§ 4.8 p.m.
§ The First Secretary of State and Secretary of State for Economic Affairs (Mr. George Brown)
I beg to move,That this House welcomes the National Plan (Command Paper No. 2764).
§ Mr. T. L. Iremonger (Ilford, North)
On a point of order. Would I be correct in assuming, Mr. Speaker, that the Amendment standing in my name on the Order Paper is not being called, namely, to leave out "welcomes" and insert "takes note of" and at the end to add:congratulates Her Majesty's Government on the adoption of ideas and policies (especially the idea that most manufacturing industry and commerce is, and will continue to be, largely governed by the market economy) which Her Majesty's present advisers opposed and derided in previous years, and regrets that an instructive exercise in hopeful forecasting should be misleadingly presented as a plan".
§ Mr. Speaker
I am sorry. I should have mentioned that the Amendment in the hon. Gentleman's name is not selected.
§ Mr. Brown
I read the wording of the Motion because of its significance, and perhaps I could have the attention of the Leader of the Opposition while I do so. I am sure that he would like me to read the wording. When we understand, as we do, that the Leader of the Opposition is advising his right hon. and hon. Friends to accept a Motion to welcome the National Plan, one is very much impressed with the powers of change and conversion that still exist in this democracy of ours. When one remembers what the right hon. Gentleman said before he read the Plan and one realises that now that he has read it he welcomes it, there are obviously possibilities for it yet.
One looks for the right hon. Member for Wolverhampton, South-West (Mr. Powell), who not only called the Plan, as the Leader of the Opposition called it, the biggest publicity gimmick of all time—which the Leader of the Opposition now favours and which is welcome on the benches opposite—but who went even further and called it "a nonsense, a dangerous nonsense". The Plan is now welcomed by hon. and right hon. Members opposite. The Opposition had better make up their minds. If it was all the 1042 things which they said it was before they read it but they do not now think so, that is a tribute to the Plan. If, on the other hand, they still think so but they have not got the courage to stand up and say it, that is not much of a tribute to them.
Even so, there is still a difference between the Leader of the Opposition and ourselves about it, and we had better have it clear. At Bristol last weekend, he made a speech, reported in The Guardian, in which he dropped his previous criticism of the Plan but went on to say that he was in favour of surveys, forecasts and studies. This really sums up the difference which still exists between us. We believe not only in surveys, forecasts and studies, but in commitments, decisions and action.
§ Mr. Brown
The right hon. Gentleman says "by the Government". He cannot have it both ways, because in the same speech he objected to the Plan because there was not any commitment by the Government. Now he thinks that there is. He must make up his mind.
The right hon. Gentleman is quite right in that there is a commitment, there are decisions and there is action by the Government involved, which he is against, I gather from his speech the other day; and this is the difference between us. But, oddly enough—or perhaps not so oddly—the hope that this country may end the cycle of stop-go-stop, of stagnation and occasional insupportable booms, lies in the difference in our conception of planning from theirs. This is why, in our view, machinery is as important as planning, national machinery, industrial machinery and regional machinery, none of which was provided in the days of the right hon. Gentleman's Government.
The Plan is designed to achieve four main objectives. The first is to put right the balance of payments. Everything else we hope to do depends on this. The second is to speed up the rate of growth. Our target here expressed over the period 1964–70 is, as the House knows, a 25 per cent. increase. These two objectives, correcting the imbalance in our balance of payments situation and speeding up the rate of growth, are obviously closely related, and the improvement of our foreign 1043 trade position and our faster growth depend to a large extent on the speed with which we can improve efficiency and productivity in British industry.
The third objective is to secure a better regional balance of development, to put an end to the situation in which some parts of the country suffer from lack of jobs while others suffer from problems of congestion and overcrowding. The fourth objective is to ensure that the fruits of future growth are used in accordance with the needs of a civilised and just society. This is another basic difference between us. The Conservative attitude, which comes out in every speech they make—it came out very clearly in a speech by the right hon. Member for Enfield, West (Mr. Iain Macleod) the other day—is a dislike of social spending and social provision and an almost obsessional devotion to the idea that whatever a person himself does is good and whatever we join together to do for ourselves as a community is bad.
An essential key to these four objectives is an effective policy for productivity, prices and incomes. Here again, there is a basic difference between the two sides, and there is also an obvious basic difference within the Opposition side. Such an effective policy is vital if we are to become sufficiently competitive internationally to achieve our balance of payments objective and our growth target. It is vital also if we are to get rid of the free-for-all system at home under which it is the weakest who always go to the wall.
We have made clear as a Government that we intend to reinforce the activities of those concerned in industry in order to make such a policy effective. We want it to be effective voluntarily. We shall reinforce the voluntary efforts by legislative powers if that is required. Here, I pay tribute to the tremendous steps forward which were taken by both the Trades Union Congress and the Confederation of British Industry a couple of weeks ago in which, for the first time in this country—perhaps hon. Members opposite do not recognise what is happening—the central bodies of both organisations in industry, of the employers and of the unions, themselves took authority and power to begin to operate in this field as is done in other developed Indus- 1044 trial democracies. These were the very first steps ever taken, and it took a great deal of courage on the part of the general council of the T.U.C. and the leaders of the C.B.I. to move in this direction. I pay tribute to it, and I recognise that it was quite a historic day on which those events happened.
The Conservative Party's attitude in this House is quite different from the attitude developing in industry outside. The right hon. Member for Wolverhampton, South-West, who is a member of the Shadow Cabinet, has not only said that it is a patriotic duty for everyone to maximise what he can get personally by way of profits or by way of personal income, but he has denounced the whole policy as "a nonsense, a silly nonsense, a transparent nonsense, and, what is more and worse, a dangerous nonsense."
On the contrary, the manifesto on which the right hon. Gentleman sought election from his constituents said this:An effective and a fair incomes policy is crucial to the achievement of sustained growth without inflation".Either hon. and right hon. Members opposite meant it when they said it to the electors, or they did not.
In fact, there is a straightforward piece of duplicity—if one can have a straightforward piece of duplicity—going on here. I put some straight questions to the right hon. Gentleman who is to follow me. Where do the Opposition, for whom he speaks today, stand—on their election manifesto or on the speech of the right hon. Member for Wolverhampton, South-West? Let us assume that the right hon. Gentleman has his reservations, but are they collectively in favour of a fair prices and incomes policy? [Interruption.] Whatever reservations any one Member may have, are they collectively in favour? [An hon. Member: "What about the right hon. Gentleman and his right hon. and hon. Friends collectively?] We are collectively in favour. We are doing it. Hon. Members should ask people outside. Let the right hon. Gentleman answer for his own Front Bench. Can he? We shall see whether he makes a declaration on behalf of the Opposition Front Bench. My guess is that he will not. The country and industrial leaders outside, who are not our supporters, know that the Opposition Front Bench at least is unable to give a decision.
1045 If they stand by their election manifesto on this matter and they believe that the policy is right, do they accept the methods we are using to bring it about? If not, will they tell us what methods they would themselves pursue? We would very much like to hear them.
At the weekend, the right hon. Gentleman issued a statement which purported to show that there was some difference between the Chancellor and myself on the subject. That only shows how important it is to check one's references. If the right hon. Gentleman would read the statement that was put out on 3rd September, the night that I went to Brighton to speak to the General Council of the T.U.C., he will see that I used the very same words that the Chancellor used last weekend at Lanark. If the right hon. Gentleman had even bothered to look at the transcript of what I said at Blackpool to the Labour Party Conference at the end of September, he would have found that I repeated in almost the very same words what the Chancellor said at Lanark and what I had myself said on 3rd September. The fact of the matter is that, in an issue of critical importance to planning, to our growth rate and to our competitive power, the Opposition is more concerned to play the fool than it is to get to grips with the problem.
I return to our balance of payments, which is the first objective of the Plan. I gather that the right hon. Gentleman the Leader of the Opposition is getting a little sensitive about our ever mentioning that there was a balance of payments deficit left to us last year, and, rather like some other countries, he is making strenuous efforts to rewrite the history of the period with certain essential pieces written out. I have no doubt that in the end we shall be blamed for the whole thing. If we had not looked like winning the election a year ago, there would not have been a deficit, he will say. "Oh", says the right hon. and learned Gentleman the Member for the Wirral (Mr. Selwyn Lloyd), "there is something in that". He is the right fellow to talk about it. If I were him I would keep very quiet over there. At the moment, I have another fish in my sights.
The right hon. Gentleman the Leader of the Opposition is so sensitive about it that he has buried the disgraceful lie once. Having buried it, he disposed of it two 1046 weeks later. Having buried it and then disposed of it, he has now dealt with it for a third time. It must be pretty clear by now, even to him, that it is something that refuses to lie down. Let us get it quite clear between us: the £800 million deficit was a statistical fact.
§ Mr. Brown
The hon. Gentleman the Member for Louth is quite right—plus £56 million on the waiver we took on the U.S.
The right hon. Gentleman the Leader of the Opposition was not as blunt and as open as his hon. Friend when he was burying, disposing of and dealing with that disgraceful lie. Some of it was current; and that is quite right. Some of it was stocks; and that is quite right. Some of it was capital; and that is quite right. But the fact remains that, whether it was category one, two or three, it was still all there, and it added up to £800 million. There it was when we came in, however it was divided. That is what we inherited, that is what we had to deal with and what they would have had to deal with if they had got back. They could not go on dodging it. That deficit was equal to the best part of our reserves, and was bound to lead to speculation against the £. With the help of our friends, we have now beaten the speculators, but the need to repay the debts incurred in the process will place a heavy burden on the balance of payments for some years to come. Whether the men who created the mess which led to the borrowing are the right ones to comment is another matter altogether.
Our objective in the Plan is to remove the deficit in the course of next year and then build up over the period ahead of us the surpluses which are needed to repay the loans incurred as a result of the deficit that we inherited. We say in the Plan, for reasons that we set out there, that we shall require a surplus of some £250 million by 1970. To do that, we shall have to look for improvements in all items of our balance of payments, and it does not do the integrity of right hon. Gentlemen opposite very much good to go round attacking each one of the adjustments that we make, when they know very well that if we are going to 1047 get rid of it and turn it into a surplus adjustments of that kind have to be made.
We cannot as a country any longer assume burdens that can only be discharged either by crippling the growth of our own economy or by borrowing from overseas. It does not matter how desirable they may be in themselves in other circumstances; they cannot be undertaken in the present sort of circumstance if we are to get a surplus. Right hon. Gentlemen opposite understand that as well as we do and should be saying it as well. For that reason, the Government are determined to achieve a substantial saving in overseas military expenditure, and that is also a reason why the Plan can only make provision for a small rise on present levels of aid. I thought that the comment which the right hon. Gentleman made the other night about a breach of faith on that account was peculiarly out of place in the situation which he knows to exist. It is also why we must also reduce capital movements on private account. Those may be desirable in other circumstances, but they are not supportable when the result is these very large borrowings in order to sustain them.
The estimates are here in the Plan. If we get all that we shall make a considerable inroad this year and help considerably towards removing the deficit next year. But, on top of that, we also need a very substantial improvement in our balance of trade, and it is here that the improvement in our competitive strength is so vital. One of the factors contributing to the balance of payments difficulties has been the very rapid rise in imports of manufactured goods. We must compete more effectively not only in overseas markets but also on our own doorstep. As the Plan shows, we are setting out in a number of industries to tackle that at the grass roots where that lack of competitiveness here at home is holding us back.
On the other side of the account, as it were, exports will have to increase by 5¼ per cent. a year in volume. That, I believe, is the central challenge of the Plan. The estimates of individual industries' export orders in our industrial inquiry make it quite clear that an increase of that order is feasible. But it will in- 1048 volve a marked improvement on past performance. It is for industry and the Government, to co-operate to obtain that improvement, and I will say a word about that in a moment. We have already introduced a series of new measures which in our view will help to stimulate exports. Those include the export rebate; markedly improved credit insurance facilities, with a considerable lowering of the level at which they take effect as against the past and a considerable lessening of the period over which they are operative; cheaper export credit; the so-called pick-a-back scheme to help small exporters; greater support for the British National Export Council; and a stepping up of the very good work which the Board of Trade does in export promotion activities overseas. Those amount to a very considerable degree of help and, given the limitations on us as a result of our international obligations, a very considerable amount of held indeed.
The hon. Member for Peterborough (Sir Harmar Nicholls) keeps muttering about tax incentives and taxation reductions. We do not accept for any other group in the community that the only thing that justifies them in doing their duty by the community is to lower their taxes. I do not believe that exporters or business men make this claim. On the other hand, the package deal that we have gone into, as I well know, and as the right hon. Gentleman opposite will find out for himself by inquiring, is a very considerable help to them.
Other work is being done. We are doing it in particular industries with the Economic Development Committees, and on the vital question of the movement of export. I accept that it is not merely a matter of getting the production, not merely even of finding where the markets are, not merely even of financing or helping to finance the operation. There is the problem of moving goods quickly enough from the factory to the dock, through the docks and to the customers overseas. There is a very considerable job to be done here. I regard the Economic Development Committee on the Movement of Exports as one of the most valuable bodies established in the last year, and I think that its work can be among the most useful that is done.
This is, of course, in the end the long-term attack, but measures will obviously 1049 take time to be effective, as will the drive, however much we push it on, to speed up the growth of efficiency in British industry. In the meantime one has to deal with the short-term position, and the Plan takes account of this and says what we have done and gives the consequences of what we have had to do. I neither hide what we have done, nor try to avoid recognition of the consequences of it. We have had to take a number of temporary measures to deal with the immediate balance of payments situation, and we have been fully attacked by those who created the need which led to our having to do so.
These measures have been backed up by steps to reduce the pressure on the economy at home, a point to which right hon. Gentlemen opposite never cease to draw attention, nor should they. Nor do we. Those things had to be done. It was all part of an inevitable, inescapable job to deal with the short-term situation. What they do not draw attention to, but what I should like to draw attention to, is that we have gone to great pains not only to correct the balance of payments in the short-term in this way but to do it in such a way that we do not damage the home economy in general. We have taken account of the fact that it is possible to manage our economy in present circumstances in such a way that one can take the steam off where the steam has built up too heavily without at the same time depressing it in other places where there is room for movement.
I want to emphasise the selectivity of the measures that we have taken. They have been selective geographically. Let hon. Members ask anybody in Scotland, the North-East or the Merseyside whether they have been held back while these measures of restriction were put on. The answer is not only that they have not been held back but that just because they were exempted from them at the time when others were being restricted they have had a bonus and gone ahead in the very places where there was room to go ahead. All the figures, evidence and indicators will show right hon. Gentlemen opposite this if they look.
These measures have been selective not only geographically. We have also been 1050 selective industrially and have picked a number of areas and sectors of industry to which the restrictions should not apply. The result is that, whereas we have been holding back on services and other less essential things, we have been going ahead on the science-based and technological things that we needed.
We have also been selective socially. For the first time the essential social services which are at present in operation have gone ahead. [Interruption.] A right hon. Gentleman opposite says that they have not gone ahead as well as they should have done. That is the sort of thing that an Opposition would always say. However, for the first time in a year of difficulty we have kept the social services moving forward and not made them subject to a cut-back.
§ Sir Edward Boyle (Birmingham, Handsworth)
May I put a question to the right hon. Gentleman in view of what he has been saying in the last few minutes? If he is concerned about the science-based industries, why did he choose—he and the Government had a choice—to cut back technical college and university building rather than stop the indiscriminate subsidy on school meals, which affects everybody equally? He talks as though he had no area of choice, but he had a choice and could have been much more selective than he was.
§ Mr. Brown
We did not cut the total for education. When it came to where the burden should be placed—the right hon. Gentleman is quite right, there was a choice—we took the view that for social purposes and reasons the school meals should not take the cut. It is open to right hon. Gentlemen opposite to say that in their view the school meals service should have been cut. That is a reasonable difference of opinion. But there had to be a cut somewhere, and I repeat that we took the view that for social purposes school meals should not be cut. I am prepared to defend that choice on social grounds anywhere in the country.
§ Mr. Iremonger
Would the right hon. Gentleman take the same position in regard to the prescription charges under the National Health Service?
§ Mr. Brown
Yes, I take the same position about prescription charges and would be quite happy to defend my view 1051 on social grounds anywhere in the country. I said earlier that there is a clear difference between both sides in our sense of economic priorities and our sense of social priorities. Let that be understood, and let the public decide between us. I have no doubt where the decision will lie. It is a matter for presentation. I do not hide it at all.
In this situation—this short-term situation with short-term actions—the Plan is even more important as a means of providing the proper perspective for decision-making in industry and ensuring, in particular, that decisions about investment, organisation of industry and the efficient use of manpower are related not to the immediate situation but to the situation likely to prevail by the time those decisions take effect. Only too often in the past industries have changed their decisions because of a temporary situation, so that we found when the temporary situation changed and we got the restrictions taken off there was not enough capacity or investment to deal with the consequences of it. The Plan, by looking ahead further than the immediate situation, enables us to deal with this, and by giving to industries a picture of each other's intentions matched against each other and matched up against a background of Government objectives, it enables them to plan ahead much more effectively.
This brings me to the general question of industry and the Plan. The Plan, as I think everybody now recognises, was drawn up in the closest collaboration with industry, and, of course, it is with industry that the major task of implementing it will rest. We had first, with it, to establish the feasibility of the overall 25 per cent. growth target, and there clearly is no doubt in anybody's mind as a result of that discussion that the target is feasible.
May I just put it in perspective in view of some of the things that I have seen written and heard said about this? To achieve that target requires us to do as much and to increase our output by as much in the six years from the base year 1964 to 1970 as was done in the past seven, and it is no more enormous than that. Clearly, it is feasible. It is not a very exaggerated target to reach for. In our view, this can be done. [Interruption.] 1052 The right hon. and learned Member for Wirral is again interrupting. It is always open to someone to say that one should do still more in six years than he managed to do in seven, but it will do for us if we can at least beat him in that respect.
§ Mr. Selwyn Lloyd (Wirral)
All I was saying was that what the right hon. Gentleman said was a tribute to what had gone on before.
§ Mr. John Biffen (Oswestry)
If the right hon. Gentleman's description of the Plan is correct related to past performance—namely, that he and his colleagues will achieve in six years what was achieved in seven years by my right hon. Friends—does he think on reflection that that justifies his remark in his radio broadcast on 16th September that we have left the stagnant years behind?
§ Mr. Brown
Yes. I am sure that the hon. Member could understand if he tried. During those seven years there were long periods of stagnation and short periods of insupportable booms. That is how we got to the £800 million deficit last year. A steady expansion over these six years can avoid a deficit, give us a surplus and earn us more than under the previous arrangement.
We had to be able to do two things. First, we had to estimate each industry's exports and the home demand for its products and, therefore, the output required of it. Secondly, we had to assess the resources needed in each industry to reach that output, particularly in manpower and investment.
This has been done with the co-operation of industry, despite incitement not to do so by the right hon. Member for Wolverhampton, South-West, who urged good, decent friends of his own party to revolt and refuse to co-operate with the Government. The extent to which businessmen took no notice of that incitement and continued to co-operate is a measure of the standing of the Conservative Party.
§ Mr. Brown
I have already given way a number of times.
1053 The Plan, therefore, indicates pretty authoritatively the requirements and the limits of the expansion on which we are now engaged. In the course of identifying these aspects, we came inevitably to situations where contraction of manpower was unavoidable. Among such industries was coal mining.
It is not an unreasonable claim for the Plan, which is not a study from outside, that we have not sought to hide the problems and complications that arise whilst highlighting the opportunities that exist. Among the industries for which a decline seems inevitable is coal mining, where output is expected to show a decline. It seems to us quite clear, after the most careful examination of the prospects in the energy industries, that we should not count on a coal market of more than 170 million to 180 million tons in 1970. In such a situation it is better to say so and discuss the consequences that flow from that for everyone.
Lord Robens claims that the industry can reduce its costs to the point where it can sell more than this, especially in exports. If that is the case, then good luck to him. It would be a first class achievement. But, in the light of all the examination and forecasting that we have been able to make, it seems to us, on present information, that the figure we suggest for 1970 is the right basis on which to go ahead.
Let me make it plain—because we can get a lot of emotion about this—that we are not talking about running the coal industry down because it would be a good thing to do. There are uneconomic pits and pits where the coal is being exhausted. The question is whether one deals with this situation on a carefully planned and phased basis or whether one waits until a crisis arises. We have undertaken to ensure that this is a phased job so that as pits go out of production either new industries come to the area affected or provision is made for the men who can move to do so. Our obligation is not only to the colliers but to their families and their communities, and these we undertake to look after in a phased operation so that hardship does not occur.
I am sure that everyone realises that the Plan is not a once-for-all exercise. It is the first exercise of its scope in this coun- 1054 try and possibly in the democratic world. Our idea is that it should be adjusted and amended and, as it were, rolled forward periodically so that the country always has a five-year plan ahead of it and can take account of the inevitable changes in the assumptions which may turn out not to have been correct. That is just what any major business enterprise has to do. If adjustments have to be made next year and in succeeding years, that does not prove that the original assessments or assumptions were wrong this year. Obviously it would be wrong to tie ourselves rigidly to the National Plan and if, for instance, it turns out that the National Coal Board can profitably reach higher production and sell it, then that will be taken into account in future adjustments.
Industrial growth must involve substantial movements of labour from one industry to another. This does not mean millions of people moving up and down the country, however. Indeed, it does not necessarily mean people moving from one factory to another. Some people may find themselves at the same machines but making something else. Of course, movement from factory to factory will be involved in many cases but I repeat that the changes will not mean millions moving about the country, digging up their roots. But it will require a good deal of mobility.
§ Mr. Deputy Speaker (Sir Samuel Storey)
Order. If the Minister does not give way the right hon. Member for Carlton (Sir K. Pickthorn) cannot persist.
§ Mr. Brown
I have been generous in giving way so far.
As I was saying, the National Plan will involve some changes in the way people work and in what they do and certainly such changes are vital and inescapable if we are to speed up economic growth. I appeal to all right hon. and hon. Members, no matter what their interests, to recognise that, if any of us, for any party reason or for any vested interest—and I speak as a trade union official—try to pretend to our people that we can raise 1055 our own standards or improve the country's position in the world without accepting this kind of change, we shall be doing them a great disservice.
The Government are doing all they can to arrange that these changes come as smoothly as possible and with as little hardship as possible. We shall phase new work in as old work phases out. The Redundancy Payments Act is on the Statute Book already. Unemployment benefit related to earnings for those for whom there is a gap will be introduced soon and the Government's and industry's training and re-training activities are being stepped up, helped by the legislation which has also just come into operation.
Steps are being taken to meet the special problems of the coal industry and of other similarly affected industries. Most of the decline in the coal industry will be covered by normal wastage but not all and that is why my right hon. Friend the Minister of Power has already announced that special funds will be provided to assist in the redeployment of manpower from coal mining. He will be announcing more details in a White Paper tomorrow.
The results of our consultations with industry suggest a demand for 400,000 more workers than we shall actually have available in 1970. Even though it takes a few minutes to do so, it may help if I speak to the House about this, because I think that there is some misunderstanding about what it means and what conclusions should be drawn from it. It seems to us reasonable to calculate for reasons which we have set out that by that period half of the gap, 200,000, can be found by the use of the effective regional policies which I was just describing, the bringing into work of people now being wasted in hitherto neglected regions.
That would then leave us with a deficit of 200,000, but it is not an intelligent conclusion that therefore we must have 200,000 more workers. That would assume that there was nothing to be found by way of increased productivity per worker currently employed. Considering the size of our labour force and the sort of ways in which it is now deployed and employed, it must be clear that there is much to be gained from 1056 greater productivity, and the figure of 200,000 against that total labour force is very small.
Therefore, the conclusion to be drawn and driven home is that we need better use of our manpower, particularly in those industries, clearly identified, where on any basis there is now over-manning, wasteful use of people. An increase in productivity per person much more rapidly will also include sharing the benefits of that increased productivity with the worker.
This is one of the most important tasks facing industry, not only important but urgent, and the trade unionist and manager must get down to this problem as urgently as possible and do what is required in his own place to end restrictive practices and the waste of manpower which occurs from keeping people un-usefully employed and to find ways of removing any other problems which hold up willingness to accept that we must have more productivity and better use of manpower.
We can say this in general terms, but we cannot do it from here or from central Government. This is something which industry has to do for itself. I regard the Economic Development Committees as one and perhaps one of the most vital agencies which can help in this and I am asking them all to concentrate on the special needs in their own industries to bring about this aim.
But all this will be done only with co-operation. Men cannot be driven into this and men and women will co-operate only when they feel secure. If they do not feel secure, they inevitably tend to protect themselves, and in that we are all alike. Hence, I regard the stupidity of the threats by the Leader of the Opposition to the trade unionists as being very damaging to the achievement of this longterm aim. If one keeps repeating to people that one is thinking of taking special steps to control them—and those were the words used—people go on the defensive and the co-operation which would otherwise be available is not there.
I now turn to the crucial subject of investment. To achieve the target for expansion which is set out with a slower rate of increase in the labour force, we shall obviously need a rapid rise in industrial investment. The Plan estimates 1057 that investment in manufacturing industry will have to rise by nearly 7 per cent. a year over the whole six-year period and that in construction it will have to double. We have agreed with the Nationalised industries their investment programmes and that will support their share of the target. For them it will have to rise rather more slowly than in the past. This will give us help in raising investment much more rapidly in outside industry.
Investment in distribution and in services will also rise more slowly during this period than in the past. This arises from a number of factors, many of them our own actions in the last year in stopping the wasteful boom in shop and office building in some parts of the country and in some areas. The introduction of the starting date procedure for private building projects of more than £100,000, other than housing and industrial building, will obviously mean that we shall be able to arrange priorities for essential building at a time when the construction industries are under severe pressure.
Here, again, nothing illustrates better that our opponents do not even now understand what planning involves than the hysterical outbursts which we have had from some of them about the starting date procedure. Given that the construction industries have to double their rate of investment and given that they are under pressure, how else can one get the essential work done unless one has some instrument for identifying and holding back inessential work? There is no other way and the industry itself understands that.
But the fundamental problem in investment is to ensure that private industry undertakes the heavy investment needed. One of the most encouraging things—and all the indicators we can consult show this—is that, despite the measures which we have taken in the short term and despite what normally would have followed from that in terms of investment, industrial investment is nevertheless holding up exceedingly well. The way in which programmes are being maintained through what would otherwise be a rather difficult period is most encouraging, especially compared with what happened in any year when our 1058 predecessors felt that they ought to take remedial action.
Of course we recognise and the Plan makes it quite clear that financial factors have great importance as incentives. We frankly recognise that a change may well be needed in this area, too. The Government are at present reviewing the present system of investment allowances to ensure that the system in operation provides the most effective inducement for the investment which British industry needs. For obvious reasons, I cannot go further than that today, but we plainly recognise that there is a need for a very close examination and possibly change.
§ Sir Harmar Nicholls (Peterborough)
The right hon. Gentleman explained about export incentives that he did not want to operate a discrimination in favour on one section of the community. I always understood that the reason why the Government and previous Governments did not introduce an incentive for exports was our commitments under G.A.T.T. Is there any possibility that the right hon. Gentleman will pursue the line he is now describing by opening discussions to see whether we can get G.A.T.T. amended to allow such export incentives?
§ Mr. Brown
Let us keep the two separate and clear. I spoke earlier about incentives for exports. We have done as much as seems practicable within our international obligations, although, of course, we shall keep under review what else can be done. I am now speaking of inducements for industrial investment at home and indicating our acceptance of the view that change may be needed in this respect, too.
There is one other matter which is very closely linked and that is the subject of correcting the regional imbalance in this country. As with so much else, much of the last 12 months has inevitably consisted of providing the machinery for doing the job. When some people criticise the Plan for not being more specific and not having more policy decisions and not having settled tomorrow's problems as well as this year's, they should take into account that making policy decisions and creating the machinery and turning all that into a plan, all concurrently, provides a full year's work. Next 1059 year, with some of these jobs done, there will be more opportunity for extending.
We have set up the machinery for dealing with regional imbalance. We have set up the planning councils and the planning boards. Between them they will bring central and local government closer together and reduce the chain between policy decisions in Whitehall and their effective carrying out locally. They have also brought in an element of local democratic, or quasi-democratic participation which did not exist before. Hon. Gentlemen may shake their heads, and wish it were something more. I wish that it were something more. I should like to see it grow into something more, particularly the unofficial element, for whom we have now got what we did not have a year ago. We have now got something to work with, something from which to build.
Therefore it is not true to say, as has been said, that we have ignored the regional elements, as I saw in a suggested Amendment which did not reach the Order Paper. It is as equally silly to say that we have ignored that as it is to say that we have ignored the place of incentives in the Plan. We have done neither. On the contrary, we have paid a great deal of attention to both. Later this month I shall be meeting all the regional council chairmen, together with all the national industrial bodies, so that we can hammer things out, in a detailed way, giving effect to the change of direction. This will help us to correct the regional imbalance and get the industrial developments in the right places. As a first step to this, my right hon. Friend the President of the Board of Trade has already announced the addition to the list of development districts of quite a substantial number of places. These areas are exempt from the deferment of public expenditure announced in July, and from the operation of the new controls on private building.
That fact, together with the controls which we have put on office development in London and Birmingham, and the tightening up of the industrial development certificate procedure in regions where labour is scarce, have all contributed to the major change which is already happening, and which we hope will speed up. We are now reviewing the Government's distribution of industry 1060 powers and policies, and intend to make changes to support much more effectively the wider aim of regional development that we have in mind. We are also considering new ideas for differential inducements, which will enable us, in a more positive way, to stimulate movement to the regions that have, so far, been neglected areas of this country. We will announce decisions as soon as possible, but inevitably this kind of exercise takes time. I hope that the House will support the Government in ending the thinking of the past, that the question of regional problems is only a matter of jobs and factories. We have got to look at this regional imbalance on a very much wider basis. It is a question of population movements, of cultural distributions—a whole range of things. It is not merely ambulance work—so long as there happens to be a certain percentage of unemployed in a certain place. We have to get the distribution of all the facilities and all the activities which a reasonably balanced distribution of population would require.
We face a very large increase in population between now and the end of the century. We must begin to plan for this now. We must plan positively if we are to achieve a better regional balance than we have had, and we must plan in the light of the movement of people and the great changes in habits, tastes and requirements, which are already occurring today. We must do this in the light of the present great pressure on land, transport, water, and all the fundamental services which are needed by a population which is growing and regrouping itself, as ours is. For this purpose, even though this Plan goes to 1970, and that is difficult enough, for this purpose we must look well beyond that. The Government have, therefore, already started, following on the successes achieved—and getting it published was a difficulty—a special study of the possible distribution of population up to the year 2000. That would be essential background to the decisions about future new towns, where they should be and the size they should be, about motorways and so on and the long-term decisions that will have to be taken.
It is my ambition, not only that we shall have a continually moving five-year plan, against which we make our year-to-year decisions, but that, as soon as we 1061 can, we shall achieve a wider background within which that Plan makes sense, just as do most of our great industrial complexes today. The regional councils are advising on the long-term potentialities of their regions, on the size of the population they can reasonably accommodate, where it should be situated and how it might be employed, and on the investment that would be required to support it. I hope that by the middle of next year, councils and boards will have done enough work to give us preliminary advice on how their regional resources might be better used, and on the broad policy objectives and strategy of development, towards which the planning in the region should be directed. Central government, whatever it is, can then make much more effective and much better-informed decisions than it has been able to make up to now.
We cannot speak to our people only about getting extra resources, about more effort, about mobility and about all problems. They have also to understand what is in our mind about the distribution and the use of resources. We have to do it this way so that they can decide that the effort is worth while. In the Plan we try to show what we expect to get from this and how to use it. It is important to keep this in our people's minds and also important that they should decide whether our ideas on the social priorities are right, as much as our idea on the economic priorities. As we have said, we expect this effort to produce an extra £8,000 million or so, at 1964 prices by the end of 1970. Clearly the first claim on that must be what is required to put the balance of payments right, and what is required to finance the increasing investment needed. We put that figure in that year at something like £2,000 million. That would leave about £6,000 million to be divided between additional personal spending and public expenditure, including the social sector. I say this quite clearly because of something which I think the right hon. Gentleman the Member for Enfield, West said the other day. We have provided for higher personal spending to take about £4,500 million of that £6,000 million. What is left when we have provided for the balance of payments and the industrial development is for investment.
1062 In that situation how can it be claimed that we are not providing as the right hon. Gentleman claimed, for personal incentives. How much more would he provide? If one provides any more than that what would be left for the social services? People need hospitals and schools and houses and all these other things. These are as much part of one's personal standard of living as the money one actually puts out of one's own pocket. Clearly one of the essential strategic decisions which we, and any Government, would have to take, and which I should like the right hon. Gentleman to deal with when he is speaking, is to strike a balance btween the resources for private consumption and those to be devoted to investment in housing, and the other social services. We are quite willing to be opposed on this, quite happy to be contested on this, if that is the view of the Opposition. But I think that we ought to hear clearly from the right hon. Gentleman, given those figures, how he thinks they should be broken up. Speaking for my hon. Friends and myself, we do not intend, from here on, to have public squalor in an era of private affluence.
The Plan also sets out the result of the Government's review of public expenditure. Again, when we are attacked for not having taken decisions in this Plan, it can only suggest that people are being highly selective in the part of it which they read. We have taken the decisions on public expenditure, and we have decided, and said quite clearly, that the growth of total expenditure over the period in the public sector shall be limited, and will be limited to 4¼ per cent. a year at constant prices. Within this the defence budget is already set to be at least limited to the level of 1964. I saw that the Leader of the Opposition at Bristol was alleged to be having some fun. One of his subjects was roads. Again he clearly still has not read, or his advisers have not, the provisions in the Plan. These are for the expenditure on roads to increase by 41 per cent. over the period and by 70 per cent. on investments in new roads and major improvements.
The investment in public authority housing, houses to rent—and these, for all practical purposes are the only houses 1063 to rent—is to increase by one-third, as is expenditure on education. The expenditure on the health and welfare services is to increase by just under a quarter. The expenditure on benefits and assistance—the largest single programme—is expected to rise by £800 million, or 28 per cent. over that period.
It is open to the Conservatives irresponsibly to promise to increase, double or treble anything that we say we are going to do. That has always been their way. I would not go so far as to say that other Oppositions have not been known to do the same. What is rash is to pretend, as they are doing, first, that we are not providing for large increases in the social services and personal spending—clearly we are—secondly, that they could increase some without cutting others; and, thirdly—the most ridiculous claim of all—that they could increase them all and reduce taxes, unless they have some secret which nobody else has thought of.
I have tried to give the House, probably at greater length than should have been the case, an outline of the main points in the Plan. There is not much point in having a debate on the Plan unless one goes through it rather than merely talks about it. It covers virtually the whole field of the country's economic activities. Even so, one still had to be highly selective. Two threads, however, run through the Plan which I should like to emphasise. Analysis must be the prelude to action. We have been at pains to underline the need for action. If those hon. Members who are interested look at the end of Chapter I they will find the check list of action and the agencies named, whether it be Government or others, from which action has to come. It will be the Government's business to progress chase, as it were, from here on to ensure that the action comes.
There are those who say that we do not go into enough detail about individual services, enterprises and people. If they think out the practical problems which would be involved in that exercise they will realise how useless such criticism is. What we can do is to set the broad framework, break it down into industries and regions—that we have done—and the action, enterprise by enterprise, will 1064 follow. Equally, let us be sensible and realistic about what we can and cannot do in a mixed economy. In the public sector the Plan sets out programmes for nationalised industries' investment, and we are in a position to ensure that their policies are geared to the Plan.
In the private sector, although we have some powers available, some means of influencing, the Government are bound to rely heavily on the co-operation of those concerned. We must not exaggerate what we can do outside that area, although equally we must not minimise the powers and influences now within a modern Government's capacity. It seems to me as though in recent weeks the Opposition have been having difficulty in sorting out what their attitude is. I hope that the right hon. Member for Enfield, West will let us know the results of their thinking when he speaks.
In conclusion, may I put three major questions to the right hon. Gentleman? Is the Conservative Party now converted to the belief that the Government should take the responsibility for preparing and publishing a National Plan? Secondly, does the Conservative Party now agree with the objectives which we have set out? If not, what would its be? Thirdly does the Conservative Party agree with the action which we say needs to be taken? If not, what action which we are taking does it regard as superfluous, or what further action does it propose?
Right hon. and hon. Members opposite may be only Her Majesty's loyal Opposition. They may show every sign of remaining that for a long time. It would still add to the interest of politics if the electorate knew where they stood on those three things. Meanwhile, I am able to ask the House to welcome this Plan as a reasonable basis for claiming that at last Britain is on her way.
§ 5.15 p.m.
§ Mr. Iain Macleod (Enfield, West)
The First Secretary started with some good humoured remarks about the debate and about the Motion. It is true that both are unusual. There is a sombre and a more lighthearted side to this matter, and it is as well to fill in the picture as I see it.
The more sombre side—and the First Secretary knows this very well—is that because at the moment Rhodesia hangs 1065 over everything else the Government thought, entirely rightly in my view, that we should add a day to what was originally planned for this week. This is why, at fairly short notice for such an important occasion, the Plan has come to us. My right hon. Friend the Leader of the Opposition has had to leave and would wish me to apologise to the House for doing so. The Prime Minister has been courteous enough to tell me that he, too, has to leave. Of course, I understand that; and if I may say so, I wish him well with all my heart in the next few days.
The more lighthearted matter with which the First Secretary had some fun was the question of whether we should vote on this issue and whether it would be more suitable to have another Motion. We could put forward an Amendment on the lines of that on the Order Paper. We could list the paragraphs in the Plan—with some difficulty—which we welcome and set out a long list of those which we oppose. But we thought it best to criticise and probe now and to reserve our position to return to dissent on a more suitable Motion.
The First Secretary pointed to some differences of opinion within the Conservative Party. I wonder whether, as a lifelong member of the Transport and General Workers' Union, he is wise to bring this subject before the House. I doubt whether at the meeting of the Parliamentary Labour Party this morning he was applauded for what was called in Tribune "the plan that never was", whether he had the agreement entirely of all the mining members of Parliament for what he suggests that he should do, or, indeed, of those concerned with the immigration policy. On this issue, perhaps we can call it quits.
I could draw the First Secretary's attention to a most excellent parable about the beam and the mote which I am sure he will know well, which roughly ends, "Cast out first the Minister of Technology from thine own eye and then wilt thou see more clearly".
One of the matters in the Plan which I welcome was referred to by the right hon. Gentleman in what I am bound to say was an extremely defensive speech, and it is what is said on page 69 about the deficit in 1964. I do not propose to 1066 read paragraphs 4 and 5 on that page into the OFFICIAL REPORT, because the right hon. Gentleman took a long time, although I do not complain of that. I would simply say that the Government are a great deal fairer in their account there of the deficit in 1964 than they have been in anything else we have heard on this or any other day from that Dispatch Box. Also, we can easily welcome what is said about increases in productivity and, perhaps, above all, in investment in recent years.
I want to turn to criticism and to take up what the First Secretary said. He stated that analysis must be the prelude to action. That may be so, provided the analysis is accurate. He said earlier in his speech that he believed that the increases which were suggested were feasible. If the analysis is inaccurate, and if these assumptions are wrong, it is abundantly clear that the Government are building upon sand. Of all the analyses there have been, people will say that one of the most penetrating was made by Mr. Alan Day in the Observer, writing immediately after the publication of the Plan. As the House will know, he is a critic who is by no means unfriendly to the Government. What he pointed out—and on this everything hinges—is that when the Plan argues thatthe evidence of the Industrial Inquiry suggests that British industry itself expects a big improvement in our export performance",one has to go back to the notes that accompanied the questionnaire which was duly completed by industry all over the country. Industrialists were asked to predict their exports in 1970 on the assumption of a 25 per cent. growth in the gross national product. They were, moreover, told that exports would also need to increase much faster than recently. Mr. Alan Day's comment on this is worth reading. He states:This is an odd way of getting evidence. You think of the answer you want, set a questionnaire which practically forces that answer, and then say that British industry 'expects' the answer you want. All that has really been demonstrated is that British industry employs men who can read and do simple arithmetic.That is true, and that is the first evidence that I bring before the House: that the analysis to which the First Secretary has referred is fundamentally false. [Interruption.] I am welcoming parts of the Plan. Both the First Secretary and 1067 I engage in semantics. The right hon. Gentleman knows that very well.
The second point is very well put in a letter, which I hope every hon. Member will have read, by Mr. Greatorex in The Times of today's date, pointing out that far from the Plan being, as its very sentence claims, a plan to increase growth—to quote the words of paragraph 1,This is a plan to provide the basis for greater economic growth"—the hypothetical increase of 25 per cent., the doubts about which are known to us, compares with a realised increase in the exactly comparable previous period of 25.3 per cent.
Where on earth, therefore, is the increased growth for which the Government are planning? To repeat the point made by my hon. Friend the Member for Oswestry (Mr. Biffen)—if those years are to be called the stagnant years, what sort of planning is this if this represents the ideas that the Government have to put before us? Will the Minister of State be replying to the debate?
§ The Minister of State, Department of Economic Affairs (Mr. Austen Albu)
May I reply to the point now? The years to which Mr. Greatorex refers started with a year when we were fairly well at the bottom of the trade cycle. Therefore, an expansion was not surprising. In addition, the rate of increase in the number of workers in the next five years will be less than half the figure during the period to which Mr. Greatorex refers.
§ Mr. Macleod
The hon. Gentleman can challenge that later tonight, but I gather that he does not challenge the figures. If that is so, he must accept that the very first sentence of the Plan has already been shown to be wrong.
What I want the Minister of State to do is to take up the question of the status of the Plan. I have read almost everything that the First Secretary has said about this. It is an interesting point, which he talked about again today, and I should like to pursue it further. A plan can be one of three things. It can be either what we can do, what we will do or what we should do.
It is not, of course, what we can do. We all know that if there were a new attitude in industry, on both sides—if restrict- 1068 tive practices were set away, for example, and if we had all the things that everybody in this House wants to see—we could leap forward. We all know this. It is not, therefore, what one can do.
Is it what we will do, in which case it is a forecast, which sometimes has value, or is it really in the right hon. Gentleman's mind that this is what we should do? If that is the case, Government action in sometimes pulling against the facts will increasingly try to make the facts conform to the Plan instead of the other way round. That is exactly the danger.
The First Secretary said that the Plan was just the same as any business would plan. The truth is that it is exactly the reverse of a business plan. A business plan would be precise about next year and, perhaps, the year after and would get increasingly more vague, for obvious reasons, as one goes further ahead. This Plan does exactly the reverse. It says nothing about next year, although that is not particularly difficult to forecast—and a gloomy account it would be—and it gets more and more precise as one gets towards 1970. Therefore, whatever the right hon. Gentleman claims, he cannot claim that in this he is acting as business planning would act.
I therefore put these questions to the Minister of State. When we talk about a rolling plan, does this mean that next year there will be a completely different set of figures which will carry the story through to 1971? If that is so, will there be another questionnaire and will it this time be a good deal more realistic than the last one? Lastly, will the hon. Gentleman say what assumptions he will invite industry to make, because one of the things that was abundantly clear was that there were omissions from the questionnaire, in particular the omission of any guidance about the future with Europe, which seems to me to be an impossibility to leave out from any questionnaire? Are these matters to be made clearer if next year there is to be another questionnaire?
I accept the First Secretary's present intention that this will be a rolling Plan which will get steadily better and better. I am, I think, quoting the words of one of his speeches. We have, however, experience of the drift to compulsion, for example, under the prices and incomes 1069 policy. Often, at the beginning of the prices and incomes policy, the right hon. Gentleman said, "We will try it by voluntary methods". When questioned on television and elsewhere about what he would do if voluntary methods failed, he said, "Let us not think of failure." Now, however, he has to think of failure, does he not, in this regard, as both his own speech and his right hon. Friend the Chancellor of the Exchequer have recently made clear?
The danger, therefore, which I see is that Government action will gradually be brought to bear upon the Plan so that they will try and make this what we should achieve in 1970. If that happens, what the First Secretary is putting before the House is not a plan, but a party political document.
I should like to read to the House from an admirable article, in which I believe in part, called "The Perils of Planning", by Professor Jewkes, in the Three Banks Review. This is how Professor Jewkes begins his article:If ever the history of economic hallucinations comes to be written, the idea that Governments possess the knowledge and power positively to determine the rate of economic growth through the techniques of central economic planning will be revealed as one of the most widespread, tenacious and harmful of errors.I agree with that. Quite a number of people go on to say, "Therefore, do not plan". I frankly do not. [An HON. MEMBER: "The right hon. Gentleman used to."] I do not. I was a member of the Government which introduced N.E.D.C. I accept all this. I always have done. What I say is that one must not be hypnotised by the results of one's planning.
The Prime Minister—I know he has had to leave—in winding up an economic debate about four years ago, made a speech which is very relevant to the great debate before the House today, and it really concentrates on the word "choice"—what it should mean. I propose to come back to this in my own speech, because I believe the dangers of not so much the Plan but of what I believe, rightly or wrongly, to be in the Government's mind, are two things. I believe that, first of all, we may inhibit change; and secondly, that we may inhibit choice.
As far as inhibiting change is concerned, let me read this extract from 1070 a speech of the Prime Minister, then economics spokesman for the Opposition. This was in a speech on 7th November, 1961, a speech in which he declared thatPlanning without controls is as meaningless as a gearbox without teeth.Listen to the example he gave:Let me give an example—fuel policy. Three years ago we called for a national fuel policy, for a figure that the Government would honour for the size of the coal industry. Two hundred million tons was mentioned as a figure for the national indigenous coal industry to work to. This would have meant controlling fuel oil imports, and controlling other things as well, but the Government insisted on what they call freedom of choice …. As a result of their policy we lost 150,000 miners from the industry …."—[OFFICIAL REPORT, 7th November, 1961; Vol. 648, c. 921.]Let the House reflect on what has happened in these four years. Let it reflect that the Plan is not with an idea of 200 million tons, but of between 170 million to 180 million tons, and so far from trying to get back the 150,000 workers the Prime Minister then said had left the industry, or the 100,000 workers who have left since, the National Plan forecasts a continuing reduction at the rate of about 25,000 a year.
Lord Robens has said,You can count me out as one of the people who are trying to reach the objectives of the National Plan, as far as my industry is concerned.I believe that this part of the National Plan is very bad psychology indeed, because the one thing which is quite certainly true is that every single assumption, particularly in the field of fuel policy for many years, has been widely wrong. We all on both sides of the House know this. Over and over again we have been unbelievably wrong—everybody—on this.
Let us take the example of gas, with all its sort of Victorian "Fanny by Gaslight" connection. Everybody thought that there was no future whatever for this. We know better now. We know better from the figures which there are in the papers this morning how well this industry has done—[An HON. MEMBER: "Publicly owned."] Yes. All right. The point I am making is that the present Prime Minister was hopelessly wrong on fuel policy in 1961, as everybody must admit who has listened to the words I have read to the House, and as, indeed, the National Plan shows, and the figures put before the House in 1965 have no 1071 more validity than those put forward by the present Prime Minister in 1961.
On this question of gas we can see—I intend to return to this in another context towards the end of my speech—a clash, which is in the papers this morning, on price. It is not a clash—I have some understanding of how these matters work—between the D.E.A. and the Welsh Gas Board. It is, fundamentally, a clash between the Treasury and the D.E.A. I think there is no doubt whatever about this.
My anxiety on my first point of change is that the mere existence of a plan—and the First Secretary of State used words which I should like to study carefully in HANSARD about the pressures and the effect they bring to nationalised industries to make them conform to the plan—the very existence, therefore, of the Plan in the context of what he said I think proves my first point, that there is a real danger and a real threat to change itself.
I turn to the second point, and I regard it as even more important. As I said—and I believe this is the true contrast between the two sides of the House—I believe that in this sort of planning there is a real threat to choice. I was last night—some people may have seen it—engaged in a discussion on television on an aspect of this. There is a suggestion—the hon. Member knows the teaching profession very well indeed and I am sure he will disagree with what I said on this, but never mind; it is very interesting that a Socialist Minister has put this proposal forward. The suggestion is that we should look at the question of whether student grants should, as they are in many countries, become student loans.
Now there is a great debate going on behind this, and it is far wider than this particular issue, and the issue really is this. Virtually the whole of what we call the Welfare State today springs from an assumption made by Lord Beveridge in 1942—he had no better information in front of him—that the percentage of unemployment after the war would be 8 per cent., and, therefore, the conception came up that it was necessary that the State—and the other side of the House are, in my view, still wedded to this— 1072 should provide a sort of cradle to grave help for everyone.
I want to read to the House, to show how opinion is changing on this, just one very short extract from a Fabian tract called "Freedom in the Welfare State" by Dr. Brian Abel-Smith, who is an expert indeed in this field. This is what he says:Who is really in a position to adjudicate between the relative social needs of two individuals? Unless there are very strong reasons to the contrary, people should be allowed to make their own choices, and the state's job is, first, to widen the range of choice available, second, to restrain the opportunities for excessive privileges and, third, to warn, counsel and advise, leaving the final decision to the individual.I agree very much with this, because—
§ Mr. Macleod
I will give way in a moment, but I want to show to the House, before coming on to one particular instance in relation to education, that I believe that the people of this country in the circumstances of today are prepared at least to consider the arguments for a much more radical approach to the question of choice in the social services than they have ever been since Lord Beveridge produced his Report.
§ Mrs. Shirley Williams
Would not the right hon. Gentleman agree that what Dr. Abel-Smith was putting forward was in the context of choice between the services offered by the State, and not between those offered privately and those offered by the State?
§ Mr. Macleod
Exactly, but he is putting forward a suggestion in this pamphlet or book from which I was reading. Perhaps I should read the next sentence from "Choice in Welfare" from which I was reading. It says:Although Dr. Abel Smith's interesting advocacy of more choice within the state services did not meet the possibility that interval competition would make the state services unworkable or that only external competition of growing private services would raise the standards of the state services, it acknowledged the role of consumer choice".Those who disagree with Dr. Abel-Smith would think that his suggestion would be unworkable; what he is considering is choice within the State services. I am suggesting that we shall get 1073 better State services if we widen choice—[HON. MEMBERS: "Ah."]—certainly—to both private and other provisions, and I am quite certain that this Plan, purely because it predetermines choice over the next few years, or seeks to do so, will in fact inhibit it.
I want to take the one example of education, because I want to speak for as short a time as possible. The right hon. Gentleman talked in some way about the education figures. The Plan provides for an increase of 32 per cent. over this period, but that is the same rate—indeed I think it is slightly less—than that which was provided by the Conservative Government in 1963 in the White Paper, and since then the school leaving age has been raised.
Let us consider the question of educational building under the Plan. One sees that £138 million is put down for 1969–70. Of that—there is an exact breakdown of every penny in it—no less than £99 million is to meet the population growth and new houses, £33 million to meet requirements arising from the raising of the school leaving age, and £6 million for special schools. That adds up precisely to the £138 million set down on page 196 of the Plan. There is not a penny left for replacements and improvements, and there is no money left at all to implement the undertaking which the Secretary of State for Education and Science has given about the primary schools of this country.
More remarkable still—and here again I invite the comments of the Minister of State when he winds up—is what is said about teachers' salaries. There is an increase put down for these years of 18.4 per cent., from £407 million to £483 million. But that increase in expenditure is based solely on the expected rise in the number of teachers employed and makes no provision whatever for any increase in all that period in the level of teachers' salaries. I should like to be corrected if I am wrong in this, but I do not believe that I am. I think that this is accurate. I also think—and I am informed that this is so—that the figure of £407 million is itself out of date because it does not take into account the April, 1965, figures.
The right hon. Gentleman talked about the difference in the two sides of the House. I genuinely believe that there is 1074 a true difference, and as I come to the end of my speech I should like to concentrate on this. It centres for me round this word that I have used on a number of occasions, on the question of choice. The more a Government predetermine, or seek to predetermine, choice in 1970, or at any other time far in the future, the more they will limit the opportunities of choice available to the individual or to the family.
The classic example of this is the policies, as we understand them, of the Minister of Housing and Local Government in relation to the percentage of council house building. This is going against the whole tendency towards homeownership in this country. It is going against the ordinary desires of the people of this country. In a survey of housing which was carried out recently, in answer to the question, "What kind of accommodation would you prefer?", 62 per cent. said owner-occupation including mortgage, 23 per cent. said council houses—[An HON. MEMBER: "If they can get them."]—I agree, if they can get them, and it is getting more difficult every day. To continue the figures of the survey, 9 per cent. said that they wanted a rented house or flat, and 6 per cent. did not know.
§ Dr. Jeremy Bray (Middlesbrough, West)
If it is important to increase the freedom of choice, will the right hon. Gentleman say whether he thinks there are more people on council house waiting lists or on estate agents' waiting lists?
§ Mr. Macleod
I would say that there were more people on council house waiting lists, but this to me is not an argument—it may be to the hon. Gentleman, and it clearly is to the Minister of Housing and Local Government—for decreasing the percentage of homes for owner-occupation in this country. I believe that this is what the people increasingly want, and I do not wish to see this choice inhibited by anything that the Government wish to do.
The right hon. Gentleman issued some challenges to me on this question of planning. I think that in so far as he is planning, he is planning about the wrong things, because what the public want to know, and what Parliament ought to be in a position to find out on behalf of the public, is not how many plastic raincoats 1075 we will have in 1970, or something like that. The public want to know what action the Government are going to take to counteract the import surge when the next reflationary period comes. This is one of the key matters which should be discussed at the present time, and also what kind of planning we need to cope with the stock cycle.
We have made it clear in a number of speeches that the whole Tory approach is going to be very different indeed. Of course the Government are right just as a business is right and an individual is right to do a certain amount of planning. This is inevitable, but to argue that there should be planning or not is at least as irrelevant as arguing about whether one approves of the weather. [An HON. MEMBER: "What about Enoch?"] The simple answer to that question is that my right hon. Friend is the man who produced the two longest-term social plans in this country, the ten-year plan for hospitals, and for local welfare services.
We believe that the Government have the wrong planning machinery. I am glad that the Chancellor of the Exchequer is still here. I know that he has to leave, but perhaps he will wait for a moment. We have two Ministries which are concerned with economic affairs, and they are headed by two very different characters indeed. We have a Minister of long-term "go" and a Minister of short-term "stop". The difference in the position of the Chancellor of the Exchequer now and under a Tory Administration is surely symbolised by the fact that then he was Chairman of N.E.D.C., whereas now he is not even a member of it. The First Secretary plans busily away, and just when he gets to the stage of galley proofs the Chancellor makes nonsense of it all with his July measures. It is ridiculous to say that these were taken into account in time for this Plan to be published. Of course they were not. If they were, let us be told how many of the little "Neddies" met after 27th July and before 5th August. Just when the First Secretary is preparing for a debate in the House, the Chancellor takes a delight in emphasising the failure of the prices and incomes policy, and we realise now that when the Chancellor spoke about fighting a never-ending enemy he was referring, 1076 not to the gnomes of Zurich, but to the First Secretary of State.
My right hon. Friend has made it clear that we believe in the useful work that is done by N.E.D.C. and particularly by the little "Neddies", but that we see no useful purpose served by the Department of Economic Affairs in its present form. We believe that its planning functions should be transferred to the Treasury, and that some of its other functions, particularly in relation to regional development, should go to a reinforced Board of Trade. This has been part of our thinking and it has been made clear on a number of occasions by my right hon. Friend.
The House will have realised that the welcome I give to this Plan is a somewhat frosty one, but I welcome the opportunity of exploring the inadequacy of Socialist machinery and the poverty of Socialist thought. I also welcome the opportunity of showing that many of the assumptions on which the whole Plan is based are themselves basically faulty. But above all I take up the fourth point made by the right hon. Gentleman. It is an excellent thing to have an opportunity of pinpointing the different approaches to choice which exist between the two sides of the House.
Of course there is a difference. The First Secretary of State puts prescriptions in front of, shall we say, the same amount of money being spent for some other purpose—perhaps hospital building or another aspect of the Health Service. It is a point of view that we do not share on this side of the House. In response to a question by my right hon. Friend the Minister said that he was quite prepared, on the order of priorities, to put a cut in the building of technical schools in front of the full provision of school meals. We are not. We think that this is an entirely false order of social priorities.
This, basically, is the issue. It goes beyond the Plan, or any of the social services. It is the question of choice, and by whom that choice should be made. The real difference between the two sides boils down to this: they believe that choice can and should be predetermined by Ministers in Whitehall, and we believe that choice should be made by the individual, in his business and in his home.
§ 5.55 p.m.
§ Mr. Edmund Dell (Birkenhead)
In many respects the speech of the right hon. Member for Enfield, West (Mr. Iain Macleod) has been extraordinary. Part of the way through his speech he informed us that he was in favour of planning, but it was only towards the end that we had any suggestion of what form of planning he might be in favour. As I stand here now I am still very uncertain what form of planning he would support. We agree that choice should be maximised, but choice would be maximised most by increasing the rate at which the wealth of this country rises. The criticism of the previous Government was their failure in this respect.
The right hon. Gentleman said that we must plan what to do about the likely surge in imports when the boom gets going. We have had a report by the N.E.D.C. on this precise subject, and on what the Government should do about it. The Government are investigating these questions and will take action. It is quite natural that the right hon. Gentleman should not be able to tell us what he thinks about planning, for one simple reason; we have recently had the Tory policy statement, "Putting Britain Right Ahead", and this document has only one thing to say about planning. It says that planning and preaching are not enough.
We know that preaching is not enough. We had 13 years of preaching from the previous Government. But this is the only reference to planning throughout that document. We can only conclude that the Opposition are still as uncertain as they have ever been about the rôle of planning in our economy. That is a great misfortune. It is unfortunate that we should still be debating, in this Chamber and in the country, not how we should plan—which is the great question that we have to decide—but whether we should plan at all. That question should have been decided.
It is not without significance that this country, which for decades has lagged behind every industrialised country in the world, is the one which is most wedded—as, unfortunately, so many members of the Conservative Opposition are still wedded—to the principle of laissez faire. We can well understand their disappointment in planning. They made a pretty 1078 feeble attempt at planning, to which the right hon. Gentleman referred, towards the end of their period in office. What did they end up with? They ended up with a deficit of £750 million on balance of payments. We can understand their disappointment. But the suggestions that they are now putting forward as substitutes for planning are themselves grossly inadequate to the nature of the problem which we now face.
They have three sovereign remedies: price mechanisms, competition and tax incentives. These will provide the answers to our problems. I do not deny that all these proposals have their place in planning, but it has been shown again and again that by themselves and without the backing of planned Government intervention in the economy, these planning mechanisms—because they can be used as planning mechanisms—will fail to solve our economic problems.
§ Mr. George Y. Mackie (Caithness and Sutherland)
Will the hon. Gentleman tell us whether these mechanisms—tax incentives and competition—have failed to solve this problem in every other Western country?
§ Mr. Dell
Taken alone they have failed, but in other Western countries they have been associated with determined Government intervention, in order to make sure that the rate of economic progress was as high as possible, given the capacity of the country's industry. Any investigation that one makes in detail of the economic situation in Western countries shows the large part which Government intervention has played in economic success in all those countries. Our great failure over the years has been a continual reluctance by the Government to intervene.
I am glad to see that that reluctance is being thrown aside by the present Government. They have a job to do to promote and expand our industry. They have to change the structure, the psychology and the philosophy of our industry. The change will be completed rapidly enough only if the Government do intervene. For example, we need more industrial mergers. It is significant that 50 per cent. of German exports are provided by 100 leading German firms. A similar situation exists in Japan. In this country it takes twice that many firms 1079 to provide 50 per cent. of our exports. If we had stronger industrial units the whole problem of promoting exports would be greatly eased. The Government must take steps to ensure that industrial mergers are promoted.
We need a different attitude in industry—which, again, the Government can help to promote—to the problem of promoting exports. But the whole problem of expanding exports is not just a question of prices. There is great danger—and the Government may have fallen into the error themselves from time to time—in continually emphasising the aspect of prices in promoting exports. I was glad to see, the other day, in the issue of 29th October of British Industry, a reference to the fall in the importance of prices as a factor limiting ability to win export orders.
We also need a different attitude to investment—a longer-term attitude, and one which looks beyond any current slump, if there is one, to the boom which is to come, so that we do not run out of capacity to provide exports and to satisfy home demand as soon as we enter into quite a minor boom. For this reason the Government are entirely right to search for ways of promoting investment by tax incentives. To do all this the Government have to plan and then intervene. They have to take up a self-confident, interventionist stance. They must use their purchasing power and their enormous economic influence within the country to ensure that the structure and purpose of industry are changed. They must root out of the Government machine itself the remaining elements of this laissez faire attitude to industry.
I should like to refer to one very small incident which took place in the House on 2nd June. I asked my right hon. Friend the Secretary of State for Defence what preference his Department was giving, in making purchases, to suppliers with good export records. The answer was "None". Although he said that the matter could be investigated, but he did not seem to offer me very much hope. The hon. Member for Devon, North (Mr. Thorpe) congratulated the Secretary of State on the grounds that his reply was:the expression of the purest free trade doctrine …"—[OFFICIAL REPORT, 2nd June, 1965; Vol. 713, c. 1702.]1080 I believe that it was and that is precisely what was wrong with it.
The N.E.D.C. Report on Imported Manufactures, which is a most important document, shows no reluctance by the people engaged in its production to see the Government intervening with its purchasing power and enormous economic influence to see that necessary changes in industry are made.
I believe that the Plan has great psychological importance. It is a pledge to industry and to trade unions that the Government will ensure that the rate of economic progress is sustained. What the country requires from the Government is a guarantee of steady economic progress. Without such a guarantee, industry will not invest enough and trade unions will not be encouraged to co-operate in rooting out restrictive practices and avoiding waste of manpower.
An example of the attitude of industry is given in the N.E.D.C. Report, which refers to the fact that the chemical industry, particularly, complained that their investment programmes had been held back by their fear that the Government would not sustain a sufficient rate of economic progress. I do not believe that that was a sufficient justification for failure in investment by the chemical industry, although one can understand their attitude. It is essential that the Government should ensure that this guarantee is given to industry.
The guarantee can be given to industry and trade unions only if the Government are able to ensure that the guarantee will be maintained. It can be given only if people believe that the Government are capable of fulfilling it. Therefore, one particular point in my right hon. Friend's speech which is of the utmost importance is his reference to achieving something which we have not had since the war—a stable balance of payments.
I do not believe that it will be possible to have a stable balance of payments while we are expected to bear the level of overseas Government expenditure which we have sustained over recent years. One of the most important facets of the plan is its revelation that the economy rests on a knife edge, in the sense that our balance of payments situation over the next five years is far from 1081 guaranteed. Therefore, the ability of the Government to ensure sustained economic progress is also far from guaranteed.
The plan itself states—we should take warning from this—that the underlying balance of payments situation of this country has been weakening over the last decade. It gives four reasons for this. It refers first of all to the rapidly growing deficit on the Government's net expenditure abroad. It refers to the long-term capital outflow, to the slow growth of exports and to rising imports. These are the four reasons for what it describes as the underlying weakening in this country's balance of payments.
The Government have made certain optimistic estimates about these four factors. I do not say that they are optimistic because I believe that the Plan's production target is optimistic—as the First Secretary indicated, the production target in itself is not very exciting—but they are optimistic when one considers the balance of payments. The previous seven years to which he referred ended with the enormous deficit which we had last year. I say that these assuptions about these four factors—imports, exports, the flow of private capital and Government overseas expenditure—are optimistic from the point of view of the balance of payments.
Of these factors, the Government have done most about long-term capital outflow. The decisions which the Government have taken in this respect are absolutely correct. One thinks of the Corporation Tax and the influence which it will have on long-term capital outflow, of the direct controls on capital exports and of the revival of the Capital Issues Committee's interest in investments in the sterling area. Inflow, on the other hand, is not in our control, yet the Government have felt able—I hope that they are right—to estimate that the net deficit on capital outflow in 1964 of £228 million will have been changed by 1970 to a surplus, a net inflow of £75 million.
The assumptions about imports are also fairly optimistic, taking into account the fact that we may be compelled at the end of next year to get rid of the import surcharge, which has had a significant effect on imports during this year. The export target is also optimistic. It is more opti- 1082 mistic than the best assumption of the National Institute for Economic and Social Research in their August report.
I see no reason why what I have described as these optimistic assumptions should not be fulfilled, given the fact that the Government intend to intervene in the economy to ensure that they are fulfilled. I have no doubt that they can be fulfilled, but we must understand, in judging the sorts of burdens which this country can be expected to bear, that they have yet to be achieved, and that they are, in themselves, optimistic.
Therefore, the Government must look very seriously at the final factor in this, which is their own overseas expenditure. The two main items here are aid and overseas military expenditure. I regret that the Government are finding it necessary to maintain aid only at its current level. It is a pity that throughout the world at the moment everyone is retrenching on aid to developing countries. If anything could be done to ensure that aid to developing countries by this and other nations was increased, that would be of international benefit.
However, this will be impossible within the existing Plan if we are to continue at anything like the current rate of overseas military expenditure. The Government say that overseas military expenditure, expenditure across the exchanges, will be severely cut. I welcome that, but the Government must understand that unless it is cut, the Plan cannot be achieved. Unless it is cut, we shall continually be running into balance of payments problems. If that happens we shall not be able to give industry the sorts of guarantees which are required if they are to overcome their own investment problems and invest sufficiently to raise the rate of economic development.
The Government must regard this as an absolute commitment to cut overseas military expenditure by the kind of figures—or larger ones—which are mentioned in the Plan. Without that, the Plan will not be fulfilled. This is, therefore, the Government's first responsibility. This is a good Plan, but to fulfil it the Government must make a far more realistic assessment then, I suspect, they have done of this country's economic capacity and its capacity to undertake military burdens in the world. If they do that, we have in the 1083 Plan an adequate pledge to the people of this country that this Government are really determined to press ahead with economic development.
§ 6.9 p.m.
§ Mr. R. W. Elliott (Newcastle-upon-Tyne, North)
I am very pleased indeed to follow in the debate the hon. Member for Birkenhead (Mr. Dell). It is probably appropriate we should be called to speak in this sequence in the debate. He represents Merseyside, an area which, in the general economic pattern, has known its problems in the past few years, and I come from Tyneside, and I think that he will agree with me that Tyneside, too, has known its problems economically in the past few years, particularly in terms of employment and industrial development.
The hon. Member said a number of things with which I broadly agree. He would like to see steps to encourage industrial mergers. I agree with that up to a point. If industrial mergers come by the application of natural economic forces, then let us have them. He also said that he would like to see longer-term investment encouraged by tax incentives. I very much agree with him, and I hope that he will press the Government to do something about this, particularly after their action on Corporation Tax earlier this year and its devaluing effect on the all-important investment allowances which have done so much to assist areas such as Merseyside and Tyneside to help themselves in the past few years of Conservative Government.
He talked about the psychological effect of the Plan and suggested that this could be good only if the nation as a whole had a belief in the Government being able to fulfil the Plan. Again I very much agree with him, but I have the gravest doubts whether the nation as a whole has a belief that the Government can fulfil this Plan.
He said that the economy of the country rests on a knife edge. I very much agree with that. I believe that the phrase originally was Lord Butler's when he was a Member of the House, and if I remember rightly Lord Butler suggested that the economy of the country rested on a razor edge, as indeed it does. But the hon. Member was right to remind us that the whole basis of our national economic well-being depends on our effecting a balance 1084 between that which we import and that which we export. It is all very well to have a plan, such as this Plan, which in some respects we admire but which is full of pious platitudes and long-term thinking. As my right hon. Friend said, it has greater emphasis on 1970 than on 1966. But we must constantly have before our eyes and minds the fact that our economy rests on a knife or razor edge.
The Plan in its broad aims is one with which we all agree for, naturally enough, we all desire a 25 per cent. increase in national output. That is bound to be a common aim. The means of achieving it are set out in broad and somewhat vague terms in the Plan. I should like to examine some of the suggestions in the context, particularly, of regional planning. Having had some experience of representation of a region which has had to organise itself very much in terms of adjusting itself to new industries and the contraction of old, I feel that I might make in consequence a reasonably useful contribution to the debate.
I suggest that in its regional suggestions the Plan takes a great deal of its general appreciation of regional development from the Hailsham Report on the North-East. This, I believe, was a good and sound Report which faced facts and which established certain criteria. Those responsible for the production of the Plan have been sensible enough to set their regional aims on those criteria. As the Plan suggests in its regional development section, there cannot be national well-being until we are socially and industrially one nation. Generally, the regional structure is right. The greatest danger to the well-being of the country or any part of it is over-parochialism, and county boundaries as we have known them in the past must not represent the barriers to co-operation which they have certainly represented in the past.
But, by the same token, we must never become too regional conscious. I believe that at certain times the rest of the country has become just a little weary of hearing of the problem areas and that the over-emphasis and over-stating of some of our problems has been inclined to give the wrong impression. The North-East has at times appeared to some of my colleagues on both sides of the House to be 1085 an area fraught with fantastic difficulties and situated towards the North Pole. I think that the hon. Member for Birkenhead will agree that at times the gloom expressed about Merseyside has given the same impression.
In fact, this country is a very small place. While we have our problems in those areas, the over-emphasis of them has at times been a hindrance rather than a help. The North-East Development Council, which was set up some years ago and which has received general support from all parties and all organisations industrially and otherwise in our area, has seen as one of its biggest tasks and problems the overcoming of the bad propaganda which the north-east of England particularly seems to attract. This suggestion that we were, as one hon. Member once wrongly and inaccurately stated in the House, a deserted plain, an area which was dying, was very bad indeed for the region, and very bad in the national interest.
The North-East Development Council did a great deal to correct this, and hon. Members on both sides of the House also played their part in correcting it. We were very sorry indeed that a recent B.B.C. documentary entitled "Dan's Castle" set us rather badly back here and gave an appallingly bad and inaccurate impression of the north-east of England. It is very easy for the B.B.C. or anyone else to go to any area and find appalling slums. It is very easy indeed for the B.B.C. to find areas which are in a bad state of repair.
It was particularly unkind of that documentary to illustrate a piece of our north-eastern coastline—which on the whole is among the best in the country—and to describe a section of it as resembling Buchenwald-by-the-Sea. That piece of coastline was Redcar-by-Sea. which I have always thought a rather nice place. I hope that the landladies of Redcar, in particular, were as annoyed about this documentary as I was. With modern transport for individuals and freight, Merseyside and Tyneside are not far away from anywhere. It is therefore sound national planning to encourage the fullest use of the whole country and sensible to try to steer industries and individuals into those areas.
Here one comes to the point of real disagreement between the two sides of 1086 the House on planning. In time, the North-East, Merseyside, Clydeside and Northern Ireland would have got their share of industry and individuals by the natural application of economic forces. If the South-East and the Birmingham area had become hopelessly and uncomfortably overcrowded, with their sources of land, labour, housing accommodation and the like completely exhausted, of course we should have had a natural overspill to those areas which, by the very contraction of their old industries, needed new forms of employment, but we had not time to wait for this, and therefore we had to find what I would call the half-way house on planning. We call it encouragement of industry, and we have done a great deal to encourage industry to these areas which need it. Over 300 new firms have gone to my own area in the North-East in recent years to assist us in our enormous battle to provide new employment and new means of production in the place of the contracting coal and shipbuilding industries.
The Hailsham Plan set up in Newcastle, the natural capital of the North-East, a miniature Whitehall. We realise that we should not expect a document produced by the Labour Party to pay much tribute to what the Conservative Party did. But while the Plan claims that planning boards have been established in the regions where development is needed—and I agree that that is so—it is only fair that I should point out that the setting up of regional boards in such areas as my own was accomplished before the last Government left office.
The Hailsham Plan also established the growth area conception and designated new towns. It is, therefore, good to see on page 85 of the Government's Plan that regional policies will not be concerned with bolstering up small areas which have no economic future but with developing those parts of each region where there is real growth potential.
I hope I may be forgiven if I recall an all-night sitting which we had towards the end of the last Parliament. On a Monday night in July, 1964, we debated the future of the north-east of England. On that occasion I was sitting on the benches opposite and listened to one Labour hon. Member after another from the North-East demanding new industry 1087 at the pithead of the constituency he happened to be representing. It is good to realise that the Hailsham thinking on the growth area conception, which is essential in regional development, has been accepted by the Labour Party.
It is essential to have development and to encourage it where developers are reasonably willing to develop. It is common sense to develop where transport facilities will be easy and good and not on the pattern of the old coal mining industry. Let us in the period immediately ahead have area thinking and planning. But what of area co-operation? The First Secretary talked of the essential co-operation which we must have if we are to have a successful national plan. I agree with that, but I must return, by way of criticism, to the subject of the north-east of England. I do not believe, having claimed that the regional boards were our work, that the appointment of, as against the election, of regional councils, is right. There is grave danger here to the basic democratic principle on which we have governed our country and regions for many years. We criticise the appointment of regional councils.
If it is argued that the advice of local business and professional men is needed, I suggest that the best of such men are already serving in local government. If they are not, they should be and we should find out why they are not. I fear the departure from the democratic principle embodied in the appointment, as against the election, of regional councils. If it is argued that these regional councils have yet to prove themselves, I naturally accept that and I can, in thinking of the First Secretary's appeal for co-operation, assure him that co-operation on regional development will be forthcoming from my hon. Friends and I and those who support us in the regions—providing we see a suggestion of co-operation from the right hon. Gentleman and the Government.
In discussing the National Plan we have heard a lot, before today's debate, about our thinking having been restricted within areas and that it has been disjointed. I believe that in the process of moving forward we must face some of the problems which are peculiar not 1088 only to the regions but to the country as a whole.
On Tyneside we know that, in regard to our problems of future employment and prosperity, a real problem exists with regard to skill. It is remarkably easy to be wise after the event and to have hindsight when one considers the problem of skill. When I listen to to or read the speeches of industrial leaders—be they employers or trade union officials—on this subject I find that much play is made of the amount that should have been done in retraining. In my experience I suggest that it would have been remarkably difficult, even a few years ago, to fill more than the 700-odd places in the three Government training centres in the north-east of England. I say this because the problem of skill is a new one for the regions and although it may be that we should have done a little more about technical education, it was not all that easy to establish the means of retraining miners, shipyard workers and so on until these people were in need of retraining. However, I add my appeal to those already made for the maximum co-operation—from trade unions and employers alike—in solving the enormous problem of training for skill, especially in the regions and particularly in the North-East.
We still have in the north-east of England about 90,000 people employed in the coalmining industry. In the Press this week the First Secretary was reported to have disagreed with Lord Robens in the suggestion of the Chairman of the National Coal Board that the price of coal should be increased. Some hon. Members opposite—I think that I am the only one on this side of the House at the moment—who attended a meeting at the Team Valley Trading Estate, Headquarters of the National Coal Board, Northern Region, in January of this year will recall that while there was no political comment one way or the other, the officials of the N.C.B. in that region pointed out that the first Labour Budget, with its increased National Insurance charges and increased fuel tax, had placed an enormous extra burden on the Board in that region.
The officials suggested to us that although they were doing their best with the closing of non-economic pits and the sensible contraction of the industry, that 1089 the Budget represented an additional burden which it would be heavy indeed to carry. I recall that when I asked if that would mean an increase in the price of coal in due course, I was quite firmly shouted down, by the Labour hon. Members present.
We can have a National Plan. We can have a Plan which talks of long-term aims and of what the 'seventies will be like. We can have a Plan which speaks of jam tomorrow, but the all-important thing on which everything depends is a sound economy—the control of inflation; the success of a wages and incomes policy, if one wishes to call it that. It is, therefore, the basic responsibility of the Government of the day to control inflation and control the economy so that, on that controlled economy, can we have a successful and prosperous future.
§ Mr. Speaker
Order. Many hon. Members wish to take part in the debate. I appeal to those who are called to be fair to those who are waiting to be called and to try to keep their speeches short. This is no reflection on the speech to which we have just listened.
§ 6.30 p.m.
§ Mrs. Shirley Williams (Hitchin)
It was after the publication of the Devlin Report on the docks that we first heard a new phrase—the "wreckers" of the economy. Anybody who listens to hon. Members opposite would have the right to call them the "knockers" of the economy. The right hon. Member for Enfield, West (Mr. Iain Macleod) revealed in three utterances an acute ambivalence towards planning, amounting almost to schizophrenia. Hon. and right hon. Members opposite are very like people who put their toes in the water but refuse to learn to swim. The right hon. Member for Enfield, West is a sophisticated economic thinker and knows far better than these three remarks implied. He deliberately confused productivity with production. He knows the difference as well as anybody in the House.
The right hon. Gentleman referred to the inability of my right hon. Friend to be able to plan effectively if what he did was to reveal rational targets to industry at the industrial inquiry, but surely the 1090 whole purpose of planning is to set before industry the national need to ascertain how far it is capable of meeting it. I would be surprised if the right hon. Gentleman is still so primitive in his economic thinking that he believes with Adam Smith that the summation of a set of individual targets amounts to what the nation requires. Surely the true solution is to find the middle path between the willingness of firms to meet the national targets and the requirements of the nation if the National Plan is to be achieved. The right hon. Member for Enfield, West referred dramatically to what he called the drift to compulsion, but surely he would agree that there is more than one type of drift to compulsion.
If this country within the next five years fails to achieve the export target, fails to reduce the increase in imports and to increase production and productivity in the manner laid down in the National Plan we shall equally surely drift to compulsion, and that compulsion will be the compulsion of disinflation, of unemployment, of cuts in the social services, which amount to a complete repudiation of choice for a large number of people in our population.
After those general remarks I turn to the National Plan itself. I believe that one of the great merits of the Plan is that it has set up a network of consultation and of confrontation of opinion between both public and private industry. In doing this it enables industries to know beforehand, far more clearly than they have done in the past, the requirements they will be asked to fulfil. This is perhaps one of the great achievements of democratic or indicative planning. It enables firms to work in the clear light of day and not in the fog of obscurity about one another's intentions. It was because of this that the Confederation of British Industries and the T.U.C. hailed the plan when they first heard of it. It was because of the advance in thinking which it represented in this respect.
My first general point on the Plan is that I hope very much that what was hinted at by my right hon. Friend the First Secretary will shortly be achieved, and that is that the economic plan will be paralleled by a physical or geographical plan which will give some indication of 1091 how far the pattern of population distribution in the country can be associated with the economic requirements of the Plan. This seems to me to be necessary for the completion of the total picture of planning in this country.
Secondly, I should like to make one general criticism of the Plan and that is that perhaps its title is a little too precise. It is very much a national plan, but I should like to have seen a little more about the effect of movements of tariffs in E.F.T.A. and the E.E.C. on future of planning in this country, and a little more based on supposition of what might happen to our economy in the next five years should arrangements in Europe change greatly, as well they might.
The first of the specific points I should like to make about the Plan is crucial and central and that is how far one can implement a plan of this kind, having said that we want to see the plan carried out because we believe it essential for the health of the economy. The Government might look again and in more detail—and I do not want to take the speech of my hon. Friend the Member for Buckingham (Mr. Maxwell) from him—at Government purchasing. The total of public procurement, local government, national Government and nationalised industry together, amounts to approximately 40 per cent. of all purchasing in this country. We might possibly consider something which has been done in France and that is to attach to major public contracts a condition that their taking-up must be dependent upon the willingness of the firm to try as far as possible to satisfy the target laid down for the industry in the whole Plan. This is one method of trying to encourage firms to satisfy the terms of the National Plan.
I very much agree with what has been said in the debate about the need to look again at tax incentives for investment. We recognise, as does the Chancellor, that the Corporation Tax again opens up the question of investment incentives. I hope that we can look at them and make them much more selective, in view of the fact that here, I believe, the Government can again ensure that as far as possible the targets of the Plan are carried out. I am not at all sure that, at least in the next few years, we should not look again at the creation of credit and again take 1092 a leaf out of the French planning book. In France the Treasury can guarantee a loan to a firm which is endeavouring to carry out or which has succeeded in carrying out its responsibilities under the National Plan. The Government should look again at the possibility of this kind of incentive—which is not compulsion. We should also bear in mind the possibility of using at some later stage, if we need to, selective import controls, bearing in mind the possibility of protection on the competitiveness of a firm. I believe that the 9.1 per cent. increase in manufactured imports estimated in the National Plan is perilously high.
The Government deserve a good deal of credit for the effort which they have made to extend Government training centres but I agree with the hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) that 8,000 places, that is a rate of about 16,000 places a year, is still inadequate.
According to statistics in the Plan dealing with two declining industries something like 112,000 men will be coming out of the inland transport industry in the five-year period and about 67,000 people out of textiles. People coming out of these declining industries particularly require the training facilities which the Government can provide—and which a firm in a declining industry will not provide—if they are to go back into the mainstream of employment. I draw particular attention to the 67,000 in the textile industry, because that industry is typically one where so many of the workers are women, and the activity rate in the North-West is the highest of all regions in the country. The woman worker is far more likely to leave the market if she does not have facilities for retraining and refresher courses than is the breadwinner of the household.
I should like the Government to look again at what they are suggesting for overseas aid, not perhaps in this first year when they are trying to balance payments but at least in the later years. The reason is simple. This country does a larger proportion of its trade with developing countries than do most industrialised countries. If there is a general move towards retrenchment then in the long run this country will suffer more than any other industrial country. It 1093 is for us to take the lead in getting away from this form of retrenchment.
As for the social services, we have made it clear on this side of the House that we believe very strongly in comprehensive social services and in improving them. I am a little bothered by the fact that the Plan suggests if anything a slightly slower recruitment for health and education. The figure for the Health Service alone is lower than it is for the gross national product. Those who have had to do with hospitals well know that, despite the "brilliant" plan of the right hon. Member for Wolverhampton, South-West (Mr. Powell), there is still a great gap to be filled.
If we can get this Plan looked at year by year and if the First Secretary would consider bringing forward an indication of the way in which the Plan is rolling forward and an annual report on progress we as Members will be able to keep a close eye on it, to offer suggestions and advice and, most important, to retain the primacy of the House of Commons over what is now a very large field of Government responsibility and activity.
§ 6.40 p.m.
§ Mr. Paul Dean (Somerset, North)
I shall follow the hon. Lady the Member for Hitchin (Mrs. Shirley Williams) in referring to manpower and the activity rate, but with particular reference to regional plans in the context of the National Plan. The National Plan itself and the speech of the First Secretary of State today emphasised the immense contribution which balanced regional development can make in filling the manpower gap which the National Plan exposes. On page 11 of the Plan we read:An essential condition for the fulfillment of the Plan is the fuller use of manpower in the less prosperous regions of the country".In the same context, I note another sentence in the National Plan where, dealing with regional plans and referring specifically to the South-West, it is said that the South-West has one of the lowest activity rates in the country and a large potential reserve of labour. Thus, we have in the South-West, as the National Plan admits, a region which can make a substantial contribution in meeting the key problem of shortage of manpower which the National Plan brings out.
1094 The First Secretary told us that the restrictive measures which have been taken were selective geographically, industrially and socially. For the South-West, they have been brutally selective, because the whole area, with one or two small exceptions, has been affected by the restrictive measures.
Along with other regions which fall at neither extreme, the South-West faces particular problems today. We are not like the prosperous South-East or the Midlands with their problems of congestion. Equally we have not the problems at the other extreme faced by the North-East and Scotland. There is a real danger that the problems of regions such as the South-West which fall into neither of those categories will to some extent be neglected, particularly in present conditions.
I shall give one or two illustrations of what I mean to show that we are as yet by no means convinced that the Government mean business when they talk in the National Plan of the need to fill the manpower gap. My first example concerns the road programme. This is practically the first Government for many years to cut the road programme. We are feeling the effect particularly in the South-West. It is an example of national planning which makes it exceedingly difficult for regional planning in the South-West to operate effectively. The Economic Survey of the South-West published last year, a report commissioned by the local authorities in the South-West and carried out by a firm of consultants, with the support of the Government, has this to say about our communications:The need for good communications is of paramount importance to the Region in view of the distances from main centres of population and industry".I am glad to see the Joint Under-Secretary of State present because he has been in the South-West quite recently. He has been along our roads and he knows how true that statement is. It will be a hollow sham to talk about the development of the South-West unless our road building programme is accelerated. Very soon, the motorway system, the M4 and the M5, will link the north of the region to both London and the Midlands. Again the Severn Bridge will link the north of the region to South Wales. But beyond that, farther to the south and the south-west, 1095 there will be jam, delay and frustration on the roads. When we have this linking of the north of the region around Bristol to the motorway system, the problems of the rest of the peninsula will be even greater unless our road programmes in that part are stepped up.
How many new industries will be persuaded to set up in the south-west of the peninsula, when the road communications over to South Wales or towards London and the Midlands are infinitely better? How many industries which are already there will be persuaded to stay or expand unless road communications are better? I shall give just one of many examples which have come to my notice recently. One of the biggest shoe manufacturers in the country, Clarkes, has its base in Somerset, and it has nearly 20 factories in the South-West. It has expanded a great deal in recent years and has many plans for expansion in the future, but it has stated that the biggest restricting factor on its expansion plans in the South-West will be communications. There is a major firm, one making a large contribution to the economic development of the South-West, which says nevertheless that its future plans must be in doubt unless the road programme is substantially improved. We cannot hope to bring in new firms or encourage existing firms to expand in the south-west peninsula unless the prospects for improved road communications are there.
Here is another example of the way that recent policy has had a disturbing effect and is working against the very prospects and possibilities for development which the National Plan admits that the South-West has. I refer to the development of ports and, in particular, to the Portbury docks scheme. This is another example of delay and indecision having a serious effect and damping the enthusiasm of those people on the regional Economic Planning Council who are doing their utmost to solve the problems which we face.
The National Ports Council has reported on this major project. When I say "major", I mean major not only for the South-West but for the whole country. The Economic Planning Council also has made its report on the project, yet 1096 we still await a decision from the Government on whether the scheme is to go forward or not. The longer we wait, the more difficult it is for industry, exporters and shipbuilders to make their plans for the future, and the more difficult it is for the Somerset County Council, as planning authority, to plan the development of the surrounding area which is growing very rapidly. There is also uncertainty and anxiety in the minds of thousands of people who live in the vicinity and who, naturally, want to know how they will be affected.
Those are just two of many examples I could give of the way in which developments and policies in recent months have been making the overcoming of problems in the South-West extremely difficult, making it exceedingly difficult for those who are working on regional plans to produce plans which will be effective and which can be put into operation before the problems I have mentioned get out of hand.
I want to quote just once more from the Economic Survey of the South-West. Dealing with the past decade, it uses these sombre words:Without the holiday industry and the introduction of a handful of new manufacturing firms during the past decade a large part of the Region could be considered a depressed area. The symptoms of depression would not be as stark as those in the great industrial areas of the North but the effects would be as serious.It says that about the past decade. It says this about the prospects for the future:There is every indication … that the Region will enjoy less success in the next decade unless there are considerable changes in policy centrally and considerably greater exertions regionally.We have no intention of allowing a situation to develop where we have less success in the future. We are willing and eager to put out greater exertions in the regions. We are not the home of the merchant adventurers for nothing. We are determined that our famous part of England shall continue to combine beauty and pleasure with economic prosperity. But what we ask for is a square deal from the Government and a fair chance to make our full contribution to national prosperity. At the moment, we feel that we are not getting a square deal and that the new economic machinery which has been set up in the region is not having a 1097 proper chance to operate. Unless these regional policies can get off the ground effectively the National Plan is not going to be worth the paper that it is written on.
§ 6.53 p.m.
§ Mr. Ness Edwards (Caerphilly)
Mr. Speaker, I shall keep in mind your injunction to hon. Members to keep their speeches as short as possible, without at the same time deleting matters which we think important and which ought to be brought out.
I want to express my general appreciation of the work that my right hon. Friend has done in producing the National Plan, because there has been far too little appreciation both in the country and in the House of his work. I was a bit surprised that the right hon. Member for Enfield, West (Mr. Iain Macleod) complained about the short notice of the debate. The Plan has been out for some time, it has had widespread discussion throughout the Press and a very great deal has been done by television to publicise it. I was rather surprised at the ambiguity with which he approached the general principle of planning. One would have welcomed from him that warmth about the Plan that he showed to the Prime Minister when he talked about his difficulties in Rhodesia and which he himself showed when he was in charge of the Colonies in the previous Government. He talked about the Plan in principle, but not in particular. His theme was, "I like planning." It reminds me of the old tag: "You love me, but why do you kick me downstairs?" That seems to be the ambiguous attitude that he showed here this evening. I am wondering whether he felt that, just as on another occasion, he could not carry the party behind him in the clear thinking which he has about the situation.
Having said that, I want to say that the publication of the National Plan gives us for the first time an overall picture of the economy, and it is only by getting that picture that we can discover the reasons for stop-go, for the booms and stagnant periods, for the financial crises and all the things which have troubled the country ever since the early twenties. Here was a very good diagnosis of the general situation and, on top of that, then to go to the employers of labour and to the trade unions and get 1098 them to look at the national problem as a whole, subordinating their own narrower interests to the national interests, was a great achievement and the first time that it has ever been done in the country. One would have expected a far greater appreciation of that achievement.
The object of the Plan has been to get expansion without inflation and to get an economy that permits a steady and continuous improvement in our standards of living. That is the job which my right hon. Friend has sought to do, and to make the necessary preparations to keep our country's place in the world to which it is entitled. It will mean a very considerable redeployment of our nation's manpower, and that is going to be a big job in itself. In producing the document, in producing the subsequent document and another document that is to come tomorrow, my right hon. Friend is approaching the national problems in a way that ought to have been tackled long ago, and the only way that is going to enable our country to recover the position it had in the past and to which it is entitled. My right hon. Friend's Department, at which there has been so much fun poked, the big N.E.D.C. the little N.E.D.C's and, in particular, the new regional economic structures and the Prices and Incomes Board all form the machinery which will give effect to the lessons and the needs that emerge from the diagnosis. In a sense, it can be the essence of a design for a new Britain and, if we are to get a new Britain, that is the sort of machinery that is necessary to work out the lines, the dispositions and the terms of the new economy and the redeployment of manpower.
It is very easy for the economists and planners to issue White Papers, to change the figures in one column, transfer them to another column and say that a particular industry must be expanded and that another industry must be contracted, that there is an expected market for a particular class of goods and therefore that we must match the manpower to it. That is easily done on paper, but, after all, we are dealing with the lives of people. Every man who has to change his job, every family which has to take up its roots, and every child who has to move to new surroundings and a new school in a strange neighbourhood, represents a little crisis. That is what 1099 we have to consider, because that is the sort of thing that is probably going to happen to hundreds and thousands of our people before this national conception of our economy becomes a reality.
We all know that the change has to take place. We all know that it is inevitable. All of us support it in principle. We agree that we have to cut out the dead wood in our economy if we are to move forward. We agree that we should change the pattern of our industry, modernise and automise, but when it affects our constituencies, industries and interests—even when it affects the House of Commons—it is an entirely different story—change for everybody else but not for us. Consequently, we must face up to it with courage and imagination.
This becomes a more serious problem perhaps in mining than in any other industry. I would tell the right hon. Member for Enfield, West that planning for an extractive industry is an entirely different problem from planning for industry in general. In the mining industry one is fighting nature, geology, pressures and a climate of opinion. Ten men killed today can mean a loss of 100 men in manpower tomorrow. These are the difficulties in mining.
Like every other miners' Member of Parliament, I am apprehensive about the situation in the mining industry, but it is a situation that would have arisen without a Plan or without a prophecy. That is one of the things that we have to face. This is our only indigenous supply of fuel, and if we go wrong in our calculations about fuel and power, it means that all the prognostications in the National Plan collapse. I see many right hon. and hon. Gentlemen in the House who remember our experience of a shortage of coal in 1947 when the economy of the country was brought almost to a standstill. We remember that crisis. Consequently, any mistake made here is likely to have consequences far greater than have perhaps been expected.
For some years now we have had a commitment to a target of 200 million tons of coal a year. I remind the right hon. Member for Enfield, West that his target in 1956 was 250 million tons, but the Conservative Government were 50 million tons out. With the best will in the world, when fixing a target for 1100 the mining industry one may be wrong both as to the size of the market and as to the amount that can be produced. I want to be fair about this. It is a difficult exercise. If we have a hard winter we shall burn 10 million tons more coal than if we have a mild one. [An HON. MEMBER: "Nonsense."] It is not nonsense; it is a fact. We have to start every winter with at least 17 million tons of coal in stock if we are to be sure of going through the winter without facing a shortage.
No one knows where the figure of 200 million tons came from. It has been a magic figure. It has also been a static one. It was fixed some five years ago, and it has remained as though no technological change had occurred in the meantime. But technology alone has created a situation in which we ought to look at that figure again. I can only assume that the 200 million tons a year was fixed as a figure to carry the overheads with which the industry was so unjustly burdened. When one looks at the situation of the industry one can say that, in view of the size of the overheads, many of which ought never to have been carried by the industry—American coal, the cost of subsidence, pits which were not worth 2d. and were, in fact, liabilities—and the need to wipe out all these things, we made very many bad bargains when we nationalised the industry. All those things had to be wiped out and the industry still had to carry a burden.
When the target was reduced from 250 million tons, in respect of which a capital investment programme had been got under way, to 200 million tons, that was the time to have conducted a capital reconstruction. Because the Conservative Party did not relieve the mining industry of the burden which the Government had imposed upon it, the industry has had to carry it ever since. The result is that because of the burden of the overheads many pits have been made uneconomic although if they had been carrying a normal burden they would have been profitable units of the industry.
The Government have now reduced the burden by £400 million. In addition they have relieved the industry of the obligation to pay £10 million to the special obsolescent fund fixed by the Conservative Party in the previous 1101 Government's White Paper on the financial responsibility of nationalised industries. Besides that, a 5 per cent. preference has been given in respect of Government buildings and Government-subsidised buildings. On top of that, the mining industry has been given a guaranteed market—not big enough in my view—in both the gas industry and the electricity industry. When I hear some of my old mining colleagues say that the Government have not done anything for the mining industry I am aghast. Never in the history of this Parliament or the history of British industry has so much been done for a single industry as the present Government have done for the mining industry. It is about time that was said.
Now in their White Paper on fuel policy the Government have said that they expect the market for coal in the coming year to be not 200 million tons but between 170 million and 180 million tons. [An HON. MEMBER: "It is not a target."] It is not a target, but even if it were, it would be to the credit of the mining industry if it could exceed it. This is an assessment of a trend. The publication of this figure has created a climate of opinion in every coalfield the like of which I have not seen since the 'thirties. It is quite inexplicable. A mood of pessimism has spread throughout the coalfields. A thousand men a week—I am sorry, Mr. Speaker, to take so long, but I must make these points—are leaving our mines. We have the race now between mechanisation and automisation and the manpower drift.
I do not think that the exclamation by Lord Robens that a schoolboy could do the job is to his credit. It was a schoolboy's ejaculation, a bit of petulence. Lord Robens has done a grand job with the industry. He brought to it the qualities it required at the time. If every other industry had achieved the same increase in productivity we should be in an entirely different position.
The manpower drift in the coal industry is now such that 50,000 men a year are leaving it. It is not only the bad pits that they are leaving. The problem is as severe in the profitable areas—Yorkshire, Leicestershire and Nottinghamshire. There, the rate of loss is similar to the rate in South Wales. In my constituency there are 1,600 vacancies in the pits. 1102 Some pits are in danger of closing because they cannot get enough men and there are others where the drift is such that the fear of shutting down is causing yet more men to leave, even where in reality there is security.
The Government have been pretty ham-handed in handling this situation. The slogan going round the coalfields is, "Halt the pit closures". It reflects a fear of the future. I believe that in South Wales there is work for all able bodied miners, if they are redeployed, and that it is better to redeploy South Wales miners within South Wales than expect them to go to the Midlands. In the redeployment in the coalfields, let us have more generosity and vision than in the past. Treat the miner we want to move from one district to another in South Wales in exactly the same way as the civil servant is treated. Let him have a resettlement grant and removal costs. See that he gets a new house and that he settles in; see that his child gets a proper chance at school in the new area.
These are things which must be done and I doubt whether it was wise to publish the White Paper on Fuel Policy without at the same time publishing the White Paper, due out tomorrow, dealing with the social consequences of the redeployment of manpower. To issue them separately was foolish in the extreme. Tomorrow we shall see what steps are being taken to give effect to something announced a week or so ago.
Whatever we do, we have to keep the viability of our valleys. There is room in South Wales for all ablebodied men in the mining industry but there is also the problem of the partially disabled men. They constitute a higher proportion of the mining industry than of any other. We must make special provision for them and I hope that able bodied men will not use the establishment of new factories to desert the jobs they can do, thereby preventing men who are partially disabled from working in these factories.
I am sorry that I have taken so much time, but this problem is vital to the country. It is vital to the men in the industry and vital to each of the coal fields—Scotland, Durham and South Wales—where the greatest changes are to take place. We know that, if the 1103 job is done slowly, still more pits will die. That is the tragedy. The slower the job of redeployment, in the last analysis the more pits will shut. The quicker the job is done the fewer the pits that will shut.
I am concerned not so much with keeping the pits open as I am about the livelihood of the people who may have to be displaced. There is fear of the future and unless the White Paper tomorrow takes away that fear from the people in the mining industry we shall not get the redeployment which may be necessary in the economic situation of the country.
§ 7.16 p.m.
§ Mr. Terence L. Higgins (Worthing)
I have a number of specific points to make, so I hope that the right hon. Member for Caerphilly (Mr. Ness Edwards) will excuse me if I do not follow him in detail about the coal industry. I am surprised to find, however, that he did not take into account the protection the industry has enjoyed in the shape of the fuel oil duty and restrictions on imports of American coal.
Normally, I would welcome any measure which encouraged the business community to employ better forward planning techniques, but I am unable completely to welcome this National Plan. We should be clear that it is in no way a national plan. It is a party political document. Its political implications are extremely serious, more particularly regarding consumer choice, already touched upon by my right hon. Friend the Member for Enfield, West (Mr. Iain MacLeod). The First Secretary of State stressed that he had had talks with industry and the unions but made no mention of talks with the consumer associations. We are very concerned that the consumer interest as well as the business and union interests should be considered. It is significant that, in an open letter to the First Secretary of State, published in the latest issue of Which?, it is clear that the National Plan is not a "best buy".
The other points I wish to make are more technical but deserve consideration as well. The First Secretary of State suggested that the National Plan provided a perspective for industry on which it could base its own plans. It is impor- 1104 tant to bring out the fact that the document is not a forecast. It is a target. I is not a forecast drawn up by the business community. The right hon. Gentleman went to the business community and asked it to assume a rate of growth of 25 per cent. and to work out the implications for particular industries. A 25 per cent. growth in output is a nice round figure, like 3 per cent. for mortgages.
But contrary to what the right hon. Gentleman suggested today the business community is in no way committed to the feasibility of the figures it has provided to him. His assertion that they are is dangerous because it will sap the confidence of the business community that is needed in this kind of exercise. He has no evidence, as far as I know, for saying that the business community believes his target rate and the figures based on it are feasible. If he had wanted to know this, he should simply have added at the end of his questionnaire, "Do you think the assumed rate of growth is feasible?" He did not do so and I believe that his remarks today were invalid. We need both a national target plan and also a document saying what the business community expects to happen. On this basis the figures based on the target of 25 per cent. and the existing plans of firms could easily be amalgamated.
One could then examine the difference between the two documents and get an idea of where the bottlenecks in the economy would arise. We would then have an analysis on which to construct suitable policies to direct us towards a target of growth. However, because it is based on the assumptions which I have mentioned, the National Plan does not fulfil the purpose of a constructive document. It is a completely political document and should be assessed as such.
The precise dates to which the Plan applies have not been made clear. I was very glad to hear the First Secretary say that he proposed to have a rolling plan in future. I hope that we shall be told tonight when the next issue of the Plan is to be. I hope that we will have a Plan next year which shows us what the prospects will be for the following five years, because it is very important that, like industry, the Government should reappraise their plans each year. Unless they do, the Plan cannot possibly fulfil 1105 the function which the First Secretary maintains that it should fulfil—providing basic assumptions on which industry itself can make its own investment decisions. I hope that tonight we shall be given a specific date when the next issue is to be produced. The present document certainly made complete revision.
It should also be made quite clear that figures must be given for each individual year. There is no reason at all why we should only have specific figures for this year and specific figures for 1970, but nothing in between. The questionnaire in the National Plan contains a remarkable entry which asks for figures for 1963, 1964, 1965, 1966, 1967—"later years if appropriate"—and 1970. I would have thought that it would have been a great deal easier to insert 1968 and 1969; we would then have had specific figures drawn up by industry for the whole period of the Plan.
I believe the First Secretary was reluctant to do that, because it would enable one to see precisely what the implications were as we went along and how far the Government's policies were succeeding in their objectives. I believe that that is why we have not had specific figures for each year in the National Plan. I hope that they will be given in any future document.
The First Secretary is quite wrong to assert that allowance has been made in the document for the recent measures taken by the Chancellor of the Exchequer. It is perfectly clear to anyone who has read through the document that no adequate allowance has been made for those measures, and yet it is more than probable that they have pushed the whole Plan back by one year. We must have a closer assessment of what has been done to the Plan by the Government's own short-term policy.
I shall follow your suggestion, Mr. Speaker, that we should be as brief as possible, but I want to make two more technical points. The right hon. Member for Caerphilly suggested that the Plan gave us an overall picture. In fact, the most remarkable omission from the Plan is any attempt to provide overall figures. There is no overall input/output table. I hope that tonight we will have an assurance from the Government that an input/output table will be placed 1106 before the House of Commons. Unless it is, we must be forced to the conclusion that the figures do not add up. If they do, there is no reason why an input/output table, showing the consistency of the figures and reconciling the set of figures for one industry with the sets for all other industries should not be drawn up.
Finally, we must have a breakdown of the global figures which are given for output per head. Such global averages are meaningless and we need to know—and there is no reason why industry should not provide the figures—how much of this expected increase, which follows from the assumption made by the First Secretary, is expected to come from the removal of restrictive trade practices, how much from people working harder, how much from greater capital investment, how much from economies of scale resulting from an increase in the size of the market and how much from technological change. Only if we have that kind of breakdown can we examine the validity of the figures which are now put forward in the National Plan with very little evidence and very little detailed analysis to support them.
Many questions about the document need to be asked. I hope that we shall have the assurances for which I have asked. The overall danger of the Plan is that we are given a target figure for a rate of growth which is set by the First Secretary without industry being asked if it is feasible. We may find that the time comes when the rate of growth is rather less optimistic than the First Secretary has assumed and we shall then find him saying that private industry is failing the country, although, in fact, it has not committed itself to the feasibility of the targets he has suggested. We shall then find the public sector being maintained at the level planned and the whole of the shortfall coming from the private sector's shore. The Plan would become an exercise whereby the First Secretary and his colleagues could seek to justify an expansion of the public sector at the expense of the private sector.
I return to the point made earlier—we must have the Plan rolling forward and we must have figures for each year, so that if the public sector is taking too large a percentage, because the target is 1107 not achieved, we have a basis for revising the Plan as it goes along. But long-term planning is meaningless unless it is put in its short-term context from time to time.
§ 7.27 p.m.
§ Mr. Ted Leadbitter (The Hartlepools)
The hon. Member for Worthing (Mr. Higgins) referred to the National Plan as a party political document. He said that it was not a plan, but he asked for another next year. He said that there were no overall figures in it, and yet he wanted something which his right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) said was not possible to obtain. The hon. Member for Somerset, North (Mr. Dean) spoke of the problems of the South-West and gave the regional reasons why more planning was needed. However, the hon. Member for Worthing does not agree with planning. Earlier today the Leader of the Opposition confirmed by gesture what he had said at Bristol—that his opinion of the Plan was very poor.
Certainly it has had a mixed reception in the Press and on television and by some journalists. For some it is a plan, while for others it is an analysis of the British economy. For others it is the object of scorn. The right hon. Member for Wolverhampton, South-West (Mr. Powell) has described it as fatuous and the Leader of the Opposition took upon himself an exercise of derision without reading it. However, whatever is said about it in some quarters, it has captured the imagination of the nation.
Industry has played its part in the making of the Plan, and the N.E.D.C. has already indicated that the Council of the "Little Neddies" accepts the need to overcome the obstacles which are revealed in the Plan and which must be overcome for the growth of the economy. The Plan points the way. It outlines the task before the nation. As a document it turns its back on more than a decade of wandering wasted opportunity and of indifference to the nation's needs. It brings our people face to face with the facts of life.
Whatever else might be said, it has a greater chance of injecting purpose and drive into the national economy, than any other measure that has been introduced 1108 by the party opposite during the years when it controlled the affairs of this country. It would be unrealistic to presume that it will fulfil its objectives in every respect. In the course of time much will be altered. Events will have their modifying influences. Technical developments may well be deviated from their expected course; manpower considerations may not remain constant; the bold steps of its authors may well be confounded by social considerations. This does not mean that, as a plan, it falls short of our requirements today. We must have somewhere to start to meet the twin tasks of paying our way and avoiding any repetition of the mess which we inherited.
This debate is to welcome the Plan. We must not be unmindful of the reasons for it—a visible balance deficit between exports and imports, between the years 1951 and 1962, of £2,870 million, which represents, in my opinion, a decade of trading which we could not afford to repeat. A real rise in our standards of living could not be obtained on that kind of performance. Our real influence in world affairs, with that kind of performance, was bound to wane. I have referred to the mess which we inherited. The Opposition may well have something to say about that. Already the Leader of the Opposition has referred to it as a myth. The Times in November of last year did not refer to it as a myth. This is what it said on 26th November, 1964, in referring to a loan which had been raised by this Government:Its immediate origin is a legacy of the last Government. This must be said because unless memories are refreshed, a Conservative myth will grow up that Sir Alec Douglas-Home and Mr. Maudling left behind them a sound, well-based economy which Labour promptly ruined … This is not so. The latest crisis was building up before the election. Action was delayed … The return of the Conservatives to power would solve nothing. They had thirteen years to produce the answer and did not do so.This was not brilliant foresight on the part of The Times; it was a confession of a knowledge of how the Conservative mind works. The inheritance was not a myth. It was one of the conditions which made this National Plan imperative. There is another aspect of the problem, and that is the question of the two nations, which was debated in this House 1109 month after month, year after year, before the Labour Party gained the confidence of this country and the right to govern. We all knew the arguments about the two nations.
I need only refer to my own constituency, The Hartlepools, which became a byword for depression and unemployment. We resented it and I was sorry about it. Here I refer to the earlier comments of the hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott), about the descriptions that had been applied to the area in general. I agree with him. I and my constituents resented the kind of reputation which they gained nationally, not only because we became a byword for depression and unemployment but because we resented the first causes of that reputation, which was the indifference which had been applied to the problems of the area for so many years. The fortitude, the patience and the drive of my constituents won through in the end and that was the general picture of the area—a kind of picture which can be repeated in other areas, in the designated parts of this country, which could be brought before the nation's mind.
If this Plan has its shortcomings it is still welcome to an area such as mine. There is one major matter which concerns me and that is the question of the present lack of skills and the present employment problem in my area. We are naturally concerned about the deployment of men, their training and their opportunities. I understand that in the National Plan there is some reference to the 800,000 workers needed during the course of the period laid down in the Plan, and how a large part of this need will be met. It is in this category that a proportion is expected to come from the provision of jobs in the areas of high unemployment. I would urge a special study here, for this provision demands a radical change in our housing needs, from a constructional point of view, from a policy of letting point of view and from a financing viewpoint. Jobs available in an area without houses are of little use to a family man who has to move.
On page 111 of the National Plan it is stated that the aim is to build 500,000 houses. Might I make a point that, while numbers are good in themselves, other 1110 matters, such as deployment of the houses, distribution of them and other matters, deserve a larger part of our thinking. The manpower part of the Plan, which strikes me most particularly as being of the highest importance, is not even in this category of moving a man from one area due to the provision of jobs in a place of high unemployment. It is something to do with a section of our population, an age range. They are the people who are now over 40 years of age. This is a matter of immediate concern to many men who are in this category, and who are denied participation in the new industrial activity which is taking place around them. In the northern region, nearly 60 per cent. of the men out of work are over 40. Far too many have been out of work for long periods. These men are too large in number for anyone to claim that they are getting a fair share of employment opportunities. In many cases prejudice stands in their way. In many cases occupational and superannuational considerations lock the door for them. Other considerations involve a lack of skill.
There is a more odious objection in the way of employing this important category of men. If they suffer from a slight disability, a cold or a cough, a spot of chestiness or a pallid complexion an employer can turn them away. This problem can become intensified in particular parts of the region. In The Hartlepools we have a serious problem concerning people over 40 which is causing educationists, industrial advisers and officials of the council much concern.
In answer to a Question of mine earlier this week the Minister of Labour told me that in The Hartlepools area at 12th July, 1965,the latest date for which information is available, 489 men aged 40 years and over were registered as wholly unemployed … Employment exchanges are always concerned to bring to the attention of unemployed men the opportunities for training in the Government training centres in the region. During the 12 months ended 28th October, 1965, there were 15 applications for training from men in The Hartlepools over 40 years of age, of which 4 were accepted, 3 rejected, 5 withdrawn and 3 are under consideration.—[OFFICIAL REPORT, 1st November, 1965; Vol. 718, c. 111–12.]I do not believe that over half the men out of work in The Hartlepools can be considered to be largely unemployable or untrainable. The fact that they are over 1111 40 raises special problems. More research is needed to discover how best to reduce the incidence of unemployment among men in this category. No doubt new approaches must be made to training needs and there must be a better understanding of the domestic problems connected with labour mobility.
For some of us the Plan may not go far enough. But time and changing circumstances will add to it. Where weaknesses are found, or expected rates of progress are not achieved, remedial steps can be taken. We can see from the Plan that age range problems and others will be upon us at a very early date.
I am satisfied that we have before us a monumental work which is a great credit to the Department of Economic Affairs. It is the first sign to put this nation on the right road to prosperity.
§ 7.44 p.m.
§ Mr. George Y. Mackie (Caithness and Sutherland)
May I start by saluting those Members who are here to listen to the debate? I do not know whether there are any, but, if so, I salute them. May I compliment the Members who are here to make a speech on their attentive demeanour throughout the debate? It is a great compliment to their patience. I am the only Liberal Member to be called, so I am afraid that I must cover a good deal of ground, and I will try to do so fairly quickly.
I welcome the Plan. In our statement we said that we welcomed the publication of the Plan. We did not mean to carp in the way that a number of hon. Members on this side of the House have been carping. My criticisms will be many. There is little point in praising the Government for what they have done. It is far better to criticise them for what they have left undone.
The First Secretary has shown great enthusiasm and ability to step in where angels fear to tread. The way in which he has got many businessmen and trade unions working together is a distinct advance. He is to be congratulated on this, and on the creation of the Department of Economic Affairs. It may not be perfect. Indeed, right hon. Members of the Tory Party may have better plans. They may criticise the Department for fighting with 1112 the Treasury, if indeed it does, which I have no doubt about. However, the creation of a Department which can fight with the Treasury is a tremendous step forward.
All of us in our political experience have known constituency party treasurers who are absolutely meticulous about telling us where the last ha'penny has gone. They criticise the amount spent on postage and are unable to raise a single bawbee to fill the party coffers. It may be unkind to the Treasury to say this, but there is a slight residue of the feeling in the Treasury that its job is to stop spending, whereas it has enormous responsibilities for the financial health of the country. For this alone the creation of the Department of Economic Affairs must be welcomed.
The Plan is a first step—a fact which the First Secretary frequently admits—and as such does a great deal of useful work. It is very useful to say that there is pie in the sky if we try, which is more or less what the Plan says. It is useful to tell people that £8,000 million can be available to them by 1970 if enough effort is made and that it will be split between the repayment of debt and public and private spending. This is useful, and it is right and proper.
The check list of action required which appears in the Plan is very useful, particularly for political opponents of the Government, in that it says that defence expenditure overseas will be reduced. This will be quoted at the Government in future. It is an excellent target for the Government to try to reach. Useful things are said about studies being made to increase exports and to establish export groups. Better and easier credit is to be given. I could go through many major aims which the Plan details in the check list which are excellent in themselves. As I have said, I should like on behalf of my party to welcome this essay in planning.
To hear some opponents of the Government speak one would think that we still believed in the pure milk of Adam Smith. But many things which Adam Smith said are still true. We are now rich enough to try, and indeed we know how, to avoid many of the evils which unrestricted competition and enterprise brought in its train. To this extent, planning is an excellent thing.
§ Sir E. Boyle
I hope that the hon. Gentleman, as a Liberal and a Scottish Member, will deliver Adam Smith from the many unfair things said about him. I have no reason to think that Adam Smith would disagree with the sentiment which the hon. Gentleman has just expressed.
§ Mr. Mackie
I am sure of that.
A rate of growth of 3.8 per cent. is not very ambitious. It is only half that achieved in West Germany and little more than 1 per cent. more than the Tories achieved from 1950 to 1962 when it was about 2.6 per cent. In the same period, West Germany had a percentage of 7.2, Italy 6.3 and France 4.4. Therefore, we do not regard the target as particularly ambitious. We regard it, however, as an advance over the Tory régime, although now that the Tories have a rough-rider in the saddle of their sluggish bronco, their sights are being advanced and some Liberal measures are coming forward under the guise of new Tory policy.
We must, however, look at some of the premises which the Government and the First Secretary have put forward. The right hon. Gentleman said that the basic requirement to get on with the Plan was that the balance of payments position should be put right and confidence in the £ established, and then we could go ahead. The right hon. Gentleman made, I thought, some dangerous statements in suggesting that there was great confidence that this had now been achieved.
Certainly, the Government deserve credit for the way in which they have manœuvred to protect the £ and the way they have got the bankers to lend them money. They are now able to attack the speculators and the £ is strong, and this has been well done. Although it has been well done, however, their position is precisely the same as that of a man with an overdraft. When his creditors hear about it, they are willing to renew supplies.
It is important to realise that the major factors which contributed to the enormous deficit under the Tories and to the position during the last year are still present. I do not believe that the hardheaded gnomes of Zurich or anybody else look specifically at the confidence of the Treasury Bench when assessing the 1114 £. They look not only at the short-term prospects, but at the long-term outlook and at the things that really matter. They look at exports, labour relations, delivery dates and the general vigour of the economy and the co-operation therein. They will be looking also at the forward planning of the Government.
The most glaring omission from the Plan is the lack of a commitment to Europe. It is quite unrealistic to en-deavour to forecast an increase in exports if we ignore the biggest growing market right on our doorstep. Exports to Common Market countries fell by 4 per cent. during the first half of this year compared with a rise of between 11 and 19 per cent. a year during the years 1959 to 1963. This, I think, was because the reduction in tariffs inside the Common Market is now beginning to bite. Because of this, we must consider ways of increasing our exports to this enormous market.
I do not think that we can look to the Commonwealth, as the Government seem inclined to do, for relief. Although Commonwealth countries have, during the last five years, increased their purchases from abroad by about £700 million, the British share has fallen by about £60 million. Both these figures illustrate the foolishness of trying to stay out of Europe. I know of all the difficulties. I am well aware of the trouble within the Common Market, but a declaration of intent at this stage that we intend to join the Common Market as soon as we can would greatly strengthen the hands of the Five and would, I think, make General de Gaulle much more reasonable in his attitude. I do not see how we can plan for a great increase in production without looking for the markets in which the increased production can be sold.
I welcome, of course, the Government's regional intentions. One of the best things in planning is that economic forces are no longer allowed to act as a magnet to a given area, destroying the life of that area and, at the same time, destroying the life of the area which it empties. The Government's regional proposals are right and proper and their intentions, I think, are good. I should like to see a good deal more bite in some of their proposals. I was glad to hear the First Secretary say that they were examining 1115 new incentives—as I hope they are—for people to move to the development areas. When I see the Government introducing a payroll tax which is variable in different areas, I will begin to think that we are getting some real biting measures which can enforce the Government's good intentions in regional development.
A great deal of thought needs to be given to the establishment of regional boards and councils for planning, and we need to look at our existing examples. The Scottish Liberal Party—indeed, the whole of the British Liberal Party—is in favour of devolution of power. We have long said that there should be a parliament in Scotland to run Scotland's own affairs. I do not say this because I dislike the English or have any great resentment against them for Flodden and things past. I have always regarded them essentially as nice people. They have no regard for anybody's interests but their own, but they do not mean to be nasty about it. The fact is that devolution is a practical policy.
In the provision of jobs and in many other directions, Northern Ireland affords a practical example which we could follow. It is of great interest that since 1948 the number of jobs in Scotland has risen by about 80,000. I am not sure of the exact figure, but I believe that that is fairly accurate. In Northern Ireland, 60,000 new jobs have been created in the last 15 years or so. These are the figures that we were given the other day. Thus, a country of 1½ million people has, by its own efforts, and because its Government are anxious about their own people and understand the problem, created in Northern Ireland nearly as many jobs as have been created during the same period in Scotland, a country four times the size. This is a practical example.
In case anyone doubts what I say, let me quote from the National Institute Economic Review, which states:The existence of a separate Government in Northern Ireland has resulted in more generous inducements to increase employment than has been applied to depressed areas in Great Britain.I do not need to read that review to know that Northern Ireland has produced a very efficient agricultural administrator. By their organisation of the seed trade, the Northern Irish have taken 1116 away a large part of Scotland's seed trade.
The lesson which must be learnt by the Government is that it is no good appointing civil servants centrally to boards and expecting to get a new feeling of responsibility in an area or a country. It is necessary to devolve Parliament as well as trying to spread economic wealth and manufacturing capacity. Without devolution of power, I do not think that any regional policy can succeed, because only the people of an area can create the sort of climate which is needed to make a place not only prosperous but fit for people to live in and to make them proud to live in it.
I should like now to come to one of the weaknesses of the economic plan. Several Members opposite have spoken scathingly of competition and incentive, and indeed, they no doubt have a right to be scathing of them by themselves if nothing else is taken into consideration, but this country is at the moment having it too easy for its home industry, and this is made worse by the fact that we have still the 10 per cent. surcharge. What the Government should be doing is thinking of ways to reduce tariffs to make economic competition, to make it a little harder for businessmen to make profits, and a little easier for them to keep them, if they want a competitive economy. Adam Smith would doubtless agree, and I will paraphrase him, that if we cannot compete at home with imports, then it is quite obvious that we are not going to compete abroad, and industry cannot compete at home with massive tariffs added to by 10 per cent., and therefore it is highly unlikely to compete abroad.
The Labour Government might learn a lesson from what is happening in agriculture. Agriculture is an industry which is doing rather well. I am very grateful to the National Plan for telling the nation authoritatively what the N.F.U. has been saying for some time—that it is making a big saving in imports and is making a big contribution to the balance of payments. The Government put it at £250 million in the last 10 years. They put in some nice figures, too, about productivity, which has risen 6 per cent. in the last four years. This is, I think, a very valuable service to my own industry, but it is also a blessing to the nation, because farming has been squeezed and 1117 this has meant that farmers have raised their production.
I am getting 1d. less for milk than I got 10 years ago and I am getting less for potatoes and less for grain and my labour is costing me double. This applies to everyone else, of course, but farming has been squeezed. Under the Tory Government plan to squeeze the farmers the farmers produced more to keep up their standards of living. I would suggest that it is high time that this Government applied this lesson to the feather-bedded industries of this country. This is a serious lesson to learn.
The time has now come when agriculture has been squeezed too long. I am being perfectly serious. I know good farmers who are thinking that they are now at the point where they should cut labour and reduce production and go in for output per man and per unit instead of output per acre. This is a right and proper thing to do if we have plenty of land. It is what the Americans do with their vast areas of land, but if we want, as the Plan says, to get the major part of the increase in consumption from home production then the Government will have to look at their techniques again. The time has come when they should look at production per acre. To do this, I am afraid they will have to put up farmers' prices. I say "I am afraid". I would welcome it, because the farmers have done a good job, and I think that if other industries had done as well this country would be in a far better position than it is now.
Competition and incentive are essential. The hon. Member for Birkenhead (Mr. Dell) made the point that in West Germany they have, of course, done some planning. Dr. Erhard has been insistent the whole time that the forces of competition must be at work in the West German economy. Of course he is right. Of course it is obvious, but this is the point which the Government appear to be completely missing. I know this is a simple point. I know that this is a point Adam Smith put rather well, but there is no mention of it in the National Plan, and it is a very bad and wrong omission. We have, of course, got to have incentive, and Government policy here does not appear to me to be a policy which will produce a lot of go- 1118 ahead among young firms in order to stimulate the older firms.
They appear at this moment to be encouraging the retention of money by the larger firms, and, although modified somewhat, they still hinder the small firms, the close-controlled ones, and they would get a much better feeling, and provide a much bigger stimulus to industry, if they encouraged the large firms to pay out more of their money in dividends and then had to go to the market for income, instead of piling up that amount. Here again West Germany sets an example, and she has obtained double the rate of expansion which this Plan sets out to do. The Monopolies Commission needs looking at. There have been 23 investigations, and 20 cases where a bad report was made and no action has been taken. The United States, which has succeeded in keeping its cost of living level for about six years, has been very strong indeed in its monopoly and cartel laws. I am perfectly certain that this has got to be looked at, and looked at in a much harder manner than the Government are doing at the present time.
In taxation, if the Government want to be fair they ought to look at the spread of wealth, and attack, instead of the incomes made by useful people, large inherited fortunes, and see that quite a lot of families who inherit them are not spoiled and made useless to the nation because they have got too much money. Estate Duty being a voluntary tax, the Government could get a great deal of money from this source, and do a great deal to mend what is a general feeling in the country about the working of Estate Duty.
I think that the Government have made one great omission from the Plan, and that is that there is no desire to spread wealth and responsibility through co-ownership in industry. The Government have consistently failed to recognise that this is one of the most important factors—I do not say the only one—in the creation of the spread of co-operation in industry which can produce wealth. It is recognised by some of the large firms. It is recognised, of course, in I.C.I. It is recognised, too, in West Germany, where they now have a new second law enabling the trade unions to negotiate for precisely 1119 this sort of benefit for the workers, and enabling firms to pay bonuses of up to about £30 without tax when it is put into savings accounts or invested in industry. This is the sort of spirit of co-operation which we need in this country, and it is one which the Government do not appear to be encouraging.
I now want to sit down, and all the people who have been hopping up and down will be very glad of it, and be able to leap on to their feet and get stuck into their own speeches which, of course, will be infinitely more valuable than anything that has gone before. I should like, however, to make one more point, and that is about the lack of go in this country. I remember that in 1959, when the Tories were ineffectually negotiating about what they thought would be a European free trade area, at one point—at least, the papers here played it up at one point—it looked as though we should succeed, and throughout the country there was a feeling of apprehensive excitement, and people were prepared to face the competition and take the opportunity of a bigger market.
After that fell through, the whole thing fell flat once again, until we had the negotiations to enter the Common Market, which the Tories also mucked up. However, I will give them credit for good intentions. Then again we had in this country a real feeling of vitality, in political life and business life, and people were preparing to face the great challenge. Again, since then, we have fallen flat. I do not think, quite frankly, that the new National Plan, in spite of the speeches of some hon. Members opposite, has provided precisely that sort of excitement. Nevertheless, it is a step forward, and the Government would improve it greatly if they would recognise what they have been loth to recognise for a long time, that the mass of exporting from this country is done by private people, and that they must be encouraged, and that they must also have more competition to make them efficient. When they recognise this, the Government may become a good Government as well as a Labour Government.
§ 8.10 p.m.
§ Mr. Derek Page (King's Lynn)
Mr. Deputy Speaker, may I say what a pleasure it is to speak under your guidance for the first time.
I have the highest praise for the National Plan, and in business circles have found it welcomed very widely, and from some of the most surprising quarters. However, it is only an indication, and we must be on our toes all the time in analysing its strengths and weaknesses, and strengthening it where necessary, and I am sure that my right hon. Friend the First Secretary of State will accept any criticisms that I make in the constructive spirit in which they are intended.
I should like, first, to make some mention of my right hon. Friend's intentions with regard to development districts. It has been widely stated, and welcomed, that the new measures are intended to aid the economies in the development districts. I remember the hon. Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott) speaking of the image of the North-East as being a depressed barren area. That certainly is not the way in which some of us in the East Anglian region look on the development districts. We tend to look on them as comparatively flowing with milk and honey because earnings in those areas are very much higher than they are in East Anglia.
For instance, average earnings in the King's Lynn area are about £13 a week, which is about £4 a week less than those in the North-East. They are about £3 a week less than those on Merseyside, and about 30s. a week less than in Northern Ireland, which is supposed to be the worst of the lot, yet these are the areas which getting help, and apparently are to get more, and taxes from East Anglia go to provide that assistance. Thousands of workers in my constituency get less for a full week's work than the average family in the North-East gets by way of National Assistance. This seems to be Robin Hood in reverse—robbing the poor to help the comparatively rich.
I agree that areas of unemployment need help, but I beg the Department of Economic Affairs to think carefully about the criteria by which development district boundaries are decided, because although in East Anglia we do not, thank goodness, 1121 have the unemployment which would qualify us for help under the 1957 Act, we do have a great need for economic assistance to raise the economic tone of the area. As it is obvious that many of the forms of aid which are coming in the future by way of tax incentives, grants and help to local authorities, and so on, are to be geared to the development districts, it becomes more than ever necessary to have a really logical basis on which to allocate this aid.
The Achilles heel of the National Plan is the balance of payments problem. I have no doubt that if Britain were an isolated economic unit, completely self-contained, there would be comparatively little difficulty in fulfilling the Plan, but it is obvious that we are in danger of having our Plan stifled and the brake put on from time to time if we run into balance of payments problems as we have done so often in the past. This is certainly the gravest danger to our Plan. During the past year we have taken certain measures to help our balance of payments, and these have been very successful up to date, but it is doubtful whether the tremendous spurt in exports last year is likely to be maintained during the next year or two.
I wish to draw to the attention of the Department of Economic Affairs the need to be ready to impose quantitative controls on imports, because I feel that the time may come, sooner than it imagines, when these controls may be necessary, remembering that they are more selective, more specific, and more measurable than the purely financial controls that we have at the moment.
No one likes restrictions on imports, and the ultimate end to our balance of payments problem must come from greater competitiveness in exports.
§ Sir E. Boyle
There is one question about quantitative controls on imports which always bothers me. I do not take a doctrinaire view of this. Does the hon. Gentleman think we could work out a scheme which was rational from the point of view of our needs in Britain, but which did not handicap the backward countries? Even as it is the Plan means that we shall do less for the backward countries than we should like to do by way of aid. Is not there a danger of making it harder for them to increase their trading opportunities?
§ Mr. Page
As I understood it, the backward countries are dependent mainly on basic materials for their export. Our main difficulties have been with imports of semi-manufactured and manufactured goods, and these are the ones in respect of which quantitative controls would be most welcome.
It is extremely important to analyse very carefully why we have not been as successful as we should have been in our export performance, and to be as objective as we can in this. I have looked up a number of factors of production, bearing in mind the suggestion made by my hon. Friend the Member for Birkenhead (Mr. Dell) that prices are not the only consideration. I do not agree with him. I think that prices are the main consideration. In my experience of selling chemicals abroad I have found that they are the overriding consideration, but I must admit that when dealing with machinery and machine tools quality and modern design are also of great importance, and one can sometimes get over the price barrier if one has something new and modern to sell. Price is, however, of major importance, and, looking at the reason why our competitiveness has not been what it should be, it is interesting to note some of the factors of production, such as the tax load on industry in this country, to which reference has been made by hon. Gentlemen opposite.
Comparisons are a little tricky, but I believe it is essential to take into account social security payments as well as direct and indirect taxation in working out the total load on industry. If we do this, we see that in 1962, for instance, the percentage of the national product taken in tax in Britain was 34.3 per cent., in Germany 41 per cent., in France 41.1 per cent., and in one or two other places, particularly the United States, it was less, 30.9 per cent., but remembering that West Germany in particular was taking our foreign trade, it is difficult to see how this could have been a major factor in suppressing our competitiveness.
§ Mr. George Y. Mackie
Would not the hon. Gentleman agree that the way in which the tax is applied is as important as the amount of tax collected?
§ Mr. Page
I agree with the hon. Gentleman. In fact, I intend to deal with that later in my speech.
1123 Average working hours in industry in 1963 were as follows: Britain 46.1 hours per week, France 45.7, West Germany 43.9 and the United States 40.2 hours. All these major competitors were working considerably fewer hours per week than we were. The figure for Japan was 46.3. That is 10 minutes a week more than the workers in British industry. So it is not the number of hours worked that is the deciding factor. I remember raising this matter at a recent meeting and being told, "Ah, but the British worker does not put his back into it like the German worker". Anybody who thinks in that way ought to go out to Germany and leave those of us here who believe that British workers are as good as anybody else, given the tools to do the job.
The increase in wage rates over the decade 1950 to 1960 was as follows: Britain, 57 per cent.; Italy, 77 per cent.; Germany, 85 per cent., and France, 115 per cent.—so the increase is not the relevant factor. It cannot be. If it is not the result of these labour factors in production, what else can it be? The wartime saying, "Give us the tools and we will finish the job" is equally true in peace, especially in exports. It is interesting to weigh up the percentage of the gross national product of these countries which was ploughed back into fixed investment. I will take the decade 1950–60, which was the basis on which our present industrial set-up was built. Our production now depends on the money ploughed in then. The figures are as follows: Britain, 16 per cent.; United States, 18 per cent.; France, 19 per cent.; Sweden, 21 per cent.; Germany, 24 per cent., and Japan, 29 per cent. Time after time it has been the countries who have ploughed the money back—ploughed the seed corn back—who have got the results. This stands out clearly as the major factor in the question why we did not come up to our competitors.
I was interested to read a booklet called. "Britain and Europe", which was issued two days ago by one of the major banking groups in this country. It says:One of the major factors behind a rising level of industrial output is the level of investment.It points out thatBetween 1958 and 1963 the share of private investment in the gross national product of the 1124 E.E.C. increased from 21.5 per cent. to 26.2 per cent.In Britain, during the same period, the figure rose from 15.4 per cent. to 16.7 per cent. If we are not ploughing the national product back into new plant and industry I do not see how we can expect to compete.
I certainly accept the fact that under the right conditions competition is a tremendous spur to production. It has certainly worked in farming. But in farming the fact that so many grants from the Government are linked to specific improvements has also been of major help to the industry. There are many industries in which competition simply cannot exist, by virtue of the fact that they are technically monopolies. This problem requires completely different handling.
Under the National Plan the level of investment is due to rise. The figure of 7 per cent. a year has been mentioned. This sounds very impressive, and it is—and it is very necessary—but I am a little disturbed by the fact that according to my pencilled calculations we must make allowance for the fact that the gross national product is also assumed to be rising, and we must take investment into account in comparison with the size of the gross national product at the time. By making allowance for this 25 per cent. assumed growth in the time, at the end of the five-year period the fixed investment would be 20 per cent. of the gross national product, compared with approximately 18 per cent. at present, or an average of 19 per cent. over the five years. This compares with about 25 per cent. or 26 per cent. in Germany now.
There is, therefore, a need for urgent attention to be given by the D.E.A. to this question of the necessity for a much quicker growth in fixed investment, especially in industry. I find it difficult to see how we can break the export barrier unless this is done, because it is providing our workers with the tools.
I want to conclude with some comments on the chemical industry. I have worked in this industry for all my working life. My hon. Friend the Member for Birkenhead said earlier that he doubted whether the failure of the chemical industry to invest and expand sufficiently was due purely to fear, as has 1125 been suggested in recent publications. I rather agree with him. I believe that a number of factors are at work which require attention. First, there is the lack of indigenous raw materials in Britain. But Britain is not the only country to have this lack of sulphur and oil, for instance. We are also at a slight but increasing disadvantage in our port facilities. A vast improvement in port facilities would put us on a much more even footing with the Common Market in the matter of competition, but this costs money.
The second factor is the relatively small size of the United Kingdom market. Although I am not in favour of plunging headlong into the Common Market I appreciate that under the right conditions a larger market is of great assistance. The Common Market countries and the United States both have a big advantage in the chemical industry, because this is an industry where giant units are necessary in order to obtain optimum results. This involves monopolies, which again raise the other difficulties to which I have referred.
Another point is that certain of the smaller industrial countries overcome the disadvantages that I have mentioned by generous governmental aid of a direct or an indirect nature, such as the Japanese tax concessions on exports which may be equivalent to reducing production costs by 10 per cent. or 15 per cent. compared with the United Kingdom.
The effective cost of money is also important in the development of the British chemical industry. We have a very high ratio of equity capital to loan capital in the industry, and this needs detailed expert attention. If we are at a disadvantage in this respect compared to our major competitors it is up to the Treasury to examine the problem carefully and see what can be done about it. I will not detain the House with the details, but if my hon. Friend would like them I shall be glad to supply them.
What can be done to help in this problem of the chemical industry? One thing I would suggest is that tax concessions which we are considering should be linked to the export performance, if it is the type of industry which could be expected to export. Certain of the heavy chemical industries cannot be expected 1126 to export, but most of the chemical industry can.
In Japan, for instance, it is well known that 80 per cent. of the profits derived from exports are free from tax, and there is obviously a tendency for the companies concerned to load their costs on to the home production. This plainly needs watching, but it is something which we should consider in our own difficulties.
Secondly, I believe that we might consider special incentives in the case of those chemical processes whose optimum size is too big for the British market. There are many such processes now which, to be efficiently operated, need to be of a size which is far too big for the British market alone to absorb. This means that firms are deterred from investing. Capital aid in setting up such plants would cause very considerable savings.
I have worked out one example for a project. Again, I should be pleased to supply the details of this if they are of interest. This chemical costs about £1 million a year in foreign currency to Britain. By a grant of about £250,000 I believe that we could set up an optimum-sized plant which would eliminate the need for these imports. This is another means of safeguarding our balance of trade, but it will cost money.
I have suggested several means of helping in this critical balance of payments position which I regard as vital to the fulfilment of the Plan, but all the measures I have suggested are liable to cost money—money for investment and for incentives. It is logical and necessary to ask where on earth these incentives are to come from.
I believe that the Opposition have failed to answer this. The only indication we have had is the suggestion of the slashing of farm subsidies, and this is quite unacceptable in my part of the world. It is imperative that we cut our overseas and arms costs. I do not see how we can fulfil the Plan without this. My hon. Friend the Member for Birkenhead pointed out that considerable savings in overseas expenditure could be achieved by cutting expenditure on foreign bases. I agree with him here, but I believe that it goes deeper than this 1127 and that, if we are to get the vast increase in investment in British industry, the slack can be found only by cutting about £500 million from the arrms burden.
§ 8.31 p.m.
§ Mr. Peter Hordern (Horsham)
I hope that the hon. Member for King's Lynn (Mr. Derek Page) will forgive me if I do not follow all his remarks very closely, particularly those concerned with his constituency. He said at one stage that he thought he had discovered one Achilles heel in the Plan, but by the time he had finished, I thought that Achilles had changed his appearance so much as to be covered with heels.
The First Secretary of State, with his usual exuberance, has sought to introduce the Plan as a new dimension in the conduct of our economic affairs. In this, he has succeeded far beyond his wildest dreams. It can scarcely ever have occurred that a Government who have failed so dismally in the conduct of their economic objectives should be able to get away with it by talking about 1970. There have been dictators in the past who have had domestic troubles and have managed to distract the attention of their people by causing trouble abroad, but the measure of the First Secretary's achievement is that he has managed to blind the nation to its present condition by means of an economic document dealing with 1970.
Its full extent can be observed only by judging what the current situation is. When the First Secretary appeared on television to discuss the National Plan, he said that there was no credit squeeze.—[Interruption.] This is perfectly true. I was with him on the same programme. He said it quite distinctly.
What he should have said was that the most stringent credit squeeze in living memory simply had not worked. I do not know whether the First Secretary has a word with the Chancellor these days—I hope he does—but, if he does, I am sure that the Chancellor could remind him of the July measures, the letter from the Governor of the Bank of England to the clearing banks and the Chancellor's hire-purchase restrictions.
However, despite all these measures and the enormous volume of increased taxation, the pressure on our resources 1128 is as great now as it has ever been. Unemployment is low, wages and costs are rising and wage drift, I understand from the last reference in April, is now 50 per cent. above the level at which it was rising last year.
Meanwhile, the National Board for Prices and Incomes talks about "disturbance compensation", an altogether new feature, and the 3½ per cent. norm is everywhere derided, and by no one more than by Government employees. The Chancellor himself has said that earnings rose by 8 per cent. in the first eight months of this year.
It may be that none of these things matters. If our balance of trade deficit can be kept as low as it has been in recent months and if the balance of payments trend continues, we should be able to reach equilibrium by the end of next year. However, I am sure that the First Secretary would agree that the situation is fraught with doubts and uncertainties.
Is it reasonable, for example, to expect the balance of payments position to improve quite as much as it has improved in the second quarter when the investment trusts repatriated so many of their dollar securities? How much of the splendid rise in exports to the United States shown in last month's figures was due to the threat of steel stoppages in that country? These local factors must be taken into account. Will the balance of payments position continue to improve next year in the face of lengthening order books for home deliveries and declining ones for exports?
Production is static. The figure for August at 132 is the same at that for December. Productivity is actually lower if one takes the lastest available figures. In addition, as the First Secretary said, 1,000 million dollars has to be repaid in 2½ years—or less than that—and a further 1,400 million dollars in less than five years. Against this we have as our armament the National Plan and the ebullience of the First Secretary. If it could be shown that central planning with or without central control works well in all other countries, that would be one thing, but there is no such evidence. If it could be shown that the nature of our economy is particularly suited to central planning, that, again, would be another 1129 Matter; that would be a good argument. But that is not true either.
If it could be shown that the adoption of the Plan would not actually cause harm to the economy, then it might be tolerable on the basis that it is always nice to have a plan. But even this is not possible. The plain fact is that if this plan is adopted, then those things which should be done now to restore the economy will be left undone, and we shall remain perhaps the favourite but certainly the ever-present and the ageing and elderly retainer of the free world.
There is now an unholy, indeed calculating alliance between the Socialist politician and certain types of economist. Economics has become an "in" profession, especially if one goes in for forecasting. One has a new name—an econometrician—a model to play with and, above all, security and respectability.Who would fardels bear,To grunt and sweat under a weary life.when he could join the Department of Economic Affairs? He certainly could not be sacked for not doing his job, for nobody can possibly tell that he is making mistakes when talking about the future.
I will not labour the point about the absurd questionnaire which was sent to industry or the constant use of the word "evidence" when what is meant is guesswork.
§ Mr. Hordern
Where did the figure of 25 per cent. spring from? It is conceded that a 25 per cent. rate bears no relation to growth achieved in the past. It means an annual average rate of growth of 3.8 per cent. whereas public expenditure is to grow by 4¼ per cent. annually. Can the Minister of State for Economic Affairs, who is to wind up the debate, tell us how we stand at the moment with regard to productivity and the growth of public expenditure, particularly the latter? We are told that public expenditure is to grow by 4¼ per cent. a year. Am I not right in saying that it has grown this year by about 10.8 per cent.?
§ Mr. Hordern
Would the right hon. Gentleman explain the position? The 1130 figures which I have to last April show an actual decline in productivity. If the growth in public expenditure has been 10.8 per cent., how do the Government propose to get it down to 4¼ per cent. next year?
§ Mr. Hordern
These are all questions which we are entitled to ask. Even if I accept a 25 per cent. growth rate by 1970, the industrial inquiry revealed a likely growth of only 3.2 per cent. a year, leaving a manpower gap of 400,000. The First Secretary has said that one answer is by filling in the development districts, which will gain 200,000 workers. But I should have thought that if a 25 per cent. growth rate leaves us with 400,000 workers too few, the thing to do is to reduce the growth rate until it matches the number of workers likely to be available. That is the simple solution. But of course if that were to be done the growth rate for exports would have to be reduced from a figure of 5¼ per cent. and this would bring down the whole basis of this so-called plan like a house of cards.
How can we say with any precision what the level of exports will be in five years' time? What shred of reality can be given to estimates of other countries' import requirements in that period? It is this extraordinary mixture of fact, fancies and hopes, all cloaked in a pseudo-scientific language to create an overall semblance of veracity, which is its most sickening feature. Where we once had a national cake to divide, we now have a national pie in the sky. Even if one can bring oneself to stomach the language and assumptions of the Plan, there are some really remarkable statements and omissions—
§ Sir K. Pickthorn
On a point of order. Could you, Mr. Deputy Speaker, persuade the First Secretary and the Minister of State for Economic Affairs to either talk just loud enough to be heard or to talk less loudly than they have been speaking throughout my hon. Friend's speech?
§ Mr. Deputy Speaker (Mr. Roderic Bowen)
If any hon. Gentleman wishes to make an intervention he should do so in a standing position.
§ Mr. George Brown
In the light of what the hon. Member for Horsham (Mr. Hordern) has been saying in such an impressive way, why is he not going to vote against the Motion, which says that we welcome the Plan which he is denouncing in such terms?
§ Mr. Hordern
I thank the right hon. Gentleman for that intervention. I thought that my right hon. Friend had explained the position—that we welcome certain parts of the Plan. I welcome very little of it indeed. In fact, I have not so far been able to find one part of it that I welcome. However, I am sure that if I read it carefully enough I will be able to find something in it that I could welcome.
I return to the subject at hand because I want the Minister of State to reply to certain detailed questions. For example, what is meant by the fundamental changes which will be required in the steel industry? Does that mean nationalisation, or not? If it does, why does the Plan not say so specifically? If it means nationalisation, how can it in any way be called a National Plan?
We then come to the question of investment. Industry, the Plan tells us, has a vital rôle to play in maintaining its investment programmes and that any temporary period of slack should be regarded as an opportunity to reorganise and reequip. The Plan involves an increase in industrial investment of 7 per cent. per year, which is pretty rich. First, the Government introduce the most stringent credit squeeze ever. Then they devalue the investment allowances by one-third by means of the Corporation Tax. During the whole of our debates on the Finance Act I was never satisfied that the Chancellor really understood the Corporation Tax. I am certain that the First Secretary never did.
We have, therefore, had to witness not just the astonishing sight of the Chancellor driving with his foot permanently on the brake, and that of the First Secretary pressing hard on the accelerator, both at once, but also the obvious fact that neither of them has the least idea how the engine really works.
That it has survived at all bears witness of the astonishing industrial and financial strength of Britain. But now I see, from the usually well-informed leak to the 1132 Observer, that there are to be tax allowances of up to 15 per cent. of the cost of a new machine. Not yet, of course—they are to be phased in. If there is any substance in this report—and I strongly suspect that there is—then industry should know that their investment allowances have been cut back substantially. That is the measure of the incentives the Government are prepared to give to carrying out the National Plan. And let it be said that one only gets these incentives if the Government approve of one's product, for like every Socialist Government, the Government alone know best just what should be produced.
Of all the pharisaical pronouncements that appear in such profusion, surely one of the most striking is that which refers to savings. The more rapid the rise in the ratio of savings to disposable income, the lower will be the taxation required, we are told. How infinitely refreshing. How long did it take this new econometrician and public relations-ridden Department to work that out? There is not a word of encouragement, not a note of incentive to encourage savings. But, then, a high level of savings has never been the feature of a Socialist Government. It is difficult enough to entrust them with a vote, but to entrust one's money as well is really asking too much.
My real objection to the Plan lies not in its obvious shortcomings but in the rôle it is expected to play. It will be used, no doubt, by the trade unions as a bargaining point in wage negotiations. That is only to be expected. If it is to have any meaning to either side of industry, that is what is bound to follow. The really fundamental objection to the Plan is the principle that industry should be expected to take on responsibility which it is properly the Government's to shoulder. When it goes wrong, as it is certain to do—not least because it was devised before the Chancellor's July measures—we shall have the unhappy spectacle of the Government limping about pouring money into goods that cannot sell and generally behaving with the finesse that one associates with the First Secretary, that incarnation of Mr. Therm or Mr. High-Speed Gas himself.
Meanwhile, from the Treasury, wafts a perpetual smell of burning rubber as the Chancellor slams on the brakes, 1133 giving a passable imitation of Michelin's "Mr. Pneu", and never the twain shall meet. For its own sake, industry cannot and should not get involved in what is designed as a confidence trick to implicate it in the Government's failure to manage the economy.
There has been a lot of talk about planning in other countries. Those countries with the longest experience of planning are the Communist countries. I rather like the story which appeared in the Daily Telegraph some weeks ago about the little profits in Russia which got missed out of the general scheme of things and were left out by the national planning. They were used to make consumer goods and within a very short time the profits had become the richest in Russia. It points a moral to the Government's idea of planning. France has planning but it has had five devaluations since the war, although it has virtually a completely self-supporting economy. Sweden has planning, but it has about one-third of the number of trade unions there are in this country. The country which has never had nationalisation of any kind is Western Germany. It has no industrial plan at all. That country is roughly the same size as ours in area and population, yet its production has increased by 100 per cent. since 1963 compared with our 36 per cent., and wages have run a parallel course.
Investment is far higher in Germany, and although costs have risen there they are now beginning to feel the real benefits of automation, because restrictive practices do not exist there. There is no need for a national plan in Germany, and there is no place for a national plan here if it is to be used, as this one palpably is, as an excuse not to take unpopular action.
I am conscious of the fact that it is very easy to be critical of the Plan. It is, after all, a useful exercise in what might happen given certain extraordinary assumptions of growth. How to get the growth—that is the rub, and it is no use talking in terms of an incomes policy alone; there is not the time, even if there was good will on all sides. The truth is that unless we are prepared to recognise that there are structural faults in our economic machine, with too many unofficial strikes and too many restrict- 1134 tive practices on both sides, and that these must be dealt with by legislation now, we cannot expect to maintain our existing standards, let alone advance them.
And what is the point of advancing them with taxation as it is today? There is in the country today a new class of people, wholly professional in outlook, who care not at all for party politics but feel an affinity with those of their own age across the Channel whom they meet on business or pleasure. These are the pacemakers, and the Government that can provide incentives for them will reap a bigger harvest than was ever dreamed of in this stillborn document, the National Plan. There is indeed a prize to be won—the self-respect of England.
§ 8.47 p.m.
§ Dr. Jeremy Bray (Middlesbrough, West)
If he has done nothing else, the hon. Member for Horsham (Mr. Hordern) has given an admirable demonstration of schizophrenia on the other side of the House. I understand that the hon. Member was at one time at Geelong Grammar School at a place called Treetops out in the bush, about which we have heard a lot of talk recently, and I wonder whether one dark night he was exchanged for something which came down from a tree. The hon. Member also shows alarmingly a certain cynicism which appears among sections of people in the City. This is a disturbing feature of the country today—this appalling gap between the practical and competent in industry and the kind of dunderheadedness which the hon. Member displayed in his speech.
§ Mr. Hordern
Why not listen to the argument and give us some facts instead of casting insults about, although that is entirely typical of the hon. Member?
§ Dr. Bray
If the hon. Member cares to read his speech later and compare it with what I propose to say, he will see that I have listened to the argument and that I am giving the facts.
If the hon. Member had been in the last Parliament he would have found that it is a new departure and a privilege to the House to be treated with respect and to have a plan brought to us, instead of being by-passed as was the case under the 1135 previous Government when N.E.D.C. reports were not even presented to Parliament. The five-year expenditure survey which the last Government produced was not debated in the House either. The much boasted costed programme on which hon. Members opposite fought the election was not even subjected to the scrutiny of this place.
If it has done nothing else, the Plan has given us in this place the right to review public expenditure at the time when these decisions are under consideration and before they are finally made. We have in the projections for 1970 a distribution of expenditure between the different services which not all of us may like, but, because they have been published, we can debate them here and in the country, and, no doubt, notice will be taken of the feeling expressed. My hon. Friend the Member for Hitchin (Mrs. Shirley Williams) mentioned the treatment of the health services. I add the treatment of pensions. We may not like particular conclusions of the Plan, but what we have to say is either that we add to this and subtract from that, as the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) suggested in an earlier intervention, or we have to produce some means or new ideas for increasing production.
This is a new departure in Government. I think that it will in due course require a new departure in Parliamentary procedure. We have a highly developed procedure in the House for financial matters, which perhaps, is a little out of touch with the actual conduct of financial business by the Government, but it still remains the fact that ultimate financial power lies in this House. It is hard to say that any crucial rôle has been taken by the House in the process of planning hitherto, and we must look, as planning become more and more highly developed, as I am convinced it will, to the part which the House of Commons can play in the drafting, the revision and the rolling on of the Plan. We have, necessarily, had a wide-ranging debate today, and it would not, perhaps, have helped if we had extended it for two or three days. We need to consider whether the kind of Committee structure which we have developed for treating financial matters 1136 should be extended to treating the Plan also.
If we are making important new advances in the machinery of Government, still more important is the impact that we are making potentially on the management and structure of the economy. Obviously, there is room for a great deal of debate, and we have had some constructive arguments from the benches opposite. The hon. Member for Worthing (Mr. Higgins) put forward some proposals about the publication of alternative plans, the discussion of them and so on. But, in my view, the basic process still needs to be more clearly understood in this place and in the country before we can work out precisely what the methods of planning should be.
First, we have to realise that it is the decision-makers whom we are trying to assist, whether they be in industry or in Government. Second, those decision makers must have the information brought to them in the place where they are and in a form relevant to the decisions they have to make. It is an undoubted fact that the decisions are made in firms, not in industries. The more rapidly changing the situation, the greater the need for an increase in the flow of information. The price mechanism is fine, but it is not sufficient to carry the information we need so it has to have the overdrive of planning.
Undoubtedly, it is a complicated problem. In passing, during the course of his speech, the First Secretary said that we had to treat the Plan at industry level and not at firm level simply because of the sheer size of the problem. If one speaks in terms of the published document, what my right hon. Friend says is plainly right. But, even in the published document, one can look at some of the detail which is given. For example, zinc is treated as a separate industry. This is one firm. Copper, treated as a separate industry, is about one-tenth of one firm. Far greater tonnage and value products than zinc, such as polythene, PVC and the like do not rank mention in the Plan at all. Certainly it is a difficult problem. Are we to be bound by the statistical classifications of yesterday or by the industrial realities of today?
Inheriting the system from the previous Government, we had very little alternative but to follow the lines that we have 1137 done during the past year. But in the rolling on of the plan we have to think much more widely than has yet been possible. Under the economic dogma of the party opposite, the individual firms have come to be regarded as an officially endorsed secret conspiracy into which it is improper to pry. So improper is it that no Government must know about a particular firm and the very information about the firm is dissolved in the way in which the Government collects information about it. It is regarded as an employer of labour, and the Ministry of Labour is interested in that. On the other hand, it is regarded by the Board of Trade as a producer, and the Board of Trade is interested in that. But no one sees it as an intelligent decision-making unit on its own. I hope in the next Session of Parliament that in company law we shall get back to the idea of a limited liability company as a public body which is open to inspection in all aspects of its business and accountable to the public, to its shareholders, its creditors and debtors, and therefore amenable to planning as well.
Obviously, there are methodological complications. What do we want to do with the individual firm? I would suggest that at the firm level it is a matter of encouraging the internal procedures in the firm which needs greater efficiency. The apparatus of inter-firm comparison and investment appraisal and so on is being encouraged by N.E.D.C. and D.E.A. at the moment. But then there is a level one-up from the firm, of analysing the problems within a particular area of industry or a particular locality of the country where there is a need to put together a number of different firms. I am told that at present, for example, we have £30 million worth excess stock of shoes lying round the country unsaleable, and the shoe trade has taken a knock of £30 million of undisposable stock this year. A scheme has been proposed for ironing out the stock cycle in shoes, but it has been ignored by the industry and given no encouragement by the Government.
Similar schemes have been working for a number of years in other fields, but we do not have the apparatus and encouragement by which the lessons learned in one industry can be transferred to an- 1138 other. It is said that that is up to the people on the ground, but is it? When the telephone was invented and a line was installed between Buckingham Palace and Downing Street, was it argued that if the Prime Minister wanted to ring up the Chancellor, then would be the time to put a line across there, too? That would be a grossly inefficient principle on which to organise a telephone exchange.
The same applies to a modern economy. If we leave the information and planning system to grow like Topsy, we shall get an extremely inefficient information system. It needs to be consciously designed, which means a redesigning of the Government's statistical service on the basis of a system to give aid to the decision makers. Necessarily, it grows up into higher levels of model. There is a tendency to argue that because a national model cannot now be brought down to the firm level, there is nothing that can be done about the firm. That is nonsense. One gets the system building up from local analyses in various sectors of the economy, and one gets a complex of models being developed in Government Departments in one way or another, but we have not had the time to get a consciously developed scheme of models or philosophy of planning.
That obviously could not be achieved in the difficulties of the first year of office, but I hope that in the process of rolling on the Plan, we shall see some of the new ideas, which are being developed very imaginatively in industry as well as in the universities and Government Departments, made the officially established doctrine of planning.
§ 9.0 p.m.
§ Sir Edward Boyle (Birmingham, Handsworth)
The hon. Member for Middlesbrough, West (Dr. Bray), once he got beyond his opening paragraph, said a number of things with which I think I would agree, and I will come to them at the appropriate point in my remarks.
We have been discussing the National Plan. Perhaps the right way to consider it is in the context of a wider question—the whole proper scope of economic intervention by the Government. I want to consider for a few minutes the questions of how much intervention ought there to be, of what kind and for what purpose.
1139 Up to a point, I think that there would be widespread agreement in the House about the answers to those questions. Obviously, if we want to preserve full employment, to curb inflation and to safeguard our balance of payments, the Government must ensure a balance between the total of our available economic resources and the claims made upon them. Furthermore, I think that we should all agree on this side that, quite apart from the restraints imposed by our balance of payments problem and by the need to defend sterling, we shall not secure growth and efficiency if we allow the economy to become overheated. It was Sir Robert Hall who said in a Rede lecture:The general stimulus to enterprise from high profits produces a counteracting effectwhenthe profits themselves become too easy to make".As a number of hon. Members have said, it is obviously wrong to have a situation in which profits become too easy to make.
The difficult questions about intervention—and some of the questions that we have been considering today—arise when one goes on from the objective of controlling the overall level of demand to consider how far the Government should intervene to influence the whole future development of our economy. Here there are two key questions. First, should the Government intervene to try to bring about a faster rate of growth, and, if so, how? Secondly, should the Government attempt not just to encourage growth but to shape our economy as it develops?
It is clearly right that the Government should deliberately make it their business to encourage faster growth. I say that for two main reasons. First, as our own policy document has said, we are not afraid of the consequences of prosperity, and my right hon. Friend the Leader of the Opposition has made it clear in a number of speeches that we want to see a widened range of choice and opportunity. But there is a second reason which is no less important. We also believe, as we have said, in people leading a more worthwhile life in better surroundings; and public services such as education, health, old people's homes or the clearance of derelict land play a creative rôle in bringing about a more civilised society, 1140 so that we want as a nation to be able to afford more of these things. I would say that there is no real difference between those two reasons for according a high priority to growth, because, as many hon. Members have said, there is an increasing desire today from individuals for better environmental standards.
In his speech the First Secretary referred to private affluence and public squalor. It sounded as though he referred to it almost out of habit. I say two things to him about that. First, the increase in the annual level of public social capital spending in the last Parliament was the most rapid increase we have ever had in our national history.
§ Sir E. Boyle
The right hon. Gentleman says "It was not high enough", but I should be very surprised if during the next five years we achieved as rapid a climb as from £735 million a year to £1,300 million a year, which we achieved in the last Parliament.
Secondly, with regard to education, which is one of the most important services from the point of view of its social effect, the rate of climb envisaged in the National Plan will, in fact, be a little slower than the rate that we actually achieved during the last five years.
I think that what I have said partly answers the second question I raised, namely, how far should the Government try to shape our economy. Clearly, major decisions on public expenditure must affect the shape of our economy, especially when these involve large sums of money and large amounts of scarce resources, including resources of scarce manpower, committed for years ahead. I am thinking here of the defence and education programmes. It is a fact that 60 per cent. of all those who have had full-time higher education are now employed in the public sector, which is a very high proportion.
None the less—and here I think we come to a real difference between the two sides of the House—we do not believe that Government intervention to shape the economy is as important as intervention to encourage growth. I contrast this view with that of the hon. Member for Middlesbrough, West, whose pamphlet, "The New Economy", I read with 1141 much interest. I noticed this sentence in it:What planning is trying to do is to get as much as possible out of the economy now and in the years ahead, and to shape the economy in whatever we may feel to be a desirable form.The latter half of that sentence would never have been written by anyone on this side of the House. If the hon. Gentleman is referring purely to the balance between the public and the private sectors well and good, although, if so, I think that his words in that context are a little misleading. But if he is referring also to private industry we would sharply disagree for two reasons. First, where private industry is concerned, we believe that consumer preference should be paramount. Secondly, and more important in a period of rapid technological change, we do not believe that any Government can forecast which industries, which firms or even which technologies will be most important to the nation in ten or even five years' time.
§ Mr. Robert Maxwell (Buckingham)
Is the Opposition likely to remain determined to avoid shaping the economy, having regard to the fact that, for example, the N.F.U. is bringing tremendous pressure on the Labour Party to adopt aspects of the National Plan and shape our agricultural production through increased productivity, saying that the Opposition is determined that we should join the Common Market? Is it not the case that many businessmen are saying that they will keep Her Majesty's Loyal Opposition for 20 years so long as the Opposition continues to believe that nothing should be done about the shape of the economy?
§ Sir E. Boyle
I do not think that many businessmen would disagree with me when I say that one cannot tell which will be the most important industries or firms to the country five or ten years from now. New firms, and large octupus concerns branching out into new lines of activity, will be growing all the time. That is the point. I hope that we would all agree that the scope for planning and detailed Government economic intervention must be limited at a time when new and sophisticated technologies are coming forward with great frequency.
1142 This is why the old slogan about nationalising "the commanding heights of the economy" has become so hopelessly out of date. The industrial landscape is constantly shifting. Therefore, we cannot agree that Government intervention to shape the economy is as important as intervention to encourage growth.
There are four ways in which the Government can help growth. The first is by generalised financial incentives—to encourage investment and industrial training as regional development. The hon. Member for King's Lynn (Mr. Derek Page) devoted quite a time to investment. During our period of office we doubled, from 6½ per cent. to 13 per cent., the proportion of the national income which went towards making net addition to our stock of physical capital—houses, factories and machines. That achievement alone makes nonsense of the slogan about "13 wasted years".
I would say two things about investment in the context of the National Plan. The Plan assumes a 7 per cent. a year increase in manufacturing investment. If we are to achieve anything like that figure, the Government will first have to be courageous about the measures to keep rising consumption in check.
On this point, I refer the First Secretary to what all of us on this side of the House thought to be the admirable and courageous speech of the hon. Member for Birmingham, All Saints (Mr. Walden), one of the best back bench speeches we have heard in this Parliament, in one of the July debates. Of course, the July measures were directed almost entirely against investment. It is a fact that the "Little Neddy" on building actually met to approve the proposal in the Plan to double the level of investments in construction on the very day after the Government clamped down on the industry and announced their intention to reintroduce controls.
I recognise that the right hon. Gentleman could not go further this afternoon, but I hope that it will not be long before the Chancellor of the Exchequer can make an announcement about a successor to the investment allowances. After all, the Corporation Tax had the effect of devaluing those allowances. Companies are uncertain about their cash flow, and 1143 already there is a downward trend in investment so that it is extremely important that firms should know as soon as they can what their position will be.
The second way in which the Government can encourage growth is by a proper choice of priorities in the public sector. As I said earlier, we dissented from the choices made in July. We opposed the cut-back in roads, which anyhow will not become effective until next year, and also the cut-back in university starts and starts on technical colleges and colleges of education.
I remind the House that the figure which the Secretary of State for Education gave last week, when he said that about a quarter of university starts for the 15 months 1965–66 have been held back, amounts to nearly half of the extra money which the universities were allocated to accommodate the extra students for whom the Robbins Report said we must find places during the critical years of the bulge. If the Government want to be taken seriously as planners, they must avoid obvious nonsenses—and it is an obvious nonsense to cut capital programmes which the Plan itself recognises as essential, while doing nothing about the indiscriminate subsidy to school meals and milk which will cost just on £100 million in 1969–70. When the Minister of State replies, can he tell the House what will happen when the six months' moratorium comes to an end? Are we to have freedom of starting dates again after that?
The third way in which the Government can encourage growth is, of course, by encouraging the spread of information and the organised discussion of common problems. We agree entirely that "Little Neddies" must be fashioned into useful instruments for pushing aside obstacles to industrial efficiency. And we fully support the wider steps which are being taken within N.E.D.C. itself, such as the study of imports to try to discover why certain British products are not regarded by the British consumer as competitive, and how many industries in the light of that study can improve their efficiency.
Are the First Secretary and the Minister of State really satisfied with what the Minister of Technology is doing, or ought 1144 to be doing, to reap the benefits for the whole of industry of scientific and technical progress, and to enable more firms to utilise the additional knowledge as it becomes available? I believe that the Ministry of Technology is no closer to industry as a whole than the old D.S.I.R. was. Indeed, I think that my belief is strengthened by the wording of page 49 of the National Plan.
We on this side of the House say that the job of the Minister of Technology is to go about the task of making the whole of industry more science-minded. Bearing in mind what the Prime Minister used to say, when he was in opposition, about science and technology and how he would "forge a new Britain in the white heat of the scientific revolution," altogether the most surprising paragraph in the whole National Plan is that which deals with Government support for science and technology and appears on page 179. It is very inconspicuous. It says:The programmes described in the previous paragraphs represent nearly four-fifths of total expenditure. The remainder include a wide variety of activities—overseas aid, support for agriculture, industry, the railways, advanced technology, scientific research and other miscellaneous central Government activities;…Some of these will probably have to be slowed down to make room for the high-priority services.I must say that there is not much of a white heat about that forge, as the First Secretary himself must agree. The last way a Government can, notionally at any rate, intervene to promote growth is by discriminating assistance to particular industries. I do not rule this out, but I believe that this sort of intervention should be used very sparingly. When it is used, it should normally be once and for all, for some particular purpose, as with the Conservative Government's Cotton Textile Scheme in 1959. Would the Minister of State agree that this sort of discriminating assistance to private industry, except where matters of location of industry are concerned, should be very much an exception?
I believe that the various kinds of economic interventions that I have just been considering are more important, and their relevance is certainly easier to understand, than the Plan which is the subject of this debate. There are many 1145 severe criticisms which can justly be made of this Plan, and I thought that my hon. Friend the Member for Worthing (Mr. Higgins) was quite right when he said that it represents a political decision to adopt a growth target of 25 per cent., coupled with not always plausible attempts to make the figures fit somehow. I do not think that Professor Day, when he next writes on the Plan, will be entirely convinced with the right hon. Gentleman's explanation this afternoon. It may be true, as he says, that he is only asking us to produce in the next six years as much as in the previous seven, but none the less the right hon. Gentleman has not answered what is one of the most powerful of Professor Day's critcisms. Professor Day pointed out that it is quite reasonable to assume that the acceleration in our underlying growth rate will continue, but that this Plan assumes that the acceleration between the earlier and later parts of the 1960s will prove to be nearly three times as fast. I agree with Professor Day that that is a very big assumption indeed.
It is hard to describe the precise status of this document. It appears to set out a statistical model of what the British economy might look like in 1970, but it is a curious kind of model, because, as the hon. Member for Middlesbrough, West so rightly reminded us, the various predictions have very different degrees of validity. The prediction for electricity is probably right. One can forecast here both demand and supply with some degree of accuracy. Again the Government can decide what level of resources they are going to make available for education in 1970—but do not let us imagine that we can now predict, at all accurately, the demand for education in that year. The Robbins prediction of the proportion of the university age group with minimum qualifications for university entry became out of date within a year. These predictions become out of date very quickly. As for the idea that we can forecast the demand for hosiery and knitwear in 1970, or for any consumer goods where fashion changes very rapidly, this is just absurd. I do also agree with those who have said that it cannot be right to produce figures that are more precise the further one gets 1146 from the present. I hope that the right hon. Gentleman will bear in mind the point that has been made in the Economist that there should be a statement in the Budget from now onwards, of the annual expansion figure that is implied in the Budget Estimate, and that this should be included in the Budget speech.
A more serious criticism is that the National Plan gives no indication of the scale of change that is going to be needed if the British economy is to grow significantly faster. There is obviously going to be a need for a massive redeployment and retraining of Britain's skilled labour force during the next few years. Surely our policy document must be right in the emphasis it lays on modernisation and on mobility—for instance, in the need to work out a scheme for transferability of pension rights? Again if the concept of "democratic planning" means anything, surely it should mean the Government confronting the country with a series of options setting before it some of the real social choices which face this country.
We are rightly told by Mr. Catherwood of the right hon. Gentleman's Department that in many industries American output per head is between two and three times the output per head in this country. What would be the effect on growth of a rapid removal of restrictive practices in industry? That is the sort of question which public opinion should be encouraged to discuss.
These are all serious criticisms, but even so I should not myself go so far as the economist who wrote recently thatthe cure for bad planning of this type is not better planning but no planning".I believe that it will be a very great pity if as a result of this document planning becomes too much identified in people's minds with this overall indicative target of a 25 per cent increase in national output between 1964 and 1970. It seems to me that the value of indicative planning lies not so much in these overall targets, but rather in more limited exercises by those important sectors of industry where an overspill of demand can add sharply to the strain on our balance of payments.
Take a topical instance which has been referred to by several hon. Members in the debate, including the hon. Members 1147 for Birkenhead (Mr. Dell) and King's Lynn, namely, chemicals. The output of chemicals is dependent on the level of investment in the chemical industry, which is itself bound up with the capacity of the chemical enginering industry. If, as at present, plant makers cannot meet the investment orders of the chemical industry, the result is £30 million worth of chemical imports for which we should have capacity in this country.
It is obviously right there should be organised and mutual discussion in certain key sectors of industry to prevent this sort of situation from arising. To me, this is a much more useful concept of planning than too much preoccupation with a single indicative target selected as a political decision. I agree with hon. Members who have emphasised the importance of devoting increased resources to ports. I also believe that a country with a balance of payments problem, compelled, as we are, to damp down demand from time to time, will always tend in the absence of planning to have an uneven growth of capacity, because every downturn makes plant manufacturers more doubtful about expanding their economy when the upturn comes. It is this uneven growth which causes a shortage of basic capacity in certain industries just when it is most needed.
I remember M. Massé, head of the French Commissariat, saying at a conference which I attended that the object of planning is to handle short-term fluctuations in such a way that they do not result in long-term weaknesses.
§ Sir E. Boyle
With respect, I believe this is a much more useful definition of the objective of planning than some of the things that the right hon. Gentleman was talking about in his speech. I believe that this should be our approach. As part of our economic strategy for breaking out of the stop-go cycle and preparing ourselves to enter Europe, which the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie) rightly mentioned, we should encourage key sectors of British industry to plan together and to plan for success.
The advantage of this approach to planning is that it is wholly consistent with 1148 the emphasis which we on this side of the House would want to lay on individual enterprise and on consent. We believe that wisely directed State intervention should never suppress individual enterprise and initiative but should always aim to make it easier for productive industry to meet the nation's needs.
The right relation between the State and industry was very well stated by Lord Keynes in a passage in his famous essay called "The end of laissez-faire". He said:I believe that the cure for [the miseries of business depressions] is partly to be sought in the deliberate control of currency and of credit … and partly in the collection and dissemination on a great scale of data relating to the business situation. These measures would involve society in exercising directive intelligence through some appropriate organ of action over many of the inner intricacies of private business, yet it would leave private initiative and enterprise unhindered.The whole of that sentence is a very good description of the concept of planning which I would support.
One other point which I wish to mention was referred to by the hon. Member for Middlesbrough, West (Dr. Bray). I believe we should think a good deal more about this House and economic planning, and how we can build an institutional framework which can ensure that those concerned with economic intervention can become a little more exposed to public opinion. I was disappointed with the Leader of the House for being quite so negative on the issue of specialist committees. We never thought of the right hon. Gentleman as a dangerous radical, but he seemed to go beyond what was reasonable in resisting all new ideas. Surely, to use the expressive words used by the Prime Minister in one of his speeches, there must be more opportunity for this House to "reach out" to the Executive. As a start, there is certainly a strong case at least for a specialist Select Committee on Science and Technology on the lines of the existing Select Committee on Nationalised Industries.
Last and most important of all, let us always remember that planning, although it can aid decision-taking, can never be a substitute for taking the right decisions here and now. On this point, the hon. Member for Middlesbrough, West used a sentence which I should like to quote with agreement. He said that "Most 1149 important to us now is what we do with the economy now and not in 1970. What happens in 1970 is important and has to be given full weight, but only in so far as it helps us to decide what to do now."
Although it has not been mentioned much today, there is no doubt what is the most worrying trend at the moment. The Chancellor of the Exchequer expressed it in his speech the other day. During the first eight months of the year, we had an 8 per cent. rise in earnings coupled with a slight fall in industrial production. This is a serious situation because the prospects for growth must depend upon a reasonable moderation in the growth of incomes.
As the National Plan itself states,Planning for economic growth requires policies for price stability and for the orderly growth of money incomes. An attack on the problem of costs is one of the essential measures if our competitive position is to be improved, and the balance of payments strengthened.Those words appear in a Plan prepared and presented by the Government. The whole Government must be seen to support them. We cannot expect industry to back up the Government if Ministers either separate themselves visibly from their colleagues during critical debates, or talk in a way that suggest that they would like to opt out of the Government's policy in their own spheres. I hope that the Minister of State will make it plain that the Government intend to use the period immediately ahead, when the pressure of demand is lessening, to use all the influence they can to moderate the upward climb of incomes. Otherwise, we have no hope of securing that steady rate of increase in exports which is essential to the expansion that we want in our economy as a whole.
What we need in Britain today is not just a plan. I have explained to the First Secretary what I believe the proper concept of planning to be. What we want, however, is not simply a plan, but an economic policy dedicated to growth and to the pursuit of competitive efficiency. We on this side want these things for the sake of the rewards they will bring: a fuller life for individuals, public services worthy of the nation and, not least, an increased ability to aid those other nations which are less fortunate than ourselves.
§ 9.28 p.m.
§ The Minister of State, Department of Economic Affairs (Mr. Austen Albu)
When we learned that the right hon. Member for Birmingham, Handsworth (Sir E. Boyle) was to wind up the debate for the Opposition, we thought that for the time being he had won the battle which has been going on in the party opposite on economic planning, which they once tried to make dirty words. In one part of his speech, when he was giving a definition of economic planning in a society like ours, I do not think that my right hon. and hon. Friends would have disagreed very much with the right hon. Gentleman. After listening, however, to the speeches of the right hon. Member for Enfield, West (Mr. Iain Macleod) and some of the extraordinary backwoodsmen's speeches made from his own back benches, I am afraid that he still has a long way to go.
The right hon. Member for Enfield, West even conjured up the most horrifying stories of the controls and restriction that inevitably follow any attempt to plan the economy of a country like ours for economic growth. The right hon. Gentleman's views most resemble the views expressed by the then Mr. Winston Churchill in such alarming fashion during the 1945 General Election, the result of which is well known to the party opposite. They are not strictly Conservative views so much as nineteenth century Liberal views. It was their application to our economic affairs which led to the disillusionment of the working class with the Liberal Party and to the growth of the Labour Party. However, I would say to the right hon. Gentleman the Member for Handsworth that I am sure he will have plenty of time and find plenty of evidence to support his views in favour of Government planning, and I can only hope that during that time he will succeed in converting the remainder of his colleagues.
The right hon. Gentleman's speech has been described by two of my hon. Friends as schizophrenic. It may, perhaps, be rather better described as an exercise in militant indecision. I do not blame him for this because he is, of course, in a very difficult position. He started with an attack on the basis of the figures which we obtained from industry and the method of obtaining them. One or two hon. 1151 Members have referred to the fact that we asked industry to predicate their estimates of their future activities on the basis of a growth rate of 25 per cent. over the planning period. I do not know how one is to conduct this exercise unless, having done a careful calculation based on past trends and on the best estimates one can make of the future, one tells industry what is really a reasonable target at which to aim, and this is, after all, what we did.
I noticed that both right hon. Gentlemen called in aid Professor Alan Day. They called in aid his first article. Neither right hon. Gentleman quoted the second article, and perhaps I may be allowed to quote from it. Speaking about the people who reply to the pollsters, he said on 24th October thatmost of them do know that the country was in a major financial mess and that in the last couple of months a great deal of that mess has been straightened out …. The plan itself may—for all its shortcomings—have contributed significantly to the business confidence which is now maintaining investment plans despite all the troubles we have been through in the past 12 months. Discussing the plan must have drawn the attention of business men to horizons more distant than the prospects for the next year or so.This is the whole object of having figures for the end of the planning period, although business men are concerned more with the more immediate years. Professor Day went on:Even if demand for some products should dip for a time, it is pretty certain to recover again and the general trend is upwards. Investments planned now will come to fruition well after the present 'stop' phase is over.This, of course, is the exact purpose of having a plan at all.
One question which has been raised is whether business men answering the industrial inquiry which asks them for their estimates took account of the measures of restriction which the Government were forced to introduce. The dialogue with industry took place after the April Budget, I admit, but before the July one, but, as hon. Gentlemen know, the investment surveys of the Board of Trade and the C.B.I., taken after July, showed that industry has made no change in its investment projects.
One, perhaps, tenable point which the right hon. Gentleman the Member for Enfield, West, made was when he referred 1152 to the prospective expenditure on education. He asked a question about teachers' salaries. I think the right hon. Gentleman failed to recognise that all the figures in the Plan are figures based on constant prices. They are, of course, figures of the use of resources, or of consumption, whichever way one likes to put it, and, of course, teachers will benefit, as well as everybody else, from the rise in personal consumption which the Plan predicates.
Of course, we all recognise that the prime object of our economic policy at the present time must be to reduce and in fact reverse the deficit in our overall balance of payments and repay those debts which those deficits over a number of years have caused us to incur. I say "a number of years" because we are dealing not with just last year's £800 million balance of payments deficit. The truth is that this deficit was only the last and the largest in a series incurred during last ten years, during which the identified overall deficit ranged between £1,300 million and £1,400 million. It is true that these figures are subject to some adjustment by virtue of unrecorded current and capital credits which form part of the so-called balancing item, but the larger part had to be covered by short-term movements into London of money, whether in the form of loans or foreign-held sterling balances. Moreover, there were clear signs that with successive cycles of good and bad years we were on average getting deeper into deficit.
Right hon. Gentlemen opposite frequently boast about the increase in well-being which occurred under their rule and were not above fighting the 1959 election on the slogan, "You've never had it so good", when they knew that we had a deficit of £119 million which was followed by an even heavier one in 1960. They never tell the people of this country that during those years they were borrowing short-term from overseas and thereby putting our economy into an increasingly unstable position.
I sometimes wonder whether they knew what was going on, and I doubt whether they know even today. If they did, the right hon. Member for Enfield, West could not make large promises to the electorate about reductions in taxation, which, as far as I can see, are to be paid for by increasing the cost of living and of our manufactures, and this at a time 1153 when we are doing everything we can to make our manufactures more competitive and so improve our balance of payments position. Nor should they give hints, as they have done, that they will remove restrictions on overseas investment without any consideration for the condition of our overseas accounts. By doing this they are only making the task of our manufacturers in trying to improve the balance of trade a Sisyphean task. It is impossible, if we go on increasing Government expenditure and investment overseas, to expect the manufacturers of this country to make up for it by continually having to increase exports at a rate which will be impossible to achieve. If right hon. Gentlemen are not making these promises out of ignorance, they are thoroughly irresponsible.
What we are now doing is starting on the hard path of reversing the economic trend of the years since the war or, to be fair, many years before. We are trying to put ourselves in the position where if we spend or lend or invest money overseas, we do it out of money earned and not out of money borrowed. To make these changes is not something that can be achieved overnight or even in the comparatively short period of one year. As an engineer I know that a machine with a heavy inertia takes a considerable time to accelerate up to full speed, especially after one has had to apply the brakes to prevent it running away.
Hon. Gentlemen opposite talk about the social services and the great rate at which they were increasing them. This is one of the troubles. They had started such an enormous increase in public expenditure last year that we were put into an extremely difficult position this year in bringing it under control, and this was the responsibility very largely of the right hon. Member for Barnet (Mr. Maudling).
§ Mr. Reginald Eyre (Birmingham, Hall Green)
Would not the hon. Gentleman agree that the difference between the Labour Party and Conservative Party Manifestoes at the last General Election was that the Labour Party promised greater expenditure on education, housing, and so on, and as a result of that the rest of the world, knowing that the economy could not bear the pressure of devaluation which would follow, caused the movement away of sterling? Is not the—
§ Mr. Albu
The hon. Gentleman's statement is completely untrue. We said that we would have to cost any public expenditure, but we were not responsible for the economy at that time. The vast increase in the rate of public expenditure which we found on coming into office was the direct responsibility of the Government of that time.
I would not deny that the tools for the job of controlling the economy are limited, and that to some extent we have had to use the same ones as our predecessors did, but we have used them more selectively. Nevertheless, I assure the House that we are forging new ones, and in case the more nervous Members of the party opposite get frightened, let me assure them that this will not involve anybody being sent to whatever is the British equivalent of Siberia.
The carrying out of economic plans in a democratic society, subject for the major part of its economy both at home and abroad to the demands of the market, can only be carried out with the fullest co-operation of both sides of industry, and even the direct governmental measures are best discussed first at home with those whom they will affect, and this we are doing. Luckily we have very good industrial support, which the Leader of the Opposition has learnt to his cost in recent months.
Frankly, we are very gratified at the reception which the Plan has had in industry. I know from personal discussions with industrialists and managers that they like the idea of an objective for the economy as a whole and particularly objectives against which they can measure their own performance. But however much support we receive from industry and however close our collaboration, this does not relieve the Government of the necessity for taking direct action wherever necessary—and the Government control about 45 per cent. of capital investment in the economy, and 25 per cent. of the employment.
The right hon. Member for Enfield, West attacked the idea of any controls at all, although at the end of his speech he implied that we should have to put some control on a possible upsurge of imports during a boom period. If he 1155 did not mean that I do not know what his reference meant at all. But his speech was so unclear in any case that that is not surprising. I do not know what he would do if this should take place.
The right hon. Member for Handsworth asked whether we should try to shape our economy. If we did not try to do this I do not know whether we should get the growth that he and I agree it is the task of Government to try to achieve. His own Government carried out the rationalisation of the aircraft industry and the cotton industry, and they had a policy for agriculture which obviously affected the development of agriculture. Obviously, we have had to do the same sort of thing. Is it wrong to have selective controls on buildings? Incidentally, the right hon. Gentleman must not think that we build schools and houses with milk or school meals. This is dealing with the question in money terms and not in terms of real resources, which is rather beneath the right hon. Gentleman, because most of his argument was very interesting.
I cannot understand the attitude of the Opposition which, while welcoming the Plan in theory—
§ Sir E. Boyle
On the point of universities and colleges versus milk, the worry from the point of view of any Chancellor must be the rate of climb of recurrent expenditure. Social capital expenditure is always controlled largely because of its consequential effect upon recurrent expenditure. Therefore a tighter control on some less essential aspects of recurrent expenditure must have other effects as well. It makes it possible to afford a higher level of university and technical college building.
§ Mr. Albu
That is a highly technical point. I still maintain that we do not build houses out of milk. I cannot understand the attitude of those hon. Members opposite who welcome the Plan—or presumably they welcome it, because they will not vote against it—and yet are unwilling to accept any Government action which is taken to ensure that it is successful. That seems to be the right hon. Gentleman's point of view. I was not sure whether or not he supported the idea of planning.
1156 A particular example is to be found in housing. This is not only a very important social service but a large consumer of our economic resources. Housing is a very good example of what happens in a mixed economy. Part of it is under the control of local government and local authorities and part is entirely within the sphere of private enterprise.
Because my right hon. Friend the Minister of Housing and Local Government discussed with the building societies methods of ensuring a correct balance between public and private housing, within an overall target, he is violently attacked. If the Opposition do not believe it right to fix a target for the number of houses built in a year, and to allocate it as between public and private enterprise, how can they expect anybody to believe in the genuineness of their late conversion to economic planning?
The right hon. Member for Handsworth rightly said that a large part of the objective in economic policy and planning is to control the economy in the short-term for long-term objectives. None of us would disagree with that. The current state of the economy is now in the first year of the Plan. On the whole we have hardly had time to get our long-term measures into operation. Let us look at the position.
I want to deal first with the external position. As the right hon. Gentleman said, we have succeeded in restoring confidence in the £, so that today it stands at a higher level in relation to the dollar than at any time during the last two years. It looks as if, in the present year, our balance of payments deficit will be halved, and we hope to get into balance next year. This could not have been achieved unless we had operated on capital account and unless our exports had risen substantially and we had been able to hold back the accelerating rise of imports in the last few years. The value of our exports in the first nine months of the year was about 6½ per cent. higher than in the same nine months last year. The volume has been a little over 4 per cent. higher and was rising strongly between the second and third quarters of the year. They are expected to continue to rise quite strongly and there is no reason why they should not reach, and even exceed, the Plan figure of 5¼ per cent. annual increase, provided that there 1157 is a continuing major effort in the export market.
Obviously, the balance of payments benefited by the higher prices which are now being obtained for some of our exports and it looks as if exporting may now be more profitable, which may increase the attractiveness of exporting for some firms. The value of imports hardly rose at all and there is no doubt that this was helped by the surcharge. We hope that the volume of imports will not rise any more this year. By that time, the work which is being done in the little "Neddies" to improve the import-export balances of these industries, and to which the right hon. Member for Handsworth paid credit, should begin to have effect.
I am not sure whether right hon. Gentlemen opposite are pleased or sorry that the rather gloomy promises made in the early part of the year of mass unemployment by the end of the year are shown to be completely false. One of the interesting features of the present situation is that the regions of above average unemployment and slow growth are generally in a more healthy position than when we took over. Our policies of tightening I.D.C. control in congested areas and, most important, exempting those areas from the July restrictions, are effective now and will have their impact when they are most needed, over the next 18 months.
We are, at present, reviewing distribution of industry policy and planning in advance for the employment changes which the National Plan has forecast. The White Paper on Energy Policy and the Plan make clear our intentions to see that pit closures take place without any unnecessary hardship. Already there are signs that the regional economies are responding to our measures. The falling off in business confidence in the less prosperous regions which followed from the last Government's "stop-go" policies has not occurred this year. The number of approvals for new factory building in the less prosperous regions is significantly higher this year than it was at the corresponding point of the business cycle in 1961.
Over all, there are many signs that manufacturers have decided to maintain a steady level of investment instead of reducing their investment plans at the first sign of any slackening in the rate 1158 of economic expansion. This is extremely important, because the achievement of the Plan is dependent on maintaining a steady and high level of investment. Steady instead of fluctuating rates of investment will make the task of controlling the economy all over the country—and especially in the less prosperous regions—very much easier.
Not surprisingly, there has been some reference to rises in prices and incomes which have been taking place during the year. This is not a new phenomenon and I do not pretend that our new policies have yet had time to be successful. Prices have been rising and money incomes outstripping real output since the end of the war. They were both rising very rapidly when the present Government took office—
§ Mr. Albu
No, I think that I had better get on—[Interruption.] I thank the right hon. Gentleman. As this is the first time that I have answered from the Box, I took precautions to protect myself. I hope that I am replying to the debate.
We have never denied that two-fifths of this rise was accounted for by the Government's measures to deal with the difficult economic situation which they inherited. They were intended to reduce consumers' expenditure and in this they seem to have been successful, because in the first half of the year consumers' expenditure was virtually unchanged from the level reached in the fourth quarter of 1964. There are signs, too, that we are now in for a period of relatively stable prices and I have no doubt that, among other factors, the existence of the National Board for Prices and Incomes has played its part.
As to wages and earnings, there have been a number of unusual circumstances, the main one being that we have been through a cycle of reductions in normal working hours, which have accompanied the usual run of high wage increases. It is clear that the present increases are very much above the norm of 3½ per cent. which is justified on consideration of the long-term rise in productivity.
However, it would be quite wrong to assume from these figures that this agreed policy is or is likely to be ineffective. 1159 After all, it is just six months since the White Paper was endorsed by a national conference of trade union executives and carried by an overwhelming majority. This is far too short a period on which to base any judgment of the success of a policy which, in itself, involves a revolutionary change of attitude. Nevertheless, there are many encouraging signs that these changes have taken place, particularly perhaps the agreement of the T.U.C. to operate its own early warning system, which demonstrates, I believe, an extraordinary and very welcome change of attitude on the part of the trade unions.
No one who criticises this policy has yet suggested an acceptable alternative, and I believe that more and more people are beginning to realise that if national productivity rises at, say 3 or 3½ per cent., then it is literally impossible for spending power to rise any faster and there is not much point in trying to raise one's money income at a much faster rate.
§ Sir C. Osborne
Since the success of this scheme depends largely upon restraint in incomes, why should this scheme succeed when under Sir Stafford Cripps it completely failed in 1948 and 1949?
§ Mr. Albu
We have to see. But I have already explained that some revolutionary changes of attitude have taken place in the trade unions and the Trades Union Congress. This is the first time that they have put their hands to such an agreement and the first time that they have themselves been willing to undertake the early warning system which my right hon. Friend is introducing.
I note that some unions put the emphasis more on productivity than on wages policy. Of course productivity is the real answer to all our problems, and the Plan makes this very clear. In fact, unless we have increased productivity we shall not have the manpower needed to achieve the growth target. There is a general belief that a determined attack on the inefficient use of labour in our factories could produce the equivalent of at least 10 or 15 per cent. more workers. Such an attack must involve many changes in traditional methods and habits of work, and I freely admit that these 1160 are suitable subjects for collective bargaining on the shop floor, and in fact account was taken of them in the White Paper on Prices and Incomes Policy.
In recent months there have been many agreements reported between management and trade unions—and many, I am sure, which were not reported—in many different industries which allow for the more effective use of labour. We are very anxious to encourage negotiations of this kind in every possible way and to stimulate management in industry further to take the necessary initiative. Apart from the better-known work arising out of the proposals of the Devlin Committee on the docks and the inquiry into industrial relations in the motor-car industry, many of the little "Neddies" are examining these problems themselves. The national shortage of skilled workers is much more severe a problem than the very small total shortage of workers thrown up by the projections of the Plan.
Obviously the main responsibility for remedying this shortage lies in industry itself, particularly through the industrial training boards, which are now getting into their stride and are beginning to have a real impact. To some extent this is the answer to my hon. Friend the Member for Hitchin (Mrs. Shirley Williams), who made such an extremely clear and brief speech, which contained a good deal of information. But the Government are doing their share with the programme of expansion of Government training centres. To meet the growing demand for competent instructors in industry the Ministry of Labour are increasing the capacity of their colleges at Letchworth and Hillingdon.
I know that those who come out of these centres are not equally welcome in industry in all parts of the country. But the Plan makes it clear that in some industries there is likely to be a fairly rapid decline in their manpower, and we are determined that wherever this happens alternative employment will be provided. Our regional policies, and particularly the active work of the Board of Trade, are designed to this end. It would be a tragedy if out-of-date fears were to prevent the training of those workers on whom alternative employment for many others depends and if they prevented their acceptance in industries which so badly need them.
1161 The right hon. Member for Enfield, West expressed the opinion that the Plan inhibited change. I do not agree. I do not see how we shall get this sort of change unless the Government take action and unless there is some plan which forecasts the need for the change in workers required and gives a target to aim at for retraining. That is exactly what the Plan does.
§ Mr. Iain Macleod
Would the Minister of State answer the direct question which I put to him and which has been repeated in at least three speeches? Will there be new figures, will the new figures carry the Plan till 1971 and will it be based on a new questionnaire?
§ Mr. Albu
There will not be a new questionnaire in the immediate future. Obviously we will look at the figures from year to year. The House will want to do that. That will have to be done if we need to adjust Government policy in the light of what is happening. That is what the right hon. Member for Handsworth asked us to do. He asked us to take short-term policies to achieve the long-term Plan. Obviously that will be done in relation to the whole of the policy so that afterwards we can bring the Plan forward.
This is the first debate we have had on the National Plan. We welcome the remarks of some of my hon. Friends as well as those of the right hon. Member for Handsworth. I think I can say—and perhaps this is indicative of the situation—that we have had many more informed speeches from this side of the House than from the benches opposite. We hope that this debate is only the first of many, for the more constructive criticism both of the Plan itself and of the measures which we are taking to carry it out, the better we shall be pleased.
We are well aware of the deficiencies of this, our first, Plan, but as my right hon. Friend has said, we shall adjust its details in the light of events and we are hard at work in improving the statistical techniques on which it is based. In reply to the hon. Member for Worthing (Mr. Higgins) and my hon. Friend the Member for Middlesbrough, West (Dr. Bray) in regard to the use of input/output analysis statistics, I assure them that had we included all the figures in the 1162 Plan it would have been a much larger document than it is and the vast majority of people would not have been able to have understood it. We are using all these modern techniques and we shall continue to do so, because out-of-date statistics must be brought up-to-date to be useful.
§ Mr. Higgins
Is the Minister aware that unless the tables are published we can have no idea whether or not the Plan adds up?
§ Mr. Albu
I assure the hon. Gentleman that it does. [Interruption.] I assure the House that the exercise has been done.
Discussion of the Plan cannot be confined to Parliament and I am glad to say that it is taking place increasingly in industry. Companies and professional bodies are beginning to call conferences, to which Ministers are invited, so that their managers and representatives of their workers and trade unions can learn of the implications of the Plan and discuss them for themselves. These conferences are a very good idea and I hope that they will be widely taken up. We shall never succeed in curing our economic ills unless everyone realises his or her own responsibility.
We believe, and we are widely supported in this belief, that the Plan is giving confidence to industry—to managers to maintain their investment and to workers to co-operate in changes in traditional methods. I think I can claim that we have, during the last year, established a new and fruitful relationship with industry—through our Department with its Industrial Division, through the increasing activities of the Board of Trade in encouraging exports, through the new work of the Ministry of Technology and through the work of the N.E.D.C. and the E.D.C.s.
Those who support the Plan have put their backs to the task of finally getting this country out of the debilitating situation in which it has been since the end of the war. None of us can feel happy about a situation in which our economy remains poised on a knife-edge. If we are to play our full part in the world, it will only be done on the basis of economic strength on which alone can be based economic and political independence.
1163 Moreover, the social policies to which my hon. and right hon. Friends have devoted their lives are dependent on the Plan's success. It is a Plan not only to raise our national wealth but also to ensure that its distribution takes place in accordance with fair and just social priorities. The Motion is to welcome the Plan. I gather that hon. and right hon. Gentlemen opposite will support us.
§ Question put and agreed to.
That this House welcomes the National Plan (Command Paper No. 2764).