THE NATIONAL PLAN

HL Deb 24 November 1965 vol 270 cc909-28

2.48 p.m.

LORD WINTERBOTTOM rose to call attention to the National Plan (Cmnd. 2764); and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I do so with a feeling of intense personal satisfaction, since the National Plan for me, and, I believe, for many other noble Lords also, is the expression of the hopes of many years now at last realised. The memories of the bleak years of the 1920s and 1930s still plague and haunt industrialists and trade unionists alike. The protective practices of both sides of industry which came into being then as a necessary means of survival are to-day the negative forces which could, if not exorcised, defeat us. At that time, when the old certainties had been destroyed and Keynesian economics had not shown us the way out of our dilemma, many of us, and not members of the Labour Party only, placed our hope in an economy which was planned and controlled, when human reason and not the blind forces of the market would determine how we should live and how we should manage our affairs. It is half a lifetime from that clay to this, and, as someone who hoped then, I can be glad to-day.

I think it improbable that all of us will agree with all the Plan—some of us, I expect, will have none of it—but I hope your Lordships will recognise the intense and devoted work by the public servants, both from within and outside the Civil Service, who in the period of one year have created a new Ministry, conducted a major industrial inquiry, and brought its findings together in the National Plan, which I commend to your Lordships today. Industry and commerce, too, deserve commendation for the excellent way in which they have co-operated to enable the results of the inquiry to be collated and assimilated in such a comparatively short time. This must have necessitated some disturbance of normal routines and much intensive work.

In some ways I regret the use of the word "Plan" for this document. Because of past controversy, the word has gathered round itself certain pejorative overtones. This, of course, is not a plan in the COMECON sense. No attempt is being made to lay down how many hundreds of computers or how many thousand gross of corsets are to be manufactured in 1970. Some attempt has been made by the Plan's critics to equate the two concepts; the false antithesis between State interference and individual initiative has been bandied about, but this, I think your Lordships will agree, is schoolboy stuff. What has happened is that there has been a meeting of minds between the Government and both sides and all levels of industry, and that branches of industry, both State and private, have told the Government of their projections five years ahead and the resources required to achieve them. Often the sum of this information defines the responsibilities of government. Planning in this democratic sense is action by the State to make the initiatives of many thousands of free individuals possible. We may distrust the State, but we cannot prosper or survive without it.

I shall not become more specific, my Lords, and I do not intend to give your Lordships a précis of the Plan—after all, the Department of Economic Affairs has done this for us—but I intend to ask my noble friends who will be speaking for the Government some questions which I personally should like answered, and I shall venture to draw your Lordships' attention to a few points which I think are of special significance.

The first point is as regards exports. I shall do no more than read to you the first paragraph of the Report, which is as follows: This is a Plan to provide the basis for greater economic growth. An essential part of the Plan is a solution to Britain's balance of payments problem; for growth cannot be maintained unless we pay our way in the world. This is the crux of the matter. If we succeed in this, the Plan can become a reality; if we fail, it is an illusion and a waste of time and spirit, and it is for this reason that I welcome the Government's decision to appoint a Minister whose prime responsibility is to promote exports. I am particularly glad that my noble friend Lord Brown has accepted this key position and will be in his place to-day to speak for the Government. His lifetime's experience in industry and the original work that he has done in the field of labour relations must equip him to grasp the essential elements for a successful policy for exports.

I propose to ask my noble friend two questions. First, if a single factor of a policy determines the success or failure of that policy, is he satisfied that sufficient resources are being devoted to the operation? Major exports to-day are so expensive that neither large public companies nor even nations can afford to purchase them without very long term credits. I ask my noble friend, are we matching the most generous terms that our competitors can offer? Are we bettering them, and if not should we not do so?

The second question I wish to put to my noble friend is this: are our tax rebates to individual exporters sufficiently generous? Eighty million pounds sounds a lot of money, but what we are trying to do is to persuade, by real incentives, the firm which is not now exporting to start this activity, rather than to reward those firms which are in any case carrying out this important work. Rebates as they are at present granted are doing little to affect the pattern of trade, and I believe that exhortation will have little or no effect; we must use the resources available for persuasion, to reward those firms which increase their output which is sent abroad; not simply to give a prize to the good boys who are already at the top of the class.

The Plan seems to argue that modernisation and increased efficiency will of themselves bring about an increase in exports. These will help, but unless the attitude of management is changed, the products of these revitalised plants might equally well be sold on the more profitable home market. I have in a former debate argued this point, so I shall simply recapitulate my argument. It is this. Since exporting is an expensive activity, the average firm will not export unless it is as profitable to sell abroad as it is to sell at home; therefore the only way to make it as profitable is to make the incentives large enough to achieve this aim. In any case we must match our competitors, who are rewarded far more liberally than any firm is in this country. Our tax system may make it difficult for us to do this. If so, so much the worse for our tax system. Must we, like India, starve because of our sacred cows?

I should also like to ask my noble friends another group of questions. In the National Plan we have created a store of knowledge and collected data which, until now did not exist in any one place. The industrial inquiry on which the Plan is based was the most intensive ever held. Is the information thus gathered kept confidential, with the Department determining what shall or shall not be published, or is it available to bona fide inquirers on request? Is the information on, say, the oil industry freely available to the engineering industry to help it in its own forward planning? Do certain Economic Development Committees meet jointly on occasion to discuss their common problems, import substitution and the rest?

Then how will the Plan be used? Will there be an annual report on its progress? Will a new inquiry be made each year and the predictions revised? Is the Plan a rolling one, so that next year we shall try to peer five years forward into 1971? I hope that this will be so, since each year's work will help us to perfect our theoretical and practical techniques of economic control. As time passes and we gain experience, the Plan will become a more perfect instrument to help us in our theoretical planning and executive control, and it should also help us to avoid mistakes in the short term. In the debate on the Plan in another place a saying of Monsieur Masse, Head of the French Commissariat, was quoted, and it struck me as being most apposite. He stated that the object of planning was to handle short-term fluctuations in such a way that they do not result in long-term weaknesses. If this is true, should we he postponing road building, when we know that we shall be strangled by vehicles in 1970? Should we be postponing university schemes, when we know that we must have every educated man we can muster to do what we have to do?

May I now make some personal observations on the Plan. The object of the work done to date is to achieve a rate of economic growth equal to that of equivalent nations in the world, without a rate of inflation greater than theirs and without a recurrent balance-of-payments problem. There has been a great deal of criticism of our comparative performance, but in passing I should like to make the observation that we have to solve our problems while carrying responsibilities which are more burdensome than those of equivalent nations. It would be nice to be able to live for ourselves, as the Germans have done. The rewards of success are great: if we are successful, we shall be better able to carry out the policies that we know are necessary at home and overseas; we shall have another £4,000 million for our own personal consumption. The Plan forecasts that we shall spend it in a pretty frivolous way, but I shall return to this point later.

If we are to succeed we have all to accept change: some of us even have to welcome it; but that has always been the function of the creative minority. The point has been well put by the First Secretary of State, in his Introduction to the Plan. He says: To make the Plan work requires above all an acceptance of change. For the manufacturer, changes in what he makes, what he sells and where he sells it; for the worker, change in what he does, where he does it, and how he does it, and for all of us a different approach to prices and incomes. Change will often mean disturbance, and we must take care of the effect it has on individuals. But without change there can be no opportunities and no rewards. If this is to happen, the conditioned reflexes caused by years of depression, and the bad habits that were formed in the easy years that followed our victory, all must go.

I argue, my Lords, that if we are to do this we must be ruthless with management and sympathetic with labour. I believe that in industry the Napoleonic dictum applies, that there are no bad soldiers, there are only bad officers. I am not setting out to make a general condemnation of all management. We all know how many devoted and able men there are in industry, and after all this is no mean industrial nation. But we also know how comfortable life has been made for some. Management has got to learn to welcome competition, and this is as true for the nationalised industries as for private industry. Only competition can in the long run keep prices steady and sweat the fat off industry. This, I know, is a truism, but when I hear someone extolling the virtues of free enterprise and competition with unusual emphasis, I suspect he has just been fixing prices for the coming year.

The National Prices and Incomes Board has a big rôle to play here. It cannot, of course, hold back the tide of rising incomes and prices if our other policies are wrong, but it can impose delay, and most of all it can expose the various nonsenses which it has already uncovered to public ridicule and criticism, which is our own particular special road to reform.

When I say, turning to the workers' side in industry, that we should be sympathetic to their attitude to change, I mean this. A friend of mine, an industrialist, once said to me that average men and women have only two basic choices that they can make in life; these are their first job and the choice of their marriage partner. Thereafter their lives are shaped by forces beyond their control. When we think of the Plan in human terms, we see great industries contracting. They have to contract if the industries of the future are to grow. As a result, millions of individuals, with little savings and probably no capital, have to leave their job and the environment to which they and their children are adjusted, and have to take a blind jump to an unknown future in a new town where there may not be even a house for them.

All individuals of middle age will remember the years of depression. We may regret the fact that the Welsh miners who demonstrated last weekend against the closing of their pits have an inadequate appreciation of the significance of the National Plan, but I think we can all understand why they marched in the rain. But sympathy is not the same thing as sentimentality; the pits have to close; the men must move if we are to renew our nation. That section of the National Plan dealing with this complex of problems is perhaps the most valuable of all. It gives us all hope, because in spite of automation, in spite of growing productivity, in spite of change, somewhere in the United kingdom there is work that must be done, more work perhaps than we have men to do it. The propagation of this single fact in every trade union branch, in every home, will do more than anything else to persuade the man at the machine to accept change. But this acceptance will become a reality only if the Government put the same effort into making change tolerable as it must put into the export drive to make it effective.

That is why I welcome the complex of measures in being or proposed in the present Session. The direction of industry to regions in decline, reasonable severance pay for redundant workers, earnings-based unemployment pay, generous grants for those who have to move their homes, a ruthless drive to build new houses into which they can move, and retraining facilities if a change from one industry to another is necessary—all these acts taken together, when completed, will lessen the emotional resistance to change. Industry could help the Government in this matter to create the atmosphere of confidence which is a prerequisite of the Plan by distributing in works canteens and so forth copies of the shortened version of the Plan Working for Prosperity; perhaps even by initiating discussions on the subject of this Plan. I think it might well be worth it.

When we have done all these things, it will be morally possible for the Government to act with the same determination towards malicious and selfish attitudes within the trade union movement as they should do against every embattled vested interest everywhere. To give only one example, transport is the hardened artery of our economy. We have got to get in and out of the blighted regions; millions of pounds worth of heavy transport vehicles have got to move freely about the country at their optimum operating speed; the railway system must perform its proper economic role; we must somehow deal with the docks in order to push the exports out. Yet the section of the Plan dealing with transport, though honest, is far less positive than other sections. In the field of transport all will be well, it says, if the railwaymen will run the liner trains, if dockers accept the Devlin Report, if transport drivers will permit schedules based on the legal maximum speed. The resistance from the transport unions is a challenge which the Government must face, but the Government must make redundancy acceptable if they ask men to work themselves out of a job.

Now let us count our chickens before they are hatched. If all goes right and all conditions are fulfilled, we shall have as a nation £8,000 million more to spend in 1970; £2,000 million will go to balancing our overseas accounts and modernising our industry; the same increase of expenditure will go to public expenditure and housing; and £4,000 million will be created for personal expenditure. This is the carrot which the Government can and must use to make their stick as unnecessary as possible. But here I should like to ask the Government to alter their division of the spoils before this pattern of consumption becomes a habit. Earlier I spoke of frivolity, and this is something which I mean most sincerely. I am not a Puritan; indeed, I am against the whole breed. But the forecast presented in pictorial form in the popular version of the Plan, Working for Prosperity, fills me with real apprehension.

I am going to make only two points in this regard. First, one without any moral overtones. It is forecast that we shall spend one-fifth of our increased wealth, or £844 million, on motoring; yet we are going to increase our expenditure on roads by only £145 million. I ask myself whether we have these figures the wrong way round. The second point is far more important. We are told that in 1970 we shall probably spend £300 million more on drink and £663 million more on entertainments and other services. The symbols in the potted version of the Plan are a foaming tankard and a football. The sum of these two items is the best part of £1,000 million, and these are increases, not totals. Yet during the same period, when the country needs every educated mind that it can find, when we are losing outstanding men to other countries because we claim we cannot afford to keep them here, we are proposing to increase our total expenditure on the universities by only £67 million from a base figure of £200 million. If we can increase by £1,000 million our expenditure on pleasures, surely no first-class mind need leave this country because a misdirection of resources leads to inadequate financial rewards or inadequate equipment in the field of education. These figures show that everything proposed by the Robbins Report can be carried into effect without real sacrifice by anyone. The Plan has put a great deal into perspective and Ministers lives, I suspect, will not be made any easier as a result.

Finally, I should like to raise one point which is hardly touched upon in the Plan. If we are honest with ourselves, we know that we grossly misuse our industrial population. But, also, we grossly misuse half our total population, and by this I mean the brains and talents of our women. We give our women the same training as our men, to prepare them for the same sort of life, and then we condemn them, unless they are childless or of exceptional character, to "suckle fools and chronicle small beer". I shall give only one example on this point. The noble Baroness, Lady Summerskill, in the recent debate in your Lordships' House on cervical cancer, drew attention to the estimate that 5,000 women doctors on the medical register are not practising. This must be an extreme case, and yet it points to a terrifying waste of talent. We must take fiscal and administrative action to create equality of opportunity between the sexes; with the figures in front of us no Chancellor dare say that no action is possible.

My Lords, I think I have said enough. But before I sit down, I should like to ask the noble Lord, Lord Drumalbyn, who is going to speak for the Opposition, what the attitude of his Party towards the future of the Department of Economic Affairs will be. I believe that my noble friends will occupy their present places for a great deal longer than seemed probable a year ago, and yet I do not think that we claim a divine right to permanent occupation of this side of your Lordships' House. What I want to see is that the machinery of co-operation between Government and both sides of industry continues and becomes steadily more effective as time passes and experience is gathered. After all, I believe that both sides of the House agree on our objectives, which are growth with stability, and the exercise of our proper influence in the world.

Since 1945, both the Labour and the Conservative Parties have tried to solve this problem, but so far success has eluded us both. Noble Lords opposite have started experiments which are continued in the present Plan. They created the N.E.D.C.; they took the first experimental steps in fashioning an incomes policy; they started the machinery for economic forecasting. I hope they will not deny their share of the parentage of the National Plan. I raise this point because Mr. Macleod, speaking on the same subject in another place, forecast the dissolution of the Department of Economic Affairs should the Conservative Party be returned, and the division of its functions between the Treasury and the Board of Trade.

I personally think this would be disastrous. I believe there must be one Ministry where all the elements of planning come together and, what is more important, where all the thinking can be positive. The Treasury, by its very nature, is forced to say "No" far more often than to say "Yes", and for this reason must develop a negative and restrictive philosophy. One Ministry at least must travel hopefully—that is the Department of Economic Affairs, as I believe it must survive and become a permanent part of the machinery of government.

I believe that the National Plan as a document can have the same influence on the successful control of our economic environment during the next quarter century as Keynes's writings have had during the last quarter. It is for this reason that I commend it to your Lordships' House. My Lords, I beg to move for Papers.

3.14 p.m.

LORD DRUMALBYN

My Lords, it is a great pleasure to follow upon such an able, comprehensive and fair-minded speech as we have heard this afternoon. I do not think that it would have been possible to deal with more aspects of the Plan in the time that the noble Lord has taken, and I do not think any of us think that his speech was a minute too long. I would start by associating myself with the welcome which the noble Lord gave to the noble Lord, Lord Brown, who is to take part in this debate to-day. We all know the great contributions that he has made to questions of organisation and industry, and indeed the whole of management and many other problems in industry. We know the work he has been doing in regard to the ports, and we wish him all success in his new appointment.

As the noble Lord, Lord Winterbottom, has said, there is a great deal upon which we are agreed. I do not propose, I say quite frankly, to answer the question that he has put to me, because I do not think that it is a question for me at this stage. I would say that that is a matter of more detailed organisation, and I think the first question that we want to consider is the whole basis of this debate. After all, for two or three years we have been talking about little else except change—the need for acceptance of change; the need for making change tolerable. This was the great theme in the last year of the Conservative Government. It was the theme in the mouth of everybody during the last Election. It was the common theme, and it is a good thing that a document like that which we are now discussing should appear, to show, or attempt to show, exactly what kind of change is required.

Let us be clear, then, what the document is and does. As the noble Lord who introduced the debate said, it sets out the national objectives, with which we all agree. Paragraph 23 of the Introduction summarises them in this way: first, to restore the balance of payments"— to which I would add, "and repay by 1970 the £900 million borrowed in the last few months." Secondly, to increase industrial efficiency", and, thirdly, to close the ' manpower gap'. Those are the immediate objectives, as well as the objectives to which the noble Lord referred. In the manpower gap we have a prospective demand of 800,000 by 1970, as against an estimated natural growth of 390,000, and in closing the manpower gap we have to secure better and more efficient employment of the nation's manpower while maintaining full employment and getting a better distribution of employment.

In Part I the Plan contains a national economic survey and forecast, which is, in effect, a handbook or compendium covering Government action, the programme of public expenditure up to 1970, and forecasts of industrial output, investment and manpower requirements in 1970. It also sets out the action that must be taken by both sides of industry if the objectives are to be attained, and gives a great deal of interesting information. I agree with the noble Lord that it is perhaps unfortunate that this has been called a Plan, partly for the reason that he gave, that it has previous associations (a matter to which I shall come back later), and partly because it does not really set out the elements of a plan in the sense that we have come to think of a plan. I do not want to insult it in any way, but I cannot help thinking that in some ways this is a somewhat misleading trade description, in the terms of the Bill that we shortly expect to receive, to amend the Merchandise Marks Act.

In Part II of the Plan there is a series of studies made by the Economic Development Committees, most of them ending with a paragraph on "conditions for growth". I should have liked to examine these conditions in some detail, many of which call for action by the Government, but I think it would be better to leave this to another time. I feel certain that we shall debate both this particular document and the report of the National Economic Development Council on Imported Manufactures to find out what the Government are doing about these various recommendations. They are apparently not in the Plan, but I thought I should mention them here. I should be interested to hear what the Government intend to do. To-day, however, I shall concentrate on Part I of the Plan and on the Introduction.

As I have said, there is a great deal in this document which carries on the policies of the last Government, and of which we naturally approve. The aim described in paragraph 2 of the Introduction is to substitute reasonably steady progress for alternating periods of too rapid expansion and of sharp checks to economic expansion in production and investment. This is a national aim which we all support. It was for this reason that Mr. Selwyn Lloyd set up the National Economic Development Council and thereby sought to establish a partnership between the Government, management and unions.

A start was also made in setting up the "Little Neddies", so-called, and nine were formed, or were in course of formation, under the last Government. I understand from the Plan that there are expected to be twenty by the end of the year. That is satisfactory, although I feel that I must sound a note of warning. Let us beware of exalting the "Little Neddies" and clothing them with authority. Each has a useful part to play in serving its own group of industrial units and the men and women in them—in helping them to play their part in the national effort. But one has only to cast one's mind back to Italy in the inter-war period to realise the dangers if they were to become not the servants but the masters, as instruments of government, like Mussolini's Corporations.

Our conception was planning by consent (and I gather from the noble Lord that under this Plan there will be a continuation of that conception) a continuous process of planning by N.E.D.C., the public authorities, and by individual companies, with the help of the "Little Neddies" and of Government. Mr. Selwyn Lloyd also initiated the publication of surveys of public expenditure for some years ahead (a matter not mentioned by the noble Lord, Lord Winterbottom, though I appreciate, of course, that he could not mention everything) with the object, as he said in his 1961 Budget Speech, of seeing how best we can keep public expenditure in future years in proper relationship to the growth of our national output. Periodical cut-backs or postponements of starts in any one year can disrupt plans of development and prove expensive, in terms of both money and morale. Sometimes they may be unavoidable. Pressure on manpower and physical or financial resources may have to be reduced. But such a need itself represents a failure on the part of Government to keep demand and supply in balance. It happened in July, and it could happen again. Much of what the Government are trying to do to encourage all in industry to be more efficient and more mobile was started by their predecessors—industrial training boards, industrial growth points and areas, and so on. So far, we are broadly in agreement. I now turn to more contentious issues.

Paragraph 6 of the Introduction states that The Plan is designed to achieve a 25 per cent. increase in national output between 1964 and 1970. This objective has been chosen in the light of past trends in national output and output per head and a realistic view of the scope for improving upon these trends. It involves achieving a 4 per cent. annual growth rate of output well before 1970 and an annual average of 3.8 per cent. between 1964 and 1970. It goes on to explain that that means a 3.4 per cent. average annual increase in output per head. For an economy so much at the mercy of fluctuations in international trade, it is always dangerous to fix too definite a target of this kind. Yet it is upon this rate of growth that the Government programme of investment in the public sector is based, and on which all the figures for investment, output and manpower requirements in the private sector are founded. Certainly it is not unreasonable that industry's estimates should be aligned upon a common assumption, provided we remember that it is an assumption, a postulate. Industry's forecasts are thus hypotheses based upon a hypothesis.

I now turn to examine that hypothesis. The assumed rate of growth in the six years 1965 to 1970 is very close to the actual rate in the six years 1959 to 1964. As, in different contexts, noble Lords opposite have been quick to point out, the circumstances are very different. The dominant factor in our situation to-day is that there is a manpower shortage which hampers growth and drives up costs. The crucial question, therefore, is this: Can the same rate of expansion be achieved with manpower resources far more strained than they were in the previous period? The answer must be: only if much better use is made of the manpower available; only if firms are willing, and are permitted, to release manpower; only if restrictive practices resulting in over-manning, out-dated demarcation arrangements and other obstacles to efficiency are abandoned. This is made abundantly clear in the Plan.

The next question must be: What contribution are the Government themselves making to ease the manpower situation? The answer is surprising. Paragraph 18 of Chapter 2 begins: The requirements of the service sectors and public administration account for virtually the whole of the net additional demand for manpower up to 1970. Indeed, the three headings, "Health, education and other professional services", "Miscellaneous services" and "Public administration and Defence" account for an increase in demand for manpower in 1970, as compared with 1964, of 665,000, as compared with an expected increase of manpower of 390,000 plus the hope of gleaning a further 200,000 or so through reductions in unemployment and an increase in activity rates in regions where unemployment is above average and activity rates are relatively low. In short, the Government are pre-empting more than is likely to be available, apart from savings through better use of manpower in the private sector.

Even making allowance for the important part that the public sector has to play in making Britain more competitive—that is, in education, port construction, road construction and ensuring that houses are provided when they are needed to meet the needs of industry and so on—this fact is most disappointing. Can the Government really not make any significant contribution to the manpower problem? Will the Government undertake to make a searching analysis to see where they can economise in their own use of manpower? To the extent that the manpower gap is not filled, the Government will also fail to find the manpower they need and so to fulfil their programme.

That the attainment of the target depends on the abandonment of restrictive practices within enterprises as well as between enterprises, is still not sufficiently appreciated in the country, despite the popular version of the National Plan. Paragraph 51 of the introduction refers to the pledge in the Joint Statement of Intent made last December pledging representatives of management and unions to encourage and lead a sustained attack on the obstacles to efficiency and says: It is an essential part of the policy for productivity, prices and incomes to get rid of restrictive practices of all kinds. If, therefore, we are to become more competitive in order to have a chance of righting our balance of payments, we must abandon these practices. It is reasonable that industry should pay a price for their abandonment, but it must not be too high or else, in the short term at least, we shall not be competitive.

Here I come to what I regard as one of the cardinal errors which the Government have made. It appears that a growth rate in production per head of 3.4 per cent. per annum would allow an average rate of improvement in incomes of between 3 and 3½ per cent. per year. But can that growth rate be obtained without a comparable increase of efficiency? Can it not be achieved only by investment combined with the abandonment of restrictive practices? By stating that the norm of income increases should not exceed 3 to 3½, per cent. per year, the Government have given the impression, widely held, that people have a right to that degree of increase; I am sure that this point of view simply cannot be sustained. I do not think the Government hold it, but I am saying that that is a view which is very widely held and a view we ought to dispense with. I wonder also whether the National Board for Prices and Incomes are adapted to achieve the results which are hoped for

At present, the Board are trying to secure their objectives by concentrating on stopping price increases consequent upon wage increases, in the hope that this will cause employers to refuse to concede wage increases not directly related to agreements for increased productivity. If this is so, they will have to accept responsibility for the consequences, and the consequences may mean strikes. Moreover, they run the risk of impairing industrial relations at the very moment when it is of the utmost importance that they should be improved. And, of course, they may upset both the finances and the confidence of the industries concerned, to the detriment of their capacity and willingness to invest.

Our immediate aim must be to get our balance of payments right. To do that, as the noble Lord has said, we must increase our exports and contain our imports by competing better both at home and abroad. Here the level of production gives rise to special cause for concern. According to Chapter 7, in the past five years imports have risen in volume by 4 per cent. a year on average, while over the ten years exports have risen by 3 per cent., although on current trends an increase of exports of 4 per cent. could be expected. The document also says that British industry itself expects a big improvement in our export performance. Imports are expected to continue to grow by 4 per cent. a year, while exports are expected to rise at the rate of 5½ per cent.

I join with the noble Lord opposite in asking: Is this enough? At that rate, in 1970 the deficit on visible trade would still be £225 million. Of course, this looks a big improvement when compared with last year, which was quite exceptional. It is assumed that the balance will very largely be covered in 1970 by an improvement in the terms of trade amounting to no less than £180 million. What is the basis for this assumption? The terms of trade have been fairly steady since 1963, moving against us in the early part of 1964 and returning to an index of 101 in the second quarter of this year. If it is true that the terms of trade are likely to move in our favour, then also there is a bleak outlook for primary producing countries. And meantime, as the document says, it will be necessary to scrutinise the aid programme with particular care.

By 1970, on this basis, it is expected that we shall have an overall balance of £250 million, including a favourable balancing item of £50 million. Does this mean that we shall gradually get to that point? I ask this because the document does not seem to expect that production will increase very much in the first two years. Do the Government expect that by 1970 we shall have repaid the £900 million, or not?

It seems that considerable reliance is placed on an improvement of £120 million in "invisibles". Here, again, there is an assumption and the basis of the assumption seems shaky. I regard the worst blind spot of the Government as their treatment of British overseas investment. Foreign investment in this country is to be stimulated, while British investment abroad is to be severely discouraged. The average net outflow of £85 million is to be converted into a net inflow of £75 million by 1970. To achieve this, on the one hand, not only is future British investment overseas to be made less attractive, but past British investment is to be cruelly and quite unnecessarily burdened; and, on the other hand, the post-tax return on foreign investment in this country, according to paragraph 22 of Chapter 7, "will probably be higher under the new system" of taxation. So more and more of our industry in this country is likely to come under foreign control. Indeed, to judge from what is reported to be happening at Ford's foreign control is tightening now.

When will the Government realise the value of British-owned international com- panies? When will they appreciate the contribution in direct exports, as well as in dividends, profits and royalties, that such companies can make? Are they not aware that there are companies which, in the past few years, have remitted more in profits, royalties and dividends than the total capital outlay? Have they not heard that 23 per cent. of all U.S.A. manufacturing exports are purchased by American companies operating overseas? This gives an indication of the contribution to our direct exports that overseas companies can make. Do the Government not know that rationalisation can often be better achieved between the parent company in this country and branches overseas, rather than between that company and another competing company in this country? Will they not heed the advice of those who are in the best position to know, those with practical experience, that international companies will inevitably capture a bigger and bigger share of world trade? Will they not heed that advice and give all possible support to international companies which are British-owned or controlled? Is it really worth while allowing so permanent a feature of our position as a great trading nation to become a casualty to temporary balance-of-payments difficulties?

Ought we not rather to be doing our utmost to increase our exports beyond the level of 27 per cent. of total manufacturing output at which the Government are aiming by 1970—an increase of 2 percent.? Others have done it. Why should not we? If the Government can really bring it home to the nation that increases in incomes have to be earned before they can be paid, and that overmanning—as the noble Lord, Lord Winterbottom, indicated—no longer protects men's jobs but puts them in jeopardy and keeps their pay down, I believe that we can increase our exports.

The last point to which I want to refer is home investment. For investment there must be the money and there must be the confidence. Without an adequate level of savings the money will not be available; without an adequate level of confidence the money will not be forthcoming where and when it is required. The fact is that the Government have not yet provided the necessary conditions for saving and investment. Chapter 5 of Part I of the Plan begins: "Investment lies at the heart of the Plan". But, until the necessary conditions are provided by the Government, this is only lip-service. This chapter calls for an annual increase of 5½ per cent. or 7 per cent. in manufacturing. As the document says, the chemical industry's representatives stressed the importance of sustained confidence in expansion if this high rate of investment was to continue into the later years of the… period. The document makes plain that the estimates "do not necessarily represent firms' actual investment plans" which "in most cases… were not yet formulated sufficiently far ahead". And it goes on: In some cases the industrial representatives had some doubts about whether the necessary investment would in fact be forthcoming. Plainly it will not be forthcoming unless confidence is sustained.

Here I must differ on one point from the noble Lord who spoke last. If we are going to have this confidence in the country we must know what the Government's intentions are. This is not schoolboy stuff. We must know. We cannot forget that The National Plan was first announced by the Labour Party in its policy document Signpost for the Sixties in 1963.

LORD SHEPHERD

It was in 1961.

LORD DRUMALBYN

I think it was in 1963 that the present Prime Minister, writing in the New Statesman about it, said: where a firm or industry refuses to meet the demand placed on it by the national programme there is a clear case for public ownership. I want to ask the noble Lord who is going to reply these questions, which I hope he will not shirk. Do the estimates of investment in the document for industry represent "demand placed on it by the national programme"? Are industries to be held to these estimates and penalised or nationalised if they do not fulfil them? I ask this because industry cannot give of its best if it is under constant threat, and such threats cannot fail to distort judgment and action. Then may I ask the noble Lord this? In 1963 the Prime Minister referred to those industries or undertakings which are required to be publicly-owned if the plan is to be fulfilled. Do the Government still think that the plan cannot be fulfilled unless some industries or undertakings are first nationalised? If so, which are they?

Thirdly, let me ask the noble Lord this. Is this document the Plan which the Prime Minister was talking about in 1963, or is it an entirely different kind of Plan, if it is a plan at all, though still called by the same name—The National Plan? I hope the Government's answer will have the effect of increasing confidence between all three partners—the Government, management and employees—for it is confidence that is required if the difficult problems involved in making Britain fully competitive and up-to-date are to be solved: problems of better relations in industry, redeployment of labour, education of management and so on. My Lords, the First Secretary's task, and the nation's task, will be made much easier if the Government will say clearly here and now that, so far as they are concerned, during the period covered by the Plan there will be no nationalisation or any other action taken that is likely to shake the confidence of either side of industry and the will to make a concerted effort to solve the balance-of-payments problem and to provide the basis for steady economic growth.