the best value.

8.53 p.m.

Mr. Emlyn Hooson (Montgomery)

I have very little time, but I want to say one thing to the hon. Member for Nottingham, South (Mr. W. Clark). If he will forgive my using the term, it is one of the stupidest arguments which can be used in support of the Government to argue that our standard of living is up by 40 per cent. and that it is higher than it has ever been before. The same is true of Communist Yugoslavia, Socialist Sweden, Fascist Spain, Christian Democrat Germany and Liberal Canada. The hon. Gentleman would not use that argument as a justification for all those political systems, would he? Of course, technological progress has meant that the standard of living has risen all over the Western world irrespective of political systems. There may be many good arguments to use on the hon. Gentleman's side, but that is certainly not a valid one as he uses it.

What we are concerned with is not to examine the Government's record in relation to other Governments—it is not possible to have a valid comparison—or to contrast the record of this Government with the record of the Labour Government between 1945 and 1951. I have no brief whatever for the Socialist Party on its economic policy, and I am a great believer generally in the free market economy, but conditions are totally different now from what they were between 1945 and 1951. We must judge any Government, as we want to judge this Government on this subject, on whether we think that they have taken all proper steps to reduce the cost of living.

The hon. Member for Cardiff, South-East (Mr. Callaghan) opened this debate with various league tables, most of which were, I think, invalid. I thought that the only possible valid comparison which could be made from his tables was between this country and its greatest rival possibly in the export field—Western Germany. It is very interesting that, as I think the hon. Member pointed out, West Germany possibly has the best record for increasing production, keeping the cost of living down, and so on. But it is very significant that it is led by the greatest exponent, certainly in our day, of the free market economy.

The criticism which can be made of the Government is that their record, certainly with some differences in conditions, compares very badly with that of West Germany.

Mr. Callaghan

rose—

Mr. Hooson

I have only five minutes, and as the hon. Gentleman did not give way at all in his speech I think I am entitled to continue.

The hon. Member for Colne Valley (Mr. Duffy), in a most interesting contribution, put his finger on the real evil of the continual rise in the cost of living when he said that it hits the poor people most of all. The class in our community we have tended to forget is the consumers. It covers every one of us. I think that more silent but real and uncomplaining suffering in this country is due to the continual rise in the cost of living than to anything else. Every penny added to a loaf, every halfpenny put on a unit of electricity, every penny put on a bus fare, every 6d. put on the cost of 1 cwt. of coal—all this hits the consumer, particularly the people on low fixed incomes.

It is largely true—and I should not dispute it—that wages and profits have kept pace with the spiral of inflation. The people who have been hit all the time are the pensioners, people on fixed incomes and those with large families. That is why the greatest benefit that any Government could confer on the people of this country would be to stabilise or reduce the cost of living. That would benefit everybody.

In the very short time at my disposal, I should like to suggest certain vigorous measures, which the Government could pursue if, as I presume, they believe largely in a free market economy. They could ensure as much true competition as possible. This means that they would have to take far more effective action against monopolies than they have taken in the past. They have had 13 years in which to take vigorous action against what Roosevelt described as "systems of private socialism". They have done very little in this matter.

The Government could, as the hon. Member for Colne Valley suggested, use unilateral tariff reductions to ensure that greater competition was brought into industry when it was needed. But what is needed all the time is the restoration of price competition. This is not contrary to economic planning in its modern sense; it is part of it. We must plan the economy so as to ensure greater price competition.

A real difficulty which will face a Labour Government as much as any other is this. There has been a tendency for the results of technical progress in industry continually to go out in increased wages and profits rather than in lower prices. If we were less concerned with the level of profits but more concerned with lowering prices it would be much better for the majority of people in this country.

One hon. Member opposite chided members of the Labour Party with being disciples of Gladstone. If that was the worst charge which could be made against them, I should feel much closer to them than I do. If the spirit of Gladstone actuated the Opposition, or, indeed, the Government, the people of this country would be far more sure that we were getting better value for money in Government expenditure than we are. Much greater scrutiny of Government expenditure is necessary. In any economy—mixed, free enterprise or Socialist—there is bound to be a good deal of Government expenditure. It is necessary for the House of Commons to ensure, through careful scrutiny, that the money is spent wisely and well and that we get value for the money spent. I think that in our day we tend too much to take it for granted that every Government must necessarily spend a great deal of money and that what a Government spends ought not to be challenged. In fact, the efficacy of the Government is too often judged by the amount of money they spend rather than how they spend it. That is quite a wrong approach.

Although I have been squeezed out to about seven minutes, I do not want to take up the time of the right hon. Gentleman the Member for Belper (Mr. G. Brown), and I conclude by saying this. Our indictment of the Government is not that they have not been following the kind of measures suggested largely from the Labour Front Bench, but that they have been very poor exponents of the free enterprise system and they have allowed enterprises which ought to have been subjected to far more competition to be protected from competition. They have failed to create the right conditions to obtain the greatest possible benefit for the majority of the people of this country from a free enterprise system.

They have, in fact, allowed large profits to be made and an inflationary wages spiral to be set up without taking proper steps to reduce prices, and it is by reducing prices, above all, that they can benefit the majority of the people.

9.2 p.m.

Mr. George Brown (Belper)

I listened with a great deal of interest to the hon. and learned Member for Montgomery (Mr. Hooson) and I am grateful to him for disciplining himself and cutting his speech short. Had his Gladstonian theories had their way, the electors of Montgomery, who lean more heavily than most upon State help and national direction, would have been having a very thin time. I think that he ought to go home and have a look at this again before he urges it too strongly upon us, or he may find that at the election things are a little different.

I ought to begin by having a look at the Motion and at the Amendment. Our Motion simply invites the House to recall that in 1951, when Her Majesty's present Administration won their first mandate, it was on the basis, using their words, that they would "mend the hole in the housewife's purse", to which the Government have put down an Amendment inviting the House to leave out those words. They were their own words.

We are to have the debate wound up tonight by just about the most brass-faced Minister who sits on the benches opposite. The Chancellor need not suggest to his right hon. Friend the Chief Secretary to the Treasury the answer to that; he already knows it. It was the right hon. Gentleman who made a reputation by urging everybody to disagree with the incoming Government on the ground that they should not co-operate with them on penalty of being called Quislings. We ought to ask the Quisling-in-chief why he is so offended by having his mind directed back to the pledge that he personally so prominently gave in 1951. Is it because he has failed so completely in the pledge that he gave? Is not that the real truth?

We do not need to spend time in proving the prices case. The fact is that the Ministers who are speaking today—the Chancellor of the Exchequer, with a little less enthusiasm, because he is a different kind of man, and Chief Secretary to the Treasury, who will follow me and who will, no doubt, have rather more enthusiasm, because he is a different kind of man, too—know that the Government have failed to honour the pledge on which, above all else, they were elected. That was the pledge to mend the hole in the housewife's purse, to stop the drain away of money and to stop the rise in prices.

Ministers can spend a lot of time, as no doubt, the Chief Secretary will, as his right hon. Friend the Chancellor did, in trying to prove, or proving if they can, that there was a rise in prices under the Labour Government, to which we answer that it happened because of special reasons. [Interruption.] The hon. Member was not present when the Chancellor spoke. We say that it happened under us for special reasons. It happened because of the Korean War and because of the aftermath of the Second World War. It did not happen for the first three years that we were in power, but it did happen in the last two or three years, so we say.

The Chancellor of the Exchequer and the ex-Minister of Civil Aviation failed, the former Minister of Pensions failed and, now, the Chief Secretary, who is back to where he started as Financial Secretary, will say the same thing. He will say, "It has happened under us, but for special reasons." But we on this side were not elected in 1945 on that pledge. The Government were.

The only thing I want to establish about the past is that, having been elected to put it right, the Government have totally failed. Prices, internally, have risen more under them than they did under us, whereas in our time prices externally rose more and in the Government's time prices have externally risen less. So that what we have had is a net loss under them, whereas what the public had under us was a net loss. [Laughter.] Clearly, the House understands the right way round that it should be. Having established this to the satisfaction of the House, I am delighted to see, let me add that I have a daughter of 26 who represents many millions of voters who will vote for the first time this year.

Sir Cyril Osborne (Louth)

Not at 26.

Mr. Brown

Yes.

Ministers can spend the whole day proving to those young people that it may be that we on this side did not do as well as we might have done in 1951, but it will not affect them one little bit. It will not affect the housewife in King Street, Belper, one little bit. Her problem is what is happening today, 13 years after the Tories came in.

This afternoon, the Chancellor of the Exchequer spoke as a totally dispirited Minister. All his bouncing now does not alter it. He was a Minister who confessed that he could not stop the uprise of prices and said that he did not know how one could stop it. He said that he did not think that we on this side could stop it. That is a reasonable expression of view from him. He said, however, that he could not stop it. To have a confession by Ministers—this is what the people will be voting about in October—that they do not think that the Opposition are very good, but that they certainly cannot do anything about it themselves, is just about all that we need to establish today.

It is no use telling the housewife in King Street, Belper—or the housewife in Louth—what the Chancellor did this afternoon, that relative to the housewife somewhere else, relative to some other time in history, maybe it is not so bad. What they know is that prices are spiralling, costs are going up—

Sir C. Osborne

So are incomes.

Mr. Brown

—and life for them is getting very much more difficult. [Interruption.] Those hon. Gentlemen over there who only come in late at night to shout, and never attend all day, should behave with a minimum of politeness. They behave like this every time. It is appalling behaviour, but it is all linked up.

Let us be quite clear what the situation is at this moment. It is not only food prices which are rising—and all because, the Chancellor says, it is June. They are rising for other reasons than that. They are rising because the Government of which he has been and is a member chose to change the agricultural marketing arrangements in order to switch the cost of supporting the farmer from the taxpayer to the consumer and, in consequence, that ended in charging the consumer a lot more and the taxpayer more. This is why food prices are rising. Subsidies have gone up, so have prices, so have the middlemen's charges. The only thing which has not gone up is the supply of our food.

But it is not only that food has gone up. So have rents gone up, and rents have gone up, and are going up, because of deliberate Government policy, because of the Rent Act and because the Government preferred to arrange it so. Rates are going up because of deliberate Government policy. The Chancellor, in answer to a Question the other day, told us by how much per week they are going up and that they are going to go up every year. It is not only because of the interest rates policy. It is because of the bulk grant, the general grant, instead of the specific grants. This is because the Government arranged their relations with local government so that this would happen.

Mortgages are going up. Everybody in Barnet and in Kingston-upon-Thames knows this. Everybody in every commuter area who is buying a house now finds his mortgage going up. Everyone who wants to buy a house now finds that he cannot raise the money to buy a house. Why? Because of deliberate Government policy. This was no accident. They arranged it so.

The cost of travel is going up. Any young couple living in a suburban commuter area just outside London has to pay inflated prices for food, rents and mortgages, rates, and travel. Let us face it: every single one of these things has happened because the Government arranged it so.

I asked a question of the Chancellor, and he thought it better to answer it simply by being rude. [HON. MEMBERS: "Oh, no."] Oh, yes. It is now becoming a regular pattern of behaviour for hon. Members opposite. I asked, "Are you saying that prices should go up because the reasons are good, or that prices are going up and we cannot stop them? Which is your argument?" He stood on both legs this afternoon. [Laughter.] Half the right hon. Gentleman's speech was because he could not stop it, and the other half was because it was good.

The real answer is that for other reasons, political reasons, the Government have arranged policies that were bound to produce these results. So they have totally failed to honour the pledges on which they were elected, and have organised policies which made it certain that they would not honour those pledges. But to that failure must be added other failures. They have failed to get a growth rate in the economy which would produce either a national income or a public revenue big enough to carry the things that we have to do. Over these 13 years, giving them their best year, giving them the year of which the Chancellor boasted so much, they have got an average of about 2⅓ per cent. increase.

The difference between that and the growth target to which the Chancellor set his own name—4 per cent.—in terms of national income is no less than £5,500 million per year. That is the cost of the additional failure of the Government. In terms of the public revenue it means a loss of £1,500 million a year, and that £1,500 million a year in public revenue with all the tax concessions that have been given in the meantime would pay for a very great deal of the houses, schools, hospitals and other things that we have to do.

Their other big failure is that they have failed to hold prices. Indeed, they have arranged that prices should not be held. They have failed to get the 4 per cent. growth to which they put their names, or, at least, to which the Chancellor put his name, and they have failed to develop new manufacturing industries, failed to get a growing share, even a maintained share, of world trade, failed to get an incomes policy and failed to deal with price fixing and price rigging by the monopolies.

No doubt we shall be told that the Government failed for all kinds of good reasons, but nobody accepted from a Labour Government—why should they? —the alibi of good reasons. Why should we accept the alibi from the Tories? The fact is that there has been one failure after another. Yet the Tories have had 13 years of complete control in this House and another place to put their policies through.

There is one thing with which I agree in the leader in The Times this morning. I agree with my hon. Friend that it is a damned silly leader overall. The one point with which I agree is where it says that, even though the Government may refuse to admit it, the people know that this is true. Nothing has been said today from the Government side of the House which will disturb the people in their understanding that this is the situation. The leader went on to say that the people are not much interested in a sterile argument about whether it is so, because they know it is so, but are much more interested in how to solve it.

This applies not only to the top people to whom The Times talks, but to many other people. It applies to my colleagues in the trade union movement. Not only do they understand what has happened, but they are tremendously concerned about the solution. The problem for them is that the way in which the Government are behaving makes it almost impossible, probably absolutely impossible, for any trade union leader to lead his people in the way that he knows things ought to go.

The Government's interference with arbitration; their rigging of the arbitration courts; the Minister of Labour's descent from the high level set by his predecessors to a political interpretation of his Ministry; the attack upon the weakest members of society—all these things have made it extremely difficult for responsible union leaders, who know what the problem is and that the solution of it is the biggest issue facing us, to be able to lead their people the way they should go.

It may be true that no Government have yet succeeded in this. I will not bandy words on it. I care not what was said about us in 1945 to 1951. Queen Anne is dead and so is 1945–51. [Interruption.] I will settle for the millions of voters, who are little concerned with that. It may be true that no Government have yet succeeded in this, but what I do declare is that it is not true that the job cannot be done. It can be done and must be done.

What is involved? What are the public concerned about? I remind hon. Members that we do not, as we sometimes think, talk here as though this were an Oxford Union debate. We are speaking tonight for the outside world. What do the people think is involved in this problem? Perhaps, as always, it is better to start with the reverse question—what is not involved?

What must not be involved is picking on the weaker sections of the community. The Government must not pick on wage and salary earners like those public servants who have the least bargaining power. The Government picked on the nurses. They are now picking on the postmen. But in the end they had to give way to the nurses and in the end they will have to give way to the postmen.

The Government will have to give way because one cannot, in a democracy, even if one is as power-drunk as this Government, stand finally against public opinion—and public opinion, which was with the nurses, is with the postmen. As the Chancellor himself knows, the Government would have liked to have made an offer of 6 per cent., but, instead, had to make it 4 per cent. because of some complicated reason.

But when the Government have gone through this exercise, what have they achieved? They have made the nurses and now the postmen angry. They have, in doing so, read a lecture to every salary and wage earning group. They have told them that unless they have bargaining power, and use it, the Government will grind them down. The Government have said to them, "Get in and fight first".

That is the tragedy and that is what makes things so difficult for those of us who know that an answer to the problem must be found. I say not merely to the Government but to the country that the incoming Government will have to work very hard indeed to restore the good will of organised salary and wage earners that this Administration have so wantonly destroyed.

Now, what is involved? [HON. MEMBERS: "Ah."] Do not let hon. Members play the fool. They know me better than that. What I have just said is a good deal more serious than if some hon. Members opposite had stood up and said it. I accept that whatever we do to try to control the price situation and prevent a continuous rise in prices must involve a degree of Government intervention at a number of points. I think that this is what hon. Members opposite have been playing for all day. This is the political point that they would like to make. For what it is worth, I give it to them.

It must involve that intervention, but that does not mean the immature Tory slogan which the Conservative Central Office is no doubt ready to use—"Somebody in Whitehall telling you what to do." We have to face the fact that a Parliamentary democracy, as we are, needs disciplines, too. A Parliamentary democracy cannot be run without disciplines, any more than any other kind of society can be run without disciplines. The difference is that, in our case, consultation, representation and participation will be necessary if we are to do the job and we are to encourage acceptance by all sections of the community of Government intervention, if by "Government intervention" we mean the Government's moulding of the voluntary acceptance of the disciplines by the groups in the community who are concerned. Unless we accept that, we have to face the fact that the job cannot be done, in which case we are inviting the country to choose some other system of government.

The present Ministers have failed because, among other reasons, they have not accepted that. We do not pretend to our followers and friends that it can be done unless we accept it. We shall say that absolutely clearly. I do not believe that it is true that the workers will not voluntarily accept disciplines, provided that there are the pre-conditions of prior consultation, representation and participation. On that basis, where are the places where intervention by the Government is inescapable; where are the points for acceptance of the disciplines?

The first is in the planning of the economy nationally and regionally. Those are not distinctive words. We cannot have a Minister going to Newcastle and doing something for the North-East while someone produces a totally contrary paper for the South-East. We cannot have a forecast for the nation as a whole, produced by N.E.D.C., unless it is understood that the nation consists of a number of regions and that the whole plan has to be broken down among the regions and fitted into the regions. Secondly, it means changing the machinery of government. At present, there is not on the Treasury Bench or in the Cabinet Room machinery of government which can do this centrally and there is none which can do it regionally. That machinery must be set up.

Thirdly, the sectors of growth in terms of industrial effort must be chosen. Whether one likes it or not, it is no use saying that this means getting too involved. Unless someone does this, the growth is likely to be too haphazard, if it occurs at all. The industries for growth have to be chosen and one then has to decide on the ways in which to assist the export industries—how to assist them, which they are and what kind of inducements they shall have.

In a voluntary democracy, in a mixed economy—and it is a mixed economy now and it will be a mixed economy tomorrow, even though the frontiers may change—we have somehow to channel investment into those areas where it has to go to enable the plan to work. Regional authorities for industrial and social development have to be established.

It is no use talking about getting industry to the North-East if the Ministers of Education, Housing, Health, and Transport, are arranging their policies as though they were not on speaking terms with the other fellow. One has to face changes in the tax structure so that responsibility and effort are rewarded and so that earning is rewarded instead of something else.

It is very easy to make political points about this, but no Government will do the job unless they accept that manual workers, supervisory workers, managers, younger directors, and the people whom we want to do more are those whom the present structure penalises. That has to be changed. Hon. Gentlemen opposite have to accept that, too. We cannot change that unless we accept changes somewhere else. too. There is no use being silly about this.

Secondly, we must have an employment policy which backs us up. The Minister of Labour distinguished himself this weekend with an outburst about a wash-out. I gather than he had thought of it, and that made it a wash-out. The point is that unless we deal—as the Government have not done—with unemployment pay, with sick pay and training, and how to encourage employees—and this does not mean manual workers alone; indeed, it probably means other grades of workers more in the first instance; for example, the man with a pensionable job, and the man who is already buying his house—to go somewhere else, or be trained for some other job, or move into some other industry, we shall not get this industrial revolution going, and if we do not succeed in that, we shall not tackle the prices problem.

Sir C. Osborne

How would the right hon. Gentleman do it?

Mr. Brown

I am not trying to dodge the issue. I set all this out in the Financial Times. If the hon. Gentleman reads it there and then comes to talk to me about it, I shall explain it to him. We must have that, and it does not exist. Our severance pay proposals, as well as our training proposals, which are set out in our charter, are inescapable.

Thirdly, we must have an incomes policy. I do not run away from these things. I have had nearly 40 years in this business. I have to explain this to people who matter, not to people like hon. Gentlemen opposite. I have to carry this with my members, and that is a bigger job than carrying it with hon. Gentlemen opposite. We must have an incomes policy. My colleagues know it. My members know it. But we cannot have an incomes policy simply on the basis of a device for holding back postmen whose take-home pay is about £11 a week.

There is a letter in The Times today, pointing out how much it costs a person to live. Do not let anyone imagine that restricting the pay of postmen to about £11 a week is an incomes policy. An incomes policy means dealing with correlated issues. It means dealing with land prices, and land speculation. It means dealing with rents, with profits, and with all correlated issues. If that is done, we can speak to our people about an incomes policy and their part in it—[HON. MEMBERS: "They are our people, too."] All right, but if hon. Gentlemen opposite claim that they are their people, too, why do they treat them like they are treating them now? If we deal with correlated issues we can produce an incomes policy. All I say is that this is the third leg of the problem. It is the third area in which the Government have totally failed.

The fourth leg—and I must finish quickly—[HON. MEMBERS: "Hear hear."] If hon. Members say that, I will not. We have put up with this rudeness over and over again. [Interruption.] The last time I had to wind up a debate, the Minister concerned went on and on for 12 minutes over his time. If hon. Members opposite want to be rude it is easy: I shall continue. I am ready to play to the rules so long as proper regard is had for them.

Fourthly, we must have an attack on food prices. I tell the Chancellor—who played with this point so ineffectually for 15 minutes—that, of course, it means new forms of marketing; of course it means long-term bulk buying overseas, through commodity commissions—

Brigadier Terence Clarke (Portsmouth, West)

Groundnuts!

Mr. Brown

—and, of course, it means a more orderly system of internal food marketing, through marketing boards. It is inescapable. Ministers are entitled to say that they do not accept this; that it is merely a Socialist view, and that they oppose it. But the House and the country must realise that the Conservatives have failed and that we might have a chance of success.

I am astonished at the Chancellor's attitude, first, to the price and cost situation and, secondly, to the economic situation and especially to the external trade and payments situation. My guess is that he is dodging, hoping to escape, gambling on the election beating the real danger, as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said. My guess is that the Government are already making use of their fall-back areas.

Our problem is that we must not say too much about this in case we worsen the situation for our nation. I want hon. Members opposite to understand—and I want the Chancellor to understand—that we know how the Government are getting through at the moment. We know, and he knows that we know, how dangerous the situation is, and the nation knows that the Government have totally failed after 13 years of complete power.

9.37 p.m.

The Chief Secretary to the Treasury and Paymaster-General (Mr. John Boyd-Carpenter)

The right hon. Member for Belper (Mr. G. Brown) began his speech with a personal compliment, the reply to which I could have spared him if he had allowed me a little more time to reply. To be called "brass-faced" by the right hon. Gentleman I find a singularly delicate and attractive compliment. After all, it comes from an expert source. Throughout the right hon. Gentleman's speech there ran—and "ran" is the word—two main themes. The first was that 1951 was, like Queen Anne, dead, and that nobody was interested in what happened when there was a Labour Government.

It was rather curious how the right hon. Gentleman came back to that theme at a later part of his speech, as if the idea was rather worrying him. I think that he is wrong when he says that the lady in King Street, Belper, is not interested in what happened under a Labour Government, for this reason: the lady in King Street, Belper, and about 32 million other people will this autumn—with due respect to the right hon. Member for Orkney and Shetland (Mr. Grimond)—have to make their choice between a Labour and a Conservative Government.

I believe that just as any thinking person judges not only by what people say but by what they did when they had the opportunity—[Interruption.] The lady in King Street, Belper, will be very interested in what the Labour Government did and did not do. Indeed, when the House looks at this in the ordinary way in which ordinary people make up their minds, hon. Members will be aware that what people did when they previously were entrusted with confidence is a very important fact indeed. If the right hon. Member for Belper does not think that people are interested in it, he will have no objection to our referring to it and we will see, in the event, who is right.

The other theme was that he accepted, and I was glad to note this, that an incomes policy was essential to both stability in prices and continued expansion. However, he proceeded to say that all sorts of things would have to happen before such an incomes policy would be acceptable; in particular, he said that there would have to be some form of planning, about which he had apparently said something at the weekend but, unfortunately, did not have time to describe it to the House tonight. It sounded to me as though he was expounding precious like what was attempted and failed between 1945 and 1951—[Interruption.]—and the very words he used came from his right hon. Friend the Member for Battersea, North (Mr. Jay) at that time.

Thus the crucial point which the right hon. Gentleman did not bring out, no doubt inadvertently, was this. Is this overall planning to which he referred to be on a voluntary basis, as in N.E.D.C., or compulsory? Is his choosing of industries for growth to be done by the Government? Is it to be imposed, compulsorily, on the community—or is it to be done in cooperation, as in N.E.D.C.? Apparently the right hon. Gentleman did not have time to tell us—[Interruption.]—but if we are to be satisfied that this is any more than the 1945–51 mixture, cooked up again, he will have to tell us more about it.

I resented what the right hon. Gentleman said about the Government having sought to grind down certain sections of the community. That is wholly untrue, and the right hon. Gentleman knows perfectly well the very real problems that exist in fixing remuneration, whether in the public service or elsewhere. To say, as he did—speaking from that Box, with all the responsibility which rests on someone who speaks from there—that we picked out certain named sections of the community to be ground down is wholly untrue and the right hon. Gentleman knows it.

Mr. G. Brown

I repeat it.

Mr. Boyd-Carpenter

In the next part of his speech the right hon. Gentleman asked us to refer to the Motion, advice which he himself did not follow. I will. The Motion consists of three propositions containing an increasing degree of inaccuracy as one proceeds. The first is that there has been an increase in the cost of living, the second that this has endangered our overseas trade, and the third that it has caused hardship to all sections of the community.

My right hon. Friend the Chancellor dealt fully, clearly, and effectively with the first part. It is plain to all that the cost of living is not completely within the control of any Government. [Interruption.] It is affected—and the hon. Member for Cardiff, South-East (Mr. Callaghan) made great play with this in defence of the Labour Government—by import prices and by the degree to which a sensible incomes policy is accepted by all sections of the community, as the right hon. Gentleman accepted a few moments ago. Therefore, to say that it is completely within the control of Government is not arguable by the party opposite. Indeed, it is certainly a wrong criticism, and an invalid criticism, to say of any Government that a change in the cost of living is a condemnation of that Government's handling of affairs.

The fairer test is a comparison with what has happened in other countries—the "league table", about which I shall say something in a moment—or with what has happened in the same country under other Administrations. That is the right test. The hon. Member for Cardiff, South-East said that he had produced all the international league tables. He had not, because although he made a very long speech it was not as long as that. But it is important in this connection to take the comparisons with foreign countries in recent years—during the periods, that is, when the policy of this Government has come to fruition—[HON. MEMBERS: "1951."]—and is comparable, therefore, fairly with what happens in other countries.

Let us take food prices, which are the most important to the ordinary citizen. My right hon. Friend the Chancellor of the Exchequer has reminded the House that between 1956 and 1963 food prices in the United Kingdom rose 11½ per cent. Since then, those in Sweden have risen by 34 per cent. and those in France by 48 per cent. Or taking even—and this is a comparison against myself—a comparison with those other countries for a shorter period—1958–63—food prices in Denmark, a food producer, have risen 23 per cent., against our 11½ per cent. over a longer period; the Netherlands by 15 per cent.; Italy by 12 per cent., and the highly competitive economy of Western Germany by 12 per cent.—against our 11½ per cent. over a longer period.

Or let us compare, if the House prefers, the experience in this country under another Government. Here, again, it is accepted that the Labour Government did not have complete control, but on 6th February, 1946, the right hon. Member for Llanelly (Mr. J. Griffiths) used these historic words—and I do not think that the right hon. Member for Belper will laugh when he hears them. The right hon. Gentleman said: The House will be aware that the Chancellor of the Exchequer has expressed the Government's intention to hold the cost of living at about 31 per cent. over the September, 1939, level."—[OFFICIAL REPORT, 6th February, 1946; Vol. 418, c. 1742.] The House will now be aware that before that Government left office the cost of living had risen by 36 per cent. above the level of that on the date on which the right hon. Gentleman gave that pledge. In that period of Labour Government the country endured the most rapid rise overall in the cost of living of any period.

My right hon. Friend the Chancellor reminded the House that during the 6¼ years of Socialist Government the average increase in the index of retail prices was 6½ per cent. a year. For the first 6¼ years of Conservative Government it fell to 4½ per cent. a year and, in the second, it fell to 2½ per cent. a year. It is, therefore, a fact, and relevant to any consideration of this Government's record in this matter, that our record in recent years is better than that of most of our rivals abroad, and incomparably better than that of the Government of the party opposite.

Then there is the proposition that this is causing hardship to all sections of the community. Here I would remind the right hon. Member for East Stirlingshire (Mr. Woodburn), who was Secretary of State for Scotland in the late Administration and who was very angry earlier today with my right hon. Friend for basing his calculations on changes since 1951, that the Motion put down by right hon. Gentlemen opposite itself invokes 1951 as the appropriate time by which to judge the relative records of the two Governments. The picture today of hardship inflicted on all sections of the comunity is simply incredible to anyone capable of going out into the streets and seeing the conditions in which people live. There are, of course, sections of people on fixed incomes, of whom my hon. Friend the Member for Tynemouth (Dame Irene Ward) is so valuable a champion, who are facing real difficulties, but to say that all sections of our prosperous community are suffering hardship is as unreal as the observation of the Leader of the Opposition the other day about twelve wasted years.

I will take some of those sections. From October, 1951, to October, 1963, to take the wage-earners, the cost of living has risen 50 per cent., but average wages for male adult workers in industry have risen 70 per cent. and average earnings 101 per cent. If right hon. Gentlemen opposite want the contrast, under the Labour Government the cost of living rose 41 per cent., but average earnings rose by only 37 per cent. One hon. Member referred with a sneer to the people who benefited in these years as being what he called the "Blooms" and the "Ferrantis". This, of course, is not the fact. In 1951–52 in the range of income before tax of between £750 and £1,000 a year there were 819,000 people. The latest figure we have for the slightly narrower range of £800 to £1,000 for these people is nearly 4 million—the number has multiplied by 5.

Moving up the income scale the increase is even more striking. Between 1951 and 1952 there were 420,000 people in the bracket between £1,000 and £1,500 a year. By 1961–62 that number had multiplied by 8 times to 3,400,000. These figures will be greater today than in 1961–62. This represents a massive improvement in the standard of life of a very large number of people which is utterly inconsistent with the suggestion in the Motion about widespread hardship through all sections of the community.

Next, to take pensions. In the 1959 election we pledged ourselves to give the pensioner a share in increasing prosperity. We have more than implemented that pledge. Since 1959 wage rates have gone up 16.6 per cent., earnings 21.7 per cent., retail prices 15 per cent. and the single rate of retirement pension 35 per cent., and the married rate 36½ per cent.

On taxation, the hon. Member for West Ham, North (Mr. A. Lewis) referred to the suggestion that the burden of taxation had been increased. It has nothing of the sort. If the rates of taxation existing in 1951 had been maintained, the total yield of taxation today would be something like £1,000 million a year more than it is, and the tax adjustments which have been made have been very closely related to improving the position of people on the lower end of the income scale. The married man with income all-earned begins paying tax today at £440. He began at £240 in 1951. A married man with two children on £12 a week paid £38 10s. a year in tax in 1951. Today he pays nothing. Old people have had their special additional provision, the age exemption, to improve their position.

The hon. Member for Cardiff, South-East charged us with having no compassion. Let me tell him plainly what we have done in respect of pension rates. The real value of the retirement pension is up 50 per cent. above the level at which hon. Members opposite left it, and the provision—I ask the House to note this—for a widowed mother with three children is up 118 per cent. in real terms above the level at which it was left in 1951.

The hon. Member for Cardiff, South-East made a very curious argument about his party's record on pensions and social benefits.

Mr. Callaghan

rose—

Mr. Boyd-Carpenter

I am sorry, I cannot give way. The right hon. Gentleman took seven minutes of my time and the hon. Gentleman never gave way at all.

The hon. Gentleman pointed out, perfectly fairly, that it fell to his Government to introduce the National Insurance Act, 1946. But he forgot some things. He forgot, first of all, that that was the product of the war-time coalition Government and that whichever Government had come to power at that time would have introduced it. He forgot a more important thing. He forgot the fact that whereas the pension was fixed at 26s. a week in 1946, during the whole remaining five and a quarter years of office of that Government it never again had the same purchasing power. Even when, on the verge of the General Election in 1951, some pensioners received a 4s. increase, that increase did not of itself even restore by some 3s. 6d. the 1946 purchasing value. To contrast that with what has been done under this Government to improve the position of the pensioner speaks for itself.

Then the hon. Gentleman indulged in an ingenious excuse, but for once it was a new one. He sought to explain the failure of the Labour Government to hold the cost of living, the failure to protect the pensioner, the failure to expand the social services, by the fact that Lend-Lease was withdrawn in the first few months of that Government. That sounds very interesting until one recalls that within a month or two, in December, 1945, the hon. Gentleman's Government received the help of the American and Canadian loans—3,500 million dollars from the United States and 1,250 million dollars from the Canadians—the capital of which, by a curious coincidence, only became repayable in December 1951. If the hon. Gentleman is to introduce the end of Lend-Lease, it would be fair of him to acknowledge the massive support which this country under a Labour Government received from the Americans and the Canadians.

The original Motion has an agreeable audacity about it in these circumstances. It gambles on the shortness of memory of the British people. The right hon. Member for Belper had a little fun about the hole in the housewife's purse. That hole is a great deal smaller than it was. Neither the past record, nor the present performance and, still less, the future proposals which we have heard tonight encourage the housewife to think that there would be any help—

Mr. Herbert W. Bowden (Leicester, South-West) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the words proposed to be left out stand part of the Question: —

The House divided: Ayes 230 Noes 289.

Division No. 137.]	AYES	[10.0 p.m.
Abse, Leo	Hart, Mrs. Judith	Pannell, Charles (Leeds, W.)
Ainsley, William	Hayman, F. H.	Pargiter, G. A.
Albu, Austen	Healey, Denis	Parker, John
Alldritt, W. H.	Henderson, Rt. Hn. Arthur (Rwly Regis)	Parkin, B. T.
Allen, Scholefield (Crewe)	Hewitson, Capt. M.	Pavitt, Laurence
Awbery, Stan (Bristol, Central)	Hill, J. (Midlothian)	Pearson, Arthur (Pontypridd)
Bacon, Miss Alice	Hilton, A. V.	Peart, Frederick
Barnett, Guy	Holman, Percy	Pentland, Norman
Baxter, William (Stirlingshire, W.)	Hooson, H. E.	Popplewell, Ernest
Beaney, Alan	Houghton, Douglas	Prentice, R. E.
Bellenger, Rt. Hon. F. J.	Howell, Charles A. (Perry Barr)	Price, J. T. (Westhoughton)
Benn, Anthony Wedgwood	Howell, Denis (Small Heath)	Probert, Arthur
Bennett, J. (Glasgow, Bridgeton)	Howie, W.	Proctor, W. T.
Benson, Sir- George	Hoy, James H.	Pursey, Cmdr. Harry
Blackburn, F.	Hughes, Cledwyn (Anglesey)	Randall, Harry
Blyton, William	Hughes, Emrys (S. Ayrshire)	Rankin, John
Boardman, H.	Hughes, Hector (Aberdeen, N.)	Redhead, E. C.
Boston, T. G.	Hunter, A. E.	Reynolds, G. W.
Bottomley, Rt. Hon. A. G.	Hynd, H. (Accrington)	Rhodes, H.
Bowden, Rt. Hn. H. W. (Leics, S. W.)	Hynd, John (Attercliffe)	Roberts, Albert (Normanton)
Bowles, Frank	Irvine, A. J. (Edge Hill)	Roberts, Goronwy (Caernarvon)
Boyden, James	Irving, Sydney (Dartford)	Robertson, John (Paisley)
Braddock, Mrs. E. M.	Janner, Sir Barnett	Robinson, Kenneth (St. Pancras, N.)
Bradley, Tom	Jay, Rt. Hon. Douglas	Rodgers, W. T. (Stockton)
Bray, Dr. Jeremy	Jeger, George	Ross, William
Brockway, A. Fenner	Jenkins, Roy (Stechford)	Royle, Charles (Salford, West)
Broughton, Dr. A. D. D.	Johnson, Carol (Lewisham, S.)	Shinwell, Rt. Hon. E.
Brown, Rt. Hon. George (Belper)	Jones, Dan (Burnley)	Silkin, John
Butler, Herbert (Hackney, C.)	Jones, Elwyn (West Ham, S.)	Silverman, Julius (Aston)
Butler, Mrs. Joyce (Wood Green)	Jones, J. Idwal (Wrexham)	Skeffington, Arthur
Callaghan, James	Kelley, Richard	Slater, Mrs. Harriet (Stoke, N.)
Carmichael, Neil	Kenyon, Clifford	Slater, Joseph (Sedgefield)
Castle, Mrs. Barbara	King, Dr. Horace	Small, William
Cliffe, Michael	Lawson, George	Smith, Ellis (Stoke, S.)
Collick, Percy	Ledger, Ron	Snow, Julian
Corbet, Mrs. Freda	Lee, Frederick (Newton)	Sorensen, R. W.
Craddock, George (Bradford, S.)	Lee, Miss Jennie (Cannock)	Soskice, Rt. Hon. Sir Frank
Cronin, John	Lever, Harold (Cheetham)	Spriggs, Leslie
Crosland, Anthony	Lever, L. M. (Ardwick)	Steele, Thomas
Crossman, R. H. S.	Lewis, Arthur (West Ham, N.)	Stewart, Michael (Fulham)
Cullen, Mrs. Alice	Lipton, Marcus	Stonehouse, John
Dalyell, Tam	Loughlin, Charles	Stones, William
Darling, George	Lubbock, Eric	Strauss, Rt. Hn. G. R. (Vauxhall)
Davies, G. Elfed (Rhondda, E.)	Mabon, Dr. J. Dickson	Stross, Sir Barnett (Stoke-on-Trent, C.)
Davies, Harold (Leek)	McBride, N.	Swain, Thomas
Davies, Ifor (Gower)	McCann, J.	Swingler, Stephen
Davies, S. O. (Merthyr)	MacColl, James	Symonds, J. B.
Deer, George	MacDermot, Niall	Taverne, D.
Dempsey, James	McKay, John (Wallsend)	Taylor, Bernard (Mansfield)
Diamond, John	Mackenzie, Gregor	Thomas, George (Cardiff, W.)
Dodds, Norman	Mackie, John (Enfield, East)	Thomas, Iorwerth (Rhondda, W.)
Doig, Peter	McLeavy, Frank	Thompson, Dr. Alan (Dunfermline)
Driberg, Tom	MacPherson, Malcolm	Thomson, G. M. (Dundee, E.)
Duffy, A. E. P. (Colne Valley)	Mallalieu, E. L. (Brigg)	Thornton, Ernest
Edwards, Rt. Hon. Ness (Caerphilly)	Mallalieu, J. P. W. (Huddersfield, E.)	Wade, Donald
Edwards, Robert (Bilston)	Manuel, Archie	Wainwright, Edwin
Evans, Albert	Mapp, Charles	Warbey, William
Fernyhough, E.	Marsh, Richard	Watkins, Tudor
Finch, Harold	Mason, Roy	Weitzman, David
Fitch, Alan	Mayhew, Christopher	Wells, William (Walsall, N.)
Fletcher, Eric	Mellish, R. J.	White, Mrs. Eirene
Foley, Maurice	Mendelson, J. J.	Whitlock, William
Foot, Dingle (Ipswich)	Millan, Bruce	Wigg, George
Foot, Michael (Ebbw Vale)	Milne, Edward	Wilkins, W. A.
Forman, J. C.	Mitchison, G. R.	Willey, Frederick
Fraser, Thomas (Hamilton)	Monslow, Walter	Williams, W. T. (Warrington)
Galpern, Sir Myer	Moody, A. S.	Willis, E. G. (Edinburgh, E.)
George, Lady Megan Lloyd (Crmrthn)	Morris, Charles (Openshaw)	Wilson, Rt. Hon. Harold (Huyton)
Ginsburg, David	Morris, John (Aberavon)	Winterbottom, R. E.
Gordon Walker, Rt. Hon. P. C.	Moyle, Arthur	Woodburn, Rt. Hon. A.
Gourlay, Harry	Mulley, Frederick	Woof, Robert
Grey, Charles	Noel-Baker, Francis (Swindon)	Wyatt, Woodrow
Griffiths, David (Rother Valley)	Noel-Baker, Rt. Hn. Philip (Derby, S.)	Yates, Victor (Ladywood)
Grimond, Rt. Hon. J.	O'Malley, B. K.	Zilliacus, K.
Gunter, Ray	Oswald, Thomas
Hale, Leslie (Oldham, W.)	Owen, Will	TELLERS FOR THE AYES:
Hamilton, William (West Fife)	Padley, W. E.	Mr. Short and Mr. Rogers.
Hannan, William	Paget, R. T.
NOES
Agnew, Sir Peter	Freeth, Denzil	Macmillan, Maurice (Halifax)
Allan, Robert (Paddington, s.)	Galbraith, Hon. T. G. D.	Maddan, Martin
Allason, James	Gammans, Lady	Maginnis, John E.
Amery, Rt. Hon. Julian	Gardner, Edward	Maitland, Sir John
Anderson, D. C.	Gibson-Watt, David	Markham, Major Sir Frank
Arbuthnot, Sir John	Giles, Rear-Admiral Morgan	Marlowe, Anthony
Ashton, Sir Herbert	Gilmour, Ian (Norfolk, Central)	Marples, Rt. Hon. Ernest
Atkins, Humphrey	Glyn, Dr. Alan (Clapham)	Marshall, Sir Douglas
Balniel, Lord	Glyn, Sir Richard (Dorset, N.)	Marten, Neil
Barber, Rt. Hon. Anthony	Godber, Rt. Hon. J. B.	Mathew, Robert (Honiton)
Barlow, Sir John	Goodhart, Philip	Matthews, Gordon (Meriden)
Barter, John	Goodhew, Victor	Maude, Angus (Stratford-on-Avon)
Batsford, Brian	Gough, Frederick	Maudling, Rt. Hon. Reginald
Beamish, Col. Sir Tufton	Gower, Raymond	Mawby, Ray
Bennett, Dr. Reginald (Gos & Fhm)	Grant-Ferris, R.	Maxwell-Hyslop, R. J.
Berkeley, Humphry	Green, Alan	Maydon, Lt.-Cmdr. S. L. C.
Bevins, Rt. Hon. Reginald	Gresham Cooke, R.	Mills, Stratton
Biffen, John	Griffiths, Eldon (Bury St. Edmunds)	Miscampbell, Norman
Biggs-Davison, John	Gurden, Harold	Montgomery, Fergus
Bingham, R. M.	Hall, John (Wycombe)	More, Jasper (Ludlow)
Birch, Rt. Hon. Nigel	Hamilton, Michael (Wellingborough)	Morgan, William
Bishop, Sir Patrick	Harris, Frederic (Croydon, N. W.)	Morrison, Charles (Devizes)
Black, Sir Cyril	Harris, Reader (Heston)	Morrison, John (Salisbury)
Bossom, Hon. Clive	Harrison, Brian (Maldon)	Mott-Radclyffe, Sir Charles
Bourne-Arton, A.	Harrison, Col. Sir Harwood (Eye)	Neave, Airey
Box, Donald	Harvey, Sir Arthur Vere (Macclesf'd)	Nicholls, Sir Harmar
Boyd-Carpenter, Rt. Hon. John	Hastings, Stephen	Noble, Rt. Hon. Michael
Boyle, Rt. Hon. Sir Edward	Hay, John	Nugent, Rt. Hon. Sir Richard
Braine, Bernard	Heald, Rt. Hon. Sir Lionel	Oakshott, Sir Hendrie
Brewis, John	Heath, Rt. Hon. Edward	Orr, Capt. L. P. S.
Bromley-Davenport, Lt.-Col. Sir Walter	Henderson, Sir John (Cathcart)	Orr-Ewing, Sir Ian (Hendon, North)
Brooke, Rt. Hon. Henry	Hendry, Forbes	Osborn, John (Hallam)
Brown, Alan (Tottenham)	Hicks Beach, Maj. W.	Osborne, Sir Cyril (Louth)
Bryan, Paul	Hiley, Joseph	Page, Graham (Crosby)
Buck, Antony	Hill, Mrs. Eveline (Wythenshawe)	Page, John (Harrow, West)
Bullard, Denys	Hirst, Geoffrey	Pannell, Norman (Kirkdale)
Bullus, Wing Commander Eric	Hobson, Rt. Hon. Sir John	Partridge, E.
Butcher, Sir Herbert	Hocking, Philip N.	Pearson, Frank (Clitheroe)
Campbell, Gordon	Hogg, Rt. Hon. Quintin	Peel, John
Carr, Compton (Barons Court)	Holland, Philip	Percival, Ian
Carr, Rt. Hon. Robert (Mitcham)	Hollingworth, John	Pickthorn, Sir Kenneth
Cary, Sir Robert	Hopkins, Alan	Pike, Miss Mervyn
Chataway, Christopher	Hornby, R. P.	Pitt, Dame Edith
Clark, Henry (Antrim, N.)	Hornsby-Smith, Rt. Hon. Dame P.	Pounder, Rafton
Clark, William (Nottingham, S.)	Hughes Hallett, Vice-Admiral John	Powell, Rt. Hon. J. Enoch
Clarke, Brig. Terence (Portsmth, W.)	Hughes-Young, Michael	Price, David (Eastleigh)
Cleaver, Leonard	Hutchison, Michael Clark	Prior, J. M. L.
Cole, Norman	Iremonger, T. L.	Prior-Palmer, Brig. Sir Otho
Cooke, Robert	Irvine, Bryant Godman (Rye)	Proudfoot, Wilfred
Cooper, A. E.	Jackson, John	Pym, Francis
Cooper-Key, Sir Neill	James, David	Quennell, Miss J. M.
Cordeaux, Lt.-Col. J. K.	Jennings, J. C.	Ramsden, Rt. Hon. James
Cordle, John	Johnson, Dr. Donald (Carlisle)	Rawlinson, Rt. Hon. Sir Peter
Corfield, F. V.	Johnson, Eric (Blackley)	Redmayne, Rt. Hon. Martin
Costain, A. P.	Jones, Rt. Hn. Aubrey (Hall Green)	Rees, Hugh (Swansea, W.)
Courtney, Cdr. Anthony	Joseph, Rt. Hon. Sir Keith	Rees-Davies, W. R. (Isle of Thanet)
Craddock, Sir Beresford (Spelthorne)	Kaberry, Sir Donald	Renton, Rt. Hon. David
Crawley, Aldan	Kerans, Cdr. J. S.	Ridley, Hon. Nicholas
Critchley, Julian	Kerby, Capt. Henry	Ridsdale, Julian
Crosthwaite-Eyre, Col. Sir Oliver	Kerr, Sir Hamilton	Rippon, Rt. Hon. Geoffrey
Crowder, F. P.	Kimball, Marcus	Rodgers, Sir John (Sevenoaks)
Curran, Charles	Kirk, Peter	Roots, William
Dance, James	Kitson, Timothy	Ropner, Col. Sir Leonard
d'Avigdor-Goldsmid, Sir Henry	Lagden, Godfrey	Royle, Anthony (Richmond, Surrey)
Deedes, Rt. Hon. W. F.	Lambton, Viscount	Russell, Sir Ronald
Digby, Simon Wingfield	Lancaster, Col. C. G.	Sandys, Rt. Hon. Duncan
Donaldson, Cmdr. C. E. M.	Leavey, J. A.	Scott-Hopkins, James
Doughty, Charles	Legge-Bourke, Sir Harry	Seymour, Leslie
Douglas-Home, Rt. Hon. Sir Alec	Lewis, Kenneth (Rutland)	Sharples, Richard
Drayson, G. B.	Lilley, F. J. P.	Shepherd, William
Eden, Sir John	Linstead, Sir Hugh	Skeet, T. H. H.
Elliot, Capt. Walter (Carshalton)	Litchfield, Capt. John	Smith, Dudley (Br'ntf'd & Chiswick)
Elliot, R. W. (Newc'tle-upon-Tyne, N.)	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)	Smyth, Rt. Hon. Brig. Sir John
Emmet, Hon. Mrs. Evelyn	Lloyd, Rt. Hon. Selwyn (Wirral)	Soames, Rt. Hon. Christopher
Farey-Jones, F. W.	Longbottom, Charles	Spearman, Sir Alexander
Farr, John	Longden, Gilbert	Speir, Rupert
Fell, Anthony	Loveys, Walter H.	Stainton, Keith
Fisher, Nigel	Lucas, Sir Jocelyn	Stanley, Hon. Richard
Fletcher-Cooke, Charles	Lucas-Tooth, Sir Hugh	Stevens, Geoffrey
Forrest, George	McAdden, Sir Stephen	Stodart, J. A.
Foster, Sir John	McLaren, Martin	Stoddart-Scott, Col, Sir Malcolm
Fraser, Rt. Hon. Hugh (Stafford & Stone)	Maclean, Sir Fitzroy (Bute & N. Ayrs)	Storey, Sir Samuel
Fraser, Ian (Plymouth, Sutton)	McMaster, Stanley R.	Studholme, Sir Henry
Summers, Sir Spencer	Tiley, Arthur (Bradford, W.)	Whitelaw, William
Talbot, John E.	Tilney, John (Wavertree)	Williams, Sir Rolf Dudley (Exeter)
Tapsell, Peter	Touche, Rt. Hon. Sir Gordon	Williams, Paul (Sunderland, S.)
Taylor, Sir Charles (Eastbourne)	Turner, Colin	Wills, Sir Gerald (Bridgwater)
Taylor, Edwin (Bolton, E.)	Turton, Rt. Hon. R. H.	Wilson, Geoffrey (Truro)
Taylor, Frank (M'ch'st'r, Moss Side)	van Straubenzee, W. R.	Wise, A. R.
Teeling, Sir William	Vaughan-Morgan, Rt. Hon. Sir John	Wolrige-Gordon, Patrick
Temple, John M.	Walder, David	Wood, Rt. Hon. Richard
Thatcher, Mrs. Margaret	Walker, Peter	Woodhouse, Hon. Christopher
Thomas, Sir Leslie (Canterbury)	Walker-Smith, Rt. Hon. Sir Derek	Woollam, John
Thompson, Sir Kenneth (Walton)	Wall, Patrick	Worsley, Marcus
Thompson, Sir Richard (Croydon, S.)	Ward, Dame Irene	Yates, William (The Wrekin)
Thorneycroft, Rt. Hon. Peter	Webster, David
Thornton-Kemsley, Sir Colin	Wells, John (Maidstone)	TELLERS FOR THE NOES:
		Mr. Finlay and Mr. J. E. B. Hill

Question put, That the proposed words be there added: —

The House divided: Ayes 281, Noes 228.

Division No. 138.]	AYES	[10.13 p.m.
Agnew, Sir Peter	Digby, Simon Wingfield	Irvine, Bryant Godman (Rye)
Allan, Robert (Paddington, S.)	Donaldson, Cmdr. C. E. M.	Jackson, John
Allason, James	Doughty, Charles	James, David
Amery, Rt. Hon. Julian	Drayson, G. B.	Jennings, J. C.
Arbuthnot, Sir John	Eden, Sir John	Johnson, Dr. Donald (Carlisle)
Atkins, Humphrey	Elliot, Capt. Walter (Carshalton)	Johnson, Eric (Blackley)
Balniel, Lord	Elliott, R. W.(Newc'tle-upon-Tyne, N.)	Jones, Rt. Hon. Aubrey (Hall Green)
Barber, Rt. Hon. Anthony	Emmet, Hon. Mrs. Evelyn	Joseph, Rt. Hon. Sir Keith
Barlow, Sir John	Farey-Jones, F. W.	Kaberry, Sir Donald
Barter, John	Farr, John	Kerans, Cdr. J. S.
Batsford, Brian	Fell, Anthony	Kerby, Capt. Henry
Beamish, Col. Sir Tufton	Fisher, Nigel	Kerr, Sir Hamilton
Bennett, Dr. Reginald (Gos & Fhm)	Fletcher-Cooke, Charles	Kimball, Marcus
Berkeley, Humphry	Foster, Sir John	Kirk, Peter
Bevins, Rt. Hon. Reginald	Fraser, Rt. Hn. Hugh (Stafford & Stone)	Kitson, Timothy
Biffen, John	Fraser, Ian (Plymouth, Sutton)	Lagden, Godfrey
Biggs-Davison, John	Freeth, Denzil	Lambton, Viscount
Bingham, R. M.	Galbraith, Hon. T. G. D.	Lancaster, Col. C. G.
Birch, Rt. Hon, Nigel	Gammans, Lady	Leavey, J. A.
Bishop, Sir Patrick	Gardner, Edward	Legge-Bourke, Sir Harry
Black, Sir Cyril	Gibson-Watt, David	Lewis, Kenneth (Rutland)
Bossom, Hon. Clive	Giles, Rear-Admiral Morgan	Lilley, F. J. P.
Bourne-Arton, A.	Gilmour, Ian (Norfolk, Central)	Linstead, Sir Hugh
Box, Donald	Glyn, Dr. Alan (Clapham)	Litchfield, Capt. John
Boyd-Carpenter, Rt. Hon. John	Glyn, Sir Richard (Dorset, N.)	Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)
Boyle, Rt. Hon. Sir Edward	Godber, Rt. Hon. J. B.	Lloyd, Rt. Hon. Selwyn (Wirral)
Braine, Bernard	Goodhart, Philip	Longbottom, Charles
Brewis, John	Goodhew, Victor	Longden, Gilbert
Bromley-Davenport, Lt. -Col. Sir Walter	Gough, Frederick	Loveys, Walter H.
Brooke, Rt. Hon. Henry	Gower, Raymond	Lucas, Sir Jocelyn
Brown, Alan (Tottenham)	Grant-Ferris, R.	Lucas-Tooth, Sir Hugh
Bryan, Paul	Green, Alan	McAdden, Sir Stephen
Buck, Antony	Gresham Cooke, R.	McLaren, Martin
Bullard, Denys	Griffiths, Eldon (Bury St. Edmunds)	Maclean, Sir Fitzroy (Bute & N. Ayrs)
Bullus, Wing Commander Eric	Gurden, Harold	McMaster, Stanley R.
Butcher, Sir Herbert	Hall, John (Wycombe)	Macmillan, Maurice (Halifax)
Campbell, Gordon	Hamilton, Michael (Wellingborough)	Maddan, Martin
Carr, Compton (Barons Court)	Harris, Frederic (Croydon, N. W.)	Maginnis, John E.
Carr, Rt. Hon. Robert (Mitcham)	Harris, Reader (Heston)	Maitland, Sir John
Cary, Sir Robert	Harrison, Brian (Maldon)	Markham, Major Sir Frank
Chataway, Christopher	Harrison, Col. Sir Harwood (Eye)	Marlowe, Anthony
Clark, Henry (Antrim, N.)	Hastings, Stephen	Marshall, Sir Douglas
Clark, William (Nottingham, S.)	Hay, John	Marten, Neil
Clarke, Brig. Terence (Portsmth, W.)	Heald, Rt. Hon. Sir Lionel	Mathew, Robert (Honiton)
Cleaver, Leonard	Heath, Rt. Hon. Edward	Matthews, Gordon (Meridan)
Cole, Norman	Hendry, Forbes	Maude, Angus (Stratford-on-Avon)
Cooke, Robert	Hicks Beach, Maj. W.	Maudling, Rt. Hon. Reginald
Cooper, A. E.	Hiley, Joseph	Mawby, Ray
Cooper-Key, Sir Neill	Hill, Mrs. Eveline (Wythenshawe)	Maxwell-Hyslop, R. J.
Cordeaux, Lt.-Col. J. K.	Hirst, Geoffrey	Maydon, Lt. Cmdr. S. L. C.
Corfield, F. V.	Hobson, Rt. Hon. Sir John	Mills, Stratton
Costain, A. P.	Hocking, Philip N.	Miscampbell, Norman
Courtney, Cdr. Anthony	Hogg, Rt. Hon. Quintin	Montgomery, Fergus
Craddock, Sir Beresford (Spelthorne)	Holland, Philip	More, Jasper (Ludlow)
Crawley, Aldan	Hollingworth, John	Morgan, William
Critchley, Julian	Hopkins, Alan	Morrison, Charles (Devizes)
Crosthwaite-Eyre, Col. Sir Oliver	Hornby, R. P.	Morrison, John (Salisbury)
Crowder, F, P.	Hornsby-Smith, Rt. Hon. Dame P.	Mott-Radcliffe, Sir Charles
Curran, Charles	Hughes Hallett, Vice-Admiral John	Neave, Airey
Dance, James	Hughes-Young, Michael	Nicholls, Sir Harmar
d'Avigdor-Goldsmid, Sir Henry	Hutchison, Michael Clark	Noble, Rt. Hon. Michael
Deedes, Rt. Hon. W. F.	Iremonger, T. L.	Nugent, Rt. Hon. Sir Richard
Oakshott, Sir Hendrie	Roots, William	Thompson, Sir Richard (Croydon, S.)
Orr, Capt. L. P. S.	Ropner, Col. Sir Leonard	Thorneycroft, Rt. Hon. Peter
Orr-Ewing, Sir Ian (Hendon, North)	Royle, Anthony (Richmond, Surrey)	Thornton-Kemsley, Sir Colin
Osborn, John (Hallam)	Russell, Sir Ronald	Tiley, Arthur (Bradford, W.)
Osborne, Sir Cyril (Louth)	Sandys, Rt. Hon. Duncan	Tilney, John (Wavertree)
Page, Graham (Crosby)	Scott-Hopkins, James	Touche, Rt. Hon. Sir Gordon
Page, John (Harrow, West)	Seymour, Leslie	Turner, Colin
Pannell, Norman (Kirkdale)	Sharples, Richard	Turton, Rt. Hon. R. H.
Partridge, E.	Shepherd, William	van Straubenzee, W. R.
Pearson, Frank (Clitheroe)	Skeet, T. H. H.	Vaughan-Morgan, Rt. Hon. Sir John
Peel, John	Smith, Dudley (Br'ntf'd & Chiswick)	Walder, David
Percival, Ian	Smyth, Rt. Hon. Brig. Sir John	Walker, Peter
Pickthorn, Sir Kenneth	Soames, Rt. Hon. Christopher	Walker-Smith, Rt. Hon. Sir Derek
Pike, Miss Mervyn	Spearman, Sir Alexander	Wall, Patrick
Pitt, Dame Edith	Speir, Rupert	Ward, Dame Irene
Pounder, Rafton	Stainton, Keith	Webster, David
Powell, Rt. Hon. J. Enoch	Stanley, Hon. Richard	Wells, John (Maidstone)
Price, David (Eastleigh)	Stevens, Geoffrey	Whitelaw, William
Prior, J. M. L.	Stodart, J. A.	Williams, Sir Rolf Dudley (Exeter)
Prior-Palmer, Brig. Sir Otho	Stoddart-Scott, Col. Sir Malcolm	Williams, Paul (Sunderland, S.)
Proudfoot, Wilfred	Storey, Sir Samuel	Wills, Sir Gerald (Bridgwater)
Pym, Francis	Studholme, Sir Henry	Wilson, Geoffrey (Truro)
Quennell, Miss J. M.	Summers, Sir Spencer	Wise, A. R.
Ramsden, Rt. Hon. James	Talbot, John E.	Wolrige-Gordon, Patrick
Rawlinson, Rt. Hon. Sir Peter	Tapsell, Peter	Wood, Rt. Hon. Richard
Redmayne, Rt. Hon. Martin	Taylor, Sir Charles (Eastbourne)	Woodhouse, Hon. Christopher
Rees, Hugh (Swansea, W.)	Taylor, Edwin (Bolton, E.)	Woollam, John
Rees-Davies, W. R. (Isle of Thanet)	Taylor, Frank (M'ch'st'r, Moss Side)	Worsley, Marcus
Renton, Rt. Hon. David	Teeling, Sir William	Yates, William (The Wrekin)
Ridley, Hon. Nicholas	Temple, John M.
Ridsdale, Julian	Thatcher, Mrs. Margaret	TELLERS FOR THE AYES:
Rippon, Rt. Hon. Geoffrey	Thomas, Sir Leslie (Canterbury)	Mr. Finlay and Mr. J. E. B. Hill.
Rodgers, Sir John (Sevenoaks)	Thompson, Sir Kenneth (Walton)
NOES
Abse, Leo	Diamond, John	Hynd, John (Attercliffe)
Ainsley, William	Dodds, Norman	Irvine, A. J. (Edge Hill)
Albu, Austen	Doig, Peter	Irving, Sydney (Dartford)
Aldritt, W. H.	Driberg, Tom	Janner, Sir Barnett
Allen, Scholefield (Crewe)	Duffy, A. E. P. (Colne Valley)	Jay, Rt. Hon. Douglas
Awbery, Stan (Bristol, Central)	Edwards, Rt. Hon. Ness (Caerphilly)	Jeger, George
Bacon, Miss Alice	Edwards, Robert (Bilston)	Johnson, Carol (Lewisham, S.)
Barnett, Guy	Evans, Albert	Jones, Dan (Burnley)
Baxter, William (Stirlingshire, W.)	Fernyhough, E.	Jones, Elwyn (West Ham, S.)
Beaney, Alan	Finch, Harold	Jones, J. Idwal (Wrexham)
Bellenger, Rt. Hon. F. J.	Fitch, Alan	Kelley, Richard
Benn, Anthony Wedgwood	Fletcher, Eric	Kenyon, Clifford
Bennett, J. (Glasgow, Bridgeton)	Foley, Maurice	King, Dr. Horace
Benson, Sir George	Foot, Dingle (Ipswich)	Lawson, George
Blackburn, F.	Foot, Michael (Ebbw Vale)	Ledger, Ron
Blyton, William	Forman, J. C.	Lee, Frederick (Newton)
Boardman, H.	Fraser, Thomas (Hamilton)	Lee, Miss Jennie (Cannock)
Boston, T. G.	Galpern, Sir Myer	Lever, Harold (Cheetham)
Bottomley, Rt. Hon. A. G.	George, LadyMegan Lloyd (Crmrthn)	Lever, L. M. (Ardwick)
Bowden, Rt. Hn. H. W. (Leics, S. W.)		Lewis, Arthur (West Ham, N.)
Bowles, Frank	Ginsburg, David	Lipton, Marcus
Boyden, James	Gordon Walker, Rt. Hon. P. C.	Loughlin, Charles
Braddock, Mrs. E. M.	Gourlay, Harry	Lubbock, Eric
Bradley, Tom	Grey, Charles	Mabon, Dr. J. Dickson
Bray, Dr. Jeremy	Griffiths, David (Rother Valley)	McBride, N.
Brockway, A. Fenner	Grimond, Rt. Hon. J.	McCann, J.
Broughton, Dr. A. D. D.	Gunter, Ray	MacColl, James
Brown, Rt. Hon. George (Belper)	Hale, Leslie (Oldham, w.)	MacDermott, Niall
Butler, Herbert (Hackney, C.)	Hamilton, William (West Fife)	McKay, John (Wallsend)
Butler, Mrs. Joyce (Wood Green)	Hannan, William	Mackenzie, Gregor
Callaghan, James	Hart, Mrs. Judith	Mackie, John (Enfield, East)
Carmichael, Neil	Hayman, F. H.	McLeavy, Frank
Castle, Mrs. Barbara	Healey, Denis	MacPherson, Malcolm
Cliffe, Michael	Henderson, Rt. Hn. Arthur (RwlyRegis)	Mallalieu, E. L. (Brigg)
Collick, Percy	Hewitson, Capt. M.	Mallalieu, J. P. W. (Huddersfield, E.)
Corbet, Mrs. Freda	Hill, J. (Midlothian)	Manuel, Archie
Craddock, George (Bradford, S.)	Hilton, A. V.	Mapp, Charles
Cronin, John	Holman, Percy	Marsh, Richard
Crosland, Anthony	Hooson, H. E.	Mason, Roy
Crossman, R. H. S.	Houghton, Douglas	Mayhew, Christopher
Cullen, Mrs. Alice	Howell, Charles A. (Perry Barr)	Mellish, R. J.
Dalyell, Tam	Howell, Denis (Small Heath)	Mendelson, J. J.
Darling, George	Howie, W.	Millan, Bruce
Davies, G. Elfed (Rhondda, E.)	Hoy, James H.	Milne, Edward
Davies, Harold (Leek)	Hughes, Cledwyn (Anglesey)	Mitchison, G. R.
Davies, Ifor (Cower)	Hughes, Emrys (S. Ayrshire)	Monslow, Walter
Davies, S. O. (Merthyr)	Hughes, Hector (Aberdeen, N.)	Morris, Charles (Openshaw)
Deer, George	Hunter, A. E.	Morris, John (Aberavon)
Dempsey, James	Hynd, H. (Accrington)	Moyle, Arthur
Mulley, Frederick	Roberts, Goronwy (Caernarvon)	Taylor, Bernard (Mansfield)
Noel-Baker, Francis (Swindon)	Robertson, John (Paisley)	Thomas, George (Cardiff, W.)
Noel-Baker, Rt. Hn. Philip (Derby, S.)	Robinson, Kenneth (St. Pancras, N.)	Thomas, Iorwerth (Rhondda, W.)
O'Malley, B. K.	Rodgers, W. T. (Stockton)	Thompson, Dr. Alan (Dunfermline)
Oswald, Thomas	Ross, William	Thomson, G. M. (Dundee, E.)
Owen, Will	Royle, Charles (Salford, West)	Thornton, Ernest
Padley, w. E.	Shinwell, Rt. Hon. E.	Wade, Donald
Paget, R. T.	Silkin, John	Wainwright, Edwin
Pannell, Charles (Leeds, W.)	Silverman, Julius (Aston)	Warbey, William
Pargiter, G. A.	Skeffington, Arthur	Watkins, Tudor
Parker, John	Slater, Mrs. Harriet (Stoke, N.)	Weitzman, David
Parkin, B. T.	Slater, Joseph (Sedgefield)	Wells, William (Walsall, N.)
Pavitt, Laurence	Small, William	White, Mrs. Eirene
Pearson, Arthur (Pontypridd)	Smith, Ellis (Stoke, S.)	Whitlock, William
Peart, Frederick	Snow, Julian	Wigg, George
Pentland, Norman	Sorensen, R. W.	Wilkins, W. A.
Popplewell, Ernest	Soskice, Rt. Hon. Sir Srank	Willey, Frederick
Prentice, R. E.	Spriggs, Leslie	Williams, W. T. (Warrington)
Price, J. T. (Westhoughton)	Steele, Thomas	Willis, E. G. (Edinburgh, E.)
Probert, Arthur	Stewart, Michael (Fulham)	Wilson, Rt. Hon. Harold (Huyton)
Proctor, W. T.	Stonehouse, John	Winterbottom, R. E.
Pursey, Cmdr. Harry	Stones, William	Woodburn, Rt. Hon. A.
Randall, Harry	Strauss, Rt. Hon. G. R. (Vauxhall)	Woof, Robert
Rankin, John	Stross, Sir Barnett (Stoke-on-Trent, C.)	Wyatt, Woodrow
Redhead, E. C.	Swain, Thomas	Yates, Victor (Ladywood)
Reynolds, G. W.	Swingler, Stephen	Zilliacus, K.
Rhodes, H.	Symonds, J. B.
Roberts, Albert (Normanton)	Taverne, D.	TELLERS FOR THE NOES:
		Mr. Short and Mr. Rogers.

Main Question, as amended, put and agreed to.

Resolved, That this House supports the economic and financial policies of Her Majesty's Government designed to secure growth without inflation, and welcomes the greater stability in prices of recent years and the high level of employment and living standards as evidence of the success of these policies.