Lords Sitting of 3 November 1949

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers
The Lord Ormonde (Marquess of Ormonde)—Sat first in Parliament after the death of his kinsman.

AGRICULTURAL HOLDINGS (SCOTLAND) BILL [H.L.]
2.35 p.m.
Order of the Day for the Third Reading read.
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, this is another consolidation measure. Your Lordships will see from the frequency with which these Bills are being brought forward that we are really getting on with consolidation and we owe a great debt to our Joint Committee who are working on these measures. I beg to move that the Bill be now read a third time.
Moved, That the Bill be now read3ª,.—(The Lord Chancellor.)
On Question, Bill read 3a, and passed, and sent to the Commons.

MARRIAGE BILL [H.L.]
Read 3a (according to Order), and passed, and sent to the Commons.

ECONOMIC POLICY
2.37 p.m.
Debate resumed (according to Order) on the Resolution moved yesterday by Viscount Addison: That this House approves the lines of action to deal with the present economic difficulties as outlined in the Prime Minister's statement made on, 24th October, to which an Amendment had been moved by Viscount Swinton—namely, to leave out all the words after "That" and to insert "in view of the gravity of the present crisis, this House cannot regard the Prime Minister's Statement as adequate to restore and maintain confidence in
128
sterling, failing as it does to provide constructive measures to stimulate initiative and enterprise, and to evoke that united national effort to grow more, produce more and export more, which is essential to our recovery and prosperity."
LORD LUCAS OF CHILWORTH: My Lords, in resuming the debate upon the Motion moved by my noble friend the Leader of the House, and the Amendment moved by the noble Viscount, Lord Swinton, I propose to deal with the industrial and commercial aspects of the subject and leave to my noble friend Lord Pakenham those points which properly fall in the wide scope of fiscal policy and all those awkward questions which he has so gallantly undertaken to answer. Amongst the latter is the statistical question which has been raised by the noble Viscount, Lord Swinton.
First of all, I think it would be advisable if we were to ask ourselves what is the essential purpose of the cuts in Government expenditure which the Prime Minister has announced. It is surely to direct and concentrate all our resources on a keener and more intensive export drive to make the right kind of goods, and to get higher output of those goods at lower prices. Those goods must be goods which will find the readiest market in the dollar countries. But perhaps I might be allowed to pause here to answer one question which the noble Viscount, Lord Swinton, addressed to me and which it is perhaps proper that I should answer as it falls within the scope of the subject with which I am about to deal. It is with regard to the investment policy for oil refineries. So far as the United Kingdom investment projects are concerned, they are already under way and there will be no cut.
May I now pass to the subject to which I have addressed myself? In doing so, I do not intend to deliver to industry a high-pressure sales "pep" talk—the industrial equivalent for exhortation. I am too well aware of all the difficulties, and industry is too well aware of the size and the nature of the task which lays before it. Neither do I intend to deliver to your Lordships an elementary treatise upon the question of our balance of payments. That is a problem which has been with us since the 1914–18 war, and has

129
been apparent to all except the wilfully blind. May I just restate what our target is? For our exports to the United States of America, and Canada for 1950, it is 720,000,000 dollars, or £250,000,000 at he new exchange rate. The size of the task can be measured by the fact that, in 1948, our exports to North America were £140,000,000 at the old rate of exchange, but we may get some sense of proportion and balance if I mention that our 1950 target represents less than one half of one per cent. of the United States gross national products.
Perhaps I could here answer the question addressed to me by the noble Lord, Lord Rochdale, in one of his characteristically constructive speeches. The dollar export target represents 2½ per cent. of the United Kingdom's gross national products, or 6 per cent. of our industrial production. We have already attained one half of this, so what diversion there is to the North American market will have to come mainly out of the home market; and that is in line with broad Government policy. It might interest your Lordships to know that our current exports to North America amount to one-fifteenth of the total amount of our exports. Before I deal with the general question of incentives, to which I propose to turn later on, I think I should outline some of the positive helps which His Majesty's Government give to all those who will make this drive on the North American markets. First, the new rate of exchange is in itself an incentive. Secondly, the industries exporting to North America will have priority for raw materials, building materials and facilities of that kind: open favouritism without shame will be shown to exporters to North America in their difficulties; and discrimination in their production difficulties will be shown to those firms that really go out for these markets. The Export Credits Guarantee Department have an unprecedented scope in doing everything they can to help, including the covering of expenses of export promotion, market research, cost of representation in those markets, and the carrying of stocks. The commercial services in North America are going to be strengthened—
VISCOUNT SWINTON: Have those schemes of export credits for promoting American sales by carrying part of the cost against subsequent payment, and the
130
carrying of stocks, which I ventured to suggest in the last debate, been put into effect?
LORD LUCAS OF CHILWORTH: Yes. There are projects being considered at the present moment.
Your Lordships are well aware of the valuable work done by the Gilpin Mission on Canadian potentialities—the noble Lord, Lord Hawke, mentioned Canada specifically in his interesting speech yesterday. Financial assistance from the Export Credits Guarantee Department will be given to appropriate groups of the engineering industry who are prepared to follow the lines of the Report of the Mission (which the Government have accepted) and to appoint specialist technical representatives in Canada. The Government are ready to consider any fresh suggestions that any noble Lord or, indeed, anyone else, may care to make. It minters not how unorthodox or revolutionary they may he. I will give an undertaking that they will be considered rapidly and sympathetically.
Now may I turn to the question of unrequited exports, which was raised by a number of noble Lords. Much loose talk has been going on up and down the country about the huge volume of unrequited exports—prompted, I can only think, by the thought that the United Kingdom have been pouring out sterling without any thoughts a the morrow. Now this is all very misleading and I will try to clear up some misapprehensions and misconceptions. I am going to indicate three directions in which our exports have gone—if I may use the expression—without "requitement." First, large contributions were made to U.N.R.R.A. and to some of our Allies for post-war reconstruction. The amount, up to date, is £400,000,000. Surely, there was in that a moral obligation. Secondly, in 1948 and 1949, a large contribution was made to the O.E.E.C. countries under the Intra-European Payments Scheme. That has amounted to over £60,000,000 but it should be remembered that we were getting substantial dollar aid from the United States of America; and had we not made our contribution to Europe, we should not have received the dollars. It was conditional aid. Thirdly, there have been exports to the Colonies for schemes of economic development essential to the lessening of our dependence on dollar

131
sources of supply. It is not necessary for me to plead the cause of Colonial development in your Lordships' House; many noble Lords have shown their interest in that subject. I well remember the most interesting speech made recently by the noble Lord, Lord Tweedsmuir, who is an authority on Colonial development. I am sure I shall carry him with me when I say that in Colonial development lies one of our hopes for the future. Adversity is a hard task master—
VISCOUNT SWINTON: What is the figure for the Colonies?
LORD LUCAS OF CHILWORTH: It is impossible to give any figure that would be at all accurate. I have given the above figures partially in answer to the noble Viscount's question of yesterday. I intend to convey his most helpful suggestions to my right honourable friend the Chancellor of the Exchequer to see whether periodic publication cannot be made.
LORD HAWKE: My Lords, is the noble Lord going to deal with India before he silts down?
LORD LUCAS OF CHILWORTH: Yes. As I say, adversity is a hard taskmaster, and we have to review all these things in the light of our resources.
I come next to the co-related subject of sterling balances. It is not necessary for me to detail in your Lordships' House how these were built up, but I must confess that I am surprised at some of the bitter remarks about our defence of certain countries during the last war and their insistence upon our making large releases against our sterling war-time debts to them. The biggest element in this matter has been the releases to India. I cannot mention India in your Lordships' House without recalling the many memorable debates we have had about that country. I cannot mention India without recalling that memorable debate in 1947 when, if I may say so, I heard a speech from the noble Earl, Lord Halifax, which will abide in my memory as long as I live as one of the greatest statesmanlike utterances that I have ever heard.
I remember the insistence of noble Lords on our responsibilities to India. They said that India was about to embark upon a struggle to develop into
132
a modern economic Power, with a vast backward population and with few assets apart from these sterling balances. I recall the words of those of your Lordships who are experts in this matter, pointing out this country's interest it preserving peace and stability in South East Asia. Would not refusal to make substantial releases from India's balances have cast grave doubt upon our determination to set India on the road to true independence and economic stability? The total amount of sterling balance releases from 1946 to 1949 comes to £500,000,000. As I have said, adversity is a hard taskmaster and, in the swords of the Chancellor of the Exchequer, we cannot afford to export if we get nothing by way of return. We cannot give further loans or credits to other countries except in very special cases, and we cannot continue to pay in sterling debts to the same extent as heretofore. I may say this—in fairness it is proper that I should do so—to all those who are interested in unrequited exports or sterling balances: that Great Britain is the banker of the sterling area, and if anything goes wrong with the bank the repercussions upon all can be of the greatest seriousness.
May I now turn to the question of trade with the sterling area, including Eastern Europe? In this I may be able to reply in some way to the excellent speech made by the noble Lord, Lord Balfour of Inchrye. It is vitally necessary for us to develop our exports to the sterling area because it is essential that those countries conserve their dollars and that we should fill the essential gaps. But it is also equally essential for us to find alternative sources of supply from other than the dollar area for the goods that are of vital necessity to us, and we will enter into agreements with any and every country where we can get the goods we require. I think that my observations on this particular aspect can be somewhat curtailed, for the convenience, I feel sure, of all your Lordships, because it was so well covered by the noble Lord, Lord Layton, in a most impressive speech a week or two ago. It is also, to some extent, underlined by the reply that I gave the other day to a Question asked by the noble Lord, Lord Vansittart. So perhaps I may condense my reply to the noble Lord, Lord Balfour of Inchrye, by giving him just four figures.

133
These are percentages of the world total of United Kingdom trade. In 1938, the imports from the sterling area were 31 per cent., and for the first half of 1949, 39 per cent. The exports to the sterling area in 1938 were 41 per cent., and for the first half of 1949, 52 per cent. I think that will convince the noble Lord that we are fully alive to the expansion which is needed. I need not worry your Lordships with a reiteration of all the trade agreements into which we have entered over the last few years with the various Eastern European countries. They represent a huge volume of trade, and I would ask your Lordships to remember this: that Eastern European countries have not always the goods we require, and they are not always willing to take the goods that we would like to export, because what are considered essentials to us in this country are luxuries to some of them. Consequently, they will not import a number of our consumer goods because they think it would artificially increase their standard of living. The total United Kingdom imports from Eastern Europe were £50,000,000 in 1948, and we hope to see them increased to £140,000,000 in 1952–53. Incidentally, it may be of interest to the noble Lord, Lord Balfour of Inchrye, when I tell him that our exports to the Colonies stood at £195,000,000 in 1948, and we hope to increase them to £290,000,000 by 1952–53.
It may be for the convenience of your Lordships if I say one word on a subject which was not raised in your Lordships' House yesterday—I refer to the question of the direction of labour. The Government have decided, with the agreement of the National Joint Advisory Council, to extend the Control of Engagement Order to the end of 1950. My right honourable friend the Minister of Labour will shortly be giving this information in a Written Answer in another place. He will have an early meeting with the Joint Consultative Committee of the National Joint Advisory Council to see how the policy in that Order can best be implemented to meet present-day requirements.
May I come now to the burning question of incentives, and make this confession straight away? I am, and always have been, a believer in the view that it is the hope of reward that sweetens labour. I have grappled with this question of incentives all my industrial life. I will add this confession: that in
134
more cases than not I found myself giving all the incentives and achieving little results. I should like to ask: What is meant by incentives? Is it payment for results, or payment in anticipation of getting results? His Majesty's Government have never put any obstacle in the way of increases in the pay packets of the workers if those increases are matched by increased productivity. If industry will, through its appropriate industrial machinery, devise a wage structure of payment by results, His Majesty's Government will put not the slightest obstacle in the way. Of all the incentives that I have heard—and I have done my penance by reading every speech in another place during the whole of the debate that took place there—apart from one isolated example, which was given also in your Lordships' House, the only incentive advanced by the Opposition for an increase in the productivity of the worker has been a reduction of income tax.
My Lords, in the 1948 Budget my right honourable friend the Chancellor of the Exchequer gave relief to the lower income groups of workers of this country to the extent of £100,000,000. When he did it, this is what he said:
"What I have been anxious to do is to remove, as far as possible, the disincentive which arises from a high rate of taxation on marginal earnings. I believe that these concessions amounting to over £100,000,000 a year, will be of great importance to our production drive. I cannot think that anyone will now have a just cause to complain that he is held back from increased effort on the score of the income tax burden."
But if I am to believe some of the critics, that has made no impression whatever upon the productivity of the worker.
THE MARQUESS OF SALISBURY: May ask the noble Lord what he means by "the worker"?
LORD LUCAS OF CHILWORTH: The lower income groups. I am using the term "worker" in the generally accepted sense. Here was an incentive of £100,000,000 and yet I hear it said, up and down the country, that the productivity of the manual worker, the producer on the floor of the factory, is less now than it was twelve months ago. So what is the good of increasing income tax reliefs? Will it produce any better results? You cannot have it both ways. Take the position of the employer. Sir

135
George Schuster, in an admirable letter to The Times quoted by my noble friend Lord Crook yesterday, said something which is very true:
"Profits have been too easy to earn, and the inefficient firm has earned more profits than it has contributed pro rata to the national effort."
I am quite willing to admit that income tax is too high. It always has been since the days of Gladstone; and I expect it always will be, whatever the amount. But, my Lords, from the point of view of the employer the amount of the profit left after tax has been paid has gone up. I do not rely upon the Central Statistical Office for these figures. I obtained them from the Economist. In the survey which that journal made, after all dividends and after all tax had been paid, the retained profit of 2,095 companies in the year to June, 1948, was £84,000,000, and in the year to June, 1949, it was £115,000,000. So, to use a colloquial expression, "some of it sticks." Is that not an incentive?
LORD TEVIOT: Could the noble Lord tell us what percentage of profit on the capital of those industries those figures represent?
LORD LUCAS OF CHILWORTH: I am on a far narrower point than that to which the noble Lord would wish to divert me. I am dealing only with this question of incentive. If you are going to say that that is not enough, you may be right; but after all increased taxation on companies has been paid, there is an increase in what is left of from £84,000,000 to £115,000,000. Surely, even the retention of that differential is some incentive. I was struck by what the noble Viscount, Lord Swinton, said yesterday, as to what incentives we were all offered during the war. The incentive we had then for our physical survival was that:
"I have nothing to offer you but blood, sweat, toil and tears, to fight the battle."
What is the incentive we have to-day to fight the battle for our economic survival? It is a better standard of living than the vast majority of the common people have ever known. My Lords, is that worth fighting for? A healthier race of children, the pride of this country and the envy of the world. Is that worth fighting for?
136
I heard many noble Lords, well versed in finance, yesterday telling us about the capital investment in equipment in industry. I have seen it all in statistics given by statisticians and economists, but I have never yet seen, and perhaps it is impossible to put it into writing, what is our capital investment in the health of the people of this country. As an employer of labour I know that I have lost more through the illness of my work-people than I have by the running down of my machinery. Do your Lordships not feel that all that is something worth fighting against? We have full employment, but during the inter-war years 80 per cent. of the wage-earning population of this country suffered some unemployment. Is that not worth fighting against?
What are the disincentives? They are, a return to the horror of the two or three million unemployed which we had before the war, when it was computed that we as a country lost £500,000,000 per year in productivity. Again, no economist, no statistician, has ever managed to put on paper the figure lost through the moral degradation of the unemployed. Are we to return to the days when over one-third of the population of this country could not afford the basic minimum standard of human existence laid down by the noble Lord, Lord Boyd-Orr, and his colleague, Seebohm Rowntree? If your Lordships want to read some of the things that are worth fighting for, and worth lighting against, read the noble Lord's book, "Fighting for what?"; that will tell you.
I come finally to this question of leadership. I am afraid I am apt to fall, perhaps, into the error of being a trifle cynical when I hear industrialists calling upon Governments for leadership. What they mean, of course, is leadership upon lines which they like and which is comfortable for them. That, my Lords, is deemed wise and courageous statesmanship. But if that leadership takes a path that slightly cuts across some of these vested interests then it becomes bureaucratic control and Government interference. Industry does not need leadership from Governments, and if I may offer one word of counsel to some of my late colleagues in industry it would be this: that they adopt the excellent precept to the shoemaker to "stick to your last," and

137
not turn themselves into pseudo-politicians. If some of them used as much vocal effort and energy in bestirring their colleagues and awakening them to the necessity of expanding and improving the industrial task as they do in castigating His Majesty's Government—a castigation which appears, by some strange chance, to increase as 1950 approaches—they would he serving their country and themselves to better advantage.
Have we not the right to ask industry for leadership? What leadership are we getting from industry to-day to attack those restrictive practices at which Sir George Schuster, in the letter to The Times to which I have already referred, points an unerring finger? What leadership has been given by the hundred and one wholesale and retail associations which are sitting down in their own particular sphere, with their price maintenance agreements, working not for the national interest but for the continuation of the status quo and their vested interests—that status quo which Lord Woolton once described in a striking phrase, which will always be remembered, as "representing one of the most expensive and luxurious factors in our national life"? We are to-day carrying 2,000,000 people in the wholesale and retail distributive trades. Can we afford this luxury? I avow that the greater part of any increase in the cost of living could be cushioned and absorbed by a more economic and more efficient distribution of the common commodities of this country. What reception did my right honourable friend the President of the Board of Trade meet when he wanted to reduce the prices of certain utility commodities? Leadership from industry has been steadily lacking.
With regard to restrictive practices it has been said: What about the restrictive practices that are rampant among the workers in industry? They are put down as being the result of Socialist teaching over past years, when it was claimed that the harder a man worked the sooner he worked himself out of a job. The tragedy is that that was true. Are we to be surprised to-day that these men pathetically cling to those restrictive practices because they cannot believe that there is such a thing as full employment? But all these restrictive practices, on both sides, practices built up during the unfortunate inter-war years—that is during the
138
period when the policy was to make a lot out of a little—must go. To-day, we must go forward with expansionist policies in industry and make a little out of a lot. I have ventured to make these observations to your Lordships not as a theoretical economist but as one who has learned his lesson in the hard school of industry in which I have spent my working life.
May I, in conclusion, ask the indulgence of your Lordships to relate a personal experience? When I was a very young man, I helped the noble Viscount, Lord Nuffield, to make his first motor cars in the little schoolroom at the top of Cowley Road. That was when the noble Viscount was plain Billy Morris, and I was plain George Lucas. There came a crisis in that man's commercial life very much akin to the crisis that is facing British industry to-day. He was losing his markets; he was pricing himself out of them. He was what is now known as "in the red." Then one night he slashed his prices by £100, which represented about 33 per cent. of the price of his product. Like a pistol shot he then went right to the top. That, my Lords, is an example of courageous industrial leadership. I heard him say many a time afterwards: "When I did it they called me a price cutter." This is not a. crisis of Governments, this is a crisis of people, a crisis for all of us at every range and every level. The British people did not earn and sustain the title of "great" for nothing. We are a great country, we are a great people. In the words of Tennyson, in this great crisis,
"Pray God we may not fail,
Through craven fear of being great."
3.17 p.m.
VISCOUNT SIMON: My Lords, I must confess that I am a little surprised at the speech which has just been made, After the measured and powerful arguments put forward yesterday in criticism of the Government's plan—for example, by the noble Viscount, Lord Swinton, the noble Lord, Lord Rennell, and other noble Lords—surely we were entitled to expect that, after a night to reflect on them, we should find at the beginning of the debate to-day some attempt by the Government to deal with those criticisms. No one on any side of the House who has heard what the noble Lord has been saying, and has followed it, could suggest

139
for a moment that he had done anything of the kind.
I understood him to begin by claiming that he was going to develop the object of the cuts. One can put these things in a simple way or in complicated language. If I may use the language of the Chancellor of the Exchequer, the object of the cuts is to reduce pressure of domestic demand at a time when, partly owing to devaluation and partly owing to the effort to increase our export trade, there would otherwise be a grave danger of increasing inflation. The question of what incentives can be offered to transfer our efforts, so far as may be, in order to meet the dollar difficulty, is an important question, but it is not a question directly related to that matter at all. I do not profess to have followed the whole of the arguments on incentives in the noble Lord's speech, and I shall read the Report of it with care, as I am sure we all shall.
I hope that I do not parody his remarks when I say that his contention, among other things, is this: that the present taxation on profits of industrial companies puts them to-day in a better position to save and gives them a greater incentive to enlarge and carry forward their businesses than existed before. Well, if a man can say that, I really wonder whether he has considered the view which is held, not by partisan or misguided people but, so far as I know, by every serious student of our existing fiscal arrangements that I have ever met. It is manifest—and it was made very clear in the most interesting speech made last night by the noble Earl, Lord Rothes—that, whether there be a good reason for it or a bad, one of our greatest difficulties at present is that our taxation system makes it so extremely difficult, after meeting inevitable outlay and after paying enormous taxation, to find anything left out of which to save. That is the reason why the National Savings Movement is in such an unhappy condition. Nobody rejoices over it, but the explanation is quite simple. It is that people find that, however much they want to help the country, they are drawing out their savings more rapidly than they are able to put them in. Exactly the same thing is true about industrial companies, as everybody knows, whatever the explanation and however much we may regard it as
140
inevitable. How can any industrial enterprise find reserves if there is not something adequate left for the purpose after the heavy taxation it has to pay.
I want respectfully to ask the noble Lord, who always addresses the House in so pleasant a manner, if he has really considered the closely-reasoned speech made rather late yesterday by the noble Earl, Lord Rothes, and what has been so constantly pointed out without challenge or contradiction by everybody who is familiar with the operation of high taxation. For the rest of it, I am very glad to hear what is being attempted in the way of incentives, though I think the noble Lord, after recording what is being done, proceeded to pour cold water on the whole thing by saying that he had never found incentives any good. For my part, I am concerned, because it means that until we end our debate, until we end these two days of serious discussion, we are not to receive from the Government any sort of answer to the cogent and carefully-phrased criticism put forward in all parts of the House of the inadequacy of the Government cuts.
I am left in some doubt whether the noble Lord opposite really appreciates how grave and urgent this crisis is. It is ridiculous for anybody to suggest that it is being exploited for some Party reason. We are all alike involved. The futures of every one of us and of all our families are equally in the balance. The desire to see these difficulties successfully overcome is just as general and single-minded on this side of the House as on the other. If what the Government are doing is enough, they are entitled to receive, and they will receive, the warmest possible support and congratulation, but we are bound to ask in all seriousness whether they appreciate the gravity and urgency of the crisis and how much the extravagance and over-spending of the Government have aggravated it? We cannot judge the adequacy of the Government's proposals without first forming a right judgment on both those matters.
As to the gravity, I will not waste time, because, whatever a few people of the Left may say, I think it is now being realised by an ever-increasing part of the population that the seriousness of this situation is beyond all dispute. Yesterday the noble Lord, Lord Crook, made a very informing speech, which showed

141
most clearly how the gravity of the situation is recognised by leaders of labour. But the noble Earl, Lord Rothes, was none the less right when he said that the great majority of ordinary people, wage-earners and others occupied in the daily round of their lives,
"remain both bewildered by, and ignorant of, the real causes of our present and continuing difficulties."
It is the business of Parliament and of this House to examine quite dispassionately that question, and that, I think, is the real importance of this debate. It is not surprising that so many ordinary people should feel bewildered and puzzled. I myself find these topics very difficult, and I do not at all claim to he an inspired expert on the whole situation. People have been so constantly told of late that they are enjoying the blessings of the Welfare State which Socialist policy is bringing about, that anxious talk now of the dangers which are threatening our country and of the adversity which is our lot is very confusing. I must say that the Government pronouncements about revaluation—I must not say "devaluation"—the need for increased productivity and the necessity of counter-inflationary measures (for unlike Mr. Churchill, the Government seem to prefer long words) make it doubly difficult to follow.
The stark fact does not depend on any assertion or campaign on this side it was stated by the Chancellor of the Exchequer himself last week. This is the sentence, which I think might he kept well in front of the minds of your Lordships in this debate. He warned us that unless the steps which are now being taken are effective
"we shall suffer a tragic fall in our standard of living, accompanied by all the demoralising insecurity of widespread unemployment."
Even on the other side of this House there are two voices. The noble Lord, Lord Darwen, in the last speech which he made only a week or two ago just before he received promotion (on which we congratulate him, though I am afraid it imposes more silences than opportunities of speech) observed:
"I feel strongly that we are in danger of exaggerating the crisis in which we find ourselves."
But there was another voice. The noble Lord, Lord Williams, in a speech he made
142
on September 28, gave his views sturdily. He said:
"I am of opinion that the people do not appreciate the serious position in which we find ourselves."
I must say I think tie second judgment is the more authoritative.
I will not delay your Lordships by speaking on the seriousness of the situation. I believe I am to be followed by my noble friend Lord Brand, who, as we all recognise, speaks impartially and with special knowledge. I wish to point out one matter which I do not think has been observed so widely as it should. The situation in which we find ourselves is not some sudden, unexpected danger which could not have been anticipated and which falls upon us now so that we have quickly to improvise means to get out of it. That is not the character of the danger at all. It is the climax of a malady, the operation of which has been largely obscured by American aid—for which we are so grateful—but the signs of which have been increasingly evident for a long time past. The noble Lords, Lord Rennell and Lord Brand, to mention no others, in our debates have again and again pointed out these signs. Anybody who looks up the debate on the Second Reading of the Finance Bill, in which I took part, and reads the speeches made by the noble Lords, will see that this is not some new, sudden, unexpected trouble: it is, in fact, the development of a long-standing, threatening danger. Yet until the last few days the Government have gone merrily on, disregarding all warnings on the subject. Indeed, the only answer was the taunt—forgive me for saying the cheap and foolish taunt—demanding to know where economies can be made. There has been a refusal to pay any attention to the diagnosis until the patient, after a long course of indulgence, is on the danger list.
I find it difficult to believe that the Treasury did not see what was happening. Nobody who has served in that great Department will fail to share my perplexity. I know that Sir Stafford Cripps struggled to avoid the decision to devalue. I feel certain that nobody was more acutely conscious of the manifest objections to that course than he, and I do not blame him for maintaining his opposition to the very last moment. But, after

143
all, what is the method by which it has been avoided? There, again, it is Sir Stafford Cripps who tells us. Six weeks ago he said:
"…expedient after expedient has been adopted, each leading to a new crisis."
Meanwhile, some of the other members of the Government, at any rate, were cheerfully announcing that we were "out of the wood"; that we were overcoming all our difficulties and that the promised land was in sight. In December last year Mr. Morrison announced:
"We are round recovery corner to a better and brighter and even more free Britain."
That is very cheering news! However, it appears to me to disregard completely what must have been known to the Chancellor of the Exchequer and his advisers.
But the prize for ineptitude must be awarded to Mr. Mayhew, the Under-Secretary of State for Foreign Affairs. It is hardly believable that when he was in New York at the end of February of this year he should have said this:
"It is time to stop talking of Britain's recovery. We have long passed that stage. We are no longer interested in recovery, but in new social and economic experiments. We are within sight of balancing overseas payments, though there is still a dollar deficit."
Apart from the distressing cocksureness of that, what is to be said of a Minister of the Crown who uses that language when he is addressing the very people who have given us these immense sums of money to try and help us out of our difficulty? I can well believe that the Chancellor of the Exchequer resisted devaluation to the last possible moment. I take the view that it was inevitable, but I also take the view expressed on the last occasion by my noble friend Lord Samuel, that it is a disaster. It is not merely a blow to our pride; it is a great shock to confidence. Therefore we are all not only entitled but bound to be concerned as to whether the steps taken now are really adequate to build up that confidence again.
I was not here at the emergency meeting of your Lordships' House at the end of September, but because of that I have studied the debate with the more care. The Leader of the House told your Lordships then that the Government had decided on devaluation "after long and anxious consideration of the issues involved." If I understand the position aright—the noble
144
Lord, Lord Pakenham, will correct me if I am wrong—that decision was taken at the end of August. Yet it is only within the last few days that the Government have arrived at and announced what the Prime Minister himself called "the necessary accompanying measures." I ask myself: Would it not have been far better to prepare these measures beforehand in this "long and anxious consideration" and, so far as may be, to put them into force beforehand? Indeed, in view of the rapid worsening of our position, most plainly revealed in the earlier months of this year, one would have thought that this desperate expedient should have been adopted before it was. But, no. The drain on our reserves—very slender reserves—went on sapping a considerable part of our remaining strength, until this step was announced, not as a stroke of high statesmanship but because it was absolutely forced upon the Government—as I agree it unhappily was—by adverse circumstances.
I do not claim to speak as a great expert on these difficult matters, though I had to deal with the devaluation of the franc in very troublesome circumstances when I was at the Treasury, and I necessarily learned a good deal of the consequential developments of various kinds. It would seem to me that devaluation as part of a comprehensive scheme which included every possible step to minimise its boomerang effect (it has a terrible boomerang effect; it hits you in one place even though it helps you in another) is a very different thing from what the Chancellor of the Exchequer announced in what I must regard as his lamentable broadcast on a Sunday evening six weeks ago.
I can assure your Lordships that I take no pleasure in saying this, for I am acutely conscious of the fact that this matter goes far beyond any possible Party difference: it touches the very vitals of the nation. But I ask myself: How could the Chancellor of the Exchequer, with all the knowledge and experience of the Treasury at his service, have conveyed to his hearers, as he did, that, as against the advantage which might be rapidly secured by inviting the richest people in the world to buy some of our products more cheaply, there was no early prospect of disadvantage to ourselves save an addition to the price of bread? That was

145
the effect of his broadcast. Anyone who actually heard it knows that that is so; and anybody who happened to look at the leading article in the Daily Herald the next morning will know that it was so understood.
Of course what happened, and was bound to happen, was that metal prices were put up the next day. The Raw Cotton Commission put up the price of American cotton by 4½d. a pound the day after, and it will not be long before the effect of that increase trickles down to the shops. Last Monday Sir Miles Thomas, the Chairman of B.O.A.C., in an effort to reduce losses, issued a statement pointing out that devaluation meant that petrol and air stations in hard currency areas would cost about £1,000,000 more than before. There is nothing in the least recondite or surprising in this, and surely it would have been better to make people realise immediately that there are two sides to this policy, and that if we are going to reap the advantage of it we have to take special and active steps to minimise the disadvantages.
Now I come to the manner in which these cuts were announced last week in another place. As some others of your Lordships did, I listened intently from the gallery overlooking the debate, and with increasing anxiety quite untinged by any sort of partisanship. What was said conveyed to me the impression that the Ministers themselves suspected that the proposals would prove to be inadequate. Also, the Chancellor of the Exchequer, after an admirably clear statement, turned to his anxious followers to assure them that what was proposed was the minimum which was absolutely necessary. He had already said that the £470,000,000, of real surplus for which he had budgeted last April as absolutely necessary to counteract inflation would in fact be considerably reduced by Supplementary Estimates. It seemed to me that he was relying on these cuts to restore that £470,000,000. The noble Lord, Lord Rennell, yesterday adopted a different series of statements made by the Chancellor of the Exchequer to arrive at the same deduction. But can that really be so? The restoration of the £470,000,000 real surplus, which was regarded as essential in April, has nothing to do with devaluation at all—devaluation has occurred since. Can the noble Lord, Lord Pakenham, tell us whether it is the case
146
that these cuts are being relied upon to fill that gap? Because in so far as they are used for that purpose they cannot also be regarded as an effective barrier against the new dangers which arise from devaluation and from the attempt to transfer our efforts to markets across the Atlantic. I venture to put that question, and I hope the noble Lord will deal with it.
How did the Chancellor of the Exchequer go on? This is what filled me with so much anxiety. After urging upon the Socialists that these cuts were the absolute minimum, he went on to say:
"There will be an opportunity to review the whole matter before very long, at the time of the next Budget, when further fiscal and other measures can, if necessary, be taken."
Is that not an extraordinary way to stop a runaway horse? It seems to me to amount to this: "I press you to accept these cuts as an absolute minimum. It may be enough, but it certainly is not more than enough. My Budget anticipation of £470,000,000 surplus will not be realised. There will be a substantial diminution there, and we must make it up by reductions in expenditure. If there is not enough left out of these cuts when that is done to stop the rot, well, later on, we will, if necessary, do some more." I do not in the least desire to parody or to make an unfair use of what the Chancellor said, but are we not entitled to say that it makes us exceedingly anxious? I wish I could feel sure that what was recommended as the minimum necessary was not really the maximum which could be agreed without splitting the Cabinet. Of course, if that is the way in which the Chancellor of the Exchequer spoke, we need not be surprised at the way in which Mr. Herbert Morrison spoke the next day. I was there, and I enjoyed it very much—it was a "knockabout" turn. But in the course of it he said this:
"We have made the present instalment of cuts to serve notice on everyone, inside and outside this country, that the Government mean business about economy, but it would be quite wrong to assume that economy begins and ends with the cuts announced by the Prime Minister."
I will not spend time on commenting upon that, but perhaps the noble Lord, Lord Pakenham, will be able to expound that passage a little further.
It can no longer be denied that our troubles, which would be great in any

147
case—I am not placing them all on the shoulders of the Government—have been aggravated by Government expenditure. If that is not so, why are the Government now seeking to reduce expenditure? Government expenditure is the expression of Socialist policy. It must be difficult for the Ministers to admit that, though the Prime Minister very courageously said some time ago:
"It may be that we have tried to do too much in a short time."
They imagined, these gentlemen, that high taxation and high expenditure, such as was inevitable in the war years, could be continued, and even be increased, in the years immediately following when we emerged from the war broken and shattered. I am sure that many of their followers believe that all this is abundantly justified so long as the object pursued is good. I do not withhold at all my admiration for the social zeal of those who are supporting the Government. They did not originate social reform, but there is no doubt at all of their enthusiasm for it, and they have done much to improve it in many ways. But I am afraid their social zeal has blinded them to the nemesis which threatens those who spend more than they earn. The real difficulty—it is the difficulty, I think, in adopting the suggestion made by the noble Lord, Lord Elton, yesterday—is that the sincere Socialist is caught in the net of what I believe to be a false political philosophy.
No doubt that makes it difficult for the Government to give an effective answer, but I think we might expect from them a better defence than we heard from the Leader of the House at the beginning of yesterday's debate. Apart from an excellent résumé of the cuts, what did he say? He began with a polite jeer at Sir John Anderson for his observation that prior to the First World War we had a favourable balance of trade. He asked:
"What in the world is the use of that reminder?"
I will tell the noble Viscount and, of course, it is the very beginning of the whole lesson. That was the situation in which we lived for a time, but we live in that situation no longer. We find ourselves in the reverse situation, and that is one of the leading considerations which make it so dangerous and difficult to proceed as if no change had taken place.
148
The noble Viscount, Lord Addison, went on with the ancient "wheeze" of challenging the Opposition to find more economies, and this in spite of the fact that the Government had elaborately explained how these cuts were arrived at. They have been arrived at, we are told, by close examination inside the Government Departments of every item of administration and outlay which Ministers can survey. But how can anybody except Ministers do that? We have no entry to Departments. But we are bound to point out broadly the warning and the results. It is surprising that the noble Viscount should attempt to meet in that perfunctory way a very serious set of questions. The noble Viscount also pointed out—and he seemed to derive great satisfaction from this—that in 1931 the cuts amounted to £70,000,000; and he drew our attention to the cuts which the Government are now proposing to make, amounting to £250,000,000. Allow me, my Lords, to point out briefly the fallacy of that argument. In the first place, the £70,000,000 cuts in 1931 were all cuts in current expenditure, blade, and very painfully made, there and then. If you want to make a comparison, the comparison would not be with the £250,000,000; it would be with the figure of £90,000,000. Let me go a shade further. A cut of £90,000,000, made when our Budget expenditure is £3,300,000,000, is less than 3 per cent. The £70,000,000 of cuts in 1931 was out of a Budget expenditure of £800,000,000, and was therefore 9 per cent. I do not think this bandying of words about these two different periods is very useful. But to what depth must argument have descended if that is to be a really effective retort on the present occasion!
Lastly, the Leader of the House, forsaking his usual urbane manner, which we all so greatly admire and respect, went in for a piece of really good denunciation. There was "a widespread and furious campaign of disparagement" which he, as an "ordinary, patriotic citizen" found "revolting." Cannot the noble Viscount understand that when newspapers like the Manchester Guardian express their grave alarm and deplore the inadequacy of the Government's statement, saying that it falls far short of what is needed, they are registering a genuine conviction from the highest patriotic

149
motives? I do not doubt that the noble Viscount is a patriotic man; we are all, I hope, "ordinary patriotic citizens." But if the considerations to which I have encleavoured to call your Lordships' attention are well-founded, they have to be stated. If they are not well-founded they ought to be answered one way or the other. When we are all involved in the consequences, and when all equally care for the rescue of Britain from the dangers which threaten her, surely an attempt to side-track a serious inquiry on that subject deserves the epithet which the noble Viscount reserved for something else: it is indeed "nauseating."
I speak with great sincerity when I say that this is much too serious a matter to be measured in terms of Party gain or Party loss. We are all in the same boat. If the boat is being unwisely navigated in rough weather we are all involved in the result. It will not be the slightest satisfaction to anybody to say "I told you so," if all of us together are to run into greater perils. But, while we are in the, same boat, it is the Government who are in charge. And if the consequences of pursuing a reckless course are now apparent, if the first officer shouts through his megaphone that we are round Recovery Point when we are so near the rocks, if the chief engineer reduces the efficiency of the machinery by loading it with burdens that make it less able to do its essential work, if the look-out man fails for so long to see the danger ahead, the captain must excuse us if we press that the supreme authority in these matters—the British electorate—should take away his master's certificate as soon as possible. That is not "nauseating misrepresentation."
When we make this statement some of the crew start complaining that we are making things worse by running down the quality of the ship. It is not the ship we are criticising; it is the navigation. The ship of Britain, wisely guided and courageously led, has buffeted its way through many a storm in its time; and there is not a noble Lord here who does not with a sincere and full heart say that we hope it may be so now. But, leaving that aside, unless the criticisms that have been made can be effectively answered—and the answer has not been given yet—what is needed now is not a list of cuts but a new House of Commons and a new Government.
3.58 p.m.
THE MARQUESS OF READING: My Lords, I have not previously intruded on a debate of your Lordships on economics But whereas economics were once upon a time an esoteric if never a very exact science, we are all economists now —not, of course, excluding that compact body of professional, and indeed professorial, economists who are Ministers as well. Perhaps because they protested so loudly, so frequently and, as we now know, so unwarrantably that they, the Government, were the true inheritors of the Liberal tradition, there are not a few on these Benches who in 1945 were prepared to wish the new Government well, or at least to suspend judgment upon it. That judgment is no longer in suspense. In the intervening years we have watched with increasing disillusion the path which they have followed, and it is with real perturbation in the national interest that we have observed their antics in the past few months.
The people of this country are notoriously shy at confronting a crisis unless they are satisfied that one exists. They have always a tendency to make molehills out of mountains but, once convinced, they are incomparable. What have they been asked to believe during the past few months? The situation has been like those notices that one sees inscribed in the streets: on the one side, "Mondays, Wednesdays and Fridays"—complacency; on the other side, "Tuesdays, Thursdays and Saturdays"—catastrophe. They have lacked throughout the chief pointer which they were entitled to require, and that was the example of the Government. After all, the great bulk of the people in this country do not derive their information about financial matters from the Economist or from the City financial papers. They form their own judgments from what they see in their ordinary daily lives. Let me take one example. A man, at any moment during the last year or two, walks up Whitehall and sees the framework of one great expensive Government office after another being erected. Is that man going to believe that the Government who are paying for the erection of those buildings are a Government who are suffering from severe financial trouble? Is he going to welcome cuts in domestic housing now,

151
when for months he has seen money being spent on those expensive public offices? Those are the tests, those are the examples that the ordinary human being looks at, and not some alteration in the lowering or heightening of our gold reserves.
By chance, I came recently upon an aphorism, perhaps not inapt at the present moment, which fills me with envy for the conciseness and admiration for the prescience of the author of the Book of Ecclesiasticus, for in a prophetic moment he wrote:
"Be not made a beggar by banqueting or borrowing."
Is not that a precise description of what this Government have been doing during these past years? They have lavishly borrowed wherever they could borrow; they have stood treat to all and sundry, and now they are surprised and, indeed, aggrieved to find that the bottom of the till is beginning to show through. During the September debate, the Minister of Health, in a sentence which the noble Lord, Lord Balfour of Inchrye, quoted yesterday, proclaimed to the world his intention of
"pricking the bloated bladder of lies with the poniard of truth."
If we are going to indulge in these orotund and deflationary metaphors, we might permit ourselves to say that for some considerable time past the Government have been carrying out a far more difficult operation by "buckling the tempered poniard of urgency with the bladder of drift."
It is perhaps worth while just to ask this when we are discussing the cuts, and to take one small concrete example: Why were these cuts so long delayed as they were, and why, when they came, were they so nugatory? Some of you may remember that for some time past I have at intervals called your Lordships' attention, and the Government's attention, to the swollen size of the Civil Service and appealed for reduction in their numbers. I was told, I think on every occasion, either that it could not be done or that it was being done, or both. Now let us for a moment consider what the Chancellor of the Exchequer said in giving some detail of these cuts. It is to be found in Column 1344 of Hansard of October 26, and is as follows:
152
"I propose to give the House some of the more important items in the two groups. Taking first administrative and staff economies, our object has been to save administrative man-power wherever possible. The largest savings of this kind will be in the Ministry of Supply and the Ministry of Food. The Ministry of Supply will save £6,000,000."
He goes on to say:
"The administrative saving of £1,750,000 by the Ministry of Food is, again, the result of a comprehensive review of the whole field of its activities. The sources of savings are, firstly, regional reorganisation and concentration; secondly, dropping some detailed requirements of control; and thirdly, savings in overheads and other administrative items of general application to the Minstry's work."
I can only say that I hope that the civil servant who drafted those remarks is one of those about to be axed, because a more meaningless series of polysyllables it would be very difficult to come upon. But, when you look and see what is behind them, it is precisely something for which many of us have been pressing for months and years past—that is, that the Government should not merely express a kind of general benevolence towards the idea of reducing the Civil Service, but should sit down and do something constructive about it. And so it is also with the rest of these things.
I regret that a certain number of civil servants will have to be dismissed, but I could wish that one or two Ministries would accompany them into retirement. I myself think that the Ministry of Supply is an expensive excrescence with which we might well now dispense. The Ministry of Food could well be amalgamated with the Ministry of Agriculture. The Ministry of Civil Aviation might find a place in the Ministry of Transport, although we should hope that the noble Lord who presides over it would be protected by the doctrine of full employment. I am not at all sure that some form of union between the Ministry of Town and Country Planning and the Ministry of Works might not also be effected with economy. That is the kind of thing we have in mind. These are only a few amongst a series of suggestions which have been made to the Government, both in another place and here, as to what might be done. I cite that matter of the Civil Service merely as illustrating the Government's failure to give a lead and as explaining the public's bewilderment.
Against that background how can we accept the Prime Minister's announced

153
cuts as adequate? It would be interesting to know at what stage in the proceedings the further favours to come announced by the Lord President of the Council were decided upon. Were they in mind when the Prime Minister made his statement in another place? If so, he was curiously silent upon the fact that these were only an instalment of cuts arid not the cuts themselves. Or were they perhaps decided upon when it was discovered that the reception in the Press was not so universally favourable as had been hoped, and that it was necessary to produce something else to reassure and to stimulate the public?
We were told very forcibly in the course of the September debate, although I was unfortunately not able to be present, that it is our duty at this moment of national emergency to preserve the unity of the country. That doctrine was forcibly expounded by the noble Viscount, Lord Hall, in the last sentence of his speech winding up that debate. He said:
"If noble Lords opposite have decided, in their wisdom or unwisdom, to divide the House in this hour of the nation's peril, when national unity is of the first importance to the nation's safety, then we on this side can but firmly stand to our stations and watch noble Lords opposite do their best to sink the ship."
I have no doubt that it is very obtuse of me, but I confess that I am in some difficulty in following that argument. So far as I know, it is not as if the Government had even asked for any advice, let alone sharing of responsibility, from other Parties in this matter. Yet they are prepared to say that it is showing a lack of public spirit on the part of those other Parties if they do not at once rally to the Government's support.
My Lords, what is this doctrine—that we are to stand by protesting that the Government have done admirably well, and that we have no cause for complaint against them, whatever they may, do? I think some of us sometimes wish that this Government were a little more sensible and a little less sensitive, and that they would not always regard criticism as dictated merely by partisan malignity.
The position, surely, has been this—I must follow up the maritime metaphor which naturally the noble Viscount the
154
First Lord of the Admiralty used on that previous occasion, and say this to him. Is this the doctrine that we are supposed to accept: that if we see the captain and the officers of the ship intent upon piling it up on the rocks, are to group ourselves behind them in an admiring circle and urge them on with full throated, or anyhow with sotto voce, cheers, instead of trying to remove the navigation from their hands? Is it an incentive to unity that only this week the Parliament Bill, with its retroactive mechanism for smuggling through the Iron and Steel Bill, made its third successive bow in another place? Is it an incentive to unanimity in the country that in a debate in another place speech after speech by supporters of the Government was impregnated with class consciousness? Is it an incentive to unity that we should read reports of resolutions passed by trade unions advocating the most naked form of political discrimination?
The Prime Minister in another place endeavoured to deal with this question of unanimity, perhaps, if I may say so respectfully, with more ingenuousness than ingenuity, for he complained that the whole situation could be so easily simplified if only the members of the Opposition Parties would swallow all the Government's measures and thereby restore harmony to the political scene. A certain set of facts are so obvious that I almost hesitate to draw them to Your Lordship's attention, hut, after all, where does the initiative in these matters lie? It is not the Opposition Parties which have come forward and attempted to force upon a Government measures which the Government disliked. It is not the Opposition Parties which have pressed upon the Government, at a time of severe national trial, stage after stage of these same Bills without interruption or remission. It is not, as I said just now, the Opposition Parties which have put down the Parliament Bill for discussion this very week. My Lords, surely the Government's action in these matters is yet another instance of their singularly inept timing: they launch an attack on the iron and steel industry to coincide with the peak of that industry's production, and then proceed to hunch a further attack upon insurance to synchronise with our most urgent need for dollars.

155
Even in 1931 their timing was better than it is now. A great deal has been said about 1931, both here and in another place, and though I would agree with my noble and learned friend who has just spoken that perhaps these ancient controversies no longer have any great materiality, at the same time let us be just a little careful as to why 1931 has been constantly brought up by members of the Government—particularly by the noble Viscount, Lord Hall, in the September debate, and by the noble Viscount the Leader of the House yesterday. The contention behind it all is: "Look what these people did in 1931, see what you would have to look forward to if anything but a Labour Government were in power now."
Can we perhaps be a little precise about 1931? The Leader of the House yesterday used words which are, if I may respectfully say so, a little calculated to mislead, though I am confident that he had not the remotest intention of doing anything of the kind. He said:
"The people did get a change of Government, and they got their economies. But they—
that is, the new Government—
"did not ask for £250.000,000. They were much more modest in those days and asked only for £70,000,000."
Anybody reading that sentence, that they asked only for £70,000,000, might well think that in 1931 the only deficit which the new Government were called upon to meet was a deficit of £70,000,000; whereas in fact, if I am right in my recollection of the figures, they had to meet a deficit of £40,000,000 for the rest of 1931, and £170,000,000, for the succeeding year. The £70,000,000 was the amount of that deficit which they covered by cuts; £80,000,000 was covered by fresh taxation, and the remaining £20,000,000, was found by reducing the amount available for debt. That is a very different picture from that which anybody might gather from reading that speech. I do not for a moment suggest that it was intentional, but I think that in fairness it requires correction and amplification, because at least the Government which took over those responsibilities tackled them and overcame them. I am bound to add, as I think I am entitled to do, that it always seems to me singularly ungracious—to use
156
a very mild phrase—of those who, baying provoked the attack, dropped their weapons and sought the snug shelter of opposition so bitterly to criticise those who came forward to fill the gap, withstand the bombardment and restore the situation.
I will say no more about 1931. I wish to add only one very short point. The noble Lord, Lord Lucas, gave us an exhortation. Exhortations at the moment are very much at a premium, and examples are at an almost Daltonian discount. The noble Lord's exhortation was about things that he said were worth fighting for. I am sure we are all obliged to the noble Lord for having called our attention to those matters, even though they may have been present, in some degree, in our minds. But when he talks about these things being worth fighting for—health, better opportunities and so on—I am bound to say that what we are waiting for, in this debate and from the Government, are some steps, not to promote improvement in the health of the people or the conferring upon them of other benefits, but to prevent the standard of living of this country falling lower than anything that has been known in our time. So far, nothing which appears to embody any constructive thought has emerged. So far as that aspect of the matter goes, their proposals have been about as stimulating as a sleeping-draught and as constructive as a land-mine.
I have been a little prone to Biblical quotation this afternoon, something to which I am not normally addicted. But I am in good company for I recall that at the time of the bursting of the South Sea Bubble Alexander Pope wrote to a friend of his these words:
"Does not the fate of these men put you in mind of a passage from the Psalmist: 'They have dreamt out their dream, and awakening have found nothing in their hands '?"
4.24 p.m.
LORD BRAND: My Lords, I was in Canada and the United States when your Lordships' debate on devaluation took place, but I may say that the action which was taken did not surprise me, though I hardly expected so large a devaluation. In my opinion that step should have been taken sooner. I have for many months assumed that devaluation would take place—and not only, as I will explain

157
later, because of the dollar gap. It may be that in our circumstances devaluation would have been necessary under any Government and under any policy, though I am not sure about that. But Socialist policy made it certain. It was inevitable, riot only because of the dollar gap but because of the vast Government expenditure and the unparalleled taxation to which that has led, because of the lack of savings that followed and, generally, because of the difficulties we have found in curbing inflation. In consequence of that, prices continued to rise here when they had ceased rising elsewhere. Exporting was rendered more and more difficult, and there was universal mistrust of sterling. That was not due, as has been said, to a concerted attack on the Government but to constant and sober appraisal by bankers, economists and others throughout the world.
Your Lordships should hear in mind that there have been many examples of devaluation in the last thirty years, and there are many experts and judges in all parts of the word on the question of when, and in what circumstances in any particular country, devaluation becomes inevitable. There are many men who can almost "smell" it a mile off, particularly those who are looking at a country from outside, examining in an unprejudiced manner what is happening there. As to the suggestion that there was a concerted attack with regard to this matter I may say that I personally was very careful in your Lordships' House never to say anything that I thought would bring, or might possibly bring, devaluation one inch nearer, although, as I say, I regarded it as inevitable. It is extremely difficult to see what will be the consequences to our country of so wide a devaluation.
So far as this country is concerned, we have devalued in exceptional circumstances for which there is no precedent. Normally, devaluation is undertaken to obtain a free currency, a convertible currency, but our stringent exchange regulations are not to be relaxed at all. That I do not quarrel with, but it is a serious handicap to the efficiency of devaluation, and in such circumstances confidence cannot fully return. It also means the continuance of free markets for sterling in Zurich and New York, and I would point out to your Lordships that as long as
158
our exchange regulations exist it is certain that, whatever rate we fix, the quotations of sterling in those markets must show a discount. There are always holders of sterling who, for one reason or another, are determined to get rid of it, who cannot dispose of it through the official exchange because of official regulations, and who will certainly sell their sterling at a discount if there is a market where they can do so. Those markets are very small and ought to be regarded as unimportant; probably, the transactions which take place in them are not great. Nevertheless, it is a severe handicap to our currency that such quotations should continue to exist and should be referred to in every financial paper in the world.
A second United Kingdom handicap is that we have inflation and over-full employment. It will therefore be extremely difficult to turn over these fully-used resources, whether of labour or of materials, to make exports which will save or earn dollars. Above all, of course, everything depends on our preventing a rise of costs equivalent, or nearly equivalent, to the devaluation which has taken place. Unfortunately, as the noble Lord, Lord Rennell, said yesterday, devaluation, to be successful, means some reduction in the standard of living: It means a rise of prices not accompanied by an equivalent rise of wages and other incomes. Where we may particularly hope to gain is that in the devalued world (and the noble Lord, Lord Layton, told your Lordships he calculated that that was 60 per cent of the whole) American exports will be greatly hampered. There will, therefore, be great opportunities in all countries that have devalued for British exports, and also for German, Belgium, French and other exports. In the sterling area this should save us dollars, because sterling goods will be bought at sterling area prices in place of dollar goods.
We must also hope for a great increase of direct United Kingdom exports to the Western Hemisphere, but in my view, this will be much mere difficult and more doubtful. How do we get these additional exports manufactured, whether for the devalued world or for the Western Hemisphere? Many people say, "Produce more." In the end, of course, our salvation depends on that, so long as we produce the sort of things we can sell. There is nothing more important. But this is a long process. To one who knows the

159
United States well, we often seem desperately slow to use methods which have so greatly increased production there. But in any case it is a slow process, and the crisis is an immediate one. We want immediate remedies.
We must stop any further drain on our reserves, which, after all, represent to the world the thermometer of our health. The world looks at our reserves and tells whether our fever is going up or down, according to whether our reserves are falling or rising. We must build up those reserves again. We cannot leave them as they are. They are much too small, even at £500,000,000, as they were a few months ago. Where can we find such remedies? How can we find the means of switching labour and raw materials and plant to producing dollar-saving or direct dollar-earning exports—say, to the extent of £300,000,000 or £400,000,000 a year? Some may he found—but not, I think, for many months—by the reduction of unrequited exports arising at present from the use of sterling balances.
I would here say that I listened with interest to the noble Lord, Lord Lucas, explaining the use of these balances. He said, as I understood, that in the past few years we had reduced them by £500,000,000 by means of exports, and that we could afford to do that hitherto but cannot afford to do so now. Personally, I know the immense difficulty of not allowing India and other countries to use these balances. Nevertheless, it is clear that we cannot afford them. Indeed we can do so at all only by being given money on the other side by the United States or some other country. Beyond this use, or non-use, of sterling balances, our only course is to reduce internal purchasing power, in order definitely to make labour redundant, so that it may move where required and in order to induce our manufacturers to turn over still more to exporting dollar-saving or dollar-earning goods. Devaluation without restriction on internal purchasing power sufficient to induce both labour and materials to move in the right direction will not be enough. We must also control inflation.
We may in addition have what Mr. Paul Hoffman referred to a few days ago—namely, some special inducement for exporters to export to the dollar area. This seems to me full of difficulties, although other countries do it, I believe,
160
with some success. Is there also to be a special inducement for workers to work in export industries, and would not that raise great difficulty with other workers? Yet somehow, we have not only to get exporters to export, but also to get workers to move from their fully-employed positions to the industries where we shall want them. The crux of the problem, therefore, is the reduction of purchasing power to check not only existing inflation but also what has been often referred to in this debate—namely, the inflation arising from import cuts and from additional exports.
Many noble Lords have discussed whether cuts amounting to £280,000,000 are enough. I agree that they are inadequate. Moreover, they are not effective for many months; and the next twelve months, even the next six months, may be vital. Therefore, if we leave the matter as it is, we are likely to get the benefits merely of devaluation by itself and of the import cuts accompanied by some continuing internal inflation. The results must be uncertain. I could not venture any estimate whatever, and I do not think anybody else could, as to whether at the end of the year we shall see a rise or a fall in our reserves. Everything depends on what we see then.
The reason why larger cuts were not made by the Government seems to me evident. Yesterday the noble Lord, Lord Rennell, quoted certain figures, which I will briefly quote again. In making the cuts the Chancellor of the Exchequer ignored, except to a very small degree in Defence, the £1,200,000.000 representing the service of the National Debt and Defence. This left civil expenditure of about £2,000,000,000. He left out the social services of £1,000,000.000. and food subsidies of about £500.000.000, so that he was left with £600.000.000 out of his total Budget. From this he has got £100,000,000 in the form of cuts. If we take the basis the Chancellor took, that is a fairly large figure. It may be possible, and no doubt would be possible, to get more, but nothing very grand could be got out of £600,000.000. The Lord President of the Council says that more cuts are coming, and T take it he means out of that £600,000,000, and not out of the £1,000,000,000 for social services, which includes the taxation arising from the free Health Services, or out of the, food subsidies of £500,000,000.

161
Before I sit down I should like to make certain suggestions as to additional measures, but first I would like to look back over our road for the past four years to see the direction in which we have been travelling. When the war ended, we knew that we were impoverished. Economists have put our total loss at 25 per cent. of our whole wealth. Even by 1945 and 1946 we knew the immense difficulty of our dollar problem. The Government have had four years, therefore, to make up their minds how best to deal with the problems arising out of our impoverishment and our difficulty in earning dollars. I should like to quote from a recent speech by the Chancellor of the Exchequer at the end of those four years, which supplements that given by my noble and learned friend Lord Simon in his speech. This is what the Chancellor said:
These economies"—
referring to the cuts—
"like devaluation are a prelude and no more to a new surge forward to conquer the hard currency markets without which our industries, our standard of living, indeed our civilisation must fade away and wither. Mr. Speaker, we must not fail in our efforts."
I thought of those words when the noble Lord, Lord Lucas, was speaking and when I gathered from him that our standard of living is secure, that our people have safe in their pockets the highest standard of living they have ever had, and really that we are not suffering at all but are enjoying many blessings.
Can we say that the Chancellor's words, which are striking and serious words, are exaggerated? I do not think we can. Nevertheless, the facts have faced the Government all these years. If failure to solve the external problem is seen now to be so disastrous, should it not always have had A.1 priority? We remember that Doctor Dalton did not think our internal policy affected our external problem at all. Do the Government yet fully understand the implications of our external problem on our internal policy and vice versa? As has been referred to in your Lordships' House, we remember that only a few months ago the Government appeared to think that all our difficulties were solved and that we were safely in harbour. Does even the Chancellor of the Exchequer recognise all the implications now? I doubt it.
162
It seems to me that Socialists cannot help hating external problems, because their theories fit only a closed economy, and not the horrid, harsh open world beyond the seas. If they had given priority to our external problem they would have postponed many cherished schemes; they would have kept Government expenditure serenely in check; they would have reduced taxation in order to increase savings; they would have controlled inflation (possibly we should have needed something like the Belgian plan of funding a part of our currency holdings and bank deposits) and they would have considered every step in policy from the point of view of making our exports competitive. Emphatically they would not last year have put another £260,000,000 on our taxation to put into force a free Health Scheme. However good it may he, in my view—I do not wish to use too strong a word—it was an insane proceeding at that moment. But I believe that neither our Government nor our people really thought that our standard of living, and certainly our civilisation, depended, upon a solution of our external problems. The Government were intent on distributing wealth and making things easy, which could be done as long as American aid was available, but for which we were in fact much too impoverished. The result has been staggering taxation which, in my view, cannot be borne permanently.
I noticed in the last National City Bank Circular a calculation—which I take to be correct—that American taxation equals 24 per cent. of the total national income of that country, whereas our taxation is 39 per cent. of our total national income. The difference between 24 per cent. and 39 per cent. is enormous. Yet American taxation is regarded as being very high indeed. The consequences of the taxation we suffer, not only on incentives but particularly on risk savings, cannot, in my view, be exaggerated. I agree with what the noble Lord, Lord Rennell, said yesterday about savings. In this country we depend entirely on our industry having enough risk savings available. Our great handicap, as we know, is that our industry is not as modern as we would wish it to be. There is an enormous amount to be done. We want plenty of risk savings and, as Lord Rothes said last night, we want more undistributed profits. I would say there are

163
no risk savings being made at present. I do not believe the public privately are saving anything at the moment. It is true there are institutional savings—life insurance, and so on—but it must be remembered that the institutions who take that money do not risk their money in common shares, except to a very small extent. Therefore I do not see where the money is coming from for our industry. That such a situation should exist is particularly disastrous for a society so precariously situated as we are. It is claimed by the Minister of Health that "transfer expenditure," which is an enormous proportion of our total expenditure—for instance, the free health expenditure, out of one pocket and into another—is of no consequence. That, to my mind, is nonsense. If we had not only free health, but free food, free clothing, free houses and free everything else we might then have a standard rate of income tax of 18s. in the £. Does anybody think that the people of this country would work for 2s. in every pound they earn? Does anybody think that people would take risks if all their money except 2s. in the £ were taken from them?
It is clear, therefore, in my opinion, that the Government policy has been contrary to what it would have been if they had felt in their bones that everything depended upon paying our way externally. As a consequence, as I have said, we have found it more difficult than any other country to curb inflation. Even accepting the dollar problem as abnormal, our external situation, and every other country's external situation, is largely a reflection of internal policy. If the Chancellor of the Exchequer accepts this view, then he cannot have had the power to make his views reflect themselves in action. I do not blame the Government for not closing the dollar gap (personally I think it will never be closed by exports alone), but I think we could have got much nearer to doing so. I believe that, in addition to exports, we must have investment by the creditor countries in this country. But if we are to have that, we must give a welcome to investment and we must do things which encourage investment instead of things which make it impossible.
I admit that it is particularly difficult for the Socialist Party to swallow the
164
need for giving priority over internal measures to the solution of our external equilibrium. It is difficult not to put theories into practice and this they have done. In fact, all along their internal policy has received priority over their external policy, until we have reached the edge of the precipice. I may add that I do not think the Conservative Party have been as clear as is desirable on the measures to be taken to reduce excessive Government expenditure. Perhaps both Parties act on the principle of what I am told is a well-known saying: "Who votes against Santa Claus?" With a General Election approaching, perhaps that is felt deeply by both Parties. But had the Conservative Party been in power, I feel sure they would have realised far earlier what the situation was and what the necessities were. They would not have been so much hampered by doctrine and dogma. I sometimes think that the Chancellor of the Exchequer himself would have liked to act otherwise (I have read some of his speeches in this light), but in fact while he has curbed inflation very forcibly with one hand, he has encouraged, or has had to encourage, it with the other. Meanwhile, Government expenditure inexorably increases and our whole system is over-loaded. As I have just said, we added a few months ago £260,000,000 to our taxation for one object, and now we are trying desperately to save £100,000,000.
I suppose it is right that a critic should make some constructive suggestions for the elimination of inflation, a course which is so vital. Can one suggest anything more? If we examine our total national expenditure in this light, it is obviously impossible, as other noble Lords have said, to suggest very great economies in the £600,000,000 of miscellaneous expenditure. Indeed, it is clear that nothing can be done in a big way to reduce taxation except by the gradual elimination of food subsidies or by making the free Health Scheme more self-supporting. While I consider that more and not less money should be spent on hospitals, I believe that the free Health Scheme should be made self-supporting to a much greater degree than the Government now propose. I believe that it is right and proper that a charge should be made for all medical consultation and medical attendance. Perhaps I have the

165
Chancellor of the Exchequer on my side, when one remembers what he said in his Budget speech when this matter was first discussed. I believe we could save quite a large sum on the Budget if that scheme were reasonably adjusted.
As to food subsidies, I have said to your Lordships before, and I say again, that I consider they should be gradually eliminated. I know that this is a very contentious matter, and obviously I speak entirely for myself. These subsidies have the disadvantage of making us live in a world of illusion and apparent prosperity. If the subsidies are gradually eliminated we can become free from the most dangerous illusion of all—namely, that the real value of food is what we are now paying, and not what it costs to produce. Moreover, by continuing these subsidies the Government deprive themselves of one of the few possible inducements to make people work harder—namely, to buy their food at its real cost. Food subsidies also deceive the manufacturer, because in my opinion they blind him to what are his real competitive costs as against his competitors abroad. Of course the elimination of the food subsidies can be only gradual. Provision has to be made for large families and hard cases, but, as has been already argued, one has only to look at the expenditure on drink, tobacco and entertainment to realise that for many millions to pay more for food and perhaps a little less for something else would not be too difficult. From the budgetary point of view the matter is of great importance. Food subsidies of £500,000,000 represent one-third of the whole of income tax and £200,000,000 more than the whole of the purchase tax.
It is, of course, perfectly clear that the situation which faces us is full of difficulty, and particularly for such bodies as the T.U.C. Devaluation itself must increase the cost of living, but by how much is not yet clear. If devaluation was necessary, it means that our exports required that amount of assistance, and that per contra it was necessary that our imports should go up equivalently in price. If higher prices mean equivalent wage increases, then the assistance given by devaluation to our exports is nullified and we shall be where we were, only worse off; we shall not be able to export snore to the dollar area, and as regards all other countries which have devalued
166
with us but which do not increase their costs, as I have assumed we shall, we shall be worse off and find still more difficulty in competing with them. This will be very serious in the case of such countries as Germany and Japan.
In addition to the effects of devaluation, if food subsidies ate gradually reduced, then the price of some foods will rise. But, of course, the community will gain equally in other directions—that is, in the reduction of taxation and perhaps in an increase of savings. At present, food prices are abnormally low, and prices of other things bearing purchase tax absurdly high. We live in an unreal world, using every expedient to hide, from the people that they are trying to get somewhat more than a pint out of a pint pot. There is no way of getting from a castle in the air down to the ground of reality without risks. Devaluation involves great risks. The gradual elimination of food subsidies involves risks. We must persuade the millions who do not follow what is happening that there must be some fall in the standard of living, at any rate temporarily, until we can live and work in a more real world where we 'work harder, save more and produce more. The only certainty is that if we sit still and do nothing, the reduction of our standards to what we can afford will take place chaotically and disastrously.
While I regard the gradual elimination of the food subsidies as a necessary step, I cannot claim that this will do anything immediately to solve our dollar problem or to preserve our reserves. Indeed, I cannot see that in the critical six or even twelve months to come anything exceedingly dramatic can be improvised—though no doubt inflationary tendencies can be moderated. We must rely mainly on the effects of devaluation, on the import cuts, and on such measures as are possible, especially to encourage exporters to the dollar area. It may be that our reserves will be maintained at, their present level; it may be that they will continue to diminish. In the latter case, we should quickly face a critical position involving great hardship and unemployment.
Such suggestions I have made have been put forward—and I should like to make this very clew—with the object of helping to avoid disaster, of maintaining employment and a decent standard of life and of re-creating the possibility of

167
raising that standard again as soon as possible. So long as we are democratically governed by a free and universal suffrage I cannot believe there is any danger that the wage-earners, with by far the greater number of votes, will not have their interests fully attended to by any Government who come into power. The greater danger is that the wage-earners may not show wisdom; that they will press their power too far against their partners in production, and will kill the goose, or damage her so that she will lay by far too few eggs. There are certainly-some who believe that "bread and circuses" and appeals to hatred will most effectively gain the wage-earners' votes. I do not agree. We have to depend entirely on the wisdom and the moderation of the British voters, men and women; and I believe they possess and will show these qualities.
5.3 p.m.
LORD WINSTER: My Lords, these matters have now occupied in the course of the last week four days of Parliamentary time, and a great deal of that time has been taken up in recalling
"Old, unhappy, far off things,
And battles long ago."
I cannot believe that the events of 1931 have a very practical application to the problems with which we are faced in 1949, and more especially to those that lie ahead of us in 1950. And, very respectfully, I would suggest that both sides might from now on practise a self-denying ordinance in 'these matters. I used to have a dog who would gnaw every bit of the meat off a bone, then go down to the orchard and bury the hone; a day or two later he would go back and dig it up and have another gnaw and then bury the bone again. I think we might give up digging up and gnawing at the 1931 bone.
In the debates which have been taking place in the last four days there have been from the Opposition three constant criticisms of the Government—criticisms which have also run through the Conservative Press. They are: that the Government have no policy; that they are giving no leadership; and that they are not telling the people the truth. All of us who have had the great education of fighting an Election know quite well that to say that your opponents have no policy
168
is common form. I expect most of us have had the experience of that persistent voice from the back of the hall which keeps on crying out "Tell us what's your policy."
It occurs sometimes even in your Lordships' House—I catch echoes of it when we debate defence here. The Opposition speakers tell us that the Government have no plans—which, of course, means that our Chiefs of Staff are content to go abroad to meet their opposite numbers in other countries and say to them, "I have to tell you that we have no plans; we have a Government and a Minister of Defence who do not believe in plans, and we as Chiefs of Staff are quite content to serve a Government who do not formulate plans." Equally, when we debate economics in this House we are told that the Government have no policy. So, of course, Sir.Stafford Cripps is content to go to Europe and meet Mr. Hoffman and the financial authorities of other countries and say, "I represent a Cabinet which has no policy at all in financial or economic matters." I doubt whether that really is so. The policy may be good or bad; one may agree or disagree with it; but I am quite sure that the policy is there.
Then there is the question of leadership. I always think this question of leaders requires considerable thought. My mind runs over some who have been called great leaders: Alexander, Napoleon, Hitler, Mussolini. I remember that Mr. Churchill expressed considerable admiration for two of those leaders. But somehow they did not seem to work out very well for their own countries; and I am inclined to think that perhaps the leader who is most attuned to the particular genius of our people is the leader who speaks in unpretentious language, who speaks in modest tones proclaiming simple truths. In peace-time especially I believe that to be the truth; I think that flamboyance, and the mixture of the orotund style of Gibbon and the pompous language of Henry James, are perhaps over the head of the common man, leaving him a little puzzled as to what it is all about. Perhaps the simple style is best. I have seen considerable criticism in the Conservative Press of the recent broadcast by the Prime Minister. In some cases it i was most unfavourably commented on in

169
almost personal tones. But I have heard that in fact that broadcast had a very considerable appeal, and was a great success. Your Lordships know that there is a sort of "fan mail" in these matters and the response to that broadcast of the Prime Minister's has been one of the most encouraging, and satisfying ever received after a broadcast.
But let us be factual about these things and look at what the Prime Minister has said during the recent crisis. He has' said for instance:
"We can only get through if every industry, and all the people who work in it, in whatever capacity, co-operate with a firm will to conquer."
Again, he said:
"We must find a way to stand on our own feet. The need is for an all-out effort."
Is there no leadership in that? is that not telling the simple truth? Does it not answer the question how we are to get out of the situation in which we find ourselves? The President of the Board of Trade said recently that this was "Britain's last chance." I think that perhaps he was a little pessimistic; I do not take quite such a grave view as that: but one cannot say that that was an effort to conceal the truth from the people.
But a passage to which I wish particularly to call your Lordships' attention is one which has already been quoted in the course of this debate. It was a passage from a speech by Sir Stafford Cripps in which he said:
"No Government action of any kind can in fact save our present social and living standards unless we all collectively and severally play our full part. I do ask every person in the country to face that simple fact and pay full heed to it. We are all fighting together as a team for the survival of a way of ife—indeed for everything that is good and helpful in our British civilisation."
Is that not a singularly honest and truthful attempt by the Chancellor of the Exchequer to tell the facts of the situation to Parliament and the country? What was the comment upon it? A Conservative newspaper leader the next morning described the speech as
"part of a long tedious lecture, a child's guide to economics. Is there no leader who will tell the truth?"
I think that might have applied to the writer of the leader, rather than to the political leader of whom he was speaking. That is the comment which one reads in the Conservative Press of what
170
I consider was a singularly truthful and honest account of the state of affairs given to the country. But comment of that sort was not confined only to the Press, for Mr. Eden, who followed, described the speech as
"a pious exhortation suitable for a Christmas cracker motto."
So really this is your reward for trying to tell the truth, as you see it. Those are the comments which you receive in reply.
I read the speech by Mr. Eden with great interest. He made some isolated suggestions. I will agree that some of them were valuable. They were suitably and duly acknowledged by the Prime Minister. But in that speech no trace whatever of a coherent policy appeared. It charged the Government with not foreseeing the event. There is nothing easier than being "Mr. Jimmy Know-all" after the event. The Opposition charged the Government with failing to restore national credit abroad. Mr. Eden's contribution to restoring national credit abroad was to say that he believed another crisis "is not many months away." As I listened to that croaking speech, which made so little solid contribution to the solution of our difficulties, but which I agree was delivered under the handicap of Mr. Churchill's ban on making any pronouncement upon Conservative policy at the present moment, I recalled some lines front The Raven of Edgar Allan Poe, which with your Lordships' permission I will read:
"Though its answer little meaning
Little relevancy bore,
Doubless said I what it utters
Is his only stock and store,
Caught from his unhappy master
Whom unmerciful disaster
Followed fast and followed faster."
There are others who, if they do not croak, at any rate criticise. I saw a resolution passed by the Institute of Directors at the instance of their Chairman which said that:
"Individual and corporate enterprises are being weakened and frustrated by Government interference … Council calls on all directors to take every step within their power to oppose such interference and to make known to their employees the proved advantages of free enterprise."
Having read that I had the curiosity to study the financial columns of the paper in which this appeared. With immense relief I read that the Standard Oil Com-

171
pany of New Jersey are about to spend 150,000,000 dollars on refineries in this country, which looks as if they still believe there is something in this country. I also read an account of no fewer than seventeen companies which had shown a record turnover, an increase in profits, an intention to allot bonus shares, or to restore or increase dividends. I read such remarks as "Powell Duffryn—satisfactory activities"; "Staveley Coal and Iron—satisfactory trading record." Having read that, I was relieved to think that, although no doubt the Chairman of the Institute of Directors has much to grumble about, yet there are, thank goodness, one or two bright spots on the other side.
I have mentioned that I thought Mr. Eden spoke under the handicap of Mr. Churchill's not wishing to make a statement on Conservative policy at this moment. Let me say at once that I am not so foolish as to say I do not believe that the Conservative Party have a policy. I am sure that they have; but Mr. Churchill does not think that this is the moment at which to reveal it. He says
"Far better lose the Election than win on false pretences."
But what the country would like to know is, what are the true pretences, as the Conservative Party sees them, with a General Election coming into sight? But Mr. Churchill, pressed coming his cure for our present besetments, says that it consists of
"a number of well considered actions all taken together to form part of a general design."
Like the captain in The Hunting of the Snark, he has brought his Party
"the best of all possible charts.
A perfect and absolute blank."
I am reminded of the events of the South Sea Bubble, to which the noble Marquess has also referred this afternoon, when subscriptions were invited for, amongst others, two projects. One was a project for a wheel for perpetual motion; another was for "a design which will hereafter be promulgated." So I feel we might say that the Churchill policy is that Mr. Churchill should be perpetual Prime Minister, when he will from time to time promulgate such parts of his "general design" as he thinks it good for us to hear. In the fourth year of Parliament, with a General Election so closely ahead,
172
I think the country is entitled to hear rather more than that.
The National Union of Manufacturers also complain of lack of leadership on the part of the Government. I think perhaps the National Union of Manufacturers might exercise a little leadership themselves on some of the industries of this country. Sir George Schuster says that there are some cases where progress in increasing production is disastrously slow. He also says that:
"The inefficient have been able to get away with it. It has often been too easy for the inefficient firms to make money. There have been too many cases of large profits without any corresponding contribution to national production."
The Economist also says that manufacturers who are really tackling the possibilities of the American market are not to be found in any great numbers. It speaks of a large group of manufacturers
"paralysed by complacency. They are perfectly happy to cultivate their garden of half an acre and see no point in running after the risks and worries of breaking new ground."
The Economist praises the Government warmly for what they have done in trying to assist the businessmen to break into the American market but deplores the fact that the businessmen do not take advantage of the services which the Government have set up.
I think there are two considerations which may be operating to deter manufacturers. The first is in connection with this question of incentive, about which we have heard something to-day. We have been told—and it is a very proper appeal—that there should be a higher incentive than personal gain, that the sense of service should operate in men's minds. I am sure that that is true, but unless self-help can be classified as a form of service, I am afraid that many politicians might possibly not quite respond to that particular incentive. I am sure the Government have examined this question of incentives. I am sure they have examined it, and will do so again; but, human nature being what it is, I think perhaps the question of incentives must be taken as a factor in this matter of increasing production. At one end of the scale, I see that the Dutch allow their businessmen to retain a certain proportion of the dollars they earn to spend in America as they think fit; and at the other end I was happy to see that

173
the British European Airways Corporation has succeeded in effecting considerable economies by a system of incentive bonuses, So it seems as if at both ends of the scale the system of incentives does work. I am bound to say that I am a cynic in this matter and that "large carrots for smart donkeys" is still a very great rule.
The question of tariffs probably operates in the mind of the businessman, too. The noble Lord, Lord Balfour of Inchrye, said that if the drive for exports ever looked like succeeding, American manufacturers would campaign for higher tariffs. I am sure that that is a matter which looms very large indeed in the minds of the manufacturer and of the businessman; and many manufacturers undoubtedly do fear that America would raise tariffs against a successful export drive. They fear that, however good the article they are exporting, however right the price may be, American business influence would succeed eventually in allowing only so much to enter America. I would ask the Government whether any reassurance can be given on this point. I think Sir Stafford Cripps in one of his speeches or broadcasts said that there were signs of the United States recognising the implications of her position in having become a creditor nation. Therefore I would ask whether any reassurance can be given to businessmen on this point, and whether they need to fear that if they are successful in their drive, tariffs will be raised against them.
There are two other matters which I would mention very briefly but which I think are of great importance at the present time—namely, the question of restrictive practices and of re-equipment. I raised both these matters in a previous speech which I ventured to address to your Lordships, and I received rather a dusty reply from the First Lord, who was replying for the Government. As a matter of fact, I felt that he was a little "at sea" about the whole matter. But there is no doubt that this question of restrictive practices is attracting considerable attention at the present time. As Sir George Schuster again says:
"The time has come for ruthless action, and the public should be informed as to the fads."
Only this week, I saw an extract in a paper—I cannot guarantee it as I have
174
not checked it, but I give it for what it is worth—stating that eight men had been seen watching one man in the Liverpool docks operating a fork lift truck, because of an old agreement that nine men constitute a loading gang. I sincerely hope that that is not true. I give it merely for what it is worth, but I do think that the time has come for a close inquiry into this question of restrictive practices and how far they are hampering production without really being of benefit to the men operating them.
Then, on the question of re-equipment, there is no doubt whatever that there are serious delays in deliveries of machinery and plant. The woollen industry is suffering particularly in that respect. There are cases of orders placed in 1944 and 1945 which are still unexecuted. Again, the chairman of the Electric Furnace Company has called attention to the great difficulty that British engineers will have in competing with the Americans, with their ample power supplies and modern machine tool equipment which our electrical industry lack; at the present moment.
My Lords, in conclusion, may I say that at one time it was thought a good doctrine that there should always be people who were very poor and people who were very rich. You cannot run a great and successful industrial nation on the basis of that philosophy. High production will come only from contented labour. Labour has, of recent years, grown more comfortable and more contented; and as labour feels more contented and more secure in its employment, so I am sure that labour will come increasingly to recognise its responsibilities and the duties which it owes to the nation. But you have to produce this feeling of contentment and security before you are entitled to preach this doctrine of responsibility and duty. The Trades Union Congress is making a great effort at this present moment to help the nation through its difficulties, while at the same time doing its duty to its members. But tie process of recent years has, I think, 'peen wise. I was mulching my azaleas at the week-end and I remembered what Bacon said about money. He said:
"Money is like muck; not good except it be spread."
You have got to wheel it away from the heap in which it is stored and spread it

175
if you want to get the best use out of it. That is true of money. Of recent years money has been spread a little more, and the country will receive great reward from it. Our resources are ample to make everybody comfortable if we are prepared to go without the luxury of maintaining the excessively rich.
Well, my Lords, the two Opposition packs have had two good days. There have been some good hunts and plenty of fun with the Government. The debate is closing; it is moving to a Division, and, of course, the Government will be defeated in the Division. They will have to sustain that defeat with such philosophy as they can call to their aid. But the Government will go forward with their plans and with their policy, supported and sustained by the overwhelming vote of confidence which they have recently received from the elected representatives of the people.
5.28 p.m.
THE MARQUESS OF SALISBURY: My Lords, it falls to my lot to say the last word on behalf of the official Opposition in this most important debate. I do not propose to speak at any great length, or to go into great detail, for the facts and implications of our present very unhappy national situation have already been fully ventilated and explored. My purpose in rising is merely to try, so far as I may, to sum up the main issues of the debate. As your Lordships know, we in this Party have tabled an Amendment to the Government Motion. In our Amendment we say that:
"…this House cannot regard the Prime Minister's statement as adequate to restore and maintain confidence in sterling, failing as it does to provide constructive measures to stimulate initiative and enterprise."
I will let your Lordships into a secret with regard to the wording of this Amendment. In our original draft we referred to the absence of "positive constructive measures." But we decided to omit the word "positive" because there were indeed positive measures in the Government's proposal. I would say to the noble Lord, Lord Winster, that in that respect we do not follow the common form—or what he calls the common form of politicians who say that their opponents have no policy. But it does remain true that in our view none of these proposals
176
is constructive or calculated to restore confidence or stimulate initiative. That is our real complaint against them. They show, in our opinion, an utter misunderstanding of the most vital needs of the moment.
The noble Earl, Lord Rothes, in that remarkable speech which he made yesterday, and which has been referred to by most speakers to-day, defined to the House with, I thought, unanswerable logic, the nature of the crisis with which this country is faced. There is nothing new about it. It has been with us for the last four years at any rate, ever since 1945. At that time, as the noble and learned Viscount, Lord Simon, pointed out this afternoon, this country had been engaged for six long years in an intense and horribly expensive struggle for existence. As we all know, we emerged from that struggle victorious; but we emerged exhausted and impoverished. I think it was Lord Brand who said, quoting from the Economist, that we had spent 25 per cent. of our total wealth in those six years. We went into the war a rich nation, or at any rate a comparatively rich nation. We emerged from it temporarily very poor, with the savings of generations spent in our fight for existence. One would have thought that any Government, of whatever complexion, would have realised that, and would have adopted a policy which, by avoiding further shocks and strains, might enable the country to get on its feet again.
There was no need for the Socialist Party to abandon Socialism as their ultimate objective; one could not expect that they would do that. But I should have thought that it would have been only common sense for them first to create conditions in which Socialism, or indeed any other policy, would have some chance of success. But what did the Government do? They embarked on exactly the opposite course. They snapped their fingers at counsels of prudence. They embarked on unknown experiments of an ideological character which were bound to create further dislocation in our national economy. They indulged in a degree of expenditure which would have been justifiable only if, instead of being poorer, we were far richer than ever before. In the four years during which they have been in office—as, I think, Mr. Churchill pointed out in another place—they spent as much as had been spent in

177
twenty years before the war, when we were infinitely wealthier than we are to-day.
Why they felt justified in adopting a course which I think history will surely regard as insane has never yet been explained to Parliament or to the country. It was not for want of warning. They were told by the leaders of the Liberal Party and the Conservative Party, who in these matters, as in a good many others, I am glad to say, nowadays see eye to eye, and they were told by economists of the ripest experience, the inevitable results of their policy. It may be that they accepted the view which I know was widely held by their supporters, that the State itself has inexhaustible resources above and outside the community. It may be that they held the opinion which was expressed with such force by Mr. Bevan and Mr. Shinwell during the war—that expanding exports (I quote Mr. Bevan's own words):
"are the will o' the wisp which private enterprise is compelled to pursue by underpaying its own workers and thus limiting its home market."
It may be that they subscribed to the fallacious assumption that if a country could overspend itself in war—when the alternative was national extinction—it could go on overspending for ever and ever, without harmful results. It may be that they dismissed normal considerations altogether, and preferred to take the view which was frankly expressed by the Under-Secretary for Foreign Affairs in that gem which the noble Viscount, Lord Simon, was fortunate enough to discover for your Lordships this afternoon. Any of these may be the explanation of the Government's attitude. Or the noble Lord, Lord Pakenham, who is to reply, may possibly have others to give us. If so we shall be glad to hear them. But at any rate the fact remains that the Government have spent money like water here, there and everywhere. So far from taking steps to rebuild the capital of the country, by penal taxation to finance their very extravagant schemes they have reduced still further what remained from the war.
But they have done more than that. They have boasted of it. They have told the British people, in speeches up and down the country, that under a Socialist Government they are better off than ever before, whereas, in fact, as we now know,
178
day to day and week by week they were being brought nearer and nearer to the brink of ruin. Of course it is true that it is always possible to live in comfort or even in luxury for a limited period by trenching largely on one's capital. I suppose that in our private lives we have all known people who have done that, who have had a good time and lived on the fat of the land while the money lasted. But always eventually the day of retribution came, and they ended in the bankruptcy court. That, as I understand it, is the danger now facing the Government and the country.
The noble Viscount, Lord Addison, the Leader of the House, yesterday tried to paint a picture of a mischievous and dishonest campaign of vilification of the Government, by persons unknown, so far as I could make out—for he did not say who they were—based on an entire misrepresentation of the position. I hope that I ant not misinterpreting the noble Viscount; but that was the impression which his speech made upon me. It was, if I may so say, a réchautiéf the old "bankers' ramp," which was not really so very successful even the last time the Socialist Party made play with it in 1931. But one has only to read the speech which was made by the Chancellor of the Exchequer on Wednesday last to realise that the newspapers and others were absolutely right in saying that this is a crisis of the utmost gravity.
In his remarks to the House the Chancellor spoke of "our tremendous task, survival." He warned the nation, in a passage which has already been quoted this afternoon, but which I make bold to quote again, that:
"unless we can quickly produce more and get our costs down we shall suffer a tragic fall in our standard of living, accompanied by all the demoralising insecurity of widespread unemployment."
That is not something taken from a campaign by unscrupulous opponents; it is the Chancellor of the Exchequer speaking. And I suggest to the noble Viscount the Leader of the House that he should take up with the Chancellor this scandalous example of "spilling the beans." But whatever may be the view of the Government, I imagine that no impartial observer, either in this country or outside, would quarrel with a single word of Sir

179
Stafford Cripps' assessment of the situation. Indeed, if noble Lords opposite will do us the kindness to look back in Hansard, they will find similar warnings, in almost identical words, given again and again both from the Conservative and from the Liberal Benches.
Why did not the Chancellor of the Exchequer and his colleagues say all this four years ago when they first came into office? Why did they jeer at us when we said it? Why have they gone about telling the electorate in season and out of season that they are better off than ever before? Why have they persisted, against all the dictates of prudence and common sense, in what I can describe only—and I hope noble Lords will forgive my using the expression—as selling themselves to the electorate on a false prospectus? That is what they have done. It was on this false prospectus that they have won by-election after by-election. The noble Lord, Lord Calverley, boasted about it last night. Do they feel so proud of that prospectus now? The Government's wilful neglect of hard facts during this critical period in our history has inflicted a serious injury on the economic position of this country. That would have been bad enough. But it has done something else which, in my view, is in the long run even more disastrous. It has gravely imperilled our national reputation for wisdom and prudence, which has been in the past our greatest asset in the world. In the past British Governments were often disliked, they were often unpopular from time to time, but they were always respected. To-day, the present British Government inspire confidence nowhere, either at home or abroad. I do not say that without evidence and I propose to give that evidence.
At home, I suggest it is apparent in the dreadful story of national savings; that is to say, the savings not of the rich, but of the common man, whom we are constantly told from the Government Benches is better off than ever before. In 1945—that is, in the first year of the present Government—the amount these small people paid in under the National Savings scheme exceeded what they drew out by £473,000,000—a fairly big figure. In 1946–47, one year after this Government had been in power, the figure had
180
fallen to £330,000,000. Last year, 1948–49, the figure had fallen further to only £28,000,000; and within the first six months of this present year the net drain on the Exchequer, I understand, amounts to over £40,000,000—£40,000,000 more went out than came in. What is the reason for this catastrophic fall in savings —because it is catastrophic? It is surely this: that as the result of the Government policy of penal taxation and ferocious attacks upon capital (which is, after all, savings) the national incentive to save has largely gone.
It is perfectly true that Ministers try to restore confidence among the poorer classes by constantly emphasising that they are taxing only the rich. But, in fact, everyone knows that that is not the case. The poor already pay very 'heavily in indirect taxation. Moreover, the rich may very soon be taxed out of existence. I think that is the intention of the noble Lord, Lord Winster, judging by the closing words of his speech, and I understand, from reading the speeches of the Minister of Health and others, that that is deliberate Government policy. Then, when the rich are taxed out of existence, the whole burden will fall on the smaller incomes. The British public are not fools. They fully realise that. In any case, the majority, as the result of taxation, cannot afford to save in these days. And those who could have saved have come to the conclusion that, if their savings are to be redistributed at the whim of Socialist Ministers or if they are to become steadily less valuable in terms of what they will be able to buy, they would rather distribute them themselves; and that is exactly what they are doing. I say this as one who believes profoundly, as I am sure most of your Lordships do, in the spirit of saving and of thrift. I believe it is absolutely vital that that spirit should be revived, if this country is to regain its former position. Unless we can have and rebuild our capital, and reinvest that capital in productive industry, I believe the nation is lost. It is for that reason that I, like many other noble Lords on this side and perhaps even noble Lords among the Government's own back benchers, regret bitterly the course of action the Government have thought fit to pursue in this matter.
Moreover, this lack of confidence, which is so visible at home, is equally

181
apparent abroad. It is not—if I may reassure the Government—that foreign countries regard them as so very wicked or sinister; they just regard them as dreadfully incompetent; and that, from the point of view of our credit, is even worse. All my information is that that feeling is prevalent in almost every country in the world at the present time. It has already led to what amounts to that flight from the pound which has forced the Government, contrary to all their intentions and desires, to devalue the currency. And this lack of confidence is only intensified by the extraordinary inconsistency between ministerial statements and what subsequently happens. The Chancellor of the Exchequer, as has been pointed out to-day, is a notable sinner in this respect. However great the sincerity with which his statements are made—and I do not in any way doubt his sincerity—they no longer carry the conviction that they did. We must all understand the Chancellor's difficulties over devaluation and his great anxiety to avoid any leak of the Government's future intentions, but why did he say, even so far back as December 31, 1948: "No one need fear devaluation of our currency in any circumstances?" It was quite unnecessary to go so far as that, and he has involved the Government subsequently in what has in fact amounted, though I am sure that was not the intention, to a breach of faith with the country.
Even this unhappy experience has not damped his ardour for dogmatic statements, as we see from the passage already quoted from the broadcast in which he announced devaluation. The Chancellor certainly gave the impression in that broadcast that, apart from a rise in the cost of bread, there would be no other noticeable increases in the cost of living, at any rate within the immediate future. Yet, as we now know, wholesale prices began to rise immediately after his announcement. The Government themselves led the way by raising the price of bread to the consumer and the price of non-ferrous metals—immediately. Such categorical statements, which are immediately contradicted by facts, can only further injure the prestige of the Government and the reputation of our country. And the same thing applies, to a greater or less degree, to other
182
Ministers. Anything they say to-clay is liable to be contradicted to-morrow by the facts; and everybody knows it. They do not even appear Io sing the same song at the same time.
For instance, the Prime Minister and the noble and learned Viscount the Leader of the House in his speech yesterday—I have checked up what he said—gave the impression that they regarded the present cuts as adequate for the purpose of meeting our financial difficulties. But the Lord President, when he spoke in another place, said quite definitely that they were only a beginning. In such circumstances, when the Cabinet themselves speak with two voices, how can confidence be expected to revive? These are the hard facts of our present situation. No one can blame the Government for the difficulties which they, found as a result of the war. No doubt they had in any case an extremely hard row to hoe. But we are hound to indict them for the spirit of levity and irresponsibility with which they have faced those difficulties, which has made them far more difficult of solution than they need have been and which has brought about the deplorable lack of confidence which we see everywhere to-day.
Nor is there, I suggest, any sign that they intend, even now, really to face up to the facts of our position. The noble Viscount the Leader of the House and Lord Pethick-Lawrence, both of whom spoke yesterday, sought to limit the issue of this debate to whether the actual cuts that have been proposed are sufficient or not. Lord Pethick-Lawrence devoted practically the whole of his speech to that particular aspect. I submit that such a limitation of the debate as that entirely ignores the nature and purpose of our Amendment. I will read the relevant words again. We say:
"We cannot regard the Prime Minister's statement as being adequate to restore and maintain confidence in sterling."
We are, in fact, as much concerned with what is not in the Government proposals as with what is in them. We are not against the cuts; we believe that the cuts are, unhappily, necessary. But we do not believe that mere cuts by themselves are in any way adequate to restore confidence; they should be part of a far wider policy. Neither by devaluation alone, as Lord Brand said this afternoon, nor by cuts alone, nor by modifications

183
in our commercial machinery, such as Lord Lucas described to us in the first speech of this afternoon's debate, will the country be saved. We are, of course, glad to hear of any improvements in commercial machinery; but if confidence is to be restored at home and abroad I suggest that more than that is wanted.
I would put this to the Government. What is needed is a firm statement that from now on they intend to live within their income; that they intend to cut their coat to suit their cloth; that they mean to eschew rash experiments, for the time being, at any rate—I do not want to press the Government too hard—and to reduce taxation so as to make real savings possible; that they give an absolute assurance that those savings will be respected; and, above all, that they will endeavour to teach their supporters to look at capital and labour as partners instead of as irreconcilable foes. Were the Government to do that, I believe that a sigh of relief would go up, not only over this country but over the whole civilised world.
I agree it might possibly mean that someone would make a profit somewhere in the sphere of private enterprise—that is, indeed, possible. I know that the very idea of that seems to shock the Prime Minister to the core. He said in his speech in the other place that we should all be actuated purely by the spirit of service. I cannot but feel—if the Government will forgive me for saying so—that it ill befits them, of all people, to take this virtuous line. What has been the burden of their appeal during the last four years? It has been purely one of personal gain; not what you give, but what you get; less work, more pay; this free, that free and t'other free; something for nothing at the expense of somebody else. That has been the burden of Socialist speeches—Socialism pays you. I thought just a flicker of that was still evident even in the peroration of the speech of the Leader of the House yesterday. And now, when this policy has brought the country, as I say —and I echo the Chancellor of the Exchequer in saying it—to the brink of ruin, they turn and lecture us on the spirit of selfless service. They must think the British people pretty gullible if they think they will swallow that. Moreover, what is profit, in any case, whether in the
184
form of dividend or wages, but a reward for service to productive industry, in one form or another? That is what I understand profit to mean. You do not get profit by sitting down and doing nothing. You may lend your labour, or you may lend your money—you must lend something to get profit. If there is to be no reward for service, then with all deference to the Government, I think it ridiculous to suggest that the service will be the same.
Indeed, I thought the thesis of the Prime Minister was largely exploded by a remark of the noble Lord, Lord Lucas, this afternon, when he said, if I understood him aright, that the Government were in favour of payment by results for the manual worker. I was very glad to hear that. I think it is an excellent thing, and I hope the Government will do all they can to further payment by results everywhere. But why do they still maintain that the other partners in industry, apart from manual workers, need no incentive at all? One would have thought that the employer, for instance, needs the incentive, at least, of being allowed to plough money back into his business to enable his plant to be modernised, so that it can compete in the markets of the world. But even that, as Lord Rothes showed yesterday, is at present being denied to him. The noble Lord, Lord Lucas, said that employers should not need Government assistance, or that they should not look for Government assistance.
LORD LUCAS OF CHILWORTH: "Leadership" was the word I used.
THE MARQUESS OF SALISBURY: I am very ready to take the word "leadership." They should not need Government leadership. I can assure the noble Lord that the vast majority of them are not asking for leadership from this Government at all; all they are asking is for a cessation of persecution. The noble Lord, Lord Lucas, painted a charming and vivid picture of his and Lord Nuffield's early days, and drew a moral from that picture. I would say this to the noble Lord in reply. Let the Government revert to the policy towards industry which obtained at that period, and I am certain that a great many employers will be willing to emulate Lord Nuffield. But do not let the noble Lord suggest that there is any analogy between the conditions at that

185
time and the conditions which prevail at the present moment.
I have tried to indicate to your Lordships the kind of statement which I believe the Government should have made if confidence was to be restored. But what have we had from the Prime Minister?—merely a string of vague and anodyne statements that take one nowhere. Some of them were quoted by the noble Lord, Lord Winston I will not go over them all again, though I did not think them very impressive, if I may say so. I would, however, like to quote one or two others. First of all, he said that he was in favour of full employment. Well, my Lords, so are we all. After all, in addition to the ordinary humane considerations which I hope are common to all in this House, unemployment in itself means less production and less wealth for the community as a whole. Of course we are all in favour of full employment. But how does the right honourable gentleman seek to achieve that admirable objective? We all know how the Government have been able to do it in the past four years. It has been done, not by Socialism, but by borrowing £1,498,000,000 from the United States and Canada. I think the Chancellor of the Exchequer himself said that without that assistance there would be unemployed to the tune of 1,000,000 or over. But, as we all know, that assistance is now gradually—and perhaps rapidly—coming to an end.
How do the Government propose to maintain full employment in the new situation which is facing the country? It could be done, of course, by the method which has been adopted by the Soviet Government of Russia—namely, by nationalising labour and forcing workmen to work at whatever trade, place and wage the Government decide. I am not going to suggest that that is the policy His Majesty's Government wish to adopt; I know perfectly well it is not. But if it is not, and if they reject the principle of private profit, I shall be glad to know what alternative they have in mind for maintaining full employment. Certainly, as Lord Rennell said last night, it will not be done merely by progressively raising taxation on productive industry; that will only bring us closer to the catastrophe which is already looming before us. Nor, I suggest, is confidence in productive industry likely to be revived
186
by the other statement of the Prime Minister, when he said:
"We live in a mixed economy, in a transitional period."
Transition from what to what? Presumably, from capitalism to Socialism. What confidence is that going to give to those engaged in private productive enterprise? They know, from bitter experience of the industries which have already been nationalised, that the more successfully they conduct their business the more likely is it to he taken over by the State and the more likely they are to be bought out with inadequate compensation. What encouragement is that going to give them to intensify their efforts and expand their industries?
Nor, I suggest, is it likely now—it may have been four years ago—to be much more satisfactory to the workmen themselves, judging by recent comments of those actually employed in nationalised industries. Noble Lords will probably have read some very trenchant assessments of the results of nationalisation which appeared, I believe, in the current issue of the official organ of The National Union of Railwaymen, and which were quoted, if the noble Lord, Lord Pakenham, wishes to know, in the Daily Telegraph of October 28. I will quote only a few words from this article, but I think the House will find them significant. This is what the workmen themselves say:
"The atmosphere is soulless, dehumanising and individuality-killing. Men—good honest trustworthy men—are leaving the railways every week in large numbers, all because of this soul-destroying system of remote control."
Is that the system which the Government, in spite of all experience, are still determined to clamp on more and more industries in Britain? Is that the transition which the Prime Minister has in mind? How, in circumstances of that kind, can he and the Government expect any national recovery? The Economist, this week, as your Lordships will have seen, describes the Government's proposals as a fleabite. I must say that they seem to me much more like a body blow. I do not go quite so far in that respect as the noble Marquess. Lord Reading, who described them as a land-mine; but I am willing to accept his "land mine" as an amendment to my original phrase.
I understand that the noble Lord, Lord Pakenham, is to reply to this debate. We

187
shall, of course, all look forward with great interest to what he has to say on these important subjects. We gathered very little from the Leader of the House. I hope we shall get a little more from the noble Lord. I anticipate that, according to the common form of Ministers, he will give a rather thin defence of the Government proposals and then ask us what we should do. When they first adopted this method I used, in my innocence, to think they really wanted some assistance and that they felt rather at a loss. They had lost their experienced colleagues in a National Government, and it was understandable that they should feel the need of help in solving their problems. But I am afraid I have been driven to the unhappy conclusion—and even what Lord Winster said has not altered my view—that they do not really want an answer for any constructive purpose. For them it is a pure debating point. When they are "up a gum tree" they always ask that question. It is a regular.gambit.
In such circumstances it would be rather futile for me to attempt to give advice which I know very well will not be taken. Nor is it actually possible—and I say this in all seriousness,—to say in detail what any Opposition will do until they know the circumstances in which they will have to operate. A great deal depends upon the state in which the Government leave the country. We do not even now know quite how bad the situation is. At one moment we are told that we are on the edge of ruin and the next moment we are being told, as the Leader of the House told us yesterday, that it is not so bad as all that. We have often asked for information on this or that point in the last three years—my noble friend Lord Swinton mentioned sterling balances in his speech yesterday —and we have constantly been refused that information on the grounds of public interest. And we certainly do not know how bad the situation will be by the time we come into office—to what depths the Government will have let the country sink.
However, I am anxious to help the Government as much as I can, and I think I can say this—and, again, I say it in all seriousness. We should subordinate everything to the vital need for restoring con
188
fidence in this country at home and abroad. Whatever steps were necessary for this purpose, we should state them frankly and fearlessly to the British people and stand or fall by their judgment. As I see it, the vital issue at the next Election will not be merely whether one Party or another Party wins it. It will be whether the country as a whole survives. In such a situation I, like Mr. Churchill and, I hope, the vast majority of noble Lords on these Benches, would infinitely rather be beaten on a policy in which we believe than buy our way to office by false promises. I can assure noble Lords opposite that it is on such a policy as that that we shall go to the country when the time comes. Until then I beg the noble Lord, Lord Winster, to curb his impatience. He really must let us arrange our own affairs, though I can assure him we value his tender concern for our future. In any case, for the time being, the formulation of policy is a matter for the Government and not for us. They are still in power, and no one else can shoulder their responsibilities.
But if they really want advice, I would say this; and I would say it especially to the noble Lord. Lord Winster, in view of what has fallen from him this afternoon. First, let them abandon, in this great crisis, the purely Party game. Let them tell the truth to the nation—the plain unvarnished truth —about our situation, not glossed over by comforting phrases, such as are still all too prevalent: and secondly, having told the truth let them base their policy upon it. If only the Government would do that, they need not, I assure them, fear the result. They would indeed earn the gratitude of their fellow citizens in all Parties. But this, as I think is apparent from the present proposals, they are not yet prepared to do. They are still living in a world of illusion. They are still content to drift on from crisis to crisis. They still—to recall the words of Mr. Mayhew—prefer
"to break new ground in terms of social and economic experiment,"
rather than to concentrate on national recovery. That is why we have tabled our Amendment, and that is why, in due course. I see no option but to carry that Amendment to a Division.
6.2 p.m.
THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM): My Lords, I

189
may have some things to say to the House which will not be acceptable to all. But I am certain that I carry everybody with me when I say from the heart how warmly and how fervently we all welcome the return of the noble Marquess after his long stay in North America. I know that he went there to perform services, and has performed services, to the Commonwealth, not by any manner of means the first or the last he is likely to perform. If he was a hot speaker before he went, he is positively fiery on his return. I know I shall not be misunderstood when I say that he is a dollar export who is likely to be more acceptable than almost every other. I beg him not to stay too long in those parts, because he may become almost too violent for those of us on these Benches. We missed him badly, and we are delighted to see him with us again.
I know that the noble Marquess, who certainly has not spared our feelings, does not wish me to spare his, and I hasten to say that I felt that his speech, which was brilliantly fierce—there is no other word for it—contained a confusion of mind which, coming from him, surprised me. He also, I am bound to say, seemed to be extravagantly unfair in one or two of his comments. If I may single out one particularly, which is hound to cause resentment on these Benches, it was the suggestion that we Socialists always appeal to the impulse of personal gain. Now why should it be supposed that that is so? Why should some of us have joined the Labour Party if we were animated by personal gain? And, having joined it, why uphold this doctrine if it is not congenial to ourselves? I can only tell the noble Marquess that we resent the suggestion just as strongly as he would if any of us on this side had said such a thing of him and his colleagues; and I am hound to protest very strongly at that suggestion.
But there was a fundamental confusion, which carries us near the heart of the debate, in many of the remarks of the noble Marquess. He denounced this Government as a Government of spend-thrifts. He said we had spent money like water. What has all this money been spent on?
A NOBLE LORD: Nuts.
LORD PAKENHAM: The point of that joke has not occurred to me, but it may
190
dawn upon me later. What has all this money been spent on? The two big items—we can speak briefly, after this very elaborate and formidable debate, and perhaps skirt round a few corners—are defence and the social services, including, under the latter heading, food subsidies. The Government, I am sure, will not he indicted by noble Lords opposite for spending too much on defence. They may have complained about the quality, but they will surely not complain about the quantity. What they mean is that we have spent far too much money on the social services in the broadest sense. If we had said, here or in the country, that noble Lords had had nothing to do with the creation of the social services; if we had gone further and said they deplored the creation of these services; and even if we were to say now that they wait to cut them down at this time of crisis, we should be accused of deliberate misrepresentation. The noble Marquess and his colleagues cannot have this both ways. Either—leaving out the small items and putting the thing broadly—these large expenditures have been incurred in the interests of well-justified social provision, or they were a tragic error from the point of view of the country, We say that they are something of which all may be proud. The Government are entitled to a considerable share, but many noble Lords opposite also are entitled to a share. The noble Lord, Lord Woolton for example, had much to do with these things, and he and other noble Lords are entitled to take their share of the credit. But there cannot be any credit for those who say that the social services are a tragic blunder and that we are nothing but a Government of spendthrifts. I say that there was a surprising though honest confusion running through the speech of the noble Marquess.
THE MARQUESS OF SALISBURY: I think there is confusion in the mind of the noble Lord, the confusion being this: that if the object is a good one and the spender is the State and not an individual, the State can spend as much as it wants, whatever its financial position, and claim that it is perfectly justified because the object was a good one. No one is disputing the goodness of the object. The point is that there must be some relation between what a county spends and what it can afford. That is the point to which

191
it seems to me this Government have never been willing to face up.
LORD PAKENHAM: Of course, there is bound to be a relation between what the country can spend and what it has got.
THE MARQUESS OF SALISBURY: Do I understand the noble Lord to say that this ratio has not been exceeded?
LORD PAKENHAM: I say that during the last few months our spending has gone ahead faster and that economies have had to be applied. All who have been concerned with the creation of these magnificent but very expensive social services should be proud of them; and all noble Lords concerned are entitled, as I have said, to take their share of the credit. But let them not take their share of the credit and at the same time accuse us of being spendthrifts because we have organised these services.
I will calm myself a little, my Lords! The noble Marquess's fire is somewhat infectious. I will turn now to some of the complicated issues that have been raised. I was grateful for many of the things that fell from the noble Lord, Lord Brand. He said in effect:
"A plague o' both your houses."
He is in a sense above politics, and all I can say is that politicians of all Parties —and here I may carry some of my noble friends opposite with me, because they too are indicted by the noble Lord—are not really so cowardly as the noble Lord supposes. We in the Labour Party and members of other Parties have not devised and operated these great social services merely because we wanted votes or to win a reputation as Santa Claus. A tremendous lot of idealism and hard work has gone to the creation of these services —just as they have on the noble Lord's part of private interests and in the service of the country. The noble Lord must appreciate that side of it. I agree, however, with the noble Lord in many of the forecasts he made about the situation. I felt he was perhaps a little on the gloomy side, but in these days let us above all things avoid complacency. I know that the noble Lord's remarks will be followed with the closest attention and will be studied by all members of the Government.
Turning for a moment to one central line of discussion which has run through
192
the debate—I shall be unable to mention a great many noble Lords who deserve mention, because in my recollection there was perhaps never an occasion when each noble Lord gave of his best so completely as during the last thirty-six hours —I would break it up in this way. The noble Viscount, Lord Swinton, who spoke with great force and eloquence yesterday, has tabled an Amendment, and the noble Marquess has told us that he and his friends will back it up in the Division Lobby. It seems to me that any noble Lord who votes for the Amendment, who takes such a grave step when the country is in difficulties—I am not saying it is not a proper step—of passing what amounts to a vote of censure on the Government must be actuated by one of three reasons. He may think the so-called cuts inadequate. The noble Marquess did not say much about that; he accepted the cuts, for which I am grateful. I am grateful indeed to other noble Lords who have spoken for not quibbling about the cuts. I think that should be said from these Benches. Secondly, some noble Lords may deplore the absence of accompanying measures that this Government could reasonably have taken without a fundamental change in their policy. Thirdly, there may be noble Lords—it is conceivable—who dislike Socialism, and welcome any chance of voting against it. Some may go in the Lobby tonight for that reason, and it is not for me to interfere with their consciences.
Let me, however, turn to this first question, the question of the adequacy of the cuts which was pressed in deliberate terms by many speakers, most noticeably by the noble Viscount, Lord Swinton, and later by the noble and learned Viscount, Lord Simon—to whom anybody who likes fine speaking listens with great pleasure—and by the noble Lord, Lord Rennell, with whom I propose to deal a little more exhaustively, unless the House becomes too restive and begs us to continue our statistical discussions elsewhere. Let us take the adequacy of the cuts. I feel that there has been, and there still is at this moment, some genuine, perfectly honest misapprehension about the purpose of these cuts. The noble Viscount, Lord Bridgeman, in a constructively-minded speech last night, complained that the measures proposed

193
might be related to the inflationary position in this country, but were only remotely related to the business of improving our balance of dollar payments. Of course the essence of the whole case is that by fighting off the danger of inflation we should put ourselves in a better position to develop our external trade, our export trade. Therefore I hope that noble Lords will bear with me if I say that these cuts are, in essence, anti-inflationary cuts. That is how we must regard them, though of course, the benefits of defeating inflation do not stop there: they carry over to the field of trade in a very important way.
I would break off to remind the House that the other side of the struggle against inflation is the Government's policy, which cannot be reaffirmed too often, of restraint on personal incomes. The House will recall that on October 26 the Chancellor of the Exchequer stated that the Government had renewed their request to all wage and salary earners to limit their demands for increases to a narrow area of very lowly paid workers. The Prime Minister emphasised during the same week that all increases of spending, whether from increased profits, high salaries or wages, or by dissipation of savings, make for inflation and must be restrained wherever possible. I certainly wish from this place to reaffirm most emphatically the Government's policy of restraint upon personal incomes.
To return to the cuts, these unwelcome measures have been rendered necessary by certain inflationary developments that have occurred since the Budget was produced in April. That is the origin of the cuts. I ask noble Lords not to talk as though this were the first time that we had attacked inflation seriously. The Budget, it will be remembered, was hailed on all sides as a "tough" budget. It was described by The Times newspaper, which has been referred to so often (as it is naturally referred to by noble Lords at moments when it suits them, and forgotten by them on other occasions) as a stern Budget. Generally speaking, then, the Budget when it appeared in April was looked upon everywhere as a stiffly anti-inflation Budget. The whole point about these cuts—and even at this moment I feel that this is not absolutely clear to everybody—is that they are in-
194
tended to restore the disinflationary conditions provided by the last Budget.
The noble and learned Viscount, Lord Simon, asked how that could be so, and asked how could these cuts at the same time be intended to prevent inflation arising from an increase of our exports which in its turn would follow deflation. What I have said just now is a precise statement, as I think the noble and learned Viscount will on reflection agree. But I admit that there are two sides to the attack. In the first place, we have to account for certain increases of expenditure in defence, in the Health Services and other ways which have occurred since the Budget was drawn up. That is one function of the cuts, to account for that. In the second place, the very fact of devaluation and the consequent increase of exports, which we all agree is essential, tends to create an inflationary situation on its own. There are two functions of the cuts, both contained within the general purpose.
VISCOUNT SIMON: My Lords, may I interrupt to ask a simple question? I am grateful to the noble Lord for dealing with this because I think it is very important. May I put it this way? Supposing there had been no devaluation, would these cuts be necessary in order to restore what the Chancellor of the Exchequer last April said was the essential real surplus if we were to avoid inflation?
LORD PAKENHAM: It is certain that cuts, not of this magnitude but of a lesser magnitude, would have been necessary to account for the Supplementary Estimates which appeared, though some of those may be found themselves to arise out of devaluation. Therefore I want to check the answer rather carefully. The short answer is that cuts of a kind would have been necessary, even if there had been no devaluation. Part of these cuts arise from devaluation and part from defence and other matters. That is as accurate an answer as I can give now.
There is the question: Are the cuts adequate for these two purposes? It is the considered view of the Government, supporting themselves on a great weight of statistical and economic advice, but taking to themselves, of course, the ultimate responsibility, that these cuts are adequate. That is their judgment at the moment in a field where much is bound to be very

195
uncertain. I am bound to say that nobody, here, in another place or elsewhere—possibly through lack of information—has come forward with any kind of demonstration to the contrary. I make that statement in a challenging way, that no one has attempted to show in any kind of elaborate detail, or even in outline, that cuts of a somewhat larger character were necessary.
VISCOUNT SWINTON: I do not want to interrupt unnecessarily but it is important that the Minister should deal with the statement of the Lord President, that this was a preliminary to further cuts.
LORD PAKENHAM: The Lord President did not put it quite like that, but I am coming to that point. Noble Lords opposite have had much more experience of administration than I have myself, and they will understand that this is a matter where extreme precision is not possible. I certainly do not wish to give a dogmatic answer to the careful question put to me yesterday by the noble Viscount, Lord Swinton, when he asked whether the savings realised this year in Government expenditure will offset this year's Supplementary Estimates. I have gone carefully into the question, and I am going to give the noble Viscount a reply that he will see is not a dogmatic answer. The noble Viscount, with his great experience, will be the first to appreciate that at this time of year we know only of overspending by the Departments. We do not know whether the Departments are doing better than their estimates. Therefore, at this time of the year, we cannot tell what the Budgetary results will be.
It would be quite wrong of me to attempt to give any sort of guaranteed reply to the noble Viscount. There are two special factors, which will be present to his own mind, that arise in this particular year—on the one hand, defence; on the other, devaluation. We cannot tell exactly what defence will cost. We have the extra provision for Western Union. We do not yet know where we stand on dollar aid under the Mutual Defense Act. Devaluation makes calculation difficult, because more money has to be locked up in stocks of food and other imported goods, the prices of which have risen, although in the end there is no net additional expenditure by the Departments in question. The fact of devaluation locks
196
up more money and, therefore, creates a larger estimate at this point.
I agree with noble Lords who have begged us to exhibit no trace of complacency, and it is in that context that I would like to reaffirm what was said elsewhere by the Lord President. He has made it plain that further possibilities of economy are being ceaselessly explored—I speak as a departmental Minister who can affirm this from first-hand experience —and, of course, nothing that is being done at this time will prejudice the great decisions, negative or positive, whatever they may be, which will be taken next year, as always, at the time of the Budget. These cuts are not the Government's first word or their last word on the subject of economy. The struggle for economy is a continuous process. Let us get this absolutely straight: these cuts are supplementary and interim measures rendered necessary at this unusual period of the year by adverse developments since the date of the Budget. That puts it as briefly and as clearly as lies within my power.
There seems to be some complaint in the House that these economies are not a remedy. But those who raise that point surely have failed to study what the Chancellor said in another place. I do not want to make any kind of quibbling point in relation to what the noble Viscount said, but it is a little symptomatic of what many people, including the noble Viscount, think is in the Government's mind, when one finds him actually misquoting the Chancellor on this point. The Chancellor was correctly quoted by the noble Marquess, but incorrectly quoted by the noble Viscount. Although I did not get his actual words, in effect the noble Viscount represented the Chancellor as saying that unless these cuts are adequate, then this tragedy will follow. The noble Marquess quoted the statement correctly, saying that the Chancellor's words were:
"Unless we can quickly produce more and get our costs down we shall suffer a tragic fall in our standard of living, accompanied by all the demoralising insecurity of widespread unemployment."
There is a considerable difference of emphasis. The Chancellor of the Exchequer was not saying these cuts are the remedy or are going to be the remedy, or that unless there are these cuts there is going to be a tragedy. He said that

197
unless these cuts are made and unless we all get together and reduce our costs, then there will be a tragedy.
Of course, devaluation gives us an opportunity, but inflation would snatch it away by raising our costs on the one hand, and on the other hand by creating so much purchasing power at home that the goods which should go for export, above all for dollar export, would be sucked away on the home market. The cuts are for the purpose of combating inflation. In our view, they are adequate for that purpose. I do ask noble Lords who are still hesitating whether to vote or not to-night, before they cast their vote against the Government to ask themselves seriously: Has there been any real demonstration in this House by anybody showing that these cuts are not adequate for this purpose, the purpose for which they are prepared? I would say, with great respect, that there has been none.
The noble Viscount has his own views on the adequacy of the cuts. He refuses to take them one by one. That, he says, is not the way to test a policy and on this I would not challenge him. The crucial test applied by the noble Viscount was this: Has it restored confidence in the pound? Speaking with all seriousness, he said that the answer to that is, alas, that it has not. Since the noble Viscount spoke yesterday I have had discussions, and I beg him to accept it from me as spokesman for the Government that his lament is not borne out by the facts. While it is true that in some places sterling is being quoted at a discount of varying amounts, sometimes as much as six per cent.; our view is that the amount of dealings at the present time is insignificant in relation to the total turnover of international sterling in legitimate trade.
May I just broaden the discussion a little on that point? I hope I may be able to do so without working myself up into any measure of heatedness. The noble Lord, Lord Hawke, tells us that the real question is whether the proposals and prospects of the Government are sufficient to reassure the holders of millions of pounds that they can safely leave their money in Britain and add to it. It is by this criterion, he tells us, that the Government will ultimately be judged. In other words, in the view of the noble Lord, Lord Hawke—who occupies a very
198
representative position in this House and who is, I understand, widely followed—everything should be subordinated to reassuring our creditors. I say that the Government are not prepared to accept that as the supreme test, although of course it is a matter of great importance. Of course, we desire that our credit should stand high in the world and, in particular, we are determined that those who have entrusted their money to us shall not lose by it. But we are confident that in the long run responsible opinion abroad will not judge the value of the pound on the strength of what are sometimes rather dubious transactions by international speculators, but on our national performance in terms of industrial output, our balance of payments, and our social and political peace and stability.
Here I must join issue vigorously with the noble Lord, Lord Brand. I was very sorry indeed to hear him use the expression—because his remarks are widely studied, and I hope he was speaking in a rather lighter vein than usual—that Socialists cannot help hating external problems. I do not quite know what he meant. The noble Lord knows' what regard I have for him, but I am afraid that that is the kind of view that we in the Labour Party are rather apt to attribute to bankers. I am sorry, but there it is. I would not attribute it to the noble Lord himself, or to the noble Lord, Lord Balfour, or even perhaps to other bankers individually, but just to bankers regarded. as an abstract concept. I am sorry that the noble Lord, a highly individual figure, has placed himself within the category of "a banker"—a kind of musical comedy character in the minds of some of us. Probably the noble Lord did not choose his words very carefully. But, in my opinion, there is one thing about the Labour Party which is inspiring and idealistic—the international feeling, the feeling of brotherhood with foreign peoples. I myself regard that as the most elevating thing of all in the Labour Party, so I hope the noble Lord will forgive my putting it in this way. But I would say that we in the Labour Party would be the last people who would be deaf and blind to the international implications of our action.
LORD BRAND: Might I say that I was not insulting the Socialist Party at

199
all. I did not mean all international problems; I meant these wretched external, financial, economic problems which really prohibit them from carrying out their heart's desire in their internal policy. It is just like 1931 coming up again. I do not think I am insulting the Socialist Party at all by saying that naturally they hate these problems which prevent their carrying out their heart's desire.
LORD PAKENHAM: I am grateful to the noble Lord and I only hope I have not misrepresented him, but it seems to me tremendously important that people should not think of the Labour Party as narrowly national. That is not so.
On this point, I would say to the noble Marquess opposite that we, of course, realise that what we can afford in this country depends to a considerable extent on our success in international trade; but we really must not allow our whole internal policy to be dictated by international speculators or crooks in relation to their view of our position. I am sorry to be so blunt about this matter.
My Lords, time is running out. The question of incentives has been raised. I would have liked to deal with that because I would particularly have liked to elaborate the point made by the noble Lord, Lord Winster, in relation to the British European Airways bonus incentive scheme. But incentives have been dealt with by the noble Lord, Lord Lucas; therefore I will draw rapidly to an end of my remarks after, perhaps, one exchange with the noble Lord, Lord Rennell, on the subject of savings. Lord Rennell, I am afraid, became a little entangled. I do not say that I was able to disentangle his remarks unaided, but I have had a good deal of assistance this morning, and I can now assure him that there is no special significance in the coincidence between his figure of £200,000,000 for institutional savings and the figure of £220,000,000 mentioned in the White Paper for personal savings.
LORD RENNELL: The one White Paper has the figure of £220,000,000, the other has £211,000,000. I said £200,000,000.
LORD PAKENHAM: I must not now pursue that point further. In fact, the coincidence which the noble Lord claimed to have discovered is not a very
200
close one, and it is not regarded as possessing any special significance.
I agree with what noble Lords have said about the importance of the National Savings Movement. We must all take that very seriously, and we must recognise that small savings have fallen off. But I am not going to agree that that in itself is necessarily a sign of waning confidence in the Government. I have not the figures at hand, but what has been noticeable has been a considerable inflow and a considerable outflow of savings. It is not a question of people declining to save through the National Savings Movement. It has really been due, so far as one can judge, to the desire, long dammed up, of many people to buy things for their houses. Things can now be bought, and in that, so far as we can judge, seems to lie the principal cause of the outflow of money from savings. Let me agree with everything that has been said by every noble Lord who has spoken of it about the importance of National Savings. Let us send to the workers a message of encouragement and increased exhortation —though some people have grown tired of exhortation. But let us give increased encouragement in every form we can to those who are playing their part in the National Savings Movement. Let us assure them that they are rendering a service which at the present time is of unique value to the whole country. There is a great deal more that I could say, and if any noble Lords wish me to continue perhaps they will indicate the fact, but I understand that most noble Lords are anxious to go to a Division.
Before I conclude let me make this abundantly plain. In the Daily Telegraph, a paper which we all read and many of us enjoy, there is a complaint that there was no recantation yesterday of the Government's policy. There, neither has been recantation, nor will there be recantation from us here on these Benches, because we are Socialists and, up to the present time, both at the General Election and at by-elections the country has shown it wishes to be governed by Socialists, and we shall continue to honour our mandate to the end. Noble Lords have made vigorous speeches, and some of them have criticised us violently. But I know that noble Lords who have spoken so vigorously and so eloquently in this debate, some from this side, some from

201
that side, and some from what I may call the outlying regions, including noble Lords who have pleaded for a National Government, are all at one in this. This country is in a great difficulty. That difficulty is far from likely to end in the immediate future. Whether we call it national unity or whatever we like to call it, we are together in this, not only because we are in the same boat but because we all love our country equally, because we know that we stand for something in the world, that we share a great
Resolved in the negative, and Amendment agreed to accordingly.
common heritage of Christian civilisation which is equally dear to every member of this House. Whichever way we vote, I know that noble Lords will be following their consciences and the highest traditions of this House and of this country.
On Question, Whether the words proposed to be left out shall stand part of the Motion?
Their Lordships divided: Contents, 29. Not-Contents, 116.

CONTENTS

Jowitt, V. (L. Chancellor.)

Bingham, L. (E. Lucan.)

Marley, L.

Braintree, L.

Nathan, L.

Addison, V. (L. Privy Seal.)

Calverley, L.

Pakenham, L.

Chorley, L.

Pethick-Lawrence, L.

Huntingdon, E.

Crook. L.

Piercy, I,.

Darwen, L. [Teller.]

Quibell, L.

St. Davids, V.

Douglas of Kirtleside, L.

Shepherd, L..

Holden, L.

Strabolgi, L.

Adams, L.

Kershaw, L. [Teller.]

Uvedale of North End, L.

Ammon, L.

Lucas of Chilworth, L.

Williams, L.

Amwell, L.

Macdonald of Gwaenysgor, L.

Winster, L.

NOT-CONTENTS

Richmond and Gordon, D.

Templewood. V.

Hindlip, L.

Sutherland, D.

Trenchard, V.

Howard of Glossop, L

Kinnaird, L.

Cholmondeley, M.

Aberdare, L.

Leathers. L.

Reading, M.

Ailwyn, L.

Llewellin, L.

Salisbury, M.

Aldenham. L.

Lloyd, L.

Willingdon, M. [Teller.]

Ashton of Hyde, L.

Mancroft, L.

Baden-Powell, L.

Melchett, L.

Airlie, E.

Balfour of Burleigh, L.

Middleton, L.

Birkenhead, E.

Balfour of Inchrye, L.

Milverton. L.

Cathcart, E.

Blackford, L.

Monck. L. (V. Monck.)

Dundonald, E.

Brand, L.

Monson, L.

Fortescue. E. [Teller.]

Brassey of, Apethorpe, L.

O'Hagan, L.

Halifax, E.

Broadbridge, L.

Ormande, L.(M. Ormonde.)

Howe, E.

Brocket, L.

Polwarth, L.

Iddesleigh. E.

Broughshane, L.

Rea, L.

Ilchester, E.

Carrington, L.

Remnant, L.

Lindsay, E.

Cherwell, L.

Onslow, E.

Clanwilliam, L. (E. Clanwilliam.)

Rennell, L.

Radnor, E.

Clydesmuir, L.

Rochdale, L.

Rothes, E.

Courthope, L.

Rockley, L.

Scarbrough, E.

Cranworth, L.

St. Just, L.

Spencer, E.

De Lisle and Dudley, L.

Saltoun, L.

Stanhope, E.

Deramore, L.

Sandford L.

Ypres, E.

Dorchester, L.

Savile, L.

Dormer, L.

Selsdon, L.

Allenby, V.

Dowding, L.

Semphill, L.

Bridgeman, V.

Ellenborough, L.

Stamp, L.

Buckmaster, V.

Fairfax of Cameron, L.

Stanmore, L.

Camrose, V.

Foxford, L. (E. Limerick.)

Strathcona and Mount Royal, L.

Falmouth, V.

Gifford, L.

FitzAlan of Derwent, V.

Grantley, L.

Swaythling, L.

Hailsham, V.

Grenfell, L.

Templemore, L.

Kemsley, V.

Greville, L.

Teviot, L.

Long, V.

Hailey, L.

Teynham. L.

Matchwood, V.

Hampton, L.

Trent, L.

Margesson, V.

Hankey, L.

Waleran, L.

Monsell, V.

Harlech, L.

Wolverton, L.

Samuel, V.

Hatherton, L.

Woolton, L.

Simon, V.

Hawke, L.

Wren-bury, L.

Swinton, V.

Hayter, L.

Motion, as amended, agreed to.

VEHICLES (EXCISE) BILL [H.L.]
Reported from the Joint Committe on Consolidation Bills with an Amendment, and re-committed to a Committee of the Whole House.
PATENTS BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills with Amendments, and re-committed to a Committee of the Whole House.
REGISTERED DESIGNS BILL [H.L.]
Reported from the Joint Committee on Consolidation Bills without amendment, and re-committed to a Committee of the Whole House.

COAL INDUSTRY (No. 2) BILL
The LORD CHANCELLOR The LORD CHANCELLOR acquainted the House, That the Bill has been endorsed with a Certificate from the Speaker that is a Money Bill within the meaning of the Parliament Act, 1911.

Seed Imported by Forestry Commission

Species

Quantity Imported

Disposals*

To Nursery Trade

To Private Individuals†

1947

1948

1949

1947

1948

1949

1947

1948

1949

lb.

lb.

lb.

lb.

lb.

lb.

lb.

lb.

lb.

Conifers

Corsican Pine

5,642

3,264

1,972

505

333

575

129

34

31

European Larch

309

—

—

—

—

—

3

26

5

Japanese Larch

1,000

4,549

5,891

—

1,460

1,622

—

96

112

Douglas Fir

1,674

—

1,691

844

—

351

39

6

26

Norway Spruce

3,140

4,688

1,094

68

219

186

47

92

126

Sitka Spruce

4,879

7,506

1,778

829

816

1,035

48

70

86

Others

408

210

1,440

—

—

56

—

—

24

Total

17,052

20,217

13,866

2,246

2,828

3,825

266

324

410

Broadleaved‡

Beech

29,691

210

6,578

6,874

—

—

—

—

—

Oak

39,375

—

13,017

—

—

—

—

—

—

Oak, Red American

1,378

1,896

6,600

—

—

—

—

—

—

Others

—

—

—

—

—

—

—

—

—

Total

70,444

2,106

26,195

6,874

—

—

—

—

—

*Actuals (i.e., irrespective of year of import.)

†Includes small sales to certain non-trading public Institutions.

‡A considerable quantity of home collected seed was also distributed to the Nursery Trade and others.