HL Deb 05 November 1952 vol 179 cc26-84

2.47 p.m.

Debate resumed (according to Order) on the Motion moved yesterday by Lord Mancroft—namely, That an humble Address be presented to Her Majesty as followeth—

" Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal, in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."


My Lords, in continuing the debate on the gracious Speech, as one who for thirty years has watched these traditional ceremonies, perhaps I may be pardoned if I say in a few words how impressed I was with yesterday's historic and moving ceremony. In the midst of traditional pageantry, Her Majesty the Queen, with great dignity and charm, yet with simplicity, carried out efficiently her exacting duties. How well it was done! Mr. Attlee recently said: A constitutional Monarchy depends for its success to a great extent on the understanding heart of the Monarch." And in this respect, the Queen's people have no fear: already the Queen is truly enthroned in the affection of her people.

I should like also to join in congratulations to the noble Lords who moved and seconded the humble Address: a great achievement, very well done. I was pleased that reference was made by the noble Lord, Lord Mancroft, to the visit of the Duchess of Kent and the Duke of Kent to the Far East, a mission undertaken with great courage and great friendliness. It will long be remembered by the peoples of the countries visited, and must result in much good between them and their mother country.

As to the contents of the gracious Speech from the Throne, it is true to say that there has been no secrecy about what were to be the main Bills which would be brought before Parliament during the course of this Session—the denationalisation of the iron and steel industry and road haulage, and the amendment of the Town and Country Planning Act in respect of development charges. Two of these Bills can be best described as over-spills from the last Session. The remainder of the legislative programme, apart from the Finance Bill, and should there be any time left, will be taken up in dealing with some of the minor Bills referred to in the gracious Speech. To most of us the gracious Speech was disappointing, because, apart from what the Finance Bill might do, there is nothing promised which will deal with the other formidable problems which now confront this country and which must play a large part in the debates in your Lordships' House and another place during the course of this Session. I propose to deal in a general way with some of the main questions which arise in the gracious Speech, but I should perhaps mention that arrangements have been made for specific matters, such as foreign affairs, the economic situation, agriculture and finance, to be debated some time in the near future; and, of course, the main debates upon the legislative programme will take place when the various Bills are before us.

In the field of foreign affairs, although there has been a change of Government there has been no change in the foreign situation. In the relationships with the Soviet Powers the cold war, and, indeed, the shooting war, continues. The war in Korea is still continuing, with little prospect of a truce being arranged, and there is also the war in Indo-China against the common enemy. Both of those are still a heavy drain on resources, not only in relation to manpower and the heavy casualties caused, but also in respect of money and material. It is interesting to note that not less than about one-third of the total French defence Budget is taken with the war in Indo-China. Our efforts in Malaya cannot be relaxed. The Middle East is still causing much concern, particularly Persia; and, indeed, had it not been for the prompt action taken, the serious trouble which has broken out in Kenya might have extended to a much wider field in Africa. On the question of the North Atlantic Treaty Organisation, I hope that some time in the near future we shall hear something about the more effective co-ordination of policies of the Atlantic Powers, which was promised some time ago. Then again, we should like to know whether the defence targets envisaged at the Lisbon Conference for the N.A.T.O. Powers have yet been realised, and if not, to what extent they are being built up.

Touching on the question of defence, I am sure that we are all interested in the success of the recent atom bomb test. But that test has since given rise to much speculation as to what it mainly accomplished:so much so, indeed, that it has been rumoured and stated that a strong Cabinet Committee has been set up, and is reviewing defence policy in the light of the test. And it is further stated that, as a result of this inquiry, our defence programme is likely to be reduced by onefifth—by £140 million to £150 million— and that this saving can safely be made in time for the next Budget. During the course of the debate, or at any rate at some time in the near future, I should like the House and the country to have some information as to what is the truth in connection with this matter. I hope that on any question of reduction in our defence effort the N.A.T.O.Powers will be kept fully informed.

There are few people who will not pay tribute to the Chancellor of the Exchequer for his efforts to restore the balance of payments and stop the drain on our gold reserves. He has, as he rightly said, succeeded in giving us a breathing space. It is true that he has been assisted in this effort by a reduction in the price of some imports; and it is also true to say that to obtain this breathing space the nation has made a great effort—and, indeed, much sacrifice. For the nation is now faced with many very dark shadows in the economic field. Production is falling, and exports are falling. This does not fit into a picture of recovery, and if this trend continues we shall be faced with a serious economic crisis. Production has fallen for the first time since 1945; and it is a very heavy reduction at that—almost a 10 per cent. reduction this autumn upon the figures for last year. Another serious aspect is the falling exports. During the second quarter of this year exports fell by 8 per cent. compared with those for the first quarter; and in the third quarter they fell by 13 per cent. In money values the exports for the third quarter of this year showed a reduction of £84 million on those for the third quarter of last year.


Are the noble Viscount's figures in pounds sterling, or in volume? It makes a great difference.


I did say" in money values." The Chancellor of the Exchequer has informed us that he has cut imports to the tune of something like £400 million during the course of this calendar year. If our exports remain at the same figure as they have been in the third quarter of this year, it will mean that in a full year our exports will be reduced by £340 million—almost a complete set-off against the reduction in imports. This heavy cutting of imports by ourselves and other countries, with the resultant falling of exports, is causing much concern, and indeed alarm, not only among industrialists and work people, but also among other sections of the population of this country. One result is that unemployment is again beginning to show its ugly head. The average number of unemployed in this country for the last six months was 470,000 persons—190,000 more than the average for the whole of last year. Indeed, with the exception of 1947, at the time of the "freeze-up," the number of unemployed in this country at the present time is higher than it has been at any time since 1940—a very ominous sign. There are large pockets of unemployed persons in some of our industrial areas. In the north western region, the number of unemployed is 105,000. Liverpool alone has 20,200 unemployed and Glasgow 21,500 unemployed, and 20 per cent. of the dockers on the Docks Labour Scheme Register are now out of regular work. In Liverpool, 6,000 dockers—one-third of the total number of dockers—are out of regular work. In addition, there is a considerable amount of concealed unemployment, and there is very much less overtime worked.

I am sure your Lordships can imagine the depressing effect these crowing figures of unemployment have on the people, particularly in those areas where unemployment was so rampant in the period between the two wars. They have not forgotten their experience, and they dread the thought of a recurrence. In the gracious Speech a year ago, the Government were concerned with the scarcity of labour. To-day they do not appear to be very concerned about the growing number of the unemployed. The figures given do not present a very good record for the first year of a Tory Government, and I should like to hear in the course of this debate what plans, if any, the Government have for dealing with this growing problem, for there is little or no reference to this matter in the gracious Speech. Nor does it appear that any Parliamentary time can be given for discussion of this problem—unless it is forced upon the Government by the Opposition—for most of the Parliamentary time is to be taken up with two highly controversial matters, namely, the denationalisation of steel and road haulage. I understand the Tory objection with regard to the nationalisation of steel, but I cannot understand the determination of the Government to denationalise road haulage. It can only be said that it is done to redeem a pledge given during the Election. Well, the Government have broken so many pledges which were given that the breaking of another pledge would make but little difference.

It is common knowledge that British transport has been in difficulties since the end of the First World War. We saw a developing road transport and, at the same time, very bitter competition between road and rail, which often meant the carriage of goods and passengers by uneconomic means and the unnecessary duplication of services. The position between the wars was so bad that not only was it strongly denounced by the Railway Companies' Association, who described the situation of transport in this country as being one of chaos and waste, but Royal Commissions and several Committees were appointed to consider this matter. In their recommendations they all pointed out that there could be no efficient transport system in this country without complete co-ordination of both services. Now, after 'four years of operation, the Transport Commission has proved that co-ordination is the right policy, for out of the chaos which then existed it has organised efficient road haulage and given a valuable service to the public, and, despite increasing costs, charges have been raised far less than the general run of prices. The Government have not produced one scrap of evidence to justify proceeding with such a Bill, and we regard it as a waste of Parliamentary time to force this Bill through. It means that transport will return to its old condition of chaos and disorder, and all hopes of efficiency in an important public service will be wrecked.

I can quite understand the difficulties which Her Majesty's Government have encountered in getting any agreement with any section of the community in relation to this legislation. I read with interest a statement which appeared in the Economist just after the proposals in the White Paper were produced. It said: There is scarcely a single matter in the Bill which suggests that thought has been brought to bear on the realities of transport. It will promote confusion and inefficiency. It is an attempt to secure political favour at the expense of all serious consideration of transport economics and organisation." Indeed, when the matter was brought before another place a highly esteemed Member of the Party opposite, and one who has had long experience as a railway administrator—I am referring to Sir Ralph Glyn—said that in his contact with his friends in transport he had not found anyone who had a good word to say about the Government proposal. Let me quote a report which appeared in the Press, to show what the industry itself feels about this legislation. It was reported that the Minister himself, at a meeting of road hauliers in Blackpool on October 16, said that his Bill to nationalise road transport was desperately handicapped by the lack of support from the industry. Who wants this Bill? I should like a reply to that question.

I will complete my quotations by referring to a very valuable section of this industry, for consideration must be given to the position of the workers employed in it. Their attitude is very clear and definite. Mr. Arthur Deakin, a responsible and respected trade union leader, said this: Never in the whole of my long industrial experience have I seen evidence of such bitterness amongst the men on the job. They remember the 'bad old days'; the struggle to establish decent wages and working conditions; the great difficulties experienced by the unions in negotiating voluntary agreements and getting them observed. Surely, my Lords, the evidence against this Bill is sufficiently strong—so strong that the Government should think again and drop it. As I have already said, the Tory attitude to public ownership of the steel industry is understandable, and it is known that the Steel Bill has been impatiently awaited by many Government supporters. At the same time, the Opposition maintain that the steel industry, like coal, electricity, gas, and rail and road transport, is an important basic industry, one that is vital to the nation's economy and that it should remain as it is at the present time. We regard it as unfair that the industry should be faced with this threat of destructive dislocation, which will last a very long time, even if this Bill goes through. We think it is quite contrary to the public interest.

In the short time that the industry has been under public control it has settled down well. Production this year is running at the rate of 500,000 tons above the figure for last year, and it is expected that, given more scrap during next year, there will be a very substantial increase in production. At the present time the industry has a capacity for an output of some 18,000,000 tons per year. That is all I am going to say about steel, other than that the uncertainty now facing the industry should be removed. The industry —management and workpeople—should be allowed to get on unmolested and without these political upheavals, with the job of making the steel required, in quantity and quality and at prices which will give great assistance to our national economy. In his speech yesterday the noble Lord, Lord Mancroft, asked for a non-political Coronation year. The Government have here an opportunity to set an example in this matter, by dropping these Bills.

Little is said in the gracious Speech in relation to the reduction of Government expenditure. It is said that the Government will persevere with measures … to reduce the heavy load of Government expenditure." Last year something different was said, but I do not think that what is said will make much difference. I am sure, at any rate, that this will not satisfy the group of influential Tory Members of Parliament who, we are told, are now demanding vast economies and cuts in the Chancellor of the Exchequer's next Budget or they will table an amendment to the gracious Speech. These "crusaders," as they are called, maintain that the Government could save £250 million by telescoping several Government Departments and transferring about 300,000 temporary civil servants to productive work—they did not say where. In addition, they say, they could save another £250 million on subsidies. With these economies, it is said, they could reduce income-tax by 2s. 6d. in the £.

It is interesting that this "Bevan group" is growing up in the Tory Party. After all, the group is reputed to include three ex-Ministers and also the Chairman of the Tory Party himself—the person who presided over the conference at Scarborough, where the Chancellor of the Exchequer said that he was not satisfied with the reduction in public expenditure. But the Chancellor later went on to say that big economies could be achieved only by big changes in policy, and that he was not going to be responsible for any big changes such as they suggested, for in his opinion they were either radically unsound, cruel or unnecessary. Nor, he said, was he going to slash expenditure in response to public resolutions. There used to be a great deal of loose talk about the big cuts in public expenditure which the Tories would bring about when they became the Government of this country. They themselves now appreciate the difficulties in relation to the minor cuts which have been imposed. Can anyone envisage the result of cuts in anything like the proportion asked for by this pressure group? If such cuts are imposed there will be, in the Tory tradition, not hundreds of thousands but millions of unemployed in this country.

Among the Bills which are to be introduced during this Session is one to make certain changes within the framework of the Education Act in the law affecting voluntary schools. Many noble Lords are, like myself, interested in this matter, and would like some information about these proposals. We should also like to know whether consultations have taken place between the Government and the same religious and educational organisations as were con- sulted before the Butler Act was passed. In conclusion, I can but say that the people of this country will not get any comfort from the gracious Speech. They look in vain for any big constructive plan for dealing with the nation's difficulties. The Speech, like the record of the Government's work during the last year, is not good. Solvency is only a breathing space—and a short one at that—for the nation is facing dangerously falling production, falling exports, with increasing unemployment and an increasing cost of living. There is noshing in the gracious Speech to indicate that the people will be "set free" during this Parliamentary Session or, indeed, during the life of the present Government.

3.19 p.m.


My Lords, your Lordships will all, I think, have agreed with the noble Viscount when in his opening remarks he referred to the deep impression which the lovely and moving ceremony of yesterday made on us all. But it is possible that with his analysis of the gracious Speech the majority of your Lordships will not be able to show the same measure of agreement. I find myself in that position. In general, I welcome the terms of the gracious Speech, but I should like to make a few observations. If these observations come mainly from a Caledonian angle, perhaps your Lordships will not be altogether surprised. We listened with great pleasure to two charming and able speeches yesterday from the Mover and the Seconder of the Address. The noble Lord, Lord Mancroft, will, I am sure, forgive me if, while saying how much I enjoyed his speech, I join issue with him good-naturedly on one point. In a moment of rhetorical expansion and with proper poetic licence, he referred—in fact he twice referred—to our Queen as "the Queen of England." Five million loyal Scots would dispute that title with him, or at least claim a part. They would do so with irrefutable authority, for the Kingdom has been firmly united for many long years, and long may it remain so! There are even some logical Scots who reflect with pride that our present Gracious Lady is descended to us from Mary Queen of Scots, but I assure the noble Lord that these old thoughts carry no bitterness; they carry only a friendly rivalry, in love and loyalty to our Sovereign Lady, and perhaps a gentle resolution that the Thistle should not at any time be trampled upon.

Turning to the contents of the gracious Speech, I anticipate that the measures relating to iron and steel and to transport will occupy much of our time. I make an earnest plea with regard to the iron and steel industry that, when the measures forecast come before this House, they should be received and treated objectively and without regard to political theory. It is immensely important that that should be so.


On both sides.


To reorganise is important; to reorganise in a lasting fashion is imperative. It is not only the livelihood of the hundreds of thousands of men engaged in the industry which is at stake; it is the very welfare of the nation. Your Lordships will agree that the importance of such an industry must not be minimised. Indeed, no first-class Power to-day can be without an efficient and healthy iron and steel industry. It is true that in the iron and steel industry output is improving, but the last eighteen months have been anxious ones, largely owing to difficulties in obtaining raw materials, particularly scrap. That is a shortage which will not mend, as many nations who were formerly large scrap suppliers are now large scrap users. Scotland has suffered heavily from that shortage, because the pioneers of the industry built it up on the assumption that scrap would be readily available—not an unreasonable assumption, having in view Scotland's large overseas trade and the proximity of the works to ports. Long-term steps are being taken to adjust the practice to new conditions. Meantime, I am glad to note that Scotland has shared in the improvement in the output of iron and steel, and I trust that her special position will continue to be recognised in all questions of allocations of raw materials, which are, I know, largely an internal matter for the trade. In general, may I say this, about iron and steel? I welcome the announcement that reorganisation is going to take place, for the present position is not built to last. I do not believe we can just stand still where we are. Your Lordships will have an opportunity of considering objectively such proposals as come before the House, and a grave responsibility will lie on us at that time.

Turning now to transport, I have not yet seen the Bill, but I welcome any change which gives to the regions a greater measure of autonomy in the matter of road transport. Here again, if I take a Caledonian angle it will perhaps illustrate what I mean. We have suffered from remote control. We are naturally more remote, and we have felt the results of remote control. Many industries in Scotland have felt the burden of high road transport charges without, as yet, any compensating improvement from the railways. There is a feeling that the proposals outlined in the White Paper on transport did not go far enough in the matter of local autonomy; but when the Bill comes forward that is a matter which we will discuss. Here again, I should like to answer Lord Hall's contention. He said: "Why not leave transport alone?" I do not think we can leave it alone where it is. It is not satisfactory where it is. In this industry, also, I hope the House will objectively consider the proposals that come before it, and will do their best for the industry without being tied to any political theory.


May I ask the noble Lord, in connection with this matter, to appeal to his own side to be as reasonable as he expects us to be? After all, we are being attacked; you are the attackers.


I accept that. If my face was turned to the noble Viscount it was intended as a compliment; I was addressing my remarks to the whole House. The responsibility lies on each one of us and that is surely something that this Chamber is eminently fitted to discharge.


Would the noble Lord also try to ensure that we have adequate time in which to discuss these matters?


That is a matter for the usual channels. I agree with the noble Lord that time for discussion of such matters is important.


Would the noble Lord arrange that the length of speeches is moderated?


Referring for a moment to another form of transport, to air transport, there is a strong feeling in Scotland that developments at Gatwick, necessary though they may be to ensure that London has a full and adequate service, should be accompanied by more vigorous developments at Prestwick. The Minister has reiterated his statement that Prestwick airport is to be the second international airfield in the Kingdom, but little has been done as yet to implement the proposals of the committee which recommended certain improvements there. A short extension only has been made to the main runway; there is no movement so far to construct a second runway, without which I believe that no first-class international airport is capable of fulfilling its functions, if the provisions being made at London are any guide. I am told that I raise the question of Prestwick on all occasions. I make no apology for that. We have the authority of the Minister that it is the second airport in the Kingdom, but there is a strong feeling north of the Border that it is losing its place in the queue. I sincerely hope that that is not so, and I hope for reassuring words on a future occasion.

The gracious Speech makes reference to the supply of electricity in Scotland. We shall await these proposals with interest. Meantime, I should like to observe this: the North of Scotland Hydro-Electric Board have I think, on the whole, been singularly successful in safeguarding the amenities of the country. There have been some criticisms but in general they have been successful through their close consultation with the bodies best able to give advice on that subject. While we regard these proposals with great interest, I hope that we may be assured that that consultation will continue in the greatest possible degree, for the question of amenity is one to which high importance is properly attached. The steps regarding the fishing industry will also be welcomed. Your Lordships will be aware that some ports round the coast have been having a very difficult time, and the proposals to help the fishing industry will be welcomed throughout the country. Reference was made in another place to the steps being taken to alleviate difficulties in ports dependent on the fishing industry in the North-East of Scotland, and I trust that this House will accept these proposals when they come forward.

Your Lordships in all corners of the House will welcome, without reserve, the determination of the Government to show the closest possible co-operation with the other members of the Commonwealth and the Colonial Empire, and will wish God-speed to the coming Conference of Commonwealth Prime Ministers.

It appears to me that the increasing degree to which the countries of the Commonwealth and Empire are coming together in financial, commercial and economic matters is one of the few bright signs in a troubled world. It is essential that there should be continuity in that policy, and I hope that we shall, one and all, give our support and our welcome to this part of the gracious Speech. In our own country, in spite of tie difficulties of the export trade to which the noble Viscount, Lord Hall, rightly referred, it would seem that there are now some slight signs of economic improvement. If that is so, they are not due simply to chance, but, as I believe, to the stern and somewhat unpopular policy of the Government. Let us ensure that in this Chamber we do our utmost to support whatever policy is brought before us which genuinely promises to improve that position—whether it be popular or not. A charge lies upon our Chamber to further such measures, which I believe are now beginning to show signs of fruit. My Lords, we pray every day for wisdom; we shall need it all for that task.

3.32 p.m.


My Lords, may I, as a humble and loyal subject of Her Majesty, be permitted at the opening of my remarks to add a few words to those that have already been spoken on both sides of this House in tribute to the gracious Lady who adorned our Chamber yesterday? I hope I may not be thought presumptuous if I say that what remains with me is a happy memory of her perfect composure, the beautifully controlled modulation of her voice and her faultless diction. Long may she live to reign over our peoples here and throughout the Commonwealth!

My Lords, I have listened with great interest to the two speeches which have just been delivered in this House. There is much that I could have said to support my noble friend who opened the debate on the general political questions of the day. I might have pointed out that the present political side of the gracious Speech reminds me somewhat of the doctor's mandate, put forward with such glowing effect by the so-called National Government of 1931. But I will refrain from any comments except that brief mention, and will confine myself broadly to a single issue which has not so far been dealt with in any detail—namely, the question of finance. May I say, at the outset, that it is a matter of great satisfaction to all of us that there has been an improvement in the position with regard to the outside world as compared with what it was a year ago. I say that, quite irrespective of Party, and I am sure that in all sections of the House that feeling exists. I am delighted that the storm which blew up so suddenly and so unexpectedly in the autumn of 1951 has been followed by brighter weather. But two questions regarding it immediately arise. The first is of prime importance to the country as a whole—namely, whether we may now look forward to a spell of fine weather, or is this only a short lived bright interval between long periods of cloud and rain? The second question, which more closely affects our political battles here and in another place, is how much credit for the improved position is to be attributed to the policy and achievements of Her Majesty's Government, and how much to other causes. To these questions I propose to try to give a factual answer.

What are the principal causes which have contributed to the more favourable result? First and foremost, I place the improvement in the terms of trade. The price of the basketful of goods which we have to buy from abroad has fallen, while the price of our exports has kept up fairly well. In view of our enormous trade turnover, a small change in the comparative prices of imports and exports can produce a quite disproportionate alteration in the balance. I have been told that this single factor would account for something in the nature of £200&million a year. But be that as it may—I take no responsibility for the exact figure—there is no doubt that it constitutes a most important factor in our recovery.

The causes of this change in the terms of trade are many and varied, and I do not propose to enumerate them this afternoon. Their continuance in the future is unpredictable, and I shall be surprised if Her Majesty's Government attempt to take any special credit for them or to claim that they arise from any well-thought-out action taken with regard to them. They can be regarded almost as an Act of God, and there is the authority of Holy Writ for the saying The Lord giveth and the Lord taketh away." The second factor is a change of policy with regard to stockpiling. When the Labour Government was in office, the threat of a third world war seemed almost close at hand, and great efforts were called for from this country to which the Labour Government responded. One of the means of taking precautions was to build up considerable stocks. I believe that in the space of a little over a year the value amounted to £200 million or £300 million—and, of course, all that had to come either out of our own production or from imports. In one of the early speeches in this Parliament, I think the Chancellor of the Exchequer said that he was reconsidering that policy. We were afraid that that meant that he was going to use up the stock for current needs—that the stock would be reduced. Well, we had assurances at that time, which of course those of us on this side accepted, that that was not, in fact, the case; and no doubt if it is necessary whoever is going to speak for the Government will say that that assurance is true to-day, and that there has been no inroad into existing stocks.

But even if that is the case—as I hope it may be—it does not alter the fact, which I do not think will be disputed, that there has been no attempt to add to the already existing stocks at anything like the same rate they were being added to in the days of the Labour Government. That, in itself, is of great assistance to the recovery of our equilibrium, because to the extent that we do not put aside into a cache profits of our labour and industry there is all that more to balance the current accounts of the country. It may be—and I am not making any criticism on this head—that the Labour Government was too assiduous in well-doing, in putting so large an amount aside. It may be that, through circumstances, however they have arisen (they are certainly not financial), the prospect of war is further away, and it may be that what it was necessary and right to carry out in the days of the Labour Government it is no longer necessary to carry out at the present time. If that is so, I think some considerable credit is due to the Labour Government for having so spent money on stockpiling as to make the condition of the country secure. But, from a financial point of view, I want to make it clear that the benefit accruing from reduction in the rate of stockpiling is not a financial feather in the cap of the present Government. It is, from their point of view, a fortuitous circumstance which has turned to their advantage.

The third factor is the substantial reduction in the volume of imports. My noble friend who opened this debate had something to say about the fall in imports and some of its consequences. But there is no doubt that whichever Government was in office would undoubtedly have pursued something like the Same policy with regard to cutting down imports, and in so far as the cut in imports has meant doing without luxuries in order to provide the preparations for war—according to the old phrase, abandoning the demand for butter in order to have guns—then that is one of the things which have been of advantage. And, as I say, whichever Government had been in office would have brought this into effect. I do not think the noble Viscount, Lord Swinton, will deny that a very large part of the realised cut in imports has been a cut in raw materials, and that is a thing which I do not think either the present Government or the late Government would look upon with especial satisfaction, because a reduction in raw materials, however it is caused, means that the productive activity of the country is not getting the material to act upon that it had in days gone by. I am afraid that this represents a considerable part of the total reduction, and that this fall has an influence on the productive activity of the country.

The fourth factor is a very simple one. It is that the financial arrangements between this country and the United States of America have, during the last and during the previous six months' period, differed in two respects. In the first place, it was during the last six months that we received from the United States the grant-in-aid towards the defence programme, and, in the second place—I think it is in this same six months—we have not had to pay any money for the service of the American Debt. Those are quite simple financial points which need no further exposition from myself. The fifth factor is the monetary policy of the Government, which has undoubtedly had its effect in helping to bring about an improvement in the position of this country vis-à-vis the outside world. Incidentally, it has, of course, slowed down the creation of new and revised capital equipment both in industry and farming. In fact, that is one of its objects. The object of the high cost of money is to stop people spending in all different kinds of ways, partly by their own private personal consumption and partly by their launching out in directions that are, perhaps, not of the highest importance, but which would, in fact, form part of the enterprise and activity of the country. I do not propose to develop that point very much to-day, because we shall have a debate on agriculture and industry generally next Tuesday, and I have no doubt that those who take part in that debate—certainly noble Lords on this side of the House—will point out that one of the effects of the high price of money is to compel banks to call in loans on mortgages to the farmers and to limit their activities.

Leaving the favourable factors, I come now to some of the reverse factors. The first reverse factor is the short-fall in the Budget receipts resulting to date in, as I make out, a deficit of £400 million this year, as compared with a deficit of only£100 million to the same date last year. I do not want to make too much of this matter I think it is easy to exaggerate its importance, and I would not suggest for a moment that the fact that at this period of the year there is a deficit is any evidence whatever that at the end of the financial year the Budget will not be balanced. It may even be that it will be over-balanced; there may be a surplus, both above and below the line, which will be even greater than the Chancellor of the Exchequer forecast. In every year the major part of the receipts—surtax and other things—tends to fall due during the last quarter, and in this particular year, as I understand, the Chancellor has so arranged matters that an unusually large proportion of the revenue will be received in the last quarter of the year. Therefore, as I say, I must not be thought to exaggerate the seriousness of the present short-fall in any way whatever. Nevertheless, it does make us slightly uneasy. In addition, it has already created a situation which is what I call a reverse factor to the favourable position, because it has compelled the Government to go to the banks for ready money, and in so doing, has tended to increase inflation and not to reduce it.

The second reverse factor—and a most serious factor it is—is the diminution of production. I remember very well in April of last year when I came to this Box to ask the Government, and to ask the noble Viscount, Lord Swinton, in particular, a number of questions as to the prospects and the estimates which the Government had formed of how they were going to secure recovery, that the noble Viscount said that they could not give any estimates; that one of the greatest follies of the Labour Government was to plan and give estimates, very few of which were realised in fact. But there was one thing of which he would give me an estimate—and he did so on the strength of a statement by the Chancellor of the Exchequer—one thing that was part of their programme; that there would be a considerable increase in production in the forthcoming year. On this matter they were bold enough even to quote a figure. He said that they hoped that in the course of the financial year production would rise by no less a sum than £250 million. Where is that figure now? Let me turn to the Economist of November, 1952. It states: There are no measurable indications yet of the renewed increase in industrial production …In August the official index of industrial production showed 99 (1948 average = 100) compared with …104 in August last year. And on the basis of information received so far, the figure for September seems likely to be 115-–116—against 121 in September, 1951. In the first eight months of this year, industrial production was 3½ per cent. lower than in the same period of 1951," Again, I should not like to predict the future, but I think that even the noble Viscount will agree with me that it is at least unlikely that anything like the figure of £250 million increase in production for the year will materialise.

It would be wrong if I were to attribute this fall in production wholly, or even mainly, to Government policy. It is part and parcel of a general decline in world trade, brought about by the desperate efforts of many countries, and this one in particular, to save themselves from bankruptcy. But though this falling off in production is not wholly, or even mainly, caused by Government action, I think I have a perfect right to maintain that it has been exaggerated and is partly due to one piece of Government policy which is distinct from that of the Labour Government—that is, the increase in the bank rate. As I have already pointed out, the purpose of that policy is to prevent people from spending money on activity, on new capital and on various projects requiring risk and courage. It has had that effect, and now it is dearer and harder for them to carry out these activities.

I have tried to state the position as I see it factually and particularly to avoid over-statement. There are many people who fallaciously believe that over-statement is of advantage to Party propaganda. I take precisely the opposite view. Equally, people may be careless when they are speaking about the prosperity of our country if, in attempting to disparage their political opponents, they at the same time disparage the efforts and the results of the efforts of our own country. I have never been willing to be one of those. In what I have said to-day I venture to think that I have been doing little more than dotting the "i' s" and crossing the" "t' s" of the warnings that were given by the Chancellor of the Exchequer himself at Scarborough in throwing a certain amount of cold water on the hot enthusiasts of his own Party.

In conclusion, may I draw my deductions from the facts as I have stated them? With regard to the first question regarding the prospect for the future, I suggest that it is very difficult to draw a positive and assured conclusion of any kind. Some of the factors which have contributed to our improvement are obviously temporary and cannot be repeated. Others may turn one way or may turn the other. Therefore, I think all those who have studied this matter will agree that though there is a lull in the seriousness of our position, it is by no means one about which we can be complacent. We have constantly to watch out. It may be that circumstances over which neither Party has any control may worsen, or it may be that they will stay as they are (let us hope they will) or even, possibly, somewhat improve. In answer to the second question, with regard to Party responsibility for improvement, I will say this: much of the improvement is due to fortuitous circumstances for which I do not think this Government would seriously suggest that they were responsible; much of it is due to actions similar to those which would have been taken by the Labour Government. Although I know the noble Viscount will say it is my" King Charles's head," I think he will admit that it is true that the essential difference in policy between the two Parties is that whereas the Labour Government would, I think, have eschewed the policy of dear money, the present Government adopted it, first of all in a mild form and then, I will not say in an excessive form, but in a very considerable form.

As I said before, I have never claimed that it would not have its effect in improving the position of financial solvency. I have never argued that at all. I have always realised that it would have that effect. But what I said before, and say again, is that the price of doing that has been, is and will be very high. I have already mentioned the effect on industry, which is to damp down enterprise and the spending of money on the replacement of capital. It has done that, and in doing so it has injured the class of smaller entrepreneurs and has injured the productive capacity of this country. It is a common view with a great many business men that they get short shrift from a Labour Government, and that they get conditions in which business and industry can flourish under a Conservative Government. I have denied that for many years. When the gold standard was reintroduced in another place by the present Prime Minister I was strongly against it, because I thought it would injure the enterprise of this country, and subsequently I believe the Prime Minister himself admitted that there was a good deal in that view. I take the same view to-day. I say that a large part of industry is injured by this monetary policy.

It is really a wonder to me that this feeling prevails about the beneficial effect of a Conservative policy on the industry of the country, because not only have industrialists suffered at the hands of the present Government the blow of dear money, but also they have had imposed upon them the excess profits levy, which is a far worse thing, from their point of view, than any taxation imposed upon them by the Labour Government. But it is not only a worse thing for them. It has always, in my opinion, been a had thing for the country, because when you take from a man the whole surplus over a certain amount you destroy his instinct for economy and create most wasteful and disastrous repercussions in the minds of the entrepreneurs. I have always been against that, and I am against it to-day. That is merely a parenthesis, as it were, to what I was saying about dear money.

What has dear money also done? It has put up the cost of the service of the National Debt; it has put up the cost of house building; it has widened the gap by several shillings a week between the actual and the economic rent; it has increased the cost of all those utility services which minister to the public good and which have to live to some extent on borrowed money; and it has put up the cost of all those products of private industry where the entrepreneur has got to borrow in order to enlarge his business and increase the productivity of his firm. Therefore, I say that this one item, which I admit freely has contributed, and does contribute, to preserving the solvency of this country, is bought at a very high price; and I believe that other methods could and would have been found by a Labour Government which would have achieved the same end without bringing upon this country this severe injury. Do not let noble Lords opposite forget that the final question is not solvency from day to day, but whether the production of this country can sustain the whole structure of the nation. If by your policy you reduce production, either the standard of living will have to go in all classes, or you will at a later stage reach a bankruptcy from which all escape is really impossible.

Now I have finished. I know that it is the opinion of a great many members of our Lordships' House who sit on the Benches opposite, and still more the opinion of less well informed members of the Party opposite outside this Chamber, that only the coming of a Conservative Government into office saved this country from the calamitous consequences of a further period of Labour in office. I believe the facts which I have with great care endeavoured not to overstate to-day go a long way, not merely to refute that view, but to show that there is more truth in the precise reverse of the case that they profess to make out.

4.6 p.m.


My Lords, like noble Lords who have spoken before me, I too, should like to join in the tribute paid to the ceremony of yesterday, with the gracious central figure. It is a happy thought that we can all, on an occasion like this, express the appreciation and admiration that we feel for our Sovereign. I hope I shall not be breaking too greatly with tradition if, instead of making a general survey of all that is within the gracious Speech, I deal with one particular point of it, and that very rapidly. I wish to call attention to the paragraph which reads: Active measures will be taken to strengthen the long-standing ties of friendship and of mutual trade between the United Kingdom and the countries of Latin America. I welcome that especial mention in the gracious Speech, because I believe that it is of great importance. I suggest to your Lordships that the mere mention of it in the gracious Speech would have an effect of good will upon that particular Continent, even though nothing were done about it. But your Lordships may have observed that action has already been taken in this matter. The Under-Secretary of State for Foreign Affairs, the noble Marquess, Lord Reading, is shortly to pay a visit to South America, and I am sure that we wish him every success in that good will tour of his. We also have a trade mission now visiting the dollar countries of South America, those in the Central American region. Further, we have a Royal Air Force mission, which in my view has not received the publicity in the Press that it might have done, because they are not only on a good will tour but are showing what Britain can do in aircraft production.

I believe that these visits alone—and I hope there will be others—will do much to assure the countries in South America, that although in our own country we have been much concerned with our own affairs—perhaps to the detriment of our relations elsewhere—yet we can still pay attention to our traditional and long-standing ties of friendship, wherever they may be. Even though mutual trade between South America and the United Kingdom may be difficult—and certainly it is—it is most important that we should not only strengthen our ties of friendship, but should also keep open the channels of communication. We are a little apt to lump together the countries of the continent into one conglomerate and talk about South America—an action which I may say the countries individually do not appreciate. It must never be forgotten by your Lordships, or by anybody in this country, that each one of these countries is moving forward. They are developing at a very great pace. The whole continent is entering into what one might describe as a new phase, or their second hundred years of development, and I believe that this country still has a great part to play in assisting them in that development.

Those countries are not merely suppliers of our primary products; they are not just another set of countries to which we find it difficult to sell anything. Trade between us is, of course, very important; but it is not everything. At times we may look with disfavour at the exchange control conditions which they impose. We appreciate, but too often do not like, their difficulties over payments due to us and we do not like some of their nationalisation projects. But these faults—if they are faults—are not unknown in our own circles, and their consequent example has in some cases been closely followed. It may be that some of the other provisions in the gracious Speech, about reversing certain things that we have done in the past, may also have their effect upon these other countries. I believe that visits to and from the countries of South America are of great importance and should be encouraged—and not only from this side: we should encourage and invite other prominent people from those countries to see us as we are here. These visits should not be merely occasions when someone can go and sit down in another country and bargain for long and fruitless periods over trade contracts. They should be part of a process of making our own country better known to them, and getting some of our problems understood by them—why it is that we take such a long time in delivering goods there. And on our side we must keep our people informed of the great progress which those countries, individually are making, and, as I have already said, must assist them, as in the past, in their aspirations and development.

4.13 p.m.


My Lords in common with all your Lordships who have spoken, I find it quite impossible to comment upon the contents of the gracious Speech without making some references to the circumstances of its delivery. I am sure that on this occasion, at least, all your Lordships will agree with me when I say that the great grief which was felt at the untimely passing of our late King is much relieved by the complete confidence which we feel in his successor. Her Majesty's task is the heaviest in the whole world, for even with a constitutional Monarchy, as compared with an absolute Monarchy, the task of a Ruler in Britain is by far the most onerous that exists to-day. In saying that, I do not except the Presidency of the United States of America. I am convinced—and I am sure that your Lordships agree—that it will be no fault of Her Majesty's if her Reign is not as glorious as that of Queen Victoria and of Queen Elizabeth I. Here I would thank my noble friend Lord Clydesmuir for his reference to the loyalty from North of the Tweed. I will just add that, to us, the most gracious name is Queen Elizabeth I of Scotland, and not Queen Elizabeth II. Her great predecessor, despite all her efforts, never succeeded in conquering or ruling us.

The Address in reply to the gracious Speech was moved in most felicitous terms by the noble Lord, Lord Mancroft. I felt a particular interest in listening to him, in view of certain circumstances to which I hope your Lordships will forgive my referring. Some of your Lordships are aware that Lord Mancroft's Christian name is Stormont, but few probably know how he acquired it. Over l20 years ago his great grandfather was my great grandfather's principal supporter, when my great grandfather, with the courtesy title of Stormont, was then sitting in another place for the great borough of Norwich. It was in view of the former association in our families that I listened with much interest to what was universally agreed to be one of the best speeches of the kind which we have heard for many years.

In regard to the contents of the gracious Speech itself it is not my intention to detain your Lordships long: like the noble Lord, Lord Luke, I wish to address myself to one particular aspect of it. That is the paragraph which, very rightly, occurs early in the gracious Speech, announcing that the Common-wealth Prime Ministers have been invited to meet together this month to confer on vital problems of finance, commerce, and economic policy. I should like to think that when this most desirable meeting takes place the subjects of discussion will include something so large and important that eventually its discussion cannot be confined even to the Empire—that is to say, the maintenance and expansion of the food resources of the Empire and later, as I say, of the whole world. It has been made clear, in your Lordships' House and outside by the noble Lord, Lord Boyd-Orr—who speaks with unequalled authority—that the whole world is facing within a measurable distance of time a crisis in regard to food supplies. Without adequate supplies its population cannot continue to exist, at least in the same numbers as to-day; and still less in the ever-increasing numbers of the future. It is rather a grim thought that all those measures which have been undertaken by the Western nations, and particularly by our own nation, to reduce infant mortality, maternal mortality, disease and so on, and to lengthen the span of life, are merely causing an added crisis in this matter of future scarcity of food supplies. I therefore hope that the Commonwealth Prime Ministers' Conference will have upon their agenda this question of endeavouring to remedy what is otherwise likely to be an extremely serious prospect for all civilisation.

First of all there is the question of the maintenance of the fertility of the land at present under cultivation. That is very important to-day. Those of your Lordships who read in this morning's Press the statement made by Mr. Lyttelton in Kenya will notice that he fully appreciates it, for he has mentioned that if Kenya is to prosper there must be a very great measure of improvement in the methods of cultivation adopted by the local inhabitants. And this applies, too, to the whole of Africa. Although I am not going to enter at length into a discussion of the ill-fated ground-nuts scheme, let me say that I was in complete agreement with the ideas behind that scheme. It was only its execution that was lamentable. Even had it been 100 per cent. successful, I am rather doubtful whether British Africa, at least, would for long have an appreciable exportable surplus of foodstuffs because a very large section of the population of Africa to-day is under-nourished, and that population is steadily increasing in numbers. I fear that even when we succeed in rectifying the various bad methods of cultivation there will still be far too small an amount of crops grown to allow of other than temporary exports. I do not believe that Africa, at any rate British Africa, will ever be able to produce a large exportable surplus. At the same time it is obvious that in the interests of the Africans themselves, as well as of the Empire as a whole, efforts must be made to provide an exportable surplus of some kind, if it can be done.

However, when it comes to the question of finding fresh food supplies for the Empire and the world, there are still certain great areas which have not been tapped. The only one that is likely to be very productive within our own Empire is Australia; and that can be only as a result of an enormous long-term policy which will bring water from the east coast, by tunnelling through the mountains to irrigate the potentially fertile plains of the centre. There is water to be found by drilling there, but it is either too brackish or too impregnated with soda to befit for drinking or for irrigation purposes. The fact remains that Australia is a potential source of an enormous amount of food, and I should like this matter to be considered at the Imperial Conference so that help can be given to Australia to get the resources she needs. This would be a first step towards making this dream a reality.

When we look elsewhere we find that the question is one which does not concern the Empire alone. There are two other potential sources of food. One of them existed two thousand years ago—I refer to North Africa, which to-day is mainly under French control. North Africa was the great granary of the Mediterranean. I understand that even to-day there remain, under the sand of North Africa, a considerable number of Roman reservoirs well filled with good pure water. Many of them are used by local Arabs, but they are not generally talked about. To put North Africa again into a state of fertility would be an immense task, but one which, I believe, given international co-operation, it would not be beyond the strength of human imagination and human resource to accomplish.

The third, and perhaps the greatest potential source of foodstuffs is a part of an area to which the noble Lord, Lord Luke, has already referred—Latin America, and particularly the great Empire of Brazil. In an all too short visit which I paid that country before the war, I was struck with its enormous possibilities, even in the very small portion of it over which I had time to travel. It has great fertility which, if properly developed, would be of enormous benefit to Brazil and to the whole of the world. I should like to see international discussions take place whereby Brazil could be helped, so that without any infringement of her national sovereignty these vast resources of hers could be made available, for herself and for the world.

Let me now correct one misapprehension that exists, and that is that tropical soils are, per se, more fertile than those of temperate countries. It is easy to understand what gives that impression. A virgin tropical soil, when cultivated for the first time, gives the accumulated fertility of hundreds or thousands, or perhaps tens of thousands of years; and naturally in those circumstances it produces most magnificent crops—for a short time. Tropical soils also have one great advantage, and that is that erosion tends to be less widespread, because, for technical reasons, into which I need not go now, tropical soils tend to cover themselves more easily and quickly with vegetation, than do those of the temperate regions. Therefore, the mis-spent efforts of primitive man, which result in his destroying much of his top soil in his efforts to increase his crops, tend to have much less ill-effect in the tropics than in cooler climates.

This may all seem very vague and remote to your Lordships, but in human affairs we have to look a long way ahead. I submit that we should not be doing our duty to ourselves or to posterity if we did not look sufficiently far ahead to do something to obviate the tremendous world famine that will otherwise be upon us within a measurable distance of time. It is true that much of the unrest in the world to-day is the result of rising nationalism and the aftermath of two world wars, but much of it is due also to economic conditions and shortage of food. Unless we can cure that shortage, we shall never have universal peace, or at least a peace which we can trust to last for long. I hope, therefore, that the Commonwealth Conference will have this matter of future food supplies on their agenda, and that this wider sphere of world potentialities will be reviewed, as well as those of the Empire itself.

4.28 p.m.


My Lords, like all noble Lords I was most impressed by the wonderful ceremony which we were privileged to witness in this House yesterday. I should like to offer my respectful thanks for the Speech which Her Majesty delivered from the Throne for the first time in her reign. I should like also to congratulate the noble Lord, Lord Mancroft, for the magnificent way in which he performed his task of moving the Address; and also the seconder of the Motion, the noble Viscount, Lord Buckmaster, on his performance of an equally difficult task. I consider that both noble Lords fulfilled their tasks with great dignity.

I should like to refer to one or two points in the gracious Speech, and first to the matter which is referred to as follows: My Ministers will encourage all engaged in agriculture, milling and industry to cooperate in increasing productive efficiency and thus to produce at lower cost the goods needed at home and by the export trades. I should also like to deal with the point which is set out in the words: A steadily increasing number of houses will be built under my Government's programme. Perhaps in connection with this matter of increasing productivity, I may touch on something which the noble Viscount, Lord Hall, said. I thought he was not quite fair and that his remarks were a little exaggerated when he spoke about productivity and employment under the Government in the last year. Let me take one very important figure—that of coal. In the first forty-four weeks of this year the coal produced in this country, including open-cast coal, amounted to 189,768,000 tons, as compared with 187,239,000 tons in the first forty-four weeks of last year—an increase of 2,500,000 tons. These are the figures in the weekly statistics published by the Ministry of Fuel and Power. Let me turn for a moment to the export figure. The export figure for the first forty-three weeks of this year was 9,563,000 tons, compared with the figure for the same number of weeks last year of 6,329,000 tons. That is an increased export of coal of 3,200,000 tons. I think that those are very important figures, for we know that, as Lord Hall rightly said, coal, like steel, electricity and gas, are absolutely vital to the life of this country.

Here is another figure which I have just obtained. During the first forty-four weeks of this year, as compared with the first forty-four weeks of last year 500,000,000 more units of electricity were sent out by the British Electricity Authority. I think that that shows a good increase also. I know that there has been, as we all regret, a temporary setback in the textile industry, but we are happy to see that about half the number of people who were out of employment in that industry in the summer are now back again. I think we shall see further improvement there. The shipbuilding industry have full books. Unfortunately, they have been handicapped by the shortage of steel; but there again there is an improvement, and I think that by the end of the year we shall, as Mr. Churchill said yesterday in another place, see a great improvement in the steel position. I have not the figures here this afternoon, but they are rising, and in the second half of this year we shall receive a great deal more steel in the promised tonnage from America.

I wanted to make the point about electricity for increased productivity in this country. As we all know, America has nearly double the amount of electricity per worker that we have here, and, if we are going to compete in the world, as we must do, and produce and deliver goods at the right time and at the right price, we must have more electricity per worker in this country. There has been a great improvement in the last three years recorded in the 1951-–52 Fourth Report and Accounts of the British Electricity Authority which I have in front of me. There was a plant increase in 1949 of 703,000 kilowatts; in 1950 of 965,000 kilowatts, and in 1951 of 1,113,000 kilowatts. Last year ten new generating stations were brought in. I would remind your Lordships that many of these ten new generating stations were authorised in 1945, 1946 and 1947. Therefore, I think that we want a great increase, if we can get it, in the speed at which these generating stations are finished, so that we may get more electricity in the next few years to help our industries to achieve the extra productivity which is so much needed in the country.

Now a word on farming. I have here the Fourth Report of the Eastern Electricity Board. I have chosen the Eastern Electricity Board because they are one of the biggest area boards, operating in probably one of the biggest agricultural areas in the country. In 1949–50 they were able to spend £800,000 on rural electrification; in 1950–51, they were cut down to £730,000, and in 1951–52 to £300,000. The total amount of capital allowed for rural electrification was £5,000,000, for all area boards, and then it was cut down by the late Government to £3,000,000. I am glad to say that in February of this year it was increased by the present Government, which I support, to £4,000,000. But, of course, that £1,000,000 extra has to be divided amongst fourteen area boards, and it leaves only about £70,000 more capital per year per board. It allows for very little more electrical installation to be done in rural areas where it is so badly needed for extra productivity of foodstuffs. I should like to make this appeal to Her Majesty's Government. I hope that they will be able, at any rate in the near future, to restore the £5,000,000 worth of work allowed to be done by these fourteen area boards for rural electrification. That would make a great difference in providing more villages with electricity. There are many villages which need this extra electricity for the farms, and it is essential for the extra productivity in the country that is required.

Another point is housing. Here I should like to congratulate Her Majesty's Government most heartily for their performance in the first eight months of this year. Construction is running approximately at the rate of a hundred more houses a day—or over 20,000 more in eight months—than last year. I think one can be pretty hopeful that we shall get 230,000 houses this year, which is a very good start. Another point on which I have always been keen (I have made several speeches in this House on this point) is the cost of housing. This has been steadily mounting in the last four or five years. I was interested in the debate that we had last week, when the Housing (Scotland) Bill was introduced here. The noble Lord, Lord Green hill, who has had great experience in these matters, and who, I understand, is a member of the Glasgow Corporation, complained that even with the increased amount of subsidy which was given to compensate them for the increased borrowing rates, and also to help with the increased costs, the four cities in Scotland found themselves in great difficulty, because there was no extra money for increased building costs.

When the noble Earl, Lord Home, answered the noble Lord, Lord Green hill, he told the House that, on an average, these houses in the four great cities of Scotland were costing about £1,900 per house. The Department in Scotland have taken the average price of tenders received in Scotland as about £1,750. They made a decision based on £1,660 or £1,650 (I think it was), allowing for the £100 reduction in the cost of these houses under the new system started by the late Minister, Dr. Dalton, for the cheaper type of house, now being christened by the present Minister, "The people's house." They arrived at this figure of £1,660, which the noble Earl told the House was about £100 more than had been agreed by the local authorities in England: they agreed to base the tender on £1.550. We all know that the areas in Scotland are much more sparsely populated, and many areas are more difficult to build, and there is also the question of bigger transport costs.

I was particularly pleased to read the speech which Mr. Macmillan made two or three days ago at the by-election in High Wycombe, when he announced that in July two-thirds of the tenders accepted by local authorities were for this cheaper type of house. If the price of the "people's house" is reduced by £100, that makes a difference of about 2s. a week in rent—and prices were getting completely out of control. It is most encouraging to think that now the local authoritie—sat any rate two-thirds of them—have adopted this new practice, and I hope that it will be continued. Otherwise, we shall get ever-rising subsidies which, naturally, we do not want, for it means that rents will be much higher. There is a limit to what people can afford to pay in rents and also, as the noble Lord, Lord Green hill, rightly said, to what the local authorities can give in extra subsidies. The noble Lord reminded the House that Glasgow recently had to put up their rates by (I think it was) 2s. in the £. With those few words, I should like to congratulate Her Majesty's Government on the very good start to their housing programme. Also, I welcome very much, the reference to the Town and Country Planning Act, a subject on which I spoke at some length during a debate in July. We are, I understand, shortly to have introduced a Bill to amend the Town and Country Planning Act of 1948. I feel sure that there are certain provisions in that Act which are highly detrimental, at any rate to private building development.

4.40 p.m.


My Lords, I wish first of all to add my humble tribute to Her Majesty's most gracious Speech. As the noble Viscount, Lord Swinton, said yesterday (OFFICIAL REPORT, Vol. 179, Col. 20): …' gracious 'gracious' is, indeed, the true word for all the Queen is and all she does. Whatever noble Lords on either side of the House may think of its contents, no one can pay anything but a most glowing tribute to Her Majesty's delivery of the gracious Speech. I trust that the historic occasion which we were privileged to witness yesterday may be the first of many occasions when Her Majesty may honour Parliament with her presence.

To come now to the gracious Speech itself, I should like to quote one or two paragraphs from it. At the top of the second page one finds these words: My Government will proceed resolutely with the task of placing the national economy on a sound foundation. The noble Lord, Lord Pethick-Lawrence, said a few minutes ago that the speech reminded him of the "doctor's mandate" in 1931. Well, it may be that the circumstances of to-day are rather similar to those of 1931; and the "doctor's mandate" in 1931 proved, under the National Government of those days, to be a very good mandate. To-day it is the opinion of many of us, perhaps on both sides of the House, that controversy is not necessarily the best way to cure the patient of his disease. Noble Lords on the other side say that the Bills which are to be brought forward, such as the Iron and Steel Bill and the Transport Bill, are controversial. And that is perfectly true, of course. But I would point out that the reason these Bills, which are certainly controversial, are being introduced now, is the fact that controversial Acts to nationalise these industries were passed some time ago. It is easy to blame one side for bringing in controversial Bills when the original cause was brought in by the other side.

In 1941 I had the honour of persuading your Lordships' House to pass a unanimous Resolution, which was supported by the late Lord Addison on behalf of the Labour Party and by the late Lord Crewe on behalf of the Liberals, stating that in the national interest agriculture should be taken out of Party politics. I had the honour to move that Resolution, and I feel that the fact that agriculture has now largely been taken out of Party politics has been very greatly to the benefit of agriculture and food production in this country. I wish that industry generally could also be taken out of Party politics. I feel that if there are good parts of the late Government's Acts, they might well be continued. Equally, if there are amendments which should be made to the late Government's Acts, those amendments might well be made. It is perhaps not easy to get the best of both worlds, but I feel that the times are so serious (in many ways they are like 1931) that a "doctor's mandate" is the only mandate which is possible, because the doctor can take not only the remedy, but also the actual factual remedies which are needed to cure the patient, out of Party political programmes.

I am very glad to pay my small tribute to the fact that the finances of the country seem to-day to be on a sounder foundation than they were a year ago. I do not intend to go into as many details as the noble Lord, Lord Pethick-Lawrence, did, but the fact is that the external position has very greatly improved and I am glad to see in Her Majesty's gracious Speech this paragraph: My Ministers will encourage all engaged in agriculture, mining and industry to co-operate in increasing productive efficiency and thus to produce at lower cost the goods needed at home and by the export trades. My Lords, the word "encouraged" is really the essential word in that paragraph. In my view, encouragement must be given in regard to the next paragraph, which states that the Government intend to reduce the heavy load of Government expenditure. Those of us who are engaged in industry know only too well that it is very difficult to encourage either individuals or companies to produce more because there is such a very heavy load of taxation, both on companies and on individuals. If you have a particularly brilliant managing director whom you wish to encourage it is no good giving him extra salary, because that is all swallowed up in income tax, and by sur-tax at the rate of 19s. 6d. in the £. The only thing to do is for companies to try to find ways of enabling the benefit of any encouragement to be put into the pockets where it is deserved. My Lords, that is a waste of time. Therefore I hope that this very heavy burden of income taxation will be studied most carefully by Her Majesty's Government, and that a decrease in expenditure may make that form of income taxation reduction possible. Then we have the incidence of the excess profits levy. I agree that if excess profits are made from the production of armaments it is right and proper that they should be taxed; but there are a number of unfortunate incidences in the excess profits levy, and I hope that before the next Budget some of the unfortunate ways in which this tax presses on companies may be put right.

My Lords, I do not want to concentrate, as does the gracious Speech, only on "reducing the heavy load of Government expenditure." For a number of years I have sat on a rural district council, and also for fifteen years I sat on a county council. The rural district council, which is almost the humblest of the local government bodies, is often peopled by members who give a great deal of their time towards looking after the affairs of their locality. But whatever they do, rates continue to rise. When, in 1927, I first sat on my local rural district council, the rates of my parish were 7s. 10d. in the £. The rates of that parish are now nearly 21s. 0d. in the £; and so far as I can see, there is nothing to stop the rise continuing. Whenever any member of a rural district council brings forward the subject of the increase in rates and presses for economy, the clerk of the council probably asks, quite rightly: "What can we do, when more and more duties are put on county councils by the Government, and county councils put more and more duties on local rural district councils?" So far as I can see, there is nothing to, stop rates continuing to rise all the time.

I have not heard rates mentioned very often in this House; it is generally taxation which is mentioned. But rates have to be paid in pounds sterling, just as taxes have, and they press equally hardly on companies and on individuals, and cause as much distress as taxation. As I said just now, the reason for the increase in rates is that more and more legislation puts more and more duties on local government, and until the amount of expenditure placed on local government can be curbed, there seems to be no chance of rates even remaining as they are at present. I do not wish to make any special reference to any particular Ministry, but in the counties where I have to do with rates the education rate seems to be outstripping all the rest. I hope that education may become more a non-Party subject than it has been lately, because if any Conservative Member of another place, or any noble Lord on these Benches, raises the subject of education, it very often happens that noble Lords, or in another place Members, on the other side, will say: "Ah, you wish to cut education expenditure." It is not that, but I cannot help feeling that there is a great deal of waste in the educational expenditure and also a great deal of waste in other Government Departments—and even in county councils. I remember many years ago hearing that Mr. Gladstone, who was, I believe, a very astute financier, stated that it was right to leave as much money as possible to fructify in the pockets of the people. My Lords, I am not very keen on planning and I feel that if people are allowed to live their own lives, and to conduct their own businesses, whether export, trade, agriculture or anything else, they will probably do it better and more cheaply than if those businesses are run by a Government Department. I hope that we may see a considerable diminution in the heavy load of Government expenditure, which, in turn, will result in a reduction of taxation on the individual.

I have not mentioned the subject of agriculture this afternoon, because the noble Lord, Lord Hanger-on, is to initiate a debate on that subject next week, and I shall hope to say a few words on that occasion. I was, however, glad to hear one or two noble Lords mention agriculture to-day, because I feel that the provision of capital for agriculture is most essential. I am not going into any detail in this matter, except to say that I have heard lately (and I have taken this up with one or two banks) that certain banks are not as good as others in helping farmers with their overdrafts. I am a farmer, and I have an overdraft; and my bank has not been bad at helping me. But I hope that restrictions of credit will not be applied too severely to agriculture, for there is no doubt that this industry, apart from coal mining, is the one industry in this country in which we have the materials. And if we have the energy and the finance we can certainly increase food production very considerably.

That is all I want to say on the gracious Speech. I could deal with a lot of other points, but before sitting down I should just like to pay my tribute to the fact that the number of houses building appears to be increasing. Housing, if I may say so, should be considered as a non-Party policy. I am glad that the present Housing Minister has taken advantage of the opportunity to allow private enterprise to build more houses than his predecessor did. I do not regard that as a question of Party politics, but one does find—as there certainly was during the tenure of office of the late Minister of Health—political bias against the building of houses by private enterprise. I am glad to see that that has now been swept away. In my view, one of the best parts of the record of Her Majesty's present Government is that relating to the increased number of houses being built. I can only add that, whether this gracious Speech was called the "doctor's mandate" or not, I feel that, looking at it from every point of view, Her Majesty's Government will continue to carry out their mandate (and they should be heartened in doing so by an Election result which I read at lunch time to-day) and will continue to make this country far more prosperous than it has been during the last few years.

4.55 p.m.


My Lords, the responsibility rests upon my shoulders of winding up this debate for noble Lords who sit on this side of your Lordships' House. But before I do so perhaps I may pay my humble tribute to the gracious Speech which we all heard yesterday. I feel that I can make a confession in which I believe all noble Lords could join me. When we saw a gracious and beautiful girl, at that tender age, bearing the responsibilities of State with the dignity and graciousness which Her Majesty showed, I am sure that a lump came into the throats of us all. To me it was one of the most moving moments I have ever experienced. If to-day we have to put aside such happy thoughts, and raise the dust of battle, perhaps there may be times when our thoughts will go out to the gracious Queen and the result will be to temper some of the things we shall say and some of the squabbles in which we shall undoubtedly indulge.

I do not intend to deal with all the points that are raised in the gracious Speech; the majority have already been very well covered by my noble friend Viscount Hall. And I am not going to start trying to add up the profits in the middle of a trading year. That is always a most dangerous procedure. We take heart from the fact that our balance of payments position in the first six months of the current year is promising. The noble Viscount, Lord Swinton, I know, would not be so foolish as to fail to take into consideration that quite a number of benefits come into the first six months, benefits accruing from a cut in imports, whereas unfortunately the liability attendant upon a drop in exports must be taken into consideration in the last six months. So before I had much to say on that issue I should wait until we reached the end of the year. It is not making any Party point to say that we sincerely hope that the Chancellor of the Exchequer will be successful. There is too much at stake to hope that he is going to fail. I am not going to indulge in any comment on transport, strange as that may seem—I shall have enough to say about transport in the weeks to come.

Everything that is worth saying upon that subject upon an occasion like this has already been well said by my noble friend Viscount Hall. Upon the wider aspect that confronts us during these next twelve months I think that he summed up the position when he said that to-day we face dark shadows. We do. Perhaps the most dangerous thing we face in this country to-day is the prospect of drifting back into the mentality of the inter-war years. As my noble friend has said, there is the spectre of unemployment. We do not want labour in this country to get into the frame of mind which results in a belief that there is no such thing as full employment and that the harder they work the sooner they will work themselves out of a job. That was their mentality in the inter-war years; and the tragedy of it was that they were right. We do not want industrialists to get into the restrictionist mentality of the interwar years so that they once again try to make a lot out of a little instead of a little out of a lot. To-day we have unemployment, and we have something that is worse; we have short-time working and concealed unemployment. When you note to-day what is happening in the case of firms in the Midlands that employ thousands of men in an industry that was one of our greatest export industries, when you hear of one of the greatest firms in that export industry calculating whether they will put off thousands of men or work a week of under thirty hours, it is borne in upon you that the situation is really becoming serious.

When you come to think of the unemployment that there is to-day in the docks, when you note the statement of the Dock Labour Board that they have now had to increase the levy to 22½ per cent., the lesson is driven home. Twenty-two and a half per cent. of the Dock Labour Board's employment bill amounts to-day to £120,000 per week. That comes out of the pockets of the employers and will eventually be added to freight rates or warehousing charges. It is a serious matter. Yet there is only one thing we can do as a positive permanent cure—that is, increase production. The moment we sit down and say that we cannot increase production, the day when industry says we must contract, not expand, on that day we are heading for bankruptcy. It is no use the noble Lord, Lord Wolverton, trying to make out that productivity is increasing. Productivity is decreasing.


It is increasing in coal; the noble Lord will agree with that.


Unfortunately, one swallow does not make a summer. The whole of the present Government's financial policy was based upon a productivity increase of 3 per cent. That is not being attained. I do not bind myself to this figure, but it has been estimated in informed quarters that productivity has fallen by 10 per cent. on last year's figures. I need take only one industry as an example—the motor industry—but it is a good example of British industry to-day, because the bulk of our exports have been from our engineering industries. In the motor industry we are now reaping the result of the policy of import restrictions, as other industries are. We discussed this matter in your Lordships' House not many weeks ago, when we debated the balance of payments. It is all very well starting import restrictions, that is a game that everybody can play; and everybody does play it. One of our troubles to-day is that approximately 50 per cent. of our best markets now impose import restrictions, and in the other 50 per cent. we have American and other increasing competition. That is true of the motor industry. For the first nine months of this year motor cars were being exported from this country at the rate of 77 per cent. of production. To-day, exports have fallen to somewhere in the region of 50 per cent. That is typical of British industry as a whole.

This afternoon I shall pose more problems than I shall supply answers, but the tendency to-day is for us to say, "We must draw in our horns." My Lords, we cannot. May I pick up a point at which the noble Lord, Lord Brocket, hinted—and he is the only noble Lord who has spoken from the other side of the House who has got anywhere near the truth. We are suffering to-day from a tax slump. It is no good burking this issue. We are overtaxed in every direction. Successive Chancellors of the Exchequer—I am making no Party point—all Chancellors of the Exchequer, if the noble Lord, Lord Waverley, will forgive me, are immoral in this respect. They have all done their part to shape industry. It has been the plaything of Chancellors of the Exchequer for years. To-day we are suffering from the fact that there has been no long-term policy in our taxation, no long-term fiscal policy. It has been expediency after expediency.

I will give your Lordships an example that well illustrates this point. I remember the fight put up to free the motor car industry from the horse-power tax, which was crippling design and cutting our throats in the export market, even though it did protect us from foreign competition at home. If I may be forgiven a personal reference, I remember the fight that I put up in your Lordships' House on that issue. Eventually, common sense and reason prevailed. But when the engineers of that great industry had new designs on their drawing boards which would have given them the same advantages as their competitors in the export markets of the world, another Chancellor of the Exchequer came along and clamped a high petrol tax on the industry. That tax has had the effect of making the motor industry drift back to smaller models—and too many of them. The abolition of the horse-power tax had the effect of cutting out the making of the range between 6 and 30 h.p., models designed to "cheat the Chancellor"; now we are going back to that again, and production costs are going up.

I should like to say something on the effect of the Ministry of Transport's Construction and Use Regulations on our heavy vehicle exports. We had a battle to get permission to construct the eight-foot wide bus, which is the only bus the South American and other big export markets will take. But the Construction and Use Regulations of the Ministry of Transport have forced the heavy goods vehicle manufacturers to produce one model for the home market and another for the export market. I see that an agitation has been started in The Times. which I have read with great interest, about the 20 m.p.h. limit on vehicles of 4-ton unladen weight and over. If ever there was an anachronism, that is one, because it forces the manufacturer to build two models, one for home and one for export, when there is not one 4-ton vehicle which travels at 20 m.p.h. in this country. When this matter was raised with the Ministry, the present Minister of Transport said, with all previous Ministers, "Of course, I am convinced you are right, but the time is not opportune." And here are we struggling to export everything we can! If our manufacturers of heavy commercial vehicles were allowed to build one model, instead of two, costs would go down 10 per cent. Surely some sense can be knocked into the Government in this kind of thing.

One thing the noble Lord, Lord Brocket, did not mention was purchase tax. If ever there was a bad tax, it is purchase tax. The gracious Speech says that we must bring down prices at home and abroad. Purchase tax is nothing but an uplift of manufacturers' prices. It is the easiest thing in the world to impose, but the hardest thing to take off. If I may be forgiven another personal reference, I remember when I led for the motor industry before the Eady Committee in 1940, when purchase tax was imposed. I begged and pleaded with the Committee not to have a purchase tax but, if they wanted a tax of this description, to have a sales tax. Now look at the dilemma with which we are faced. If we really take the question of exports seriously, there is one thing we must have and that is a home market in this country. We must have a cistern that balances the whole market, so that when there is a fall in the export market we can temporarily absorb the surplus goods m the home market. I have just given your Lordships the figures of exports of motor cars—and I take those as an example. They have dropped to just 50 per cent. of the production, and they were running at 77 per cent.; and when they were running at 77 per cent. the motor car industry was working to only about 70 per cent. of its capacity.

Now what is going to happen? I will make this prophecy. In a few weeks' time, as the Minister of Supply has admitted, we shall have to absorb some of these cars into the home market—temporarily, we hope. Who is going to buy them? The retail and distributing trade cannot afford to, because they have to pay the purchase tax at the time the vehicle leaves the factory; and the incidence of purchase tax is such that if they were left with those cars at a time when purchase tax was reduced or removed it would ruin them and put them in the bankruptcy court. And there is not one manufacturer in this country who produces motor vehicles who could last for one week unless his distribution organisation absorbed his output. The Chancellor of the Exchequer cannot have it both ways. If I may use this expression, which I do with some apology, he cannot sit like a broody hen, thinking that he is going to hatch the egg of a £300 million purchase tax, because the only way he will get that purchase tax is when the goods are sold. While that purchase tax is imposed the goods will not be sold. What is he going to do? I wonder whether many noble Lords in this House would contemplate the purchase of a £400 or £500 article upon which there was a purchase tax, either of 66⅔ or of 100 per cent. and a prospect of its removal.

Purchase Tax is a very easy tax to impose, and it all looked so nice in 1940. I forget who was the Chancellor of the Exchequer in 1940, and I will not embarrass any noble Lord in this House by speculating. But now the chickens are coming home to roost. This is the great dilemma of Her Majesty's Government and it is one which they have really brought upon themselves—or, at any rate, one which successive Governments have built up. Take the case of industry and the build up of its costs through purchase tax. I cite one brief example. I am told that 90 per cent. of the stationery supplies of this country are used by industry. Yet those supplies bear a purchase tax. It is said in the gracious Speech that costs must come down. If that is to be realised, these are some of the problems that must be solved, and solved without hesitation. The Chancellor of the Exchequer and the Government must take the risks that we, when we were industrialists, had to take many times.

We have to dangle more carrots in front of the industrial donkey, and throw away some of the sticks with which we have been beating it up to date. Unless the Chancellor of the Exchequer is willing to take that risk, I know of no other way of increasing the productivity of this country. It is no good the Chancellor of the Exchequer saying, as he did in a speech in Scotland only the other day: "I do not run industry." He handicaps industry, and he must remove those handicaps. If the noble Viscount who is going to reply for Her Majesty's Government can suggest any way in which we can increase productivity, apart from giving greater incentive, I should like to hear it. I do not know of one in my industrial experience. At the present time, as the noble Lord, Lord Brocket, quite rightly said, there is no incentive to the risk-taker. Is there any hope of full employment to the worker unless there is increasing productivity?

I should now like to come to the second point I intend to make, in relation to the meeting of the Commonwealth Prime Ministers. I believe I have said this before to the noble Viscount, LordSwinton—that there has got to be some pretty straight talking. I cannot understand the agitation there is at the moment from a certain group in this country that had some expression at Scarborough during a certain Conference, that there is one thing that must emerge from the Commonwealth Prime Ministers' Conference—namely, that we must come out of the General Agreement on Tariffs and Trade and pin our faith to an extension of Imperial Preference. It would be an exaggeration to say that Imperial Preference is as dead as the dodo, but it is on its death-bed, and through no fault of this country. The demise of Imperial Preference started with the advent of secondary industries in Commonwealth countries. To come out of G.A.T.T. (as it is called) at the present time would, I believe, be a blunder of the greatest magnitude. I would not for a moment contend that G.A.T.T. has proved to be an ideal instrument—it certainly is no substitute for the international trading organisation that was envisaged under the Havana Charter. But it has served this country well. It has done three great things, if nothing else: it has brought about a reduction in American tariffs it has given us some arbitration tribunal where we could, at least, discuss the problems confronting us; and it has kept us from going back to the chaotic days of the inter-war years.

But in a world where tariffs are now old-fashioned and import restrictions are taking their place, industry and commerce are up against some great problems. I believe that Her Majesty's Government have got to seek a widening of the powers of the General Agreement on Tariffs and Trade, and that—and I hope I can say this with great sincerity to the noble Viscount—the one thing the Commonwealth Prime Ministers must be able to agree upon is a common policy of approach to the new American Administration. We in this country can go on doing as much as we can or as much as is humanly possible. I agree with my noble friend Lord Pethick-Lawrence, that deflation has been turned on too hot and too fast. We are working on a perilous margin, and we cannot go on doing so. The British people must have something better to hope for than they have had and they are now getting.

Whether or not, now that the American Administration has been changed, Her Majesty's Government will get a better and more sympathetic hearing than we succeeded in getting in the past, I am not going to speculate upon this afternoon. But, whatever we do, we can never rectify the economic disequilibrium of this world by ourselves, or even with the help of the Commonwealth. America must play its part; America must open its doors to more Commonwealth goods; it must lower its tariff walls; it must alter its customs restrictions, and it must be prepared to invest more capital in the backward countries of the world. But to think that we can do this by talking of increasing Imperial Preference is to live in an unreal world, for two very good reasons. All Commonwealth goods, whether food or raw materials, come into this country without a tariff imposed upon them. The only way we can increase preference is to increase the tariff on foreign imports into this country, including the imports of food. Would Her Majesty's Government for one moment contemplate that action and the further increase in the cost of living in this country which would result?

What is the reciprocal side? The only way we could have more preference in the Commonwealth—and I will take Australia as an example—is for Australia to reduce the tariffs on our manufactures. Would she do that when the reason she has put them on is to protect her secondary industries? As I have said, those who ask for this do not live in a real world. I hope sincerely that when this Conference is held our position will be put forward with strength I do not want to dwell too much upon the Australian scene, but I am certain of this—that in Australia we have to combat a very strong protectionist element. She must open the doors to our imports. We have to persuade Australia that she must play her part once again as a primary producer, because her economy, like ours, can never exist upon a policy of curtailing imports—it must be based upon an expansion of exports.

I comeback to the point from which I started. I trust that Her Majesty's Government will give serious thought to the dilemma in which they find themselves to-day. They wanted the responsibility; they have got it. They have my sympathy, because the present position of our country has been built up over years. We are tax-controlled. Tax has shaped the destiny of our industries, and until we free our industries from a number of taxes, until we increase productivity by a removal of the disincentives and an increase of the incentives, we are never going to carry out what is outlined in the gracious Speech—an expansion in our exports and a reduction in prices both at home and abroad.

5.24 p.m.


My Lords, the debate on the Address, as is usual in this House, has been both responsible and well-informed. It has also been wide ranging. I will cover as much ground as I can, but if I leave out anything I trust that your Lordships; will excuse me, both because I do not want to go out for ever and also because I understand that the noble Viscount, Lord Hall, wants to have another canter over almost the same course next week. So we shall have ample opportunity, if we fall at any fences, to do better on the next round.

On the whole, this has not been a controversial debate, and I had better clear out of the way the controversial elements which necessarily figure in the speech of the acting Leader of the Opposition. Indeed, he would not have been" doing his stuff" if he had not read them out. I must say that I always like him better, and he convinces me more, when he speaks from the depths of his heart than when he is following more closely the notes prepared for him in another place. The noble Viscount said quite frankly—and I am sure he was speaking the truth —that he did not like the Iron and Steel Bill or the Transport Bill, neither of which he has seen. I hope he will like them a little better when he does see them in their final form. I thought he was a little inclined to say that we ought never to change any legislation that has been passed. I think it was Lord Melbourne or Lord Palmerston who said: "Why can't you have the goodness to leave it alone?" If they had left it alone, that would be all right. If we all joined in the view, expressed, I believe, by one of the speakers yesterday, that the less legislation we had the better, provided that that was a self-denying ordinance, equally applicable to all Parties, there would be a general consensus of opinion in favour in a good many quarters of this House. After all, all legislation involves a change in the law. That is what legislation is for. It really cannot be said that the legislation passed by a Socialist Government is sacrosanct and, unlike legislation passed by a Conservative or a Liberal Government—and in the olden days there was a Liberal Government—ought to be completely immune from attack. I would readily agree that it is undesirable and quite impracticable that one Parliament should spend all its lime undoing the work of its predecessor, and no one suggests for a moment that we should do anything like that.

Surely there is another side to this, and that is that we want to learn from experience; and we want to learn impartially and without prejudice. Mr. Herbert Morrison once said: … I must justify every piece of public ownership I want upon economic facts and the business merits of the proposal … If I cannot show it is a business proposition then I have no right to ask for it to be done and Parliament has no right to do it. A good many years later he said: In our country there is room for State enterprise and private enterprise side by side. If you have no right to do some things unless you can prove that it is a business proposition, and if, when you have done it, experience shows that it has not worked, surely as a business proposition, not only in logic but in common sense, you ought to change it. I think that certainly applies in the case of steel and transport. I am not going anticipate the details of the Bills; that would be out of order, and it would certainly be inconvenient. We shall have plenty of time to discuss them when they come up to us—fully discuss them, but, I hope, with reasonable restraint in the length of our speeches, though not in the force of our arguments. I hotly opposed the nationalisation Acts when they were discussed in this House before. I do not think that I ever spoke at undue length, although I may have spoken—I will not say with force, but at any rate with forcefulness. After all, it was an open secret (if, indeed it was a secret at all) that a good many noble Lords, and certainly honourable Members on the opposite side in another place, were very doubtful about the wisdom of dealing with steel at all.

The industry was very efficient, and I am bound to say I thought there was no great force in the noble Lord's argument, or assertion, or article of faith, or whatever it may be called, that because the industry is a basic industry you want to destroy the system under which it is working. Surely the whole point is that a basic industry has to be, above all, an efficient industry; efficient above all others, if you like, because so many depend upon it. When it is working well, when it is giving, in the words of the noble Lord, quantity and quality and at the right price, what more do we require? I would only say, as regards steel, that I cannot approach any of these questions dogmatically. I have never had any a priori convictions about nationalisation or private enterprise, any more than I have ever had any preconceived ideas about either protection or free trade. It all seems to me to be a matter of how the thing works.

I do not think anybody would deny that the result of steel nationalization, if it had gone on further, would have been that there would have been far too much interference of the wrong kind. You would have had centralised direction—that was what Mr. Hardie was trying to do—and control over very efficient individual companies, whereas you had not central control over the broad principles, over the plan and over the prices, of a great deal of the industry which ought to have been controlled in that way. In fact, you would have had too much nationalisation and too much uniformity and not enough broad control. Experience has shown that in transport there has been too much centralisation. I agree entirely with what the noble Lord, Lord Clydesmuir, said about that, and I agree that there has not been enough freedom, either for the railways or for the road hauliers. If we are to give the railways the best opportunity possible to develop, we have got to have more decentralisation, so that the management can try out their own ideas, with the knowledge of what will suit a locality. I do not think we should be ashamed about this; I do not think we should try to steam-roller the thing into uniformity. There was a certain merit in the pride of the individual railways in the old days. It was all very well to laugh about the G.W.R. — "God's Wonderful Railway," as the noble Lord tells us it was called in Wales. But after all, there is something in that pride—a sort of "old school tie" spirit of the right kind. They have certainly not had enough freedom in the matter of their charges. They have to serve industry fairly; but they have been kept in a straitjacket—a straitjacket imposed upon them when there was no road transport competition and when it was considered essential to curb monopolies with every kind of restriction.

I think, too, it is true that, when you come to road haulage—and I want the railways to have their chance in that sphere—you can, as Mr. Morrison said, have a nationalised industry and a private industry side by side. I think it is a good thing that one should stimulate the other. You do not want uniformity and centralisation. I should have thought that in road transport you need flexibility and a ready response to local conditions. I will say no more about that, but I will ask the noble Viscount to believe that we do respect each other's sincerity in this House. When these Bills are seriously considered in debate we shall debate them on their merits in general, and in detail. We have genuinely sought to make both industries, steel and transport, efficient for the public service, efficient for trade and industry, which both of them serve and by which we all live and pay our way. At any rate, I hope that that is the test which we shall try to apply to these Bills when they come to this House.

I pass now for a moment to the very interesting speech which the noble Lord, Lord Pethick-Lawrence, delivered. I do not always agree with him, but I say quite frankly that I find him the most difficult man in this House to answer; he really does know what he is talking about. Moreover, he always puts his case with scrupulous fairness, except perhaps for his "King Charles's head" of the bank rate. I think something must have happened to the noble Lord—perhaps he has come in touch with some Oxford Group Movement who are acting on him—but at any rate he did admit to-day that the bank rate had been a very potent factor in the restoration of our balance of payments and the stability of the pound. We have argued this over and over again, and perhaps another time we shall argue it once more. I am, of course, very interested indeed in what the noble Lord said. But he went on to say that the increase in the bank rate had done other things which were not so good. Of course, it has restricted credit; it was intended to restrict credit. But I do not think it has restricted essential credit in a way which has been inimical to production.

As the noble Lord said quite frankly, the balance of payments position is much better. This could have been achieved only by a comprehensive policy, of which the financial, the monetary, weapon was an essential part. If we had left out any element in that comprehensive policy we should not have seen the results which we see to-day. There has indeed been a remarkable improvement. When we came in the reserves were not draining—they were sluicing away. In the second half of 1951 we had a deficit of 1,578 million dollars. Without defence aid the deficit fell to 96 million dollars in the third quarter of this year, and last month, without dollar aid, we actually had a surplus of 47 million dollars. That improvement has been reflected in the increased confidence abroad in the pound. The noble Lord asked me whether that was a bright interval after a long period of cloud and rain. I think it a little unkind of him to regard the six years during which the Socialist Government were in office as a long period of cloud and rain.


I think that when the noble Viscount reads the OFFICIAL REPORT to-morrow, he will find that he has misquoted me. What I said was that I was delighted that the storm which suddenly blew up in the autumn of 1951 had been followed by a long period of brighter weather. I asked, "Will it be 'Set fair,' or will this be only a bright interval before a long period of cloud and rain?"


I did take down at the time what the noble Lord said, but I am certainly not going to argue about it. I think the noble Lord will find that he will have to correct it when he has read Hansard. I will say this to him. I am not at all fond of prophesying in these matters—it has caught me out. I thought the Labour Government were very foolish to make a lot of prophecies, all of which as a rule, proved wrong. Then the noble Lord said: "You were foolish enough to make one, and that has proved wrong." That is true, and it has made me all the more chary of making any forecasts. It is difficult to make definite forecasts when you realise that what we are dealing with here is the whole of our trade. The matter is affected, and is indeed conditioned, by the whole volume of transactions which take place between the sterling area and the rest of the world, which are something of the order of £9,000 million in a year, or even more. Of course, an error of only 1 per cent. in guess or forecast makes a very considerable difference to the figures we are dealing with to-day. But, if I am challenged to give a forecast, at any rate up to the end of the year, I would say that, provided something catastrophic does not happen, the forecast that the Chancellor of the Exchequer gave in July for the current half year is likely to be fulfilled.

That really was a threefold forecast. It was, after taking credit for defence aid, that the United Kingdom should be in balance on current account with the non-sterling area—and I think that should happen. The second part of the forecast was that the rest of the sterling area was expected to be just about in balance with the non-sterling world. The third part was that the United Kingdom should be in balance with the rest of the world (including the rest of the sterling area) without taking United States defence aid into account. Let me assure the noble Lord of one thing about which he was anxious, when he said that he thought we had achieved this improvement by running down all the stocks which he, like a provident squirrel, had stored up. We have not. I promise him we have not. We do not disclose details of stocks, but, broad and large, the stock position is better to-day than it was a year ago.


I do not want to keep on interrupting the noble Viscount—


That is quite all right.


—but I was most careful not to make the insinuation which the noble Viscount suggested. What I did say was that previously they had stated they were not running down the stocks. I accepted that at the time, and I believed that it was still true to-day. What I said was that they were not increasing the stocks at the same rate.


I do not want to misrepresent what the noble Lord said. He asked me for an assurance that we are not running down stocks. I can tell him that the stock position to-day, broad and large, is better than it was a year ago. I think that is satisfactory. Anyway, those are the facts and I think there is nothing between us.

I believe that we have done well, but certainly that is no ground for complacency. When we look beyond the end of this year—I am not going to make a definite forecast, but I think it right to say that we must all appreciate certain facts which will make next year a difficult year. Though our reserves have improved, and will, I hope, improve still further, they stood at £631 million at the end of October. That is £24 million better than in March, but it is far too small for permanent safety. Then we have big commitments overseas. Those will certainly not be less in 1953. Therefore, a regular surplus on current account, and a substantial surplus, is needed if all those commitments are to be met. That means a prolonged and hard effort.

We have saved ourselves from disaster. We have established an equilibrium which we must maintain and improve. We are back on the right road. I hope that I shall not be accused of using a controversial term—I used it before it was adopted as a slogan—I think we are winning through. We have done this very largely by restriction. It was absolutely necessary to do it, but you cannot go on like that. You can reach a stage of magnificent equilibrium at which you export and import nothing. After all, that is not the goal at which any of us wishes to arrive. Therefore, we must bend all our efforts to production at home and to production in the Empire. I was interested in the speech of the noble Earl, Lord Mansfield. He may be quite sure that the maximum of production in the Empire will greatly occupy us at the Conference upon which we shall be entering in a few weeks' time. We must concentrate on expanding our exports in mutual trade within the Empire and with the whole world. All that we shall be discussing most fully at the Conference. On that I think we can all agree and can all concentrate.

I promised I would say a word in response to the noble Lord, Lord Pethick-Lawrence, to show that I do not think our financial policy has unduly restricted investment essential to the improvement of industry. I entirely agree with him in this: that, taking not the long but even the snort view, it is absolutely essential that industry should be up-to-date, that the necessary new factories should be built and, above all, that the improvements and extensions in factories that are required should be done. A good deal has been said (I was interested to hear it said from both sides of the House) about the effect of taxation upon industry. I am not going to anticipate the Budget statement, but I must say that such statements strike a chord of sympathy, at any rate in my breast.


We have achieved something.


As the noble Lord says, that is something. I would say that, broad and large—and I think the noble Lord, Lord Balfour of Burleigh, would bear me out in this—if the banks are to lend discriminately to their clients, there must also be the price mechanism and the bank rate in operation. But we have been trying, whether it is with financial resources (and this is broad planning of the right kind) or with material resources, to channel those where the need is greatest.

Let me give an example. Much more is being allowed for what is called licensed building, which is largely the expansion and development of factories. It is necessary to have the broad plan of an investment programme (I never think it is very accurate, but it is useful to have it; it focuses efforts into the right channel) and we are doing all we can to get a good deal more money spent in necessary factory development. That is true of money; it is also true of material. In regard to steel, I have allocated for licensed building a 20 per cent. increase for this coming quarter, and I hope to maintain that allocation, certainly throughout this year. A large part of this steel will go into essential factory construction. Let me assure noble Lords that housing will certainly not go short either of steel or of timber. Those concerned with housing are getting more and more economical in the use of materials. They will not be really great users of steel, and I am satisfied that we can pursue the housing programme while devoting all the necessary steel to factory building. I do not divorce housing from the industrial effort because, to put it at its lowest as a sort of economic argument, men cannot move from one industry to another unless there are houses to move into. But there is much more to it than that. A great deal depends upon people being happy at their work. For them to be happy at their work, they must be happy in their homes. Health and happiness really depend upon housing.

Let me end—I shall not be much longer—by saying something about production. I know that we are to return to this subject later, but as I think all three of the speakers from the Opposition Front Bench raised this matter, it may be helpful if, as fairly and as briefly as I can, I give the facts on this matter so far as we have them. At the end of 1950 production reached a record level; from then until the first quarter of 1952 it was about stationary, and since then there has been a decline. In the first half of 1952, as compared with the first half of 1951, the decline was about 2½per cent. In that half year the decline in textiles, leather and clothing, which was very serious, was about enough to account for the whole fall in the level of production. I am glad to say that there is now some improvement in textiles and clothing. Stocks in the pipeline have, I think, been largely absorbed; there has been a fall in retail prices, and there is a good deal of buying. I have never concealed from the House my own view, that although this situation will improve and we have taken special measures, such as putting special contracts into the textile industry, the improvement cannot go on indefinitely. When you get a recession it is quite right to act quickly if you have the means of acting. But you cannot continue to anticipate £20 million worth of contracts that might come next year, and place them this year. Frankly, whatever is done, I have doubts whether you can get the cotton industry back to its earlier peak. There are no politics in this. It is a matter really of competitive world production against world demand. We have been selling textile machinery all over the world—it has been one of our large exports. That machinery is coming into production. People do not wear a great deal more clothing, particularly in the hotter countries, and if they are making more of the simpler things themselves there just is not the amount of trade that there was hitherto.

To my mind it is never very satisfactory to compare aggregates—to compare gross figures of production. It never weighs very much with me, though it is not without its uses. If we take the figures for the first half of the year, for which we have definite, ascertained figures, we find that the satisfactory features are coal, iron and steel in primary production; building materials; metal manufactures (by which I mean the fabricating of metal, ferrous and non-ferrous); shipbuilding, to which we are devoting more steel each quarter; 'and a good deal of mechanical engineering, aircraft and chemicals. In the definitely unsatisfactory category—by which I mean in the volume of production; I am not criticising the firms or anything of that sort—there are textiles, china, consumer metal goods, as opposed to capital goods, textile machinery, cars, trucks and tractors, furniture, paper goods and rubber products. We have no final figures yet for the third quarter of this year, but on such information as we have the figures are less satisfactory still. I want to be perfectly frank with the House. I tried to get these figures, or at any rate an estimate of them, for this debate to-day, rather than wait until next week, because we must debate these things in an atmosphere of mutual confidence and in the light of the best knowledge that the Government can give to the House. It looks as if production in the third quarter will prove to have been some five or six points below the corresponding figure for 1951. My Lords, whilst these figures should be a warning, they should also be an incentive.

I want to say one thing, not in any polemic sense or because of anything that has been said here, but because of things that have been said out of doors, and because one has a right to answer such things. It is not at all in answer to anything that the noble Lord said. I have been reading in the newspapers and in speeches delivered by less responsible persons, that we have failed because production and exports are down. That really is not a true comparison. If I were to answer that, I should ask; What would have happened if we had not taken the comprehensive and drastic measures we took in the winter of 1951 and in the Budget? The answer is that we should have been bankrupt; the pound sterling would have fallen catastrophically; the cost of living would have risen; we should have had no money to pay for our imports, and we should have been unable to export. In 1951 we were running into debt at the rate of £800 million a year, which meant that we could pay for only a quarter of our imports, or rather that we had to pay for them out of our scanty reserves, and we should have had mass unemployment. We must never forget—it is a matter of agreement between us—how Mr. Morrison and others frequently spoke, in gratitude, of Marshall Aid. It was said that had it not been for Marshall Aid there would have been one-and-a-half million people out of work. I think that that is the true comparison.

We have saved ourselves from disaster, but now we must build up and expand. It is going to be very difficult. There are going to be no easy years in a sellers' market. I said earlier that I was fully alive to the importance of increasing trade. But there is little use in producing unless we can sell. I have indicated some measures by which we are trying to help production, but I should like to add my view, that to-day salesmanship is just as important as efficient production—indeed, I am not sure that it is not more important. I am perfectly sure that, until the knowledge percolates through the factories—and thank goodness more and more managements and men are getting together to apply their knowledge to these general problems!—it is no good talking at large about so many hundreds of millions on this or that side of the national balance sheet. That sort of thing needs to be translated into such questions as: How does it affect my particular works if I lose a contract or if I get a contract? How much has had to go out of the ordinary profit margin? And so on. But salesmanship, as I say, is absolutely vital. In some cases, certainly, it is extraordinarily good. I expect nearly everyone knows from his own experience of the difference there is between the salesmanship of one firm and that of another.

I do not want to weary the House with details but I know of a number of cases. In one particular case a contract was won by skilled salesmanship on the part of a man who knew the people he was dealing with, a man who was able to deal with the right people in the right way, and who knew what his factory could do. That man secured a very important 3,000,000 dollar contract, in the face of the keenest competition. That is the sort of thing that is being done in many cases, but in other cases salesmanship is not so effective. The personality of the salesman is very important, and so is his knowledge of the market and of the people with whom he has to deal. Salesmen should not rely on general reports; it is the particular reports of their own concerns on which they should depend.

However, I do not wish to elaborate this matter further. I think that salesmanship is as important as efficient production. The two must go together. There is certainly no miracle or short cut. We may differ about details—indeed, we shall do so. But, after all, there is so much more that we can agree upon. There is so much which is outside politics, if politics are real and not a sort of Cloud Cuckooland of silly promises. We are all in this together. We are all in the effort together, and we shall certainly be in it together in the result. We have enormous assets. They are assets that interlock and help each other. Vote as you please. But it is no good just saying: What are the Government going to do about it? Criticise us by all means if you do not think we are on the right road, or even if you think we are not doing all that we could do. But remember that the Government alone cannot do this. Everyone, the staffs of every workshop and every merchanting business, all consumers and producers, must join together and concentrate on the real business of making our country safe in trade and finance as well as in defence.

6.3 p.m.


My Lords, I hope that your Lordships, most of whom, no doubt, are hoping to get away home very soon, will not be too greatly disgusted if I intervene for a few minutes to speak on a subject which, so far as I have followed the debate, has not attracted the attention which it deserves—that is, the question of our historic country houses. Some of your Lordships may feel that this is becoming rather a "King Charles's head" with me, but I should like to refer, just for a minute or two, to the important announcement which the Prime Minister made, to the effect that there was a really good prospect of a Bill being introduced to deal with this vital subject during this Session. I am sure that a very large number of people, on both sides of this House and in the country must have seen that announcement with great joy. But my heart rather sank when I came to the end of the gracious Speech, and found that nothing had been said there about this matter. It bounded accordingly when, on reading the Prime Minister's speech, I came across that very short sentence. Seldom can so few words have given so much pleasure to so many people, for I can assure the Government that there are literally hundreds of thousands of people who take a deep interest in this matter, and who are greatly concerned about the Government's failure to take action over these last months. Certainly the 30,000 fellow members of mine of the National Trust would receive that statement with the greatest pleasure.

I am not going to elaborate the importance of these country houses; we all realise how important they are. The Prime Minister said that it was just a question of time, of whether there was time available. I take that to be a promise that, if time is available, a Bill will be introduced. There is no reason why it should be a controversial Bill. This is a matter which members of all political Parties are equally concerned to see dealt with, and dealt with rapidly. This really is an urgent problem and if a Bill which is non-controversial can be introduced, surely there should be no difficulty in finding Parliamentary time, because it can be put through very quickly. Therefore, my intervention really comes to this: I thank the Government for the intimation that there is some real prospect of this matter being tackled during this Session, and urge that the Bill which they put forward should be a non-controversial Bill, so that it may pass on to the Statute Book very quickly and so that this priceless heritage of our country may be saved.


My Lords, I beg to move that this debate be now adjourned until to-morrow.

Moved, That the debate be now adjourned.—(Earl Jowitt.)

On Question, Motion agreed to, and debate adjourned accordingly.

House adjourned at seven minutes past six o'clock