ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH

HL Deb 05 November 1958 vol 212 cc222-74

2.46 p.m.

Debate resumed (according to Order) on the Motion moved on Tuesday, October 28, by Earl Jellicoe—namely, That an humble Address be presented to Her Majesty as follows:—

"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."

LORD SILKIN rose to move, as an Amendment to the Motion, to add at the end of the proposed Address:

"but humbly regret that the gracious Speech makes no adequate proposals for dealing with the problems of industrial output, unemployment and under-employment, the continuing high cost of living, or satisfactory provision for old age, present and future."

The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper by way of an Amendment to the proposed humble Address. So far the discussion has ranged round a wide field of matters of public importance, but we have largely left to this day and to to-morrow the discussion on our financial and economic affairs. On behalf of my noble friends, I have put down this Motion in order to express our dissatisfaction with the financial and economic policies of the Government.

Let me say at the outset that in the Motion we have included a reference to the Government's inadequate provision for old age pensions, and while we wish to adhere to that in the Motion I do not propose to speak on it, because since I put the Motion down it has been thought desirable to ask for a separate day for the discussion of pensions, which, of course, is a very wide subject. Therefore, neither I nor, I understand, any of my noble friends propose to discuss this question on the Motion to-day and tomorrow. Moreover, my noble friend Lord Pethick-Lawrence referred to the matter in some detail last week and there was a fairly detailed reply by the noble and learned Viscount the Lord Chancellor. So that if we make no further reference to old age pensions, noble Lords generally and, I imagine, the noble Earl, Lord Dundee, who is going to reply to me, will feel somewhat relieved.

To an increasing extent in the last fifty years and more all Governments have been compelled to accept responsibility for the general welfare of the people, including particularly their economic welfare. This is a phenomenon, I imagine, which really began in 1906 with the accession of the Liberal Government of that time, and it has been accepted by the two main Parties, although, curiously enough, many of the Liberals who were responsible for initiating this conception of government and a number of Conservatives still adhere to the Manchester school of laissez-faire. We have a good example of that in the speech of the noble Lord, Lord Grantchester, last week in the debate on the humble Address.

In respect of election programmes, the main political Parties each try to demonstrate that their programme, policy and administration will be more beneficial to the public than those of the others—that is, that, broadly speaking, they will provide a better standard of living. In their Election Manifesto in 1951, the Tories said: A Government will be judged according to the effect of its programme of rising costs and prices. Well, this Government have been in office now for 7½ years and I should like to begin by accepting that criterion and judging the Government by what has been the effect of their administration upon rising costs and prices. Broadly speaking, since that statement was made in 1951, prices have risen by about one-third. The pound of 1951 is to-day worth only 15s. in terms of purchasing power. The increases in prices have been particularly heavy in the vital necessities of life; that is, in food and clothing.

The House will forgive me if I give a few examples of the increases in the prices of staple foods. For example, bread has risen from 6d. a quartern in 1951 to 11½d.; milk from 11d. a quart to ls. 4d. to 1s. 8d.; cheese from 1s. 10d. a pound to 2s. 9d. to 3s.; meat—well, that has gone up to an astronomic figure, and it is certainly more than double; bacon, back and gammon, have gone up from 3s. 1d. a pound to 5s. 2d. to 5s. 4d.—and I would say, in parenthesis, that it is not the producer of the bacon who is getting the benefit of the increased price; tea has gone up from 3s. 8d. to 6s. 8d.; and generally, food prices have increased considerably more than the one-third to which I have just referred.

I need hardly say that these increases operate most harshly on persons with the smallest incomes. Obviously they are the people who spend a larger proportion of their income than do others on the staple articles of food. It is no wonder that families with two children or more whose earnings are under £15 a week cannot afford enough food to provide their families with the minimum energy and protein content recommended by the British Medical Association; and £15 a week is substantially more than the average earnings of families to-day, which is about £12 10s. a week. Rents have gone up by over 15 per cent, in the same period, more particularly in the last two years since we have had the benefits of the Rent Act passed by the Government, and they will go up more when the full effects of decontrol are felt.

This country has the highest increase in the cost of living in the world—certainly higher than the costs of the eight countries which might be regarded as our competitors. Sweden and Japan come next with 23 per cent., as against our 33⅓ per cent.; France, the Netherlands and Italy are about 15 per cent.; and the United States, Belgium and West Germany 7 per cent. Government speakers, in the course of the debate on the Address in this House and certainly in another place, have prided themselves that at any rate prices have been fairly stable in the last year or so. That is not so. According to the Second Report of the Council on Prices, Productivity and Incomes—that is, the Cohen Report—in the sixteen months up to June, 1958, prices had risen by 5.6 per cent.; and they have certainly risen since June, as is the experience of everyone with any knowledge of prices and the cost of living. So judging by the effect of their programme on rising costs and prices, the Government have failed miserably, and they have certainly not lived up to the criterion which was laid down by themselves in 1951.

I now turn to the next test. The Government have declared in the gracious Speech that it is their aim to maintain a high and stable level of employment. They have been in office for seven and a half years. How have they carried out this policy up to the present time? There is no precise up-to-date information of the registered number of unemployed available beyond September last, which is two months ago, but it is generally agreed that to-day the total number of registered unemployed is rather more than 500,000. In September, 1955—that is, when the Government came into office the last time—it was 185,000; in September, 1956, it was 238,000; in September, 1957, it was 267,000; and to-day, as I say, it is about 500,000. Of this latest figure of 500,000 no fewer than 193,000 have been unemployed for eight weeks or more, which means to say that to-day there are more people who have been unemployed for eight weeks or more than the total number of unemployed in 1955.

In the debate in another place an attempt was made to ride off some of this unemployment by saying that it was seasonal. I have taken the figures for September of each year, and if it is seasonal to-day, it was seasonal in 1955 and 1956. But you cannot explain unemployment which has lasted two months or more by saying that it is seasonal. Moreover, there are categories of workers not included in these figures: dock workers are not registered as unemployed, even though they have no work available, and there are miners and others. Then, in addition to these registered figures, there is a con- siderable amount of short time being worked. For instance, in May, 1958, which is the last date for which I have figures, the number of people working on short time was 217,000, whereas in May, 1955, it was only 59,000. So that since the last time that this Government came into office the number of people working part-time has been almost quadrupled. Furthermore, this is not the end: unemployment will certainly increase. I think everyone who has spoken on this subject in the course of the present debate in both Houses has accepted the fact that we have not seen the worst of unemployment yet.

I need hardly elaborate on the cruelty and suffering caused to individuals, men, women and children, when, through no fault of their own, they find themselves unemployed, especially over Long periods. When we talk of figures and percentages and the advantages of a certain amount of unemployment in our economy, let us not forget the human factor in unemployment and what it means to the individuals. So here again, judged by the test of unemployment, this Government have not fulfilled their promise and have failed.

I should like to ask the Government about these high unemployment figures. Do they accept responsibility for them? Are these high figures of unemployment deliberate—that is, in accordance with their plans and what they desire? Or are they just the result of bad management, or of no management at all? Or are they, to paraphrase the words of the Prime Minister, "merely a piece of bloomin' bad luck"? We are entitled to know. When unemployment goes down the Government take the credit for it. What is the Government's position on the present large-scale unemployment and the even larger-scale threatened unemployment?

We are particularly vulnerable as regards our standard of living, because a large part of our raw materials—more than half—have to be imported, and we pay for these imports by means of our exports. The more we import, the more we have to export. These are truisms, but sometimes not entirely remembered. There is keen and ever-increasing competition with other countries in the export markets of the world. How are we faring as regards our exports? The gracious Speech refers to our seeking to expand our oversea trade both in Europe, by the creation of a Free Trade Area, throughout the world. I will not blame this Government for not having been able to reach an agreement on the Free Trade Area. I say, quite frankly, that I think the Paymaster General has done a good job of work. He is doing it to the best of his ability, and I would not say that it is at all his fault that, so far, the negotiations have run into difficult waters.

Apart from that matter, we have not had much success so far in relation to our export trade. Between 1953 and 1957 (1953 happens to be the earliest year for which I have reliable information) the percentage increase in our exports was 21. But this is the lowest figure among the exporting countries; we are, so to speak, at the bottom of the table. Japan's increase is 132 per cent., and that of Western Germany 88 per cent. So we go down the scale: Switzerland, Belgium, Sweden, France and America, of course, have all increased their exports to a considerably higher extent than we have. Indeed, in the Economic Survey for 1957 there is a statement that there was a slight fall in our share of world trade in manufactures, and there is every reason to believe that our exports in 1958 have not risen either in volume or proportionately to other countries. Both in the first and second quarters of 1958 our exports are down as compared with 1957 as well as 1956.

The one bright spot on the horizon is the increase in our exports in the motor trade, and that is very welcome. The increase, however, is merely in the sale of passenger cars: our exports of commercial vehicles have gone down very substantially indeed. But one swallow does not make a summer, and we cannot base our success in exports purely on the one industry, the motor trade. From the figures I have given as to unemployment and partial unemployment, it will be apparent that our industrial resources are not being wholly used. We have an immense amount of spare capacity. The steel industry, for instance, is working to 75 per cent. of capacity, and there are many other industries, the aircraft industry, and so on, which are similarly under-employed. I hope that some of my noble friends on this side will be able to expand this point.

As regards our national output, that has increased only fractionally since 1955, while industrial production has actually declined. I quote again from the second Cohen Report, published only a month or so ago, which says: Industrial production has fallen a little since the middle of last year, and in the second quarter was 2½ per cent. below the peak quarter a year earlier. On the best figures I have been able to obtain, our total manufacturing is down to-day by 4 per cent. as compared with last year. Again, one would like to draw a comparison with other countries. Our increase in industrial production as between 1951 and 1957 is about 18 per cent. But in Japan and the U.S.S.R. production has doubled; in West Germany it has gone up by 75 per cent., in Italy and France by 50 per cent., and in the Netherlands by 40 per cent. Once again, with our 18 per cent. increase, we are at the bottom of the table of production, and it is doubtful whether we can easily increase our production. If our production had risen at the same speed as it has done in the whole of Europe, we should have been in a very favourable position as regards balance of trade, our finances, and in every other way. I would ask your Lordships to imagine what the prosperity of this country would have been.

I turn to another aspect of our economic position. We cannot hope to maintain our exports or our standard of living, still less to improve them, unless we increase our capital investments in such a way as to increase our efficiency and reduce our costs. We on this side of the House have constantly urged upon the Government the essential need for expanding our economy in both private and public. In April, 1957, Mr. Peter Thorneycroft said in another place [OFFICIAL REPORT, Commons, Vol. 568, col. 980]: Of course, we have to have a high investment economy. It is a condition of our survival. I ask your Lordships to note the words, "It is a condition of our survival." Yet soon after that statement was made the Government deliberately embarked on their restrictionist policy, which has led to such disastrous results. But even before that, our capital investment in industry was proportionately less than that of any other country in Western Europe.

I will not weary the House with more figures (I think it has had enough to go on with for a time) but I can assure your Lordships that the table is roughly the same, and follows the same pattern: that we are at the bottom of the table for investments, both in our public and private economy. To-day, the Government have decided to reverse this policy, to a limited extent, and to permit and encourage capital investment, both in the public and the private sectors of our industry. But we shall derive very little, if any, benefit from this expansion if it is wholly undiscriminating. To expand production merely for the purpose of making more television sets, refrigerators, motor cars and so on for home consumption, or electrical gadgets to be acquired on the hire purchase system, is not going to improve our economy to any serious event. Indeed, it may well result in inflation and high prices and so increase the cost of production. Our primary concern must be our export markets and our expansion of credit and production must be directed to that end.

It is because the Government are not discriminating between capital expenditure which will help the economy and capital expenditure, both public and private, which will injure it that they are deserving of censure. They are impregnated with doctrinaire ideas—so much so that they have become blind to the public interest. Increased investment will mean more than a proportionate increase in our imports of raw materials, and these will have to be paid for. In 1958 the prices of the raw materials we imported were about 10 per cent. lower than in 1957. Those 1957 prices were, in turn, substantially lower than in 1956. If we had had to pay for our imports at normal prices the very high and record surplus of exports over imports, of which the Government boast, would have disappeared and we should have had the normal deficiency, although admittedly not so high as in some years. This is the "bloomin' piece of luck" which every Government speaker has referred to as if the Government had done something meritorious to deserve it. But it is of the essence of luck that it is fortuitous; there is no nonsense as to merit about luck. It comes to the righteous and the unrighteous alike—and more often than not it comes to the unrighteous—and it evens itself out in the end. The Government must not gamble on their "bloomin' luck" continuing.

Moreover, this luck has been at the expense of the primary producing and, generally, the undeveloped countries of the world, and mainly members of the Commonwealth. Its effect upon them has been very largely to impoverish them. Nobody knows that better than the noble Earl who spoke on this subject yesterday. Instead of the Government boasting about their luck in getting their material so cheaply, too cheaply, as if they had done something clever, which they have not, they ought to be ashamed of themselves. They have not only tended to antagonise members of the Commonwealth but they have so impoverished them that they will be forced to reduce their imports from us or else very greatly increase their prices; and, in any case, these countries will be forced substantially to lower their standard of living. Noble Lords on the other side know that as well as I do. You cannot impoverish your customers and expect to do a thriving trade with them. Yet that is what the Government have been trying to do.

We have no confidence in the measures the Government propose taking to alleviate the position. At the best they are mere palliatives. They may possibly hold the employment position for a time—I would not deny that—by our taking in one another's washing; but in the long run they will be entirely inadequate. To increase artificially the consumption at home, with its increased demand for raw materials, without at the same time increasing our earnings abroad by means of increased exports is both mischievous and irresponsible. The Government have no clear aim or objective; they are floundering from one desperate remedy and one crisis to another. They are shooting without seeing the target, hoping that they will hit something, if it is only the Gallup Poll for the time being.

LORD BARNBY

Will the noble Lord forgive my interrupting him? Would he dispute the fact that Britain does not decide the prices of world raw materials, which he is alleging is the fault of the British Government? It is world factors that decide it, not Her Majesty's Government.

LORD SILKIN

I am delighted to hear that, because the Government have been claiming credit for it, for their cleverness; and if prices had gone against us they would have gone the other way.

The Government are doing indiscriminately what should be done in a carefully planned operation. The Government may claim to have an ideological objection to planning and controls, and I know that a great many noble Lords opposite have; yet they do exercise controls, even though at times misguided. Every sound business must plan and control, which, after all, only means looking ahead and ensuring that policy is carried out. It must be bad for private industry to be subject to repeated changes of policy—expansion, restriction, expansion, low rates of interest, high rates of interest, low rates of interest, and so on. Business cannot carry on successfully under those conditions, and it is no wonder that we are in the plight that we are. Business must be allowed to plan ahead, even if the Government do not. I believe that the Government are deceiving and hypnotising themselves into presenting to the public a false and misleading picture of our economic position and prospects, a picture of confidence in the future which I believe is entirely misplaced and for which, on the basis of their policy, there can be no possible justification. It is for those reasons, because we on this side sincerely believe that the Government's policy is misplaced that we have put down this Amendment to the Motion. I beg to move.

Amendment moved: To add at the end of the proposed Address:

"but humbly regret that the gracious Speech makes no adequate proposals for dealing with the problems of industrial output, unemployment and underemployment, the continuing high cost of living, or satisfactory provision for old age, present and future."—(Lord Silkin.)

3.20 p.m.

THE FIRST LORD OF THE ADMIRALTY (THE EARL OF SELKIRK)

My Lords, before addressing myself to the remarks of the noble Lord who has just sat down, may I in my turn, congratulate the openers of the debate on the humble Address? I enjoyed their speeches very much, and I found myself in full agreement with the happy words of the Leader of the Opposition when he congratulated them on the way they spoke. Perhaps I may be permitted to add one word to the legends of Goschen, because the first question I was asked by the Governor of Bombay, when I stayed with him, was: was it true when they said of Goschen, when he became First Lord of the Admiralty, that "Lord Goschen had no notion of the motion of the ocean"; and he looked at me as if it might apply to me. And of course it does. I should also like to congratulate most sincerely the noble Baroness, Lady Elliot of Harwood, on the speech she made yesterday, not only on its content but, I may say, on the extremely happy way in which she has entered into this last sanctum of masculine isolation; and indeed also on the charm and naturalness with which she spoke, as if she had been here—I will not say for many years, because that might be discourteous, but at least as if she has been well accustomed to being here.

Let me turn now to what the noble Lord, Lord Silkin has said. I am bound to say that I was interested to find that he was thoroughly satisfied with the words on pensions which my noble and learned friend the Lord Chancellor said. He did not wish to make a single comment on it.

LORD SILKIN

The noble Earl ought not to try to mislead the House into thinking that I was satisfied. In view of the long speech I had to make, I felt that it would be better if we had a separate debate on pensions.

THE EARL OF SELKIRK

Then the noble Lord ought to have taken that part of the Amendment off the Order Paper. I should say that the level of pensions to-day is, in buying power, higher than it has ever been before; and in fact a married couple getting £4 a week will have contributed, if the husband has contributed since 1926, what would actuarily have entitled him to 6s. a week. When you compare that to a deficit rising to £400 million in a matter of twenty years I think it is absurd to pretend that the financial basis of an insurance scheme is not extremely doubtful. I regard it as running a great risk that this National Insurance scheme might turn into a National Assistance scheme if the payments were not made of right. Therefore, I say that it is of the greatest importance that this scheme should be put on a thoroughly sound financial basis. But I will not, as the noble Lord has not developed his argument, go any further than that to-day.

What I should like to say to him is this. He has given an extremely critical view of our economy, but he has made very few suggestions of what he would like to do. In a great exporting country which, when we came to power had had a recent devaluation and a commodity boom arising from the Korean war, it would have been extremely unexpected if we had not had some rises in prices. If we take a more recent period, from the beginning of 1957, we find that prices in this country have risen less than in the United States of America, fractionally more than in Germany and considerably less than in France. In fact, in spite of the gloomy view he takes, we are eating, drinking and housing ourselves better than ever before.

The noble Lord was a little more solemn when he came to talk about our export trade. I quite agree with him because here we are dealing with a very critical point in our economy. It is worth remembering that the balance is inevitably very narrow. This is what we should expect and must continue to expect. Having said that, I would add that we should remember that we have doubled our exports since before the war. Of course that has been achieved largely by private enterprise. We have kept sterling an international currency, with half the international trade dealing in sterling as a basis of exchange—and the importance of that was clearly emphasised by my noble friend the Secretary of State for Commonwealth Relations yesterday afternoon.

Although we have lost considerable investments overseas, we are investing something of the order of £200 million a year overseas, mostly in the Commonwealth. I think the noble Lord has no justification for believing that we are antagonising them. Certainly that would not appear to be so from my recent visit to Australia and New Zealand. There really is no justification for that statement. Of course the New Zealanders would like a higher price for their butter; but so would the housewife like to have cheaper butter. So the noble Lord is nicely placed as to what he thinks might be the right thing to do. I believe that it is also right to remember that, of all overseas investments in the Commonwealth, about 70 per cent. comes from this country, and, one way and another, we have invested overseas something of the order of £2,000 million since the war. I do not think that that is something which can be passed off lightly as insignificant. Of course the noble Lord's "league table" can be taken to show almost anything, but as a percentage of our national income we are investing overseas more money than any country except Switzerland, so I do not think we are doing so badly.

Perhaps I may be allowed to give another figure from the Seventh Report of O.E.E.C.—namely, that since before the war we have raised production per head by about 37 per cent., as against 47 per cent. in the United States and 21 per cent. in West Germany and in France. These are considerable achievements at a time and in a century when we have taken part in two world wars, in the prosecution of which we have stinted neither life nor money. I think they represent a very material recovery.

VISCOUNT ALEXANDER OF HILLS-BOROUGH

I take it that the last set of figures given by the noble Earl includes the whole period since 1945.

THE EARL OF SELKIRK

Of course. The Socialists were not entirely without virtue. I accept that. Perhaps I may give one or two other figures in order to put into better balance the picture presented by the noble Lord opposite. The motor car industry has doubled its production. That is not the only thing. The chemical industry has trebled since pre-war; and the production of aircraft engines and airframes is four times as valuable as it was ten years ago. Commercial vehicles stand at about double, in spite of what the noble Lord said; diesel engines at about twenty times; excavators and earth-moving equipment about five times, and radio communication and navigational aids about six times. Those are quite impressive figures. It is true that textiles are not as important as they were and that engineering products have become by far our most important export. But we are still by far the biggest textile exporters in the world—indeed nearly half the woollens and worsted goods are exported from this country. I think it is proper that we should remember that, whatever difficulties we may be running into. This is my answer to the broad picture which the noble Lord has given of this country not making very much progress. There is, in fact, a very great progress taking place.

Of course, we must face quite squarely that there is one weakness which has been apparent in our post-war economy and to which the noble Lord referred. I will do so, if I may, by making a quotation from the White Paper on the economic implications of full employment. It says: If the prosperous economic conditions necessary to maintain full employment are exploited by trade unions and business men, price stability and full employment become incompatible. The solution lies in self-restraint in making wage claims and fixing profit margins and prices, so that total money income rises no faster than total output. In the absence of such self-restraint, it may seem that the country can make a choice—albeit a painful one—between full employment and continually rising prices, or price stability secured with some danger to the level of employment that might otherwise have been achieved. But soon looms up the grim danger that the first of these apparent alternatives will turn out to have been no alternative at all, because we may fail to secure sufficient imports to maintain full employment and our present standard of living. Of course, the simple answer is that that warning was not adequately heeded, with the result that in September, 1957, we reached a crisis which was very closely connected with the fall in the value of the pound in this country. People overseas were not sure whether they wished to continue holding sterling. There were other factors, of course, but this was the central theme. We took very strong action at that time, and I would say to the noble Lord that I do not think there was any luck in the action we took. May I point out that Mr. Stanley Holloway goes on to say: With a little bit of luck, when temptation comes You give right in", and that is rather what I should have expected noble Lords oposite to do had they been in power in September, 1957.

But I will not go over what we did. Rather I will recall what we have achieved by what was done then. First and foremost—and I think I am putting it fairly—for nearly twelve months we have had retail price stability. Secondly, we have had an extremely favourable year in our balance of payments. Our reserves have risen by about £400 million—the highest we have had for some years—and our sterling debt has fallen. It is sometimes commented that these two things always move in the same direction, but they do not always do so. They may often move in opposite directions.

The most remarkable achievement is that we have had a favourable balance in our visible trade in the first six months of this year—£137 million—which is the first time that this has happened this century; and our current trading surplus has been over £300 million. At the same time the rate of investment in the private and public sector has been higher than ever before. With great respect to the noble Lord, I believe I can say that that is a considerable achievement which cannot really be described as "floundering" or "pure misrepresentation". In the difficulties that we were in it has been a year of considerable achievement. Perhaps we could have done things in a better way or differently. We have often had discussions about different forms of economic instruments; but what we have done has certainly been extremely successful.

It is always the task of the Treasury to push against the wind, and there are two matters with which we are concerned to-day. The first is production which, I will concede to the noble Lord is running at 3 per cent. or 4 per cent. lower than at this time last year. Secondly, the level of unemployment is higher than it has been for quite a number of years. We are, of course, taking action to meet that, as I shall tell your Lordships. I would emphasise that what we want to do is to create a steady growth, built on a sound foundation and not simply to create a mushroom growth which could fade away extremely easily.

The noble Lord asked whether we are in complete control of the economy. I say frankly that no Government, except a Communist Government, is ever completely in control of the economy. We live in a free community and the success of our economy depends necessarily on the contribution which everybody makes. The task of the Government is merely to create those conditions in which the private and public sectors of the economy can prosper, but above all without again setting in motion an inflationary spiral with all the adverse effects which follow. I am sorry that the noble Lord, Lord Pethick-Lawrence, has departed but in his attack on the bank rate he said that it was indiscriminatory and attacked a large number of people who have nothing to do with inflation, and that it would have many disastrous effects on the economy of the country. Without entering into a discussion on the bank rate, I would point out that every one of those things is far more adversely affected by inflation. Inflation has precisely those effects, and far more seriously than the bank rate, because nobody can choose inflation whereas, within certain limits, it is always possible to decide whether or not we are willing to take advantage of the possibilities offered by the bank rate. I was also rather disturbed that the noble Lord appeared to think that inflation could not be stopped. I believe that that is a very defeatist view, and I was extremely sorry to hear it expressed from the Front Benches opposite.

LORD SILKIN

My Lords, if the noble Earl understood me to say that—

THE EARL OF SELKIRK

My Lords, I readily concede that the noble Lord, Lord Silkin, did not say it. I was referring to a speech made earlier by the noble Lord, Lord Pethick-Lawrence. The Chancellor of the Exchequer took early steps to meet the wind which we see blowing now. As far back as March 20 he first started to lower the bank rate. Noble Lords will recall that at the time of the Budget the initial allowances were increased and purchase tax was substantially reduced; and noble Lords will recall that initial allowances were further increased last June. Since then the bank rate has been further reduced and there has been a removal of hire purchase restrictions, and the so-called bank squeeze, has now entirely gone. I do not know what would be said by those employed in the motor car or television industries about the necessity for them to do their work. After all, television is something that we in this country invented and I do not see why we should not have the use of it. I believe that it can be of great value as an educational medium in this country.

It is due to all these steps which have been taken that we are now in a position to do one or two things overseas, referred to yesterday by my noble Leader the Secretary of State for Commonwealth Relations. The first is the extension of the International Monetary Fund and the International Bank which we envisaged at New Delhi and which we hope will make a major contribution to the objective of maintaining and expanding world economy. He also referred to the line which we took at Montreal. The intention was to remove quantitative restrictions on capital goods, and we hope to press on with the removal of restrictions on consumer goods as and when we feel able to do so. Those are important steps which will help the world economy towards expansion, in which we have a real and important part to play.

I should like to say a word about employment. My right honourable friend the Minister of Labour has spoken quite frankly on this subject, as I believe your Lordships will agree, and has said that, even allowing for seasonal trends, there is an increase in the October figures of unemployment. He went on to give hostages to the future by saying that he did not think the figure would rise to 3 per cent. this winter but he ventured to suggest that it might go to 2.8 per cent. But I think it was made quite clear, at the same time, that the number of unfilled vacancies, taking into account the seasonal trend, was showing a tendency to rise. I am glad to see that short-time working has fallen since May, the time of the figures quoted by the noble Lord, Lord Silkin, and is now down about 25 per cent.

In regard to children leaving school, who number something under 700,000 in this year, they were a little slow at first in finding employment, but I am glad to say that those unemployed are no more than about 30,000 at the present time—an improvement on the position a month or two ago. I am not saying that those are more than straws in the wind, but they seem to indicate that there is a slightly stronger demand for labour than there has been in some respects. I think it is a pity sometimes to regard live statistics as an unchanging mass, for statistics are something which change constantly; and I am given to understand that something like seven million job changes take place every year. One of the most important factors is mobility of labour to enable people to get from areas where employment is difficult to those where the opportunities are better. This position has been helped by two steps recently taken. The first is the Distribution of Industries Act, the operation of which is now spread all over the country in areas where it is specially required, and I am given to understand that something like thirty cases are being actively considered at the present time. Secondly, my right honourable friend the Minister of Labour has announced certain steps to assist the movement of labour from one place to another, including the abolition of waiting time for the assistance which can be given.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I am very interested in what the noble Earl is saying about the employment position. I shall want to speak on this matter to-morrow and I should like to know whether he agrees with the Minister of Labour. If I understood him correctly, the Minister said at Blackpool that the increase in the unemployment figures is largely due to the policy of Her Majesty's Government.

THE EARL OF SELKIRK

My Lords, I do not think my right honourable friend said that. I have not the quotation, but if the noble Viscount, Lord Alexander of Hillsborough, will give me the quotation I shall be only too glad to give him my comment. But I think that would he stretching the meaning, which, of course, the noble Viscount does sometimes, frankly and openly.

What I would suggest is that in a number of cases I have been very satisfied to see the way in which employment has been found. No fewer than 78,000 people left the Services last year and yet the number unemployed has gone up by only 2,500. May I give two other short examples? One concerns the Saunders-Roe Company, in the Isle of Wight, which presented quite a problem, owing to Government policy in that case involving the cancellation of an order. Five hundred people were discharged in January and February, and in June there were no more than fifty-five remaining on the register. The other example affects my own Department at Donibristle. There were 1,300 people discharged, of whom 1,000, I understand, were re-employed without the loss of a day's work. Both those examples show the efficiency with which the Ministry of Labour is working and the way in which labour can be redeployed.

No one, I think, underestimates the vital importance, both from the human and from the economic point of view, of maintaining a high level of employment. That will remain our determination and our resolution. We have taken certain steps now and I am confident that they will bring their effect. But I would say this: I find myself in full agreement, and I believe it will be shown to be correct, with what the Chancellor of the Exchequer said—namely, that, just as with the philosophy of hedonism, if you seek employment in too bald-headed a way you will not get it. So in hedonism, if you seek pleasure with too much resolution you will not get it. I think that is a fair comparison between those two.

I am sorry that the noble Lord, Lord Silkin, did not tell us more fully what it was that he was going to do. He talked vaguely about a controlled economy. I do not know whether he has gone back to the policy which I believe used to actuate some noble Lords opposite, of an expanding economy limited by controls; I do not know whether that is the policy they work to. It may have been justified immediately after the war when there was in fact a very heavy demand. But has he now elevated that into an abiding principle of economic policy? I should be interested if someone would tell us.

I would just add—and I shall not occupy more than another minute of your Lordships' time—that noble Lords have to make up their minds whether they think we are to be an international trading community or to run in a close national economy. It is true, as the noble Lord, Lord Silkin, seemed to think, that we have to keep exports at a high level; but I do not know how he is going to force people to buy exports, because there is no possible way of forcing people either to buy our exports or to want to hold our currency, sterling. There is only one way in which that can be done and that is by confidence—confidence in the belief that our goods are worth buying and our currency will retain its value. That is the object of the measures in the Queen's Speech which will be carried out. That is what we have in mind, and that is why I ask you to reject the Amendment which the noble Lord has moved.

3.44 p.m.

LORD McCORQUODALE OF NEWTON

My Lords, it was news to me when the noble Lord, Lord Silkin, began his speech this afternoon by saying that we were not to discuss in detail the Government's pension plan. I had prepared a few remarks to make on that subject, but, like the noble Lord, Lord Silkin, shall endeavour to reserve them for another occasion. But there is one point that I should like to make, because there seems to be a great deal of misunderstanding and confusion (whether intentional or unintentional I do not know) about the question of contracting out, so far as private industrial schemes could contract out of the Government scheme.

Some of the difficulties here are quite considerable. It has been said by some people that what the Government propose to do is to leave it solely at the option of the employer as to whether the people in private schemes should contract out of the Government scheme; and these people have suggested that, rather than be left with the employer, the option should rest with the individual employee on the existing pension scheme. I should like to make it quite clear, in case there is any misunderstanding in this House, that the option is not one to be left solely either to the employer or to the employee; it is, and must be, a matter for mutual agreement, as so many things are a matter for mutual agreement in industry, I am glad to say.

Existing private pension schemes would, of course, be completely disorganised if one employee wished to contract out and another employee wished not to do so; and no good employer who values the good will of his employees—and he will not remain long in industry if he does not value the good will of his employees—is going to impose unilaterally on those employees a decision against their will which so closely affects their interests. Therefore the issue is not whether the employers are going to have the last say over this matter of contracting out. We can go into the details when this promised debate comes off, but I think that that is a point which has been made in another place, on public platforms and in the Press and which should be contradicted as soon as possible.

My Lords, it seems to me that the answer to the noble Lord, Lord Silkin, was contained in one very short sentence in the October issue of the Bulletin for Industry, the economic situation review prepared by the Treasury, which has always been regarded as an impartial review. In the summary entitled "Halfway report of the year on the economy" the final sentence is: The economy is therefore in a better condition than for some time. I cannot believe that anybody listening to the noble Lord, Lord Silkin, can have supposed that that is the case. Indeed, his speech, if he will not mind my saying so, was a very successful exercise in making bricks without much straw.

He appeared first of all conveniently to forget the disastrous results of the devalution of the pound in the late Socialist Government's era of office, which of course took some years to work through our economy—indeed, it was five or six years before we were able to overcome its deleterious effects. And I must say, further, that one would not have expected from the remarks of the noble Lord, Lord Silkin, that both his Party and the Government are on record as claiming it as the primary task lying in front of them after the disastrous experience of the past, to maintain the value of the pound sterling. That, of course, we in industry welcome enormously. It is quite impossible for us in industry to lay our plans ahead for the proper conduct of British trade, and especially for British trade overseas, if hanging over our heads are any risks whatever of the devaluation of the pound sterling. I hope that when the noble Lord, Lord Silkin, has an opportunity again to speak on the economy of the country he will underline that vitally important fact. I hope also that he will go so far as to remind his own colleagues that to avoid inflation, further inflation, in this country it is absolutely essential that the rise in our own earnings—whether we be wage-earners, whether we be salary-earners, or whether we be living on dividends—as a whole must not be more than the rise in the general productivity of the nation.

When we consider the American recession of the past year, which was extremely acute in the early months of 1958, when we consider the financial difficulties of last September, and when we consider the world slump (for there is no other word for it) in the prices of primary products which Lord Silkin has referred to quite accurately, affecting, as they must do, the ability of those countries to buy our manufactured goods—when we consider all these difficulties which have faced us in the world field, I think that no unprejudiced observer from overseas could do other than marvel and congratulate Britain on the remarkable stability of our commerce, employment and industry over the last year.

But I wish to turn such few remarks as I have to make to your Lordships to-day more on to the question of employment and unemployment. Considerable anxiety has been expressed, and quite naturally, about the increase in the numbers of persons registered as unemployed in this country, and Lord Silkin is perfectly correct when he says that unemployment is a personal problem as well as a national problem. I should like to refer for a moment to the figures. Of the 475,000 people unemployed on September 15, 60,000 were temporarily stopped. We can leave those out of our account for the moment. Of the remainder—the ones that are serious, of course—just under 300,000 in all, 269,000 were men and 25,000 were women.

These figures of registered unemployed are often compared in the Press and in the official publications with the number of notified vacancies remaining unfilled. Those figures of notified vacancies cannot be completely correct. I was looking at the figure in the last issue of the Ministry of Labour Gazette showing the number of notified vacancies in my own printing industry. The number of notified vacancies is quite small, but I happen to know of my own personal knowledge, being on the Council of that industry, that the number of real vacancies is considerably more. However, it is no good notifying the Ministry of Labour if they have nobody to send to us as skilled in that trade. Therefore, these numbers of notified vacancies are on the low side. Nevertheless, on September 10 there were just under 180,000 such vacancies, 94,000 for men and 85,000 for women. The point I want to make, my Lords, is this: that very misleading conclusions can be drawn from those figures considering this matter in an overall way and for the entire country. The Ministry of Labour analyse the totals in a number of ways which would make the true position much clearer if only they would advertise it a little more. One has to bury one's head in the Ministry of Labour Gazette, which is pretty heavy reading and contains all sorts of things, before it is possible to get at the true picture.

The picture does show that the situation is very uneven from one part of the country to another. But even more significant—and this is what I want to bring very much to your Lordships' attention this afternoon—is what they call the "Occupational analysis of adult workers who are wholly unemployed". The most recent issue of the Ministry of Labour Gazette, that for August, 1958, which I have here, relates its figures to June 16. Of course, there has been a rise since then, but the proportions remain more or less the same. At that time, of 250,000-odd wholly unemployed men, almost 200,000 were classed as labourers and unskilled workers. Now, my Lords, this is of vital importance to all sorts and conditions of people. There were only just over 50,000 unemployed who were skilled or even semi-skilled. At the same time, the number of vacancies for skilled or semi-skilled men was many more than this. Vacancies for labourers are hardly ever issued to the Ministry.

The problem, therefore, at that time, and to-day, is primarily the problem of the unskilled labour—the labourers and those classed as "miscellaneous unskilled". This fact is one which should surely give cause for thought to all sorts of people: to those who are encouraging unskilled labour to come to this country from overseas (and I do not refer only to Jamaica and Africa) and to those who are considering what young people should do, whether they should go into blind-alley occupations and chance their luck at getting a good job later on, or whether they should be made by their parents (because nobody else can make them) to undertake some form of skilled or semiskilled training. Because the fact of the matter—and we must understand this if we are really to understand the employment situation in this country—is that ever since the war there has been, and there still is to-day, an acute shortage of skilled labour, while we have too many completely unskilled labourers. These factors require study and consideration when we are discussing how to find jobs for these unskilled. The recently announced increase in public works investment is, I think, very welcome in this regard, because the largest number of unskilled men is, of course, employed in public works. But I wish to take this problem a little further with regard to training for skill, and, if I may occupy a moment or two of your Lordships' time, I want to refer not only to the past and the present but to the future.

There has been, I think, a very significant recent development in the field of industrial relations generally: I refer to the setting up of a new Industrial Training Council to supervise the training of young people going into industry—apprentices, semi-skilled training, and the like—and that has been set up by the British employers, by the Trades Union Congress and by the nationalised industries. In 1956 the Ministry of Labour took the initiative of setting up what was known as the Carr Committee, with the Parliamentary Secretary as chairman and with representatives of the trade unions and employers, to keep training under review, and especially to consider what ought to be done with regard to what is commonly known in education circles as "the bulge" in young people which is coming forward in about 1961 or 1962. This Committee made the suggestion that there was a need for some national organisation which should be charged with the specific function of keeping in mind this problem of training young people for industry, and so to get away from this mass, this deadweight, of unskilled labouring people for whom, as we more and more move into the automation and the skilled world of the future, there will be less and less work.

The Carr Committee, in their Report which was published this year, recommended that very vital steps should be taken if industry is to make the best use of the increased numbers of people who are coming out of the schools in the years that lie ahead. As soon as the Carr Committee Report had been issued the employers' organisation held a conference to consider its very valuable recommendations, and they accepted the responsi- bility for industrial training as being one which was primarily a matter for the employers. They decided, with the warm co-operation of the Trades Union Congress, to set up this mixed body to which I have referred, in order to encourage industry to review their present arrangements for training, which will not be sufficient if we are to take advantage of the young people who are corning out of school shortly, to follow up the recommendations of the Carr Committee Report (there were a number of them) which were very valuable, and to act generally as a centre for collecting and disseminating all the latest ideas on training. This is of great importance, socially and nationally.

We have been suffering from a shortage of skilled labour. When this bulge of some 500,000 young people extra to the present rate of those leaving school come out of school and enter employment in the years 1961–64, it will give an opportunity, if we take hold of it with both hands, of re-equipping ourselves with young people who will make the skilled operatives of the future. But if we do not take advantage of it, we are going to build up a further discontented heap of young people with no skills, a drug on the market. I do not wish to bring sentiment into this matter, but these young people were the first fruits, if I may be allowed to put it in that way, of our young men coming back from the war. They were born between 1946 and 1948 and, more than any others, they are not the children that we ought to let down.

Our industrial set-up in this country is essentially a voluntary one, and no-one acquainted with it on either the employers' or the trade unions' side would wish to see that altered. Therefore industrial training must be part of that system and cannot be dealt with in isolation. It is the responsibility of the organisations of employers, trade unions and joint industrial councils in the various industries to co-ordinate the training of their recruits and to see to it that they make plans during these three years to take 50 per cent. more recruits than they have been taking before It is a simple job; it is not for all time, only for a short period; and provided there is the will it is a perfectly possible job. I think that the engineering industry and many others will jump at the opportunity, because they have never enough young people of this calibre to train.

I am sorry to go on about this training council, but to me it is very important. This council, which is composed of eight representatives of the employers and of the Trades Union Congress and representatives of the nationalised industries, is the first body ever set up by industry which has co-opted members of the Administration. Usually the Government set up a committee and ask industry to co-operate. We believe that this is much better. Industry is setting up a council to do this job, as I hope, and we are asking representatives of the Ministry of Labour, the educational services, the City Guilds and so on to come and help us with their expert knowledge. If I may say so, the council have done me the honour of making me their chairman for the first two years.

I regard this as one of the most important questions of the moment and anything that your Lordships can do to bring home to those in industry the necessity of looking to this matter, both for themselves as an enormous opportunity and as a social service, will be of real benefit to our work. Our first task is to find out exactly what industry are now doing and what plans they are making. It will be some few months before we are able, having got this information, to lay our plans and go forward; but I thought that as there was an opportunity in the debate this afternoon it would not be entirely out of order for me to mention this matter to your Lordships.

In conclusion I would say that there are most encouraging signs that the report of the Carr Committee, on which our work is based, has already reached one objective, in that it is stimulating discussion in industry up and down the country; and in particular, as I happen to know from reports we have already received, it has caused a great number of industries to begin already to re-examine the whole position of their training arrangements. We trust that our work will result in everybody who cares about these problems stimulating the training activities in industry, and I hope very much that at the end of the day our labour will not have been in vain.

4.6 p.m.

LORD LAWSON

My Lords, I had expected that my noble friend Lord Hall would be opening the debate for us today but I was pleased indeed when my noble friend Lord Silkin stated his case to the House. He made me think of the headlines we saw in the newspapers this morning. Most of us were surprised and there were some who were startled, but those who know anything at all about unemployment have paid no heed to statements that 5 million or 6 million unemployed in America is nothing to worry us. It is the best warning to this Government that they could possibly have.

At the time I entered Parliament, about twelve months after the First World War, the then combination of Parties had a mighty majority and could have done anything they liked to do. Yet, as everybody knows, there was misery and strikes from the beginning to the end of that Parliament. So far as unemployment was concerned, matters culminated in the establishment of the "depressed areas." I mention this because I think that the Government should take note of what is happening in another country. Of course, there are people who think that several hundred thousand unemployed is neither here nor there. In another place this week the Minister of Labour solemnly said that he was sure that the number of unemployed would go up to 600,000. I have been told by a man who knows this question as well as the Minister of Labour in spite of the Minister's departmental information, and who has reason to keep in contact with it day by day and to note the effect of events upon industry, that he is sure that there will be 750.000 unemployed by the end of January.

The rapid increase of unemployment is a noticeable thing, yet we treat it as though it were inevitable. I remember the days between the First and the Second World Wars, when almost the whole of the country had what were called "pockets of unemployment." Those who want such a phrase, can have it. I know what a "pocket" was; I lived in one. I used to do my day's work in the other place and then up I went to Durham where the labour exchanges had queues standing at the front door and queues standing at the back door. It was a sight that was unforgettable. How this country got through it without any physical trouble, I do not understand. I see now the same spirit operating as operated at that time.

Let me refer to another parallel. America was years after us in coming into the trough of unemployment. After the First World War we went right into it. I will not talk about the policies that led to it, but that is what happened. I remember coming from America in the early 'thirties and an American industrialist gibing at me about what he called "the dole" in this country; that they had no dole and they had no unemployment. Well, we know what happened in 1933, not many years after, when the great crash came in America. But on this occasion, after the Second World War, Labour became a majority in the Government in this country, and Labour did the right thing, as they saw it. They saw to it that industries were put into something like shape; they saw to it that decent standards were made. There is what is called the Welfare State (of which I personally am very proud), which assures a man or woman decent conditions and that he or she is not blamed for being unemployed. Labour came in, and now we have gone thirteen years without any unemployment worth mentioning. Labour gave good conditions. What does it prove? It proves that it pays a nation to give good conditions to its people; it proves that it pays a nation to educate its people well. I think it is possible that if Labour had been in power now there would not have been 600,000, and rapidly going to the million mark, unemployed.

I want to speak on how that is affecting a certain industry. Labour nationalised the mines. I wish that every Member of Parliament, and all the Members of this House particularly, could see the effect that that has had upon the population. For me, life has been worth living if only to have seen that change. I remember when men in the street in which I lived walked to eight different collieries, some of them walking eight to nine miles there and back and having to do the work in addition. Now they go on motor cycles; they go in buses; and some of them even go in cars—and I am pleased that they do. That is a desirable change, is it not? Now a difficult problem has fallen upon that industry, because oil has come in on a vast scale as a form of power. Coal, say those who are in authority, is cheaper for producing electricity than atomic energy, and will be for something, like twenty years; but I think it is possible that oil is cheaper. The question for this country is: are we to use the great gift that Divine Providence has given to us? It has been so cheap; it has been so rich; it has been produced on such a great scale that we have never thought about it.

I almost feel like apologising for talking about coal, but we have to do it regularly in this House and in the other place because it is fundamental to the life of this nation. I do not want to spend too much time on it, but one thing I do want to say is this. I like to see the pride with which young men go to work now. It is like a new world. They are proud to be miners. But if the Government do not face up to the fuel problem we shall lose a lot of these young men, and some of them, as they are doing now, will go overseas. We have been able to say to some of them (and I think it is worth while telling your Lordships and the representatives of the Government this) that this is an industry in which they have a great future. We have been able to persuade them to go into that industry, and we have been proud to see their pride in it. It has made a great change in the whole outlook of the worker in that particular industry. But nowadays there is talk of unemployment in the mining industry. Some have been laid idle—not unemployed—and it would have gone on longer had it not been for the conditions prevailing at various collieries and in the industry generally. I am warning the Government that the time has arrived for a settlement of the fuel problem. Are the Government ultimately going to use coal, or are they going to keep on developing the flow of oil into this country to suit certain interests?

I do not want to detain the House any longer, but I wanted to get the point home that we shall lose some of the best material in the industry unless we reach an early settlement of this problem. If the Government want to do the thing that is right for the country, then they will not be long in arriving at a decision in regard to this fuel problem. That is all I have to say to your Lordships. I am pleased to have had the opportunity of pointing an historical parallel which this country might well take note of, because if it does not it will probably land itself in the same position as people overseas, with vast numbers of unemployed.

4.19 p.m.

LORD ST. OSWALD

My Lords, I had not realised how closely I should wish to follow the noble Lord, Lord Lawson, for a moment or two, and I hope he will not take it amiss if I do so. He has spoken with pride of the coal miners, and I wonder if he knows with what pride they speak of him and what a great figure he is to all coal miners, not only in his own area but also in the area of South Yorkshire in which I live. I belong to a family who were once coal owners, and I assure the noble Lord that we are not ashamed of having been coal owners. Nostell Pit, which is still at my front doorstep, or on whose front door-step I live, is still known, as it was known for 200 years in my family's hands, as Harmony Pit, and I am happy to know that it is still so known.

The noble Lord, Lord Lawson, has spoken of the danger that oil fuel and other sources of power may take over from coal. I think he will allow me to say that part of this is due to the fact that, justly or unjustly, coal and coal miners have got the name of being less reliable than they were before. Therefore, I myself believe—though I will certainly accept any contradiction from the noble Lord—that in present circumstances any future Government will be under continual pressure from industry to change over increasingly to another form of fuel. It is not, I think, the miners' fault. I know less well, though I know to some extent, the conditions under which they still live and work: it is not comfortable work though it is no longer miserable work. Indeed, if I had no miners among my friends I should have very few friends indeed in my part of Yorkshire. But I hope the noble Lord will not be offended if I make this point, because it is pertinent in this particular context.

This chapter of the debate on the Address follows most naturally, it seems to me, on yesterday's discussion, when questions of Commonwealth trade were most searchingly discussed. Nobody will feel like denying, as the noble Lord, Lord Silkin, stressed, that without encouraging and, where necessary, enabling Commonwealth countries to purchase from us, none of the conditions which the noble Lord himself desires and which all of us desire will be attainable in any degree. But it is worth noting to this end: that the "little bit of luck" about which the Prime Minister spoke, and which many other speakers, including the noble Lord himself, have used as a phrase in subsequent debates, has been turned to practical account from the point of view of the primary producing nations within the Commonwealth, as well as from our own point of view.

The advantages that we have been enjoying, and to some extent are still enjoying, of lower prices for primary products have not been accepted selfishly and rapaciously, and certainly not, I feel I am sound in saying, at the price of ruining Commonwealth countries, as was suggested by the noble Lord. A substantial part of the profits accruing from those conditions are being ploughed back, to the benefit, for instance, of India, in the new loan, and to other countries through the decision to make credits more easily available. I am not an economist, but it is my impression that this decision would not have been possible had we not reached our present level of prosperity.

It was appropriate, I thought, that while yesterday's debate in your Lordships' House was in progress a great meeting in the Albert Hall had already started. I cannot but feel that had it been held before it might have infected noble Lords opposite with greater optimism than was revealed in some of their speeches last night. It must be to the lasting credit of the British Commonwealth, in our own eyes and in the eyes of the world, that this Commonwealth has produced a man of stature and vision such as Mr. Diefenbaker. He made it plain that, much as the Commonwealth owes him—and much more it may owe him in time to come—his own personality and imagination flower from his membership of the British Commonwealth—that membership which we all share with him. He reminded us that Commonwealth membership was something to live up to. The noble Lord, Lord Silkin, has put down a critical Amendment suggesting, I think, that the present Government of the Mother Country are not quite living up to it. He is not, I think, impugning the Government's intentions, but he distrusts its methods.

I listened to his words with all the respect and interest which they inevitably obtain. I was unable to identify any really positive alternatives as to policy in his criticism, although his Amendment implied policies which struck me, in all humility, as mistaken. For instance, he regrets "the continuing high cost of living". I studied that phrase carefully before coining into your Lordships' House this afternoon, and I was waiting for some correction of my initial impression. But are we still to understand that, because he regrets the continuing high cost of living, he wishes to see a reduction in the cost of living and that he is, in fact, a deflationist? If so, I think by saying so he might somewhat clarify this debate. I find it hard to believe that that should be his intention or his meaning. The noble Lord is better aware than I am that deflation carries greater injustices even than inflation. I prefer to think that his aim is the same as the Government's: to maintain a stable standard of living and not to allow it to fall—an aim in which this Government have been signally more successful during the past year than in any since the war.

It seems to me that the noble Lord selected from the gracious Speech certain cohesive and interdependent points of policy for criticism, and for that reason I am personally also regretful that he has decided to drop out of this debate the question of pensions. If the Government's policy is right in respect of one of these points which he is criticising, then it strengthens the rest. If it is wrong in one of these policies, it prejudices the others. The noble Lord does not say that the Government have made wrong proposals for dealing with the problems of industrial output, unemployment, the cost of living and provision for old age; he claims that the proposals made are inadequate. From that I infer that he would like to see the present proposals carried further. That is the natural inference to be drawn from the Amendment as it reads. I am not suggesting that the noble Lord ignores the dangers entailed, but he suggests that he is ready to face them. He stands for boldness and I, at least on this occasion, for prudence.

The noble Viscount the Leader of the Opposition described the performance of my noble friend Lord Goschen in his speech on Tuesday as, "Up Guards and at 'em", but it seems to me that as a result of this Amendment the noble Lord sitting beside him is prepared to charge a good deal further than my noble friend. What would his "adequate" proposals be? The Government, as one of their aims, plan to increase their capital investment by £150 million. Does the noble Lord not think that is enough? What sum would he favour?—£200 million, £250 million? It must be a fairly substantial increase to justify an Amendment in these terms. If what we are aiming at is a stable value of money and a stable cost of living, the perils of creating too much money are clear. Any increase in the value of money beyond the point necessary to balance increased production is a peril which can inflict a worse than ever defeat on its own purpose. It is a matter of judgment, and I am certainly not setting my judgment against that of the noble Lord. But when he sets his against that of my right honourable friend the Chancellor of the Exchequer, I wait to be convinced; and I confess that during this afternoon I have not been convinced.

Against this background, I should like to say a word or two about the Government's pension scheme, because it seems to be entirely in harmony with the general policy, and preferable to the Labour proposals in that it is quite clearly anti-inflationary. By allowing private pension schemes to continue it declines to load that huge, perpetual and increasing commitment in its entirety on the Budget. It allows instead for a great part of it to be financed by real investment, and ensures that the rising cost of this provision is financed, therefore, outside the Budget. It can hardly be argued that this precaution is anything but anti-inflationary. I shall listen with interest to what other noble Lords on the other side of the House have to say, but at the moment I am bound to affirm that the Government's proposals seem to me to take into account, far more realistically than those of the Labour Party's architects, the problems of a future Government, and in particular the problems of a future Chancellor of the Exchequer.

4.30 p.m.

VISCOUNT STONEHAVEN

My Lords, I hope that the coal industry having been discussed I shall be forgiven if I discuss the agricultural industry, but before doing so I would, in all humility, congratulate Her Majesty's Government on the bold and courageous steps they have taken in the past, and in particular I should like to congratulate them on their excellent sense of timing. I must, before referring to the Government White Paper (Cmnd. 553) Assistance to Small Farmers, declare an interest. I am a multiple small farmer, if there is such a thing, in the north-east of Scotland. To make that a little clearer may I say that I am farming (if it will not bore your Lordships to hear the names) Cowton, Rooten, Meickle Glenton, Muchall Glenton, Glenton Croft, Pitspunkie, Rumblegood, Upper Cairn Bank. Upper Millsburn, Hillhead, Nile Croft. Haldon Croft, Westerton of Bogheadly, Lower Mills-burn, Sunnyside, Snob Croft, Blackburn, and Snob Farm: so I think that that justifies the term. Those nineteen holdings comprise in total 700 acres of arable. They are lying up in the hills and they are so marginal that I am even getting the marginal grant on one of them; and that means it is very marginal indeed.

I read with considerable interest the White Paper Assistance to Small Farmers, and I went into it to see whether, other things being equal (in my case it is rather different) any of my farms qualify for assistance and what the effect would be. I apologise for being detailed, but small farms are a detailed subject and you cannot discuss them without discussing a certain number of the details. I hope your Lordships will forgive me.

I took a 98-acre farm which I have in hand and applied the appropriate Ministry figures for man-days to various crops, and so on, in operation. The 98 acres is under 100 acres, so it qualifies on that score. This farm is farmed in the traditional manner of the north-east of Scotland, a tradition we are very proud of, and by a method we have been using for 160 years or something like that. It is farmed on a six-shift rotation, which gives a break of roughly 17 acres. There are 17 acres of turnips. That, according to the Ministry, represents 204 man-days. There are 17 acres of lea oats, at 4.5 man-days to the acre, and combined with seventeen acres of clean land oats that comes to 153 man-days. Then there are 17 acres of hay, which, multiplied by two, represents 34 man-days. Next there are 30 acres of grazing, at a quarter, making 7.5 man-days, and on that I can carry 30 head of cattle grazing—it takes all one's time but one can do it. That gives another 135 man-days, and with 15 per cent. one is well over the mark of 450.

But now appears a point which shows how complicated these things are. Suppose I cut out growing turnips and grow instead 17 acres of silage. The rating of silage is two man-days to the acre, which fetches that figure down to 34, and if all the other calculations remain the same that brings me down to 418 man-days, which, of course, would qualify on both scores. So the future for turnips looks a bit black!

The next point I looked at was the return of a small farmer engaged in breeding beef store cattle—and somebody has got to do that. I cast up for a typical farm of this size a budget—the cost and the income that could be received from doing it. The first thing required is a man and a boy, and the wages for them are £9 and £5 a week for fifty-two weeks in the year; that is £728. Land at 30s. an acre is £147; rates £15; insurance £50; light bill about £35. Then comes the equipment. With a tractor and the minimum number of implements—there are about twelve of them—the cost comes to a total of £2,265. Thirty breeding cattle, heifers, at £65 each, amount to £1,950; and that gives a total of £4,215. You have to get that money from somewhere and pay 6 per cent. on it, which costs £253 a year. Depreciation on the tractor at 33⅓ per cent. is £200 and the depreciation on the implements at 10 per cent. is £362 (I have also taken the cattle because they depreciate the same as anything else). Fuel amounts to £186; veterinary expenses £20; fencing £50; fertilisers, lime, less subsidy, £20, and others £206. Seeds—because you have to re-seed your areas to grass every six years—come to another £68. That gives a total outlay on that basis, which is very rough, of £2,338.

What can you get back? If you are darned lucky you will get 30 calves at £40 each, which is £1,200—and again if you are jolly lucky indeed you will sell them as weaners at £45. The subsidy is £7 each, which is another £210. You will grow on that type of land six quarters to the acre of oats at 60s.; that is another £612. That gives you a total of £2,022, which means a loss of £316. That is using figures which are really quite beyond reach; but, of course, equally those figures do not happen in point of fact. But if you are considering the case of somebody who is starting on his own, those are the figures you have to take, or something like them. It is not a complete picture of how these things go, but they show that the farmer in my part of the world does not know the meaning of "feather bed."

There is another point which seems to me sometimes to be missed. The farmer's income is derived only from what he receives from the sale of the end product of his own farm. Therefore, if the farmer is breeding beef stores it is all very well to say to him, "Go into dairying; you will do better." No doubt he would, but somebody must breed beef stores, and the cattle people have never, so far as I know, been considered favourably or directly by any Government measure. I think it is about time they were considered. The cost, of course, depends on the cost of wages, which is conveniently fixed; the farmer has no say. It depends also on the cost of fertilisers, which is fixed by the gentlemen who sell fertilisers. Then the interest which he has to pay is fixed by the people who lend the money. We always hear of the efficiency of the farmer, but there are a number of things which the poor, wretched farmer cannot influence, no matter how efficient he may be. That applies in particular to the small farmer. To the big farmer none of these things matter.

If one compares a beef cow with a dairy cow, one finds that the beef cow in her life will probably produce ten calves, and if you sell those calves as weaners and get £40 apiece that gives you a figure for the life of your cow of £400. Compare that with a dairy cow crossed with a beef bull. She also will produce ten calves, and if they are sold straight away and reared by somebody else, which is often done, they will raise £20 apiece so that you will get £200 straight off for a by-product. Then in the cow's lifetime you will get from her at least 4,000 gallons of milk, and at three shillings a gallon that works out at £600. So the value of that cow is £800, or exactly double the value of the beef cow. But again the point of emphasis is that somebody has got to produce beef stores. Therefore, how that type of farmer is to be helped is a matter for consideration. I feel that the emphasis should be on the greatest possible efficiency having regard to all the circumstances affecting the branch of farming concerned, and not just theoretical efficiency.

The man-day calculations ignore the fact that in many places in Scotland—certainly in my part—there is no casual labour available. When the potatoes have to be lifted the schoolchildren have their holidays and get the potatoes in, because there is nobody else to do it. Labour requirements on a small farm really must be on the basis of a man-year. You cannot split a man and employ him for so long, or think that you are going to get a man for so many days in the year and then casually chuck him out. You must have the man on the farm, house him and endeavour to find him full employment. If you consider the matter from that angle you arrive at a totally different point of view. One of the difficulties in amalgamating these small farms is to secure a unit that will support either one man, or a man and a boy, or two men, as a fully employed unit. Juggling about with fences and buildings and all the rest of it is a difficult and tricky problem in regard to this matter.

I should be the first to pay tribute to the brilliant research work which is being carried out in our agricultural research stations. But one must not be too theoretical in farming. I remember a story about a time-and-motion study expert who gave a most interesting lecture on the time wasted by farmers in winter in regard to bad gates letting into turnip fields. He spoke of how a man has to stop a tractor, get off and open the gate, drive the tractor through, shut the gate and so on. This expert worked the thing out very carefully to about two places of decimals; he demonstrated how, with a properly designed steel gate, costing so much money, with interest at so much, it would be possible to save a great deal of time. It was not until the end of the lecture that it was pointed out to him that in Scotland the cattle are inside for the whole of the winter, and therefore the flakes, which are home made affairs, can be left open for the entire winter without worrying about them. That is just the sort of pitfall into which one can fall when being too theoretical.

Then there is another matter in regard to the employment side. When their sons leave school many farmers employ them on the farm and teach them farming. You have got to employ your son for the entire year, or for a long period, and you cannot be too theoretical about having man-days for crop requirements and so on. You must try to work it from the unit of an unsplittable man for a year, and try to arrange the farm so that you can employ either one or two fully. I am glad to say that in my part of the world farm servants still have large families. I have one family of ten, and another with seven, coming along nicely, and they are bringing up their children in the traditional farm method and keeping them on the land. I think that is a good thing and should not be interrupted, if it possibly can be avoided.

I think that by taking the density of man-day figures suggested by the Ministry and applying them to an actual farm or farm conditions I have shown that the requirement for growing turnips is 613 man-days, which is very close indeed to a two-man unit even on the Ministry figures. Therefore, I think that the highest limit they set of 450 man-days is too low. The full employment figure for one man must be 52 weeks of 5½ days a week, including his paid holiday of a fortnight, which works out at 286 man-days for a one-man unit. A two-man unit works out at 572 days. Adding the 15 per cent, to that, we get the figure of 637 man-days for a two-man unit and 329 man-days for a one-man unit. I suggest that those figures are a far better basis to work on than those suggested in the White Paper. I hope that serious consideration can be given to this point, at any rate in our district.

Nevertheless, I should like to congratulate Her Majesty's Government on the direction of their thoughts, and on the way their thoughts are going and are taking them. They place an emphasis on the business of farming and not on the subsidising of hopeless units. I believe that that is perfectly sound, and I congratulate them on that; it is quite a courageous thing to do. In my part of Scotland the last wages award may very likely have the effect that, for the first time, I think, in almost the memory of man, we shall have unemployed farm labour. The farmers just cannot make the profit or the money necessary to pay these increased wages—at all events, they are all talking that way; whether they will do so, I do not know. The farm servant is a skilled man, a hard-working, willing and cheerful chap, and a very good friend. But the money just is not there. There we are. That is a matter which must be considered.

To speed up things in regard to this scheme for small farms, I suggest that it might be worth while for the Government—they have costed farms all over the country, and they have figures in regard to types of farm and everything else—to send out a sort of skeleton budget, rather like the type of thing I have talked about, to suggest to a farmer how the thing can be balanced and what improvements can be made, but leaving it to the farmer to sort out whether he wants to try it or not. If eight or ten schemes of that sort were sent out in blank to the farms, with the comment, "Here is the type of thing we have in mind", it would considerably assist in sorting out the schemes when they come back from the farmer to the Department, because the farmer, at any rate partially, would be adopting the Department's scheme and not piloting some scheme of his own which the Department would have to investigate and which would take a great deal longer to put into operation.

The last thing I want to talk about is grassland improvement. This depends largely on liming, fertilisers and ditching. Here one comes to the good old argument: When does a ditch stop being a ditch? If one has a ditch that has not been running for fifteen or twenty years, and is so overgrown that it has a twenty-foot tree growing in the middle of it, I maintain that that is no longer a ditch and that one should be entitled to claim the grant or assistance, whatever it may be, to reinstate that ditch. The Department says, "No." Their argument is that my back is broad enough to carry it without a grant, but I do not agree with them. I believe a clear definition of that matter would be most helpful. It might be said, for example, that a ditch which had not been working for ten years and had had no grant should rank for whatever grant there might be. That should be made clear, for there is at present a great deal of trouble and bad feeling on this point. Whatever the ruling may be, a ruling should be given.

Then there is the great question of the cost of maintaining ditches. Her Majesty's Government, with great wisdom, readily pay a grant for liming pastures as often as a farmer likes to do it. He can get a grant in the form of a subsidy each year if he likes to lime each year, and he can also get a grant for spreading lime. It seems to me totally illogical to refuse a grant for clearing out ditches on the grounds that that is a maintenance job and has nothing to do with the main principle. It has just as much to do with maintaining and improving pasture land. It is the key point—in fact, the actual money issued by Her Majesty's Government in lime subsidies can be largely nullified and wasted through a refusal to help farmers with the much more expensive and difficult labour of clearing out ditches periodically. I suggest that there should be a maintenance grant (it need not be the full grant) for cleaning out ditches every six years. I believe that would be a very worth-while thing for Her Majesty's Government to consider.

There is something else which would be of great help in dealing with small farms. The great problem is that no two farms are alike. Her Majesty's Government cost farms all over the place—which is a very good thing. They have costed some of mine and I will give them the lot next year. Their advice is good. But why should that practice not be extended further? Why not produce a scheme, theoretical or otherwise, for the improvement of small farms, and guarantee farmers against loss—nothing more—provided that they employ the scheme on their own farms or in their own particular district. By that method we could use a great number of "guinea pig" farmers to get a good scheme at very little expense. I should like to end my remarks with the old quotation: Muzzle not the ox who treads out the corn.

4.54 p.m.

LORD SHEPHERD

My Lords, I am quite certain that the noble Viscount who has just sat down will forgive me if I do not follow him on agricultural matters. The nearest approach I have to agricultural matters is my week-end gardening. I noticed that the noble Viscount offered his congratulations to Her Majesty's Government on its past and present policy. I also noted that the noble Viscount is himself a farmer. My little experience of farmers is that they curse either the Government or the weather. The amount of their cursing of the Government largely depends on the state of the weather, so I should imagine that Her Majesty's Government have got off rather lightly this year.

We have also heard a lot during this debate about a "bloomin' bit of luck." Yesterday I had my name down on the Order Paper for the debate on Commonwealth and colonial affairs, but unfortunately, for personal reasons, I had to withdraw. My noble friend, Lord Ogmore, who led from the Front Bench for those on this side, put the case far more ably, but at least put the case I should have tried to put. This afternoon I have had the like experience to find that my noble friend, Lord Silkin, has dealt with many of the points that I had proposed to take, particularly on the importance of the export trade.

We have heard this afternoon from my noble friend, Lord Lawson—I thought in a very eloquent and sincere manner—the old story of unemployment. The fear of unemployment is definitely abroad in this country to-day. We can have debates on unemployment within this House and they can be held also in the other place; but the debate on unemployment and production difficulties is now being held out in the streets of this country and in the homes of this country; and the future of Her Majesty's Government will depend entirely upon how they can control the growth of unemployment and bring its speedy reduction. It has been said by members of Her Majesty's Government that noble Lords and members of our Party wish to aggravate unemployment for a political end. Nothing is further from the truth than that. We express our concern on unemployment because basically this Party understands unemployment, because it has had to live with it.

Last year at just about this time this House discussed the economic situation of the country. That discussion was held at the very height of an economic crisis. The situation was so grave that Her Majesty's Government considered it fit to put down a Motion of confidence. Naturally, they obtained their majority. We heard speeches from the other side and from the Ministry, but when one compares those speeches with the correspondence and evidence that was given during the inquiry on the Budget "leak" one sees a very considerable difference. The evidence at that inquiry was that this country was on the way to doom as far as trade was concerned. We are told that things have been changed. That has taken place in a matter of twelve months. Has the body of this country really recovered? Has it recovered to the degree that Her Majesty's Government wish to convey to your Lordships this afternoon?

I have spent my entire business career in the export trade. My whole energies have been in the selling of British goods. The order books of companies which I represent, of finance houses who are financing shipments, are thinner to-day than they were last year. The ships that are leaving London Port, Liverpool and Birkenhead are carrying less cargo than they did last year. My Lords, this is a very serious matter. This drop in exports is not something that is new. As I say, I can speak from my own experience. We have had a general contraction of trade during the last four years. This has been due to a number of reasons. We have had greater competition in our export markets; we have had lower commodity prices. But one of the reasons why we have felt these effects, I believe, is that we are not putting our full energies into these export markets.

I believe that this is the great challenge to this country: to go after all our export markets. We know that the Government wish to take this country into the European Free Market. I believe that that is right; but unless the export departments within our trading companies are on the alert and have the aggressive spirit, that free market, which could open a new world to us, could be our grave. Germany is fully equipped; she will jump into this market at the first opportunity. We must be strong enough, we must be competitive enough, to fight Germany in the European Market. My Lords, the challenge is there. Is the country ready to take it? Sometimes as I go around the country I have my doubts. I find that possibly not the best man is in the export department; he is in the home-trade department where the profit margin is. We must get a new outlook. It is no good depending for your export trade on your heavy engineering, on your motor car trade, on your aero engines or on your aircraft. They are very satisfactory; but what really counts is your general trade, your bread-and-butter trade, and it is in that section that I feel we are weakest.

May I quote an example? Some time ago I went to a factory and was complaining bitterly about delivery. I was taken into the warehouse where goods were being packed and was told, "This is the reason why we cannot export". I looked. Everybody was very busy; the place was full up. But when I saw the trade mark it was for one of the largest multiple stores in this country. They were getting priority in delivery; the export market came second. If this country is to survive, that is not good enough. We really must go out and win these export markets. A lot will depend upon private enterprise, and I believe a lot will depend upon the Government and its leadership. We do not get the same call for exports as we did in the days of Stafford Cripps. So I would call upon the Government, as I did this time last year, to take a lead in the export drive.

I should like to make one concrete suggestion to Her Majesty's Government. I do not expect a reply to-day or tomorrow. It is on the question of the Export Credits Guarantee Department. This organisation was set up to encourage exports. It was to encourage the manufacturer and merchant to go into difficult markets—markets that were difficult because of political reasons, difficult because of financial reasons, possibly difficult for lack of information available to the merchant. It was a very good scheme, but I believe it fails on one ground. It gives basically an ordinary commercial insurance cover; it will take a risk; it will insure your exports which are reasonably gilt-edged. But if any article or any shipment to a doubtful market is presented, no. I ask the Government to look into this to see whether they can make this Department more flexible. I should like to see them reduce the premium rate, because there are many firms which today are prepared to do export business but, with a very reduced margin, are not able to go in for that trade because the premium required is high.

There is another side, which really follows on what was said a few moments ago on the question of its being a commercial insurance company. If I, as an exporter, wish to go into a difficult market like Japan, and I go to the Export Credits Guarantee Department and ask whether they are prepared to insure me, I think it is wrong for them to say, "Certainly, at this rate—but what about all your other trade?" I say that I am doing very good business in Australia, and that that is perfectly safe; I am doing very good business in New Zealand and I do not need their credit there. But if I am going to insure for Japan and they say, "You must bring in your Australian and New Zealand business", and that I must insure on that level, I believe that that is wrong. I believe that that spirit is quite contrary to what we understood it to be when the Export Credits Guarantee Department was set up. I ask the Government, very sincerely, to look into this side of the question, because I believe it will play a very important part in the development of our exports.

I have spoken for longer than I had intended to speak, but I believe that the noble Viscount, Lord Hailsham, was quite right in his speech when he attributed the unemployment rise, the unemployment figures, to the short export order book. Therefore, unless we increase our exports, that unemployment will remain or will increase. Rejuvenating the home market by taking off hire-purchase restrictions will make little difference. The export market is our life. If we lose our export markets we shall sink. I look now to Her Majesty's Government to take a lead in this trade.

5.9 p.m.

VISCOUNT BRIDGEMAN

My Lords, I am going to repeat the advice given by my noble friend Lord Selkirk, that the House should resist this Amendment. I am also going to say that I could agree with very little of what the noble Lord, Lord Silkin, said in moving the Amendment. But, paradoxically enough, I feel very glad that he put it down, because it was certainly right that we should spend plenty of time during the debate on the humble Address in discussing this very vital subject of unemployment. Although the Motion has an end-piece dealing with social conditions, we have not really touched on that this afternoon. Only my noble friend Lord St. Oswald, I believe, mentioned it; and the only other noble Lord who strayed from the subject of unemployment was my noble friend Lord Stonehaven, who, I am told, will be answered by my noble friend Lord Waldegrave to-morrow; and I hope that in the meantime he will have had time to check Lord Stonehaven's sums.

Of course, my Lords, unemployment is very much in all our minds. It is as much in the minds of the noble Lords on these Benches as it is in the minds of noble Lords on other Benches. Therefore I must make one reference to some words which I think I heard correctly from the noble Lord, Lord Lawson. He was talking about the state of affairs in County Durham between the wars, and he used these words (I think I have got them correctly): "We see now the very same spirit operating". If that remark is intended to mean that unemployment is regarded in a spirit of indifference by any noble Lords on these Benches, I cannot possibly take it lying down. How could the noble Lord, Lord Lawson, who we know has done great things for Durham, have used those words just after listening to the eloquent speech on the education of workers made by my noble friend Lord McCorquodale of Newton? On the other hand, let me go on to say that I agreed with a great deal of what was said just now by the noble Lord, Lord Shepherd, who certainly knows the export business. There was very little there with which I did not agree fully.

But let me come back to the noble Lord, Lord Silkin, and his figures. He quoted some figures showing the number of unemployed in 1955, 1956 and 1957–185,000, 238,000 and 267,000. Of course, those were the recorded figures then, but I put it to him that those were the figures for a period when we were going through gross over-employment, which has its evils and disadvantages just as much as unemployment ever has. Figures were quoted in another place two days ago to show that the unemployment figure was now 2.2 per cent. and was expected by the Government to reach a peak figure of 2.8 per cent. at the worst time next year. But if my recollection is right (and I think it is), when the noble Lord, Lord Beveridge, made his original calculations in 1944 for the Welfare State the figure of 3 per cent. unemployment was assumed as a useful figure. Let us be quite clear what that figure is. It is usually called the unemployment figure, but in point of fact it is the figure, I think noble Lords will agree, of the number of people in receipt of unemployment benefit from the Ministry of Labour; and that may or may not be quite the same thing. It includes transitional people—people moving from one job to another—and it includes a certain number of people who in practice are unemployable, although technically they are employable. In fact, it adds up to mean that out of that figure of people in receipt of unemployment benefit a certain number can be deducted because they are not people who could be employed although they might be entitled to the dole.

If we were to leave it at that, I should not regard the present figures or the present prospects as really alarming. But let us just see for a moment whether they tell the whole story. They do not quite tell the whole story—for two reasons. First of all, they do not tell the story of short-time working; and there is a certain amount of short-time being worked, although here again, when dealing with workers on piece-rates, I am by no means sure that the working of short-time involves an equivalent loss of productivity. From what I hear I doubt very much whether it does.

Secondly—and we have to face it—that figure of 2.2 per cent. or whatever it is now, as we all know is not spread evenly over the whole country, and there are places and industries where the figure is a good deal worse. Northern Ireland is one; the textile industry in Lancashire is another. But on this aspect of the matter I would say that, when we are dealing with the situation of the country as a whole, we must not allow our views to be too much distorted by particular happenings in particular parts of the country. I think I am right in saying that the Lancashire textile difficulties are not only due to the fact that the customer has alternative suppliers in Japan and other countries: they are caused to a great extent by a change in consumer demand. In other words, we are having exactly the same thing repeated in Lancashire to-day as took place fifty years ago, at the end of Queen Victoria's reign, when the ladies of the world decided to cease wearing lace and using antimacassars; and Lancashire must now reorganise her industry as Nottingham has done so successfully between that day and this.

There is one other point about this unemployment figure, and that is the time lag between changes in Government policy (and the time lag is exactly the same whatever Government make the changes in policy) and what happens on the factory floor. Some of this rise in the figure of unemployment which is taking place now can, I think, be traced directly to the credit squeezes—the necessary credit squeezes because of our balance of payments—in September, 1957. Let us just think for a moment about what happened then in an ordinary firm. By and large, the people who had already given orders before the credit squeeze did not cancel them. They stuck to them, and those orders were executed on the factory floor at the end of 1957 and in the early months of 1958. However, what they did do when the bank rate went up to 7 per cent. was to run down their stocks, and they therefore placed fewer orders with their suppliers than they would have placed if there had been no credit squeeze. Therefore, what happened was a delayed-action result of the Government's credit squeeze—a delayed-action result of which I have no doubt whatever my noble friends in front of me were fully aware, because it does not take a wizard intellect to know that it takes a little time before a decision to restrict activities is actually felt on the factory floor.

If that appreciation is right, and if, as we know, there has been an upward trend in certain industries, particularly in the consumer industries, since earlier this year, I think it is a fair assumption that the improvement is already being reflected on the factory floor and that, as time goes on, it will continue in greater degree if the Government policy is right, as I believe it is. Anyhow, the fact of the matter is that the consumer brakes have now been taken off and the machine has been put into gear again; and only this morning we read in one of the financial papers that furniture makers are receiving a rush of orders. So far, so good. It looks as if the furniture industry, at any rate, is benefiting from the Government's policy.

What I have been saying in these last few moments has really been directed to the problem of home consumption, because home consumption and exports are two rather different things, especially when looked at from the point of view of how far the Government can influence one and how far it can influence the other. In the sector of home consumption, the Government can influence matters to a very great degree indeed. If they take certain steps to stimulate production, those steps will certainly be felt in industry. For instance, to take an oversimplified case, they might decide to give all civil servants a free motor car—I do not think that they would; but in any case it would be highly inflationary, and so they could not do it. I simply give this example, an over-simplified one, to make the point of how much any Government are in control of home industry in these days.

The main restriction on the Government's activities must surely be the need to encourage an expansionist policy and at the same time to avoid inflation caused by rising prices and wages. That is a matter in which the Government's powers are very much conditioned by the amount of support they get from both sides of industry, from employers and workers. To put it another way, if employers and workers really mean to maintain the value of money and co-operate with the Government, then we can have expansion without inflation. And I am quite sure that we can.

I want to look for one moment at the export position. As the noble Lord, Lord Shepherd, has just told us, that is a far more complex matter and one not nearly so much within the power of the Government to affect, for good or for evil, especially if one considers the limitations that any Government are under because of G.A.T.T. It is not an easy matter. The noble Lord was right when he said that order books are much slimmer than they were a year ago. I think that applies not only to capital goods but also to consumer goods. The Canadians, who in the ordinary case would be buyers on a large scale, have had a poor year, and some Canadian firms are running at a turnover down to as low as 50 per cent. of their turnover of 1957. Australia and New Zealand have had a rough year, partly, though not entirely, because of their relatively low wool crop. The noble Lord mentioned commodities. In Rhodesia, copper went down to £160 a ton in the spring though it is now back to £250, which in itself ought to stimulate exports to Rhodesia and I hope that it will. The recession, if there has been one, in the United States has in its turn caused United States manufacturing firms to show the keenest possible competition with British exporting firms for orders in the world markets.

The noble Lord, Lord Silkin, mentioned the strides which are being made in increased productivity by Western Germany and Japan. These countries started from scratch, which is what the figures he quoted meant—a rise in Japanese exports of 132 per cent. over a given period and a rise of Western German exports of 88 per cent. over the same period. Everybody knew that since we could not keep Western Germany and Japan indefinitely in the status of enemy countries, they would have to return to the manufacturing world. And so they have. We must meet the threat of that competition with our eyes open. None the less, it would be wrong to suppose that there was nothing the Government could do. The Government could do a great deal—any Government could—to help exports.

LORD SILKIN

My Lords, I feel sure that the noble Viscount will not mind my putting this point to him. The increase to which I was referring was from 1953 and not from the end of the War.

VISCOUNT BRIDGEMAN

My Lords, I am sure that the noble Lord is right. On the other hand, the real controls came off both Western Germany and Japan only in about 1951, and from 1945 to 1951 both countries were still completely controlled, either by N.A.T.O. countries or by the Americans in the case of Japan. Therefore, that was a dead period and there could not have been any expansion until the date about which we have been talking. That is why it went so fast when it got started.

LORD SHEPHERD

My Lords, would the noble Viscount not agree that both these countries, when they started to come into the export markets, were operating with completely new machinery, a condition which, as we know, particularly in our textile industry in Lancashire, does not apply in this country?

VISCOUNT BRIDGEMAN

I agree entirely with what the noble Lord has just said. As I say, there is much the Government could do to help those who are prepared to help themselves. The noble Lord, Lord Shepherd, talked about the Export Credits Guarantee Department. I think your Lordships will know that a great deal of evidence was given both to the Radcliffe and to the Speed Committees by different organisations on the same point, and I think that it is fairly common knowledge that a great many of the recommendations of those Committees have already been adopted or are in process of adoption.

Noble Lords who read the newspapers this morning will have seen the step taken in regard to the aircraft industry by which the credit period is to be extended by the Export Credits Guarantee Department to seven years instead of five. That is good hearing. It is absolutely true that if we do not give the required credit terms to other people, those countries which give such credit terms will get the orders and the exports. That will be the royal road to unemployment in certain industries, both capital industries and consumer industries, which the noble Lord, Lord Shepherd, understands better than I do. There are certain markets which have the record of never having paid properly for anything they have been given, and one has to decide how far one can play down those markets or how far one can maintain the finance required, and, if one does play them down, how far one can risk unemployment. That is a matter which only the Government of the day can decide, as they have sufficient information from all sources to be able to reach a decision. I am sure that the European Free Trade Area, if it eventuates, as I hope it will, will have a good effect on our exports. I am sure that in certain directions it may be necessary to resort to barter agreements, though there it may be difficult if those agreements involve primary products, as some of those talked about now do, because we should have to decide whether those primary products could be fitted in without detriment to British farming.

There is one other matter on which I think the Government could help industry, because, after all, when it comes to goods for export in most cases the home trade is our shop window. We get other shop windows every now and then, like the Brussels Exhibition, and I should like to say here—and I am sure that everybody else would say the same—how successful we were in our two pavilions at the Exhibition. In my experience it was the first time I had come away without saying how frightful the Government's effort was. All of it was good, whether it was the prestige pavilion or the industrial pavilion or the kiosks where British beer was sold. But we cannot have windows like that all the time, and the permanent shop window for British goods is home industry, and I include the nationalised industries. Therefore, if the Government can frown on such local authorities as the one which, as recently reported in the newspapers, bought Hungarian baths, and on such contractors as the one who specified the use of imported timber for the fence of an arterial roadway, they would be doing a good job of work.

One of the advantages of nationalisation in this country is that the industries are sometimes split, as is the case with the railway industry. The nationalised part is concerned solely with home trade, and the private enterprise part alone is concerned with exports. As the converse of that, one sees the extremely interesting organisation which has been set up in France between the French nationalised railways and the French railway industry called Sofrerail, in which the nationalised industry is taking part with their private engineering firms in pushing the engineering products and the railway material in the export world. I mention that point because it is an example of what is presumably Government-sponsored effort which might well be worth while looking at here.

But it is no good pretending that this is not a vital subject; and it is no good taking up the attitude that we are out of the wood and that the matter does not require the most careful attention, not only by the Government but also by both sides of industry. I am sure that the Government and their advisers understand the position quite clearly—to-day's news about export credits goes to show that. I am equally certain that we now possess a machine to deal with the economic conditions and economic difficulties which is streets ahead of, and far more efficient than, any machine (if there was such a machine) which existed in the times of which the noble Lord, Lord Lawson, has spoken. If we follow the lines that the Government have laid down, and if, as I say, we realise that this is a matter in which we all have our varying share of responsibility, I, for one, have no doubt that we shall steer past the rocks. Therefore, I hope that the House will not accept the Amendment.

LORD SILKIN

My Lords, on behalf of my noble friend Lord Alexander of Hillsborough, I beg to move that this debate be now adjourned.

Moved, That the debate be now adjourned.—(Lord Silkin.)

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

House adjourned at twenty-seven minutes before six o'clock.