ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH

HL Deb 07 November 1962 vol 244 cc277-369

2.49 p.m.

Debate further resumed (according to Order) on the Motion moved on Tuesday, October 30, by Baroness Elliot of Harwood—namely, That an humble Address be presented to Her Majesty as follows:

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

LORD BURDEN

My Lords, on behalf of my noble friend Lord Alexander of Hillsborough, I beg formally to move the Amendment standing in his name on the Order Paper.

Moved as an Amendment, to add at the end of the proposed Address ("but humbly regrets that the gracious Speech contains no adequate proposals for raising the economy of the country from its prolonged stagnation, for stimulating industrial activity, or for reducing the present level of unemployment.")—(Lord Burden.)

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, I am very happy to be able to speak to this Amendment to-day, and I remain happy in spite of the events which have arisen since my colleagues in another place put down their Amendment some days ago. The House of Commons listened a day or two ago to what has been described in the Press as a "mini-Budget". If that is carried out faithfully, I daresay it may have some effect upon a level of production and unemployment. But I think it is a great pity that the Government had to wait until November 5 of this year to put down their proposals in a "mini-Budget" only after a Motion of Censure had been proposed in another place.

We adhere still to the wording of the Amendment which has been read by the noble and learned Lord the Lord Chancellor, because that represents the fact. We listened to a speech yesterday from our noble colleague on the other side, Lord Derwent, which astounded me. However, first of all, I want to congratulate the noble Lord on his promotion to the high office he now holds, and to say that his articulation yesterday was as perfect as usual. But I am bound to say that as a performance at the ministerial Box in relation to the actual circumstances as they occur from the gracious Speech from the Throne, to me it was lamentable. We had come to admire the noble Lord, Lord Derwent, in his position as a noble Back-Bencher for his forthrightness, for his obvious capacity and for the knowledge gained in his business experience; and we had hoped that when he came to speak on a Board of Trade subject, as he did yesterday, he would not be, as perhaps many other Ministers have been in the past, hopelessly tied to a brief from a Department which dealt quite inadequately with the situation. The noble Lord spoke in a way that he has never done, in my experience, as a Back-Benoher (I have great respect for the noble Lord), and as if the brief from the Department was determined that we should not have the whole truth.

We have referred in our Motion, both in another place and here to-day, to the prolonged period of stagnation in British industry. That, of course, is proved over and over again by the figures spreading over the ten years. People do not like our referring to what was called the "league tables" of production. But we have descended and descended, until on the last occasion that I saw, we shared at that time, with, I think it was, France, the bottom position in the league; and I daresay, the way things are going up to the present, that that will remain our position for some time. Nor is it inappropriate to point out to the House at the present time that the Government themselves have become anxious about this matter in a way which perhaps they have not displayed before during the whole long period of their office of eleven years. There could be no other real explanation in their proceeding to set up the N.I.C., and that other body on the development of industry which we now refer to jocularly as "Neddy". But that this should have to wait eleven years before being introduced is an extraordinary assessment of the Government's real attitude to this matter.

It may well be (I have not the actual reference here, but if the noble and learned Viscount has time perhaps he will look it up) that Mr. Wilson's charge in another place on July 18 last year is true. For he pointed out that the Government's career in these matters was such that they now appear to have a complete four-year repetitive plan, and that each of the four-year periods which has so far been completed, or is now in the course of being completed, has shown clearly that the Government have not been concerned with greatly increased production at the opening of their particular Election term of office, but that, in fact, the contrary has been the case. They have put on restrictions, where possible without too much complaint ("Damp things down; work on until you come to the fourth year") and then they have produced a sudden attempt to show that there is a boom.

They have produced a special Election Budget giving benefits to taxpayers, but still not doing anything really effective, in the long run, for the maintenance and expansion of our production industry, and have been carried back to office with cheers for the actual state created by the last Budget; and then within three weeks or so they have introduced a second Budget in order to undo the generosities that they have given in the previous Budget. They have not really been concerned during the whole period with establishing a firm foundation for a steadily expanding and permanently expanding production in our country relative to our resources and to our increasing population. That is our charge against them.

That they have acted in that way seems to be shown by the actual other effects of these periods. For you will see, if you go back to these particular years, 1955 and 1959, that what I have said about their action is true; and if you trace what happened afterwards, you will find the restrictions were put on. First there are restrictions; then perhaps one or two Budgets stand still, and then the fourth Budget comes in giving gifts to friends, the taxpayers, and speciality and the like. And then when they get back to office nothing more is done about it. That is my case on that, and it will be for the noble and learned Viscount the Leader of the House to refute it if he can. But the figures I have do not seem to make it very easy for him to do so.

The second thing I have to say is this. I spent nine months only (but it was quite an interesting period) as Parliamentary Secretary of the Board of Trade in 1924. That was not a very easy time for the Board of Trade, with tremendous unemployment taken over from a Conservative Government, and with no power, because we had fewer than 200 Members in the other place. But I found during that period that the advice given by the Board of Trade, and the regular statistical information from the leaders of industry, was really quite commendable. I have never forgotten my experience in those nine months. How was it, then, that in presenting the case yesterday the noble Lord, Lord Derwent, did not give us some of the actual facts about production in, say, the last twelve to eighteen months? He chose periods to suit himself which had no real bearing upon the general charge made in this Amendment, and quite contradictory to what the Federation of British Industries say is the real position.

I am going to give the figures, and I can easily do it from memory. I do not know why the Board of Trade could not have given them to us. They quite contradict the general trend which the noble Lord seemed to try to set up yesterday. What are they? As all commercial Members of your Lordships' House know, the Federation of British Industries regularly take consultation with their members to find out exactly how they are placed and what their condition of trade and employment may be.

What did the Federation report? They reported at the end of September that, of the answers which were given to their request for information as to their trade situation, 66 per cent. showed that they were producing below the capacity of their organisation. Now I compare that 66 per cent. at the end of September this year with the figure which was given by them four months earlier, which was 64 per cent., and the figure which was given by them four months earlier than that, which was 59 per cent.; and then I compare that with the figure given in September, 1961, which was only 51 per cent. So that in twelve months, according to the returns made to their association by members of the Federation of British Industries, the proportion of firms replying to them who were producing below capacity had increased from 51 to 66 per cent. Could there be any real doubt in the minds of the Board of Trade as to what the present trend" is? It seems to me astonishing that we should have been fobbed off with the kind of presentation of the Board of Trade case which was delivered to my noble friend—I always call him that—Lord Derwent, to pass on to your Lordships yesterday.

I hope that the noble Viscount who is to answer will have some check upon these figures which I have been given, because I think there is not the slightest doubt about them. Let us take another excerpt from what the Federation of British Industries have reported to us. Take two of the most important industries we have, and which are interlocked with each other. Take iron and steel. What is the report of iron and steel? It is that, with all the enormous capital which has been spent on modernising and bringing steel production up to date, that industry is working to only 77 per cent. of capacity, with 23 per cent. unused and large sums at this moment being spent on further expansion of capacity.

Let us have a look at the motor industry, which became the subject of a very belated largesse from the Chancellor in his mini-Budget. What has been the situation in the motor-car industry? In a memorandum that I received from the Federation of British Industries, the information I got was that for considerable period of months the motor-car industry had been working only to about 75 per cent. capacity, with 25 per cent. unused. Mark you ! that is not because of the shortage of labour, although there may be pockets of insufficient skilled labour: this is in face of the fact that unemployment has risen to over 500,000. Yesterday, a business man came to me to consult on something quite unrelated to what I am discussing to-day. He said that he had just come from Oxford Street and had seen a demonstration of unemployed from Liverpool who were carrying banners to the citizens of London saying, "We want work". In Liverpool to-day there are 37 men applying for every single vacancy. That is the state of unemployment in Liverpool.

Of course, the new Chancellor of the Exchequer has made it clear in his speech that he is concerned—very concerned indeed—about these special pockets of unemployment in the country, in Northern Ireland, Scotland and North-East England, where a good deal of the same section of heavy industry is centred. The shipbuilding industry is an industry of which I have some past knowledge. I am not able to keep in touch with it now as I used to do during my years at the Admiralty during the war, when I was responsible to Parliament, not only for the building of Naval ships, but for the whole of the merchant ship building, and the whole of the repair of both Naval and merchant ships. I am bound to say that I am appalled at the present shape of the shipbuilding industry.

There is no question about the class of workmanship. In the history of the post-war years there is nothing to show that the ships which have been built by British industry are in any way defective. In fact, they have often been purchased when we were really short of labour thirteen, fourteen or fifteen years ago when, for that one reason of labour, and perhaps other subsidiary reasons, the time of delivery of a ship was delayed in relation to other offers open to shipowners. But on the class of work done, I understand that it is the best in the world. Yet where are we now? Yard after yard has already closed, and that closure looks like being permanent. That is a disaster to this maritime nation.

What has been done about it? So far as I can see, practically nothing. I suppose there is a little hope that there will be a little easement for some of the yards that are still managing to keep going. There are the larger ones and those financially better off who in the end will get the benefit of the depreciation allowances which are allowed in the mini-Budget. That is if no change is made between now and next April. Because I think that, although the allowances date from now, they cannot be effective until they have been passed in an ordinary Budget. At any rate, that is what I gather from the statement of the Chancellor of the Exchequer. What sort of contribution is that to a real resuscitation of the pace, the capacity and of the competitive need of these shipyards in the world of shipbuilding to-day? I think that is another outstanding thing.

It is true that we have done our best from our point of view, in the twenty years before the war came to an end, to make it clear to everybody concerned in this country that there would be no possibility of avoiding all the results that followed, as night follows day, the end of the First Great War, unless we had a properly planned society, and a properly planned industry and finance. That is what we warned the nation about and it is one of the reasons why we got that surprising majority in 1945.

In face of this growing disaster in our productive and financial organisation of this country we have been faced with two conversions. I am very happy, if I may say so to my noble friend Lord Rea, to feel that he and his Party are going to vote for this Amendment. He will not mind my saying that I welcome one thing, which is that the Liberal Party, which always used to be on the political and economic basis of a free-for-all, Free Trade, and "Look after yourselves" in business, have now adopted a five-year plan. I am pleased. We shall see how the plan goes.

When we think of the Tory Conference at Llandudno, when we think of the disasters of the absence of planning in the last eleven years, and when we hear the Prime Minister saying on television, "We are all planners now," I wonder how far this acknowledged conversion is going to take them in an actual conversion of policy. Because there is nothing yet announced by the Government anywhere that would be any different from the kind of thing which has let them in for this criticism: that, because of their action and inaction, pause, inaction, action, inaction, all over the place, stop, go, stop, go, industry does not know where it is.

When you come to consider that their main preoccupation of the last eighteen months to two years has been to try to pull off what is called the entry into the European Economic Community, I am amazed at the case which was put up on this trend in the economic debate yesterday by the Board of Trade, through the noble Lord, Lord Derwent. What an amazing statement it was! He practically said that our exports are better than people think in almost every case; that things have not been too bad. Of course there are bright spots. The bright spot that we had our attention drawn to was our exports into Europe; and I think the figures which were given by the noble Lord, Lord Derwent, yesterday showed that in the first year of increase we increased our exports into Europe by 10 per cent.; in the next year by 11 per cent.; and in the following year by 15 per cent. plus, I think. This was an indication of how alive the export section of our industry was for the time being.

But then there was another part of the speech, which I interrupted, and in the course of the answer to the interruption the noble Lord told me he would be coming to that side of it later, and that he would produce the facts. Later on he said that he would now produce the facts. What were they? Not facts at all. Not a single numerical was mentioned; not a single contrast of a particular commodity was mentioned; there were no facts at all, just extracts from a European Bulletin for Industry showing comments by certain people as being indicative that European countries were now entering into the same difficulties that we ourselves have had to face since the war. That was all he said; nothing more. I think the noble and learned Viscount will bear me out. That was all the information I obtained in that respect. What did it amount to? It amounted to this: that the so-called prosperous and successful six countries in the European Economic Community were now doing much worse than they had been, and were likely to do worse still because they were coming up against the same hard facts of increased costs, increased prices and many other things of that kind which are always laid to the door and charged against British labour in this country.

If that is the position, and if you were able to increase your exports over an E.E.C. external tariff to the extent you say you have and yet the position is going to grow so much against their continued expansion in the European Community, why are you going in? It wants careful thought, very careful examination, if, at the same time, Mr. Maudling, the Chancellor of the Exchequer, can say to us, as he did this week in the speech introducing his mini-Budget:

"Well, you see, this will generally do good. It will not only be likely to stimulate engineering and such trades, heavy and machine tools industry, but, of course, it will give such a greater home market. That is, of course, at present behind our tariff. It will be such an improved home market that we shall be better able to support our motor car export industry." That is an amazing position, is it not? Of course, I believe that last part to be true. But what will happen when your market is open and entirely free to this declining E.E.C., as it us according to these suggestions of trend given to us by the Minister to the Board of Trade yesterday? I just cannot make these things out. I hope that the Government will have some more thinking to do about this matter.

The trade unions, if they were really going to help in this matter, could have been consulted on a basis which is even wider and deeper than is the case now, years ago in the course of the Conservative reign of office of eleven years; they could have been consulted long ago. How far they will be able to keep in step with what the Government have in mind I do not know, but at present it looks to me as if the Government are not getting very far from where they were in 1955 and 1959 in preparing a case for an Election. That is what it is. We have had all these bad years, but now in the year before the Election there must be something good. I do not know what it is going to be; maybe another Budget of gifts. We have had our experience of gifts. Some have been given in small measure to all classes of workers in the country, but nothing quite of the same value and concentration as the relief to the surtax payer. I refer not only to the £83 million relief which will become operative within the next few months from a Budget produced some time ago by Mr. Selwyn Lloyd, but to a previous occasion and a Budget in which part of the relief was provided by an additional charge for health prescriptions.

What about the tax upon capital gains? How much could that have helped in the Government's being able to organise an expansion in production? Here is a Daniel come to judgment, anyway. You see, my memory is long; it goes back, yet it carries forward with me all the time. I remember that we had an Election in 1959 and, if we were elected, our plan provided a specific set of proposals for dealing with capital gains. What did the Prime Minister call them? I will tell you what he called them. First, irresponsible nonsense.

SEVERAL NOBLE LORDS

Hear, hear!

VISCOUNT ALEXANDER OF HILLS-BOROUGH

Thank you, I will note that. I am glad to have your support. "Absolutely unworkable", the Prime Minister bluntly said of the next thing. I am using the Prime Minister's comment on our proposals for a capital gains tax in the 1959 Election. And the next time your Lordships want them, I can produce chapter and verse. His other comment upon it was that it was a fake.

Now let me ask those who said, "Hear, hear!" which is the fake? Is it our plan, or is it the policy of those who tried to get votes by using those names but whose Chancellor of the Exchequer last year introduced a capital gains tax? Who now says, "Hear, hear!"? Who is the fake? And who is producing the bunk? Why, it is the Prime Minister who is producing the bunk! For this reason: this capital gains tax is not intended to work. Everybody knows—it has been said widely in the City—that it is couched in such terms that after six months anybody can get out of it. That is the fake. And this is the kind of way in which our people have been hoodwinked over and over again in the Elections.

I do not want to speak longer because I know your Lordships would not like all the things I should go on to say, but perhaps I have said enough to show that we have strong feelings. Therefore, I am going to conclude by saying that I hope the Government may yet be converted to a sane, solid judgment of what our country really needs for permanent expansion and for a real and lasting rise of the standard of life of the whole people.

3.20 p.m.

THE LORD PRESIDENT OF THE COUNCIL AND MINISTER FOR SCIENCE (VISCOUNT HAILSHAM)

My Lords, in the course of his generous remarks at the beginning of this debate on the first day the noble Viscount the Leader of the Opposition promised us a controversial speech later on. We are all very fond of hearing him and of him personally when he makes a controversial speech, and he has made a controversial speech now, if a slightly incoherent one. He will not therefore get very angry with me if I make a slightly controversial speech in reply, even though I hope to have a more definite theme around which I wish to make my remarks.

I should desire to begin by saying this. About the mood of self-questioning in which this country has engaged, two main themes, I think, have emerged and they are the two main themes underlying the policy of the Government in the gracious Speech: the need to work positively and dynamically in support of the creation of a new world order, and the need for a technical and technological revolution at home modernising Britain. It is, of course, something of a paradox that the Labour Party have emerged as the archpriests and prophets of the status quo on both these great themes and issues, at best a respectable Party of elderly fuddy-duddies who do not like change and at worst a sour, negative, unconstructive collection of disappointed men.

But, my Lords, I think that this Amendment, which has now appeared in slightly differing but in broadly similar forms in both Houses of Parliament, betrays at once all the fundamental defects of their thinking and the irrelevance of what they have to say upon the present economic and international situation. This particular version of the Amendment is, I think, even slightly less happy than that which was proposed in another place, because it leaves out the special reference to Scotland, the North, Wales and Northern Ireland, thereby giving the, to my mind, false impression that it is the general level of unemployment which gives us most cause for consideration and concern at the present time. However, in both Houses the Amendment contains, like Gaul, three parts—indeed, "gall" is not an unsuitable word for some of them. It contains a diagnosis, prolonged stagnation; it contains a prescribed remedy, the stimulation of industrial activity; and it contains, too, a symptom, the figures for unemployment.

I should like, if I may, in replying to it, to take the reverse order, because if the figures for unemployment be indeed a really significant index of the present situation—I personally think that they are not—it is really of value to refer to them only if one has made the correct diagnosis of the disease and prescribes a relevant and effective remedy. So far as these figures are concerned, of course, they give the Government and anyone else who takes a serious interest in the affairs of the country a degree of concern, and particularly so in three or four areas, which were mentioned in the Commons Amendment two days ago. But whether one can say anything significant about them will depend on whether or not the House agrees that the disease from which we are suffering is stagnation and whether or not the House believes that a mere stimulation of industrial activity is what the nation requires.

My Lords, I do not want to be thought to underestimate the value of stimulation by the Government from time to time of industrial activity. This, it seems to me, was the great personal contribution which the late Lord Keynes made to the political and economic thinking of his generation, and I think we are all the richer, intellectually as well as materially, for having inherited his thought. Indeed I should be wrong to do so, because of course in the week since the Opposition first put their Amendment on the Order Paper my right honourable friend the Chancellor of the Exchequer, rather I thought to the noble Viscount's chagrin, has taken very considerable steps to stimulate industrial activity; and I thought it was a little unworthy, if I may say so, to suggest that he was animated solely by the desire for electoral success in a General Election, which for some reason which I could not understand the noble Viscount placed during the next year. Of course, therefore, I do not underestimate the value of stimulating industrial activity.

Nor have we by any means heard the last of it yet. The preliminary measures were taken before the Recess. My right honourable friend announced a great number of them two days ago. The ones which most appealed to me were those affecting capital allowances: probably those with the most immediate effect will be the reductions in purchase tax. Of course, there will be the Government White Paper showing the prospective capital investment on the public sector, and that, too, may be expected to show the degree to which industrial activity should be in our view stimulated. Nor should we in this connection overlook what to my mind is the equally important series of proposals which either have been adumbrated or will be made by my right honourable friend the Minister for Housing and Local Government in conjunction with the Minister for Public Building and Works.

But what I have to say shortly and by way of general comment upon the suggested remedy is that I myself think that we should not overestimate the value of a purely quantitative injection of activity into the economy as a means of improving our position. I do not myself think that that will do the trick by itself, and that is because I differ fundamentally from noble Lords opposite in my own diagnosis of the disease, if it be a disease. The noble Viscount calls it stagnation. I have already had this quarrel out with him and he will forgive me if I revert to it again. T do so not as a mere argument about words but because I think it strikes deep into the difference between the two Parties.

In my judgment, what we are suffering from, and have suffered from, cannot by the wildest stretch of the imagination be described as stagnation. On the contrary, over a period of years what we have been having is full employment. Full employment is inconsistent with stagnation. We have been having recurrent inflation which has resulted in balance-of-payments crises. Inflation is inconsistent with stagnation. "Stagnation" is a word invented, or at any rate seized upon, by the Labour Party to conceal the real obsolescence of their economic and social thought. They are, I think, uneasily aware that all their ideas date at the latest from the thirties, and at the best were designed to remedy a period of depression and unemployment, which happens to be the last thing from which we have been suffering recently. The result is that the word "stagnation" is invented in order to give plausibility to these old and outworn theories which have no relevance whatever to the present situation.

What I think we are in fact suffering from (this will be no surprise to the noble Viscount because as I say we have had this quarrel before) is almost the precise opposite of stagnation. It is not stagnation, but rigidity; and there seems to me to be a real danger that the Labour Party, besides making themselves the archpriests and prophets of the status quo, are also becoming the archimandrites of rigidity. It is because I regard this as a matter of such importance that I should like, if I may, to give a number of examples of what I am seeking to say. This is true over more fields that the purely economic, although it is natural that the examples that I give, apart from the first, are economic examples.

In Defence the noble Viscount who leads the Opposition repeatedly reminds us of the splendid, gigantic and expensive armed forces which he left in 1951—three times, as he proudly tells us, in size what we have at the present time, although not, he fails to add, in fire power. We were even treated during the Cuban crisis to a suggestion that the Prime Minister should repeat the journey of the noble Earl, Lord Attlee, to Washington in the summer, I think, of 1950. But we are, in defence, no longer in the age of the aeroplane; we are in the age of the satellite and the rocket, and the forces, which may or may not have been adequate in 1950—we shall never know because, happily, they were never tried, and that I think is entirely to the credit of noble Lords opposite—would have been wholly obsolete to-day. In the circumstances of the crisis of two or three weeks ago, to deprive the British Government of its effective head by sending him haring off to New York when events were developing as fast as they then were, seems to me not to have been the happiest or the most up-to-date of suggestions.

When we come to the question of London government, the attitude of the Labour Party, proclaimed with something like frenzy by the noble Lord, Lord Morrison of Lambeth, and with engaging enthusiasm now by the noble Earl, Lord Longford, is that we must at all costs maintain the administrative area, long since outgrown but reflecting the line of building in London in 1888, and which happens by a curious and happy coincidence to correspond to a machine-made Labour majority, for which reason the Labour Party accuse us of seeking to destroy this majority for Party reasons——

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, may I ask the noble Viscount to elucidate one point? There is no need to get upset or to laugh. I want to know, if I can, from one who has been a leader of a Party organisation, Whether his majority in Parliament or elsewhere is machine made? What does he mean by "machine made"?

VISCOUNT HAILSHAM

By "machine made" all I mean is that it does not think.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, this is more of a philosophical address by my noble friend opposite than anything else; but when he says it is something that does not think and he refers to it as being machine made, who made the machine? The noble Viscount was very proud of his machine when he indulged in his aquatic exercises at Brighton and rang a bell.

VISCOUNT HAILSHAM

Well, the great virtue of the Conservative majority is that it is much more volatile than the solid core of unthinking voters who support the Labour Party. But with respect to the noble Viscount—we are both enjoying ourselves on this—I think we had better not go on.

Now I turn to another field. When we come forward with our proposals for joining the Common Market, the Leader of the Labour Party of this country has nothing more constructive to say than to remind us sonorously of a thousand years of history; and the noble Viscount in this House will to-morrow no doubt redeploy his relentlessly reactionary dislike of the basic principle. But in the economic field which we are discussing to-day, the Labour Party has already done incalculable harm by allying itself with rigidity and encouraging, happily only with partial success, those whose natural fears and natural conservatism lead them to stand for rigidity and against change and to resist the march of progress in its appointed sphere.

We have repeatedly pointed out, with overwhelming statistical evidence, that the rigidity from which we suffer is primarily caused by the push of wage demands in excess of productivity. In places like Northern Ireland and in Scotland that attitude has led directly to pockets of unemployment—as, incidentally, it has done in Canada. Elsewhere, it has contributed more directly to the symptoms of inflation, because the fact is, of course, that the same fault of rigidity which causes inflation in a sellers' market is the ally of unemployment in a buyers' market. We have repeatedly pointed out that the whole situation might be transformed almost overnight by the co-operation of the Labour Party in an incomes policy or a policy based on voluntary restraint in such matters. It is only recently that we have had some distinguished converts like the noble Baroness, Lady Wootton of Abinger. With her, at least, the penny appears to have dropped, at any rate to some extent.

BARONESS WOOTTON OF ABINGER

My Lords, would the noble Viscount perhaps take account of the fact that the penny dropped in print eight years ago?

VISCOUNT HAILSHAM

I think I must accept that from the noble Baroness. But she did come to my aid very strongly, against, I thought, the majority of her Party, only a few months ago, and it would, I think, be churlish not to recognise that she has been among the foremost of her Party to recognise the facts of this important case.

BARONESS WOOTTON OF ABINGER

Possibly the noble Viscount himself derived his views from having studied these earlier publications of my own.

VISCOUNT HAILSHAM

My Lords, I always learn from the noble Baroness whenever she speaks, and sometimes when she writes. But it is in the field of technical change that I would suggest that the attitude adopted by the Labour Party in the present Session is so desperately contrary to the public interest and to what the present situation requires. It is, of course, no good talking as they do in the Amendment about stimulating industrial activity until it is fully accepted that the only stimulation which really counts is the stimulation towards the increase of efficiency and towards the increase of technical change.

Recently, the Party opposite was much perturbed at the closures of the News Chronicle and other newspapers. What happened? Largely as the result of this concern and that which was felt upon our Benches, the Government instituted an inquiry. They found that the most significant cause of the closure of newspapers with an important popular circulation was the fact that 40 per cent. of the staff in certain spheres, or thereabouts, were, in effect, standing about doing nothing. We had suspected as much. Perhaps we could have dealt with it if the Labour Party had drawn attention to this a few years ago and helped us to do something about these modern Luddites, which they could well have done, and then several newspapers might still be in production. Rigidity is an actual cause of inflation; it is a certain obstacle to expansion. Except in a sellers' or a monopoly market it is a potential ally of mass employment.

LORD REA

My Lords, could the noble Viscount explain the difference between stagnant rigidity and rigid stagnation?

VISCOUNT HAILSHAM

No, because I never use the epithet and the noun together. Stagnation is one thing and rigidity is another. Yet it is the Labour Party who continue to talk about this mythical stagnation, without really helping us to deal with rigidity.

Take railways as an example, which I have no doubt we shall be discussing later in the Session. It is not perhaps directly the fault of anybody now alive—although it was the waste of public money in carrying through nationalisation, instead of bring about modernisation, after the war which was a contributory cause of it—that our railways were designed and built before 1855. The tunnels and the bridges do not take the biggest loads. The gauge was designed as a means of, unloading and drawing ordinary waggons and carriages. The distance between stations—about 2½ miles, I believe, in some cases—was based upon the convenient radius of action of the horse and cart. The branch lines were developed when rail was virtually the only method of mechanical transport available. The workshops were designed and located for the maintenance, and in some cases for the manufacture, of the steam engine—before the age of mass production or modern manufacturing techniques.

Yet, so far as I can judge, the attitude of the Labour Party, not very explicitly revealed, I must say, in the course of this debate, after a few ritual gestures in favour of modernisation has always relapsed into a sort of fundamentally obscurantist attitude of trying to adapt to twentieth century conditions something which was designed in the nineteenth century. I wonder whether noble Lords opposite appreciate that in Japan—Japan of all places!—there is a train which is said to average 140 miles per hour. We need, I think, to adopt a principle of modernisation in twentieth century Britain.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, these statements that are being made are a travesty. If one goes back to the period of office of Mr. Alfred Barnes, who has now retired—he is not in Parliament now—one can find scheme after scheme of modernisation which was put into operation: electrification, diesel engines ordered during his period of office, and many improvements which have been opened since have dated from the schemes he then produced. The noble Viscount has no ground for making that wide charge against us of not being ready for modernisation of an almost worn-out capitalist-produced railway system. It started modernising straight away.

VISCOUNT HAILSHAM

I do not want to go back too much over the past with the noble Viscount, but I still say—and I said at the time, so he will forgive me for repeating it now—that nationalisation was a great waste of public money which could have been used for modernisation with much better value. I think that is something which can quite reasonably be stated. At any rate, it is my opinion, to which I am entitled.

My Lords, it is no good their going on, as they do go on, repeating cries to the effect that the railways are a public service. Of course they are a public service. But the question is how long the public have got to put up with a nineteenth century public service financed out of the taxpayers' money in the middle of the twentieth century, instead of a twentieth century public service, paid for by those who use it and offering reasonable wages to a contemporary labour force. My Lords, it is only a system of that kind which can be integrated with a road system, only a system of that kind which can be called an integrated transport system.

EARL ATTLEE

My Lords, I am not quite clear what the noble Viscount's idea was. Was it that we should scrap the railways, cut off all our worrying railway shackles?—which is something quite new.

VISCOUNT HAILSHAM

What I said at the time to the noble Earl when he was on the Front Bench was that he ought to spend his money on modernisation and not on nationalisation. I still think that would be a very good thing.

EARL ATTLEE

That is the point. You would not have given anything to the shareholders. That is the Russian method, of course.

VISCOUNT HAILSHAM

I would not have nationalised the railways, so I do not see why I should have given anything to the shareholders.

Or take the construction industries, and land use—which are two favourite topics of the Benches opposite. I wonder how long it will be, my Lords, before a properly reasoned scientific attitude begins to dawn. The only way of handling the slums is fundamentally by a concentrated attack on construction methods and design, converging from a number of different directions, to increase the productive capacity of the building industry. This will be an immense undertaking. It will sweep away, before it has done, a good many old-fashioned attitudes in management, and no doubt elsewhere—attitudes towards apprenticeships, job layout, construction methods and professional training. But, my Lords, so far as I can make out, the Labour Party's remedy in national and local government has consistently exaggerated the disease by pathetically clinging to rent control, subsidised tenancies for men and women well able to afford economic rents, artificial restrictions in types of building, and a senseless complaint of the high values of land which, until we can devise a more scientific approach to land use and a more complete understanding of the forces underlying the migration to suburbia, is only the protective mechanism interfering with the uncontrolled growth of the metropolis.

LORD SHEPHERD

My Lords, did the noble Viscount say something about a senseless complaint about the high price of land? I thought it was well accepted in the country that the high price of land was one of the major factors for development in housing.

VISCOUNT HAILSHAM

I am not saying that the claim that the price of land is high is senseless, but, as the noble Lord will see if he follows my argument, it is the particular nature of the complaint I complain of as unscientific and senseless. Put on artificial ceilings, and see what happens. The social forces making the metropolis a magnet will continue; the homeless will redouble in numbers, and the flow of population South and East will become a flood. No doubt the Party opposite will blame everybody except themselves for the social consequences of their wholly unscientific and emotional attitude which they themselves helped to create.

My Lords, I have mentioned quite a number of different topics. But they barely scratch the surface. How about docks, whose obsolete condition was revealed by the extremely valuable report of my noble friend Lord Rochdale? Where does the Party opposite stand on modernisation there? We should be very glad to receive some assistance in preparing people for changes there—changes in layout, handling, loading and unloading. There will be plenty of problems.

Or take shipbuilding, to which the noble Viscount referred. He says there is no question about the class of workmanship, that our shipbuilding is the best in the world. But are we going to be told that it is nothing to do with restrictive practices, demarcation disputes, or the multiplicity of unions; that high-cost Sweden, with one union, has full order books, and Britain, with I think about seventeen or twenty unions, with empty order books? I must say I find it exasperating to hear the Party opposite seek to exploit every emotional breeze and conceal every genuine cause of economic inefficiency.

LORD SHACKLETON

My Lords, could the noble Viscount tell the House what the Government are going to do about shipbuilding? That is what we are really waiting to hear.

VISCOUNT HAILSHAM

My Lords I hope to do so. I said at the beginning of my speech that the two great themes of this Session, I hoped, would be, first of all, the dynamic working toward a new world order, which we are going to discuss under one heading to-morrow, and the modernisation of Britain and the carrying through of the technological revolution. That is what we seek to do.

My Lords, all this shows that we have a good long haul ahead of us before, as I put it last Session, we can push, pull, coax or even shame noble Lords opposite into the twentieth century. We are all told that after eleven years of Tory rule all that I have been saying is the greatest condemnation of Conservative policy. There might be some sense in that if we were not (the only Party with the courage or the honesty to say it. But even then there. would not be much sense in the charge, because what we are really engaged upon is a major revolution. In the scale and in the time which I am considering, eleven years of consecutive progress, hampered as we have been by perpetual world crises—and, I must add, an unconstructive Opposition—is a short time enough. We need 50 years of progress, not ten—

VISCOUNT ALEXANDER OF HILLSBOROUGH

Who is being paid for it? You are being paid for it.

VISCOUNT HAILSHAM

—to do all that we have to do in all the fields that need our attention.

Of course, it is the case that somewhat conventional language clothes the Speech from the Throne. Colour is out of place and is rarely employed. But, my Lords, I do not think it is too much to say that in the case of this present Queen's Speech we are in the presence of one of the most formidable lists of Parliamentary Business ever presented to Parliament at the beginning of a Session for very many years past. We are, of course, not committed formally to legislate during this Session on the Common Market. The course of the negotiations in Brussels, quite apart from any other considerations, clearly compelled us to leave that question open. But, quite apart from any possible Common Market legislation, which would obviously be quite extensive, the programme to which we are committed includes Bills on weights and measures, shops and offices, children, Greater London, contracts of service, water conservation, television and public service pensions. With none of these the Opposition Amendment deals, nor has any mention been made of any of them to-day; nor have we heard, I think, any positive suggestion put forward by the noble Viscount for any particular legislation which will achieve the objects which he with his noble friends evidently has in mind.

VISCOUNT ALEXANDER OF HILLSBOROUGH

You are paid to do the job.

VISCOUNT HAILSHAM

My Lords, I was, as a matter of fact, encouraged at the end of his speech by his claim that we had been converted to the Socialist theory of planning. I hope this foreshadows a certain amount of healthy cooperation in this particular field. But at the risk of disappointing the noble Viscount, I must repeat to him what we have said in the past—namely, that the system of planning which he erected in the period of his Administration is fundamentally different from the kind we have in mind ourselves. That, as we saw it, was a fundamentally restrictive and corrupting system of centralised control. What we look forward to is a flexible system, forward-looking, of technological progress. I hope that noble Lords opposite will co-operate with us and will not be too ready to assume that what we are doing is wholly wrong, because although the word used is the same, "planning", it none the less means almost exactly the opposite of the doctrine that the man in Whitehall is always right, to which the Leader of the Opposition in the country committed himself some years ago.

My Lords, it seems to me that the Amendment falls by the wayside as being based upon a wholly wrong diagnosis, prescribing a remedy which, in so far as it has any relevance, the Government have already adopted, and drawing attention to a symptom which, in so far as we can do it ourselves, we have every intention of removing.

3.55 p.m.

LORD CITRINE

My Lords, may I first compliment most sincerely the mover and seconder of the Address in reply to the gracious Speech? They opened in terms which I thought were entirely unexceptionable from any part of the House. They took an objective view of the gracious Speech and, indeed, after listening to them I could not imagine just what features of the Speech it was possible for persons like myself to take exception to. I want, too, to compliment the noble Viscount the Leader of the Opposition. He is an able political warrior. He made a speech to-day, which I thought was logical and sequential, without the assistance of a Government brief—in fact, so far as I could judge, without any notes at all. I thought at the same time that he succeeded in making many cogent points in support of the Amendment, which I also rise to support.

I had the pleasure many years ago of debating at the Oxford Union as a visitor with the noble Viscount who leads the House. Well, he was a first-class debater even then, and he has broadened out a good deal since. But I cannot help feeling that, much as I have always admired his dialectical skill, he is much more attracted by the polemics of a discussion than by its substance and by its realities. I have many times wondered, in fact, when I have listened with great enjoyment to the noble Viscount, whether I was being transformed back to the Oxford Union. He has never lost his love of polemics.

BARONESS SUMMERSKILL

He has not grown up.

LORD CITRINE

I do not want to say anything which imports any acerbity, which I gather is prevented by our Standing Orders, and which distinguishes this House from another place. But I cannot help feeling that the way the debate has been turned has carried it a good deal away from the serious subjects with which we are faced in our country to-day. It is said that the way to hell is paved with good intentions. That does not mean to say that all good intentions are the way to hell, or otherwise I should disqualify myself on the spot. There are many laudable features of the Address which I think are completely unexceptionable, and, indeed, call for broad support. I have been specially interested in such matters as the further protection of consumers, welfare in shops and offices, and written terms of employment—all of which are foreshadowed in the Address—and of course, in this vital subject, the expansion of the national economy.

The words in the Address are: My Ministers will continue to promote efficient and sound expansion of the national economy, with a high and stable level of employment. If I may say so—without, I hope, making too much of a debating point—there has not been very much evidence of the success of the policy in the last few years. But it is a declaration of intention, and it is a good declaration. I cannot see any reference to stable prices, which was a feature of one of the gracious Addresses some years ago. I do not know whether or not that policy of attempting to keep prices stable has been abandoned, but there is no reference to it. If it were implicit in the policy, then, of course, it might not have been necessary to re-state it, but we should be—and I personally should be—gratified if it were possible, in the course of the Session, to enumerate just how this is to be done; how we are to effect stable prices. Most people are interested not so much in words and good intentions as in how completely and expeditiously they are carried out: in other words, not in words but in deeds.

Now the Amendment that the Opposition has moved deals with the inadequacy, as it is seen, of the Government's proposals, not in the sense of deprecating all the proposals but simply saying that they do not make adequate provision for the expansion of the economy and for the removal or diminution of unemployment. The noble Viscount, Lord Hailsham, made points in the course of his speech which would take me completely away from the theme I myself wanted to follow. That may be one of those hoary political devices which are employed by Parties on occasions, but I would not suggest that that was the motive behind it to-day.

He spoke about the rigidity of the system. My Lords, do we not all know, anybody who has one scrap of knowledge concerning our industrial system, that it is permeated from top to bottom, both on the side of employers and on the side of workpeople, with rigidity, with restrictive practices of one kind or another, with customs and with all sorts of traditional devices which prevent anything in the way of flexibility of an extended kind? It is no use pointing to any particular section of our people as being responsible for that: we are all contributors. I might say, were it not for the misuse of the political term, that we are all extremely conservative, and I know of no stronger a conservative force in the country, in the sense in which I am using it, than the trade union movement.

A NOBLE LORD

Some of us.

LORD CITRINE

You say some of us, but I notice our conservatism is usually applied to ourselves, while we are always extremely advanced and progressive in the thing that the other fellow should do. But we do not get anywhere, I think, by avoiding the fact that, as a nation, we have this strong reluctance to change speedily when change has become necessary. That is inherent—though it has its good points, too. We do not sacrifice the real and the known for the possible too easily: but I must confess that at times I am extremely impatient at the speed at which we make change.

The noble Viscount spoke about the railways, and that the Labour Party should have modernised the system. Candidly, the system was left in its parlous condition by the complete lack of adequate depreciation and modernisation before the war, which was very greatly added to by the excessive strain that war conditions put upon the railways. They were not in a condition of which anybody could be proud at that particular time; and, with all the pressing duties that were incumbent upon the incoming Government just after the war, it was quite impossible for anybody to embark systematically and thoroughly, in the way it should have been done, upon the necessary planning.

I have had some experience of planning in the electricity supply industry, and I can assure noble Lords, as many of you must already know, that even the planning stage takes some years. It is not something that can be done overnight. In electricity supply, we had to accept designs, we had to accept power stations, which were almost obsolete before they were constructed—and that, of course, would apply to many other sections of our economy in the period just after the war. But I cannot help saying that the Labour Government at that period did at least co-ordinate road and rail transport, and I do not think it will be shown by history that it is greatly to the credit of the present Administration and its immediate predecessors that they have dismembered that system of co-ordination. I think it will be found to be bad for the economy of the country as a whole. Similarly, in regard to docks. An inquiry is made in the year 1962 about our dock system, as though the faults are to be laid completely at the door of a political Party.

VISCOUNT HAILSHAM

My Lords, I do not think I said that, and if I did convey it I did not intend to. What I asked noble Lords to do as regards the docks was to help us to see that modernisation could be carried through—and they can be of very great help, if they will.

LORD CITRINE

I should be very sorry if any of my colleagues dissented from what the noble Viscount has just said. I believe that our country is in such a condition that, no matter what differences we have on the political side, when it comes to the economics, when it comes to the question of doing something demonstrably good for the country, we should combine to do it. That has been the approach, I think, that most of our trade union leaders have adopted during my period.

My Lords, I am not a very good Party politician (I have not been engaged in it long enough, perhaps, to learn all the tricks), but I cannot help saying this. Does it really become anyone speaking on behalf of the Government to try to lay at the door of a Party that has been out of office for a decade the faults inherent in our present economic system? Is it not the fact that the impression has been created throughout the country that the present Government are so (I do not want to use language which does not describe my thoughts) at a loss to be able to find any comprehensive measures to revive our system that we are desperately pleading at the gates of the Common Market to get in as a means to our economic salvation? As you all know—I have said it in the House—I believe in our entry into the Common Market, but I do not believe in going supplicating to the extent to which it has been indulged in most recently.

The Chancellor's proposals described in the other place are, to my mind, useful. Some of them may turn out to be part of an intelligent, thought-out system of recovery: but repeatedly, even in this House, the term "shot in the arm" has been used. Now I have never been a drug addict. I have never been a person who goes to the doctor at the approach of winter to be stimulated by all kinds of injections. I have tried to keep clear of that because, so far as I know, shots in the arm have a purely temporary effect, and invariably there is some kind of reaction. At all events, they cannot be permanent. I do not think nature itself will endure that sort of thing. So we have to think in terms of something more than a mere shot in the arm. If "shot in the arm" is used in the sense of the acceleration of some process or other, then, of course, it is justifiable; but, as the noble Viscount the Leader of the Opposition said, there is no escaping the fact, although there has been no clear acknowledgment of it, that this is an abandonment of the devices used by the Government which are now described as the "Stop-and-go" system.

If I remember rightly, the Chancellor of the Exchequer said in another place that he rested his proposals on two principles, and it is the first of the principles that I want to refer to—namely, that they would endure. In other words, what he was doing was not intended as a purely temporary expedient, but was something which would last and, presumably, would fit into a broader system of reconstruction. It certainly has the appearance of a planned economy, or of an approach to a planned economy, which Members on these Benches and elsewhere have been urging for a long time past. And never let us forget this: that the Prime Minister himself, thirty years ago, wrote a book, which I read with great interest at the time, on this very subject of a planned economy, and showed himself far more progressive in that respect than many of his followers.

I have not yet seen any reference to the remnants of the policy of Mr. Selwyn Lloyd when he was the Chancellor of the Exchequer. I know the impression is being created that that policy is being continued, but, in point of fact, what has been said by his successor seems to me to be almost completely different. I should have said, not to put it too strongly, that the policy is being perhaps continued by throwing it overboard. I welcome what has been done in the way of a reduction in purchase tax in the motor industry, in the increasing of the investment allowances—all very good things, very important things—and in the measures in respect to depreciation of plant. All will help. There is no doubt about that. But in themselves they are in the nature of expedients rather than dealing with basic factors.

One thing that rather troubles me is that this go-ahead industry, the motor car industry, which has demonstrated that it can compete on reasonable terms with the industry in any other country in the world, should be such a turbulent place. Some considerable time ago I took out some figures which I have now forgotten, but the impression I had is that there are more disputes in that single industry than in any other industry privately operated in the country. And yet it is one of the highest paid industries. It is a curious position, and, as we see by this latest example at Messrs. Fords of Dagenham, where, so far as I can gather, they are refusing to reemploy some 70 men, there is evidently a state of industrial relations of which no firm can be proud. I am not suggesting for one second that the blame lies all one way. As a matter of fact I can well understand the attitude of the employer who can be driven to the point, by a succession of unofficial strikes, where he says that there must be a showdown. I have heard that expression used in more than one place in recent years. But one has to think a bit as to what might happen.

I have rather a special interest in this matter. It is common knowledge, I think, that prior to the last war Messrs. Fords followed what was broadly the American policy of their company in the United States: they did not recognise trade unions. I do not mean to say by that that they never negotiated with any trade unions, but they certainly did not recognise the trade unions generally. I was then the Secretary of the Trades Union Congress and had a talk with the then-President of the company, Lord Perry, and the outcome was that the first agreement ever signed by Fords—and it is still in operation—was signed in April, 1944, on behalf of the T.U.C. and certain other unions with the company. That agreement provided a high-level council, a high-level committee of such people, for example, as Arthur Deakin, who will be remembered by many as a level-headed, stalwart and courageous type of trade union leader. Arthur Deakin was chairman of that council and we especially attached one of our best men, Victor Feather, as secretary. That arrangement endured for some years and it worked well. It was a high-level council to deal with the company on the various problems that arose.

What has happened in the years between? I do not know. I believe there are still officials of national standing working on that council on the trade union side, but the fact remains that the control of conditions of labour, apart from the broad policy laid down by the council, has passed into the hands of the shop stewards. That, to me, is a most deplorable situation. It really means that any undisciplined section of men, sometimes a very small section of men, can so disrupt production that a whole works can be stagnated. I believe this is not merely an employers' problem. It is a problem for the trade unions too. They cannot on the one side sign agreements with the firm intention of keeping them and at the same time allow repeated breaches of those agreements by individuals calling themselves authorised on behalf of men in the shop.

I know the limitations on trade unions in imposing discipline. Their ultimate power is expulsion from the union, but that is no guarantee that men excluded will no longer be employed. So the sanction might act to the benefit of the excluded person. It is a tangled skein, this, but something in which, if tackled with energy and courage by both sides, a relationship can be developed that might even furnish a model for the whole country. When I think of men like Carron of the Amalgamated Engineering Union, a most courageous fellow; Cousins of the Transport Workers, one of the most outstanding in the Movement, and Cooper of the Municipal and General Workers meeting responsible managerial representatives or other people who have executive power to act and not merely delegated authority (the Ford company is completely American controlled: always remember that) in my opinion these two groups of people meeting together should be able to avoid any dislocation of industry at a time like the present.

I say "at the present" because at the moment unemployment seems to be increasing, and, indeed, I have been reminded that in another place it was stated by Mr. Macleod that an increase in the winter months was to be apprehended. He is probably right for seasonal reasons. But however relatively small 500,000 unemployed seems to be when we put it against the 3,000,000 in the period of 1931 to 1933, it has a very serious effect on the individual man. Hopelessness is developing on the North-East Coast, in Northern Ireland and even on Mersey-side, where I was born and spent a good deal of my trade union life. There is a feeling of despair. It is easy to talk about transferring people somewhere else. Men have to root up their families and go searching for a job in places where it is known, in advance, that there is no adequate housing accommodation for them. That is what creates rigidity.

What can be done? Over thirty years ago I was on a deputation to the Government—not a Labour Government, by the way—to try to put forward certain ideas of the Trades Union Congress in regard to the location of industry. There are two things you can do: you can offer inducements to companies to go to particular areas, which the Government have done, or you can use pressure on them through a system if licences. My opinion is that the time will come when, despite disadvantages for individual companies, recourse will have to be had to some such system.

I am glad to find that in the discussions that have taken place we see no recrudescence of the pay pause. If ever there was a blot on the industrial relations in this country, it was that. It was a most ill-conceived policy which could not possibly be successful. A cart and horse were driven through it on several occasions. It was unacceptable to the trade unions. Unfortunately, its main victims were people giving public service in the highest form. I hope that some equitable treatment will be meted out to those in the public service. At all events, it should now be possible to be more generous.

I must confess that I am much disturbed about what I have read in the last few days about the so-called National Incomes Commission. In the House of Commons the Chancellor of the Exchequer has described this Commission and its work, and when I read that description I asked myself what was the difference between this Commission and the two bodies of "three wise men" set up in succession to each other some years ago—not that very much notice was taken of them. They are travelling almost, but not quite, over the same ground.

This Commission has been given the powers of a Royal Commission, and here I think we may run into trouble. As was pointed out at the T.U.C. in Blackpool, the Commission are given the impossible job of defining "the public interest". Any body of men may be asked to think about this subject, but we cannot say that any particular body of men are specially well qualified to determine the national interest. That is a very broad subject. There is such a thing as a trade union interest, a working-class interest, representing a very large portion of the population, when dependants are included.

I am struck by one thing about the composition of the Commission as already announced—and I know that it is not complete; there may be others added. Out of the four people who have been appointed, two, at least, so far as I know—I may be wrong about one of them, but I do not think I am—have a good knowledge and experience of industrial negotiations from the employers' point of view. One of them was for ten years the Assistant Secretary of what is now the British Employers' Confederation, as hard-boiled a body of men at that time as I have ever met in my life in any place. He was for six years subsequent to that the Secretary of the Iron and Steel Employers' Association. So we could expect, with his subsequent experience of the Industrial Court, that he is equipped with the greatest knowledge of the employers' point of view.

But where on this Commission is anybody who has even a remote insight into the trade union attitude of mind on the questions that will come before the Commission? I gather, from such information as comes to me, that there is no intention to appoint anyone who is associated with the trade union movement. I am not now talking in a representative sense but from the point of view of experience and understanding of the mind of people on whom this Commission will have to depend for the major part of the time. This is an Incomes Commission, and I think that the trade unions will watch with very great care how it deals with things other than wages and salaries.

So far as I can see, the Commission has very wide powers, which may easily upset industrial relations very much, and then, goodbye to a large part of the industrial progress for which we are all hoping! The Commission has power not merely to call for documents but, as fully stated in the White Paper (Cmnd. 1844): The Commission is authorised, under the Royal Warrant, to call before it such persons as it judges likely to afford information relevant to its enquiries; Let us stop at that point. Suppose the trade unions decide to boycott this Commission. Where is the power going to come from to compel them to appear before the Commission? I know that there are penalties, but those penalties may not be applicable when it comes down to fact. To my mind, this is a most dangerous provision. If people are compelled to go before the Commission for some reason or another, not only will they be reluctant witnesses, they will also be hostile witnesses, with a good many other hostile people behind them.

Then the Commission is authorised: to call for information in writing; and to call for, have access to, and examine all such books, documents, registers and records as may afford the fullest information on the subject. This is full of danger. The trade union movement has been built up on the secrecy, the privacy, of its proceedings behind doors, first of all because it would be a diabolical thing to give employers access to what goes on in trade union branch meetings. If that were possible, there could be victimisation on a scale that would frighten us all. Yet, under paragraph 10 of the terms of reference, this Commission has power to call for branch boobs and minutes of meetings. I do not like that a bit. I cannot help thinking that those words have been put in deliberately. I think that our trade union Mends will wake up to this and when the application of this paragraph comes to be attempted, we may be in for a good deal of trouble. I am not specially qualified or equipped to say what the trade unions will do on these subjects, but I know that the trade unions have boycotted Commissions before to-day and that may be the fate of this particular Commission. I do not know. But I do know that any attempt to pick a quarrel with the trade unions over an issue of this description would be very bad for the country.

The trade unions will watch the activities of this Commission with meticulous care. They will look to see whether it deals with classes of income other than wages and salaries, and their conduct in relation to the Commission will largely depend on that experience. I believe that on that experience may depend the outcome of what I would call a concerted wages policy, for which we have all been seeking for years—trade unionists, economists, statesmen or whoever they may be. It may be destroyed by the injudicious use of power, in an attempt to coerce the trade union movement.

There is no denying that there is good in the gracious Speech, but there is no clear evidence of the adequate provision, called for by the Amendment of the Opposition, to deal with this very serious question of unemployment.

4.29 p.m.

LORD LUCAS OF CHILWORTH

My Lords, I think that I could claim with a high degree of accuracy that this is the first time that I have ever been able to find it in my heart and in my conscience to offer a sincere word of congratulation to a Chancellor of the Exchequer. For over 40 years I have watched them, and at last I feel that I can offer not only a large amount of praise but also my sincere congratulations. I do so under two headings. For the first time in my recollection, now going back over far more years than I care to count, we have had a Chancellor of the Exchequer who has treated one of this country's greatest industries with the consideration that its national place deserves, and not treated it, as his forerunners have done ever since 1922, alternately as a milch cow or a rag doll. The Chancellor of the Exchequer has said—and I quote from The Times, as I have been unable to find time to read the OFFICIAL REPORT: The motor car industry is a fundamental part of our whole engineering complex. Apart from the direct employment offered by the great motor car companies, the activities of their many suppliers, from sheet steel to the smallest electrical component, have a marked effect on the whole level of business activity in this country. They are moreover an industry with a fine export record. When I read of a Chancellor of the Exchequer using language like that, then there is some hope kindled in my breast that the economy of this country is getting on the right lines.

It is not necessary for me to say that I have no interest to declare. I have lived my life in the motor industry; I was born in it.

VISCOUNT HAILSHAM

No, not born in it.

LORD LUCAS OF CHILWORTH

Oh, yes. I was born in the same year as the red flag that was carried before the motor car. But now I am as independent of it commercially, industrially and financially as I am, as I stand here, of Party politics; I have no directorships at all, and I cannot be accused of a vested interest. But why I am so delighted with the action of the Chancellor of the Exchequer is because I believe sincerely that this great motor industry can be the spearhead of our entry into, and our onslaught upon, the European markets. I know that if there is one industry in this country which the Continental manufacturers fear more than any other it is the British motor industry, which, as the noble Lord, Lord Citrine, said, possesses technicians, engineers and far-sighted business men equal to any in the world.

The other thing that I would put very much on the credit side of the Chancellor of the Exchequer is the fact that he has amply demonstrated that he has an economic mind of his own and the courage to use it. He has broken away from the chains of the Treasury economists which imprisoned his predecessors for many years. So, while I think that the action he has taken over the relief of purchase tax will, when the dust has settled, do an enormous amount for the economy of this country, it raises a great many problems, one of which I will mention in a moment. But What I admire about the Chancellor of the Exchequer is the breadth of his vision in cutting that impost by the amount that he did. Various Chancellors of the Exchequer have managed to escape the clutches of the Treasury economists and tickled these problems with feathers; but the present Chancellor has used an axe to very great effect.

I also welcome his other proposals—we have to await White Papers—for factories in the North-East and for new factories in Scotland. But I would ask the noble and learned Viscount the Leader of the House to take his mind back to the time when the present Chancellor of the Exchequer was President of the Board of Trade—and it is as well that he should not escape wholly from his past on the flood tide of his present success. Your Lordships will remember a passage of arms that I had, when I had the pleasure of speaking from the Opposition Front Bench, with the noble Earl, Lord Dundee, on the subsidy which the Government of the day gave to the motor-car industry to set up factories in the depressed areas of Merseyside, Scotland and South Wales. I have refreshed my memory by looking it up in Hansard, and if the noble Earl would like (to get a copy, he can read it.

It was on December 6, 1960, that the noble Earl gave me the answer that £31 million of the taxpayers' money was going to be given to the motor-car industry. But before one brick was placed upon another the Chancellor of the Exchequer increased the purchase tax to make certain that none of the products that would come out of those factories would ever have a chance of being sold. Is the same going to happen again? We hear that the present Chancellor of the Exchequer says that his proposals are made to endure. Well, we have to accept his word for that. I hope that they are. But the past history of this kind of planning does not make us wildly enthusiastic that the "Stop" signal will not be pushed in once again. So I say to the Government: unless you do get the Scottish industry going, you will never recoup the money you have guaranteed for the Colville strip mill. You have a huge investment in Scotland, and you have to do something better than the proposals I have seen for the Clyde and for heavy engineering in Scotland.

I welcome the capital and depreciation allowances. They are intricate to work out, and although in the long term no doubt they will have their effect, they will have no immediate effect. They will not put a crumb into an empty stomach for two or three years to come—and there are far more empty stomachs in some of these areas than I believe the Government appreciate. On my way to your Lordships' House yesterday I was held up in my taxi for a quarter of an hour while a procession of unemployed men passed Marble Arch, on to Speakers' Corner, with banners flying, and chanting, "We want work". I never thought that I should witness that sight again. I could not think that during the period of office of a Government pledged to full employment I was going to be taken back to the years 1926 to 1930. I believe that the Government are underestimating the employment problem in this country at this (moment of time.

My mind goes back to 1947, when the cry from the Conservative Party in your Lordships' House was that what we in this country wanted to put us on an economic footing was a little, weeny, tiny bit of unemployment. I well remember the days. I well remember asking, "What are you going to do so that you will fix it at a little weeny tiny bit?" Because once you start doing what is suggested by these wretched economists to whom the Government have listened ail too long and who have been pleading that what we wanted in this country was surplus capacity, in other words, unemployment—how are you going to stop it from slipping down the slippery slope?

As I sat yesterday afternoon in your Lordships' House and listened to the noble Lord, Lord Derwent, I wondered whether he would have made the same speech if he had been sitting next to me in that taxi halted the other side of Marble Arch? I share with the noble Viscount the Leader of the Opposition my respect for the noble Lord, Lord Derwent; I hope I enjoy his friendship and I have admired the way he has dealt with the problems that have been before the House. But, if he will forgive me for saying so, I have never heard a more appalling speech of complacency than I heard from him as Minister of State to the Board of Trade. It shook me. AU the country have given the Chancellor of the Exchequer credit for a major injection into the economy, but the best phrase he could use was "a shot in the arm". As a matter of fact, as he went on I wondered why the Chancellor had made the speech he had in another place. I find it difficult not to agree with much the noble Viscount the Leader of the Opposition said. Of course I will give the answer to him. The Chancellor of the Exchequer spoke from his intelligence and his heart. The noble Lord, Lord Derwent, was chained to a Board of Trade brief, and between those two there is an ocean of difference. I am going to suggest that it will not be long before the Chancellor of the Exchequer will have to use more stimulation. I know the difficulty. I am not in favour of a removal at the present time of the whole of that impost which was put on purchase tax last July, but there must be more demand. I remember saying this in your Lordships' House on last year's Finance Bill, and I was taken to task by the noble Lord, Lord Molson, who, I think, said that he disagreed with almost everything I said. Yet the Chancellor of the Exchequer has done what I suggested.

It is no good—and the noble Viscount, with all his love of polemics, at least has a hard enough head to know this—seeking investment unless you are going to invest in production; it is no good producing unless you can sell the goods; and you cannot sell the goods without a demand for them. As I said last time, that is 14-year-old schoolboy economics; but it is very true. So I hope the Chancellor will use more stimulation. But before he does it, I am going to suggest to him that he will have to find another way of regulating purchase tax. I have been a bitter opponent of purchase tax ever since it was instituted in 1940. In 1940 I led the motor industry delegation to the Customs and Excise Department when they were trying to find a way of implementing the Government's decision to put purchase tax on goods. I remember asking the chairman, a most delightful man, whom I have met many times since, Sir Wilfrid Eady, whether the tax was put on as a war-time measure to stop purchasing, or whether it was for revenue raising purposes; whether it was a wartime expediency, or whether it would go on after the war was over. He gave me the perfect answer. He said, "History proves that no impost put on in time of war has failed to leave its mark on the fiscal policy of peace".

VISCOUNT HAILSHAM

Jolly well right!

LORD LUCAS OF CHILWORTH

He was right. I said, "You will find it is the easiest tax to put on and the hardest tax to take off because the results of taking it off will be drastic". It has been said in the Press—and I have no reason to doubt it—that, through the incidence of the removal of this purchase tax on new motor cars, the retail motor trade have lost £25 million on the fall of second-hand motor car prices. I have also been told that one of the reasons why the Chancellor of the Exchequer has not reduced purchase tax on some of the other consumable goods is that he dare not do it at this time of the year, when the shops are so stocked up with goods upon which purchase tax has been paid that the loss to the shopkeepers would be catastrophic. It hangs on the one thing—the one vital principle of successful merchandising. It prevents traders, wholesalers and retailers, stocking goods because they dare not run the risk of a loss.

In quite a number of cases, as in the case of motor cars, the purchase tax is far more than the gross profit, and that is why the Treasury had to alter the method of inflicting purchase tax. The manufacturers said, "Our dealers will not stock the cars", so the method employed in the motor car industry to-day is that a dealer does not pay the purchase tax. All cars are delivered to a dealer on a sale or return basis, and the purchase tax becomes payable only when a car is actually delivered to the retail purchaser. I am going to suggest that the Chancellor should adopt a sales tax, which is far easier to operate. It is fairer and it does not have the difficulties I have just explained to your Lordships. Of course, the reason why the Inland Revenue and Customs and Excise are against it is that they would have to collect the tax, whereas the industry collects it for nothing. But the hardship that it places upon the delicate mechanism of distribution has been well illustrated over the last two or three days.

There is one other point I should like to make as a suggestion to the Chancellor. In the right honourable gentleman's speech he was discussing the lack of investment, and he said: The main reasons for the decline lie, in my judgment, in the current reduction of profit margins … He went on to say: … and I would stress once again that a healthy growth of profits is essential to an adequate level of investment. My Lords, how true! What is worrying industry to-day is the factor of cost of production; yet the present Chancellor of the Exchequer's predecessor, in one of the most stupid of all stupid things he ever did—and he did a lot—was to put up the costs of two of our major producing industries, the steed industry and the chemical industry, by £38 million by an impost of a fuel tax of two-pence. That is the first thing that should come off. We cannot afford to load industry's costs of production with costs like that.

My Lords, I am going to mention only one other thing which I think is going to prove in the future the nub of this country's economic progress. We shall never get the benefit from this Government's policies mentioned by the noble Viscount the Leader of the House—at least in his passage of arms with the noble Viscount the Leader of the Opposition I discerned, in the fog of political rhetoric, some policies—and we shall never in this country succeed with our economy as we should until we have brought peace into industry. I follow the noble Lord, Lord Citrine, in this; and perhaps I should give my bona fides for treading on what might be thought to be this dangerous ground.

I have had long experience of trade unions and their organisation, and of dealing with them. Years ago I was responsible, under the instigation of that great man and Minister of Labour, Ernest Bevin, for bringing conditions of employment and wages agreement into the motor trade that had never before known discipline or trade agreement. And with the help of some of those really first-class men on the trade union side whom the noble Lord, Lord Citrine, mentioned—one of whom is sitting in your Lordships' House to-day; the noble Lord, Lord Williamson, who was my light and vice-chairman of the National Joint Industrial Council for years—we brought in an agreement which the Minister of Labour at that time said was a model of what an industrial agreement should be; and there never was a strike, and there never has been a strike. It can be done. But in those days, with people like Arthur Deakin, Charles Dukes, Jack Tanner and Tom Williamson—if he does not mind my reverting to his former title—you had men who had the position in control. It was after the war that the trade unions abdicated their responsibility, and hence the growth of the rabble shop steward movement which I condemn as much as does the noble Lord, Lord Citrine.

The strike at Ford's is not an industrial dispute; it is a political dispute. The series of disputes at B.M.C., Pressed Steel, and the Morris Works, were not industrial disputes: they were political disputes engineered by a small nucleus of avowed Communists.

LORD STONHAM

Not always avowed.

LORD LUCAS OF CHILWORTH

They are now open. One of them at Dagenham is standing for Parliament as a Communist candidate. They are all there, and I do not care what you do to stiffen your back. And, as the noble Lord, Lord Citrine, has already said, it is as much the responsibility of the trade unions. What disgusts me is that, instead of the trade unions standing foursquare behind the management, they are now thinking—and I hope only thinking—of making it an official strike. And for what reason? The chairman of the local body said to the Press that they are doing this in defence of the right of the men as an element of British justice. That word, used in such a context, sticks in my throat. I do not think that a Government can stick their head in the sand and ignore this as they so often want to do. The British people must be safeguarded because this is a matter of the life and death of British industry. If the Ford management give way on this issue they might just as well shut that factory—something which is very likely, and I do not want to be an alarmist. They may well do, because do not think that their American principals came in and bought that factory out for nothing. And we have the same sort of situation running through many other industries.

There is one other aspect of this matter that I should like to deal with because it is a very serious thing, and that is what I regard as the misguided attitude of the railwaymen in connection with the work of Dr. Beeching. Dr. Beeching is only doing the job the Government gave him to do, and if anybody has any complaint or any objection to what Dr. Beeching proposes, his quarrel is not with the British Transport Commission but with the Government. To have one-day strikes is a farce. They do no good. The only thing they do is to alienate the sympathies of the vast bulk of the British people.

My Lords, I have been talking earlier on about the unemployment position and about what the Government have to look forward to. They have to look forward to 100,000 men coming out of the railways, men who must be found suitable employment; or, if they cannot be found suitable employment, they must be compensated. The noble and learned Viscount who leads for the Government and the noble Viscount who leads for the Opposition had a passage of arms about the railways. But let us face this fact: Beeching is only doing to-day what the Chairman of the British Transport Commission should have done ten years ago. He is only doing a business job. This situation has been built up over years. It should have been tackled ten years ago. Instead of that, it went on and lost £500 million of the taxpayers' money. And that loss is nowhere near what the ultimate loss will be. I should like to say this to the railwaymen of this country, for whom I have a very great sympathy—they are the worst paid of any of the big industries: that no British Government will be allowed by the British Parliament to see the railway-men of this country thrown on to the scrap heap through a necessary modernisation of the railway system. But what they must realise is that railways are not there for the purpose of finding employment for railwaymen; they are there to serve the transport needs of the whole of the community. But the railwaymen, the redundant people, must be found adequate employment; and that is going to be difficult.

So I come back to where I started. I welcome the Government's proposals. I quite understand the slowness, perhaps, the caution, which the Chancellor of the Exchequer shows. But he will have to stimulate demand more than he has done, because jobs will have to be found for an increasing number of unemployed in those industries which the Government of this country must cease "feather-bedding".

5.3 p.m.

LORD WALSTON

My Lords, I am sorry that the noble and learned Viscount the Leader of the House is not in his place at the moment, because I think that many would agree with me in saying how pleased we were during the Recess to read of the fact that he had recently once more become a father. It gave us a great deal of pleasure, and some of us a certain amount of envy. But having listened to him this afternoon I begin to wonder whether it really was a blessing to anybody except himself and his immediate family, because I cannot help thinking that the things he said to-day, and the manner in which he said them, were much more suited to a young father in his early twenties than to the responsible Leader of your Lordships' House.

After all, we are to-day debating a serious subject and a serious Amendment on the economic state of the country. So far as I could disentangle, from the magnificent spate of words, the message which the noble and learned Viscount had for us, it was this: he admitted that we were suffering in this country from certain evils, economic ills. He rejected the diagnosis or rather the word "stagnation", and substituted for it the word "rigidity". He blamed some of this upon the structure of our railways, which are 150 years old—or so he told us; and, in passing, he threw out the fact that the Japanese have faster trains than we have. He blamed a very large part of this rigidity, not upon anything his own Government had done, or failed to do, in their eleven years of office, but upon the failure of the Opposition to co-operate. He made no mention of such matters as the wage-freeze, or the reductions in surtax, or any of the other things which, in the opinions of some of us, have led to certain industrial feelings in this country. And he gave us no hope for the future, other than the fact that he pinned his faith upon technological progress, on technological progress which we might have hoped would have been gathering pace over the last ten years, so that at last we should begin to reap the benefits from it. But apparently not a bit of it! The future is going to depend upon technological progress, but not the present. That was extremely depressing listening for many of us on this side of the House, and I very much hope that the noble Earl, Lord Dundee, when he comes to reply, will be able to give us something, perhaps not quite so scintillating but at any rate a good deal more concrete and hopeful, as a reason why this particular Amendment should be rejected. But I think he will have his work cut out to do that.

We have heard so far to-day from most speakers a great deal of very good sense on the economy and the ills, whether the word is rigidity or whether it is stagnation. But we must always remember that our economy does not depend solely upon money or upon machines. It depends to a very large extent upon the people who operate the machines which are bought with the money; and unless people co-operate in the full use of those machines we shall never succeed in having the type of economy that we want. There, my Lords—my noble friend Lord Citrine just mentioned this—is one of the greatest problems which is facing us to-day.

So far as people in industry are concerned, one can roughly divide them, I suppose, between what is called management and labour. When it comes to the actual rewards, salaries and wages, there is plenty of scope for argument. I feel, somewhat naturally, that an undue amount of reward goes to management —though not a grossly excessive amount, except possibly at the very highest levels—and too small an amount of the reward goes to the day labour and weekly labour. But it is not solely the actual reward that is received at the end of the week or month which is of importance. It is the whole terms and conditions of employment. And there I am very glad, and I think all of us are very glad, to read in the gracious Speech that the Government are proposing to introduce legislation which will require employers to give their employees written statements about terms of employment and will prescribe minimum periods of notice. That is a good step forward; a very small step forward, but certainly one in the right direction. But it does not even begin to solve what is probably the major problem beginning to face industry, and that is the problem of redundancy.

The noble and learned Viscount used the word "rigidity", as being the overriding evil of our economy, and I think I agree with him on that. I believe that stagnation is there, but that the stagnation is caused to some extent by this very rigidity. But the rigidity is not only on one side. There is rigidity in the thinking in the boards of management; rigidity in the lower levels of management, and undoubtedly rigidity in labour also. But I do not think that we can be surprised, when we turn to the labour side of this, that this rigidity should exist. After all, what is the greatest fear of the ordinary man? It is not that he will not earn enough money when he is in work—though he always, somewhat naturally, wishes to earn more than he is getting at the present time—(but that he may no longer be able to earn that money at all; that he will lose his job; that he will be declared redundant. If he were on the managerial side the chances are that he would receive a "golden handshake"; that he would receive introductions; that he would already have been approached by other people. So his problems, though severe, would not be unduly severe.

For the ordinary working man, the weekly wage earner, this fear of redundancy is a serious one. It has been highlighted by the threatened closure of parts of British Railways which, from the strictly business point of view, as the noble Lord, Lord Lucas of Chilworth, said, is necessary (though there are other aspects to it that we must not forget), but which has thrown into the open in a most dramatic form the threat which confronts the working people of so many industries that we have at the present time. When the London Transport Executive wishes to introduce on to the streets buses which take more people with fewer operatives, buses which may need no conductors at all; when the newspapers (the noble and learned Viscount referred to them, and I agree entirely with what he said) are shown to be employing a large number of people who have no worthwhile jobs to do at all, can one be surprised that the unions looking after the interests of their workers put every force they can command into ensuring that their own workers do not become redundant?

There is one, possibly minor, sidelight to this which has been reinforced over the past years. It is natural that any man should wish to have security of work even if he has no debts, even if he simply has his weekly outgoings in rent, fuel and food and the rest of it. But when, superimposed upon that, and almost deliberately so, comes this great burden of hire-purchase, from which practically no working class family is free, the urge to remain in work, the insistence on fighting to keep a job, is quite naturally magnified many times. This problem of redundancy cannot in my view be left entirely to private industry, or for that matter to public industry. It is all very well to have conditions of employment. They are good; it is right that they should be there. But there must be more to it than that.

There must even be more to it than what is being done at the present time by some industries, who deserve credit for it. For instance, the Coal Board has a good and worthwhile redundancy arrangement of generous payments to its redundant workers. In fact, recently it introduced a £1 a week pension for all redundant miners who have reached the age of 60 and have had 10 years' service in the pits, regardless of whether they find employment or not. It is also proposing now to extend the lump sum compensation to all redundant miners. It is doing well in that way and, what is even more valuable, it is assisting local authorities in rehousing redundant miners if they are to be moved to other pits where they are needed. That is a good start. It is a thing which should be done. But it is not enough, any more than are the redundancy agreements, which nevertheless deserve credit, of Unilever, I.C.I., B.O.A.C., and a good many others. But, as I say, it cannot be something which is left solely to the employer; it must be something for which the Government have to take a large measure of responsibility.

One of the reasons why in my view the Government must (take responsibility, though a minor reason, is that often Government decisions and Government policy in fact lead to redundancy. It may well be that in the future still more occasions will arise where the Government ought to take decisions which will cause redundancy. So they cannot wash their hands of this problem. In the realm of defence, the abandonment of different defence projects may mean—in the past it has meant—that a large number of people are thrown out of work. The closure of the railways, to which I have already referred, the possibility at certain times of substituting gas or oil for solid fuel are things resulting from Government action and decision which lead to redundancy. So for that reason, if for no other, the Government must take on the responsibility for coping with this problem.

There is, of course, a further side to this—namely, the great need that we in this country have for the mobility of labour. We cannot allow our industries to remain stratified in certain areas where they have been traditionally. At times there are reasons why they should change, but for the actual people engaged in labour in those industries, carrying out the work, the problem of movement is a real and a personal problem. Again, my noble friend Lord Citrine reminded your Lordships of that in what he was saying. So, in my submission, what we must have is a comprehensive plan worked out by the Government, first of all for the location of industry; secondly, for retraining men leaving one industry and moving into another; and, thirdly, for the resettlement of these men in the areas where these new industries for which they have been trained are in fact situated.

I should like to commend to your Lordships' notice a remark, which I am sure most of your Lordships heard and approved of in yesterday's debate from the speech of the noble Lord, Lord Polwarth. According to the OFFICIAL REPORT, he said in column 236 [Vol. 244 (No. 4)]: I am afraid that, as a result of this, we shall once more see overfull employment in the Midland area and competition for scarce labour pushing up wages and attracting men from other parts of the country, in turn causing greater congestion and leading to requirements for more social capital, the building of houses and so on …". A little further on he said (col. 237): I think that this whole question of distribution of industry must be looked at, not just from the point of view of the difficult areas but from the point of view of the over-congested areas, too, and of the country as a whole. That surely must be an essential part of any action on the part of the Government to cope with the problems of redundancy, shortage of labour, over-supply of labour, mobility of labour and so many of these other matters as well.

Your Lordships may say that this is all very well, but it is an impossible thing for any Government to undertake, and that to ask for it is just crying for the moon. But there is no need to be so defeatist as that. There are already examples of how this can be dealt with—they are not widespread and they have not been tested very severely up till now. Your Lordships will all know of the European Coal and Steel Community and of the plans that they have for coping with redundancy as it occurs in the Community itself. There, the high authority have power to grant compensation of up to 90 per cent. of wages to workers who have lost their jobs, and to pay a part of the cost of the retraining and resettlement of miners and steel workers who have to move to new jobs. Therefore that has been worked out and, in a modest way, has already worked satisfactorily in the Community.

In Sweden one has an even better example, because it has been going for a longer period, of how this thing is dealt with in that rather progressive country. They have set up a national labour market board, which is in some respects equivalent to our Ministry of Labour, and it has secured an agreement under which firms which have been threatened with closures, or which are proposing to reduce their activities for any reason, give notice to the board at least two months beforehand. The board then, because it has this advance notice, is able to take steps to find alternative jobs or to retrain at State expense—not at the expense of the firm itself—to give allowances for travel, and to help with the general problems and difficulties of movement. So we have examples on which we can draw. How much better it would be if other countries could look to us for examples instead of our having to go to them.

But we cannot get very far with this—not as far as we must—until we know more facts than we have at present. The number of gaps there are in our statistical knowledge of redundancy is surprising. I think I am right in saying—and I hope the noble Earl when he makes his reply will correct me if I am wrong—that we do not have any firm official statistics showing the redundancy rate. It has been calculated by some people at 1.6 per cent.; by others at 1 per cent. It looks as if it is probably somewhere in the region of 250,000 a year. A survey was instituted by the Acton Society Trust in 1959 which gave very valuable information, but it related to only a limited Midlands area and it was done in an unofficial way. There has also been a Ministry of Labour Working Party on the subject, again in relation to a restricted area. But we have no comprehensive, basic knowledge on which to base our final policy in this matter.

Having got the information we want, we must make still more decisions. Above all, we must decide where we want our industry located. Do we want to finish up in twenty or thirty years' time with all our industry congregated in the South-East of England, and to hell with Merseyside, Scotland, the Tyne-Tees and all the rest of it? Do we want to let them become National Parks, or monuments to the industrial depression of a bygone age, while the whole of the working population, the whole of the capital investment and the whole of our educational system congregate in the South-East and in the Midlands? Obviously, we do not want that. But if we do not want that to happen, it is no good just saying so. It must be part of our general plan to stop that from happening—because we know that it is in fact happening to-day.

The way to stop it from happening is not to allow branch railways and uneconomic railways in Scotland and the North to close down because there is not enough work for them to do. It is to bring more work to those areas so that the railways are in fact needed. We shall look pretty silly if we allow such railways to close down this year and then, when we finally do develop our location of industry plan, find we have to revive the railways, to reopen them and to start the whole thing going again because industry has been moved up into those areas. That is the first thing we must do. Having got our original survey, having found out the extent of the problem, we must decide how we want our industry to be located and what the balance should be.

We must then institute a comprehensive scheme of retraining for workers who become redundant. We need to retrain them, not in a haphazard, blind sort of fashion, but specifically for those industries where the need for labour is greatest, so as certain industries decline—and it is right that they should decline—we shall have trained men becoming available in the newer, expanding industries. This training scheme should, I suggest, be linked up with the apprenticeship scheme of which we have heard a certain amount of talk but in relation to which we have seen such lamentably miserable results. Therefore, having got the scheme moving, training is the first prerequisite.

The second is to ensure that when the factories are provided there are houses for the workers to occupy. There should be deliberate housing assistance from the central Government, given through local authorities, so that houses are built in the areas which are to be expanded and where the need for labour is going to be greatest. The third requirement is a system of resettlement allowances to enable men changing their present jobs for new ones to move with their families and to set up homes in the new areas in the same sort of life as that to which they have been accustomed. Even with such a payment it will not be easy for them, but it will make it easier than it otherwise would be; it certainly will make it possible for them to take advantage of the scheme. This is not in any way overriding the need for private contracts between employer and employee, as the Government now propose. That should be gone ahead with, but it is only a very small start to the whole scheme.

Who is it that should do this general rethinking of our labour problems? The trade unions must play a very large part because without their co-operation the whole thing would fall to the ground. It undoubtedly will mean a very great deal of rethinking by the trade unions. And the fact that they have gone to study what their Swedish colleagues are doing shows that they are prepared to act. But they cannot be expected to act by themselves. The initiative, the signs of good will, and the desire to work this out properly must come from the Government. I should be very much surprised—and I think the noble Lord, Lord Citrine, will agree with me—if the trade unions lagged behind on this if there were concrete evidence from the Government that they were prepared to tackle the problem in a realistic manner. We clearly need a shot in the arm, a stimulus, whatever it may toe called, to bring us out of our stagnation and rigidity.

The record of the past ten years—no matter what figures the noble Lord, Lord Derwent, produces—is not a happy one and is not one of which we can be proud. But in addition to the purely economic factors, in addition to the supply of credit and capital, the easing of taxation, the extension of depreciation allowances and all the rest, we must never forget that none of these things will succeed unless the men who do the work are properly looked after, unless they know they are receiving a square deal, that they will not be thrown on the scrap heap because of some modern innovation. Until the Government tackle the problem of redundancy that is something which will always impede our national recovery.

5.29 p.m.

THE EARL OF PERTH

My Lords, the noble Lord who has just resumed his seat and myself spent the weekend together. I knew that he was making some notes for the speech, but I had not realised that he was going to speak to-day on this subject, nor did I realise that I was to speak immediately after him. I think that if I had known that at the time, I might have been tempted to try to distract him from what he was preparing. I am glad that I did not, because I think the remarks he has made on redundancy, and the importance of that subject at the present time, are well worth the consideration of all of us.

My Lords, it is now six months since I was fully occupied on colonial affairs, and during these six months I have been fortunate in that I have been able to spend a little more time in Scotland, and to study a little more generally what I would call Scottish affairs. It is from what I call the Scottish angle, that I want to talk this evening about the Amendment to the gracious Speech. Because there have been only six months for my study I know that your Lordships will understand if in some respects I am either brief or ignorant.

Before I turn to what I would call the fundamentals of the Amendment, which I suppose are the accusations of stagnation and that nothing is being done about unemployment, I should like to digress for a moment to refer to the thoughts that occur to me as a result of going back to Scotland more frequently over these last months. I have found that Scotland is in a curious mood. Perhaps it is best illustrated by the strong support that is given, where people are displeased with the present Government, to the Scottish Nationalists, rather than to the Liberals or the Labour Party. It is not shown only by the support for Scottish Nationalists; it is also shown by a sort of wish that they should "go it alone". But when they say that they want to "go it alone", they say in the next breath: "Oh! But the Government must do more to help us, and must give us more money". Or, again, there is the feeling—and this, I think, is natural and traditional: if only they were not run from Whitehall! My Lords, I must point out that what is run from Whitehall is essentially Scotland, whether it is the Prime Minister, whether it is the Foreign Secretary, or whether it is many others.

Again, I find that there is a fierce local patriotism, which is apt, I think, to leap before it looks. Perhaps I might give an example of that, which occurred only in the last several days. We had the Mackenzie Report on the future of power in Scotland. In that Report it was suggested that the North of Scotland Hydro-Electric Board and its Southern brother should merge. Immediately, various leading citizens of the Highlands—I think perhaps somewhat egged on by the Press—went into print and said: "This is all wrong. This cannot be". I do not think many of them had had a chance to read the Report. It was a compliment to Tom Johnston, and to all the work the Northern Board had done for the Highlands, but it was not thought out; it was not a reaction after studying the Report, which, if I may say so, is well worth studying. Because what did it recommend for Scotland as a whole? It recommended a new and large-scale power plant to burn coal, which is surely of great value to Scotland. It also recommended very special measures to help the islands, which, of course, is what we all need in relation to the Highlands. So, my Lords, I think that this sort of emotional approach, though it is, in a way, understandable, is wrongly based, as is all of this mood—because I am not sure that many of my compatriots realise just what is happening in Scotland at the present time.

They are anxious, because they see that the population is not increasing, let us say, at the same rate as it is increasing elsewhere in the United Kingdom. They are anxious, because many Scots, or some of the best Scots, leave Scotland. My Lords, that has always been our history, and when I look around the world, whether it be to Canada, to New Zealand, or to many other parts, I rejoice—and I am sure your Lordships all do—that Scots have left the country, and have done so much to build up elsewhere. Then I think the other thing which worries them greatly is the fact that the level of unemployment in Scotland is greater than that in the United Kingdom as a whole. I understand this worry, and it is, of course, something which we must all deplore and wish to see remedied. But, my Lords, I do not believe that the reason for this is that Scotland's economy is finished, that Scotland is in a static or declining state. Rather do I think that the Scottish economy is very much alive, and that soon we shall all see that this is in fact the case.

Why do I say this? I say it because we must realise what is happening. Let us look at Scotland before the war. Before the war, if you asked anybody, "What is the Scottish economy based on?" immediately two things sprang to mind—shipbuilding and heavy industry, and the coal mines. We all know what is the position of shipping all over the world; we equally know the bad luck that has come to Scotland in the latest development of several of her mines. That was a geological fault, but it is fact, and we cannot get over it. So we find, certainly with shipbuilding and heavy industry, and naturally with the mines, that they are on the decline. That has also been true of some of the other pre-war industries, whether it be jute or whether it be shale oil; and unfortunately all of these things have gone wrong, if I may put it that way, at the same time. So I think one must have that background of the past in studying what is happening at present.

In fact, we in Scotland are changing over to a wider base. We have a new, light engineering industry; we see the development of the woollen trade. All over the world now, how keenly are the jerseys, and so on, sought after? We see whisky, as always, being drunk more and more throughout the world. In general, there is a mood of change, of development, and of expansion. But it takes time, and I think it is not possible during such a changeover, during such a revolution, which inevitably produces hardship, to avoid some temporary increase of, for example, unemployment and unhappiness. But, my Lords, it is not because Scotland is either finished or on the decline. So much for the analysis, as I see it. of what is happening there.

The question is: are the Government doing enough to help? I think we ought to look at that question both from the long-term angle and from the short-term angle. When we look at it from the long-term angle, I think that on the whole they have so far done us well. For example, as the noble Lord, Lord Lucas of Chilworth, pointed out, they have helped on the Colville sheet steel mill. Not only may that, in its turn, encourage other light industry, but we are soon to have our own Scottish motor car. Then, again, the Government have helped, or are helping, on such important matters as the technical training colleges. We had the other day an example of forward-looking help for us from the nationalised railways. I have in mind Dr. Beeching's suggestion of a new railway workshop, which would be able to produce and compete all over the world. Now we have heard about vacant factories, which are to be put up, so that industry may be tempted. All of that is to the good. More, I am sure, the Government will wish to do; and there are two particular points mentioned yesterday by the noble Lord, Lord Polwarth, which I would ask the noble Earl who is to reply to consider most seriously, and to bring to the attention of his right honourable friend the President of the Board of Trade as being of great importance.

The first is the proposal that is now before the Board of Trade for a pulp and paper factory in the Highlands. I gather that there is some question as to Whether, because it does not immediately produce a very large return in terms of employment for the money that may be involved, the Government should go in and encourage, with financial help, the private enterprise which is taking the risk. But all noble Lords know how, for the Highlands, one of the great hopes is forestry and all that may come from it; and so it is of first importance that we should get this particular help.

Then the second point the noble Lord, Lord Polwarth, made and which I want to reiterate is that, When we are trying to attract industry to Scotland, we should not be handicapped by, as it were, having no price ticket to enable us to tell those who are going to come from, for example, North America, that if they do come to Scotland these are the minimum terms of inducement they may expect. My Lords, I think we are unique in, as it were, keeping all our cards in this respect in our pockets. Go, for example, to Holland and ask them What they will do, and they will immediately tell you. There is no doubt that not knowing what are the minimum terms is a disadvantage. I am not asking for full disclosure of all the cards; we should always keep an ace up our sleeve. AM I am asking is that something should be known to enable those seeking industry to give a fairly clear picture of what may be expected. So much for the long-term.

Then we come to the short-term question, which is, of course, epitomised in the level of unemployment. Here, I think, the Government really might do more. What I have in mind is this: that they might do more spending on public works, especially, I would say, on roads and bridges. I urge this not because I am seeking a policy of spending because we in Scotland are going to have a steady and continuing depression, but because we are in the course of a bridging operation, changing over from the narrow base of the past to the wider one of the future (and, as I have said, this must inevitably mean some hardship), and because assistance in these two respects would help one of the great industries of Scotland, namely, the tourist industry. To be penny wise here would, I feel sure, be pounds foolish. So I would ask that there should be a greater spending on roads and bridges, which is surely necessary sooner or later and which will help us as regards unemployment at the present time.

I think the same point applies to housing, although I know that here many of the local authorities are themselves to blame because of their policy as regards rents. I am glad that the Government are trying to force up some of these rents, Which are clearly uneconomic from every point of view, because that will encourage building, not only by local authorities but also by private enterprise. Again, I think that expenditure on housing at this time would be of the greatest value.

My Lords, looking at the Amendment from the Scottish angle, I have tried to show the House that I do not think that the Government's record, certainly from the long-term point of view, is too bad. Therefore I do not think it would be right to vote against the Government this evening. Perhaps somebody might say, "You had better abstain if you do not think it is too bad", returning a verdict of "Not proven". I do not like that very much at the present time, either. Rather do I think that we should support the Government in relation to Scottish affairs at the present time, with the knowledge that, before too long, we are to have a debate in this House on the Scottish economy. If, by that time, there are not signs in one or two respects of continuing help, then we may, I think, look at it again: but I consider it would be both ungenerous and wrong at this moment to vote against the Government in this respect.

My Lords, I believe in the future of Scotland in the United Kingdom. I think it is important that the Government, from both the long and the short-term points of view, should give us help; but I think that when people there realise just what has been happening during this difficult period of transition, and when they come in several years' time to see where they are placed, they will be well pleased.

5.46 p.m.

LORD PEDDIE

My Lords, we have listened to at least one speech during the course of this debate which has shown a most entertaining dexterity in avoiding the real issues that are before this House, and I have no intention of wasting a great deal of time upon disputation concerning the definitions of "rigidity" or "stagnation". If we are rigid, without doubt we shall soon stagnate: if we stagnate, we shall swiftly approach the rigidity of death. I am quite certain that every Member of this House is quite convinced in his own mind that no one can find the slightest degree of satisfaction with the present economic state of our society. That is the real issue that is before us in this debate; and our Amendment focuses attention upon the moribund state, economically, of our society to-day, and complains with justification that eleven years of Conservative Government have had little to show in effecting a development of this country's resources and creating that stable employment to which the gracious Speech makes reference.

Personally, I feel that there is really little need to argue the case by the production of statistics in order to demonstrate that things are not as they should be. The Chancellor himself has only recently indicated and agreed—indeed, he has admitted—that the industrial state is moribund, and that there is a declining confidence, not only in the minds of workers but in the mind of management. The gracious Speech contains the suggestion that Her Majesty's Government will continue to promote efficient and sound expansion of the national economy, with a high and stable level of employment". My Lords, in the light of past experience, if the intention is to pursue the same policies, I think this sounds more like a grim threat than a golden promise, for the facts indicate, quite clearly, that the Government have shown a complete inability to promote visible industrial expansion—and that during a time when international circumstances and the economic environment have certainly provided opportunities far more favourable than ever were those presented to the Labour Government that followed upon a period of complete war-time devastation.

We have seen expanding world trade during that period of eleven years, and yet Britain's percentage of that world trade has fallen. The noble Viscount the Leader of the Opposition quoted certain facts, which I need not repeat, but I will at least draw attention to one illustration he made concerning the Federation of British Industries' survey. No one can complain that that is a political document. Yet there is clearly an indication of increasing surpluses of industrial activity—worse this year than it was last. Investment is declining and. worst of all, there is an increasing lack of confidence. This is not a political statement: it is a statement, as my noble Leader indicates, made by a responsible body like the Federation of British Industries.

Now it would be churlish not to welcome the tax concessions made by the Chancellor of the Exchequer in another place a couple of days ago, but one can be somewhat amused at the righteous self-satisfaction of the Government; self-satisfaction of a character that savours of the man who savagely knocks down his victim, then wants some commendation and credit for helping to pick him up. That seems to be the general attitude of the Government at the moment. The reduction in the purchase tax on cars I am sure will be welcomed by the industry; and I think we, on this side of the House, can extract a considerable measure of satisfaction from the decision of the Chancellor because it indicates acceptance of the argument that has been advanced from this side of the House, time and time again, that export trade cannot develop by cutting back home trade.

I remember quite recently discussions in this House concerning export trade and its development and how we on this side had to urge and prove that home trade and the development of home trade is a necessary corollary to the development of exports. While we welcome the tax concessions, all of it seems to be indicative of what my noble Leader described as the "Stop-Go" policy of the Government. I would rather describe it as giving the nation an alternating diet of pep pills and tranquillisers; one knows what would happen to the individual who pursued that sort of diet for any length of time. I can assure the House that what would certainly happen to the individual must inevitably happen to the State.

I might also point out that the car tax reduction—and again I emphasise I welcome it—will create its problems for this Government. I think someone has said that this tax concession means jam for the industry, and I am suggesting that some of it will spread on to the roads. There is going to be an increase, and I hope there will be, in the number of cars that are purchased for home use, which will provide a reduction in production costs. But do the Government honestly believe that the present state of the roads is of such a character as to enable those roads to carry that increased traffic? There is going to be some difficulty in that regard.

The Chancellor of the Exchequer and Government spokesmen have quite rightly indicated the necessity for taking action to stimulate employment, and particularly in those areas where unemployment is above the national level. In (the light of that I would ask Her Majesty's Government how they explain the situation which was expressed in a statement made by the Director of the Lancashire and Merseyside Industrial Development Association only last night. He said that not enough is being done to help attract new industry to the North-West. He went on to say that it is foolish to turn down new schemes for the North-West. We want to expand, and we have the know-how and skilled labour to do it. I would ask the Government, in the light of the statements they have repeatedly made, how they can justify the Board of Trade's refusal of industrial development certificates for an extension to a new engineering factory at Wythenshawe, Manchester and a new engineering factory in Bolton. I will be quite honest. I personally do not know the circumstances for such decisions, but they certainly seem remarkable decisions in the light of statements that have been made recently in regard to the anxiety on the part of the Government to stimulate industry in the North, particularly, where the standard of unemployment is higher than the national average.

I know the argument has been advanced in your Lordships' House that some excuse for our non-development in relation to the development taking place on the Continent is that our manpower is not expanding as fast as that of other countries, particularly France and Germany. I feel that statement is indeed strange in the light of recent immigration legislation and in view of the fact that unemployment is rising, and rising rapidly. I have already heard it stated that the unemployed numbered 501,000 in October: 2.1 per cent. of the working population, a jump by nearly 50,000. It is the industrial North that carries the main burden. The average for all development districts is 5 per cent., and in some districts in the North it is far worse than that: in the Hartlepools 6.7 per cent.; Greenock and Port Glasgow, 7.4 per cent.; I might also say that the figure for Milford Haven and Pembroke Dock is 10.7 per cent. I could quote others. Yet the noble Viscount the Leader of the House (if I heard him aright, and I hope I am not misquoting him) tells us that pockets of unemployment are frequently caused by excessive wage demands. Yet we find in the Midlands and the South——

VISCOUNT HAILSHAM

My Lords, the noble Lord is not misquoting me; he is just not quoting me.

LORD PEDDIE

I am appreciative of the noble Viscount's adroitness in dealing with situations of this character, but I made a note of the point he was trying to stress at that time and that was——

VISCOUNT HAILSHAM

What I said if the noble Lord will forgive me, was that rigidity was certainly a cause of unemployment in a buyers' market, and I stick by that. I went on to say that that being the case, in a buyers' market rigidity itself had been caused over the past few years by a wage-push inflation, and that again I stick by. But I do not think I can subscribe to the proposal attributed to me at all.

LORD PEDDIE

I must accept the noble Viscount's explanation. He appears to be quite rigid in his determination to pursue that policy.

VISCOUNT HAILSHAM

I say the same thing.

LORD PEDDIE

I will leave the point. If there are any people who believe that unemployment is caused by excessive wage demands, I would point out for the benefit of those persons that we find that the Midlands and the South, which have the lowest rate of unemployment, have by and large the highest level of industrial earnings. In those areas where we have the lowest average industrial earnings we have the highest level of unemployment.

However, I want to deal with the matter from another aspect. I know we can refer to this in terms of human despair, and I have no desire to become emotional in this matter. It does not need much imagination to realise what it means in terms of 500,000 people out of a job. I would just draw your Lordships' attention to the fact that, again in the industrial North, one in every five boys who left school last summer is still without work. It does not need any words of mine to draw attention to the social problems that attend upon this fact, the ultimate difficulties that are going to be created by the lack of proper training for these youths and the difficulty of effecting recruitment of skilled labour in the future.

I would also draw attention to another aspect of the question of unemployment. Quite apart from the individual aspect, if Britain is to meet the challenge of new techniques (the noble Viscount the Leader of the House made great play with this, and I agree with him that we have to be challenging in our attitude towards the acceptance of new techniques), this demands flexibility and mobility of labour, and these can be achieved only by and through the confidence and cooperation of labour and the trade unions. How can one expect to draw on the mine of workers' confidence, when they have real doubts about the future of their employment? What opportunities are there for effecting the rationalisation of industry that would involve transfer of labour, if, in fact, transfer is impossible? It is indeed a bleak prospect. I have listened to some glib speeches about what we need to do with the railway system. It is easy to sit back, knowing that you are not likely to be personally affected, and talk about other people being thrown out of a job. The difficulty in effecting the necessary rationalisation of the railways will be made increasingly worse unless we can deal satisfactorily with this question of employment. How can we get this confidence? If the present policy of the Government is pursued, how can we feel justified in answering those people who believe that rationalisation and redundancies lead to permanent unemployment? I think that this is one of the most important dangers that arise out of the present unemployment problem.

Lastly, I refer to the Bill mentioned in Her Majesty's gracious Speech requiring employers to give their employees written statements about terms of employment "and to prescribe minimum periods of notice." Frankly, I am a little suspicious of the timing of this action. I have here a copy of the Conservative Manifesto of 1947. The wording in the gracious Speech and the wording in the 1947 Manifesto are almost identical. I do not know whether this is a death-bed repentance. I do not know if it can be explained why, if this was so good as to be recommended in 1947, we have to wait eleven years before the Government introduce it. I do not know whether it is an attempt to soften the blow of still more unemployment and to prepare for increasing redundancy, a redundancy not created by healthy change but by a sick decline in the economy of the nation. I hope that that is not the case. The Government will certainly have to justify their position in the light of the gracious Speech.

I would conclude by emphasising the fact that these economic problems cannot be tackled in isolation. I believe—and I am confident that in this regard the noble Viscount the Leader of the House will agree with me—that the sporadic efforts of the Treasury are completely out of date. I believe that annual Budgets and all the paraphernalia of the Budget speech ought to be as dead as the dodo. Far more practical application to this problem is needed. I believe that the action of the Government can have enormous influence upon the destiny of our trade and economy. So far we on this side have seen little evidence of anxiety on the part of the Government to introduce real planning, planning that would show a determination (to pull this nation out of the economic trough.

6.6 p.m.

LORD SHACKLETON

My Lords, I am sure that your Lordships will have welcomed the moderate tone of many of the speeches in this debate, in marked contrast to that of the noble Viscount the Leader of the House, to whom I shall come later. I should like to follow some of the points which my noble friend Lord Peddie has made and relate them to the economic situation from a different angle. Since we have really had nothing from the noble Viscount on the economic Situation, I would ask the noble Earl who is to wind up for the Government what is their present attitude towards the targets that have been set by the National Economic Development Council. The Council are in the process of producing a report, but so far I have been able only to get hold of a Press hand-out.

The Council have suggested that we should achieve an increase in production over the next four or five years at a rate of 4 per cent. per annum. Your Lordships will remember that once Mr. Butler talked about "doubling the standard of living"—mysterious phrase !—in 25 years. It is obvious that at the present rate, under !the Government we have had for the last eleven years, we are not going to get anywhere near this. We are now running at somewhere under 2 per cent. There are many reasons for this, which I frankly admit are not entirely the fault of the Government, but we should like to know whether this instrument which has been created by the Government is to be taken seriously. It is clear that they expect an increase of exports of over 5 per cent. per annum and an even higher increase in investment of 6 per cent. I would ask the noble Earl, Lord Dundee, whether it is not the case that private investment shows signs of declining at the moment. Our complaint, which is the basis of this Amendment, is that as yet there are no positive signs of the Government's doing anything, other than by fiscal or monetary policies, to achieve the targets that we all wish to achieve. These are very considerable targets, and if we are going to meet some of the obligations to which the Government have already committed us—for instance, with regard to the expansion of education—we have clearly to advance at a rate approaching what the National Economic Development Council suggest.

Over the last three years, apart from the last eleven years, and leaving aside Lord Derwent's one year, the Government have been obsessed by the fear of inflation and have devoted too much of their efforts to controlling it—and, of course, they have lamentably failed even in that limited target. There was an article in the Financial Times the other day by Mr. Harold Wincott. which pointed out that even if you buy your equities at the top of the market you can rely upon successive Chancellors of the Exchequer to float you off in due course: and Chat is precisely what Mr. Maudling did yesterday. He has started to float off again those people who were a little worried but had the sense to hang on, under successive Tory Chancellors of the Exchequer, knowing that Tory inflation would go on. We have had very little from the Government—and we are looking for it to-day—on their economic policy. I must confess that the new Chancellor of the Exchequer appeals more to me than some of his predecessors. Certainly he was pretty frank about some of the problems that confront us; and he referred to one matter that has hardly been dealt with to-day—that is, the problem of our balance of payments and of international liquidity. This is the other aspect of the picture, the bogy that has made it so difficult for a Conservative Government reluctant to take positive measures towards planning to enable the economy to expand.

There are some encouraging aspects of the situation, not the least of which is the improvement (I am sure that some noble Lords will agree with this) in international banking techniques. There is little doubt that the working of the International Monetary Fund and the closer co-operation between central bankers in other countries and banking generally is making it much easier to iron out these uncomfortable movements of short-term funds across the international exchanges. It is unfortunate that the Chancellor's efforts to advance further with regard to a more rigidly international monetary system have not so far yielded success. I do not blame him for this. Unfortunately, there are some international bankers who are reluctant—partly because their needs are not as great as ours—to provide a greater measure of international liquidity. This is the bogy that has always bedevilled our position in recent years.

It is absurd, of course, to argue that the Government have achieved a satisfactory advance during their term of office. They know that they have not done so, and we know that they have not done so. There are some worrying aspects, even now, which we hope the Chancellor's measures will go some way to help. There is still this declining private investment. I doubt whether (and the experience of the last few years bears this out) this type of sudden reliefs every two years or so, whether in connection with General Elections or the temperament of the Chancellor, is going to take the place of positive planning. The Labour Party have over the years put forward a number of very definite views as to how they would seek to achieve better planning; and if we go into the Common Market it is likely that even a Tory Government will be pushed further along the road of planning.

It might be more responsible to ignore the speech of the noble and learned Viscount, Lord Hailsham. It was one of his ripe vintage speeches of the kind with which he used to rock Members in another place. The trouble is that the noble Viscount made some remarks which I think are positively harmful and dangerous in the present situation. He is not particularly strong on economics. The best speech that I heard him make was when he re-wrote the end of Lady Chatterley's Lover in the debate that we had on that subject. In these wider fields he can be most entertaining and stimulating, but when he gets down to this sort of speech, I think he becomes positively mischievous. To start with, he analysed the Amendment wrongly. He said that we said that the stagnation was a disease. We did not say that. We say that stagnation is the symptom, and that the disease is the present Government.

As my noble friend Lord Peddie said, rigidity and stagnation do come together. If you leave the patient in bed long enough, you will get rigidity as well as stagnation. There was nothing in the way of a constructive proposal from the noble Viscount. He talked about rigidity in defence. If ever there was a Government with a rigid Defence policy—and I admit that we all have our particular things to follow—it is this Government. It is this Government which believes in bombers and atom bombers, and is reluctant to think of this wide, sweeping vision of satellites which the noble Viscount put before us. I remember an earlier speech that he made in which he said, as Minister for Science, that it was not his intention to hurl satellites into orbit. Now he is perhaps doing so.

VISCOUNT HATLSHAM

My Lords, I do not wish to interrupt this entertaining exposition, but I think I was talking about man-carrying satellites. Of course, I have always been aware, since our policy changed in (I think it was) 1958, that we were going to put satellites in orbit. We have already started with Ariel I, and we hope to have Ariel II and Ariel III in due course; and Ariel III, I hope, will be British-built.

LORD SHACKLETON

That is fine; I like that. But it does not suggest that the Government show a great flexibility.

Here I should like to return to a point made by my noble friend Lord Peddie. He, perhaps, is more courteous than I am: he accepted that the noble Viscount had got himself out of his difficulty on the push of wage demand. I made a note at the same time, and I am quite certain (we shall see in the OFFICIAL REPORT to-morrow) that the noble Viscount attributed the troubles in Northern Ireland to the push of wage demand; and he attributed rigidity to this, too. This is absolute economic nonsense. If there is a major factor of rigidity in industry and the economic situation, it is low wages: it is the failure of wages to rise, particularly in the technologically more backward industries, those from which following competition will come. Unless these wages rise, those industries will remain rigid and we shall not move into other and more forward-looking industries.

Our complaint against the Government is that they have failed to plan these changes. They have failed to make adequate arrangements for redundancy. There is a certain amount going on with regard to re-training, and examples have been given. But there is nothing like enough to meet a situation which, as noble Lords have shown, is serious in certain directions. In certain areas there is a degree of unemployment which is disastrous to the community and a source of real suffering. The Government have failed to do this; and if they attribute it to the fact that wages have gone up too much in those areas, then I can only say, Heaven help this country! Fortunately, I do not think the Chancellor of the Exchequer would share the noble Viscount's views.

Then, again, the noble Viscount accused the Labour Party, and I think the trade unions—certainly he accused the Labour Party—of not trying to cooperate in the technological revolution. I think the noble Viscount was positively discourteous to the House in this matter. We have had a number of debates in which noble Lords from many parts of the House, and certainly some of my noble friends, like the noble Lord, Lord Citrine, have made really important contributions on the need for technological advance, and for improved managerial techniques. To talk about Luddites is an old cry which will not lead to an improvement in productivity. I would remind the noble Viscount that this is National Productivity Year, in which there is a great deal of co-operation going on between trade unions and employers, and in which a few employers and the more forward-looking trade unions are hoping to achieve something. Yet all we have from the noble Viscount is something about restrictive practices in the shipbuilding industry. I would remind him of a Report produced by his Department, the Department of Scientific and Industrial Research, which in 1960, in analysing the troubles of the shipbuilding industry, said: The total effort at present devoted to research and development in the field of shipbuilding and marine propulsion is insufficient in relation to the serious problems now facing the industry. In particular almost no organised research has hitherto been applied to the industry's production and management problems with the object of increasing the productivity of labour and capital and reducing costs I must say again to the noble and learned Viscount that, however much we may talk in this House, and however much we may differ on the particular economic solution to problems, this is a responsibility of management, certainly good management.

There are noble Lords in this House who have experience of management and who know that there are ways of getting excellent co-operation and labour relations. We have the noble Lord, Lord Lucas of Chilworth, talking in extravagant language about Ford's, but it is no good just expecting an industry or a firm, where trouble has existed, to change overnight. We are reaping this particular whirlwind. I remember that, in the earlier investigations and troubles over Brigg's Bodies and Ford's, Mr. Carron, one of the most moderate and cautious of trade union leaders, was driven almost mad with fury at the intransigence and stupidity of certain of the employers. We know that Ford's are making a determined effort. They are faced with a tremendous problem, and the noble Lord, Lord Citrine, referred to some of the difficulties that were intervening. There is the contrast (I am sorry to take up the time of the House on this) of the Fawley experiments to which we have referred as an example of the way in which progressive, intelligent and patient management, taking a couple of years dealing not merely with union officials but with shop stewards, have been able to get rid of restrictive practices, of most of the overtime, and to achieve a relationship which is entirely good for all concerned and for the country.

I still do not know what Government policy is in economic terms. We know that they are going to try to scramble into the Common Market. I happen to be in favour of going into the Common Market, but I do not want to scramble into it. I think the only serious contribution we had from the noble Viscount was his regret that the railways were nationalised. I do not know whether his noble friends agree with that. Undoubtedly we paid too much money for the railways. But I hope that we can plan our approach to these problems. We are building ourselves up serious trouble if too abrupt solutions are applied in industries where there is a long history of failure to meet the problems. I will not pursue the question of the railways, but I think the noble Viscount showed a frivolity and irresponsibility such as I have rarely seen him achieve before—and he has done pretty well in the past on other occasions. The noble Viscount knows that I have a high regard for him in many fields, but if his speech represents the views of the Government, then any doubts that noble Lords on this side might have had about voting against the Government are swept away.

Of course we need fresh ideas and technical change; and of course we must all co-operate in it. We need to expand the universities. We know that the Government have not the resources to produce the expansion necessary. The noble Earl, Lord Jellicoe, spoke yesterday about the increase to £30 million in, I think it is, the non-recurrent grant. The University Grants Committee based the whole of their expansion plans on £30 million, and what frightened us was that the Government were not going to lend that £30 million. Indeed, there was concern that that sum would not be enough, because at that time the Government, perhaps wanting to keep £5 million up their sleeves, were not explicit. But this sum will not be sufficient to meet the needs with the appalling increase in building costs which seems to go on all the time and which is having a possibly more serious affect on industrial development than anything in the way of bank rates. We need to achieve very much more nationally in terms of production. We want it for education, and we want it, above all—and I would emphasise this point—against the background of a world in which two-thirds of the population are still in dire poverty. There needs to be an urgency; yet, so far as I can tell, there is a total lack of urgency in this Government's policy in regard to this matter, and therefore the Amendment is, in my view, fully justified.

6.25 p.m.

LORD STONHAM

My Lords, I think there would be general agreement that the only purpose of a debate of this kind is to see whether, by our speeches and discussion, we can do some good for British industry. We had a speech of that kind from the noble Earl. Lord Perth, who gave us some very convincing reasons for supporting our Amendment and voting against the Government, and who has no doubt retired for a few minutes in order to make up his mind on that point. But I very much regret that that was the only speech we have heard at all from the Back Benches on the other side of the House. I should have thought that on a subject of this kind we should have had the benefit of the knowledge and experience of all the noble captains of industry and finance who adorn those Benches. But we have had a number of very helpful speeches from noble Lords who sit on the Opposition Benches.

I am sorry, and I express my apologies to the noble Viscount the Leader of the House, that for reasons beyond my control I was not here to hear his speech. I am not going to accept the estimate of his speech which we have just heard from my noble friend Lord Shackleton, in what I thought was a sparkling and very helpful address, but I have been given some notes. I am going to accept the estimate of the noble Lord, Lord Lucas of Chilworth, who said of the noble Viscount that his speech contained some gleams of policy midst the fog of political rhetoric.

I had hoped to speak purely as a manufacturer, but I have to pay some heed to tradition. On these occasions there is a sort of political ritual dance, whereby one partner to it quotes a set of figures and facts to prove his case, and the other partner to the dance does nothing about those figures at all, but quotes another set of figures to prove his own point. The noble Lord, Lord Derwent, made some particular reference to that practice, and I must, because of what the noble Viscount said, dance a few steps with him. I trust that I shall be reporting him accurately, but if I do not then I am quite sure he will interrupt me with his usual unconvincing enthusiasm.

One of the things that I understand the noble Viscount said was that he accused the Labour Party of being the archpriests of the status quo. My Latin is conspicuous by its absence, but I understand that means that you believe in standing still, or standing where you are. Of course, the point that the noble Viscount neglects is where we were standing in 1951 when my noble friend Lord Attlee was Prime Minister. The fact is that at that time our output as a nation was increasing by an average of 6 per cent. a year. We were at the top of every league in Europe which mattered in productivity increase, and capital investment; our prices were lower and the cost of living was lower than that of any other country in Europe. If we are accused of being anxious to keep on doing those things—if that is the status quo—then, of course, we plead guilty to that. But I would remind the noble Viscount that if his Government had carried on in the same way as we did, with the same increasing rate, then every family in Britain to-day would be better off by £3 a week in real terms compared with what they are now. That is the kind of status quo that I would believe in.

I am going to pay the noble Viscount back in his own coin by saying that his Party are the handmaidens of the yo-yo, because the whole of Conservative Party policy over the last ten years has resulted in a succession of peaks and depressions as they have made one mistake after another and have taken panic steps to cure them. We have heard a lot about rigidity and it has been alleged that it is due to the Labour Party and the trade unions. But the Party opposite have been in power for eleven years; they should have lent some colour to the nation's industrial policy.

The noble Viscount, Lord Hailsham, said that the railways should have been modernised but not nationalised. Which Party has been responsible for the fact that the modernisation programme of the railways has been held up again and again? It is, of course, the Government Party. He spoke about education, the Press, shipbuilding and the construction industry, and described them all as Luddites, as performing a Luddite-type of policy of restrictionism. I would ask the noble Viscount whether he has considered the coal industry? Would he consider that my noble friend Lord Robens had not succeeded in convincing miners of the need to accept maximum re-equipment and modernisation methods? No one likes being turned out of his job or, indeed, his village, but there has been in operation a major change in the coalfields of this country which would have been quite impossible if they had not been under public ownership. I can point to the electricity and gas undertakings where, right throughout the piece, there have been major changes which have affected the employees and which they have accepted.

The reason why there is success in this matter in some industries and not in others was clearly shown by my noble friend Lord Citrine, who I (thought made an extremely valuable contribution to our deliberations, and also by my noble friend Lord Shackleton. It depends entirely on management. I speak, as the House knows, as a small manufacturer. I have a unit of about 150 employees, and that is the kind of unit which is capable of management, so far as labour relations are concerned. I do not mean, of course, that with a vast company employing 50,000 people there cannot be excellent labour relations; but it does mean, first of all, that the will has to be there from the top; and, secondly, that you have to begin by breaking the numbers down, as it were, into understandable units. I am at the moment personally engaged in an exercise which I do not suppose is being carried out anywhere else in the country. A month ago, with the co-operation and knowledge of the trade union, I made demands on my workers for reductions. I might say that they were very well paid before hand. We have already reached three agreements, and nobody has lost an hour's time; nobody has resigned, and nobody has gone on strike. That is because the men are told Why. Things are explained to them all the time. They are given their say-so, as it were, and it counts. That is the kind of relationship that we should try to build up in industry.

I deplore, with my noble friend Lord Citrine, the fact that control has to a large extent passed into the hands of shop stewards. I say that employers and the trade unions are alike to blame, and I would say more the employers, because they have completely lacked courage in facing up to this situation. First, they have not told the men and, secondly, they have not had the guts to stand up when they had a real point—and there is a time when they have to do that. The difficulty with regard to trade unions, whilst I agree that trade unions having like objectives should come together, perhaps, in larger units, is that they must still on their side maintain the kind of conditions in which they have a proper relationship with employers. And the one thing I regret, above all, is that so many trade union officials are insufficiently paid. It is a wonder that we now have men of such great distinction in the trade unions, dedicated men and extremely capable men, who are willing to work for such low salaries.

There is one thing I disagreed with in what my noble friend Lord Citrine said. He said that this country was American-controlled. Certainly that is not the country from which the shop stewards have their instructions.

LORD CITRINE

I said the company.

LORD STONHAM

I misheard my noble friend, but what I said anyway is quite true; unfortunately we know the country from which most of them get their instructions. I feel that the Government have underestimated the situation.

VISCOUNT HAILSHAM

My Lords, I am sorry to interrupt the noble Lord at this point. I was trying to seek the reference in my speech which he attributed to me. I think it is important that I should get it right. He enumerated a whole series of industries and said that I called them all Luddites. I think that if he reads to-morrow morning what I said he will see that I was referring to a certain statement in the Shawcross Report about newspapers.

LORD STONHAM

I am grateful to the noble Viscount for having made that clear, and equally grateful that he has mentioned newspapers, because I happened to be sitting at luncheon yesterday right next to two, I think, of the largest executives in the newspaper world, and I asked them this very question: What are you doing about the Report? Have you met yet? They said: "We are doing nothing. We have not met yet." And that gives confirmation of the very thing that I am saying. These employers must discharge their responsibilities and get on with it. It is no good blaming the men, as my noble friend Lord Walston mentioned, for this kind of rigidity. The only thing the men have to sell is their labour. That is their only asset. If they cannot sell it, they have nothing. Of course they want to hang on to their jobs as long as possible and they do not want to be thrown on to the scrapheap of unemployment.

We are in a very serious situation, and I do not blame the Government for trying to put the best surface on it they can, so long as they do something about it. We have more than half a million people unemployed, the largest number in October for fourteen years. I have been in business for 38 years—and remember this is right from 1923—and in my business, however bad the year was, October was the best month in the year. That is not so this year; October is very bad. I have reports from representatives all over the country. So far as Wales is concerned, we have had ail the orders coming from there this year. In Merseyside there are no ships on the stocks; 2,000 men are laid off. At the atomic accessories plant 3,000 men are to be laid off. I believe that the situation has become a lot worse in the last three or four weeks. I think that Mr. Maeleod's estimate of perhaps 600,000 unemployed is likely to be proved an underestimate; and that is a serious matter. It is the same with Scotland, as the noble Earl, Lord Perth made clear. It is the same in the North-East and elsewhere; and there are hundreds and thousands of families who are going to face a bitter winter.

We speak about a European home market. We hear it said: "Go into the Common Market, and we shall have a home market of some 200-million people." But we have not gone into the Common Market yet. Let us begin to think of our own home market and see whether we can build it up for the benefit of our industries. Because home sales will not recover of their own impetus from the consequences of this long-drawn-out economic squeeze and credit restraint. We need real stimulus and, above all, a renewal of confidence based on a sound plan. I am not opposed in principle to this reduction in the purchase tax on motor cars. Good luck to the motorcar industry! But I will say this: that there are plenty of people in the motorcar industry to-day who are saying: "This is the eleventh change in purchase tax that we have had in the last eight years. We have been the victims of the yo-yo. We have been an instrument of Government policy eleven times up and down. How long is it going to last?"

We do not want industries to be the instruments of Government policy, the medium of a shot in the arm for the economy. I am going to say that this was a wrong step for the Government to take—and I will say why. I am in what is now a depressed industry, the furniture industry, which is subject to purchase tax, but I do not believe that a reduction to half the present rate of the purchase tax on furniture would or could make any difference, or at any rate, more than very little difference, to demand. That largely goes for taxes on most of the other consumer durables. My objection to this cut in purchase tax with respect to motor cars is, as my noble friend Lord Peddie pointed out, that the country's roads are totally unprepared for it.

This is typical of the Government's way of adopting an expedient and never part of a total plan. It always seems to be something they suddenly thought of, and there has been a bit of extra pressure in one direction and they think, "If we do this it will make the overall figures better". The kind of thing we get is expenditure on Hyde Park Corner, where we have cured one bottleneck and created two more—two at the price of one. People are saying that the policy towards the motorist to-day is: if he is moving stop him, and if he stops fine him. That is the condition of our roads, and we are going to inject some hundreds of thousands more cars than before. It will create a great deal of work over many industries but it will also create a deal more work for the undertaker, and that unfortunately is something we have to think of.

Why do I say that dealing with the thing at the top, as it were, taking a bit off the top, purchase tax, just where the consumer comes in, is not the kind of help industry wants as a whole? You have to do it at the bottom. If you make our heavy industries, our basic industries prosperous, fully employed, fully developing, the other industries are bound to be all right. Of course they are. It is quite impossible for the lighter industries, if you like the consumer durable industries and the ancillary industries, not to be prosperous and fully employed if the main major industries are fully employed. That, I believe, is the view of any man who is directly in control of an industry and who really has to make things go. It is so patently obvious that once the wages and expenditure in these major industries begin to fructify it must go through the whole of the commercial structure.

I would remind the noble Earl who is going to reply of Mr. Per Jacobsson's view that there is danger of world deflation and the only way to overcome that is to be ready and expanding, and we must expand in the basic industries. Indeed I believe that was made quite clear in The Times editorial of Monday which said: The trouble at present is that some of the excess capacity now being created, both in men and equipment, is concentrated in particular parts of Britain and in particular industries: in Scotland, Wales, the North of England, and Northern Ireland; and in steel, shipbuilding, coal, railways. In short both the basic trades and the older industrial areas are having a thin time. The Chancellor of the Exchequer himself, Mr. Maudling, said in his speech: [OFFICIAL REPORT (Commons), Vol. 666 (No. 5), col. 623.]: The unused resources are not so much in the consumer goods industries as in the heavy industries and in sections of engineering, and it is these resources, human and material, that we must seek to bring into use. Except for the investment and depreciation allowances, which the noble Lord, Lord Lucas of Chilworth, said quite rightly cannot be felt for a couple of years in real terms, the Government have done nothing for those industries, nothing at all.

It is just fantastic for them to get up and make the kind of case that has been made in this House—for the noble and learned Viscount to talk about Belfast for example. I have been over to Belfast recently; I think I know something of what are the problems there. They want what those chaps wanted who were marching behind the banner, "We want work; we want orders". Time after time, about four times, in this House I have spoken about another order of Belfast aircraft for Northern Ireland. They have not got it. They are doing subcontracting for something else and hanging on by their eye teeth. If the Government do not take steps, when it is in their power, to see that these orders go to these areas where the men are—it is not a wage-push inflation in Belfast; there are lower wages there than in any other part of the United Kingdom—

VISCOUNT HAILSHAM

Lower earnings?

LORD STONHAM

Yes; but do not suggest that that means they are less skilled or able. It is merely an answer to the point about the wage cost inflation.

We have had the Minister's speech, and I have mentioned The Times article, and I think they prove we are all agreed that revival can begin only through a revival of prosperity in the major and heavy industries, on which indirectly all other industries depend and which in large measure will determine the competitiveness and volume of our exports. It is the basic industries which are most depressed and which feel they have been most let down, and their confidence is all but destroyed.

Those in private ownership—and the Chancellor of the Exchequer said this—are not earning enough either to finance research or to attract the capital necessary for development. Take steel, which has been mentioned. The industry has spent £1,500 million on an expansion programme to bring its output to 28 million tons, more than double the level that we had in 1946. But for a year a quarter of that plant has been idle for lack of business. Steel is the national barometer; when you know the level of steel output and sales you pretty well know what the national prosperity is. There is no surer barometer than that, and our steel industry is working at 25 per cent. below capacity. The extraordinary thing is that it is the sheet steel industry—which was not doing so badly as the heavy steel industry; I do not say that things were as good as it would like but it was not doing so badly—that will benefit from reduction in purchase tax; nothing at all is being done for the heavy section of the steel industry. The Steel Review, the journal of the Iron and Steel Federation, included this in its last issue—and I think that the Government and the whole country have to heed this kind of thing when it is said by men who know what they are talking about and are not talking for any kind of political reason: The low rate of growth of the national economy in recent years is blamed … for the present difficulties of the steel industry outside the strip mills: 'If this could be corrected and effective expansionist policies introduced and maintained there should be no reason to suppose that more normal rates of working should not prevail in mid-decade' … 'The next few months could therefore be vital. If excessive restraint policies were to be continued for so long as to make reasonable men believe that spare capacity was likely to be a longer-run rather than shorter-run phenomenon, the "commitment to growth" accepted by much of British industry in the late fifties could well be destroyed for a long time to come'. The commitment to growth"— in other words, confidence has been completely impaired. You do not make noble Lords who sit opposite, and lesser ones like myself, captains of industry; you do not make us invest by exhortation or speeches; you do not make us go to the bank manager, Whatever the terms are, to raise a loan, unless we think there is a chance of improving, of expansion or of buying machines which will increase production and improve our employment or business. That is the only impetus, and if industry as a whole, and steel as a whole, has its confidence sapped in that way it is going to take a long time to put it right.

There is one other thing I want to say and one other major industry I want to mention—namely, the power industry. Whether or not we enter the Common Market, our rate of expansion will depend primarily on power. The Electricity Council fully recognise this, and in their Annual Report published only in August last they announced the generating plant programme for the year 1966, and that was at the level of over 4,500 megawatts. That is double the programme for the next three or four years, and it will be higher still in 1967. The year 1966 is the year when, according to N.E.D.C., we should have a gross domestic national product of over £32,000 million—a tremendous advance, which can be achieved only with the power, and will not be achieved without the power; and we shall not have the power unless we have the equipment.

Most of this increased plant will come from the largest plants, of which there are only four in the country with the resources to manufacture and install them. They are confronted with two major problems. Of course it will require a heavy programme of capital investment. It will be impossible for them to get the necessary capital if the present low rate of return to which the Chancellor referred on Monday continues; they just could not raise the money on the market. Therefore, this is a matter which the Government must seriously consider with this industry, and soon.

The second problem that they have is that the large transformers, the switch gear and the turbo-generators have only one buyer, the Central Electricity Authority Board, who are in the position of monopoly buyers. That is a position which imposes on the Board a responsibility not only to the heavy electrical industry but to the economy of the country as well. At present there is a tendency for the Electricity Board to shop around the world with tenders for large equipment. This would not matter if there were a reciprocal flow of tenders from Europe; but there is not, and there is not likely to be. The programme envisages the construction of 25 large power stations in the next five years. I would submit that the Government should give a categorical undertaking in the near future that those British power stations will be built and installed by British firms, otherwise we cannot expect them to take the immense risk of stepping up their output to meet this demand.

I think that basically what I have suggested about the importance of the major industries, and letting the work flow and the money flow, and the consumer demand flow so that it permeates into other industries, is unanswerable. My noble friend Lord Shackleton said that it was not stagnation which was the disease, but that the Government was the disease. We all laughed, because it was funny—and true, of course. But the real point that I am trying to make is that it is no good trying to cure a man's blood disease by treating the pimples. You must get to the source, the foundation of the trouble; and the foundation of our national stagnation is the ill-health of our major industries. That is where we ought to start, and not go messing about in the way that the Government are doing.

The second and last point I want to make is this. N.E.D.C. is undertaking invaluable and important work, but it is a Committee. We want many subcommittees, each dealing with separate industries. I know that we have sixteen of them already operating or being considered. That is necessary and it is important. But when they have each made their reports, what are we left with?—something on paper. No doubt it will be sound, good, practical advice. If it is going to be translated into terms of real benefit for the country—more work, better conditions, more wealth, more happiness for the people—then it needs action. It must be followed up. I hope that tonight, if nothing else comes out of this debate, the noble Earl will give us an assurance that the Government really mean business; that they are going to stop messing about, uttering slogans, coining words in order to fob off the inevitable in the hope of winning the Election. Give the nation the chance to deliver the goods, and the nation will not fail.

6.56 p.m.

THE MINISTER OF STATE FOR FOREIGN AFFAIRS (THE EARL OF DUNDEE)

My Lards, may I be allowed to offer a warm welcome to the noble Lord, Lord Milner of Leeds, whom I am so glad to see back in his place. We all hope that he has finally and completely surmounted the troubles which have caused his long absence, and we hope to see him again as often as we used to do.

I am glad to have the privilege of winding up this most interesting debate which we have had. It was opened in fine fettle by the noble Viscount opposite, and although, probably due to my own faults of apprehension, it did not seem to me that the trend of his argument was quite so coherent as it usually is, he left me in no doubt whatever that, for one reason or another, he intended to move a Vote of Censure upon the Government. He was followed by my noble friend the Leader of the House, who I thought made it even more plain that he intended to move a Vote of Censure on the Opposition. The noble Lord, Lord Citrine, who spoke third, quite rightly complimented his own Leader on the excellence of his speech, and he mentioned that it was particularly meritorious because the noble Viscount opposite was speaking without the help of any Government brief. I should like respectfully to congratulate my own Leader in the same way. I think that if he had been using a Government brief his speech would not have delighted your Lordships in the way that it did. It would not have given that colour to the debate which, as my noble friend said, is necessarily lacking in the gracious Speech from the Throne.

After the first two opening speeches I thought that the debate descended from a high level of controversy to a more modest level of discussion. The noble Lord, Lord Citrine, if I may say so, made what I thought was a most helpful and thoughtful speech. I agreed very much, as I always do, with what he said about industrial relations, and I think very largely with what he said about planning, which is, of course, very relevant to the subject which we are discussing. I do not think anybody can have a policy without having a plan, but the word "planning" in public political controversy is used with all kinds of gradations of meaning and all kinds of overtones. We often use it in different senses. The noble Lord referred to the Prime Minister's book on planning published before the war, with which I have always agreed. And, so far as I remember, our present system of guiding the economy by monetary and fiscal methods is very much what he advocated then. The only thing is that it is now condemned for producing what is called an alternation of "Stop" and "Go", and, of course, we all want to move a little beyond that.

I was interested to hear what the noble Lord said about his own experiences on the Electricity Boards. I have never been on an Electricity Board, but I have been on an Advisory Committee to one. I think they have all done very well indeed. I cannot say anything now about the Mackenzie Report, to which my noble friend Lord Perth referred, but, as I have said, the Electricity Boards have done a good job.

The noble Lord mentioned that planning was very difficult because by the time you had made your plans and had got a new machine it was already obsolete.

LORD CITRINE

My Lords, I should like to qualify that, because I may have misled the House in what I said. What I had in mind was this. We were faced with plans which had been prepared before the war. We either had to base the orders on those plans or wait until new plans could be drawn up, which would have meant a very long interval of time. In that sense we had to place orders on designs which were at that time in the stage of obsolescence.

THE EARL OF DUNDEE

My Lords, I do not want to have a long argument about planning. I think we should all aim at agreeing on what is the best kind of planning for the future of industry. Some of your Lordships would be more inclined to use physical controls in planning; others would not. I have no doctrinaire prejudice in the matter. It seems to me that the kind of restrictive planning which was necessary both during and for some time after the war would now have many disadvantages. For one thing it takes up far too much manpower; far too many people have to be engaged in deciding what goods will be allocated to this firm, how much to that—in fact, half the people are occupied in deciding what the other half of the people in the country shall do. Very often when you made a plan, even with the best planners in the world, you found that, by the time your plans had matured and come into operation, conditions were not what you thought they were. What we want in planning is a very broad form of guidance, not only by the Government, but also by bodies in the country which are willing to co-operate with the Government. I think that we ought to seek for agreement rather than enter into controversy on this topic.

The noble Lord also asked some questions about the National Incomes Commission, with which I think it would be better for me to deal in a moment when I come on to the general question of incomes policy. I have been looking up some of the debates which your Lordships have had on this subject, and I find that in the last three and a half years, or a little more, it has been my duty to reply to your Lordships on behalf of the Government on substantially this subject, in almost these words we are now discussing, no fewer than eleven times.

The first time I did so was in March, 1959. and I see that in that debate I said, in an endeavour to be as polite as I could, that I did not object to noble Lords opposite using the word "stagnation" so long as it was made clear that it referred to a state of affairs in which our industrial production was not actually increasing, although I added that I thought it was a very misleading word to apply to our industrial position at that time. I must say that the more often I discuss this subject the more strongly I feel that this word, "stagnation", is a hopelessly misleading and irrelevant word in discussing the economic problems of Great Britain in the 1950's and 1960's. I do not want to prevent any of your Lordships from being like Humpty Dumpty and using words to mean what you choose them to mean; but really, my Lords, the suggestion which is being made in all these debates that we are in a condition of industrial stagnation is one that will not bear examination for one moment.

This matter was gone into at some length just now by the noble Lord, Lord Stonham. I have never tried to disparage what the Labour Government did from 1946 to 1951. I think that we are all capable of understanding the different circumstances. I think it is very creditable to achieve a percentage increase in production as they did, but starting from the low level at which one is bound to start after a war I think it is rather a doubtful assumption that we could have gone on increasing our production at that percentage rate for the next ten years, thus earning now an additional £3,000 million a year, which of course we always say could have been spent on all the things for which we should like to have that sum available.

LORD STONHAM

That may well be, my Lords, but N.E.D.C. now thinks that we can increase at a rate of 4 per cent., compared with 2.7 per cent., which was the average rate of increase over the last ten years.

THE EARL OF DUNDEE

I will say a word about that in a moment. I am not going into a great number of statistics, but I have a few here. I think that if you use statistics properly they are quite friendly and helpful things, and I do not think you ought to use one or two without using others which may balance them. If you do not attach too much importance to them, and if, on the other hand, you are not too rude to them, they will be quite ready to help you.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, might I ask the noble Earl exactly which standard of judging statistics he proposes to adopt? Is it one that he gets from a Government brief, or would he accept the statistics of the Federation of British Industries?

THE EARL OF DUNDEE

My standard of dealing with statistics is one of pure objectivity.

VISCOUNT ALEXANDER OF HILLSBOROUGH

Of the Tory Party.

THE EARL OF DUNDEE

I have the figures for industrial production from 1946 to 1962; I also have some comparisons with Continental countries and with the United States of America. One slight difficulty about these things is that the Central Office of Statistics have a habit every four or five years of altering their basic year. When you have spent five years in learning about the increase in the cost of living and why it has gone up by so much per cent., you find, just when you think you have it right and begin to think you are rather good at it, that it is in fact 50 per cent. lower than you thought it was because they have started in 1958 instead of 1953. That is a little irritating However, I got the figures from 1946, when the Party opposite began, and the best I can do is the base 1954.

In 1946 production was 69 per cent. of what it was in 1954, and in 1951 it had gone up to 91 per cent. That, as the noble Lord said, is an increase of from 5 to 6 per cent. a year. Now from 1951—that is when we are told the stagnation begins—you go up from 91 to 105 in 1955. Then there is a period of two years in which there was no increase. Then from 1958 to 1960 you go from 106 to 120—a very large increase.

I am afraid you must shift in 1960from the base year 1954 to the base year 1958—I am sorry, but there it is. With 1958 being 100, 1960 would be 112, and on that basis it goes up to 113.9 in 1961 and to 116.8 in the present year. If you carried it on from 1960 on the 1954 basis, it would go up from 120 to 122 last year, and from 122 to 126 this year. Now I am not arguing that these increases are as great as we should have liked them to be, or as they ought to have been. What I am suggesting is that it is not objectively correct to say that there have been just two quick spurts of rising production, with long troughs of depression. What has happened is that there has been a continuous rise of industrial production except for two short periods in which it did not rise, both of which followed a crisis due to our failure to contain our expenditure, our national incomes, in a proper relationship to the increase of production.

The noble Viscount mentioned in his opening speech the comparison with other countries. I have got that, too, from 1953 onwards. In 1959 our industrial production had gone up, as I said before, to 120, compared with 116 in the United States; and now in 1962 it has reached a figure of 133 per cent. compared with 131 in the United States. So our increase of production has been greater in percentage than that of the United States. I think, perhaps, the kind of economic problems we have had here are more similar to those of the United States than to those of Europe.

There is not time for me—and I do not think I need do it, because I have done it before—to go into the various factors which have made it easier for France, Germany and Italy to show a much larger increase in production—and it is very large. On the 1953 figures, Germany had got to 162 compared with our 120, and she has now got to 196. France had got to 150 in 1959, and she has now got to 196. The increase achieved by Italy is even greater, but your Lordships will understand that these figures do not really give a true, comparable position, owing to the fact that some of these countries started from a lower beginning than others, some have a bigger supply of labour, and so on.

But, my Lords, I think that the chief cause which has hindered more rapid expansion in Great. Britain during all these years has been our general inability to wait until we have earned our income before we spend it. Great Britain, of course, is much more vulnerable to the inflationary effects of overspending than most other countries, because we depend so much more on foreign trade and on imports, and when we spend too much, when monetary conditions are too easy, we import too much, more than we can afford That means there is a balance of payments crisis, and, for a country in our industrial position, that means that employment is threatened. If we go on to do nothing about the balance of payments crisis, and allow uncontrolled inflation to proceed, we shall very soon have an industrial disaster with rapid unemployment. That is the reason why it is necessary—I think it is recognised as necessary by all Parties—to try to have some kind of national incomes policy. I think it is in some ways a thing that we ought to be thankful for: that our economic problems in this post-war period—the 1950's and 1960's—are not problems arising from stagnation, from unemployment, from depression: they are problems created by abounding prosperity, which we have had all the time, and it is because of the abounding prosperity that we have got this problem of trying to contain inflation.

Now are we going to do it, or are we going to try to do it, by methods of compulsion? I do not know whether or not they would work—I do not think they would in this country—if there was a law giving some body the compulsory power to control incomes, to fix wages and other forms of income. I doubt if it would work, and it would certainly be inconsistent with "the principles of liberty which we desire to defend in this country. I am perfectly willing to listen to arguments from anybody who thinks that it ought to be done compulsorily, but if you are not going to do it compulsorily, then what kind of voluntary method is the beat way of doing it?

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, could I be quite clear just what is the road which the noble Earl is taking?

THE EARL OF DUNDEE

Yes, my Lords. I am only trying to acknowledge What I think is the general view of your Lordships, that it would be a good thing to have some national incomes policy so that our national expenditure might be kept within the limits prescribed by our production. I think we are all agreed that if that were done our production would increase very much faster, and would therefore enable our incomes to rise very much faster. I do not think that is a very controversial proposition to put forward, and I think it is perfectly clear.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, may I come back now? It is very interesting, and I have followed the whole of this part of the noble Earl's speech very carefully. Of course, the last move of the Government, with regard to the relief of part of the taxation on motor cars, will certainly involve one consequence: that is, a fairly steep increase in the money borrowed for hire purchase, in which not only the old trusts but practically all of the Big Five banks are now involved. On the matter of expenditure to which the noble Earl referred, I just want to point out the hire purchase question. Is there going to be control of the spending of the incomes, as distinct from having an incomes policy? What is going to be done about that? The more the Government seek to level off the income that a man can earn for the only thing that he has to sell—his labour—the greater will be the difficulty when they come to deal with the way in which much bigger incomes than that are actuality spent.

THE EARL OF DUNDEE

My Lords, I am always very interested to hear the noble Viscount's interventions, but I reality think that a law to compel people to spend their money in a certain way would be even more difficult a law than one deciding how much income they should have. All I am talking about is what kind of national incomes policy is practicable, and I was going to answer the questions about the National Incomes Commission which were asked by the noble Lord, Lord Citrine. The differences between this Commission and the old "wise men" is, of course, that the N.I.C. will advise on individual cases referred to it either by the parities concerned or, in certain cases, by the Government, whereas the "wise men" dealt only with general issues. The noble Lord was very anxious to know whether the powers of the National Incomes Commission would be used to compel the production of minutes of meetings, papers and documents which the people to whom they belonged would not wish, and ought not to be compelled, to produce. The powers which the noble Lord quoted from paragraph 10 of the White Paper about this are the powers normally conferred on all Royal Commissions. These words are simply common form: there is nothing unusual about them. There will, in fact, be no question of compelling anyone to give evidence to the Commission if they are unwilling to do so. That would be quite contrary to the spirit of N.I.C.

LORD CITRINE

Might I just interrupt——

THE EARL OF DUNDEE

Perhaps I could finish this paragraph first. There will be no question of compelling anyone to give evidence to the Commission if they are unwilling to do so: that would be quite contrary to the spirit of the Commission; but if anyone unreasonably withholds evidence which the Commission considers necessary for the purpose of its inquiries, the public will have to draw its own conclusions

LORD CITRINE

My Lords, is it not the fact that there is a distinction between the power of a Royal Commission to ask for documents or for attendances and that of other bodies? Is that not true? What is the use of putting in any kind of power which a Commission may exercise—that it can do this and it can do the other, such as request the production of documents—unless there is some power of compulsion at the end of it?

THE EARL OF DUNDEE

So far as I know, no Royal Commission has ever used these powers.

LORD CITRINE

"Has ever used". That is not the point.

THE EARL OF DUNDEE

I do not think so; but, on the question which the noble Lord has just asked, "What is the use of the Committee if it cannot use these powers?", I think that is the same principle as that involved in whether it is any use trying to have an incomes policy it you do not use compulsion. I am arguing that it is better to try to do it without using compulsion, and that is what this body is intended to help us to do.

LORD CITRINE

With every respect, I asked the question: is there not the power, under the terms of this Commission, for it to order the production of documents and to order attendances? Is that true, or is it not?

THE EARL OF DUNDEE

There is no difference between this and any other Royal Commission which has ever existed.

LORD CITRINE

But——

THE EARL OF DUNDEE

May I just finish? These words are common form, and are used in the appointment of every Royal Commission. But there is no intention to use the National Incomes Commission to compel people to give evidence if they do not wish to do so, and I hope that is clear.

LORD CITRINE

Can the noble Earl quote me one single case where an inquiry has been made, under Government auspices, into the affairs of the trade union movement where powers of compulsion, such as those given to a Royal Commission, have been granted? Can he quote me one instance?

THE EARL OF DUNDEE

They are always granted, in exactly these words, to every Royal Commission.

LORD CITRINE

I am simply saying that there has never been any Royal Commission which——

THE EARL OF DUNDEE

I think I have made the position as clear as I possibly can, and I do not think there is any doubt about it.

LORD CITRINE

You are running away from the point.

SEVERAL NOBLE LORDS

Order, order!

LORD CITRINE

Power is given under the terms, and there is no getting away from that fact. I say emphatically that, within my recollection, there has never been such power given to a body inquiring into labour matters, in my trade union experience—never once.

THE EARL OF DUNDEE

If the noble Lord is referring to Royal Commissions, he is wrong. These powers are common form.

LORD CITRINE

I know, but there has never been a Royal Commission into trade union affairs in my lifetime.

THE EARL OF DUNDEE

I do not know that the innovation is one which should be as heavily deprecated as the noble Lord appears to be doing. But, my Lords, the success of the incomes policy, which we think is important for our economic future, does not depend on coercion—that is the whole point of it. It depends on general public understanding and acceptance of the issues arising on what constitutes the national interest; and it is to secure this wider understanding that we think the National Incomes Commission has an important part to play.

My Lords, besides using this word "stagnation" the Amendment also criticises the Government for doing nothing to stimulate activity or to deal with unemployment. I think that part of it has already been fairly well covered in debate. The noble Lord, Lord Shackleton, asked about capital investment. Private capital investment has been running at a very high rate. It rose very much in 1960, and still more in 1961. In this year, as the noble Lord rightly said, there have been signs of a falling off, and it is for that reason that my right honourable friend the Chancellor of the Exchequer has lately decided to increase public investment at the rate of £70 million a year. That will be principally in building, schools, roads and electricity, and wherever possible it will be centred on the development areas, so that the largest possible share of this increase in public investment will go to those areas where unemployment is at the moment higher than in the rest of the country.

As to the other things which we have done, we are now coming out of one of these periods of short stability or stagnation, as I think it is wrongly called, in industrial production which have followed excessive spending. The aim of our policy, as your Lordships know, is to try to get a more even, steady increase without the necessity for the use of what is called the "Stop and go" method of money and fiscal policy. We do not like that. Of course, when a free country decides to give itself more money than it is earning, and to spend more than it is earning, nothing can stop inflation except action of this kind by the Government, and you are bound to have a "Stop and go" policy. What we want to do is to get a greater understanding by public bodies and all sections of public opinion so that this will not be necessary and that we can have a more steady policy of monetary and industrial planning.

We have also made the investment allowances and the reduction of purchase tax on the cars. With regard to unemployment, unemployment in many areas, in some of the conurbations, is still below 1 per cent. The noble Lord, Lord Stonham, said that the present level of unemployment in the country was the highest for fourteen years, but it is not.

LORD STONHAM

I am sorry to interrupt, but I said it was the highest October figure for fourteen years.

THE EARL OF DUNDEE

It is not even that, because it was a little higher than it is now in October, 1958; and after that it went up still more in January. But, my Lords, the most important thing for those who are in areas of under-employment is the general expansion of the economy, and particularly the expansion of investment, and the policy which was imposed by the Local Employment Act, which I had the duty of piloting through your Lordships' House three years ago. This policy of refusing industrial development certificates to firms unless they are going where we want them to go has created new jobs and is creating them still in the areas where they are most needed under the Act. Some 336 new projects, costing £75 million, have been set in hand during the last two-year period. Of these, 50 are in Wales, 135 in England and 151 in Scotland, and the number of jobs in connection with those in Scotland is now 31,000.

I was glad to hear my noble friend Lord Perth—the only noble Lord who spoke explicitly on the Local Employment Act in relation to Scotland. There are, of course, many other measures which have been or are being taken there: the strip mills in North Lanark; the great expansion of roads and bridges, and the building of a new town at Livingstone, near Bathgate, where the large factory of the British Motor Corporation has been set up. My noble friend also asked particularly if I could say anything about the projected pulp mill in the Highlands. I cannot say what response will be made for the representations that have been put forward about this project, but my noble friend knows that I understand the importance to the Highlands of having something of this kind.

The noble Lord, Lord Shackleton, asked about targets. He said that the National Economic Development Council, "Neddy", had set this target of a 4 per cent. annual increase which was higher than the increase we have had. I think in fact that what the Council adumbrated is that it should rise to 4 per cent. by 1966. But what the noble Lord, Lord Shackleton, wanted to know was whether or not the Government accepted that. I do not think the Government have formally adopted any target, but the Chancellor of the Exchequer is Chairman of the National Economic Development Council and therefore its responsibilities and recommendations are not things with which the Government are entirely unconnected. Of course if we could hit a higher target so much the better.

I would ask the noble Earl and all your Lordships to believe that the Government are not complacent about this matter. We do not think that the present rate of industrial production is increasing as fast as we should like it to increase. We are always ready to consider new methods and new policies, and to listen to advice, either from your Lordships or from anybody else. But we must unquestionably repel the Amendment which has been put forward. The word "stagnation" is utterly irrelevant and meaningless as applied to British industry, which is producing at a record rate and has been increasing fairly rapidly, although not as rapidly as we should like, for the last fifteen years. The charge that we are doing nothing to stimulate activity or to remedy unemployment is not correct. We believe that the policy which we are pursuing is one which will give a free people the best chance of gaining the greatest advantage from the new industrial revolution which is now taking place.

LORD PEDDIE

My Lords, I had hoped that I might receive an answer to the direct question I posed concerning the rejection of permission to develop factories in particular areas.

THE EARL OF DUNDEE

Yes, my Lords, I had intended—but I was interrupted several times and it is getting very late—to say a little on the whole question of local employment policy, and I should like to assure your Lordships, and to repeat assurances often given before, that we intend to be tough about industrial development certificates. If you are not tough you will never get new industries to go to development areas. The effect has been, in many cases, to cause discontent in the large conurbations, in the large centres of production where an industry wants to expand and is told it cannot unless it goes to Scotland or the North-East. This is inevitable. You could not have a policy of certificates properly administered unless there were, in some cases, disappointment. The rate of unemployment in one of the areas Lord Peddie mentioned is only 1 per cent. and in Bolton I believe the figure is 1.7 per cent. Well, if we are going to make a success of this policy at all we must try to insist that industry should expand not in those conurbations but in development areas where we want it to go.

LORD PEDDIE

My Lords, I hope the noble Earl will pardon me. The actual figures in the North-West region are that of the male population 3.1 per cent. is unemployed, and of the female 2.2 per cent., making an average of 2.8 per cent. This is certainly higher than the national average and I fail to see why the certificates were refused.

7.38 p.m.

VISCOUNT ALEXANDER OF HILLSBOROUGH

My Lords, with the permission of the House, I should like to say how grateful I am to my noble friends for their support of me in the debate, and how grateful I am also to the solitary Back-Bencher of the Peers on the Conservative side who came so gallantly to rescue his Front Bench from complete isolation, and I appreciate very much the manner of Lord Perth's contribution to the debate. Some of these things I could comment on, but I shall not do so at this stage. We must have another look at the suggestions which have been made by the Minister and ask for time to discuss one or two of them if we think fit. In that case I shall make the approach through the usual channels. We will certainly not be persuaded against pressing our Amendment, and I ask my noble friends to support me in the Lobby.

On Question, Whether the said Amendment shall be agreed to?

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