SHIPPING AND SHIPBUILDING.

HL Deb 04 October 1944 vol 133 cc312-65

2.5 p.m.

LORD WINSTER rose to ask His Majesty's Government, whether any plans for post-war reconstruction of the shipping and shipbuilding industries are being formulated; and to move for Papers.

The noble Lord said: My Lords, in introducing the Motion which stands in my name I feel bound to refer for a moment or two to the very great loss which the shipping industry has suffered recently by the death within such a short period of the noble Lord, Lord Essendon, and the noble Viscount, Lord Craigmyle. Lord Essendon took the very greatest interest in the subject of my Motion to-day, and had it been possible for it to be discussed earlier I know it was his intention to participate in the debate. I am sure we shall all feel that in this debate to-day we are robbed of very wise experience and counsel by his lamented death.

I have very much in my memory the warnings which the noble Viscount, Lord Craigmyle, gave in the years before the war on the subject of the shipping industry and the disrepair into which it was falling. Those warnings, I am afraid, fell upon deaf ears. The Governments of Mr. Baldwin and Mr. Chamberlain paid very little attention to what Lord Craigmyle repeatedly told them, especially as to what Japan was planning in the Far East. She was edging out our shipping in the Far East by means of Government subsidies, building tankers designed for war purposes and building liners which were specially designed for conversion to cargo carrying. It is very regrettable that those warnings fell upon deaf ears. When I think of the price we have had to pay in blood, in ships and in treasure for ignoring the warnings uttered by Lord Craigmyle, I can only say that I hope the noble Lord, Lord Leathers, will be able to convince us that warnings of a similar nature about the post-war period have penetrated the ears of the Government and have entered the Government's brain.

My Motion has been on the Order Paper for very nearly a year. When I have wished to bring it forward I have been asked to postpone it a little longer, the reason given being that if I did postpone it something really important might be said in reply to me. I notice that the matters about which I will not say I have been restrained, but which it was indicated it might be very inconvenient to discuss here, have been very freely discussed in another place. I make no complaint about the postonements—the noble Lord, Lord Leathers, has been most courteous in the matter and I quite realize the pressure of war circumstances—but while I make no complaint about the delays I must say that if the noble Lord, Lord Leathers, has nothing to tell us to-day after these many postponements he really must not be surprised if those interested in shipping problems decide that the Government have been stalling and draw their own conclusions.

If I may be allowed to digress for a moment to say a little more on this question of postponement of Motions, I would remind your Lordships that I raised a protest some time ago about the use of Secret Sessions as a technique to avoid discussion of awkward matters. I really think the technique of asking for postponement of a Motion is reaching very nearly the same proportions. I am bringing forward a Motion to-day after many postponements and a debate on civil aviation which was to have been taken to-morrow is to be, I understand by request of the Government, postponed. I have a Motion on the Paper dealing with post-war security, and indications have already reached me that I shall probably be asked to postpone that also. I make no complaint, because in war-time we try to facilitate the task of the Government and if the Government have good reason for not wishing a matter to be discussed that must rule our proceedings. I do, however, suggest this in all seriousness. I think perhaps the Government are failing to recognize that the function of Parliament is not merely to assemble in order to hear what the Government wish to tell Parliament. There is another very important function of Parliament and that is to assemble in order to tell the Government what are the views and opinions of members on certain matters. If we are really driving into this custom that Parliament only assembles in order that the Government may inform it of decisions which have been taken, then, surely, our democratic government is becoming a farce. One does not always expect that a Government speaker may be able to give a reply, but the point of having a debate is surely that the Government may know what the views and opinions of people are before they take irrevocable decisions. I do seriously suggest to the Leader of the House—who does not happen to be in his place at the moment—that he should take that into account, and reflect that debates are not merely a matter for the convenience of the Government but also a matter whereby noble Lords may inform the Government as to what their views and feelings are before irrevocable decisions are taken.

Before proceeding to my remarks on the post-war shipping situation, I feel that I am in duty bound to say one word about the officers and men of the Merchant Navy. I would like to make it a little wider, and say what a debt the country owes, not merely to the officers and men of the Merchant Navy, but to the managements and staffs of the shipping industry and to the managements, staffs and workpeople generally in our shipbuilding industry also. I include among these the women who have made a rather belated appearance in the shipbuilding industry, but who have rendered magnificent service since they have been given the opportunity to do so. Of the officers and men of the Merchant Navy, it can truly be said that their courage, their fidelity to duty and their endurance have really been beyond anything for which words will serve.

I feel that your Lordships will agree, looking back over the story of this war, that what Hitler really relied upon for our defeat was starving us into submission, and in the plan of campaign which he had formed to starve us he felt that the one great thing he had to do was to break the nerve of the officers and men of the Merchant Navy so that they would refuse to go to sea. With that end in view, he gave his orders for a campaign of cold-blooded terrorism and brutality towards those men. Again, words are useless to describe all the tortures and the brutalities which have been inflicted upon the officers and men of our Merchant Navy. It is a story which will stain for all time the traditions of the sea. I cannot forget that the German Navy made itself the willing instrument of this campaign of brutality and terrorism, and I hope that no Englishman will ever again shake hands with a German naval officer. These officers should be made to feel that they have put themselves outside the pale by what they have done. But Hitler's campaign in this respect has come to shipwreck upon the rock of the courage and resolution of the men of the Merchant Navy, and to-day we know that in all our long sea history no braver men have ever sailed from the harbours of this country than have sailed from them during the progress of this war. And we rejoice to-day to feel that the danger of the U-boat and other perils, though by no means at an end, are so very much minimized.

But what are we going to do for these men in return? I am afraid I have rather little confidence in all the promises and fair words which they are receiving at the present moment. They have heard similar promises and fair words before, and they have tramped the streets in misery after hearing them. I am not surprised that they are rather sceptical. But I think that it is putting this matter of our Merchant Navy and post-war policy in a completely wrong light to represent it only as a matter of paying a debt of gratitude to our seamen. It is a much bigger thing than that because all our security in war-time depends upon the Merchant Navy. The Armed Forces alone cannot win a war for you, and they will never be able to do so. The Merchant Navy must play its part. In peace-time, all the plans you may make for a higher standard of living for the officers and men depend upon a great export trade, which, of course, it is impossible to carry on without a large and efficient Merchant Navy.

What I have got to say is not concerned only with the interests of the shipping industry. I should like to make that very, very clear at once, important though that industry is, with all its ramifications extending into so many industries. The shipping industry, we know, employs millions afloat and ashore. It is a bigger question even than that of a rise in our standards of living. Questions of employment, questions of national security and questions of financial stability, are all involved in what concerns the shipping industry. Nevertheless, the motive of gratitude towards our merchant seamen ought not to be absent from our minds when considering the future of that industry. I think that many things have greatly improved in that respect. I have the honour to be the President of the Navigators and Engineering Officers' Union, so that a great many expressions of opinion naturally come to my notice. Great advances have been made, and many old grievances have been removed. It is a very long time since there was a dispute in the shipping industry between the owners on the one hand and the officers and men on the other. This is a great tribute to the leadership of those who direct the great organizations to which officers and men of the Merchant Navy belong, and also a tribute to the more humane and generous spirit which is animating the managements of our great shipping concerns. I feel that that tribute should be paid to them. I would make only one exception to what I have said about this happier state of affairs, and that is in regard to coastwise shipping, where I feel that there is still great room for progress, and questions of manning, hours of duty, food and conditions still require very great improvement. I regard coastwise shipping as the only rather doubtful spot in what otherwise is, I feel, a very greatly improved situation.

Promises are being made about continuous employment in peace-time. There can be no continuous employment in peace-time without a prosperous trade, and it is useless to dangle these promises of a large Merchant Navy and of continuous employment before the officers and men while at the same time failing to make any declaration of post-war shipping policy. I regard some of the promises which are being made to-day as completely contradictory and conflicting. There are promises being made to the agricultural interests of this country which to my mind conflict completely with promises which are at the same time being made to the shipping industry. I feel very strongly upon this point. These promises ought not to be made; they are made altogether too glibly and freely by Government spokesmen. They ought to be far more seriously weighed and considered before being made.

I confess that I have not had time fully to consider the matter—it has only recently been brought to my notice—but from what I have been told and have read myself I think that the implications of the Government White Paper on Social Security require to be most carefully considered by the Minister of War Transport. I am not at all happy about it. I think that there are implications in that White Paper which conflict very sharply indeed with the promises which are being made to the officers and men of the Merchant Navy to-day. How will they affect the people in the pool? We can be quite sure that tie Minister of War Transport is giving most careful attention to this matter, but I am sure that the implications of that White Paper do require the most careful consideration in the light of the future of the Merchant Navy and of the premises which are being made to it at the present moment. Let me say this. The mood of the men in the Merchant Navy is very grim about these questions. The iron entered into their souls last time; and if they find that similar worthless promises are made to them now, and that the debt of gratitude of which I have spoken is not paid, I do not think that they will take it with quite the pathetic resignation with which they took it last time.

As I have been speaking about the seamen, I should like to say a word about what are known as Merchant Navy comforts. The noble Lord, Lord Leathers, most wisely appointed a Committee to inquire into this question of seamen's welfare. I believe that that Committee has completed its investigations. I hope that the Minister will do what he can to speed up the Report, because I am most uneasy about this matter of comforts for merchant seamen. I think that there is a tremendous amount of overlapping and a great deal of wasted expenditure in the collection of these funds; and, speaking with a great sense of responsibility, I would advise the public to go very slowly indeed about responding to these appeals to their generosity and their charity until we have had the advantage of reading the Report of the Committee to which I have referred. Only this morning I received a letter from the captain of one of our merchant, ships, which I think your Lordships may be interested to hear: Before we left port this time we received through the Merchant Navy Comforts Service a whole shipload of woollens. Please, Mr.‡ do not let your people send on such bundles any more, as we have scarves, balaclavas and mittens to do us for the rest of our normal lives. Actually my chief officer has still three sackloads in reserve that it would only have been a waste of time to hand out; our native crew would only sell them in any case. If we are in need of anything in the comforts line I think we should write and ask whether you can do something for us before anything is put on board in this way. I repeat that I advise the public to exercise some restraint in responding to these appeals until we have had the Report of this Committee, which I believe will put the whole business of seamen's welfare and seamen's comforts on a much more centralized and workmanlike footing. Let me add this. The merchant seaman does not regard himself as an object for charity at all; he is a self-respecting man following a good profession in which the pay and conditions have improved enormously, and the idea of charity should be divorced from such a man altogether.

Now let me pass to the subject of the post-war shipping industry and post-war policy. The shipping industry has been operating under very difficult war conditions, and in considering the shipping industry let us remember that it is an industry which in the course of thirty years has had to face two major wars and one record depression. During this war it has had to face very difficult conditions. It is badly hit, and I think that it is being put at a great disadvantage against the day when once again it will be expected to provide cheap peace-time services and at the same time to fight foreign corn-petition. The nation, which will expect these services from shipping after the war, has a right to expect the Government to be active in this matter. I am sure that the noble Lord, Lord Leathers, will not dispute that point of view, and that he is active in the matter. But there is some doubt upon the subject, because I notice that the London General Shipowners' Society is in such a mood of pessimism on this subject that it has recently passed a resolution asking that British shipping may receive "no worse treatment than is accorded to any other nation." That the London General Shipowners' Society should pass a resolution in those terms, asking for "no worse treatment," is, I think, a fairly clear indication of the doubt, not to say pessimism, which pervades the shipping industry today.

I am not going to quote a lot of facts from balance sheets, striking though they are. There are some very impressive facts revealed in the statements of Chairmen at the annual meetings of our shipping companies. I am not going to quote them, because we know that there must always be hard cases, and I think that the case which I have to put forward is sufficiently strong without having to quote these cases which show how extremely hardly hit certain shipping companies are by war conditions. One is always supposed to apologize for introducing facts and figures in a speech, although how on earth it is possible to establish a case without quoting facts and figures is beyond my comprehension. However, I shall bow to the custom and give as few as I possibly can.

I think that the crux of the matter is this. The Minister in charge of overseas trade, who is so visibly wilting under the cruel strain of his duties and responsibilities, has told us (and I believe it to be his only contribution to thought during the last war or this) that in order to maintain our pre-war standard of living—and I would remind your Lordships that we are planning very actively to improve upon that pre-war standard—there will need to be an increase over the pre-war volume of export trade of no less than £350,000,000. The statement is rather characteristically vague and loose, because it does not explain whether war increases in price are taken into account, and I consider that we want a very much more carefully framed statement by a far more responsible authority on what must be our target figure for exports and how we propose to achieve it. However, let us take this figure. It is not generally recognized that shipping is far and away the biggest item in our export trade. I believe there are people who think that such commodities as coal, cotton, iron and steel are the great giants in the export trade, but as a matter of fact shipping is our largest export trade, and is or should be our primary export.

This country has always to import more than it exports, and the enormous adverse trade balance produced by the excess of what we buy over what we sell used to be made good before the war mainly from three sources—from gross shipping freights, from dividends on foreign investments, which amounted to £200,000,000 in 1937, and from commissions of insurance brokers on overseas business. These were the Big Three of the sources from which we have redressed our adverse trade balance in the past. What is the position to-day? The foreign investments have been sold. They are not there any longer to yield this revenue to us. We have the Department of Overseas Trade and a Minister for Overseas Trade, but where is the overseas trade? It just is not there. Our shipping has been decimated. The Red Ensign has been replaced by the Stars and Stripes as the predominant flag at sea. The United States Mercantile Marine has grown from something like 7,000,000 gross tons to 22,000,000 gross tons. It now represents two-thirds of the world's tonnage. The end of the war may very likely find this country with 10,000,000 gross tons of shipping and the United States with 30,000,000 gross tons.

I have said that our shipping has been decimated. I often think that while Hitler is certainly losing upon the major issue, in very large part he has won his war against the Jews and against British shipping. British shipping is the only one of our great industries which has been crippled by the enemy. Many of our other industries have had their efficiency actually improved by the war, but shipping has been decimated and crippled. The post-war demand for exports will be higher than ever, while we shall be less able to pay for them by invisible exports. We cannot increase our export trade unless shipping is enabled to make a far greater contribution than it did before the war. But how is this to be done, with a greatly decreased volume of tonnage? Tonnage has been halved, so presumably earnings have been something like halved also; that is to say, the power to buy imports has been diminished by something like a half in the case of shipping.

If that is so, it must affect oar standard of because we cannot afford to buy the imports. We began the war with a fleet of 18,000,000 gross tons. It was a very great fleet, but it was not enough. What happened when the war broke out? The ships were private property. I am not going to argue this afternoon the merits of private or State-ownership that is another subject for debate. I will only deal with the facts. The ships were private property. They were built by private capital, subscribed out of private savings, and they were owned by private companies. When the war broke out the State borrowed this enormous fleet of 18,000,000 tons from the private companies and assumed supreme control over Well, that is quite a large loan. To borrow 18,000,000 tons of shipping is a big thing. Most of what was borrowed is now represented by the words "sunk or worn out." I will only quote one case, the P. & 0. The fled: of that great company to-day stands in the balance sheet at half its prewar figure. One company has lost thirty-one out of thirty-two ships. Another, which when the war broke out had eight fast cargo and passenger ships, now has none, and its replacement account stands at about £1,000,000, with which possibly, it could build two ships. I know, as I said, that there are hard cases, and I do not ask your Lordships to draw too close a conclusion from these figures, but they do illustrate what has happened to the fleets of our great shipping companies.

British shipping on loan to the State has suffered this decimation, and without any guarantee of restoration. Here is the war drawing to a victorious conclusion, and the Government in my opinion are caught short with a bundle of White Papers in their hands and no Bills on the Statute Book. I know there is the Education. Act on the Statute Book. I regard that as a promissory bill which, I prophesy, will be very frequently renewed before it comes into operation. But we have got a White Paper about Social Security which envisages an expenditure of £650,000,000 per annum. When we are asking the Government what they intend to do about replacing and restoring the ships which they borrowed from the shipping industry, a step upon which all our plans for social security must depend, there are requests to postpone putting the awkward question. That is what one gets.

Certainly some replacements have been built. Such replacements as have been built are built by the Government for Government ownership. Owners can only obtain licences to replace a very small proportion of their losses, and when they have got a licence they have to build to wartime specifications, without any regard whatever to post-war requirements, The tonnage which the Government are building will presumably pass to the owners after the war, but it is very costly tonnage, and it is built for war purposes and not with peace-time competition in view. And all the war-time replacements which have been effected do not equal the lost tonnage. The ships have been built at far greater cost than the lost tonnage they replace. The cost exceeds the insurance receivable on the lost tonnage. Therefore the State will only return part of the private property which it borrowed on the outbreak of the war, and so must inflict a very heavy loss and injury on the industry unless the Government produce some proposals for bridging this gap between insurance receivable and the cost of replacement. These war-time replacements are not only unsuitable for peacetime requirements, but certain categories of highly specialized ships upon which our export trade peculiarly depends are not being replaced at all; passenger ships and the refrigerating liners for meat and fruit are not being replaced. No liners have been replaced. I find that very sad because not only are liners essential postwar ships, but they are ships which are the very best possible advertisement for this country all over the world. A Union-Castle liner lying in Madeira at the height of the tourist season was very fine propaganda for this country.

It is sad to think of all these liners being sunk and of no replacements. The net result for the shipping industry is that the insurance receivable will only replace little more than half the losses, so that it will be unable to build ships equivalent to the tonnage of those lost and worn out. In other words, at the identical moment when the shipping industry ought to be switching over and swinging into intensive peace-time activity, it will find itself crippled because it will not have the funds available to replace those ships which the State has borrowed and which have been lost and for the replacement of which the State is not paying sufficient compensation. That is the simple issue: whether shipowners will be able to rebuild their fleets up to pre-war strength. That in most cases was all too small. They ought to rebuild in far greater strength. I am almost afraid to quote the Atlantic Charter, which has become a rather flyblown document; but the Charter does talk about "unrestricted trade," and unrestricted trade should mean a great increase of trade and a call for more ships. Surely, the thing of first importance is to try and form some estimate of what the post-war volume of trade is likely to be and then to make your arrangements for building the tonnage to meet the requirements of that estimated volume of trade.

I shall say nothing much this afternoon about the very urgent problems which arise between ourselves and the United States. Great care ought to be exercised in what one says regarding this particular matter. Certainly, whatever one does say ought to be prefaced by a very frank and generous acknowledgment of what America has done for us in this war in the way of shipbuilding. Sir Arthur Salter has twice told us that United States construction saved us in a very critical situation, and the Parliamentary Secretary of the Ministry of War Transport has not hesitated to go on record as saying that without American help the war could not have been won. Thanks of that nature should colour all that we may say or feel about American post-war shipping policy. I propose to say very little indeed about it. There are some rather raucous voices on the other side of the Atlantic on this subject, but I am sure they are not the voices to which one need pay the greatest amount of attention. If the noble Lord will allow me to say so, we can with great confidence leave this matter of shipping policy as between America and ourselves in his hands. I have complete confidence in what he is doing in that respect, and though one may have to revert to it at a later date if things do not work out quite happily, although I have very strong feelings on the subject and am very well aware of what is being said on the other side of the Atlantic and recognize the peculiar difficulties which the problem arouses, I think it is better for the moment to leave matters entirely in the hands of the noble Lord and not dilate upon them.

Perhaps the noble Lord will allow me to say in conclusion that there are one or two questions to which the shipping and shipbuilding industries on this side of the Atlantic would like direct answers in order to enable them to try and see something solid through the mist which at the present time they feel surrounds them. Is the Ministry of War Transport going to disappear after the war? Is shipping to be handed hack to the President of the Board of Trade? The shipping industry would like to know. It may have its own ideas, but it would be very nice to know. Is the industry going to be nationalized? That is a very important matter, especially when insurance recoveries do not equal the cost of replacements, and when the only hope of bridging the gap seems to lie in the direction of some form of Government assistance. You cannot be surprised in these circumstances if people ask, "Is the industry going to be nationalized or not?" They would like to know. I shall not weary the House with my own views on nationalization, but surely it is a question of great importance. If the industry is not to be nationalized, is some measure of control to continue? On what financial terms will ships to replace those worn out or lost be acquired? Are shipping companies to be allowed to operate air services without coming into competition with subsidized opposition?

How is the gap to which I have referred, between insurance received for lost ships and the cost of replacement and reconditioning, to be bridged? Do the Government propose to help? I shall certainly say this, that there ought to be no question of Government assistance in this matter unless there is evidence of a firm intention to build on the part of the shipping companies. It is a thorny question, but there must be good evidence of intention to build before there can be any question of bridging that gap. What is the size of the post-war mercantile fled to be? It was 18,000,000 tons before the war. Is it considered that 18,000,00n tons will meet our post-war needs and the needs of a greatly increased export trade? Naturally the shipping industry is perplexed and anxious. Its ships are lost, its men are drowned, it will be called upon to make an immense post-war effort to facilitate the rebuilding of our trade and commerce, and yet nothing is announced about tie future. The industry is left in a condition of doubt and uncertainty.

If I have said some rather critical things and implied that we have not got any clear ideas about the Government's postwar shipping policy, may I be allowed to add this before I sit down? I am sure that al: your Lordships are agreed that the noble Lord, the Minister of War Transport, and his Ministry deserve the warmest and most generous tribute. When the archives are opened we shall know how great a part they have played in our various landings, and their share of credit will be no small one. If I have been critical I hope that the noble Lord will allow me to say that I do most fully realize what an immeasurable debt we owe to him and to the work of his Ministry. Having said that, he will not mind my saving one thing about his Ministry. I have heard from ship's masters that the Ministry afflicts them with an intolerable plague of forms. Really I am quite serious about this. One of the most serious anxieties and worries of our ship's masters to-day, who are exposed to such exceptionally long hours in bringing their ships home, is this plague of unnecessary forms to which the Ministry of War Transport subjects them. If the Minister could put someone on to look into this matter he would find what a very unfair burden is being Inflicted upon these masters.

I say this in conclusion of what I fear has been a far too lengthy speech. Is the story of what happened after the last war to be repeated? Is our shipping industry and is our shipbuilding industry once again to plumb the depths of depression? What it must have cost those men in charge of our shipbuilding industry to stand up to what they had to stand up to during those years of depression! And indeed if they had not been remarkable men they would have laid down and died and we should not have had the shipbuilding yards to pull us through this war. What happens after the war depends upon the strength in which the nation makes its opinion felt by the Government. I think it is unfortunate that the nation should be indifferent in this matter in peace-time. In war-time they applaud the Merchant Navy as they applaud a pugilist making a great fight against a bigger antagonist but in peace-time they seem to find no matter for pride in a great Merchant Navy. That I think is unfortunate and ungenerous because of our dependence upon the Merchant Navy for our security. I plead for a declaration of policy which will enable the shipbuilding industry to shape its course. I do so because it is an industry which is essential to our security and to our prosperity. It is an industry in which enterprise and initiative and foresight are vital. If those engaged in it cease to show those qualities we shall lose our shipping industry to other nations.

It is a pity that we are a people of short memories and apt to be lethargic in this matter. I think the matter is put in a nutshell in a quotation which I will make from Lloyd's List which appeared the other day. It says this: If our experience has not convinced us of the necessity of maintaining an efficient Merchant Navy, not as a form of reward to the men who have built it up and manned it but as a sure condition of our survival, then we are a very stupid people and deserve defeat. Those words I think are profoundly true. They have inspired the remarks which I have ventured to offer to your Lordships. I beg to move.

2.52 p.m.

VISCOUNT BUCKMASTER

My Lords, I am sure that your Lordships feel we owe something to my noble friend for the Motion which he has moved this afternoon. He has persisted in the face of some difficulty and I am glad he has at last secured a day for it. The importance of shipping in time of war is plain to everyone, but it is none the less vital to us in time of peace. These mighty programmes of social security may, indeed we hope they will, improve our way of life, but they are not and cannot be a means of living. Without our shipping and the trade to support it we in this country simply cannot live at all. It needs but a sharp decline in our prewar volume of shipping for all our plans for prosperity to be swept away like leaves in an autumn gale.

What is the task before us? My noble friend has said that we are asked to increase our pre-war volume of export trade by £350,000,000. I am glad that he mentioned the amount in volume because your Lordships appreciate that £350,000,000 in, terms of money may mean very little. The rise in prices of goods carried might achieve that result without any increase in the volume of goods carried at all. So, if my noble friend is accurately informed, as I am sure he is, and if the volume is right, we do at least know what we have to achieve. He ventured to give some figures. Perhaps I might, with your Lordships permission, add some to them. If my memory serves me our invisible exports in the last pre-war year, 1938, were £371,000,000 of which shipping represented £90,000,000. We were left with a deficit of £55,000,000. Our overseas investments brought in roughly £200,000,000, of which, my noble friend Lord Samuel advises me, something like one half may be considered to have disappeared. He takes a more hopeful view than I do about the amount lost. Anyhow, we see that the task is no small one. We have got to get a very large increase in our pre-war volume of shipping if our present standard of living is to he maintained. The shipping industry are alive to the position. The General Council of British Shipping have issued a Statement of Policy and the noble Lord, Lord Rotherwick, I understand, will speak on that this afternoon. If he will allow me to say so, I feel sure that in view of his commanding position in that industry your Lordships will listen with great interest to anything that falls from him.

In regard to the industry's proposals for the future, the industry can make its plans but how can they be carried out without some knowledge of what the Government propose? Here we are with victory in sight after five years of war and not a word from the Government as to what their plans for post-war shipping are to be! All we have is a statement in the memorandum of agreement with the shipping industry of 1940 to the effect that our Merchant Marine should be maintained in "adequate strength" and "full competitive efficiency." No statement is made as to how that is to be achieved, none whatever. And we have not got much encouragement in the task before us from the history of the last war. If we look backward we see that prior to 1914 we were carrying half the trade of the world, and in 1936, in days when there was an ever-increasing trade, our own tonnage was halved while foreign tonnage doubled. That is the picture of the last war. What is to happen now? I cannot say, but the problems that are facing the industry are undoubtedly grave. Some are new, none can easily be solved. There is the question of international trade and the share of it which we shall be allowed. The problem of American tonnage, the question of replacements, the possibility of competition from the air—all these are grave matters which have to be dealt with. To some of them, with your Lordships permission, I should like to refer.

There can of course be no prospect of shipping without a full volume of international trade, and this question of international trade must hinge to a large extent on the policy of the Government acting in concert with the other Governments of the United Nations. If the spirit of the Atlantic Charter is to be carried out and all countries are to have access to the trade and raw materials of the world on equal terms, all will be well. Whether that will be fulfilled or not remains to be seen. There remain other dangers to all of which I cannot refer but there is one on which I should like to say something, and that is the question of subsidies. It may be that other countries, as they have done in the past, will be tempted to subsidize their ships. I think we are entitled to ask the Government what they are prepared to do to curb and control such a situation. I think we are entitled to ask that any agreement arrived at should be enforced against all the countries who are parties to it, not, as so often happened in the past, against this country alone. I think we are entitled to go further and say that all agreements for the welfare of shipping which meet with the Government's approval should also receive the Government's support.

But, my Lords, if we feel that the Government are to play, and must play, a big part in international trade, that is not necessarily to say we want them to control or to own the shipping industry. I stand before your Lordships a staunch and unashamed supporter of the principle of private enterprise. I consider that one of the first conditions for any real economic recovery is that the currents of international trade should be allowed to flow freely through their proper channels and should not be dammed at their source or diminished in their volume by arbitrary regulation and control. But assuming that international trade recovers it is still open to doubt whether we shall receive our full share. We are faced at once with the problem of American tonnage. I do not propose to raise any "raucous voice" on this side of the Atlantic match those voices resounding on the other side. I always seek in your Lordship;' House to give offence to no one and I shall not, I trust, offend if I say that in this matter we need not be without hope.

The problem is an awkward one. I am not sure that the effect and full extent of American building are yet realized. I am told that since the passing of their Merchant Marine Act in 1936 the Americans have built more than half the total tonnage that existed in the world before the war. One ground for hope is not only, if he will allow me to say so, the fact that the noble Lord, Lord Leathers, and others with him have been to the United States and have this matter well in hand, but that we did in 1941 agree with the United States that we should primarily build combat vessels while they should build merchant ships. I think it would not be unreasonable to suggest in such a case that we should be allowed some of the surplus tonnage on reasonable terms. Assuming, however, that some such arrangement nay be achieved, even then it cannot be a final or a full solution. Those ships will not be suited to post-war tasks. They cannot compare with ships designed in peacetime for special purposes. Nor must we forget the just and proper claims of our own shipbuilding industry.

That takes me to the question of replacement I must say quite frankly that I have no expert knowledge in this matter and I must crave some indulgence from your Lordships in trying to present this matter as it appears to me. The shipping industry works under art agreement with the Government and this agreement strictly limits the profits which can be earned. I understand it has been loyally accepted by the industry, but it does create a great difficulty. When losses arise sums are credited to the companies by way of insurance recovery. These insurance recovery values were fixed on a pre-war basis which has subsequently been increased by 25 per cent. But the cost of building ships has risen by 100 per cent. When a ship is lost the bulk of the insurance recovery money is paid to the company which is then allotted a ship at an agreed price for post-war delivery. On that there are one or two points I should like to make. First, that ship is managed by the company; they do not own it. In no sense do they receive a ship as their own. The second point is that no definite date is fixed for the transfer of ownership. They do not know whether the ship ever will belong to them finally. That matter was raised in another place and no satisfactory answer was given.

It will be apparent that shipping companies are in many cases very well endowed with liquid resources, but while it may occur to your Lordships, as to me, that superabundance of liquid cash has under certain conditions its advantages, I think we realize the truth that when a shipping company has got the money but has not got the ships it cannot carry on its business. To summarize the position, the insurance recoveries do not cover the cost of the ships allotted to the companies by the Government; still less do they cover the cost of new building. When we come to the question of replacing obsolescent tonnage, which is vital—my noble friend I think said the bulk of the ships were lost or were worn out—the limitation of profits makes it impossible for the companies to set aside the sums necessary to provide full depreciation. This is the problem and it is not a very easy one to answer.

I have spoken at some length about the ships. I would like to say something about the men. These men do not need any tribute from me. I would not feel it right to attempt in any way to give them the praise which is their due. I can only say that these men were not trained as fighting men and in the early days of the war few of their ships had arms and none had armour. Yet they brought food to this country and took munitions where they were needed. With- out them all our planning, all our Staff work would have been futile. Without them the sacrifices of our fighting men and civil population would have been in vain. But what was the position of these men before the war, and was it what we wished it to have been? A case was brought to my notice by chance—I assure your Lordships I did not go out and search for it—which, except for the attainments of the man, I have no reason to believe was exceptional. In 1924 a father at considerable personal sacrifice sent his son to the Worcester Training Ship. The fees were approximately £150 a year. This boy got a first class extra in seamanship, a first class on the scholastic side, the silver medal for good conduct, and became Cadet Captain. He was one of six chosen for the Royal Navy, from which he was debarred because he was twenty-one days too old. With that record he joined one of our great liner companies and became Fourth Officer. In 1930 he was flung out with an excellent character simply because the ship was laid up and he was not wanted. For two years he ate his heart out trying to find work at sea without success and then went into the cinema industry.

If I say there is in that case something which offends our conscience, if I say there is in it something lacking in social justice, it is not because I wish to assail the shipping companies—they are at the mercy of the ebb and flow of the tides of international trade—but I do say that young men such as that with their training are a national asset and we have no right to squander them in such a way. There exists at present a Merchant Navy Shipping Pool which provides for continuity of employment but there are features in it which would not be suitable in times of peace. I feel that the shipping companies and the men are eager and anxious that the conditions of casual employment obtaining before the war should disappear and that some kind of pool should be established, but if the companies are to play their part and if the men are to play their part, does not the question arise whether the Government also should not do something? Can shipping companies who pay their unemployment contributions be asked to maintain quite unaided a shipping pool which will permanently guarantee security of employment for every man in the shipping industry? On the question of the men there are two other things which it is not unreasonable to ask. The first is that accommodation on the obsolescent ships should be brought up to date, and the other thing is that the drab and dreary conditions of our ports should be relieved by providing opportunities for recreation wherever this can be done.

I have no knowledge of what answers the noble Lord who is going to reply will give to the points raised in this debate. But I would say this. I do urge that all matters relating to shipping, including the question of State ownership, should he dealt with in no narrow and in no Party spirit, but that the national interest should be the sole consideration. It cannot be too often repeated that the Merchant Navy is an essential part of the defence of this country. One often hears it said that we are to have a strong Navy. Much less often does one hear it said that the Merchant Navy must be strong. But the two are one. They cannot be divided; they cannot exist apart. It is quite futile to propose that one should be strong without seeing that the other is equal in relative strength. If I may be allowed to do so, I will end with a quotation, as did my noble friend. I would say that I hope that the people of this country will not forget the spirit of the noble lines of one of our greatest poets: The Fleet of England is her all in all. Her Fleet is in your hands And in her Fleet her fate.

3.12 p.m.

LORD ROTHERWICK

My Lords, I would like first of all to ask for the indulgence usually given by your Lordships to a member making a maiden speech. I may say that I have waited for some time until a subject like shipping came before your Lordships, it being one about which I ought to know a little seeing that I have been concerned with it all my life. I wish to associate myself with the remarks made by the noble Lord, Lord Winster, in appreciation of Lord Essendon and Lord Craigmyle, and in speaking of the great loss which your Lordships' House has sustained through their deaths quite recently.

In speaking on the Motion, I would first stress the importance of shipping to this country. Just as much as it is necessary that the country should have a strong Navy and Air Force, so is it every bit as necessary that we should have a strong Merchant Service both in war and in peace. It is just as essential in war as in peace. In peace-time we must have it to ensure that it will bring the necessary food and raw materials to these shores and also to help to bridge the gap for many years between our exports and our imports. We must always remember that this country is not self-supporting. Essential imports can only be paid for by exports. In 1937 our imports exceeded our exports by £442,000,000. That gap was bridged by invisible exports of which the two chief items were foreign investments and shipping. Between them, they accounted for £350,000,000 of that gap. Shipping's proportion was 30 per cent. although in 1920 shipping actually made up 90 per cent. of the invisible exports. That shows the great importance of shipping to this country not only to ensure our food supplies but to help our finances. For these reasons I think that its well-being should always be most carefully fostered and encouraged by the Government.

Of all the major industries of this country shipping has suffered most, in making its vital contribution to victory, both in ships aril in men. The result is that shipping, as a private enterprise, has been deprived of the greater part of its tools. Hundreds of liners, tramps, oil tankers, and coasters have been sunk. I believe that over 26,000 officers and men have lost their lives—a higher proportion, understand, than in any of the Fighting Services. And they have made the great sacrifice in order that we may live. Much has been said, and much still remains to be said, in appreciation and admiration of, and gratitude for, the invaluable part which officers and men of the Merchant Navy have played in this war. Everyone realizes and appreciates the splendid gallantry and the great deeds of our Navy, Army and Air Force. But none of their great successes would have been possible without the indescribable hardships, constant dangers and great sacrifices of life which have been willingly endured and undertaken by the officers and men of the Merchant Service. To them is owed a debt which the nation, and especially shipowners, will always remember. Without their heroism victory would not have been possible.

Before turning to the problems of post-war organization, perhaps it may be just as well if, for a few minutes, I touch on some of the problems which confronted us, as shipowners, after the last war. One problem which became very pressing at that time, in this and other countries, was that of the nationalization of shipping. This was tried by many countries and, generally speaking, given up after enormous losses. To mention only three instances: Australia lost£12,000,000; Canada lost £19,000,000; and America, not counting the war years but just taking from 1920 to 1932, lost over £600,000,000. Have we learnt any lesson from that? Some of my friends returning from America lately have remarked to me on the very much greater efficiency and better service that you get in America in such matters as the telephone system, broadcasting and the air services, as compared with this country. I cannot think that America has all the brains, all the organizing ability and all the enterprise, but there is indeed one little difference between us. In America these services are run privately, whereas in this country they are nationalized. That ought to make us think a little. But, apart from that, America derives revenue from these services whereas here they are a heavy drain on our national resources.

Another matter which has come to be a great menace, and which we have had to fight against between the last war and this, arises out of subsidies. Foreign Governments in one form or another subsidize their shipping to the tune of £30,000,000 a year. The American, German, French, Italian and Japanese Governments, by means of subsidies, have extended and developed their Merchant Services almost invariably at the expense of this country. In fact British shipowners were being rapidly ousted out of the trades which they had initiated and built up. Shipowners have had the hopeless task of trying to compete against ships subsidized by foreign Governments. Except for the £2,000,000 subsidy given for two years to the "tramps" when practically down and out, British shipowners have never received any help whatever from their Government. Is this going to happen again? The shipping industry does not want subsidies, but if foreign Governments continue to subsidize to the disadvantage of this country, then the British Government should defend British ships by a subsidy or by some other means. I often think, in fact, that we need some agreement in the Peace Treaty to call off the race in subsidies, or at least to regulate them.

Another problem which arose after the last war was that of the German merchant fleet. The Government, as your Lordships probably remember, took over these ships and sold them at high prices to British shipowners. Many of them were old and unsuitable for our trade, and they undoubtedly helped to increase the surplus of shipping and to depress shipping. I am told that Germany to-day is building numbers of ships of 5,000 tons and a certain number of 3,000 tons. No doubt Germany, like America, and unlike our own Government, is already make postwar plans. It reminds me of a picture which I saw in a paper the other day. One old gentleman, speaking to another, said: "I usually work privately at postwar problems for a couple of hours each day. I wake up considerably refreshed." I do suggest that this question of German merchant ships requires serious consideration. The Germans should not be allowed to own foreign-going ships for a considerable number of years after the war is over.

I think the problems which shipowners are facing to-day can be divided under four main heads: tonnage supply and demand; conditions of future world trading; replacement of ships having regard to the great increase in building costs and the obsolescence of a large percentage of the ships which still remain; and competition from air transport. Those are four of our main problems to-day. As regards tonnage supply and demand, the future, of course, is very uncertain; it is overshadowed by the surplus American tonnage and also by the great building capacity of America. At the end of this year, as one noble Lord has already told us, America will possess approximately two-thirds of all the tonnage of the world. During the war, this country has largely built combat ships. That was by arrangement. On the other hand, for the best prosecution of the war and in the common interest America has built a large number of merchant ships, and incidentally other Governments have also built merchant ships. I suggest that all Government wartime construction should be treated as one problem; but, if the Allies relieve America of some of her surplus tonnage, it will depress our shipyards and ruin the efficiency of our shipping, if we take too many of these uneconomic types of ship or hold them too long. If that happens, then shipping will once again be plunged into the depths of depression.

What is the solution? We shipowners have been giving a great deal of thought to the question of how to solve this very difficult question, and the plan which seems to us most likely to solve it is to use the surplus ships as stopgaps and then dispose of them by scrapping them or putting them to reserve. To suggest a policy of scrapping unsuitable ships may appear wasteful, but it will have been well worth while if by that means and by building the right types of ship we can secure an efficient merchant service and avoid the misery of unemployment and distress amongst our seamen.

As a Past President of the Chamber of Shipping of the United Kingdom and also of the General Council of Shipping of Great Britain, I have been asked briefly to give the policy of the shipping industry. I shall mention a few of the main points. The Governments concerned should recognize that war has upset the balance of shipping. It has created a surplus of some types and a shortage of others, and the surplus ships are not effective substitutes for the shortages. The replacement of all types lost has been largely uniform, by ships of 10,000 tons. It would be senseless to employ a ship of 10,000 tons in a trade calling for a ship of only one-third that size or in minor trades which require ships of specialized design. It is therefore suggested that the surplus should be divided into two classes, (a) the strategic or break-up reserve, and (b) the commercial reserve. The a reserve is to take off the market ships which are or become surplus, and the b reserve should be formed of those ships which from their quality and expectation of employment would be regarded as marginal tonnage. The b reserve should be offered on charter to shipowners pending replacement by new construction, after which they would be transferred to the a reserve. That is briefly the main outline. Unless we can arrive at a satisfactory solution for the disposal of surplus tonnage, it is indeed difficult to see a post-war future for British shipping or to propound a policy for its rebuilding or maintenance. Personally, I believe that the question of surplus tonnage is really more of a headache to America than it is to this country, because we can compete on lower costs while they have to subsidize. But one thing is certain: we cannot compete against foreign subsidies unaided.

After the problem of surplus tonnage has been solved, additional measures of reconstruction and reorganization will be required to secure an industry which can provide good and continuous employment for its personnel, and shipowners attach very great importance to this last point. Some of our aims can be achieved only by international co-operation; others are purely national in scope but will require the co-operation of His Majesty's Government. As regards those requiring international co-operation, it is proposed that after the cessation of hostilities with Germany we should call a meeting of the Internal anal Shipping Conference to discuss the future organization of shipping on the basis of private enterprise and free competition, subject to a reasonable agreement to keep freights on an economic level and to keep the supply of tonnage adjusted to the demand.

British shipping policy wishes to emphasize the fact that the primary condition for a strong British Mercantile Marine is the restoration and expansion of Dominion and international trade. On this depends the very existence of British shipping. It is no use having large numbers of ships if there is no trade for them to carry. After all, merchant ships only exist to carry trade. Shipping depends largely on our exports and imports. It seems to me, therefore, that our first step should be to get our trade and industry going. Shipping, employment, the standard of living, schemes for social security and in fact the prosperity of the whole nation all hang on this; but unless we make a start soon in this direction we shall be left at the post. America has already got away, and she is making every effort to capture the markets of the world.

I should like to say a few words about post-war planning. The American Government are making things easy for their manufacturers, whereas the British Government, until quite recently, have been impeding the post-war planning of British manufacturers, by refusing to facilitate the change-over from war production to peace-time needs, even where this could be done without prejudice to our war effort. I noticed yesterday that the Parliamentary Secretary to the Board of Trade stated that a few firms—I think he said about eighty—had been granted these facilities, but what is a few among so many? What is eighty among the thousands of firms in this country? It seems to me a very half-hearted way of playing with this question. Unless we do it on a much bigger scale than that we certainly shall not establish our exports.

Very few people realize that American exports have reached to-day astronomical heights. President Roosevelt's report to Congress on Lease-Lend the other day said that the United States' total exports in the first six months of 1944 were at the annual rate of £3,600,000,000 a year. The war has introduced American products to other countries in a volume and variety never approached before. After the war these countries will want to continue to get these products by buying them. Of course a proportion of these large exports is due to Lease-Lend, but they have served to introduce American goods all over the world, and this shows what we are up against. On the other hand, the British Government up till quite recently had tied and gagged British exports, I believe, under Lease-Lend arrangements. The result is that total British exports to-day are only one-third of the pre-war figure, and unless the Government can disentangle this knot which they have tied themselves, and give this country a chance to breathe the fresh air of industrial freedom and expansion, schemes such as that for social security will be still-born, because only by a great increase of exports can we maintain our pre-war standard of living, let alone finance new social schemes which are all in the air at present.

Replacement of ships has been mentioned already to-day, but it is one of the knotty points which confront shipowners. Many ships have been lost by enemy action in the service of this country, but of those left a large proportion are obsolescent, indeed the British Mercantile Marine is greatly depleted. We must replace war losses and obsolescent ships, and we must get our shipyards employed steadily over a long period; but for this we have as shipowners inadequate resources, owing to the pegging of war profits, taxation, which is the highest in the world, and a great increase in the cost of construction. Under Government requisition the Government have made no provision for replacement, although the present costs of building are about 100 per cent. over the pre-war figure. Rates of hire do not suffice, because the principle on which these were fixed was that they should cover expenses plus a normal allowance for depreciation and interest. They were designed expressly to exclude any provision towards the building up of funds for future replacements. Thus the shipowners are faced with the problem of how they are to replace old ships which survive. The position is really worse because the rates of hire do not cover some of the cargo line ships' expenses, which they were meant to do. As regards tramp cargo lines, the rates are inadequate. I am told that the companies were promised a rate which would give them 10 per cent. depreciation and interest on an average basis, and, in fact, they have only received about 7½ per cent. The noble Lord, Lord Leathers, is not responsible; it is the system which I am blaming, and this system was adopted before he took over the Ministry of War Transport. I have always thought a much fairer system would have been that which was enforced in the last war; that was a graded preferential rate for speed.

It is quite true that shipowners have acquired large sums as payment for lost ships under the war risks insurance scheme, but it must he remembered that these funds represent capital, and they are earmarked as far as they will go for replacing the ships that have been lost. The requisition scheme and taxation have prevented the accumulation of profits, but war risks insurance recoveries do not suffice to cover replacement of war losses, and of course they do not apply to obsolescent ships. Many companies' earnings to-day are considerably less than before the war. The proof of this is that very few companies, if any, will share in the Excess Profits Tax Fund, a fund which the Chancellor of the Exchequer himself explained was for the express purpose of "enabling industry to turn back to peace-time production and to face expenditure involved therein," and which he described as "an important contribution from national resources towards the problems of post-war reconstruction." I am afraid that shipping alone will be unable to share in the benefits of that fund. The anomalous position is that private property borrowed for the defence of the State has been restored only in part, imposing a heavy and serious financial burden on the shipping industry.

I should like to say a few words on shipbuilding. At the suggestion of the Ministry of War Transport the shipping and shipbuilding industries have prepared schemes for the orderly building of ships. It is believed that the scheme would, at least for some years help towards more stable employment in the shipyards and avoid the artificial rise in prices through unregulated shipping. But the best safeguard of all for the shipbuilding industry is to ensure that you have a strong and healthy shipping industry. When the shipping industry is flourishing shipbuilding is prosperous; when the shipping industry is depressed the shipbuilding industry lacks orders. The result is unemployment and distress. You cannot get away from the fact that shipbuilding depends first, last and always on the shipping industry.

The question of aviation is coming up very soon, but I must say one or two words about this in connexion with shipping. This was before the war, and still is, a subsidized industry. Shipowners who wished to start air services have failed to obtain a guarantee that they will be permitted to branch out in this way or, if they do so, that they will not have to compete against the B.O.A.C., a heavily subsidized State monopoly. Competition from air transport may seriously affect the whole outlook of liner trade, especially passenger liners, unless they are allowed to operate air services. Moreover, quite apart from their sea services, shipowners can offer their world-wide experience and organization in developing air transport for the benefit of the nation.

I would like to say a few words also on how shipping is placed under Government requisition. I wish to refer especially to the Government's preferential treatment during the war of Allied and neutral tonnage, as compared with British. The rates of hire which Allies and neutrals receive are very much higher than the British ships receive. Also the rates for victualling are higher in their case than in the case of British ships. Why this difference? I know the Government's argument is that the more favourable terms are conceded to the Allied Governments, not direct to Allied shipowners, but there is no check on the proportion of these payments which is handed an to the Allied shipowners either during or after the war. After all, why should shipping pay for the upkeep of Allied Governments? Then again, as regards the disposal scheme of Government-built ships, the Allies are given immediate delivery when they buy, and they get rates of hire. British shipowners do not get delivery until after the war, and I they get no rates of hire, only a small management fee. By this means the Government have, to some extent, weakened British shipping during the war, and it may well be that they are providing funds for the subsidizing of foreign shipping. They are giving foreign shipping a firm basis for successful competition with British shipping after the war.

Regarding release from requisition, owners expect ships to be released in accordance with the terms of Government charter—that is six months after cessation of hostilities with Japan. There are three points we consider essential. First, British shipping should be released not later than any class of shipping under any other flag. Secondly, it must suffer no disadvantages with foreign and allied shipping. Thirdly, shipping of all flags should bear a proportionate burden of the work of reconstruction. I welcome the Allied agreement which appeared in the newspapers the other day for continuance of control of the United Nations' shipping until the war in the Far East is won. It is a very big step in the right direction thought it does not quite meet these three points, as derequisition of British shipping does not take place until six months after hostilities cease whereas Allied shipping will be free immediately the war ends.

Finally, shipowners are quite unable to budget for the future without a declaration from the Government of constructive policy. I may say that we are still waiting for this. Perhaps the Minister will be able to give us one in the course of this debate. In fact, the only tangible thing we have to go on at present is the Government's White Paper of August, 1940. The shipping industry continues to rely on the assurance given in that White Paper. The Government then said that they will ask Parliament in due course to consider the necessary measures for the maintenance of the British Mercantile Marine in a state of adequate strength and full competitive efficiency. We ask the Government to implement that pledge. Shipowners are confident that, with Government support and backing, and if allowed to compete on fair competitive terms with foreign shipping, they can and will maintain the supremacy of Great Britain as the premier shipping nation of the world, providing good and continuous employment to the seafarers of this country.

3.45 p.m.

LORD HUTCHISON OF MONTROSE

My Lords, I am sure you would wish me to congratulate the noble Lord who has just spoken on his very admirable maiden speech. Many of us, including myself, have listened to him with great pleasure in another place, and I hope that, with his wide knowledge, he will often address this House to its great advantage. I should like to associate myself with those who have mentioned the great loss which this House has sustained in the death of at least five eminent men in the shipping world, including Lord Essendon and Lord Craigmyle. Lord Craigmyle was a great friend of mine and I can only say of him, as of the others, that we are the poorer for his departure.

I do not propose to address your Lordships for long. I speak not as a shipowner but as a ship user, and as one who is interested in some aspects of marine underwriting. There has been recently in the City in certain quarters a tendency to speculate on the balance sheets of some of the smaller shipping companies, and on their statements of available assets which have been accumulated through the payment by the Government of the basic rate in respect of lost ships, such assets being included in the general make-up and value of shares. Some of us feel that the various sums which have been paid by the Government at the basic rate for insurance, plus the kitty rate held in credit by the Government for future building over a period of seven years, ought to be looked upon as trust money for the replacement of ships. I am not one of those who believe that legislation could be used to insist on such a policy, but if a man like the Chancellor of the Exchequer could express his view, to put it no higher, that the Government considered that this money ought to be used properly for the replacement of ships, and not as assets to be distributed in the form of cash, it would go a long way to relieve certain anxieties which are felt by some people in the City.

THE MINISTER OF WAR TRANSPORT (LORD LEATHERS)

May I ask the noble Lord if he is referring to the kitty money as such?

LORD HUTCHISON OF MONTROSE

I am talking generally. There are certain people in the City who have been boosting shares and they have been taking into the balance sheet various assets they have accumulated in the form of cash payments for loss of ships. In the City it is felt that that money ought to be earmarked for the replacement of ships rather than as payments to shareholders who happen to hold the shares.

LORD LEATHERS

The kitty money has never been other than kitty money, to be used only for the purchase of new ships. No matter what sales may take place in regard to shares or any other disposal of ships, the kitty money remains kitty money, and is only released for the purchase of new ships.

LORD HUTCHISON OF MONTROSE

I am glad that that point has been brought out. It is one that may do good. The Government have been telling us, especially those who use ships for exports and imports, that we have got to increase our export trade and necessarily also our imports by 50 per cent. but they do not tell us whether it is an increase in value or volume. These are two entirely different things. If we are to increase our export trade the one thing we have got to do is to replace our special ships. There will be plenty of tramps about, but we want special ships, and it takes time to build them. I suggest to the Minister that yards ought to be set aside now, and the Admiralty ought to be able to give up these yards so that these ships can be put under construction. It is going to take time and cost a lot of money. In this way the ships will be available for export trade when a freer state of trade comes along. I should like to say that the type of shipowner who ought to be encouraged by the Government is the shipowner who not only carries goods in his ships, but also looks for commodities and markets abroad, who hunts for these things not only to supply his own ships but also for cargoes. I think that class of shipowner ought during the early years after the war to be specially helped and speeded along.

I have noticed that some of our Allies are already sending goods in ships to certain quarters while we ourselves are not able to do so. That is wrong; we ought to be put on an equality with our Allies in this matter. I am quite certain that the noble Lord, the Minister of Transport, knows all about it and is taking all the steps he can to put it right. What are we to do with the enormous mass of tonnage now in the hands of the Americans? I do not know and I do not pretend to offer any advice whatever. I have no doubt the Government will draw up their own schemes. It is a problem. Whether or not it can be solved I do not know. Probably the Americans will want to break up their shipping and dispose of some of it. At any rate it is a problem which will give us a headache for a long time to come.

There is one other point I should like to make and that is in reference to the price of coal. The noble Lord, the Minister of Transport, knows all about that too. In the north we are very concerned about the price of coal. It is going to affect everything in connexion with ship construction—machines, steer plates and everything. If we do not keep a close watch upon this matter coal will become such a price that we shall not be able after the war to build in competition with the rest of the world. What are we to do to get down the price of coal? I do not know; but something must be done. No one knows better than the noble Lord about the export of coal. In the north we feel that we want to get on with building some smaller ships. The big 10,000 tonners are not suitable for trade across the North Sea to Scandinavian, German and French ports. We want a smaller ship, one anything from 3,000 to 4,000 tons. That class of ship is very scarce now. Lord Rotherwick pointed out that the Germans are building that type of ship now, especially in the Swedish yards. I should like to know whether we cannot get on with the build- ing of small construction now and get it ready for the time when we shall have a market for our coal. We shall have a very large market for cur coal and shall be able to send abroad all the surplus we can spare.

I do not want to repeat what has been so well said by those who are experts in shipping, but there is a point that I would like to mention in regard to the work of the splendid men of the Merchant Marine. There is no doubt about it, they have done a most wonderful job. If it had not been for our merchant ships and merchant seamen we should have been forced to surrender. They have served this country splendidly. They have supplied our Armies abroad and done a very fine job of work in this war, as they have many times previously. They deserve the greatest attention and help from the Government. I wonder whether the conditions of their employment and their quarters are up to what they ought to be. I have heard many different reports of people who have sailed on the various seas as to the varying conditions of their life, and I think it would be as well if the noble Lord would set up a Committee, probably presided over by one of those splendid Admirals who have been doing convoy work and have been continually in touch with the Mercantile Marine and composed of representatives of the seamen from below decks and perhaps of an owner and a captain of one of the ships, to inquire into the conditions that have existed and see whether we cannot bring the conditions of service and of quarters up to the very highest standard. I am sure every good shipowner would desire that and would wish that we should give all our fine seamen the best that can be given in the shipping world.

The last thing I would like to say is this. We live on the salt water and unless we recover our shipping trade, which means our export and import of goods, this country cannot live. With 47,000,000 of people in this country we depend to a great extent on the salt water and therefore it is of the first importance that the Government should give the very closest attention to this matter. I hope the noble Lord, the Minister of Transport, will get his way with the Cabinet because I know there is no one more sympathetic to, or more understanding of, the needs of the Mercantile Marine than the noble Lord.

3.56 p.m.

LORD WESTWOOD

My Lords, I desire to associate my noble friends on this side of the House with the sincere congratulations on his maiden speech tendered to Lord Rotherwick by Lord Hutchison. I should also like to say that I am an enthusiastic supporter of all that my noble friend Lord Winster has said in moving this Motion. This question of shipping and shipbuilding is one of vital interest to this country. In my opinion it is one of the two major industries of this country, of which agriculture is the other, and I think it ought to be looked after. I hope that our pre-war follies over our shipping and shipbuilding industries may not recur to our national jeopardy after peace is achieved, as both these industries are our very life blood in peace as well as in war. But unless we press to know what is going to be done little or nothing may be done. What future, if any, are we planning for our shipping and shipbuilding? Like my noble friend Lord Winster, I do not want to criticize unduly the grand work that has been accomplished, is being accomplished, and I hope will still be accomplished by my noble friend Lord Leathers. We know the good work that his Department have been doing, but we feel that the time has now arrived when we ought to know what is to be the future of shipping and shipbuilding.

Without a sufficient and efficient Merchant Navy to carry our exports and imports our plans for improving the lot of our people in peace and our better national security in times of trouble will be wholly impracticable. The Government must give greater foresight to the basic causes of danger to our merchant shipping than they did after the last world war. The phenomenal increase in the output of merchant shipping in the United States looks like creating a situation with which we as a maritime nation will find it difficult to deal at the end of the war. We shall be in rivalry one with another but I am confident that it will be a friendly rivalry. It has been stated that America has more than 30,000,000 dead weight tons of shipping, the greatest merchant tonnage in the world. Shipbuilding in the United States, as we all know, has been accelerated to an amazing extent. Can we be told how Britain and the United States, the two greatest maritime Powers in production, with their control over millions of tons of shipping, will stand in relation to each other when the war is over? The British Mercantile Marine, owing to the tonnage lost, will, when the war ends, probably be half the size it was in 1939, whereas the United States merchant fleet will be at least four times its pre-war size. According to today's paper I see that it will be something like 50,000,000 tons.

One thing is clear from this. The people of Britain depend for their wellbeing on the possession of an adequate merchant navy. This must be brought up to pre-war strength with the least possible delay. The end of the war will bring its difficulties but it will also bring its opportunities. We can fairly claim the right to serve the world in the future as far as shipping and shipbuilding are concerned. We can do this more economically than any other nation. Day by day since hostilities opened the peoples of the world have had dinned into their ears the triumphs by land and in the air especially of our Russian and American Allies. I do not want to belittle in any way what these great Allies have done, but in fact if we had lost the battle of the seas the war would have been over. The enemy would have been victorious in Africa, seizing control of the Suez Canal. No expeditionary force could have been dispatched to Europe and we could not have gained the command of the air, for there could not be air command without sea command.

The first line of defence and offence of the United Nations has been the sea. If the command of that had been lost the Axis could not have been broken, and Germany, Italy and Japan would to-day have achieved their immediate ends without any fear that they would be dethroned. The foundations of victory were laid in the shipyards and shipping offices of this country long before there was any thought of a second world war. Everything depended on the ships which were afloat under the Red Ensign and of our capacity to build more ships. The Government cannot be allowed to remain blind to the debt which is due to those who provided the first line of war supply at great financial risk in the dark days of the longest depression which the maritime industries have ever experienced. I think we are due in some way to pay our respect and our debt to the Merchant Navy. In considering the future of British shipping we must not be unmindful of the debt we owe to our seamen. That is a debt I am convinced that the people of this country will wish faithfully to discharge and we can discharge it by doing everything possible to raise the standard of their lives and the safety of their ships. Let us support them in their demand for better conditions of service, for a higher standard of accommodation on board ship, for continuity of employment, better wages, more welfare facilities, rehabilitation centres and convalescent homes, and generous compensation scales and pensions during their old age. Let us discharge this debt of honour with credit to ourselves and in the best interests of the men who sail under the Red Ensign.

I now turn to the question of shipbuilding. We must recognize that without ships there would be no Merchant Navy. We cannot readily divorce the one from the other. The shipbuilding industry in this country has done great work during the war for which in the absence of output figures it has not always received the acknowledgment due to its efforts in circumstances of great difficulty. But its pre-war position had become precarious. Between 1927 and 1937 the percentage of world marine tonnage building in Great Britain fell from 50.6 per cent. to 37.6 per cent. At the close of 1938 the value of tonnage under construction in British yards for foreign owners was £3,500,000 only, while at the same date the value of tonnage under construction in foreign yards for British owners was £6,500,000. I leave your Lordships to judge where the patriotism really is in those figures. The recurrence of so dangerous a position must be avoided at all costs if we are to avoid further the pruning knife of national shipbuilders' security.

When the present war began in 1939 there were no more than sixty shipbuilding yards in Great Britain and Northern Ireland with a productive capacity of about two million tons of merchant ships which was far from being employed. On the contrary, the indications in 1939 were that three-fourths of that capacity would be unemployed. Britain, it was evident, was losing its foremost place as the builder of merchant shipping and as the carrier of international trade. There was a time within living memory when eight out of ten ships under all flags were of British construction. Even a large proportion of the foreign Navies, every type of war vessel, was produced in British shipyards. Up to the date of the last war in 1914–18 more than 6o per cent. of the world's shipping was built in this country. Many factors operated in bringing about the position of 1939, including the development of foreign shipbuilding establishments in Continental Europe and the adoption by them of ship construction techniques, marine engineering and ship architecture which had been diffused from their centre in Britain throughout the world; also the effects of depreciated currencies, the liquidation of German foreign credits in shipbuilding and the practice which became the rule in France, the United States and other countries of penalizing the shipowners for building and repairing outside their own country.

The result of the operation of these causes was a marked and progressive decline in the maritime strength and importance of Great Britain. Countries which before the war could not be regarded as shipbuilders have as a result of stern necessity extended their shipbuilding facilities to a considerable degree and they are not willing to scrap them after their war-time purpose has been fulfilled. It is perhaps only natural that they should be making plans to maintain such facilities with a view to continuing their shipbuilding activities. There will therefore be a certain amount of competition between the shipbuilders of the world for the construction of tonnage for such maritime nations as are unable to produce within their own borders the ships needed to rehabilitate their own merchant fleets. At the present moment many orders are to be placed and I should like to mention a few. Sweden, we are told, is at the present moment building eleven ships for German shipowners. I am rather afraid we shall require to have some definition of the word "neutral" when we find this going on at the present time. The Companhia Nacional de Navigacao of Lisbon have already placed orders in British shipyards for three passenger and cargo steamers of 10,000 tons each. Work on these ships will not, I understand, be started until after the end of the war. Still to be placed is a contract for thirty cargo vessels for the Netherlands Government. Negotiations in the United States were broken off but have been proceeding with Canadian yards for some time. It is more than likely that in the end yards in this country will be asked to open negotiations.

I understand that negotiations have also been proceeding for some weeks between representatives of French, Portuguese, Swedish, Dutch and Greek shipowners and the chief of our shipbuilding firms for the supply of cargo and passenger ships immediately after the war. It is also estimated that the shipping needs of France, Belgium and Luxemburg, in the first six months after the liberation of Europe, will be something in the region of 7,000,000 or 8,000,000 tons dead weight. The shortage of passenger liners has already been referred to by several noble Lords in to-day's debate. It will become apparent as soon as hostilities cease. Some British liners were lost during the first phase of the war, and no replacements have been made for five years. The liners in service are getting old and will have to be replaced. Others are suffering from the strain of war service, and will require extensive and costly overhauls. Orders for these, I believe, are ready to be placed with the principal shipyards of this country which specialize in this class of work. Even if construction is commenced immediately hostilities end, there will be a shortage for many months, as ocean-going passenger liners take a long time to build. Even overhauls and docking periods take several months. However, owing to war-time restrictions and post-war uncertainty, contracts can only be noted, but the fact that representatives of shipping companies are anxious to start negotiations is regarded as an encouraging omen in the British shipyards.

I have mentioned these particular orders and the likely future of the industry in order to reassure both sides of the industry who, as I think my noble friend Lord Leathers will agree, are getting restive with regard to what is going to happen in the industry. When one can give the workers some idea that they are not likely to become immediately unemployed but are to have a run of work for a period of years, I feel confident that they will be a little uplifted in view of the times through which they have passed before and, possibly, are expecting again. Whatever policy is adopted to the American wartime-built standard tonnage, there will, undoubtedly, be considerable demand by British owners for specialized tonnage, such as tankers, cargo and passenger ships for specific trades, fruit carriers, refrigerated meat carriers, colliers and coasters. The existing shipyards could readily and expeditiously handle such a replacement programme.

One sometimes hears about the competition that may possibly have to be faced from shipbuilders in the United States after the war. Well, I do not fear that competition at all. Take just one consideration—the cost of shipbuilding in the United States. Quite recently a tribute was paid to the British workers by the United States Government. In this it was stated that British shipyard workers' output is 25 per cent. higher than in America, according to a U.S. Department of Labour survey. Vessels of the Liberty type totalling 272 were delivered at an average of 437,000 man-hours per vessel. The equivalent figure in a British shipyard would be 340,000 man-hours, and this figure would include certain work which often in the U.S.A. is let out to sub-contractors. The average cost of the Liberty ships works out at £39 a ton dead weight—80 per cent. higher than the cost of equivalent British vessels. Having said that, I think it is clear that we do not need to worry over, and to fear, American competition in the building of new ships. I feel that what we want in order to bring about a longterm period of employment is regularity of orders. There can be no doubt that one of the surest methods of keeping down building costs is so to arrange matters that orders for new tonnage and for repair work will flow regularly rather than in alternations of spate and trickle.

I am glad to learn that the General Council of the Chamber of Shipping, as the noble Lord, Lord Rotherwick, pointed out in his speech, has been in negotiation with the shipbuilding industry in this country with a view to arriving at a future policy for both industries which will ensure building at an economic rate, and keep the flow of orders to the yards regular, instead of having bursts or booms of employment and then periods of severe depression. I feel that the co-operation of both these sides should be developed. This must surely result in greater employment. We have also another council or organization which is likely to play a very important part in the future of British shipbuilding. I refer to the new British Shipbuilding Research Association. The formation of this organization, in my opinion—and I think Lord Leathers will agree—is a step in the right direction and will spell success for the future of the industry. Co-operation between all parties is essential. Shipowners, shipbuilders, scientists, employers and employees—none of them must be left out, none must be allowed to be sleeping partners.

I feel that some pronouncement, or announcement, of the Government's policy for post-war shipping and shipbuilding is long overdue. My noble friend Lord Winster, in the course of his opening remarks, said that his Motion had been down for discussion for something like twelve months. I do not know if we are going to get from the noble Lord, Lord Leathers, any definite information to-day about the Government's intentions. We have been pretty patient hitherto, and we do not mind being patient still, if, when a programme is produced, it will be for the good of both the shipping and shipbuilding industries and the people following those industries. Anxiety as to the future of these industries has been growing as the end of the war in Europe appears nearer. Because of the forward state of the country's shipbuilding programme generally, pressure on the yards has not been as great recently and overtime has been reduced. In some cases workers have been laid off and, naturally, at the first signs of idleness in the yards, men's minds have reverted back to the days between the two wars when whole communities were plunged into unemployment because shipyards were closed down. Workers who have enjoyed continuous employment and no mean wages during the war, are anxious to have some indication of what is going to happen to them as workless days and "dole" queues rise before their minds like two great black shadows.

Not only the workers, but managements, too, are turning their thoughts more and more to the possible post-war shipbuilding situation in this country. The good news from the battle fronts naturally tends to increase this process. While the yards have been occupied up to the limit during the conflict, will their capacity be far greater than the post-war demand for new tonnage. The feeling among both workers, and managements at the moment is that we shall be caught as unprepared for peace as we were for war. That must be avoided. I wonder whether the noble Lord, Lord Leathers, can let us have an answer to a few questions which I wish to put. The first is this: What is to happen to Axis shipping? Will it be handed over, and, if so, will it be used on the trade routes by its new owners or will it be scrapped? Secondly, what is to happen to the great number of American-built, mass-produced ships when the war ends? Thirdly, what effect will air transport developments have upon shipping, and consequently upon shipbuilding? Fourthly, what about postwar trade and freight rates, which of course will react favourably or unfavourably on the shipbuilding industry? Fifthly and lastly, what about a revision of the tonnage laws? All these questions provide the industry with more than enough food for thought. The answers to most of them depend, of course, on the Government, and the shipbuilding industry cannot get down to brass tacks until the answers to them are provided. Surely the time has arrived when the Government can give some indication of their post-war policy for both shipping and shipbuilding?

4.21 p.m.

LORD SALTOUN

My Lords, there is one phrase which fell from the noble Lord, Lord Winster, which perhaps I misunderstood, and which therefore I should like to put to him. He referred to the greater plethora of "comforts" at the disposal of the Mercantile Marine, and went on to say that the merchant seaman was an independent person—with which I entirely agree—and no proper object for charity. The noble Lord will realize that the only possible means open to a member of the general public to show the deep gratitude which he feels to the members of a service which has toiled unceasingly on his behalf is by subscribing to their comforts and to the various funds which help them in one way or another. It would be, I think, highly unfortunate if people were to think that in embarrassment caused solely by the excess of their deep gratitude should be regarded in so dubious a light.

4.22 p.m.

LORD LEATHERS

My Lords, the Motion which my noble friend Lord Winster has brought before us to-day is, I think, most opportune. I know that he takes the view that this Motion should have been put down sooner, but he has been good enough to postpone it, and I regard it as most opportune to-day. I should wish first of all to associate myself with those words of appreciation which have come from a number of noble Lords with regard to the services rendered here by my old friend Lord Essendon and by the noble Lord, Lord Craigmyle. I should also like to join in the congratulations to my noble friend Lord Rotherwick, who in his maiden speech has had the opportunity of a lifetime; I feel that this was just his day

This debate has ranged over a wide field. The subjects on which it has touched do, I know, relate to the subject-matter of the Motion, but there have been questions, such as that of air transport, which are rather outside my jurisdiction and I shall leave some of them aside. I shall, however, do my best in the statement which I now propose to make to cover most of the subjects raised. If I fail to do so I shall be very ready to be prompted. Hitherto the main shipping problems which have confronted me as the Minister of War Transport are those of finding sufficient shipping for the effective prosecution of the war. I am happy to say that the emphasis is now changing, except in relation to the passenger carriers, of which we still have too small a number. The execution of the military plans will still make a very heavy drain on our shipping resources after the defeat of Germany. We must remember that the war in the Far East will be fought out in areas at great distances from the bases at which military operations can be mounted. At the same time we shall be incurring heavy commitments for the relief and the rehabilitation of the liberated areas. Nevertheless the cargo shipping now in hand and in sight should be sufficient for all these purposes, so far as it is humanly possible to foresee.

Shortages of types, including passenger carriers and specialized ships generally, will persist, but the building programme for the large bulk carrier of standardized design can soon be shortened up. The very success in providing the standardized ships needed for the operations and for the maintenance of war requirements has necessarily created the problem of a post-war surplus in these types of ship. The remarkable achievements of American yards, together with the great shipbuilding programmes in this country and in Canada, have played an absolutely indispensable part towards victory, but it is inevitable that these war-time ships will leave the world's Mercantile Marine after the war in a very unbalanced state. The two things were inseparable; if we were going to do the war job well we were bound to be faced with this after-war problem, and we must not shirk it. The return to normal peaceful commercial conditions will be difficult. In fairness to all maritime nations, we have to see that no one is put in a better position than the others to return to commercial trading. No one must have a flying start. At the same time, each of the United Nations rightly wishes to bear its due share of the common tasks arising out of the completion of the war.

It was with these considerations in mind that the Government entered into the "agreement on principles" as to the continuance of co-ordinated control of shipping which was published last week as a White Paper. It has for long been clear that Government control over shipping would continue to be necessary for the prosecution of the war in the Far East, for the maintenance of Armies of Occupation in Germany, for the movement of troops and for their repatriation, for relief and rehabilitation and for the supply of all the United Nations. It was clear too that the continued co-operation of the maritime Allies would be needed after the expiry of the agreements under which their ships are at present used in the common war effort. I felt that the European Governments, even though they are not all so deeply involved in the Far Eastern war as the British Commonwealth and the United States, would be ready and indeed anxious to continue to provide their share of the shipping needed. It was with this conviction that, in collaboration with the United States Government, we set before them the proposals which led up to the present agreement. Our proposals were accepted by the other Governments concerned in the spirit of co-operation which we have learnt to expect from them throughout the four-and-a-half years during which we have worked together.

All the Governments that signed the agreement have accepted as a common responsibility the provision of shipping for all military and other tasks necessary for, and arising out of, the completion of the war in Europe and the Far East and for the supplying of all liberated areas as well as all the United Nations generally and territories under their authority. An organization is already at work elaborating in greater detail the means by which the participant Governments will collaborate in the day-to-day measures necessary for the completion of their common tasks. We regard this agreement as an important measure towards that international collaboration which we hope to see as widely extended in the post-war period as it has been while the Governments of the United Nations have been striving together for victory.

The agreement covers only the transitional period of the war with Japan and its immediate aftermath. It is not directly concerned with post-war shipping questions as such, but it had a direct bearing on these problems. On these we shall be able to see our way more clearly as the transitional period progresses. Moreover, throughout this period, when all our ships are still necessarily engaged in the tasks of war, we shall be free from the fear that other countries may have the opportunity to secure an unfair advantage in post-war trade by earlier release of their vessels for commercial purposes. The agreement secures in effect that all shipping, whether or not under the flag of one of the contracting Governments, will be operated in conformity with the purposes of the United Nations. If, as is possible, it should prove at a later stage that there are more than enough ships to meet immediate and essential purposes, there is a provision in the agreement for release of shipping for commercial trading by common agreement between the Governments in accordance with a mutually acceptable formula which shall not discriminate against the commercial shipping interests of any nation, and shall extend to all contracting Governments an equitable opportunity for their respective tonnages to engage in commercial trades. We—that is the United Nations—have been obliged during the war to build a high proportion of bulk-carrying vessels of standard design because in this way we obtained the maximum output of cargo-carrying capacity. These ships include certain features necessary for war pur- poses due to the need for carrying aircraft, tanks, trucks, locomotives, landing craft, and so forth. The consequence is that heavy derricks, high 'tween decks, clear holds, large hatches, and so on, are outstanding features, and the vessels have to be a substantial size—namely, about 10,000 tons dead-weight. These features will limit the usefulness of the vessels in many peace-time trades. I have, however, had under constant watch the appropriate time at which we could alter the balance of our building programme. It is now clear that tramp tonnage of this type need no longer be produced as soon as the vessels now ordered on Government account are off the stocks. In addition, our standard cargo liners and our standard tankers will soon be sufficient to meet all the needs that we can foresee for the war against Japan.

With the full support of my right honourable friend, the First Lord of the Admiralty, I have been in touch with the shipping industry, as he has been in touch with the shipbuilding industry, with a view to relaxing where we can the severe war-time restrictions on the types of vessels our yards have been allowed to build. This relaxation will allow the construction of types of vessels suitable for peace-time needs. In particular, smaller sized ocean tramps and intermediate types of cargo liner are likely to be built in growing numbers, while I hope that we can soon resume the construction of passenger liners, a type of ship that will be very urgently needed for the movement of our forces and their eventual repatriation and other essential movements of displaced populations, returning administrative staff and so forth. Such a change-over can only be gradual, but it should be progressive and, as soon as more can properly be done, we shall not delay in permitting it.

I should perhaps make it quite clear that control of shipbuilding will have to remain at least until the end of all hostilities and that construction on private account will still have to be controlled by licences. Furthermore, there are still shortages of raw materials and finished products, and to this extent vessels must still be built with a certain amount of austerity in their equipment and fittings. In general, while we must still give priority to immediate war needs, I can assure your Lordships that we are also giving most careful consideration to post- war questions, even though, with so many factors as yet obscure, we can only formulate our ideas in the most tentative way. I am, of course, in close consultation with the General Council of British Shipping from time to time.

There are certain principles which can already be laid down. First of all "this country must continue to serve the world with a large and efficient Merchant Marine." It is difficult to be more precise at this stage but I would say that our Merchant Navy must be at least as large as before the war and so much larger as British enterprise and efficiency can make it in a world from which we hope artificial obstacles to trade will have been removed. A Merchant Navy is, of course, essential to this country for two major reasons. In the first place shipping services provide a large part of the foreign exchange resources with which this country must balance her payments. The very serious overseas disinvestment to which we have had to resort during the war makes it vital to our standard of living and to all our post-war social plans that our earnings on foreign exchange should be immensely increased. In this shipping services have an important part to play. In the second place, the war has shown once again how essential to the very existence of our country is a merchant fleet to bring in the food and munitions that we need. Our own tonnage, severely depleted by war losses, would have been inadequate to meet those needs but for the valuable assistance we have received from our shipping Allies and ultimately from the huge shipping programme of the United States.

The prosperity of our shipping and that of the other maritime nations will depend mainly upon the success of the plans being made for the extension of world trade in general. Indeed, until these plans are further advanced it is too early to determine in detail what will be necessary to secure the welfare of the shipping industry or the shipbuilding industry, which closely depends upon it. The industry has always stressed that the welfare of British shipping depends on a greater freedom of trade between nations. A world governed by the economic doctrines of Dr. Schacht would not give our shipping or our shipbuilding the opportunities of prosperity we wish to see. We are ready to collaborate with other like-minded Governments in establishing con- ditions under which the shipping of the world can be efficiently and economically carried on. We shall therefore seek to secure, in collaboration with other countries, the establishment of conditions of fair competition so that the trade of the world will be carried by the ships of those countries who are able to do so to the best advantage of producers and consumers alike in all countries.

Before the war our chief enemies all subsidized their ships, and gave them all kinds of indirect assistance, so that enemy owners were often able to compete against ourselves with faster and more modern ships, built with State aid and with a view to war-time employment. We can look forward at least to the elimination of these unfair and destructive practices. I may perhaps add in parenthesis here that the Chancellor of the Exchequer has already stressed the importance of providing adequate wear and tear allowances on ships. He has recently intimated that in the legislation which he will in due course submit to Parliament he intends to propose that the 20 per cent. initial allowance shall apply to ships ordered now and to ships at present on offer by my Department for post-war delivery.

I think I might say a word about the the very difficult question of surplus ships. It is indeed an enormous problem. I could almost frighten your Lordships with the number of ships that are involved as surplus, as we now assess it, at a period of two or three years after the war. During that immediate period a great many of these ships will be able to find employment, but the demand is bound to taper off and leave the world with a prodigious surplus. I cannot do more to-day than say that I am indeed most mindful of it. I think it is probably one of the biggest individual problems that have to be dealt with. I am dealing with it, but I am dealing with it in such a way that I cannot make any report at this stage. I just wanted, however, to make your Lordships feel that I am moving and will continue to move until we get a satisfactory settlement of this very serious and difficult problem.

On the question of the air, to which I had not intended to refer, my own view is that the development of civil aviation will go a long way to create a new kind of trade of its own and that there will still be left a very large volume of passenger traffic for the ships to continue with. While some of that special traffic—for example big business people making their journeys in very quick time, almost regardless of what they have to pay—will go by air, I feel that a great number, probably more than we have ever seen before, will seek to travel by ship. I think the day is a long way off when we shall see any big inroad into the cargo-carrying of our shipping by the intrusion of the air.

Another point, with which I was not originally proposing to deal, has been mentioned by several noble Lords, and I Should be wrong in not making some reference to it. That is the very difficult problem of replacement and the disparity between war risks insurance recoveries and the cost of new building. This disparity has widened as time has gone on. At one period it was not so wide, and it is not seriously wide in all cases to-day, but in a large number of cases I must confess there is a gap which must have consideration. The White Paper of 1940 which announced the rates of hire to be given to shipping also made a reference to this very point. There was, perhaps a little vaguely in terms, a promise that this matter would have consideration at a later time. Now that we are reaching the point when new ships are likely to have a chance of being put down on a peace-time basis, and we are getting nearer to the time when we shall be face to face with this replacement problem, this matter will have consideration. That is being dealt with now, and the Chamber of Shipping and the Liverpool Shipowners' Association have been in touch with me about it.

In the conditions which we hope to establish the factor determining whether British shipping will regain its former place in world trade will be the enterprise of British shipowners. We cannot ignore them on the one side and expect them to deliver the goods on the other. They must not seek merely to resume the services that they carried on before the war, but we hope that they will seize new opportunities, such, for example, as that of carrying trade formerly carried in enemy ships. We shall welcome every sign that the shipowners are seeking new and more efficient methods both of constructing and running their ships. For this reason we particularly welcome the recent establishment of the British Shipbuilding and Research Association whose general object is to promote research in shipbuilding and allied trades. I give that a hearty welcome.

A reference was made by my noble friend Lord Westwood to the conditions on board ship. I take the view that we have moved forward in recent years—I mean before the war—towards much improved accommodation for the crews on board ship. One only sees the advantages in the new ships which have been built during that time. You always have, for quite a long time, a lag in the case of older ships which cannot really be altered in many cases. These advances come through structural alterations, and many of the older ships could not endure that type of alteration, so you do not get all at once the improvements which have been developed. Even although we feel that a big advance has been made in recent years, the matter is now having renewed consideration and, with so many new ships to be built, we must see to it more than ever that this accommodation is completely satisfactory.

Now for a few moments I with to speak of the post-war position of the officers and men of the Merchant Navy, who have throughout rendered such splendid service. We owe a tremendous debt to those who manned our ships in the very dark days that now lie behind us and who have done so much to make possible the great victories our fighting men have secured. It is a remarkable fact that, notwithstanding all that our seamen have borne, we no sooner called for volunteers for the Second Front operation, with all its unknown dangers, than they rolled up to volunteer for the work of putting our men and equipment on the other side. Out of the officers and men in the coasting trade and those from overseas ships who had the opportunity to volunteer in the few months preceding D-Day, over 70,00o volunteered to play their part in these operations. We must see that the future of these men is safeguarded, and this is another reason why we must maintain a large and efficient Merchart Navy.

As noble Lords are already aware, I received from the industry some time ago, their first outline plan for a scheme of continuity of employment for our seamen after the war. There have been a number of unofficial talks with representatives of the industry on this plan, but consideration could not be pressed forward until the Government reached conclusions on the principles of the Social Security plan. Now that these have been published, the project is being re-examined in the light of the Social Security proposals. It was necessary to await these before we could proceed further. I have also received from the Merchant Navy Training Board, which includes representatives of all sides of the industry as well as of my Department and the Ministry of Education, proposals for the future training of those who wish to enter the deck department either as officers or ratings. These proposals represent a very considerable advance on anything that has hitherto been attempted in training and selection for the Merchant Navy. The Training Board is now considering what similar arrangements should be made for the engineroom and catering departments, and I have no doubt that their proposals will similarly represent a very real improvement on what has been done in the past.

Turning to shipbuilding, the welfare of that industry will depend largely upon the prosperity of the British shipping industry, which in turn will depend mainly upon the volume of seaborne trade. The future of our shipyards will also depend on the readiness of the shipbuilding firms to go out and seek orders at competitive prices for the building of ships for foreign owners—once a very important item in our export trade. We are very much alive to the national importance of this industry, which employed nearly 90,000 workers before the war and employs considerably more now. Its importance is due to two major factors parallel to the two factors I have mentioned in relation to shipping. First, we must have a large shipbuilding industry as a means of national security and, secondly, the building of ships for overseas owners can make a very valuable contribution to our export trade. These two factors are very closely connected. We cannot maintain a shipbuilding industry large enough for our defence needs solely on orders from British owners. We must have a very considerable and steady flow of foreign orders. This means, of course, that the equipment and layout of our yards must be the best possible—and must be kept constantly abreast of every development. There will be no room for backward or restrictive practices on the part of management or labour.

During the first four or five years after the end of the German war there will be a large flow of shipbuilding orders, due to the desire of British and Allied owners to replace both their war losses and their obsolescent tonnage, particularly in the specialized types. Once this has been done a great slackening off is inevitable. My right honourable friend the First Lord of the Admiralty is fully alive to the desirability of evening out, as far as possible, the total load on our shipyards by adjusting the naval building programme to the variations in merchant demands. It cannot be expected that the increased war-time capacity can be kept busy by regular peace-time demands. The amount of shipping that the world's trade requires is unlikely to expand indefinitely, and must impose a limit upon the number of orders for new ships. The whole question of the prospects of the shipbuilding industry is now under close review and in due course the Government will make a further statement. In conclusion I can assure your Lordships that the Government are determined that the British Merchant Navy, ships, officers and men, shall be reconstituted as a large and efficient fleet. We shall see that the industry and those who work in it have fair play.

4.51 p.m.

LORD WINSTER

My Lords, perhaps I may be allowed to reply briefly to the question put to me concerning the welfare of merchant seamen. What I said in my speech was that a Committee under Mr. Graham White is preparing its Report on the subject of seamen's welfare and I said I thought members of the public would be well advised to restrain their generosity and gratitude until that Committee has reported, when they will then know how to apply their generosity in the most effective manner. I would like to be allowed to thank the noble Lord, Lord Leathers, for his very full and careful reply to my Motion. He has repeated the Government's undertaking, given before, that this country must continue to serve the world with a large and efficient Mercantile Marine and has added that in his opinion that Mercantile Marine must at least be as large as pre-war.

Then the noble Lord said that the size of the Mercantile Marine must, however, depend upon world trade. I entirely agree. I ventured to say in my speech that I thought it was very necessary that some authority should form and give us an estimate of the post-war export target figure at which we should aim because that must inevitably determine the size of the future Mercantile Marine. As regards how we are to achieve this large and efficient Mercantile Marine the noble Lord is hopeful that the present measures for control of shipping during the Far Eastern war may be extended into the post-war period and lead to further co-operation then. He has told us that the Admiralty will to a certain extent relax regarding the types of ship now being built in our shipyards but that control of shipbuilding must remain until all hostilities are over and that shipbuilding must still be under licence and there must still be considerable austerity restrictions in the specifications.

The noble Lord also told us that he has given careful consideration to post-war policy and that this country is ready to consider with other countries a charter of fair competition in the post-war period. That of course would have to apply to wages and this will be a subject for debate after the international conference on shipping, to which apparently many American shipowners attach very great importance, comes to fruition between now and the end of the war or immediately after the end of the war. I think myself there will have to be a large measure of preliminary agreement reached regarding wages and fair conditions before it would be worth while summoning a conference of that sort. I think an important point in the reply was what the noble Lord told us in regard to wear and tear. I understand what was said about continuity of employment but there can be no continuity of employment except for a small and limited number of officers and men unless we get the export trade that we must aim at. It all depends on that.

As regards shipbuilding the noble Lord told us we must go out for foreign orders. How warmly I agree with that. My noble friend Lord Westwood told us of a prewar period when there were £6,000,000 worth of orders building abroad for British owners. We have got to reverse that position if we are to have any success in going out for those foreign orders. I was interested to notice remarks made the other day showing how alive the noble Lord is to technical research and special training and education for the shipbuilding industry, because it is in those ways that we shall arrive at the increased efficiency which will enable us to get orders from abroad instead of having to rely solely on our own orders.

I feel that the debate has served a useful purpose and cleared up a good many points. We shall arrive at the end of the war with a great many ships short and with others seriously worn out, and with insufficient money to repair the damage that has been done. The question of replacement is to my mind a wholly important question and the noble Lord has told us that it is at the present moment under discussion. As I said in my speech, I feel that the gap has got to be made good; otherwise a serious injustice will be done. I entirely agree that there must be convincing evidence of an intention to build and to replace before anything can be done to make good that gap. I beg to thank the noble Lord for his most courteous reply and to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.