ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH

HL Deb 06 November 1958 vol 212 cc275-340

3.5 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, to which an Amendment was moved yesterday by Lord Silkin—namely, 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.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I listened with great interest to the debate yesterday and to a good deal of the debate during the previous part of your Lordships' comments on the gracious Speech. I must apologise to one or two of the later speakers yesterday that business meetings in the House prevented my sitting right through. May I also at the outset say how grateful I am to my noble friend Lord Silkin for the manner in which he submitted the Opposition's Amendment to the gracious Speech. He covered so much ground, especially in the statistical form, that it saves me to-day a great deal of labour in that direction. I would also say that I am grateful to my noble friend, Lord Wise, for the speech he made with regard to agriculture earlier in the debate on the Address. I am looking forward in the hope that to-day we shall get some reference made by Her Majesty's Government to agriculture. I take it that we are going to get it.

I should like particularly to say how much, although I did not hear it, I enjoyed reading that detailed analytical summary made by the noble Viscount, Lord Stonehaven, of the proposals in the Small Farmers' Grant Aid Bill. I have never seen such a conglomeration of methods by which decisions may be arrived at in the case of individual farms since the famous debates in another place when it took a woman member of the Labour Party to unravel the mathematical problems of the Government of the day. I remember it very well. A great deal of unravelling will be required to be done by the farming community in that connection. Before I turn to what I have to say in principle, I should like to join wholeheartedly—and I am sure all my colleagues would—in congratulating the noble Baroness, Lady Elliot of Harwood, on her maiden speech. We hope to have the pleasure of listening to her often.

I felt yesterday, as I listened to the speeches—in particular those of the noble Earl, Lord Selkirk, and the noble Lord, Lord McCorquodale of Newton—that there seems to be in these matters always a particular method of approach on the part of the Government. They say: "We are doing awfully well, really, you know, in spite of the most tremendous difficulties and the most tremendous crises which arise and have arisen since we came in. When you hear some speakers from the Labour Benches they always seem to forget the disasters that used to occur during the term of office of the Labour Government."

SEVERAL NOBLE LORDS

Hear, hear!

VISCOUNT ALEXANDER OF HILLSBOROUGH

I am glad to get those very half-hearted and faint acknowledgements from the other side. But if any impartial historian in the future analyses the tasks of the Governments of the two Parties, he will be bound to say, "What a magnificent job was done from 1945 to 1951, and how completely fatuous has been the claim that the Tories have done so much better since they got in, in spite of their so-called enormous problems requiring almost superhuman efforts to overcome! "Of course the thing is quite fantastic stated in those terms.

Let us look at it from the point of view which is so vital to the Amendment we have down. On the point of comparison of production, what are the real facts? The Party opposite and their Government in their term of office have never had to face one-twentieth of the difficulties we had to face in 1945. Up to the time we went in we were living only by courtesy of Lease-Lend. It was gone in five or six weeks from our taking office. As to production for export, it almost did not exist. We had to get down to how we were going to feed our people, let alone employ them, until we could get the ruins repaired and the war-time production factories turned over completely, in plant and equipment, to a peace-time production of goods. Noble Lords opposite and the Government at large have never had to face a difficulty like that.

I support entirely the statement of my noble friend Lord Lawson yesterday when he said that he seemed to see the same spirit growing with regard to employ rent and unemployment as existed in the years from 1918 to 1929. In fact, we are quite free to say, and we can prove, that the methods adopted through the outlook upon society of the Tory-cum-Liberal capitalism at that time brought ruin to the country. People are now talking glibly of the aim, the objective, of the Conservative Government to have always high employment. That term is used in the gracious Speech, but I noticed that Mr. Macleod said at the Blackpool Conservative Party Conference that they still stuck to full employment. I thought they had cast that overboard long ago. Their objective is high employment. But you may be quite sure of this: that if you had had your heads as Conservatives and Liberals at the end of this last war, and you had had to tackle the problem, we should have had massive unemployment such as you were never able to cure from 1918 to 1939.

What is your record? Your record is that you never could get unemployment below five figures. It was over one million and often over two million. What is there so sacrosanct now about your methods in dealing with these questions? Nothing. You have proved nothing. You took over from us in 1951 a going concern, in the best business sense (Laughter). I knew that would draw you. In fact, you have had no record of improvement in production at any time in your seven years' history now as a Government, to equal the achievements of the Labour Government starting from scratch. The noble Earl, Lord Selkirk, said yesterday that when people talk about the increases in Germany and Japan compared with our current increases in production, they have to remember that those countries started later. They started from scratch. So did we, and with practically all the same handicaps—ruined factories to be rebuilt, and houses to be rebuilt and repaired before we could start on really new houses. It was an enormous problem.

Not only was that done, but this was achieved: over the course of the six years the volume of exports—not the value in money, but the volume, the weight of goods exported—improved by 75 per cent. over the figures of 1938–39. Does anybody want to challenge that? It can all be found in the records. I say to the Government: You talk about your achievements now, but in those six years the overall increase was about 7 per cent. per annum in our whole production. What is your record? Your record is that for the first three or four years of your term of office your rate of increase of production dropped to about 31 per cent., and you have gradually gone below that until, in the first nine months of this year (as the noble Earl, Lord Selkirk, had to admit yesterday), actual production has dropped, according to the Bulletin for Industry, which was quoted with great ceremony yesterday by the noble Lord, Lord McCorquodale of Newton, as being an official, impartial document, by nearly 4 per cent. Have the Government any reason to be proud of that? One would think they had, judging by the speeches at Blackpool and now repeated in this debate. Either they are most extraordinarily complacent, or they still do not seem to understand the facts of the last fourteen years since the war. It seems to me an extraordinary state of affairs.

The constant challenge was made yesterday by the noble Earl, Lord Selkirk—or, rather, he repeated it: "What would you do if you were dealing with the situation yourselves?" Well, we should do what we have always said we should do: we should do the very thing he seemed to think was impossible; that is, adopt an expansionist policy but have effective controls. The Government had to show in the end that in their policy they cannot do without controls. But instead of having a wise, sane, judged, balanced control overall, they go in for a method of hamfisted, enormous increases in such matters as the bank rate and the restriction of capital investment, to an extent that they are bound to create unemployment as they go. Does anybody deny that?

When I interrupted, I hope courteously, the speech of the noble Earl, Lord Selkirk, yesterday on this very matter, as to what was the view of the Minister of Labour on this point at the Conservative Conference at Blackpool, he said he had never understood that that statement was made. I have looked it up in The Times of October 9—I thought it might be useful. Mr. Macleod said, after references to adverse world trading conditions: … it is true also that our policies which were aimed at reducing inflationary pressure and thereby strengthening sterling and stabilising prices, as they have done, were bound to have some effect on employment. Of course they were. You have been going out deliberately for the last few years to secure your particular objectives by taking little notice of the amount of risk to be faced by creating unemployment.

You are congratulating yourselves very much just now, and I am very glad to see that the figures of enlistments in the Regular Forces have increased—as an old Minister of Defence I am naturally interested. But let me tell you this: in spite of the very large part that payment in the Forces may now have to take in a wage spiral, nevertheless the greatest impetus in the last six months has undoubtedly been actual unemployment, or the fear of it. There have always been those in the Tory Party who recognised what a valuable thing it would be to have x per cent. of unemployment at least, so that you might either have your way in the particular industries or at least have such general economic pressure upon the workers as to increase their mobility. Mobility is now spoken of as a great virtue; mobility of transfer from place to place in search of, and finding, decent employment. There is no question about this being the fact. This is the history of the Tory Party in trying to deal with modern productive and economic problems.

When the noble Earl, Lord Selkirk, yesterday made his claims about the soundness of the situation, because of the amounts that we have invested and continue to invest overseas, and in the Commonwealth in particular, one had to interrupt and make sure whether or not he was speaking of the period of office of the Tory Government. Of course he was not. He was speaking of the whole period since the war ended. Who is going to deny what an important part in that investment overseas was taken by the Labour Government, not only by creating conditions out of that dreadful situation which had to be faced in postwar circumstances to make it possible for industry itself to expand and invest overseas, but by the actual legislation of the Socialist Government to promote colonial and other development overseas. I think I am not far out when I say that I know what judgment any impartial economic historian or critic—of course one cannot find impartial critics now in such papers as the Economist: that has become an ordinary weekly Tory "rag"—will come to make upon the comparison between the two.

Now I will say this: when one looks at the present and immediate problem. the combined problem of production and of investment, particularly industrial investment from the expansionist point of view (I am very indebted to conversations and notes I have had with my noble friend Lord Hall, who, but for his indisposition at the moment, would have been making this speech to-day; I did not intend to speak; he has been most helpful to me in the matter), one finds that the Government need, on the gracious Speech and also upon the statements made in the last few days about industries and investment, to have a thorough overhaul of what the problem is and exactly where they think they are going. Because, my Lords, the situation in industry itself is pretty serious. You can have all the talk you like about the danger of over-writing the actual existing figures of unemployment, or even those that have already been forecast by the Minister of Labour. And may I add, in fairness, that the noble Earl, Lord Selkirk, was quite right yesterday. The Minister of Labour has been much more frank on these matters than any other Government Minister. Probably, being a pretty good thinking and fairly advanced person, his having to maintain industrial relations in this country has prompted him to be frank—and a very good thing, too!

On the general situation of unemployment, as affecting production, let me say this. At the time of the earlier speeches, both here and in another place, we had not the actual figure of unemployment for October. We know now that in the middle of October the figure was 514,000. That is not an inconsiderable figure when one compares it with our general post-war experience. But the Minister of Labour and National Service quite frankly says—and he told us it would not be honest not to say so—that it is quite on the cards that in the next few months the unemployment figure may go to at least 625,000. Even this devoted Tory weekly newspaper, the Economist, was talking about the comparative ease of dealing with—perhaps I am misrepresenting it. At any rate, it did not seem to be much alarmed about having a figure of 700,000. Yet when we consider that with a figure of 700,000 about 600,000 homes would be affected, that is a pretty serious thing for the people concerned.

I cannot for the life of me see how the Government hope to maintain the present improvement in our gold and dollar reserves or improve the general economic position, if they are going to do it with an overriding and constant problem of unemployment, because they will get neither all the production they need nor the wholehearted assistance from the workers themselves that is so badly needed.

LORD SALTER

My Lords, if the noble Viscount will allow me to intervene, would he agree that the Labour Government defined the level of employment at which they regarded it as reasonable to aim as involving no more than 3 per cent. of unemployed, and that that compares with what is almost exactly 2.2 per cent. now?

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I do not think I am going to be diverted from what I have to say this afternoon. That matter has been answered over and over again. I agree with the noble Lord, Lord Salter, that the Beveridge assessment of what could be carried economically, and no more, was the figure of 3 per cent. But that was disregarding the real human problem that lies behind unemployment. It simply dealt with what could be carried economically, on the basis of the known provision which would have to be made for unemployed.

LORD SALTER

My Lords, with great respect, I am not referring to the Beveridge figure but to the Labour Government figure at O.E.E.C.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I am told that Mr. Gaitskell dealt with that point himself in his speech on Tuesday. I will look it up during the course of this debate, and I shall be glad to show it to the noble Lord, Lord Salter. If he is still not satisfied, I will go further into it, with the greatest possible pleasure. But the first mention of 3 per cent. was by the noble Lord, Lord Beveridge, and I think that he was at least as conscious as anybody of the human problem, as evidenced by all his other work in regard to economic insurance—and, of course, there is this great human problem which lies behind it. But when we come to deal with our present situation do not let us forget the pockets of unemployment—I was most grateful to my noble friend Lord Lawson for having emphasised that point. It does not matter what the unemployment problem has been in the past: there have been some very serious phases of it in the whole of my Parliamentary experience ever since 1922. But there are always deeper pockets; there is always deeper distress in some areas, and there is always greater strain upon some local authorities. That situation must be dealt with.

What are the facts about declining employment? Let us look at the industries, taking first the outstanding one, which seems to have been dealt with by the Government so far in almost a cavalier fashion—that is, the textile industry. They have largely been told that there is a change; that they had better see what they can do to help themselves, and that there might be very little else to do. The actual number of people employed in textiles since September of last year has dropped by 78,000. That is a considerable problem to deal with in the areas covered by the textile industry. Take shipbuilding. Of course it is true to say that that is something in which I am most interested: I had ministerial control of what was happening in our shipyards right through the war. I am well aware that in the larger shipyards to-day there are still quite large order books, but in the course of the last year or so, and especially since the introduction of the 7 per cent. bank rate, so many orders have been cancelled, many of them affecting the smaller yards, that since last September the numbers employed in the shipbuilding industry have dropped by 43,000.

If we take the metal manufacturing goods industry, many sections of which are doing exceedingly well, we find that, owing to the stringency of Government control, employment in that industry has dropped by 38,000 since September of last year. Take coal mining. The numbers employed in coal mining have dropped by 18,000. It is only a few months ago that the Tories were hurling abuse at the miners, and all the rest of it, about being chary of accepting more Polish workers and the like in order to get more production of coal.

What is the situation to-day under the Government's general policy of production? The situation is exceedingly serious. In fact, in this country to-day there are stocks of coal on the ground worth something like £67 million. I am very glad that the noble Lord the Minister of Power has come along this afternoon—I gave notice that I was going to talk about this matter. I think that the actual figure in tons would be somewhere in the region of 34 million tons. It may seem strange to noble Lords but it is the fact that every ton of coal costs about 13s. per year in regard to charges arising from stocking; this is a constant additional charge upon the mining industry. The noble Lord the Minister of Power will correct me if I am wrong, but I am certain that my figures are right. I agree that it is not a problem common only to this country. In Western Germany the figures, while not quite as large, are certainly fairly considerable. To some extent the same situation exists in Belgium, and elsewhere.

But here, my Lords, is the rub. The Minister of Power had a good many questions to answer, some helpful, some more critical, when he was adumbrating to the House within the last two years his programme for setting up power stations relying upon nuclear power for the production of electricity. My noble friend Lord Hall tells me that recently he has visited Australia, New Zealand, the United States and Canada, where he has seen a number of the people who are experienced in this matter of the development of nuclear power for other than war-time purposes. He has seen what they are doing with regard to the production of electrical power, and he has been especially interested in the areas in which coal is produced, and whether they look with any confidence to the substitution on a widespread basis of nuclear power in the production of electricity for either coal or oil. So far as my noble friend can discover, from his personal inquiries, nowhere is that substitution being made in any of the countries where these two natural resources are readily obtainable and accessible and available for the production of electrical power. Nowhere are they turning to nuclear power in any wide sense at all.

How is this going to affect the huge programme which the noble Lord the Minister of Power put before us with regard to the nuclear production of electrical power? Is he going to see other sources of power lying idle in the stockyards of the country and miners going out of work? Has he any figures to suggest that the production of electrical power by nuclear energy is any cheaper than that produced by coal or oil? I am told by my noble friend Lord Hall, from all the inquiries he has made, that no such figures are available, because it is not proved. In most cases those making a choice between the two policies are sticking to the use of coal and oil.

So ought not Her Majesty's Government to have another look to see whether or not they are going to waste our own immediately available resources and go on to a huge capital expenditure? And, of course, that expenditure does not necessarily end with this extraordinary expenditure. When these highly expensive nuclear power stations have been put up—I forget the number—uranium will be needed, and I seem to recollect that Her Majesty's Government have already had to visualise that they will need to buy, quite early on, something like £177 million worth of uranium. How many power stations are there to be? Is it ten or twelve? What will be the bill for uranium, and how long shall we be free to get it? Why, therefore, all this huge capital expenditure? I feel bound to pay all the tribute I can to the work which the scientists have done in applying their discoveries to these peaceful and important projects: I think they have done a quite wonderful job. But it is for the economist and the statesman to decide exactly how far we go—and how quickly—in relation to the general employment and production problems of the country. That matter ought to be re-examined and and re-examined pretty quickly.

What are Her Majesty's Government proposing to do now? They are going to start not only "setting the people free" once more—that was the text on which they came back to office in 1951, though I do not know how far the spending spree will be allowed to go—but they are also proposing to invest from £125 million to £150 million in certain projects. How much of that represents nuclear energy? Can we be told to-day? We shall be bound to return to this subject again and again, and the earlier we can have that information the better it will be. Can we not have stated from the Government Benches what are the main heads of investment covered by this £150 million maximum of investment in the next two years? Not that that is going to make any tremendous contribution to solving the problem of production in the country as a whole, especially in the four main industries that I have mentioned, four industries only which are already employing 177,000 fewer persons than a year ago, for we have to take the whole field all the way over.

I believe that it was the right honourable gentleman the Chancellor of the Exchequer who said that the £150 million worth of projects to be spread over the next two years may provide employment over that period or for some time during that period for about 150,000 people. That is how I interpret what was said. Is that a major contribution? I do not say that it is not an important contribution, but is it a major one in the present situation, especially if our unemployment total, as has been fore- cast by the Minister of Labour, is to be not 500,000 but 625,000 within two or three months? I feel very strongly that Her Majesty's Government have been playing the very old-fashioned game of the capitalist industrialist economist. They are always prepared to have a system of boom and slump. "Eat, drink and be merry, for to-morrow we die" at one moment; severe restrictions at the next moment; a period of recovery and common sense, and some reserves, enforced by brutal and very often discriminating processes, sometimes worse because in certain circumstances they are undiscriminating—and then on to the next boom and from that boom on to the next slump, and front slump on to boom.

People talk about the Socialist theories we have preached in this country for the last fifty years being completely fossilised fifty years ago. The only great progress in organised industry that we have really had in this country was in the six years of almost impossible tasks that the war left when there was a first majority Socialist Government. Noble Lords opposite are terrified that there may be some danger of having a Government of the same texture coming again into office. We do not mind their criticisms. We know when we are right. Her Majesty's Government have made a lot of mistakes. No doubt we shall make some but I should be very terrified if I thought that after all the promises that were made in 1951 so little could have been accomplished by a Tory Government with a majority all the way through and with nearly 99 per cent. of the Press behind them. If we could not make a better job of it we should deserve to be called on to resign, as Her Majesty's Government ought to have done at least three years ago.

3.37 p.m.

THE JOINT PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE, FISHERIES AND FOOD (EARL WALDEGRAVE)

My Lords, I do not intend to follow the noble Viscount through the wide-ranging discourse he has just given us. My noble friend, Lord Dundee, will be winding up this debate, but I propose to accept the noble Viscount's invitation to say a word or two about agriculture, for we in this House do not need to be reminded (although I am afraid other sections of the community sometimes do) that agriculture is still our largest single industry, with its gross output valued at £1,500 million and one million people dependent upon it. I am confident, therefore, that no one in your Lordships' House will think it inappropriate that when we are discussing the whole economic state of the country in this wide ranging debate we should spend a few moments on the subject of agriculture.

I am grateful to the noble Viscount opposite for giving me this opportunity and for having raised various points, and I should like to take this opportunity of apologising to the noble Lord, Lord Wise, for the fact that unfortunately I was not able to be in my place last Wednesday when he made his speech. Perhaps that is not wholly a disadvantage, however, because I have been able to read it carefully; and also I shall now be able to say a little more on the Small Farmers' Scheme than I could have done at that time.

Before I go any further I feel I should refer briefly to the point raised by the noble Lord, Lord Silkin, when he introduced the Amendment yesterday, because he made great play of the fact that food prices had risen very considerably. Most of that price rise has, of course, been in consequence of the inflationary conditions which everybody deplores; but inflation has by no means left unaffected the cost of food processing and distribution, which necessarily represents a large part of the amount which the consumer pays. Let us never forget, however, that there have been major improvements in the quality and variety of the foodstuffs and in the standard of the service that we get from the food trades compared with 1951. Part of the rise in prices is attributable to that; and it is good value for money willingly spent. There has been no reduction, despite this rise, in the volume of consumption. In fact, consumption of food has risen over this period by some 13 per cent.

May I now turn to the words of the gracious Speech? I confess that I was rather surprised to find that they appeared to be somewhat unacceptable to noble Lords on the other side of the House. May I refer your Lordships to certain of them: A healthy and thriving agriculture will remain among the principal objectives of My Government. To that, the noble Viscount the Leader of the Opposition made the comment, "Fancy that!" Forgive me; I may be wrong; but I detect a slight note of mockery in that.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Yes!

EARL WALDEGRAVE

The noble Lord, Lord Wise, said (I have his words here) that he could not see why after seven years we had to have this as an objective any longer. But this most important statement in the gracious Speech means exactly what it says: that we intend to keep agriculture in a healthy and thriving condition, and we shall do that as part of our very successful policy for sustaining a healthy national economy. We shall continue to provide for our agriculture, through our price guarantees and production grants, a framework of support that fits into a sound economy for this country.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, the reason why I feel a spirit of mockery is that some of us who have followed agriculture very closely during the term of office of the Government feel that they have, by most subtle methods, denigrated agriculture to a considerable extent and by a long-term reduction they are going to denigrate it further. So we do not quite believe their general objective stated in the gracious Speech.

EARL WALDEGRAVE

My Lords, I am much obliged to the noble Viscount. We now see where we are. It is one thing to say that it is not a suitable objective and another thing to say that you do not believe that it is the objective. That must be a matter of opinion. I say that it is our objective, and I should like to attempt to demonstrate, in the few moments I propose to detain your Lordships, how we have got on so far and what we propose to do in the future. We shall continue to use those methods which accord with our general policy of encouraging private enterprise and promoting efficiency in agriculture, as elsewhere. I hardly need to remind your Lordships of the many specific steps that we have taken in recent years, which culminated in two major pieces of legislation, the 1957 Act and the 1958 Act, designed to strengthen and improve the arrangements for supporting our agricultural industry. There was the 1957 Act, with its new long-term assurances and its assistance for the modernisation of farm buildings. This year, in the 1958 Act we have made improvements in the working of the landlord-and-tenant system, and there was the removal of the outdated and unwanted disciplinary powers. Those were most important measures for the long-term benefit of our agriculture and they have certainly solved a number of outstanding problems. We have strengthened the structure in some places and removed hindrances to the future progress and freedom of the industry in others.

But a difficult problem remains—we do not deny that—and that problem is the large number of small, full-time farmers who still find it hard to make a reasonable living, despite all that has been done for the benefit of the industry as a whole. We believe that a large number are potentially capable of running their farms economically and profitably if they can be given assistance of a specific nature to help them on their way. That problem we are going to tackle as courageously, and as effectively, as we have tackled the other problems to which I have referred. I shall return to that later.

Noble Lords opposite have implied, arid in Fact openly stated, that the state of agriculture is neither healthy nor thriving. I really cannot accept that judgment. I believe this industry is fundamentally sound. I would not for a moment wish to minimise the great difficulties that individual farmers have this year suffered from the dreadful weather we have had; but do let us keep this matter in proportion. Farmers do not expect the Government to be able to alter the weather for them, or to shield them from the misfortunes, or fortunes, of the seasons. We sympathise most sincerely with those who have been hard hit this year, hut conditions have varied very considerably. I myself have seen many badly hit districts. Others have been very much more fortunate; and on the whole I think the summing up of the situation of this years' harvest is one of grievous disappointment—not disaster, but grievous disappointment.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Come to Essex.

EARL WALDEGRAVE

I have been to Essex. What once looked like being a bumper harvest is now, due to this vile weather, rather less than an average harvest. It is not a matter of disaster. We should, I am sure, want to pay a very sincere tribute to all those in the industry, farmers and workers, who have struggled so hard to make the best of what, in this year's harvest, has been a rather bad job.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, might I ask a question? What we who are in the farming community are anxious to know when we get these very nicely phrased and courteous expressions of sympathy is this: what is going to be the attitude of the Government at the next Review of Prices? You are already going to bring in a small-farmers' scheme, which is to be taken into account at the expense of the rest of the farming community. Yet we have not been able to make up the £30 million-odd you required us to make up in improved efficiency in this current year. It is quite impossible to do it. But what are you going to do at the next Review of Prices? Tell us.

EARL WALDEGRAVE

My Lords, I do not think that the noble Viscount the Leader of the Opposition really wants me to answer what we are going to do in the next Review of Prices. I really think, with my right honourable friend whom I have just taken sight of in the precincts, that I must duck that one. I cannot say what we are going to do at the next Review of Prices. But I wanted to take up a point on this year's harvest, which was a point made by the noble Lord, Lord Wise. He suggested—I am sure that he remembers his words and I will quote them if I can find them—that the barns were full of grain which the farmers were unable to sell. My Lords, I cannot find evidence on which that assertion can be based. The price of home-grown wheat in Mark Lane has been steadily increasing. The quotation at the end of September ranged from 17s. 9d. to 19s. per cwt. By early November the price had increased from 19s. 6d. to 21s. 6d. Then consider barley. There is no difficulty in finding a market for it. I was talking at the end of last week to some leading manufacturers of animal feedingstuffs. They are all big buyers of barley and they were telling me of their difficulties in getting supplies. In some cases the country compounders are paying anything from 10s. to £1 a ton over the guide price set out each week by the Working Party on feed barley, which is composed of representatives of the National Farmers' Union, the merchants and the compounders. The price of feed barley has increased from September to early November and, of course, from the farmers' point of view there are other deficiency and acreage payments that come on top of that. I do not think it is accurate to say—I think it is not at all accurate to say—we are in a position where the barns are stuffed with goods we cannot sell.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, does that not depend very largely on where you happen to be based and whether or not you have a drying station which is available to you? There are farmers in my district who have not yet been able to get their corn into a drying station because there has been such a procession of those needing the service.

EARL WALDEGRAVE

My Lords, I think that if the corn has not yet been dried it will be getting rather hot! I think that at the time at which we are speaking, in the first week of November, most of the grain is dry and in store. Many farmers are, quite legitimately, holding out for a rise. They may be lucky or they may not: but there is no evidence that they are unable to sell. May I turn from this question of details of market prices to ask what is the real strength of the industry to-day.

LORD WISE

May I interrupt the noble Earl for a moment? Is it possible for him to supply us with figures as to what tonnage of corn has been sold to date in comparison with the tonnage of corn sold last year?

EARL WALDEGRAVE

I have no doubt that those figures can be supplied, but I regret I have not got them at my fingertips. However, they will have to be read with care, because in a year when you have an early season a large amount of corn is sold early, and in a year when you have a late season it will be sold later. But we have no reason to believe that the flour millers will not take a million and a quarter tons of wheat off the market, as they have said, and it is on offer.

Now, there is evidence of the real underlying strength of this industry apart from the detail into which we have been going, and that evidence that we are healthy and thriving (and not merely surviving) is surely shown in the record level of net output—which is now more than 60 per cent. above prewar—and in the record level of net income which, at £360 million, is more than £25 million above the previous highest. It is shown, too, by the fact that we have already received 65,000 applications for grants under our new Farm Improvement Scheme; and we must remember that the industry itself finds two-thirds of the costs of these farm improvement schemes. This is a real and important item of capital investment. We must not forget, also, the tremendous activity in the technical development of our industry. My Lords, we really have one of the most modernised and mechanised agricultures in the world. One has only to travel abroad to notice that very strongly and very clearly.

I should like to take up another point made by the noble Lord, Lord Wise. The noble Lord said that he thought that agriculture was fast losing its creditworthiness. Can that really be said of an industry whose net output and net income are increasing? If we look at the figures, we find that the current level of bank advances has not in fact been falling. It stood at about £230 million in mid-August, which is the latest figure that I have. I should like to take one other piece of concrete evidence. We have the returns of September 4 that have just been issued. The trend of those returns shows, I think, that the industry is moving forward confidently for the future and broadly in the directions that we should wish it to move. Beef-type cows continue to increase in numbers. They are 3½ per cent. higher than a year ago. We are 9 per cent. up on our beef-type calves. Our sheep breeding flock continues to expand, and our poultry meat continues to expand. All these expansions are in the right direction, and I would say that this is not a picture of a sickly, declining industry which has lost its credit-worthiness, as was suggested.

The noble Lord, Lord Wise, attempted to draw a distinction between the prices received by our farmers and the prices that they have to pay for what they buy. He said that the farmers had no predetermined prices but that other people had. Is that quite a true picture? The whole basis of our policy is that our farmers do get guaranteed prices for their main products. They are not dependent only on what the market will yield. These guaranteed prices are determined in advance each year at the Annual Price Review. Moreover, under the 1957 Act the farmers know the limits within which their prices can fall at any Annual Review.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Not rise—fall.

EARL WALDEGRAVE

And some scope for reduction there must be as efficiency increases and as adjustments of production to the requirements of the market need to be made. I think the noble Lord, Lord Wise, will agree that this is a much more secure position than that of other industries where there are no such guarantee arrangements. A manufacturer may sell at a list price, but there is no Government underwriting of that list price. If the market will not absorb Iris goods then he has to reduce his price or stop production. There is no parallel to that in the farming industry. Our system is this system of deficiency payments, on which we rely for the main part—

VISCOUNT ALEXANDER OF HILLSBOROUGH

Might I ask one question on that point? What the Minister says about the consumption of commodities and about guaranteed prices is true, but in fact the return of the disposal of large livestock is left to a free market in a market. In the case of beef calves, for example, apart from the fact that there is an initial subsidy on the raising of an animal to an older status, if you can sell them as beef calves within two weeks you get a bonus of £10 per head, which is more than you can get by selling an object which is going to be the subject of a subsidy later on.

EARL WALDEGRAVE

I really do not think that when you are in any trade, you can totally iron out the operation of the market, or that you should. What alternatives have we? We can have the alternative of tariffs. Surely nobody suggests that in present conditions they will provide the same security: and, of course, they will penalise the consumer. The noble Viscount is clearly thinking of the system of fixed prices that was operating when the Labour Government was in power, and in war time. But that would mean a whole system of controls, and that, I believe, would in peace time be wholly unacceptable. Moreover, fixed prices mean that the men in Whitehall have to try to guess what the price ought to be, what the market will want, what quality it will want, and how much it will want. Now the consumer decides what quality he or she wants. I have been farming, I think, for twenty-five years, one way and another. One used to have to farm against the Government grader: now one farms against the housewife. I know which is the easiest one to get round. Our system is to provide a safety net of guaranteed prices for the producer, with freedom for the consumer to buy at the market price. This keeps down the cost of living, helps the poorer sections of the population and assures a wide market to the producer. These important economic advantages of our deficiency payments system are widely recognised overseas and are acknowledged and envied in other countries, and we intend to keep them.

Now in the moment or two that remains to me I must say a word or two about the small farmer legislation which we propose to introduce. I am very grateful to the noble Viscount. Lord Stonehaven, who I am afraid is not able to be in his place to-day, for having introduced this subject, albeit in some detail. I was, grateful for the opening remarks of his speech in which, in case it should be thought he was "agin the Government" in this matter—which he was not at all—I will read. He said [OFFICIAL REPORT, Vol. 212, col. 254]: 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 … on their … timing ", and so on. But the noble Viscount did give us some fairly detailed figures—I must admit that—such as those which appeared to him to affect his Scottish farms. I hope the noble Viscount will not mind if I do not attempt now to conduct a sort of public audit of these figures before your Lordships.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Do.

EARL WALDEGRAVE

I hardly think it would be appropriate to go into all the figures, which were mostly profit and loss figures, I understand, but I am going to deal later with the figures on yardsticks.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Have we to send again for a Labour woman mathematician?

EARL WALDEGRAVE

I do not know about that. We shall have an opportunity of going into all the details of the working of the small-farmers scheme when the scheme and legislation are before us. Then I am happy to say it will be for my noble friend, Lord Forbes, as Minister of State, to deal with the Scottish problems. I am afraid he is not here to-day. For my part, I will try to make one or two of the main purposes of the scheme as clear as I can.

Most individual farmers are doing all they can to help themselves by improved management and by cutting down costs, but these are particularly difficult for many small farmers, and what they most need is good advice and some working capital. We are going to give them an inducement to get that advice and an opportunity to get working capital. In return they will have to carry out approved plans for the improvement of their farm businesses. The whole objective is to make these farms more profitable and this will redound not only to the farmers' own profit but to the long-term benefit of British agriculture. But while the broad objective is clear, it is not going to be an easy thing in detail.

My noble friend Lord Stonehaven said a great deal about qualifying tests. We have laid down two tests, and first of all acreage, though clearly that is not enough—not by itself. Therefore we have introduced a second test which is the standard labour requirement, or standard man-day. The standard man-day we propose is the average amount of work that a man can get through in eight hours. Figures have been worked out for every kind of crop and every kind of livestock, and a provisional list is given in the White Paper. This is not a new idea it has been used for some time by those who are advising on farm management, and the National Farmers' Union agree that it is a suitable yardstick. The advantage of the method is that it allows us to add together the crops and stock on a farm in order to measure the size of the business. It means that we do not have to make detailed inquiries about an individual farmer's profits, about his turnover and about his bank balance. In fact, it gets us out of all the horrors of a means test.

I must emphasise that this calculation is a notional one and has nothing whatever to do with the amount of labour employed on a farm, because I am not sure that my noble friend Lord Stone-haven had quite taken the point. It is a method for adding together and scoring points for the size of farm businesses. The figures we have chosen, into which I am sure your Lordships will not wish me to go to-day, show a bottom limit at 275 man-days and an upper limit as 450 man-days. I should say that the bottom limit is actually a potential limit. What we say to the small farmer is that if he can turn his farm into a 275 man-day business, then he will be in, even though he is lower than that at the moment.

I want your Lordships to realise that these new grants will be paid in addition to the existing grants and subsidies for which small farmers qualify in the normal way. The intention is that assistance available from ordinary grants and special field husbandry grants, taken together, shall, on an average, cover nearly the whole cost of full husbandry operations included in the approved plan. This new scheme then is intended to put an important section of the farming industry on a sounder basis, and I believe that larger farmers will be prepared to accept this small redistribution of resources in the interests of farming as a whole. It means a courageous attempt to tackle what is admittedly a difficult problem.

There is one other point put forward by my noble friend Lord Stonehaven to which I must reply. After paying tribute to the research work we undertake in our institutes—my noble friend's word was "brilliant"—he implied that it was far too theoretical and came up with rather ridiculous answers. I really must challenge that. It is widely acknowledged that exceedingly beneficial results are flowing from the work studies which are being undertaken in our Institutes.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I wonder whether I understand the noble Earl correctly. I understand that the Government will not be called upon to put any money at all into this aid-to-small-farmers scheme but that it will all be taken into account and deducted from the guaranteed prices. So the industry pays for all this. I hope I have not misunderstood the noble Earl.

EARL WALDEGRAVE

My Lords, I am afraid I have not made myself clear. What the noble Viscount says is not at all correct. The whole sum will not come out of the industry. If your Lordships will not be wearied, as I have been asked a specific question I will go into the scheme in a little more detail. The estimated cost of the scheme in the first full year is £12 million. This is made up of about £6 million for the Small Farmers' Scheme; about £3 million for the supplementary scheme—which is to help those who for one reason or another might have to wait their turn for the scheme and cannot get into it straight away, and to help those who benefit from the marginal production schemes; and finally £3 million that is likely to be spent on existing production grants, for ploughing, fertilising, and so on, because of the greater use of these which will be encouraged by this scheme. Therefore, £9 million will be spent directly on the new scheme, but against this is to be set £3 million spent on existing marginal production schemes which will be discontinued. That leaves £6 million in the first full year, which is a redistribution within the industry.

I would ask noble Lords, the farmers and all interested in this subject throughout the country to keep this matter in perspective. This is £6 million out of a total in guarantees of £1,278 million. This is £6 million out of a total subsidies bill of something between £250 million and £300 million. It is not a very big proportion and I do not think that we ought to exaggerate it. I hope that that answers the noble Viscount on the point he has raised.

I have detained your Lordships long enough on this matter and given agricultural matters a full airing in this general economic debate. I should like to conclude by saying that we are not complacent. We are encouraged by the effects of what we have already done and by the favourable reception which generally has been given to our latest proposals to provide help for the small farmer. I maintain that the Government are living up very well indeed to their objective of maintaining a healthy and thriving agricultural industry. With respect to the noble Lord, Lord Wise, I would say that if the Government are in office, not for seven years, but seventy times seven years, we will still have as our main objective the maintenance of a thriving agricultural industry in this country.

4.10 p.m.

LORD FRASER OF LONSDALE

My Lords, I count it a great honour to be invited and to be appointed to come to your Lordships' House. I shall earnestly seek to study your Lordships' customs and tradition, which I admire and revere, but if, meantime, I make mistakes in addressing your Lordships or in not conforming to your tradition, which is a somewhat different one from that to which I have for some time been accustomed, I ask your forgiveness and indulgence. I should not have spoken so early, but should have taken the advice of some who said, "Wait six months, or even six years ", had it not been for the fact, which was first brought to my attention by the noble Lord, Lord Pethick-Lawrence, last week when he spoke from the Bench opposite, that it appeared that we should not have an opportunity for some months of debating Her Majesty's Government's pensions and retirement allowances proposals—until, indeed, they came to this House in the form of legislation. It may be that Her Majesty's Government will provide a debate on this subject in this House before that time, but in case that is not so, I thought that I would venture for a few moments to say a little about this subject, which is one that I have studied for some time.

Before I touch upon that broad subject, perhaps your Lordships will permit me to say a word or two about a narrower one—namely, that of war pensions. I have seen it stated that the gracious Speech makes no reference to this subject, and that it should have done so. I would call to your Lordships' minds that last February the Government made proposals which were widespread in their nature and were generally received, in the Houses of Parliament and throughout the country, as fair and generous. Whilst all our political Parties over recent years have made their contributions to the wellbeing of disabled ex-Servicemen, the proposals of last February were, in fact, far and away the largest and most substantial that have ever been made in this country. I am no longer, as I was for some time, concerned with the leadership of the British Legion, or with the group of some thirty societies who made representations to Parliament and to the country during the years preceding the arrangements that were made last February. Nor have I had any consultation with them or know what is in their minds. However, if I am not mistaken, it would be my guess that, as a whole, they would regard what was done last February as an instalment, but a generous instalment, of what should be done, and as a point at which they should rest a while from any national campaign, and at which they should study the whole subject and come again, perhaps next year or the year after, with further proposals.

There are details which, when examined, will show anomalies and cases that should be dealt with. But it would seem to me better that they should be dealt with not by campaigning throughout the land, because you cannot, as every trade union leader and every leader of any great mass movement knows, whip up public opinion twice in a short time for the same purpose. Better, it would seem to me, that such anomalies as there are, and such amendments as it is thought should he made, should be brought to the notice of Ministers by way of deputation or by other means. I do not doubt that opportunities of discussing these detailed matters will occur again, and so I will not dwell upon them now but will turn to the wider subject of the gigantic scheme which the Government have placed before the country for dealing with the subject of old age and retirement.

I want to start by saying that among the many human disabilities and afflictions I regard old age, especially when it is accompanied by loneliness, and sometimes by lack of creature comforts, and even lack of warmth, as among the hardest things that human beings may be called upon to bear. I have the deepest sympathy for old people, especially those who are lonely and cold. I am not satisfied that we yet make a sufficient provision for all of the old, and I therefore hope that during what few years may remain to me in public affairs I may be able to see amendments which will warm my heart and warm the declining years of a great many of our people. However, I differ from some views that I have read and heard as to the way in which this problem should be tackled. When I read the Government's proposals, I am bound to say that I think they are firmly and soundly based, and for this reason I want to devote a few minutes to them.

The first important point is that this is a scheme which purports to be, and in my judgment will be, a solvent scheme. I have noticed that sonic critics of the Government do not attach so much importance to solvency as to other aspects of the matter; they like to take solvency for granted, or to hope that it will not be a problem for them, but rather one for the next Government after them, or for their children, and thereby I think they show a great lack of responsibility. I would ask your Lordships to consider these few facts. In 1911 there was one old person in every fifteen of the population in these islands; to-day there is one old person in every seven, and in twenty years' time there will one in every five.

I would ask your Lordships to consider, also, that approximately half of the people who live in these islands are dependent, because they are too young or too old to earn, and consequently the living for all of them has to be earned by the other half, the active, wage-earning, salary-earning workers. It is not enough to say to people: "You have gained your pension by what you have done in the past ". That is an ethical consideration to be taken into account, but it is not an economic consideration, because the pension cannot be paid in the currency of the past but must be paid in the currency of to-day. If, therefore, the currency of to-day is not protected, the blank cheque ethically earned by work in the past is useless when it comes to be cashed. This is my principal criticism of those who think that solvency is of secondary importance or that it can wait. They thereby undermine the very fabric from which the good things that should come to the old can be fashioned.

What are the kind of considerations that the Government have had in mind in this scheme which they have brought forward? One is that there is not enough money in the country, and there is not prospectively enough money, to give the best possible benefits to all. If, therefore, we cannot give the best possible benefits to all, let us seek to give them to those who need them most. I cannot help thinking that that is a good principle, whether it be applied in the field of retirement pay, social service or even in farming. If I may digress for one moment, I beg leave to commend what the noble Earl, Lord Waldegrave, said about the small farmers' scheme. That is indeed a scheme in which the Government are directing help to those who need it, instead of directing help to all, and thereby wasting much of the help. So it is in the social services.

Briefly, then, this is the outline of the scheme. Those persons who earn less than £9 a week will continue to receive the present retirement allowance, 50s. a week for a single person, or £4 for a married couple, but the lowest paid among them—those who earn £6, £7 or £8 a week—will find their weekly contribution towards their retirement allowance reduced by 1s. 7d. a week, a not insignificant sum, and one to which a great deal of attention was paid when the last rise in the contributions took place. Those earning between £9 and £15 a week will come into a graded system, which will mean that the higher their earnings the more they will pay in, and eventually the more they will draw out, so that at the end of a working life a man earning £15 a week on the average will have paid in 3s. 6d. a week more than he now pays in and will draw out at the end an additional £2 1s. 0d. pension.

May I now declare an interest? I am a director of many companies which have insurance schemes, as they are called—occupational schemes—for our work-people, management and staff, and I am also a director of an insurance company. These facts have not, I hope, vitiated my view of the matter, but they have given me a little information and experience from which to speak. Anyone who has had to do with occupational schemes in business knows that the problem is: how we can deal with those who are already in our employment? It is easy enough to prepare a scheme for which the employee and the employer will make contributions, and on the assumption that someone comes into your employment at the age of twenty or thereabouts and stays arid works for you for forty years. He can go away with half his earnings, or perhaps more than half his earnings, and no great burden has been placed upon the firm or upon the individual.

But what is to be done with the man who is now forty or fifty who is in your employment? You cannot give him the same pension when he leaves, because it would be wholly unfair on the man who has contributed all his life. You cannot, if you are a decent employer, let him go out with no consideration. You cannot ignore the fact that during the last few years the currency of this land was allowed to slip until it became worth 30 per cent. less than it was before. You cannot ignore these facts. They are beyond the control of the individual concerned, and he has served you faithfully for so many years. So what do you do? You make an ex gratia payment to him. You set up a reserve in your company, or staff superannuation reserve, or the staff pensions reserve, or something like that, and you make an ex gratia payment to him by way of a leaving present when he leaves you, or by way of some addition to whatever modest pension he may receive under the scheme. He is not: affronted by the fact that he is given an ex pratia payment: he is glad, and thinks that his employer has been decent to him in all the circumstances. You do your best to make it up to him.

It seems to me that that is what the State does and what the State must do. It is quite impossible to imagine that any final weekly payment contemplated in, any scheme introduced by either of the major Parties that can be enjoyed at the end of a scheme can now be enjoyed by the people who are already in the scheme. We politicians, I venture to think, have all been guilty over the years of misleading the people, to some extent, by letting them think that in all circumstances the retirement allowance or pension or old-age pension, or whatever it is called, may be theirs as a right, and is wholly earned by the fact that they have made contributions towards it. It should be absolutely clear that the contributions which they have made towards it come nowhere near to paying for the present rates, let alone for any new rates that may be thought wise or may be established. Therefore, the taxpayer has to find the money. I am not saying that he should not. I am only calling the attention of your Lordships to the consequences of trying to find more money than is really possible, and forgetting that these benefits as our day-to-day standard of living, have got to be earned by the men and women who are working to-day. Nothing can be paid out in the way of goods or services that is not earned to-day.

It seems to me, therefore, that there are but two ways in which the State can deal with this subject. One is to make its own payment from the Treasury into the fund—and we are already doing that at the rate of £125 million a year—and the other is to make sure that those on the basic rate who are in special need have their needs specially met through National Assistance. There are some who feel shocked at the very use of the phrase, "National Assistance." There are some who feel a sense of pride, much to be admired in some circumstances, that they would not go for National Assistance if they could help it. We must admire that, but there is no more disgrace in going to receive the National Assistance which a grateful nation is very willing to give you than there is in the employee taking the ex gratia payment given him when he leaves by his employer by way of an additional pension over and above that to which he has contributed.

It is much more economical for the nation to direct the help where it is needed than to spread it over all workers, whatever they may need. We have therefore to abandon the cherished ideas of Mr. Neville Chamberlain and others that it is possible to create in this country a pension which would be paid for by the individual and would always be paid as a right. For the next twenty, thirty or forty years that cannot happen, because the great mass of present employees who are thirty, forty or fifty years old will have to have more than they are getting now, and they will have to have it from the taxpayer, because no scheme could possibly provide it for them. How are they to have it? Partly by increases in the basic rate, which I do not doubt will come, and partly also by making the National Assistance scheme more generous—doing all that each one of us can do to make people feel that it is a proper and right thing to go there for supplementation.

Those, my Lords, seem to me to be the two ways in which the State can deal with this matter. I have heard it said that the Government scheme is a shoddy imitation of a scheme produced some months before by a committee of members of the Labour Party. If it is an imitation, I would venture to submit to you that imitation is the sincerest form of flattery. But the truth is that both the Opposition scheme and the Government scheme are imitations of the private enterprise schemes with which we have become familiar in this country over the last ten or twenty years, and which have already brought more than half our workers into their ambit. Let us give credit to firms and companies and corporations and insurers who have devised these admirable schemes which the State is now proposing in one way or another to copy. This very grading of contributions and of benefits is an exact copy of the familiar industrial and commercial schemes which we have had for so long. I very much hope that, making every allowance for electioneering—a sport which is, I understand, denied to your Lordships—it may be found possible for the statesmen of our two great Parties to formulate the best possible measure to help our old people, to give them more and better conditions during the evening of their lives, without making too much Party politics about it.

4.33 p.m.

LORD BURDEN

My Lords, in accordance with the courtesies and traditions of your Lordships' House, I have the honour of expressing the thanks of your Lordships to the noble Lord, Lord Fraser of Lonsdale, for his wholly admirable maiden speech. Those of us who knew the noble Lord in another place will remember him as a valiant and fearless fighter there for the causes which were nearest to his heart. He has given us a taste of those qualities this afternoon, and while I am sure that he would not expect those of us who sit on these Benches to agree completely with all the sentiments he expressed, it is not mere platitude on my part, and I am sure of those who sit with me, to say that we all hope the noble Lord will find many opportunities in future of addressing your Lordships' House.

During the course of the earlier debate on the gracious Speech the noble and learned Viscount, Lord Hailsham, thought fit to attack the policies of the Liberal and the Labour Parties. For that reason it may not be inappropriate if I examine, quite briefly, the record of the Tory Party. The noble and learned Viscount, the Lord President of the Council, went back to the Industrial Revolution. He sang the praises of what flowed from the Industrial Revolution—one would almost have thought Mr. Gladstone had been born again. One could, I think, find similar passages extolling the wealth and so on, the growth of the nation, as a result of the Industrial Revolution, in more than one speech of Mr. Gladstone.

But I am not going back as far as the noble and learned Viscount. I take as a starting point the formation of the then Lord Salisbury's first Cabinet, in 1885. I do so for an obvious reason. For nearly two decades, with two brief intervals, Tory Conservative Governments ruled this country until the Campbell-Bannerman Cabinet of December, 1905. Listening to the noble and learned Viscount, Lord Hailsham, as to what flowed from the Industrial Revolution, wealth and so on, I think it is not unfitting that one should give the opposite side of the picture, and by way of introduction I trust your Lordships will forgive me if I quote some words written by Professor Huxley in 1888.

THE LORD PRESIDENT OF THE COUNCIL (VISCOUNT HAILSHAM)

My Lords, would the noble Lord do me the honour of agreeing that the purpose for which I quoted those advantages was in order to point out to the noble Lord, Lord Grantchester, whom I was then in process of answering, that there were certain disadvantages upon which I touched fairly ruthlessly?

LORD BURDEN

I am quite aware of that; but shall I say that it was a theoretical, if not dialectical, discussioin between the noble Viscount and the noble Lord, Lord Grantchester, on, shall we say, theory. But here are words, if the noble and learned Viscount wants them, which will support his thesis. This is what Huxley said: Anyone who is acquainted with the state of the population of all great industrial centres, whether in this or other countries, is aware that amidst a large and increasing body of that population there reigns supreme … a condition prevails in which the food, warmth, and clothing, which are necessary for the mere maintenance of the functions of the body in their normal state, cannot be obtained, in which men, women and children are forced to crowd into dens wherein decency is abolished, and the most ordinary conditions of healthful existence are impossible of attainment; in which the pleasures within reach are reduced to brutality and drunkenness t in which the pains accumulate at compound interest in the shape of starvation, disease, stunted development, and moral degradation; in which the prospect of even steady and honest industry is a life of unsuccessful battling with hunger, rounded by a pauper's grave… When the organisation of society, instead of mitigating this tendency, tends to continue and intensify it, when a given social order plainly makes for evil and not for good, men naturally enough begin to think it is high time to try a fresh experiment. I take it to be a mere plain truth that throughout industrial Europe there is not a single large manufacturing city which is free from a vast mass of people whose condition is exactly that described, and from a still greater mass who, living just on the edge of the social swamp, are liable to be precipitated into it. My Lords, Huxley was by no means a Socialist—

VISCOUNT HAILSHAM

The noble Lord has been quoting from Huxley. Perhaps he will allow me to add something to his quotation. Surely the whole thing was very much better and less turgidly said in the 'forties by Benjamin Disraeli, in two of his early novels.

LORD BURDEN

My Lords, I am quite aware that he divided the population into two nations. What I am going to try to substantiate in the course of my remarks is that the two nations existed, and the position in this country was even intensified in 1905, after twenty years of Tory rule. With such conditions as Professor Huxley describes, it is not surprising that there was a stirring of the social conscience of many men and women of good will. The new trade unionism was born; the Christian Socialists, the Fabians and others worked unceasingly to call attention to these evil things. Even Joseph Chamberlain, before he became the idol of the Tory Party, preached the terrible gospel of ransom. In 1886, the Honourable Charles Booth began his immense inquiry into the conditions of life and labour in London, avowedly to confute the Socialists. But the result of his investigations, when published, more than amply confirmed the Socialist case. The figures revealed that over 30 per cent. of the population of London, the richest city in the world, existed on or below the poverty line of a guinea a week.

Just to support what I am saying, may I recall to your Lordships that in 1899, during the South African War, out of 12,000 who applied to join the Army in Manchester, 8,000 were rejected outright, and only 1,200 were found fit in all respects. The Director-General of the Army Service Corps in 1903 reported that in the decade 1893 to 1902 some 34.6 per cent. had been rejected on medical examination, besides an uncounted number, known to be very large, whom it had not been thought worth while medically examining.

My Lords, that is one side of the picture. What of the employers? With labour cheap, millions on a guinea a week and less, they had grown lethargic and self-complacent. Here is the indictment of Professor Marshall, of Cambridge, in 1903. Many of the sons of manufacturers were—and I quote: content to follow mechanically the lead given by their fathers. They worked shorter hours, and they exerted themselves less to obtain new practical ideas than their fathers had done, and thus a part of England's leadership was destroyed rapidly. In the nineties it became clear that in the future Englishmen must take business as seriously as their grandfathers had done, and as their American and German rivals were doing; that their training for business must he methodical, like that of their new rivals and not merely practical, on lines that sufficed for a simpler world of two generations ago; and lastly, that the time had passed at which they could afford merely to teach foreigners and not to learn from them in return. Again I quote from someone who would be horrified at the mere suggestion of Socialism and Socialistic ideas.

But now I am going to quote, if I may say so with respect to the noble and learned Viscount, something from a Socialist, to endeavour to substantiate the case that I am trying to put to your Lordships: that in two decades, with almost absolute power during almost all of that time, despite Disraeli's teaching, to which the noble and learned Viscount has referred—and that of others too—very little, if anything, was done to improve the conditions of our people. The following is a short extract by a Socialist from the introduction to Modern Socialism, by R. C. K. Ensor, now Sir Richard Ensor, and it gives a sombre picture of the conditions of England in that year.

VISCOUNT HAILSHAM

Which year?

LORD BURDEN

It says: Nor can Socialists look with full confidence upon the English electorate. It is hardly disputable that millions of electors in the greater British cities have reached a point of personal decadence—physical, mental and moral—to which no Continental country furnishes a parallel on any comparable scale. Time is steadily multiplying these millions; and for English Socialism there is a race against time which it is very likely not to win.

VISCOUNT HAILSHAM

Would the noble Lord forgive me for interrupting? In which year was the noble Lord saying this race against time took place?

LORD BURDEN

It was a quotation from Modern Socialism, as set forth in the writings edited by R. C. K. Ensor, now Sir Richard Ensor, author of the standard work on England, 1870 to 1914, in the Oxford Histories, with which no doubt the noble and learned Viscount is familiar.

VISCOUNT HAILSHAM

But which was the year to which this quotation referred so movingly? Should I be right in supposing that it was the year 1905?

LORD BURDEN

Quite so; it was. The book was published in 1905.

VISCOUNT HAILSHAM

It is a little out of date now.

VISCOUNT ALEXANDER OF HILLSBOROUGH

It is not. Human problems arise and remain.

LORD BURDEN

My Lords, if, by the march of events since 1905, this prophecy has proved incorrect, surely it is because the Liberal Government of 1906, with a Labour Party which appeared for the first time with twenty-nine Members (afterwards increased to over fifty when the miners' Members joined) laid the foundations of what is now, rightly or wrongly, called the Welfare State. The feeding of necessitous schoolchildren, the Trade Boards Act to stamp out the grosser forms of sweated labour, and the National Insurance Acts are only a few of the measures we owe to that Government; and there are noble Lords in this House who I am sure remember the frenzied agitation against the first National Insurance Act. Following two devastating wars, when we had been warned, if Mr. Morgenthau is correct, that at the end of the last war this country, according to Sir Winston Churchill, would be bankrupt, these measures were amplified, extended and supplemented by the Labour Government of 1945–50.

VISCOUNT HAILSHAM

My Lords, surely after delving into the remote past the noble Lord is not going entirely to pass over the remarkable series of social Acts passed after the First World War and seriously to suggest to this House that there was nothing in the way of social legislation between that of the Liberal Government of 1906 and that of the Labour Government of 1945—because there are limits to which our historical incredulity can be pressed.

LORD BURDEN

My Lords, I am going to refer to some of that legislation—the Guardians Default Act and the Local Government Act of 1928. One's speech should not be too long, but if your Lordships will allow me I have a particular reason for wishing to refer to what flowed from the Local Government Act, 1928—and, of course, some of the basic industries of this country were brought under national ownership and control. I agree, that much remains to be done before we have a full and complete industrial democracy in this country. I know that it may be argued that Tory ism to-day has a "new look", and that one should draw an iron curtain over that somewhat murky past. But the things I have ventured to mention have occurred in the lifetime of some Members of your Lordships' House.

Now I come to one piece of legislation which was passed by one of the Conservative Governments. I agree that it had many good features, but the fact remains that one feature was the transfer of the duties and responsibilities of boards of guardians to the counties and county borough councils. It happened that I was one of those appointed to carry on the work of the West Ham Board of Guardians until the appointed day—and here I hope I shall not shock the noble and learned Viscount too grievously, because in these few remarks I have tried to be purely factual; and what I am going to say is absolutely true.

I had to replace an official who had been sent to West Ham by Mr. Neville Chamberlain and had ground the faces of the poor of West Ham. I wish it were possible for me to give your Lordships a picture of my first day at the South West Ham relief station. Crowded in a large hall were a number of men, ill-clad, dejected, with haggard, drawn faces. These were the men who had been subjected to test work for food tickets for a few shillings a week. I asked the relieving officer about them. The relieving officers were tough, hard-bitten men, by no manner of means soft or sentimental. I asked about work for these men and I have never forgotten the reply—that some of these men got a few hours' casual work in the docks but that after a little time many of them would faint and collapse because—and I repeat the actual words: they had not had enough food in their bellies. Is that something of which Conservative legislation can be proud? It is for reasons similar to these that to those of us who have been brought up in the Labour Movement all the sophistries, all the clever rhetoric of the noble and learned Viscount, make no more impression than if the noble and learned Viscount were to give your Lordships a display of his skill as a campanologist.

This Amendment has been moved because those of us on these Benches believe that the policy which Her Majesty's Government are pursuing at the present time is restricting legitimate industrial development and imposing quite unnecessary hardship, through unemployment, on an increasing number of men and women; and come what may we shall go forward in our work, believing that the Labour, Trade Union and Co-operative Movements are the only safeguards for democracy and for maintaining a decent standard of life for the majority of the people of this country.

4.59 p.m.

LORD CHORLEY

My Lords, I count it a great privilege to take part in this debate which has been illuminated by two outstanding maiden speeches from two of the new Life Peers—two of the best speeches which it has been my personal good fortune to listen to in this House for quite a number of months. As one who, in his humble way, has stood out, both in this place and elsewhere, for the rights of women, it has been a particular pleasure to be present to hear the distinguished speech of the noble Baroness, Lady Elliot of Harwood, who, I am sure we should all agree, did great credit to herself and her sex in the delightful speech she gave us on Tuesday. As one who has got to the verge of using the mechanical aids which so many of your Lordships have to use, I particularly liked her very clear enunciation in which not a single word was missing in my slightly defective hearing.

My Lords, I rise to support the Amendment which was so ably presented by my noble friend Lord Silkin yesterday. This Amendment, as your Lordships know, picks out four significant elements in the existing situation, and three of these are obviously basic to our economic situation: under-production, under-employment and high prices. These matters are, I suggest, obviously interconnected. If production falls then there is a fall in employment also; if resources are not fully employed there are not being produced as many goods as could he produced and then prices are higher than they need be. The central feature, I suggest, in all these matters, is the question of production, and therefore I propose to concentrate on that particular aspect of the matter this afternoon.

There are, no doubt, a number of reasons why output has been falling during the last months and even years. One of the most significant of these, I think, is the falling off in demand in the countries which are primarily producers of raw material, because of the fall in prices which has occurred in those countries—which has been called "catastrophic," a word which seems to me not too strong to describe what has been going on in some of the countries, particularly some of the countries of the British Commonwealth. I propose to say something more about this aspect of the matter later in my speech.

Another reason, and an even more important one. I think, is our failure to make adequate capital investments. During the whole period of the present Government that has been a feature, and it is, I am sure, a very damaging feature of the whole economic situation. I suppose that superficially it might seem, at a time when we cannot sell all the goods we can produce, that it would be rather a waste of our economic resources to start putting them into plant and equipment; but I suggest that this is clearly a very superficial view of the situation, since one of the causes why we have been unable to sell our products in a number of markets is that we have been priced out of those markets by the superior efficiency of our competitors, a superior efficiency which has been based, particularly in the case of our German competitors, on the re-equipment of their industries. It must never be forgotten that German industry, and indeed a great deal of Continental industry, has been completely re-equipped since the end of the war, and that that is the reason why in a number of respects they have been beating us during the last months.

But superficial as is the view that we also do not need to re-equip ourselves, it is, I suppose, quite natural that manufacturers should adopt it and should, so far as I can see, be actively pursuing it at the present time, if it is possible actively to pursue a negative policy of this kind. Not only have the Government, as far as I have been able to observe, during the whole course of their career since 1951 failed to encourage capital investment, but their financial measures, certainly over the last months, have seemed to be calculated to have exactly the opposite effect and, indeed, to discourage capital investment. We have only to remember the absurdly high interest rates, the credit squeeze and all the other apparatus which has been pursued so actively over the last months until very recently indeed.

I suggest that in this atmosphere we really cannot expect manufacturers, who are already faced with difficulty in keeping their machinery fully employed, to launch out into expensive schemes for replacing their old, outworn items of plant and machinery. It is not to be wondered at, therefore, that the Board of Trade estimates for capital investment in 1959 actually show a continued prospective fall in the amount which is likely to be invested of no less, I understand, than 16 per cent., which is a very large and very serious figure. While this may not be altogether surprising in the light of the points I have just made. I suggest that it is really disastrous from the point of view of our national economy, and it is a really outstanding fact at the present time which we shall dare to neglect at our peril.

The truth is that in the modern world no country can afford to fall behind in capital investment. Technological progress has during the last twenty or thirty years been so outstanding, has gone on at such a break-neck speed, as indeed we all know, that whole sections of industry are out of date in regard to their equipment and machinery in very short periods of time—periods of years of often less than double figures. This is a truth which is appreciated in Communist countries at least as well as, or even better than, it is in the West; and it is undoubtedly an essential element, in my view, in the extraordinary advance in industry which has been made in the U.S.S.R during the years since the end of the war, an advance which has completely flabbergasted those people who knew only the old Russia of Czarist days.

It was only within the last two or three days that I read a most interesting account by the leader of the delegation of the British steel industry which has been recently in the U.S.S.R., studying what is going on in that country. Our own steel industry is obviously one of our most up-to-date and one of our best-equipped industries, and yet the leader of this mission felt, as a result of what he had seen in Russia, that it would be necessary that the whole problem of the re-equipment of our steel industry should be re-thought out before we embarked upon it. That is a tribute to what has been done in Russia as a result of their capital investment and investment in education, which I am quite sure is a very genuine tribute coming from such a source. Indeed, it will be necessary to do a great deal of re-thinking in respect of the whole of the re-equipment of British industry if we are going to maintain our position as a great industrial people in the modern world.

What is particularly wanted at the present time, I suggest, is a lead from the Government, particularly in respect of making cheap money available to the industries which stand so sorely in need of re-equipment and which it is so essential, from the point of view of the future of our industry, that we should effectively and efficiently re-equip as soon as possible. Unfortunately, even now, with unemployment mounting and gloom in the hearts of so many unemployed people, as has appeared from the speeches of noble Lords on this side of the House this afternoon, Her Majesty's Government seem to give no real signs of tackling this problem or even of properly understanding its importance.

One may say, I suppose, that their action in de-restricting the hire purchase market will stimulate capital investment to some extent, but I doubt whether that was actually the end in view. It seems to me that its main purpose has been to induce a more cheerful outlook in the consumer population against a General Election which is not so very far away. But even if the object of it is to stimulate capital investment, surely it is a very indirect and second-rate way of carrying out that important objective. The truth is that this is no method of tackling a problem which is of such great moment at the present time. It is really hardly more than chicken-feed.

The pity is that this Government is really wedded to laissez-faire. It was very interesting yesterday afternoon, I thought, when the noble Lord, Lord Barnby, interrupted my noble friend Lord Silkin to point out to him that world prices ruled in regard to the problem of Colonial produce. That was a very interesting interposition, because it indicated that he felt that we were in the grip of forces which we could not control and that we must allow them to govern the situation.

It was also interesting to hear the noble Earl, Lord Selkirk, replying for the Government, when he misread his brief for a moment and referred to the Crimean War instead of to the Korean War. Freud says that one's real meaning comes out in the inadvertent use of words in that way, and it seemed to me that that was a good indication of what was going on in the noble Earl's subconscious mind. He was still living in the time of Ricardo and Cobden, and was in the grip of the iron forces so popular with the economists of that time. The muddle of the Crimean war was symbolic of the muddle of laissez-faire, and I suggest it is also symbolic of the muddle in which the Government itself has been over these matters during recent months. It is no wonder that The Times, in a leading article only yesterday, said that the Government have been "conspicuously worried and non-plussed by their economic problems." After all, one does not expect The Times leader-writers to be altogether supporters of the Labour Party.

Even the removal of hire purchase restrictions will only stimulate production in certain directions, some of which, at any rate, are of very dubious advantage. I read in yesterday's paper that as a result of the removal of these hire purchase restrictions it is already expected that the demand for motor cars will exceed the supply early in the next year. It is obviously ridiculous to allow motor car production for the home market to be stepped up in this way before we have a road system which is capable of taking these motor cars, and it will be a long time before we have a road system which is capable of carrying even the motor traffic which it has to bear to-day. It is really scandalous, the tens of millions of pounds wasted in time and money in the great cities of this country at the present time owing to traffic congestion. In London the situation is such that at almost any time the whole place may seize-up for hours at a time as a result of the tremendous traffic congestion in the City and in the West End. Yet, because the Government will never plan but will always take general measures and allow things to sort themselves out according to the principles of laissez-faire, developments of this kind take place and we are threatened with the early exacerbation of a traffic situation which is already almost unbearable. Without a great deal more planning and a great deal more discipline than exists at the present time, life in this country in many ways will become quite frustrating and impossible.

I should like to finish this part of my speech by pointing out that capital investment in its widest aspect includes investment in education, and that is an aspect of the matter which has been only too clear to our rivals on the other side of the Iron Curtain. It is true (and I was very gratified to see it) that the gracious Speech does make reference to plans for improving education, particularly higher education and secondary education, but I would remind the Government that an army is not entirely composed of officers and that in the modern world the best armies are those which are built up out of an educated population. The framers of the Education Act appreciated the importance of this factor in the industrial development of the country when they decided that the school-leaving age should be stepped up from fourteen to sixteen. One of the outstanding achievements of the great Labour Government of 1945 was that, as one of the first things they did, they took the initial step to implement the Education Act by raising the age to fifteen, and this country owes an enormous amount to Miss Ellen Wilkinson's courage in going on with that against a great deal of stupid opposition at the time. But the next step, I suggest, is now overdue. This is a form of capital investment which it is within the power only of the Government to carry through, and it is a step which obviously the Government ought to take, and ought to take as quickly as possible.

I should like to conclude my speech with a reference to the position in the primary producing countries to which I referred at the beginning—the most obvious element in the present situation and one to which reference has been made a good deal already. As Mr. Harold Wilson pointed out in his speech in another place, the improvement in our terms of trade (for which, incidentally, the Government have been largely taking the credit) has resulted from the fall in import prices. A similar fall has marked the economic crises which have been such an obvious feature of economic history over the last fifty or even one hundred years. I find the Government's attitude of readiness to cash in on this unfortunate situation, combined with an almost resolute disinclination to do anything about it, a most distressing business. Indeed, this attitude seems to me to amount almost to that sort of insolence which the gods chastise. Take "A bloomin' bit of luck "—a phrase which I think Government spokesmen ought to be ashamed of repeating so often. There is a kind of insolence about this phrase; a kind of innuendo to the electors which, to my mind, is electioneering of the worst kind. It is a sort of suggestion that luck comes to those who manage well and that God helps those who help themselves.

Yet this crisis among the primary producers, although it may have assisted the Government in their so-called efforts to deal with the inflationary situation, is a stroke of terribly bad luck to all those people who have been struggling to increase production in the primary producing countries. For us to cash in on it in this way seems to me to be disgraceful. It is not all a matter of luck, because one element in it, in my opinion, is the Government's own failure in their economic policy, and the Government must take a good share of responsibility for the catastrophic fall in prices in Commonwealth countries overseas. I was upset at the almost flippant reference to how nice it was for the British housewife to have butter selling in the shops at half the cost at which New Zealand farmers produced it. That, in effect, was what the noble Lord was saying, and I am sure that a flippant remark of that kind will not go down at all well among farmers in New Zealand and in those parts of the Commonwealth which are putting up with this difficult situation. I am sure that the Dominion Governments are doing what they can to alleviate the situation, but they do not seem to be getting anything like the help they ought to be getting from our own Government.

It is typical of the attitude of noble Lords opposite, with their laissez-faire outlook, that the noble Lord, Lord Barnby, should have interrupted my noble friend Lord Silkin to point out that this is the responsibility of nobody: that it is a matter of world prices reacting on the situation.

LORD HAWKE

My Lords, the noble Lord is complaining of the low prices of commodities, whereas his noble friend Lord Silkin was complaining of high prices. Which are we to take as the Party line?

LORD SILKIN

My Lords, this is not a Party line, but perhaps I can explain. I was complaining of the low prices which we pay to the primary producing countries and of the high prices which consumers in this country are paying.

LORD CHORLEY

My Lords, some prices are high and some low, and some of those which are low are quite unfairly low. But the suggestion, in effect, was that we are in the grip of iron forces, the same sort of iron forces which existed in Victorian England in the time of Ricardo and Cobden. Of course, if the Government really believe that they are in the grip of iron forces, then it is no wonder that they do not do anything really effective to get out of the present situation. This is a stage when it seems to me that the Government should step in and support the prices of primary products like New Zealand butter.

It is a great pity that the old bulk buying arrangements were scrapped. It is perfectly true that they were not 100 per cent. efficient, because it was an economic technique which was just beginning, and no doubt it would have taken a number of years, and a good deal of thought and experience, to make it anything like fully efficient. But in so far as it did operate, it operated very valuably in a number of ways and kept prices of a number of commodities within reasonable limits. I think that it is a great pity that the present Government, with their addiction to laissez-faire, should have scrapped it all.

I cannot foresee any increase in our industrial production of the volume which is called for in the present situation unless the primary producing countries can be put back on their feet, and that very quickly. I understand that the President of the Board of Trade said in his speech that we were doing better in our exports to Germany and some of the other industrial countries. We all like doing trade with Germany and other industrial countries, so far as we can; but, valuable as this is, I suggest that it is really taking in one another's washing and that this is no real substitute for trading with the primary producing countries which have always been our really large customers. After all, they are linked to us by sentiment as well as by economics and it is to our advantage in every way to keep these countries in good economic fettle. I hope, therefore, that the Government will give up relying upon "bloomin' bits of luck", in the way they have been doing over these last months, and will put their backs into improving the economic situation throughout the Commonwealth.

5.26 p.m.

LORD AMULREE

My Lords, before I begin the short speech which I propose to address to your Lordships, I would associate noble Lords on these Benches with the congratulatory remarks on the two maiden speeches we have listened to yesterday and to-day. We trust that we shall hear both the speakers on many occasions in future. I was extremely grateful to the noble Lord. Lord Silkin, for putting down this Amendment, because he has worded it so that I can give him some of my support on one or two matters.

I should like to confine myself to one particular matter concerning the provisions for old age in this country. One of the important things old people want is security. Their entire happiness depends on that far more than in the case of younger people. There are two types of security. One is finance, an aspect which I do not intend to pursue now, because I understand that there is to be a further debate in the near future on pensions. The other type of security is for the old people to be in a home. Many, if not most, of our old people are not a source of anxiety in regard to that because they live in their own homes, or with relatives or some members of their family, or with friends, and I am not worrying very much about those. But there is a type of old person which has given me, and I think other people, a good deal of anxiety—that is, the frail and infirm. These should be the responsibility of the major local authorities under the National Assistance Act, and I am bound to say that in many parts of the country local authorities have done extremely good work in this direction. We are particularly fortunate in London, where the London County Council have worked very hard and established a great variety of homes—little homes, not the big institutions of the past. But there are not enough of these at the present time.

There are a certain number of homes which are run by voluntary organisations, who do very good work. There are a few people, who I think can be numbered in thousands, rather than in tens of thousands, who go to private homes because they can no longer lead an independent life and have a certain amount of money at their disposal. Most of these private homes are run satisfactorily, but there are a number of badly run homes, which have bad accommodation and are not properly equipped and staffed. One finds that one person may own a number of these homes and run them, as one might say, at the expense of the residents.

We do not find a large number of such homes in the middle of London. They seem to be concentrated around the fringes of the built-up area. And the same thing occurs on the outskirts of the bigger cities and towns. These homes, as I have said, are not at all satisfactory: they are crowded, ill-equipped, uncomfortable and badly run. There was a time when we used to hear talk about " baby farming", which of course has now been put down entirely by the action of the Government and local authorities. It seems to me that to-day there is a danger of some kind of "old person farming" cropping up to take its place; and that, to me, would be just as deplorable a state of affairs as the "baby farming".

I know that at present these homes are liable to inspection by the local authority, but because of the shortage of staff the inspections are carried out at infrequent intervals; and certainly in one or two cases I have come across the inspector has given notice of his visit, which seems to me to take away entirely the value of the inspection, because if you know an inspector is coming, naturally you tidy up the place. The whole point of an inspection is that it must be as regular as possible and completely unexpected. These are the people to whom I wish to draw your Lordships' attention this afternoon. I do not expect a full reply on the subject from the noble and learned Viscount on the Woolsack—I have given him no notice of the point—but I trust that it will be referred to the appropriate Department and that some kind of action will be taken in future.

5.30 p.m.

LORD PAKENHAM

My Lords, we have had an interesting debate. It used not to be very fashionable to congratulate oneself on one's own speeches, but the Prime Minister has broken that tradition by recently referring to his own speech as "a very fine one." I do not go as far as that with reference to any of my own utterances, but I should like to congratulate my noble Leader, Lord Alexander of Hillsborough, and all those who have spoken in support of him from this side of the House. But I should not like to confine my humble tributes to those who accept the Labour Whip. I should like to call attention once more to the outstanding impression made by the noble Baroness, Lady Elliot of Harwood. Unfortunately, I did not hear her speech, but I have had the pleasure of reading it, and I am sure that it was in the minds of many noble Lords how happy her dearly beloved husband, the late Walter Elliot, would have been made by that speech.

I should also like to join in the congratulations to the noble Lord, Lord Fraser of Lonsdale, who has spoken so effectively this afternoon. In a sense, no Conservative name can be completely satisfactory in my eyes, but if I must choose a Conservative name, let it be "Fraser". Therefore it gives me great pleasure to think that the noble Lord was so successful to-day. It has been a disappointment to all of us that the noble Earl, Lord Dundee, whom we all join in congratulating on his elevation, should be deprived at the last minute by influenza of the chance of demolishing me, an opportunity which now falls to the noble and learned Viscount on the Woolsack, who will no doubt make the most effective use of it in a few minutes' time. I feel that some of us on this side of the House, and perhaps others elsewhere, will spare a thought for the noble Lord, Lord Mancroft, who has deserved so well of your Lordships on many occasions. Perhaps I need not say more than that.

The noble Earl, Lord Dundee, was very kind to me when as a young Conservative, magnificently unprepared for the long littleness of Conservative policy, I went up to Oxford. There were giants in those days, in the noble Earl, Lord Dundee, Sir Roger Makins, Sir Evelyn Baring and Mr. Lennox-Boyd, none of them less than six-foot-five tall and with a mental elevation not altogether inappropriate to their physical stature. I have deviated somewhat from those paths, but that experience has taught me not to despise intellectual capacity in leading Conservatives; and, if I may say so, that is a lesson which some noble Lords opposite might learn with advantage. They are always ready to recognise our sincerity, but sometimes they treat us as if we were congenital idiots.

Let me ignore the old-timers and take a newcomer, the noble Baroness, Lady Wootton of Abinger. She was, I think, the last member of Cambridge University to receive the star in the Economic Tripos. Many of my other colleagues could also be instanced. To talk to us as my noble friend Lord Hailsham (if I may call him that) did last week is hitting, not perhaps below the belt but certainly below our intellectual standard. I hope that he will at any rate bear that thought in mind. He said for example [OFFICIAL REPORT, Vol. 212 (No. 2), col. 61]: Even in the long run Socialism and democracy are utterly inconsistent with one another. That kind of talk will do, as Burke would have said, with a lamp-post for a second. It would equally be all right at a gathering of the Primrose Ladies. But the noble Viscount cannot expect to make a profound impression on some of us on this side of the House by that sort of language.

I turn now to the economic issues before us. I have not inflicted myself on the House in economic debates in recent years if only because I am chairman of one of the smaller clearing banks—I might be called "the poor man's Walter Monckton"—and that has stifled me somewhat. It is difficult, when one is in a small way an executant of Government economic policy, to indulge in any biting criticism of that policy. Bankers' speeches are always apt to be dry, but the speeches of a banker politician in my situation might achieve the impossible feat of being dry and wet at the same time. However, I have stepped into the breach to-day in the absence of the noble Lord, Lord Latham.

I suppose one could consider the Government and what they are hoping to do for us under four headings: the programme, the performance, the personality and the philosophy. I will not say much about the programme, partly due to the inhibition on which I have just touched, but I must, in candour, across the havoc of Party politics, say that no one can fail to be impressed with the personality and approach of the present Chancellor of the Exchequer. One must say that much if one is to preserve a sense of balance. He is a man whose record in peace and war is equally impressive in the eyes of all fair-minded people. As I say, I do not wish to say much about the programme, as one of the people concerned with the carrying out of certain aspects of it. But we can bring other standards to bear on the topics of discussion before the House.

There is the performance. It would be ridiculous to deny that in same respects the economic position of our country is considerably better than it was a year ago. Anybody who denied that proposition stated in that form would, I think, put themselves out of court. As the noble Earl, Lord Selkirk, said yesterday, our reserves have risen in the last year by about £400 million; and we have had a favourable balance in our visible exports in the first six months of this year, which is the first time that this has happened this century. These facts are very much on the credit side. Though there seems to be some small difference of opinion about the level of retail prices, I think one must admit that there has been more retail price stability in the last year than for some time past.

On the other hand, I cannot share the excitement which I think the noble Earl, Lord Selkirk, manifested at the thought that we are living better now than ever before. I was always brought up to believe, and I have always supposed it to be so, that with a constant improvement in scientific technique our standard of living ought to be rising continuously, whatever Government was in power, unless there were a major and unforeseen Act of God of an adverse character. Mr. Butler hopes and believes that our standard of life will be doubled in twenty-five years, and we all share that hope and believe that it will come about more quickly under a Labour Government. But whoever is in power, we ought reasonably to expect to see a constant rise in the standard of life. Our Conservative rulers have been in power for seven years, and it is not much of an argument to say that we are living better now than ever before, or better than when the Labour Government were in power.

Let us look at the other side which has been brought out effectively from this part of the House. My noble friend Lord Silkin brought out, as did my noble friend Lord Chorley, that there has been a most disastrous stagnation in our industrial production for several years. I hope that the noble and learned Viscount the Lord Chancellor will not attempt to belittle that statement. I think as it stands it can hardly be denied—the most disastrous stagnation in our industrial production for several years.

That is the economic side of it. There is the social evil, brought out by several speakers, including the noble Lord, Lord Lawson, and connected with it the disquieting rise in unemployment. As regards production, the noble Lord, Lord Silkin, produced some damaging figures to show that other countries have surpassed us in productive progress in recent years. I am sorry that the noble Earl, Lord Selkirk, is not here, and I am sorry that I did not give him notice, but I am not referring to his remarks in any personal way at all. They were the standard views on behalf of the Government. The noble Earl, Lord Selkirk, set aside this damaging submission of the noble Lord, Lord Silkin, on the grounds to quote his words [OFFICIAL REPORT, Vol. 212 (No. 5) col. 234]: or course, the noble Lord's ' league table ' "— he meant the league table of comparison between this country and others— can be taken to show almost anything…. Of course, if our figures are not going to be met in any way, and only favourable figures are going to be attended to on the Government side, the argument will proceed very readily to a happy conclusion from the Government point of view. But the noble Earl, however antipathetic to awkward statistics which did not suit the Government case, was not able to offer any reply to the charge that production in this country has fallen down lamentably in the last few years. That has been our theme from this side, and up to the present it has not been replied to.

The noble Earl, Lord Selkirk, conceded to the noble Lord, Lord Silkin, that production is running at 3 to 4 per cent. lower than at this time last year, and the level of unemployment is higher than it has been for quite a number of years. So I was hoping that we should not have much complacency from the opposite Benches, whereas I am bound to say we have had a considerable dose of it during this two days' debate. The noble Earl went on to say that they were taking action to meet this situation. He said (col. 236): … what we want to do is to create a steady growth, built on a sound foundation and not … create a mushroom growth which could fade away … easily. That is an unexceptionable aspiration in which we could all share. What we are entitled to ask is whether the present Government are the people to promote it. With the best will in the world I do not see them doing so. The figures in recent years suggest the precise contrary. On the record of the last few years, since 1955 there has been no increase in production, when many other countries, of course, have been going ahead fast. Since 1955 there has been no increase in production, and since the beginning of this year there has been a decline. Taking simply the record, with the best will in the world the Government are much more likely to promote a decline than an increase in production.

If the Governmental life of this Government had begun a year ago, I think they would have much more grounds for congratulating themselves than they possess at the present time in the light of actual history. After all, the Government can claim to have presided over a big improvement on the external front, and many of us in this House have talked about the need for strengthening the reserves. It would be unpatriotic not to take note of the fact that there has been an improvement there, and I welcome it.

The Government, I hope, are aware—and they have shown themselves aware, though not perhaps sufficiently so—of the large extent to which this has been due to luck. A good deal has been said about "luck" recently. I am not sure that these figures which were announced in another place have been actually brought out in front of your Lordships. Taking the first half of this year and comparing it with the first half of last year, the improvement in the trade balance was £189 million, and the improvement in import prices, which must be mainly—some would say entirely—put down to luck was £190 million. The improvement in import prices due to this adventitious factor was bigger than the whole of the improvement in the trade balance.

As the right honourable gentleman quoted in another place, the Financial Times has told us that it is an achievement which has been made possible only by a sharp drop in commodity prices. Those are the cold facts. We take note of certain improvements. We try to find out how they have come about, and we take note of the price that has been paid for them. But still, to be fair to the Government, I am not trying to create the impression that they have sat and folded their hands and waited for events to run their course. That would be a false suggestion.

The Government have pursued a very definite policy—whether we like it or not—of restriction. I do not think I need quote on this subject, because I do not think the Lord Chancellor will disagree with that statement. I could quote The Times—one could quote so much—which I think yesterday referred to the improvement in the reserves. The Times said: … the gold and dollar reserves have risen continuously over the last thirteen months since the Government raised bank rate to 7 per cent. and introduced other restrictive measures in September of last year. So the improvement, in so far as it is due to policy here, has been due to a restrictive policy. That can hardly be challenged as a statement of fact. One can argue, according to one's fancy, whether the achievement has been greater than the price paid for it. But I am only trying to make it plain that it has been achieved by a restrictive policy.

I think it is conceded that this restrictive policy is no long-term solution to our national problems. The Government are, in fact, abandoning it and claiming now that they are at least as expansionist as ourselves. I am not going to be involved in the question of whether their methods are exactly right. I am speaking broadly, and I am suggesting to the House what can hardly be denied. Whatever was the policy last year, it is not the policy now. We must now ask ourselves whether the new policy is going to succeed under the present Government.

It is perhaps not unreasonable to glance at the personalities, because nowadays everyone seems to be SO concerned with building up personalities—not the most attractive side of political life, but we must accept it as a fact in the modern political struggle. The noble Viscount, Lord Hailsham, said recently in a broadcast: I believe that the public is really hungry for a race of politicians which ranks common sense and common decency as important political principles, and seasons its policies with compassion and its speeches with a sense of humour. I believe, furthermore, that people have begun to believe that they have found such a race of politicians in the present Conservative Cabinet. I said earlier it has become the fashion to praise oneself, but that is going further, con amore, than one is accustomed to in political life.

I am bound to say that the noble Viscount does not carry this back very far. He is not saying that this was true of the Conservative Cabinet during their seven years of life, but is something which has come about quite recently. According to The Times he said in the same broadcast that the Conservative Party were unpopular last year because people did not like their policies or distrusted their leaders: People did not like our policies, or believed that these policies were vacillating and weak and that our leaders were lurching from crisis to crisis without a clear knowledge of where they were going. Rightly or wrongly people no longer believe that. Here is a miraculous transformation, if you take the last of the seven years compared with the earlier six. Of course, the Conservative personnel have changed. They have lost Sir Winston Churchill; they have lost Sir Anthony Eden; they have lost the noble Marquess, Lord Salisbury, whom we all revere in this House; they have lost the noble Earl, Lord Woolton, and other leading statesmen. I am not quite sure whom they have gained. They have gained the noble and learned Viscount, Lord Hailsham; otherwise the personnel seems almost identical. I cannot feel that, with all his gifts, he can have brought about a change on that scale so quickly. At any rate, we know where they were a year ago; and if the Chairman of the Party does not know where they stood I do not see who else is qualified to speak. A year ago people did not like them or their policies after six years, but in the meanwhile they have had a stable policy. Who introduced it? The right honourable gentleman Mr. Peter Thorneycroft was particularly associated with it, but he was soon dropped overboard. It is not quite clear how the change came about except by a great deal of luck, which is not denied, during the last year. I am not making a personal speech, but since the personal issue was raised in a manner very flattering to the present Administration it seemed to me that a rank-and-filer from the other side might humbly submit a few qualifications, and perhaps others will share my scepticism as to whether this transformation has occurred.

I should like to say a word about the philosophy—

THE EARL OF HOME

And the gracious Speech.

LORD PAKENHAM

I should be glad to talk about the gracious Speech, but the hour is late. I was hoping last week to talk a great deal about penal reform and mental health reform, which the noble Earl the Leader of the House knows are bees in my bonnet, but somehow the opportunity has not been provided and I am afraid the House may have to listen to me later on those topics, in which I am very much interested. But I think I am speaking on the gracious Speech to almost the same extent as did the noble and learned Viscount.

A great deal was said about philosophy. The noble and learned Viscount, Lord Hailsham, is a much better philospher than I am; he is a Fellow of All Souls, which is an achievement beyond the capacity of most of us, and demonstrably beyond mine; therefore I am not going to question his philosophical credentials. But he did not go very deep into philosophy; he talked mainly about history and fairly recent history. He left us to understand. by and large, that there was something inherent in Conservative philosophy which was likely to make a Tory Government successful and something inherent in Socialist philosophy which was bound to make us fail. If we go back to the years between the wars we find that there were Conservative Governments then. The noble and learned Viscount talked about 1923, 1931, 1951 and so on. Well, there was that Government of 1931 to 1935. What was said about that? In the years before 1945 it was the Government with the biggest majority that we had had for many years. As regards that Government we were told by Sir Winston Churchill, Thus an administration more disastrous than any in our history saw all its errors and shortcomings acclaimed by the nation. So much for the period 1931–35. That was, I suppose, Toryism at its least characteristic, but it was Toryism very strongly placed.

Then we come to the period 1938 when the noble and learned Viscount first made his way into Parliament, and a very gallant election he fought. He is a doughty electioneer, as I know to my cost, but he ran that election against stronger opposition than I was able to put up in later years. Not only was he opposed by the Labour Party and the Liberal Party but one of his doughtiest opponents was the present Prime Minister, Mr. Macmillan, who came to Oxford to speak against him. I do not know what had happened to the Tory philosophy there, or which side of the fence they were on; there was a good deal of chaos on the Conservative philosophical front. So these rather one-sided presentations of Party philosophy do not cut as much ice as their well-intentioned propounders would wish.

Noble Lords opposite I think are sometimes in doubt as to why we have become Socialists. Some of us, of course, have seen a great deal of suffering—that would not apply to me, but some of those on these Benches have lived through periods of great suffering. The noble Lord, Lord Lawson, comes into mind, and there are many others. Others have come to it by some kind of intellectual process. I would say this: whether or not one could prove that Conservatism was more efficient, we on this side would still be Socialists, members of the Labour Party, because we believe that ours is the only just system. We believe in the brotherhood of man. That is our view. We believe that any system under which one per cent. of the population have about half the wealth—it may he more or it maybe less—is morally wrong, and we consider it our duty to upset it by constitutional means.

It may be asked whether against that background our system of production is likely to be more efficient. Before the war there was little doubt that the Conservative. Government was extremely inefficient and a Labour Government with a clear majority would have improved upon their production record. In post-war years a good deal has been learned by all Parties. I would not say in terms of production that there was this enormous gulf necessarily fixed. I still consider that our ideas of planning give us the advantage, but I am not here to deride the possibility that noble Lords opposite can ever do any service to the country during their rule—that would he absurd arid unfair and not worthy of spokesmen from this side. But I do say to noble Lords opposite that if they are going to try to demonstrate that their system, which, if I may say so, pursues a lower social ideal, is clearly more efficient than ours, they will have to put up a much better record than they have during the last seven years.

If this Amendment were to be pushed to a vote I should be pleased to join my noble and learned friend, Lord Silkin, in the Division Lobby. I hope, if I may say so, that while we cannot expect the noble and learned Viscount the Lord Chancellor to agree with us, he will show us and the country that while he does not agree with our policies he does share our great concern about certain aspects of the situation, particularly on the human and social side.

5.57 p.m.

THE LORD CHANCELLOR (VISCOUNT KILMUIR)

My Lords, after the warning which the noble Lord, Lord Pakenham, has given us about saying anything good of our own speeches, I assure your Lordships that I shall not do that, because I am in the unhappy position of seeing you as the audience of a theatre who have all come in, having got their programmes and expecting to see the lead played by my noble friend Lord Dundee. As you saw at a certain stage in the afternoon, it was impossible that that should happen, and I am well aware that I am only the understudy taking the part at very short notice.

The noble Lord, Lord Pakenham, said something about the philosophy of our parties. I am not going to follow him in any detail, but I should like to put this to him for his thought. Do not let him hold against us that we as a Party do not believe that a human situation and human difficulty can be swept away by a preconception or a prejudice. We do not believe that all the ills that human flesh is heir to can be cured by nationalisation or by a facile egalitarianism which might attract shallow minds. We do believe that the history of a country can never be ringed round, and that the past must always affect the problems of the present; and we are good enough democrats to remember that the dead are the great majority, and many of them were not fools. At the same time we take tradition as a spur, and not as a cushion to rest on complacently. I can give you that at once: it is a spur and not a cushion; and we believe that with that spur we can, by a wise empiricism, unclouded by prejudice or preconception, look at the problems that face us, and find the correct solution. That is our philosophy, and it is not one, if the noble Lord will allow me this much, that I am ashamed of.

Now I pass to the other aspect of the noble Lord's speech. I think it was Mark Twain who defined the banker as somebody who loans his umbrella and then asks for it back when it rains. I am not sure whether the institution over which the noble Lord presides conducts its business in that way, but there was just something of that attitude of mind in the speech which he put before us. He referred to the history of past years, as did the noble Lord, Lord Burden, in a speech which delighted us all. I am not going to debate with Lord Burden the details of Lord Salisbury's Administration from 1886 to, I think, 1902, but I should like just to ask him for a moment to go a little further back.

He will remember that the name "Tory" came into being (Lord Pakenham will no doubt approve of this) to describe those who refused to be misled by Titus Oates and his lies about the "Popish Plot". Again going back to the origin of our name, I do not think it is at all bad that the colloquial name of our Party should be taken from those who were not afraid to give the lie to unctuous liars and knaves. But I do want to say one serious word to the noble Lord, Lord Burden. I do not think he did justice to the period of history in my Party in the 19th century which is associated with two names particularly—the seventh Earl of Shaftesbury and Mr. Disraeli. He will find in Shaftesbury's work for the Factories Acts and Disraeli's measures for public health that were spurned as "a policy of sewage", great achievements, and also achievements which won the unstinting praise of the early figures in the Labour Party who came into prominence at the turn of the century.

LORD BURDEN

My Lords, I could have gone back to Peel's Factory Act of 1802, but I did not dare do so. I thought the word "Tory" had something to do with people in Ireland. Could the noble and learned Viscount tell me about that?

THE LORD CHANCELLOR

That was where the name started, but it was given to the people whom I have already described. I thought that Lord Pakenham would like to have that famous ancestry of the Party which he once adorned. There is only one other point, and then I will stop dealing with history, because there has been quite a lot in the debate.

The noble Lord, Lord Pakenham, quoted something with regard to the Parliament of 1931–35. I should now like to put this point—and I know the greatness of the person from whom he quoted, who was not a member of the Government at that time. It is remarkable that in 1935 the Conservative Party was returned with a majority of 250 at the General Election, having done two things—built a million houses and caused a million fewer people to be unemployed. Whatever else may be said, that is an achievement which is not likely to be forgotten.

Now, my Lords, may I deal with one or two relatively minor points before I pass to the main economic question of the debate. Before I do even that, I should like to add my praise to that which has been given to the speech of my noble friend Lord Fraser of Lonsdale to-day and to that of the noble Baroness, Lady Elliot of Harwood, two days ago. I am sure that they have given us the happiest reason for great hopes of the new development in our constitutional aspect.

If I may deal now with what are relatively minor points, I should like to tell the noble Lord, Lord Amulree, that I will with pleasure communicate with my right honourable friends the Ministers of Health and of Housing and Local Government on the point that he raised as to old peoples' homes. As he rightly forecast, I cannot give him a complete answer to-day, but I will do it.

The noble Viscount who leads the Opposition raised one important matter with regard to nuclear development, and especially in regard to coal stocks. With regard to coal stocks, the noble Viscount appreciates that the figure which he mentioned included the value of the amount of stocks in the ordinary process of distribution. But that figure, including, as it does, the ordinary pipeline stocks, is a figure of no more than about nine weeks' supply; so that I think he ought to consider it from that point of view.

VISCOUNT ALEXANDER OF HILLSBOROUGH

May I just make my point on that? As I understood it—I ought to have mentioned this, and I regret that I did not—15½ million tons were unsold.

THE LORD CHANCELLOR

I think that what I intended to say was that about half the figure which the noble Viscount originally mentioned comes under the ordinary distributive system. I do not think there is much between us on that, but I think it ought to be remembered also that, that is a nine weeks' supply. The noble Viscount raised the point tentatively, and I think rather for discussion, without attempting to lay down the law about it: was it wise of us, in the present coal position, to be investing as much as we are in nuclear stations?

The noble Viscount will realise that one must, on a point like this, consider the long-term problem and the amount of increase of energy that we are going to require. My noble friend the Minister of Power is proceeding on the basis, of which I think he has more than once informed your Lordships, that we envisage an increase of the equivalent of 5 to 6 million tons of coal per annum. Whatever be the position at the moment, if we consider the future and the potential demand. it is a demand for the equivalent of 5 to 6 million tons extra each year. The nuclear programme which my noble friend mentioned to the House was one which would provide, I think, 5 to 6 million kilowatts installed capacity by the end of 1966. That is the equivalent of 15 to 18 million tons of coal per annum at the end of 1966. If my arithmetic is right, that is some eight years from where we are now. By that time there will be an increased demand for energy of something between 40 million and 48 million tons of coal. That is the position with which we have to deal and on which our investments have to be based; but if the noble Viscount considers the capital investment on the conventional sides he will gain further reassurance from that.

At the moment, investment in coal mining is running at about £110 million a year. Half of that is self-financed through the depreciation accounts and half is borrowed from the Government at the usual rates. The programme for electricity generation is running at roughly three times as much. It is true that the capital cost of the nuclear programme will add some £750 million to the equivalent conventional programme as a capital cost, but the fuel costs will be much lower. That is the position; and on that position I say that it is essential, first, that we should keep ourselves in the forefront of major industrial advance—and that applies to nuclear engineering, metallurgical work and the chemical industries also; and that what we are doing gives a promise of energy cheaper than that produced by conventional means and which, as I have indicated, will reduce the import costs of fuel.

With regard to the point made by the noble Viscount on uranium, I am told that the cost is a fraction of the cost of the coal and oil required to produce the equivalent energy. I do not think one can give the fraction exactly, but probably it is between one-tenth and one-fifth. That is the position which I would ask the noble Viscount to consider, taking the long view of British industrial expansion—whether it would be right for him or his Party in any way to head us off this extraordinarily important field of development. Because we do not know, and no one, not even my noble friend Lord Mills, can know what discoveries the next five years will bring and what revolutionary results they will have for our own history and the history of the world.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, may I just put this point. Undoubtedly this subject is so important that, while I am greatly obliged for the statement made by the noble and learned Viscount the Lord Chancellor, we shall come back and perhaps ask for a special day to discuss this matter in more detail; for, so far as I know, we have not yet had figures, prior to this last statement of the noble and learned Viscount, which would demonstrate that nuclear-produced electrical power is more economical than power produced by coal. We should like to know of the experience on the lines I mentioned in other advanced countries, like the United States of America. I mention this now because I feel that we must have a much more detailed debate in relation to our present capital position.

THE LORD CHANCELLOR

My Lords, I am grateful to the noble Viscount, and I think he realises that I have done the best I can to acquaint myself with this subject. I hope that I have not made any false point, for I certainly have not intended to do so. I have not underestimated the amount of capital investment. I have referred, I believe rightly, to reductions in running expenses and so on, which I mentioned a moment ago; but I did not want the noble Viscount to leave without having an answer on what he agrees is a very serious point.

Perhaps I may come back to the major point of this part of the debate, developed with his usual formidable argumentative power by the noble Lord, Lord Silkin, in his opening speech and picked up to-day by the noble Viscount who leads the Opposition and by the noble Lord, Lord Pakenham. I have only one general complaint: that they not only selected their own arguments hut rather adopted the old procedure of selecting the arguments of their opponents, which they then proceeded to demolish. I should like, just for a moment, to take a more general view, which includes most of the fields that have been mentioned.

If we take capacity, there has been talk of "stagnation". But the capacity of, say, steel production has increased by nearly 50 per cent. since 1951. If one takes capital investment generally, the net investment in real terms has increased by nearly 70 per cent. since 1951; and that of course means that we are dependent on that for the increase in plant, machinery, and so forth.

Let us take exports. Since 1951, exports have increased in money terms by 25 per cent., and in terms of volume by 16 per cent. Let us take earnings abroad. The noble Viscount explained with great eloquence the difficulty under which his Government laboured during that period. Allow for that, but the result at the end of those six years was a deficit in earnings abroad of £800 million, while in our seven years there is a surplus of £1,100 million. I agree with the noble Lord, Lord Pakenham, that the standard of living should increase. If we do not believe that, it would be rather depressing to think of the amount of time he and I have given to politics. But it is rather remarkable to look over these seven years, with 2 million more motor cars and some 8 million more television sets, and so on, all along the whole line. It is something that has changed the face of our people, and we have to take that into account.

Let me put it into actual fact—because this answers the question of prices which was raised by the noble Lord, Lord Silkin. The average weekly pay packet to-day can buy 17 per cent. more than it did in 1951, whereas during all the years of the Labour Government prices went up with greater increases than wages and the ultimate real position was worse. Let me take the question of savings. This country saved more last year than it did in the whole six years of the Labour Government. Take the question of houses. We have argued this matter before and we have heard the difficulties, but the noble Lord, Lord Pakenham, said that in certain matters we must be judged by results. Look at the results in housing: 2 million more houses built—and throughout that period, as compared with the Labour Government, a ratio of 3 to 2 in houses to let and of 3 to 1 as compared with the period of the Labour Government in houses built for sale.

Let us take pensions. I firmly believe—and I am sure that the noble Lord, Lord Pakenham, will agree with me—that the standard of living must go beyond the people who are able to work or able to pay taxes, to the casualties of life. With regard to pensions, they are now, in real terms, 6s. 6d. a week higher than they were in 1946, and 11s. a week higher than they were in 1951.

My Lords, I have covered a great deal of the field, but I have not covered one point which I hope no one thought for a moment I was going to avoid, and that is the question of unemployment. The problem which we have to face, and which, so far as I know, is unique (in the real sense of that much-abused word), is to harmonise full employment and stable prices. I do not think it has ever had to be solved before and it is a problem to which we have all to devote our minds, wherever we sit.

The noble Lord, Lord Pakenham, very fairly drew attention to our disinflationary measures; he referred to the improvement of £450 million in the reserves, the improvement in the balance of payments and the strengthening of the pound; and that is common ground. I now want the noble Lord to follow me on to, if he likes, the moral or psychological side. Unless we are prepared at times to take action against inflation, then the social injustice that we are inflicting falls most heavily on those with fixed or slowly-rising incomes. Broadly, a great many entrepreneurs and a great many workers can pass it on by asking for higher prices and wages, but there remains that section of society of which I have spoken—and, my Lords, they are entitled to social justice. It is a fact—and do not let us go into arguments as to the rate of acceleration at various periods—that we had, since the war, got into the position when prices were going definitely up, and really until last September no one had tackled it. Then we did. Just let: me follow up this point. If the noble Lord's Government did tackle it they were extraordinarily unsuccessful, because my recollection is that prices rose by 12 per cent. in the ten months of 1951 in which the Labour Party were in power.

Now let me put the position from the other point of view—the noble Lord, Lord Pakenham, recognised this. From the point of view of employment, surely inflation is the biggest enemy of full employment that we can have, because we are inevitably going to price ourselves out of the market and eventually get to a posit ion where it is more difficult to buy the raw material we need for our work. I know that we get a temporary assistance from a devaluation, because our goods in real terms cost less; but when we think of the 40 per cent. increase in the price of our imports that was built into our, economy by the Labour Party's devaluation of 1949 we realise that it is a very serious matter indeed.

But I would go further than that. When the Labour Party were in office, they had Marshall Aid. I can remember one Labour leader after another saying what would have happened if they had not had Marshall Aid. My recollection is that it was Mr. Herbert Morrison who put the figure at something about 1,500,000 unemployed; I think it was Mr. Aneurin Bevan, then a Labour Minister, who said that it would be from 1,500,000 to 2 million unemployed if they had not had Marshall Aid. Mr. Arthur Greenwood, with that charming nonchalance we all remember, said that the figure might be 5 million, though I do not think he was putting it as seriously as the others. But that was the position; that was what the leaders of the Labour Party were saying: that without Marshall Aid they would have had massive unemployment.

My Lords, we in the present Government have not had Marshall Aid, and to-day noble Lords are complaining about a figure of just over 2 per cent. I am not content with that, and we are taking measures to deal with it; but it compares with a figure of 8 per cent. in the United States of America during the comparable time. I repeat that I am not content with it. I accept, for the purpose of this argument, what I understood was Mr. Gaitskell's method of expression. He said that full employment can be defined as a situation in which unemployment does not rise beyond 3 per cent. at peak periods. He went on to say, as I understood the passage, that before it had come to 3 per cent. he would, of course, be in favour of dealing with it. My Lords, that is exactly what we are doing. At 22 per cent. we are in process of dealing with it. And that is what we intend to do.

There are three obvious ways in which we can deal with such a situation. First of all—and a very important one—there are exports; and that really deals with the point which the noble Lord, Lord Chorley, made with regard to the position of the Dominions. With regard to exports, we have stated that we are prepared to take further action under the Export Guarantees Act. We have also discussed—and plans were adumbrated and discussed at Montreal—encouraging longer-term development in the other parts of the Commonwealth, and of course we also depend on the increase in world trade, which was the main object of all the parties which met and talked at Montreal. So, as far as that is concerned, we are putting our policy into effect.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, may I just make a comment on the general case. I am following the method which the noble Viscount the Lord Chancellor is adopting in putting his case, but he forgets certain things. He forgets, for example, that Marshall Aid, although obviously of importance, was also given at the time when we were having to make very large grants abroad. Not merely were there those specific grants to foreign countries, but we were constantly in need to get relief of some of the enormous sterling balances against us which had been built up for the benefit of the country as a whole in winning the war. Those things have to be fairly understood and fairly considered. But if the noble and learned Viscount says we took no steps at all with regard to combating inflation, I think that that is a slur on the memory of Stafford Cripps. We do not easily forget the comments at the time of the 1950 Election upon the austerity with which the people had been treated and the denigrating of any attempt in that way to keep down a wage spiral.

THE LORD CHANCELLOR

My Lords, with regard to Sir Stafford Cripps, I am not saying for a moment that he did not make the efforts. What I am saying is that, judging by the two years after he left office, the efforts had very poor results, because prices went on rising in that way. I am not going to go into the actual statistics, but they are simply not arguable. As a means of checking the prices they failed. There the noble Viscount and I would disagree, because he believes that the way to get prosperity is to take away people's savings and for the Government to use them. I do not believe that that follows. I believe that that, coupled with a low price for your money, can in fact be a very inflationary policy. But I am not going to go into that matter further.

I have dealt first of all with the question of exports, which is a very important one. The next is investment, and we have seen that we build on very healthy personal savings. As I say, we saved more last year than was saved in the whole six years of the Labour Government. In addition, we have now given a greater access to bank credit, and also, through the relaxation of the requirements of the Capital Issues Committee, have improved the position there. Now, I should like to sum up the other things we have done. The bank rate has been reduced; the credit squeeze in the accepted term has gone, and there has been a rise in bank advances and an end of hire purchase restrictions. All these are reasonable advances from the consumer's end. Then there are two which may be considered either as investment or as consumption. They are the initial allowances which my right honourable friend restored and the measures of assistance which we are taking in areas of high local unemployment. None of these measures have been attacked as such, and I do not think that the general policy of dealing with the problem from the point of view of exports, investments and consumption, in that order, has been attacked as such.

My Lords, some day, when everyone in this Chamber is enjoying a happier clime, it may be that wiser men than ourselves will find the perfect solution for the problem of price stability in a time of full employment. At the moment I am not ashamed to say that these are problems so difficult that they have to be considered every minute of the day and every minute of the night, and they have to be looked at week after week and month after month. If one may go to Alice in Wonderland, one finds it is sometimes necessary to eat the bit of the mushroom that reduces one's size, and at another time it is necessary to eat the other piece of the mushroom which increases one's size. What you cannot do is ever to let the problem out of your mind. All I can do is to assure your Lordships that Her Majesty's present advisers will do their utmost, that the problem will never be out of their mind, and that such collective wisdom as they can command (and I say to the noble Lord, Lord Pakenham, that I do not for a moment overestimate my own contribution) will be strenuously devoted to that great problem of our time.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, before we leave this debate and come to the conclusion of our business, may I say that there was one point at which I did not want to interrupt the noble and learned Viscount again, but he made play of 1951, 1951 was vastly important to us. We wanted to keep the prices down. In December, 1950, we had to go into Korea and we had an enormous expenditure, and that had a great effect upon production, wages and prices. I think that when we start weighing up all these little balances we should take all these things into account. At any rate, the noble and learned Viscount has not persuaded me to depart from my attitude this afternoon.

On Question, Amendment negatived.

On Question, Motion agreed to, nemine dissentiente: the said Address to be presented to Her Majesty by the Lords with White Staves.

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