THE NATIONAL PLAN

HL Deb 24 November 1965 vol 270 cc938-1024

4.7 p.m.

Debate resumed.

LORD WADE

My Lords, I congratulate the noble Lord, Lord Winter-bottom, on providing an opportunity for debating this subject of the National Plan and for introducing the debate in such an interesting speech. As an attempt at a forecast of future trends and as a commitment by the Government to the aim of a higher rate of economic growth, the National Plan should be welcomed. I have no sympathy with those who condemned the Plan before it was published, or those who would denigrate the work of officials and representatives of industry who have endeavoured to provide the information on which future policy can he based.

I have, however, some doubt about whether this document should be called a Plan. I was interested to hear the comments of the noble Lord, Lord Winterbottom, on the word "Plan", and I think that the noble Lord, Lord Drumalbyn, had some observations to make on that. The document consists of a number of estimates and targets coupled with some expressions of hope which may or may not he fulfilled. I think there is some danger in regarding steady economic growth, which we all wish to see, as something which will automatically take place once the Government have decided on it. The public may be tempted to sit hack and just watch it happen. It certainly will not just happen. I would much rather have had targets, with the Government producing reports annually to Parliament showing to what extent these targets had been attained and where they had fallen short. I am not saying that it is not the proper function of Government to prepare and carry out long-term plans. In fact the Liberals have been doing valuable pioneer work for a number of years on that subject. I do not agree with Mr. Enoch Powell, that this is "dangerous nonsense", nor do I agree with the proposition which was once fashionable, that the best Government is that which governs least.

My Lords, may I digress for a moment and mention an incident which I think must he regarded as a story against myself? Recently I was taking part in a debate at a university union debating society, where I was one of the guest speakers. The motion was: "That this House would vote Liberal." During the course of the debate I received support from a somewhat unexpected quarter—namely, from an anarchist. Having outlined his anarchist principles, he said that he intended to support the motion because he believed that if we had a Liberal Government in this country, that would be the best way to achieve anarchy. I had to point out to my unexpected supporter that he was misinformed. The theory that the best Government was one that governed least was popular among political theorists about the end of the eighteenth century, it had begun to decline before the Liberal Party came into existence. It has never had much influence on Liberal thought, certainly not in this century.

In the complex society of to-day the rôle of Government must cover a wide field. The question is not: to plan or not to plan, but rather: what should be the aim and purpose of Government policy? Is the aim to create a free society or to create one which is increasingly subject to centralised control? In either case, I think that some long-term forecasting is necessary. I do not think we shall ever achieve a free society if we live hand to mouth and from crisis to crisis.

So far as steady economic growth is concerned, the 15 years from 1950 onwards has not been a period of which Britain can be particularly proud. Over the period from 1950 to 1962 the rate of growth of the gross national product of the British economy was 2.6 per cent. a year. This was less than that of any other developed country in the Western world, except Ireland, and much less than that of the other major industrial countries in Western Europe. We have been bedevilled by economic crises and periodic cutting back of capital investment. The recent breakdown of gas and electricity supplies was not due solely to a failure to foresee a cold spell in November—although, for the life of me, I cannot understand why the possibility of a cold spell in November was not anticipated—but I recognise that the failure was due in part to the curtailing of capital expenditure several years ago. If the Plan will help to create confidence among industrialists that this kind of thing is not going to happen again, it will be of some value. I would quote from The Observer of November 7, 1965. As an attempt to create a new atmosphere, to convince businessmen and industrialists that they can plan their own investment on the assumption of continuing expansion, it makes sense. Confidence plays an important part in business life. What we do may to some extent depend on what we believe we can do. Nevertheless, it would be a mistake to over-simplify this aspect of forward planning. In the days when the views of M. Coué were novel and fashionable, the following rhyme was written about him: This very remarkable man Commends a most practical plan: You can do what you want If you don't think you can't, So don't think you can't, if you can. I should like to think that inflation, the balance of payments and other equally difficult problems could be solved by some such simple philosophy. Unfortunately, it is not so easy as that. In so far as the Plan helps to create the belief that steady expansion is possible without interruption by economic crises, it would be all to the good, but there is a risk is placing too much reliance on this. If, in a few years time, we are faced with all the old troubles again, with credit squeezes and the cutting back of capital investment programmes, there will be deep suspicion about any economic Plan produced by this or any other Government. For this reason I would put the stress on targets which can be achieved only by co-operative effort, rather than on any rigid Plan.

I believe in targets, and I also believe in choice. Whether this be called a plan or a target, I should like to see more scope for democratic choice. I am not referring to choice by individuals between one commodity and another, but to choice by Parliament between one long-term policy and another or between one priority and another. For example, the National Plan lays down the pattern of public expenditure for the next five years. The housing subsidies are to be increased substantially. But there are some who take the view that less generous treatment has been shown in calculating the cost of building new schools, except in so far as additional expenditure is necessitated by the increase in the number of schoolchildren and later by the raising of the school age.

To quote again from the article to which I have already referred, "some" items of expenditure …like the housing programme, are to increase dramatically; others, like the schools, are given only a very meagre helping of money. Now the Government may not agree with that statement, but I think that we need to be realistic. The local education committees are being asked to change over to the comprehensive principle, but that would involve a great deal of expenditure. I am not sure that sufficient account has been taken of that. But I am not intending to make a speech about education; I am introducing this by way of illustration. If there has to be a choice between education, on the one hand, and some other expenditure, on the other, should not Parliament be asked to decide on the priorities first and only then the planners be asked to prepare proposals in accordance with the decision of Parliament?

Another example is provided by roads, to which the noble Lord, Lord Winter-bottom, referred. We have to consider whether the failure to spend sufficient on roads at the present time may not adversely affect the situation in the future. Again, there is a choice here, because if we spend more on roads we may spend less on something else. Again, I should like to see Parliament faced frankly with that kind of choice. To take one other example, the National Plan forecasts a manpower gap in 1970. This is estimated at 400,000, to be reduced to 200,000 as a result of regional policies. This gap could have many serious consequences. It would make it much more difficult to hold in check the wage—cost spiral. It would lead employers to hang on to surplus skilled or semi-skilled manpower for fear of being caught in an adverse labour market. And it would increase the likelihood of inflation.

At one time, it was thought that automation would lead to large-scale unemployment, but this now seems unlikely, unless there is a serious recession. There are a number of trends which are likely to create a shortage of manpower—and, of course, I use that expression to include "womenpower". Teenagers are staying at school longer, and this is a trend which will be accelerated when the school leaving age is raised. Women are marrying earlier and are having children earlier. Although many married women go out to work, the overall effect is to reduce the number available for full-time employment. All the evidence seems to suggest that labour is likely to be in short supply, unless there is very much greater efficiency in the use of manpower. At the same time as we have this forecast of labour shortage, the Government are introducing measures to cut back drastically the inflow of immigrants. Surely this is a matter on which Parliament should be asked to make a choice.

Of course recognise that it is not just a matter of figures. If there is a shortage of 200,000, this cannot be solved merely by permitting an inflow of 200,000 immigrants. But the two problems are closely related. Quite apart from the principle of racial discrimination that is involved, are we prepared to accept a situation in which there may be a permanent labour shortage, with no certainty that higher productivity will close the gap, while at the same time we are severely restricting immigrants? Surely we have an issue here which should be put clearly and frankly to the country and to Parliament. The principle should be decided by Parliament first. I can find no reference in the National Plan to this kind of issue.

The Plan covers a wide field, and I do not propose to attempt to go over all the ground. But one cannot talk about this preparation for the future without some reference to exports. I think all noble Lords will agree about the vital importance of exports, and I am glad that the noble Lord, Lord Brown, is to take part in this debate. I believe that success will depend, to some extent, on whether or not we have access to the countries of the Common Market on the same terms as the existing members of the Common Market. Therefore I should have expected to find in this Plan some assessment of the prospects, on the one hand, if we joined the Common Market, and, on the other, if we did not. But no mention is made of this aspect of the export problem. The authors of the Plan seem to assume that it will make no material difference to their calculations whether we are in the Common Market or not. That seems to me to be incredible.

Before sitting down, I should like to make one specific inquiry, which perhaps might be answered by the noble Lord, Lord Shepherd, when he winds up. On page 8 of Part I of the Plan there is the reference to the consideration that has been given to the establishment of export trading corporations to buy as principals from British manufacturers and sell overseas through their own marketing organisations. I should be interested to know what progress has been made with that idea, and whether it is thought to be a practicable proposition. I am myself a little sceptical unless such an organisation is very efficiently managed. There was a reference to this by Sir Edward Playfair—and I quote from the Financial Times of November 19, 1965, which said: The speaker described the Export Trade Corporation as a new kind of animal it was hoped would emerge under Government sponsorship but with commercial management". I think the important words there are "commercial management". I have some knowledge of the wool textile trade, although I am not engaged in it. It makes a most valuable contribution to the export drive. There are many small firms engaged in this trade, and there is a considerable amount of specialisation. They produce high quality material, and they send representatives all over the world selling British goods. But these men depend for their success on great experience and understanding of individual tastes, fashion and design, and I cannot myself see this kind of work being carried out by a Government-sponsored corporation. However, if such a body is set up, perhaps for some other industry, it is, in my view, essential that well-qualified and efficient people with sound business experience should be in charge. I hope that this will prove to be the case.

In conclusion, I return to the point I made at the outset of my speech. I think that this is an occasion for constructive rather than destructive criticism. The day may come when we look back on this so-called Plan as rather immature; we may find that some of the estimates are not quite correct: but at least it is an attempt and, as such, it should be welcomed.

4.26 p.m.

THE MINISTER OF STATE, BOARD OF TRADE (LORD BROWN)

My Lords, may I start by acknowledging with grateful thanks the kindly references by the noble Lords, Lord Winter-bottom and Lord Drumalbyn, to my new position. This is indeed an extremely important occasion, because it is the first time that this House has debated a published Plan, one that covers the economic activities of the nation for the next five years. I daresay there have been plans before, but they have not been published.

I speak, as the House knows, from extremely limited experience as a Minister, but I do claim a long background of experience as an industrial manager. During that previous career I have been faced at least once every year with the task of predicting the future of the company which I managed. I was always acutely aware that the accuracy of those predictions was considerably more dependent upon the trend of the national economy than upon any other single set of factors. In other words, in budgeting our own future, we were, in fact, trying to predict future movements of the economy.

In this sense, every large business has in the past separately predicted the future of the economy. This has always seemed to me to be a highly illogical position. Has there ever been a time when it would not have been of great assistance to industry and commerce to have a shared notion of the way the economy was going, instead of each one making its own predictions? In the absence of a shared notion, we know well that there have been manifold instances of one company predicting growth for itself, and another company manufacturing vital raw materials for the first company predicting a decline in its consumption. This has happened in our time. The case for planning is, to me, very clear indeed.

May I here interject a comment on what the noble Lord, Lord Wade, and other noble Lords have said this afternoon? When I used to talk to my own subordinates in industry about any awkward issue—and perhaps I prepared a document—if they were a little scary about the proposals that I was putting in front of them, they would always have the same technique in debating it, and that was to fasten on particular words and say: "Why did you not use another word here or another word there?" We have a great inclination to do the same thing here. If the Government had called this Plan "The Five-Year Forecast", I would not mind betting that there would have been people in some quarters who would have said: "Why not be honest and call this a plan, for that is indeed what it is?". I do not think we ought to debate too much the semantics of this matter. Let us call it a forecast, a plan or what-have-you. But I think we should chuck this semantic argument, because it does not get us anywhere.

I am sure that every Member of this House shares some degree of anxiety on the general topic of restrictive attitudes. The removal of these restrictive attitudes is crucial to this forecast. But these restrictive attitudes embrace not only craftsmen and operators, trade unions and all the rest, but also managers and boards of directors. I refer to failures by some companies to use modern technology, to design better goods, to expand production capacity when it is clear that it ought to be expanded, and to export. They do these things, not because of any deeply engraved original sin, but because they are resistant to change or pessimistic about the future. I suggest that, fundamentally, all restrictive attitudes stem from a lack of knowledge of what the future holds, combined with bitter experience of what this uncertainty has meant in the past. I believe that many years will pass before ordinary people in this country are completely free from the fear of unemployment, and before business men will be free from the fear of boom and slump. The great thing about this Plan is that, after so many years of shivering on the brink, we have started the process of dissolving these fears.

I hope and believe that we are agreed in this House that the production of a live-year Plan is completely necessary for any Government in the future. May I draw attention to this fact? There have always been implicit plans in the past. Every decision that any person in a position of responsibility makes which has implications for the future must, if one pauses to consider it, he based on some assumptions as to what the future situation is going to be. The trouble has been that this vast array of assumptions has never been co-ordinated. But we work always on hypotheses when we make decisions, because we always make decisions on the expectation of something happening in the future. So the case for planning seems to me to be a completely logical one.

I was born and bred in a town where over 40 per cent. of the able-bodied citizens were unemployed over a period of six years. Thank God! situations of that sort are matters of the past. Planning could have prevented the social evils of those days and, equally, it could have utilised the waste wealth represented by that unemployment to provide better homes, a better town and better social facilities. But in those days a majority of people in this country were bemused by outworn economic fallacies, and frightened into believing that any attempt by Government itself to ensure employment for all was inconsistent with the maintenance of individual freedom. Those were the shibboleths of the 1930s. The Plan we now debate signifies the final act of turning our backs on illusions of that kind.

I think the idea that economic planning will interfere with individual freedom dies hard, and I want to say a word about this. Life itself is a constant process of decision-making by the individual, but these decisions are always within bounds set by the law, by his employment or profession, and by his own preceptions about the future. Without such boundaries to the use of discretion, all of us would live in a state of such uncertainty and anxiety that creative living would be impossible. The ordinary man who seeks, with his wife, to plan the future of his family in terms of his own career, his place of dwelling, his house, the schooling for his children, and so on, will not find his task made easier if he is deprived of the knowledge, for example, that the local school is to be torn down and re-erected a mile further away, that the company which employs him is going to move to a development district, or that the local authority is planning to run a motorway within 100 ft. of the house he is proposing to buy.

Likewise, the board of directors has more freedom to decide the future of its company, not less, when, by virtue of a National Plan, it is made better aware of the probable future trend of the economy. The law and forward planning of economic matters provide freedom for the individual. They do not, as so many think, limit it. Your Lordships may want to debate that as a contention, but those are my views. I hope your Lordships will excuse me for spending time talking about the concept of planning itself in this way, but it seems to me to be important that the emotional fear, which has for so long inhibited us as a nation from taking a firm grasp of our own economic affairs, be set at rest.

In my notes I had a synopsis of the Plan, but I am not going to give it to your Lordships because we have had three very able speeches, each one of which has given some degree of insight into this Plan. It has been published, and in the interests of time I am going to skip it and proceed. I must, however, before I go on, make one comment about national planning which has not been touched upon in great detail, and that is the question of the prices and incomes policy. I believe that every Member of this House applauds the vigorous efforts being made by Mr. George Brown, the First Secretary of State, to establish this policy. But there is in some quarters some lack of realism in the discussion about the results so far achieved.

My Lords, ours has for many years been predominantly a laissez-faire economy, and its implicit terms of reference have been that companies should maximise their profits, whilst labour should seek its maximum gain in terms of wages and salaries. The last Government started the attempt to establish a changed situation by starting an incomes policy. The present Government are attempting the more ambitious project of establishing a prices and incomes policy; and what I wish, especially to emphasise is that the introduction of such policies imply a really dramatic economic and cultural change for our society. It is impossible to imagine that it will be feasible to establish such policies immediately with full effect. The important thing is the attempt, and the resolution to continue with that attempt until success is achieved. I think it is true to say that already the climate of opinion is beginning to change. The signs are encouraging, if one looks at them in the perspective of the significance of the changes in attitude which are being sought. Some people are hastily condemning this policy because it has not been possible to achieve more in so short a space of time. But they do not do this venture any service, and it is important to this country that these new policies should succeed. All I can say is that they will be pursued.

The noble Lord, Lord Drumalbyn (I am interjecting here to answer a question he asked), raised some questions in relation to the five-year Plan, as to whether or not the Government were going to use pressure; whether or not they were going to nationalise.

With due respect, I think he knows as well as I do that it is not possible to answer questions of that sort. Some four or five years ago I was a manager in the motor industry, and I well remember the then Conservative Government rightly putting extremely heavy pressure on various companies in the motor trade to establish their increase of capacity in development districts. I heartily approved of their doing so, but they were certainly using pressure—and how!—as the motor trade knew full well. If they had been asked in this House whether they were prepared to use pressure to man those development districts and to use controls, it would have been a very awkward question. I do not think these questions can be answered in this "Yes" or "No" manner, as implied in the questions asked by the noble Lord, Lord Drumalbyn.

One of the reasons why I have dealt, scurvily perhaps, with the National Plan—I have not referred to it in any great depth—is that I wanted to give myself more time to comment on this question of exports. I believe that the House will agree with me that no subject is more important to the achievement of the targets in this Plan than exports. We have to achieve, over the period of the Plan, an average annual increase of 5¼ per cent. in the volume of our exports. I think it is possible that some people have not realised the difference between a percentage of that order of volume and a similar percentage of value: they may have confused the two. Clearly, to achieve a 5¼ per cent. increase in volume is a much more serious target than to achieve that percentage increase in value.

In considering these figures however, we have to get things into perspective a little. Japan, Italy, West Germany, Austria, the Netherlands, Belgium and France have all shown an average annual rate of increase of exports by volume over the ten years, 1953 to 1963, of 8 per cent. or over. If they can do it, we ought not to be too despairing about doing it ourselves. It should give us resolution to face what others have done. Our target has to be seen also against the increase in exports over the last decade of about 3 per cent. per annum by volume, so we must achieve minimally an additional 2¼ per cent. increase over the five years until 1970.

We agree with the noble Lord, Lord Drumalbyn, that we must regard this as a minimum. If, indeed, we do get into a position where we are squaring the balance of our overseas trade, I join with him in the hope that the balance will effectively be used to restart a large volume of overseas investment. But, with great respect, I think he knows well that the real criterion as to whether or not we can indulge in a large volume rests solely on the question whether or not we have a balance-of-payments surplus. Any country which invests in a large volume overseas when it is in a deficit position is courting disaster; and that is the fundamental position of the Government at the moment.

First, a word about the services to exporters provided by the Board of Trade. Speaking as one who was, until six weeks ago, an industrial manager, I found on taking up my new responsibilities that the services to exporters were much better than I expected. I was a little ashamed that I had not known more about them. What impressed me was both the rate of improvement of these services and the zeal which was being shown to make them still better in the future. The staff of the Board of Trade, including those of the regional offices and the Export Credits Guarantee Department, are deserving of our thanks. That is my considered opinion. I do not wish to give the House a full catalogue of these services, but I will comment on one or two of them.

There has been much comment this year on the need to provide greater monetary incentives to industry to export. The noble Lord, Lord Winterbottom, had a good deal to say about this. There is little doubt that the estimated £80 million, which is a very substantial sum of money, provided for under the Export rebate scheme has helped, if one understands the comments made by so many industrial people. And the possibility of extension of incentives has been, and is being, continuously explored. I think it is fair to say that if means of doing this could be discovered, which was within our international obligations, the extra finance involved would not necessarily be a deterrent to the Government implementing it, but as things stand at the moment we cannot exceed the amount of indirect taxation which is borne by exported goods in giving a rebate. To give a larger rebate would constitute an export subsidy and offend international obligations which it is very much in our own interests to support. This really is a matter of discovering the means.

Of course, we do get complaints that other countries help their exporters more than we do. This is only natural. No exporter is ever content—nor should he be. I know that in some other countries complaints are being made by their exporters that we do better by our exporters than their Government do for them. We are not alone in this trouble. We in the Board of Trade are always watching other Governments and what they do, and we are working internationally to ensure that competition over exports is fair. If what we try to do is to estimate the relative value of all the different kinds of assistance given to exporters in various countries, then of course we must take into account the whole of the respective systems of taxation. The matter then becomes an extremely complex job. It is not a simple matter, and there are those who say, as I confess I was saying only three months ago, that clearly Germany or France or other countries are in an advantageous position but once I began to look into the complex facts I was not so sure. I do not think there is a clear case for saying that. However, I would not say that there was a clear case for denying it, either. The whole matter is extremely complex.

The claim for increased incentives is at times based on the assertion that increased exporting can only be carried out at the expense of profitability and to the detriment of the shareholder. I think that for most companies this is a false assumption. We live in an international world and any company of substance that is potentially an exporter and which deliberately confines its activities to the home market is not really working in the interests of its shareholders. Admittedly the first years of exporting are bound to be expensive. But any company which confines its activity to the home market and which sets out to launch some new product would, in the first three years, find it very expensive. We all know that in business we shall lose money for one, two, or three years on any decisively new venture, and so no doubt does one lose money in one's first year of trying to enter a new market, but this does not deter one if one has a sufficiently long-term view and in the years to come a company that has remained parochial and small because it insisted on confining its efforts to the home market, will inevitably face the competition of others who have been growing strong through international trading. I suggest that this is business common sense. To say of American, German and Japanese companies which have been trading increasingly on an international scale that by their efforts they were undermining the position of their own shareholders, makes nonsense of the general argument that exporting is unprofitable and therefore it should be rewarded in some other way.

To turn to the question of credit and insurance of credit, the Export Credits Guarantee Department is now offering services to our exporters which compare favourably with those of any other country, and are very much better in some respects than some of those elsewhere. Nevertheless, cases do arise where the overseas buyer seeks longer credit than the Department is prepared to insure. The Board of Trade is approached by zealous British exporters seeking exceptional insurance terms. Apart from exceptional cases these have to be refused because there exists an understanding among the main industrial countries not normally to insure credit in excess of five years from the date of delivery of the goods. It is extremely difficult at times to convince the eager exporter working in the national interest that it is indeed in the long-term interests of the country as a whole that we should not be in breach of this understanding. Moreover, if it were destroyed we should find ourselves in competition with other countries which are less dependent on their exports than we are and which, at the same time, are in an easier position to finance competitive offers of longer credit than we are ourselves. Thus it is in our own interests to preserve these agreements.

Exporting is another issue from trading in the home market. When trading in the home market, £1,000 of turnover may involve debtors of up to £2,000 at any one time. When our firm trades overseas—and maybe if a firm has not been trading overseas before it may get into this position unawares—it will find that it can throw up debtors of £3,000, £4,000 or £5,000, and then it is in great trouble. This is an issue which is being much raised with the Board of Trade at the moment, and thought is being given to the extension of the Bank Guarantee facility which enables such firms to recover their outlay more quickly.

I want to take up a point here which was made by the noble Lord, Lord Winterbottom. He asked whether the Board of Trade would not undertake to match the terms of credit offered by our competitors in overseas countries. But if evidence can be produced that the terms of credit agreed internationally are being exceeded specifically by another Government in backing their exporters, the Board of Trade in this country is prepared to match those terms, as long as we get proof of competition of this sort.

LORD DRUMALBYN

My Lords, may I ask if this is restricted only to what another Government do?

LORD BROWN

Yes, it is. If, indeed, the credit offered by another company without the aid of its Government is greater than the five years, then in those circumstances the Board of Trade is not prepared to match the offer. Exceptions to this are very rare indeed, as your Lordships will understand. They almost always arise on big contracts.

LORD HAWKE

My Lords, may I ask the noble Lord whether the Export-Import Bank credits come into that category? I seem to remember providing evidence to this House some years ago of credits running up to something like twenty years, for locomotives and such things for South and Central America, done through the Export-Import Bank.

LORD BROWN

We are getting into a rather difficult field which we should have to spend a long time debating. When one gets an export order of over £2 million, and especially when this is concerned with large civil engineering issues, the conditions of insurance to which I have referred earlier this afternoon cease to operate and different circumstances come into play. I should prefer not to attempt to answer that here and now, because to describe it precisely becomes an extremely involved matter. If the noble Lord would like an answer, perhaps it would be better to give him a written answer.

I am talking about these services generally now. They are being used on an increasingly large scale. This year the extension is something of the order of 15 per cent. But there is some disappointment in the sense that there is evidence that a great many British firms do not know sufficient about these services and are not using them sufficiently. For example, the Export Services Bulletin, a daily bulletin which gives details required by overseas buyers, has a circulation of only 3,000. There are other examples of under-use. One means of counteracting this is the advertising campaign which is generally referred to as "Call Export Intelligence". We hope to maintain this and perhaps increase it in the future.

I think that exports have, over the last two to three years, gradually become a subject of increasing interest, until to-day I believe it is true to say that they are the number one topic in industry. Credit on this account is due to the large number of experienced businessmen, trade union officials and others who are to-day voluntarily giving their services to the "Little Neddies", to the British National Export Council, to the Chambers of Commerce and to the export associations and export groups which are springing up all over the country. In passing, I would comment that more co-ordination of the activities of these many groups seems to be required, and thought is being given to this problem. On the other hand, never before, except perhaps in time of war, have so many industrial people been involved in the economic processes of government and in co-operative activity in the national industrial effort as there are to-day, and I think they deserve our thanks.

The noble Lord, Lord Wade, in his speech made reference to the researches which are going on to review the possibility of setting up a Government export trading corporation. These investigations are in the hands of the Denman Committee, and that Committee is employing market consultants in three overseas territories. We are hoping that their Report will be available by the end of December, and we shall then examine the matter. But it would be unfair to assume any particular form for such an export corporation or that we are definitely going to have one. We are awaiting the Report and we shall see what it says.

I want, in finishing, to turn to a rather more sombre aspect of this export situation. I would make it very clear that in my view our difficulties with our balance of trade and exports are not the result of failure of any particular Government or Party. I suggest to you, my Lords, that our country has been suffering from something that approaches a decline in economic virility over a period of at least fifty years. I think we have to acknowledge that, in order to get the whole problem into proper perspective. If we make the mistake of assuming that short-term failures on the part of some particular Government have been the cause of our present exporting difficulties, we shall be equally liable to assume that short-term measures alone could recover the situation. Our comparative lack of export success over the years is the manifestation of a very old problem in our society; namely, failure of society in many ways to accord sufficient status to industry. Perhaps because ours was the first industrial society, familiarity has bred contempt.

Let me, to support my point, name just a few facets of this failure. Our educational system has failed to establish in the minds of young people the central importance to our nation of our industrial effort, with the consequence that to-day the brightest sixth formers are still not sufficiently attracted to industrial careers. Our university system in the past has influenced its best towards intellectual pursuits or towards training as doctors, lawyers, teachers, scientists and so on; it has tended, in some universities at least, to act as though second-raters are good enough for industry.

While other societies since the mid-nineteenth century have been expending serious effort in fitting their people for industrial careers—I refer to the German technik-hochschule, the Swiss technical high schools and so on—it is only since the last war we have begun seriously to try to make up for this long period of neglect. If in what is euphemistically called "polite society" you are a young soldier or doctor or lawyer or stockbroker or teacher, you can say so with pride. But if you are a salesman, then you are made to feel slightly non-U. I have been a salesman, and proud of it, for the early part of my life, but I am always aware of this and any salesman will confirm this; he prefers to call himself a technical representative or anything rather than a salesman, because this has a bad image in the eyes of British society. Yet we are to-day to a quite large extent dependent upon our salesmen for selling overseas. In short, the industrial institutions, which are the very basis of the comfortable lives which so many in our professions enjoy, are simply not sufficiently respected by those same professions.

One of the results is that too many of our small firms have remained small because they have not been led by men of the necessary intellect and vision. We all know that we need in this country fewer, but larger, companies if we are to compete with our larger competitors in America, Germany and Japan, and they are larger. It is, however, no use stimulating the integration together of consortia of smaller firms unless the necessary high level of leadership is available to weld these groups of smaller firms into one and produce the initiative required for international competition, in our machine tool industry, for example, it is estimated that about one-third of the firms in it employ less than 24 people. So the story goes in other industries. There are great virtues in the small company, but I think we have worshipped too long at the shrine of the small man. Too much of our production of various categories of goods is split up between too many units which are too small to be effective.

I suggest that by any criteria one likes to select, be it satisfaction to the consumer, the design of a product, conditions of work for the employee, or capacity to earn foreign currency, even a superficial examination of performance would demonstrate that most of our larger organisations are of more value to this country than the majority, not all, of the smaller ones. I suggest that we must admire small companies when they are cracking good companies, but not just because they are small. We must root out thinking of this sort. Let us encourage them in every way possible to become large, sophisticated and professional, so that they can take part in the export battle.

So we must generate—and I am going to make it my task to try to generate—the long-term policies which will stimulate this change of attitude to industry and to the exporter. We have to press forward on every front with improved services and initiatives, but we must generate this new attitude towards industry. Individual companies must be brought to realise ever more sharply if they claim the right to employ people, that they must employ them efficiently, and that the use of the nation's human resources in this way lays upon them the responsibility of helping to earn our bread and butter overseas. Society must make industry feel much more important than it feels to-day. He who exports must be recognised as an exporter, and given status on that account. Differentially others will have to realise that they are not quite as important as they used to think they were.

We cannot continue in the future to play a kind of brinkmanship over balance-of-payments problems. We cannot keep on coming back to this problem, then edging a little away, and then finding ourselves back on the brink again. We must generate plans and policies which will eliminate these endemic difficulties, for our status as a great nation and our future influence on international affairs is dependent upon our finding a solution to these difficulties. The National Plan makes clear to us the tasks that lie ahead. We have to cut out waste, especially waste of human resources; we have to work towards the elimination of strife over wages; we must achieve a more stable cost of living; we must maintain a higher rate of investment in industry; we must become a more sophisticated, technological, professional society than we are to-day. If we do these things, we shall certainly solve our balance-of-payments problems. No superhuman efforts are required to achieve these targets, but rather we require the steady elimination of waste and inefficiency of all kinds. Perhaps the best feature of the Plan we are debating this afternoon is that it reduces uncertainty and anxiety about the future, and replaces it with an achievable set of tasks for all. It is on this basis that I commend it to your Lordships.

5.4 p.m.

VISCOUNT ECCLES

My Lords, I should like to thank the noble Lord, Lord Winterbottom, for giving us this opportunity to debate the National Plan. I should like also to congratulate the noble Lord, Lord Brown, upon his first speech from the Government Front Bench. I recognised the brief on export credits which I was given six years ago, word for word throughout the whole passage. But I am most grateful to the noble Lord for that part of his speech which he devoted to the concept of planning itself, and I should like a little later on to engage in some argument with him on the philosophy.

I came to your Lordships' House in a difficulty about the Plan, and I am still in it. What precisely is the status of this document? The noble Lord, Lord Brown, tended to say that this was only a matter of words. But it is much more than that, because if we can take this Plan as a guide to future trends, then we should give it a warm welcome No condemnation would be too severe if we have to regard it as a commitment to action. Ministers—and, of course, we are fully accustomed to this—speak with different voices. A fortnight ago in your Lordships' House the noble Lord, Lord Shackleton, said that the National Plan is only an outline. The noble Lord, Lord Brown, has said much the same this afternoon. But how can we square that with what the ever-candid Mr. George Brown has said—and I quote: The Government will treat the Plan not as a forecast of what might happen if things go well, but as a commitment and a blueprint for action. The difference between those two statements is serious, and all the more so because the objectionable description comes from the responsible Minister. I must therefore ask the noble Lord who is to reply to be good enough to tell us plainly (he will be doing industry a great service) which Minister the Government support, because they cannot support both. Do they support the noble Lord, Lord Brown, or Mr. Brown? Is the Plan an outline, or is it a commitment? I feel sure that Mr. Brown meant what he said, and that is why he was prepared to prejudice the minds of the public by calling this document The National Plan. The trouble is that once the concept of The National Plan has sunk in, the impression is created that Ministers, industrialists and trade unionists are committed to make its constituent forecasts come true. But as everybody knows, some of these forecasts are not going to be reached, and some of them will be over-reached—and by large margins either way. What I fear is that when this happens, the Plan having already engaged the honour of the Government, Ministers will then blame everybody but themselves, and voluntary indicative planning, which can be a most useful guide and has, I hope, come to stay, will be brought into disrepute, and will either be abandoned or superseded by controls. Either of these courses would, I think, be a pity.

I readily agree that the statistics and forecasts in this Plan are the most comprehensive ever produced in this country, and we should be grateful for the enormous work that must have gone into their compilation. But if your Lordships will consider for a moment how these tables and figures were built up, you will see that the resulting document ought never to have been described as The National Plan. As the noble Lord, Lord Brown, said, the Government first made an assumption—namely, that growth could be 25 per cent. over six years. They then asked industry to take that assumption and to work out their contributions towards it. When the various industries sent back their estimates, they did not add up to the Government's figure—not by a long way. I would quote from paragraph 5 of Chapter 2: …the original estimates by industry gave a significantly lower increase in total output and showed a different pattern of growth from that finally put forward. Then what did the planners do with these unsatisfactory estimates? They sent for the representatives of industry, put pressure on them and made them agree both to the 25 per cent. total and to the Whitehall concept of growth within that total.

Since this was the procedure, how is it possible to say honestly that we can be committed to these forecasts which have been twice hashed and highly seasoned? Who of us here can tell how many surprises, economic, political, or military, will be sprung on us in the next five years? I make two suggestions, one favourable and one unfavourable, for reaching the target. Supposing a large quantity of natural gas is discovered in the North Sea, what then happens to the fuel estimates in the Plan? It is anybody's guess. But the change must be very important and very favourable.

Or suppose that the forecast of the increase in the number of motor vehicles is not reached. The Plan says that the 9 million motor cars on the roads to-day will become 14 million by 1970. But the motoring public may get fed up with the queues, with the lack of parking spaces, with the delays in the road programme, and they may at last become frightened of the number of accidents. In that event the forecast total will not be reached, perhaps by one or even two million cars. What then becomes of the Plan's steel and engineering forecasts, many of which are geared to the dominant motor car industry? Is Mr. Brown committed to buy all the motor cars up to the 14 million the public do not want to buy? I have merely to ask the question to show how absurd it is.

Therefore I particularly ask the noble Lord, Lord Shepherd, how firm do the Government consider the estimates of growth in the motor car industry? This is one of the most important and fragile estimates in the whole Plan. If the noble Lord says, as I think he must say, that the Government are not at all sure about the 14 million figure, then a very great deal of what Mr. Brown is saying about the Plan comes tumbling down like a house of cards.

Nevertheless, if the Plan is treated as no more than a useful guide it certainly deserves praise. The satistics are immensely interesting. The Plan highlights certain obstinate weaknesses in our economy, such as the inadequate capacity of the building industry, and does it in a way which has never been so clearly stated. More important, I must, in fairness, say that the Plan has established more firmly than before confidence in the long-term expansion of our economy. The restrictions imposed this year to deal with the short-term financial troubles have been endured more philosophically than in previous periods of strain. This is all to the good. If, next year, businessmen are willing to continue their investment in new plant and machinery at a high level, and that can be shown to be at least partly due to the longer-term thinking encouraged by the Plan, then the whole exercise will have justified itself.

But what are we to think about the chances of reaching the 25 per cent. increase target by 1970? This rate over six years, as my noble friend Lord Drumalbyn said, is nothing extraordinary. The other advanced countries have done, and are likely to do, better. Why, then, must we set our sights so low? Leaving aside the important question of an effective incomes policy, the planners themselves give two main reasons for their conclusion that 25 per cent. is already high. These two limitations on doing better in Britain lie at the heart of the whole document and, I venture to think, deserve our close attention.

First, the planners are anxious about the supply of labour. They say that there will be an overall shortage of labour by 1970. Secondly, they insist—and this is a powerful passage in paragraph 8 of the Introduction—that if productivity is to improve to the extent that even their target requires, then there must be new policies and new attitudes in industry. These two factors are interdependent. In so far as new attitudes to work are forthcoming, and management makes better use of labour, we shall require fewer men and women in employment, and vice versa.

The Plan makes the crucial estimate that by 1970 there will be a manpower shortage of about 200,000. It is true that a number of reservations are offered about this estimate, but the fact remains that the Government accepted this figure and put it into circulation as the centrepiece of their design. But we on this side of the House are not the Government, and I seriously wonder whether we should accept this estimate of shortage. Other countries are going to make better use of their manpower. Why do we admit inferiority so easily? Is it because the labour we already have is not, and for various reasons cannot be, effectively employed? This is my view, and apparently it is also the view of Mr. Austen Albu, Mr. Brown's Minister of State, a man who is much respected in economic circles.

Mr. Albu said on November 3 in another place: There is a general belief that a determined attack on the inefficient use of labour in our factories could produce the equivalent of at least 10 to 15 per cent. more workers."—[OFFICIAL REPORT, Commons, Vol. 718 (No. 177), col. 1159; 3/11/65.] Your Lordships will note the figure—10 to 15 per cent. more workers. The Minister of State was not denying that belief: he was using it to justify his appeal for an attack on the inefficient use of labour. He was saying that we could go about half way to the 25 per cent. target without any more manpower at all. It follows that the manpower estimates in the Plan are an admission of defeat in a vital sector of the battle for growth. That is the rough hard truth which the Plan keeps well in the background. And why? I suspect that Mr. Brown did not dare to upset the trade unions by putting his name to the statement that the 25 per cent. target could be reached with a surplus of labour. It is hoped that by allowing the exaggerated estimate of the scarcity of labour to become current the trade unions will be a little more willing to look at restrictive practices, a little more willing to co-operate in the transfer of large numbers of men from old to new industries. And perhaps it is also thought that this same exaggeration will make employers more willing to install laboursaving machinery.

These advantages to be obtained by telling only half the truth are highly speculative. I would much rather the Government had said plainly that here, under our noses, is the reserve of manpower in boardrooms and comfortable offices, as well as on the factory floor—the reserve which, if we could call it out, would go a very long way to solving our economic problems. If the 2 million men and women who to-day are either badly managed or downright lazy could be got out of the half-jobs they are doing and persuaded to do their best, either where they are or in some other jobs, then the Plan's target could be reached and passed before 1970.

My Lords, this is not a fanciful picture. We have the data on which to compare our British use of manpower with the use in other countries. We know, for example, that the productivity rates in the United States are at least twice ours—and that in industries such as building, in which the Americans have no material advantages. Can it be true that an American is all that superior to an Englishman? Is he stronger or more skilful? Is he mentally better gifted or better educated?

Americans are none of these things, but they do have a different attitude to work and to profits. They do not shelter behind restrictive practices. Their managements and their labour organisations welcome change which has the backing of technologists. We are told, of course, that we are different from the Americans, because for Americans to make money is a sufficient incentive to work hard. I have always thought that was an unjustified simplification of American life. But be that as it may, in spite of what the noble Lord, Lord Winterbottom, said about financial incentives for exports, I do not think that making money could possibly be a satisfactory incentive for Britain to-day—Britain which is in search of an incomes policy, and which must rally behind this or some other plan.

Very well, then, what are the incentives that would create the new attitudes to work which the planners say are essential? Surely this is the fundamental question raised by this great document, and not answered. There used to be a kind of national philosophy, derived from the Christian religion, which held us together in an accepted system of values. This old framework to society is falling apart, and falling apart exactly at the moment when the stick of unemployment has been removed. Clearly, when jobs are easy to get, the sense of responsibility towards work and towards society as a whole is far more important. So that politicians, whether they realise it or not, have now to move into the moral vacuum made by the decline in traditional religion, and by the advance of science which tells us nothing about how we should behave. Therefore I think that Parliament has to lead in the search for adequate incentives, and what can we say about them?

Some people pin their faith to competition as the great incentive, and nobody—certainly not politicians—ought to despise the spur of competition. But, as the Plan itself says, competition to-day is becoming international, and therefore presupposes very large units of industry. The great international companies seem to me to provide the spur of competition only to their top management. The lower level management and the weekly wage-earners are too far removed from the decisions that count to be much stirred by international competition. Of course, the workers in industry know what it is to compete for a job, but with full employment this competition, I am glad to say, is in abeyance. The planners are well aware of this—much better aware of it than Mr. Enoch Powell. Have they, then, any other incentive to offer us?

By implication they rely on a new kind of patriotism. I have no doubt that it was the wish to harness this powerful emotion that made Mr. Brown call this collection of forecasts The National Plan. Our national duty, he wants us to feel, is to put economic growth before everything. This new kind of patriotism has been quietly fostered ever since the war, and it has been given a very vigorous push by the present Government. But I do not think it is going to prove to be the incentive that we are looking for, and I will conclude my remarks by expressing some doubts on this score.

Your Lordships will remember that, at the last General Election, economic growth was given the pride of place in the political programmes of all Parties. I doubt if that had ever happened before in British history, though perhaps Sir Robert Walpole comes to mind. He was a Prime Minister whose only policy was the prosperity of the country, and in twenty years he had reduced the nation to a spiritless lethargy. Now we are at it again. Last year the Parties vied with each other on practically no other subject but plans for modernisation, and I thought the prominence of that theme infinitely depressing, because if politics become nothing more than economics life will become very dull and probably corrupt as well.

The National Plan which we are discussing is the outward and physical symbol of this new patriotism, which makes economic growth no longer a means but the chief end of the Government and of the people. I do not deny that politicians go on talking about ideals like liberty and justice, and say that they are the ends of their endeavours, but if we look behind their nostalgic phrases we see that, little by little, the old personal values which used to be ends in themselves are changing their status and becoming means to the end of economic growth. I must give your Lordships just two or three quick examples.

I thought the noble Lord, Lord Brown—I am sorry he is not here—gave me one when he talked about education. We used to say that education was an end in itself, an equipment for life, not a training for a career. The planners do not say that. You have only to read the Plan. You have only to listen to the noble Lord, Lord Brown. Education is now a tool of economic growth.

LORD SHEPHERD

My Lords, does the noble Viscount take the view that education is the end? Surely, that is the complete opposite of what the educationists would think.

VISCOUNT ECCLES

My Lords, I think that education is the beginning of life for a civilised person—an end in itself, something which should not be subordinated to a national plan for economic growth. But I can quite see that this is the kind of principle on which we are likely to differ.

Take overseas aid, which is mentioned in the Plan. Your Lordships might think that, as the West gets richer, the duty of the advanced countries is to continue to give aid to underdeveloped nations at least in proportion to their growing resources. But not at all. As soon as some internal economic reason can be found—a Budget in difficulties, inflationary pressure, too great a volume of imports—the duty is set aside. Look at what has happened here. Her Majesty's Government have frozen British aid, and of course to freeze British aid this year to what it was last year is, in effect, to cut it, since the value of our money goes down all the time. But what can you expect when national prosperity at home is the first and foremost aim of politics?

Finally, I must just say a word about freedom, in answer to what the noble Lord, Lord Brown, said. Of course, it is true that planning nearly always results in telling somebody that he cannot do what he wants to do. At the same time, in a complicated society where so much depends on teamwork, it is quite obvious that there has to be an ever-growing give and take between one citizen and another. But the question is always open: how far should planning override per- sonal choices and personal habits which conflict with greater productivity? What right have we to blame a coal-miner who earns all the money he wants in three or four days, if he goes fishing or stays at home for the rest of the week? In my view, what matters is how well that man works when he is down the pit. In other words, has he got the right attitude?

It seems to me that if a Government is committed to so detailed a plan as we are discussing this afternoon, they are bound to make unconscionable inroads into personal freedom. Those noble Lords who were here at Question Time will have heard the noble Lord, Lord Lindgren, saying in definite words that lorries are more important than pedestrians.

LORD SHEPHERD

No.

VISCOUNT ECCLES

Yes: read Hansard to-morrow morning. Here you have the individual being sacrificed to getting trade moving. This reversal of ends and means has happened in Communist States, and I do not want it to happen here under any Government. A great nation like ours ought not to subordinate these personal, human values to economic objectives. That may be a moral question; but, apart from that, it is a very stupid policy, it will defeat itself, for men who hear their leaders say—and, goodness me!, they do to-day—that faster economic growth is the supreme object of national policy must not be expected to think differently about their own lives. Material interests will be all the inspiration they can get and then what chance will remain of creating the new attitudes which the planners say are essential to achieve even their modest target?

My Lords, these new attitudes are the greatest problem raised by the Plan, and where are we to find incentives to call them into existence? I may be very old-fashioned, but I believe that our best hope is to restate in terms of present-day conditions and needs the old ideals of freedom, justice and help for others. I suspect that the political Party which says, and which is believed when it says, that economic growth is only a means to new incarnations of these ideals will revive the vigour and spirit of the nation, and as a kind of by-product will find that the new attitudes are growing in industry. Therefore, my Lords, I welcome the Plan very much if it is only an outline, but I condemn it with all the severity I can if it is a commitment to action.

5.32 p.m.

LORD CITRINE

My Lords, I, too, wish to thank the noble Lord, Lord Winterbottom, for introducing this Motion; and I should like to preface what I have to say by expressing a view in diametric opposition to that of the noble Viscount, Lord Eccles. I regard this as a courageous attempt to survey the problems of this country over the next five years. It is by far the most comprehensive review of the prospects before this country in the economic sphere that I have seen. There may be others, but I cannot recall them emanating from a governmental source. This is not a rigid plan, and I was very surprised that, in his most interesting speech, the noble Viscount, Lord Eccles, assumed that there was no provision for flexibility in this document, that attempts to look so far ahead would be almost certainly falsified by events in some respect or another, and that in that sense the Plan would be vitiated.

The noble Viscount's speech was a good speech. It was argumentative from end to end, but the arguments were reasonable ones only if you accepted the premises, which I could not possibly do. I was puzzled by the underlying assumption of the noble Viscount. He seemed to feel that a community could somehow struggle along maintaining the freedom of the individual and his right to initiative and yet not plan for the future in any comprehensive way. His reference to the motor industry, for instance, puzzled me completely. If there is one section of our economic life that needs close attention and planning for the future, surely it is the development of the motor industry and its consequent effect upon roads. I do not think anybody could possibly deny that; and the same kind of reasoning can be applied broadly to most of the sectors of our economy. I shall deal with one at least, arid possibly two, before I conclude.

No one looking ahead for several years can foresee all the circumstances, but certain assumptions have to be made. One assumption which I am sure would not be challenged, although it rests upon a knife-edge, is that we shall maintain, as we shall strive to maintain—and I believe we shall succeed—full employment. So far as I know, there is complete agreement between all the political Parties in this country as to the desirability and the possibility of doing that; and yet it is an assumption. It is an assumption which, I repeat, could be falsified by world events over which this Government have practically no control. I will not develop that point; I merely make it. It is quite impossible to foresee so far ahead. But that is not an answer to the need for trying to look ahead and dealing with the probabilities in the light of past experience. Provision for flexibility is made in this Plan. In the diligent survey which the noble Viscount quite evidently made of this Plan he must have missed what is stated on page 21. I will quote it: The Plan will be kept under regular review in the light of developments, and periodic reassessments will be made so that Government and industry can base their plans on the latest information available. Is it possible to overlook that qualification when we are considering this document? Surely, it is common sense. It is what any Government would do—try to furnish themselves with the latest information, and review their efforts in any planned direction, no matter how limited.

I would express this note of caution. Reviews are undoubtedly desirable, but when making reviews great caution should be exercised to avoid doing anything which stops or slows up the momentum by which industries are reaching the ideal or the goal set out in the Plan. That could be fatal. Altering the basis materially could frustrate the possibilities of industries coming anywhere near the goal set out in the Plan itself. No one can think about the difficulties of devising an overall plan in a mixed economy such as ours without realising the possible errors of judgment, the possible overestimate of prospects and that kind of thing. This country lacks something which, in my view, is essential to any rigid application of a plan; that is to say, I regard as the essence of successful planning the power to carry it out.

I spent some years in the trade union movement trying with colleagues to devise a plan for the reorganisation of the trade union movement; but, despite a unanimous report, nobody took any notice of it. They went on in their own sweet way, and that portion of the sector of private industry represented by the workers through the T.U.C. just disregarded any possibilities of conforming to a plan, however good it may have seemed. The Government have power, direct power, over one growing sector of industry; that is, the nationalised sector. All the Boards are under the direction of a Minister, but that Minister does not have absolute power. His directions can be only general in character and they must he based upon some clearly revealed national circumstance. He cannot give a specific direction. During the course of my years in nationalised industry, I had occasionally to remind the Minister of that fact.

In the nationalised industries, power in reserve is always a factor in the mind of anyone who has to deal with these problems and, so far as I know, in all the nationalised industries close cooperation with the Government of the day has been characteristic since their formation. We have a very modern instance of that in connection with the restriction on advertising by certain of the nationalised industries. It has arisen within the last few days. The electricity industry has been trying to build up for a decade what we call a night load, to do something which could remove the highest extremities of the peaks and transfer them to night-time generation; and the apparatus that makes that a most likely possibility is the storage heater. Storage heaters have been purchased in such numbers that last year some 714 megawatts of power were transferred to night generation. That may not be clearly understood when we go into megawatts and kilowatts. It becomes a little plainer if we talk in terms of the off-peak load which has resulted from the favourable tariffs the Boards apply for storage heater use, and the discovering of the means of doing this and of manufacturing the apparatus.

We find in the last few years there has been some 3,700 megawatts of load transferred to off-peak periods which, so far as my calculations take me, would represent the output of about ten power stations of the size of Battersea power station. Therefore, there is a strong case for continuing to advertise something of that kind in a critical period like the present. Yet the Electricity Council and the Generating Board, in response to the Government's view as to the psychological effects upon the public of continuing advertising, have agreed to a temporary suspension.

So much for the nationalised sector. The Boards have the power to carry out their plans, broadly speaking—certainly more power than the Government exercise in the private sector—and the Government have power over the Boards. In private industry, as everybody knows, individual firms come into existence for one primary purpose; that is, to make money. By that I do not mean to imply that there is no other motive; do not mean that everyone in connection with private industry is oblivious to public policy and community needs; I do not mean that at all. No one can deny, however, that the shareholders who make it possible for these industries to exist are animated by the return they are likely to get on their investments. It is not correct to say that individual firms in the same industry have precisely the same interests. They are in competition one with the other. One can imagine the strain put upon their loyalties when they are asked to conform to a general policy which may take the keenness off their individual ability to be successful in that competition.

On the other section, we have the trade unions, representing the workers mainly employed in private industry. What have they done in the realm of prices and incomes? The Government there, as in other sectors, are relying on persuasion; but, up to date, the trade union movement is substantially divided as to how far it will be responsive to this policy. So, while devoutly hoping that persuasion will be effective in both these directions, with the individual firms on the basis of their products and with the individual unions in respect of their wage claims, I am by no means confident that it will be implemented as quickly as is assumed or as extensively as any reasonable person would hope.

When we come to the responsiveness of private industry in the larger spheres, the Government have, quite properly, paid tribute to the co-operation they have received from industry generally. I have been one of those who for many years past have tried for some kind of amalgamation between the large employers' associations. That at last has come about. We now have the Confederation of British Industry. The managing director, or whatever it may be appropriate to call him, is a very far-seeing and capable man, with, I believe, a progressive outlook. They, like the Trades Union Congress, exercise only persuasive influence over their individual associations; they have no direct power. They cannot order their subordinate associations or firms to do certain things. They can only point out that it is to their general advantage, and to that of industry, to do certain things. None the less, these are things not to be disregarded, and I personally am glad at the response that has been made.

However, my Lords, let us test it on this question of the response to advertising. The Government made an approach to the oil companies to see whether they, as competitors in the fuel field, would do what the gas industry, and the coal and electricity industries have all decided to do; that is to say, to suspend for a period of, I think, three months advertising their devices for central heating. I read in The Times this morning something which I hope is badly phrased. It was that the oil companies have decided to ignore the Minister's proposal. It is the word "ignore" that I object to. I can hardly believe it represents the views of those on the side of the oil firms who had to deal with this problem. But there you are. They will not play. They may have good reasons, but they are not as responsive as the nationalised Boards have been.

So we may find in the working out of this Plan that persuasion is not enough and that at some point some kind of compulsion will be needed. The Government have already said in respect of the trade unions and the early-warning system that they will bring in legislation if voluntary means fail. If that ever happens it will represent a struggle which the Government ought not to enter into lightly. On the other side, it will be expected that similar treatment will have to be meted out to individual firms which are unresponsive. But I think most people would feel it very undesirable for this country to find that compulsion had to be applied down the line as it is in the Iron Curtain countries.

There is an aspect of planning which is sometimes not understood. Planning to reach a certain goal implies close coordination. I am not now talking about co-operation in the general sense, but physical co-ordination within the industry or industries concerned. In the case of electricity supply—I mention electricity supply merely because I am familiar with its problems; as your Lordships know I served for something like fifteen years in the industry and for ten years as its Chairman—all the plant produced is made by private firms. A plant shortage has existed ever since the end of the war. It was inherited by the nationalised industries and it was a slow job to overcome it. I will not attempt to go into detail, but it was a terrific job. I am proud to say that when I left the Chairmanship of the industry, it had substantially overcome that problem by close co-operation with the individual firms and adequate co-ordination within the industry and on the jobs.

On Friday last I visited a power station which will probably be the biggest in Europe; that is the station at West Burton. Its capacity is four times as big as the largest power station which existed in this country prior to nationalisation. One generator and its associated boilers alone will give as much output of electricity as did the Barking Power Station prior to nationalisation. There were 60 main contractors on that job, apart altogether from the sub-contractors whose number was legion. There have been labour shortages, there have been disputes, not with the Electricity Board and its employees, but with the contractors and their employees, which have thrown the whole operation out of phase. It requires only a stoppage in one section when one is trying to co-ordinate production on the site, to throw back everything, and that is the one thing that has been happening.

I am too well disposed towards the British electricity manufacturing industry to be critical of it; I know too much about the problems; but I regret that within the last two years or so circumstances have arisen which have caused so many of the large power stations to be delayed in coming into operation. It is grossly unfair for either newspapers or anyone else to place the responsibility on the Electricity Boards; they are the customers, not the producers. I say no more about it than that. I do not believe in penalty clauses or anything of that kind. I think that good will between the Boards and the contractors is by far the better method.

There is one further factor which must be referred to in this connection. It is no use embarking on a plan which involves extensive capital investment and then, halfway through, to cut down that investment. When I was Chairman of the electricity supply industry I had a constant struggle with the Treasury, irrespective of whichever Government, Labour or Conservative, were in office. All the way through I had a struggle to secure the minimum amount of capital necessary to maintain an efficient and coordinated service and a reliable service. Treasury pessimism, the assumption that electricity was reaching a point of saturation, was apparent. All the way through there were arguments, when plans had been provided which themselves had taken months of discussion and careful review. The result was that cuts were made in the power programme on the distribution side; that is to say in respect of the Area Boards which supply the consumers. It was argued, despite warnings, that this could least affect the prospects or progress of industry. In other words, if you had enough capital to build your power stations and transmission lines, somehow the rest could get on—a fantastic assumption. In electricity supply you must get generation, transmission and distribution in balance. The result was that we had breakdown after breakdown in the system until at one stage we warned the Government that we could not be responsible for such occurrences if the capital programme was clipped.

I have read about rumours of curtailments of the capital programme of other industries in the week-end Press and in one or two other papers. The articles were reasonable and not fantastic. They seemed to imply that some discussion had gone on in governmental circles about cutting capital investment in this important industry. I was overjoyed to read the statement of the Minister of Power made in the House of Commons yesterday. The right honourable gentleman made it quite clear that no such proposal is likely to be entertained by the Government. Because of that, I hope that no other source will be found to be using pressure to reduce capital investment. If capital investment is cut, plant shortages will occur in the years to come. As it is, it will probably take two or three years, at the minimum, before the desired end of 17 per cent. reserve plant, which is imperative to maintain reliability of the system, has been reached.

I have in my notes a reference to the Prices and Incomes policy. I do not think I can carry the matter further than I did on August 4 in a debate in this House, one month before the Trades Union Congress. I was very anxious about that and expressed my views, I hope clearly and emphatically, about the duties of trade unionists. But realisation of the gravity of our situation is very slow. I hope there will be no carping critics who will criticise the Government too much regarding the materialisation, of the policy which is, I think, the most difficult phase of the Government's policy. I congratulate them on the courage they have so far displayed in setting out the problems despite the difficulties.

5.58 p.m.

LORD SHERFIELD

My Lords, I should like to begin by joining with other noble Lords in giving a warm welcome to the decision to draw up the National Plan and, with some reservations, to much that is contained in it. I do not propose to follow the noble Viscount, Lord Eccles, and the noble Lord, Lord Citrine, and go into the philosophy of planning; or to discuss in detail the assumptions underlying the Plan or the validity of the figures in it. No doubt many criticisms on these points could be made, and fairly made. Some have been made this afternoon. But provided the Plan does not acquire a kind of life or personality of its own, or come to be regarded as something which will or must be realised, then—and here I agree with the noble Viscount, Lord Eccles—it is a very valuable frame of reference. Indeed, the policies and targets outlined in it represent a challenge to which everyone concerned with the operation of the economy should do his best to respond.

I wish to say a few words about a matter, touched on at the end of his speech by the noble Lord, Lord Brown, namely, the implications of the National Plan for the small and the medium-sized firm. It is broadly estimated that at present unquoted and private companies, most of them relatively small, account for just under one-third of the employment in manufacturing industry in this country, and that firms with fewer than 500 workers account for 30 per cent. of our industrial output. In the debate in your Lordships' House on the Finance Bill last Session, I made some remarks about the close company provisions of the Finance Bill, as I thought that sufficient account had not at first been taken of the tax problems of the small firm. Now I again have the impression that the interests and problems of this large section of our industry have not bulked very large in the planning exercise.

To the smaller industrialist, the Plan does not give much guidance. For him it is rather like the dog in the Sherlock Holmes story that failed to bark in the night-time, and in so far as the Plan does touch on the problems of the smaller firm, its effect is somewhat sibylline. It advocates rationalisation, standardisation, larger production runs and so forth, in a number of passages. Their cumulative effect is considerable and they nearly all point in the same direction. The implication of this for small firms is not at all clear.

It is easy to see how this situation comes about. In the first place, the Plan's projections for the future as regards output, employment, investment and exports—the raw material, which, when processed and modified, constitute the Plan—are based on the expectations of individual industries and, within these industries, almost entirely on the expectations of larger firms. This may be reasonable in the case of chemicals or in iron and steel, but in the case of engineering, for example, the projection is much less certain.

Secondly, the Economic Development Committees, the "Little Neddies", which have such an important rôle to play in planning and in modernisation, have so far drawn most of their representation from the larger firms. This, again, is understandable. It is much more difficult for the smaller firm to supply representation on such bodies in terms of time, staff and breadth of experience. I believe that the same is true of the experience of the Development Commissions in France, which are broadly parallel to the "Little Neddies" in this country. It is obviously much easier for large concerns to bring influence to bear in the formulation of Government policy. This no doubt is inevitable and in large measure reasonable, but its effect should not be overlooked, for the philosophy and proposals which emerge may be less favourable to the smaller firm than they might be.

I have just three points to make in elaboration of this theme. The first relates to the question of mergers, which the Plan generally encourages by implication and explicitly—for example, in the case of wool textiles and machine tools. Of course, mergers are desirable in many cases. There are strong economic reasons—and the noble Lord, Lord Brown, gave emphasis to them—for more rationalisation, standardisation and so on in many of our industries. But the case can be pushed too far. One important consideration is that of management. It does not follow that the well-managed small firm will be equally well-managed as part of a large unit. Perhaps we shall get some further indication of official thinking in this matter when the Government's plans for the machine tool industry are made more specific.

Secondly, whether the process of rationalisation is fast or slow, smaller companies will continue to be responsible for a substantial proportion of our national production and resources—though the definition of "smaller" will no doubt change. For example, in construction, distribution, textiles and large parts of the engineering industry, small firms will continue to play an essential rôle. I am not defending the inefficient small firm, but I am talking of the efficient firm or of the one that, with help and encouragement, could become efficient. Perhaps the main point is that the problems facing large firms and small firms are essentially different, and it is this which has been insufficiently recognised, at least, on the face of it. In the case of the smaller firms, I do not think that there is now any serious problem about finance. Many sources of finance are open to them, and though, no doubt, these could be further expanded and become better known, I doubt whether there is any gap in the financial structure.

Within the realm of Government action, the important things are investment incentives and assistance with exports. On incentives, we are awaiting a Government pronouncement, and all I would say here is that I hope this will not be long delayed; that any new or revised system will be a simple and workable one, and that the encouragement it provides, in terms of inducements, will be not less in attractiveness and in total quantity than in the past. As regards exporting, it is well known that many smaller firms have difficulty in entering export markets and in improving their export performance. The noble Lord, Lord Brown, has mentioned a number of ways in which the export effort could be furthered and which are under consideration. I would suggest that these, and perhaps other methods, should be made specific as soon as possible and, among other things, with the special problems of the smaller firms in mind.

Thirdly, the efficient small firm makes, in a number of ways, an essential contribution to the economy of the country. In many cases it is an important complement to the large—for example, the small firm may be a jobbing supplier to a large plant maker. In many cases small firms have been active in developing the use of new products arising from the research of the large producer. Small firms have often been the source of important innovations. Many of the most interesting industrial growth sectors in the post-war period have been pioneered by small firms—for example, in electronics, vacuum technology and scientific instruments—and these have later grown into medium or large firms. The energy and enterprise of individuals can often make bigger impact in a small unit than in a large one, and however much the process of rationalisation and integration proceeds, there will, for all these reasons, always be a place for the smaller unit, new or old, fitting into what I believe have been called the "interstices" of the economy.

In conclusion, therefore, it seems to me desirable that the problems of the smaller firms should be more explicitly recognised in the general exercise of national planning. A good deal has been said this afternoon about the question of confidence. It is particularly important to create a feeling of confidence among small firms, who may feel uneasy about some things now stated in the Plan or, indeed, about some of what the noble Lord, Lord Brown, said this afternoon. So I hope that when, as will no doubt be the case, a revised edition of the National Plan is produced, it will be more specific, as the noble Lord, Lord Brown, began to be more specific this afternoon, in regard to the prospects of the smaller firms and to the part they can, and should, play in the growth of the economy.

6.10 p.m.

LORD PEDDIE

My Lords, I join with other noble Lords in complimenting my noble friend Lord Winterbottom on introducing this topic for debate in your Lordships' House. When I recorded my name as taking part in this debate, I believed myself to be free this evening, but I find that I have need to express apologies because of an unfortunate but unavoidable engagement which necessitates my leaving before the end of the debate. I have already spoken to my noble friend on the Front Bench, and he has accepted my apologies.

In making comment, which will be brief, on the National Plan, I felt, in listening to the many contributions, that the greatest justification for the Plan was found in a speech that was mainly critical. It was in the speech of the noble Viscount, Lord Eccles, when he said that the Plan established confidence in the long-term prospects for the economy. That in itself gives the complete justification for the Plan, because what is needed to-day, above all things, is confidence on the part of both management and labour in the future prospects of Britain. If the Plan does that, then that alone justifies the work that has gone into this document.

I did not, however, agree with the remark of the noble Viscount, Lord Eccles, when he deplored economics as being the major activity of modern politics. He went on to say that he was a little old fashioned, and in that comment I think he gave a demonstration of that, because politics to-day are no longer the platform or the playground of the dilettante. I can assure the noble Viscount that the efforts of this Government, or any other Government, in concerning themselves with economic questions or economic policies that can stimulate production and raise the general standard of life are recognised, in the minds of the great majority of the people of this country, as something which is most desirable.

LORD HAWKE

My Lords, the noble Lord will forgive me for interrupting, but I think he is being a little unfair to my noble friend. My noble friend was bewailing the fact that economics seem to be the main preoccupation. I put it to the noble Lord that if the Government, by a stroke of a wand, could abolish crime in this country, the people of the country would think it a far greater blessing than a 2 per cent. growth in economics.

LORD PEDDLE

There may be a certain relationship between the economic situation and crime itself. This has been shown in the past. Therefore I feel that any effort on the part of the Government to increase the general standard of life is in the best long-term interests of the people. Diogenes may have been able to live in a barrel and develop his philosophy, but I assure your Lordships that under modern conditions the average man in the street is concerned with his material standards, and that they have a bearing on his mode of life and his general standard of philosophy. Therefore, I feel it is important, in our consideration of this document, to appreciate the major objectives that lie behind the Government Plan.

I believe that this is the first attempt that has been made by a Government, under peace-time conditions, to coordinate all the complicated strands of our economy. I know that isolated efforts have been made, but this is the first occasion when there has been an attempt to provide a guideline giving some indication of the contribution that can be made to the development of this country by a co-operative effort on the part of both labour and management. The important thing to consider is that this is no imposed dictate by a Government, but something that has evolved out of the co-operation between Government, industry and the trade unions. I believe that its main virtue lies in the fact that it gives industry, both individually and collectively, a target, a purpose and an objective: and, above all, it stresses the interdependence of industry. This is seldom realised by the average industrialist.

I spent long years in commerce and industry, and I know from past experience the necessity to concern oneself with the operation of that business, with what one believes to be the immediate objectives related to that business, and giving very little concern to what is going on outside. Yet we all know at the back of our minds that, however efficient a business may be, the optimum turnover of the business, and possibly its profitability, is determined by the degree of national progress. This National Plan does, at least, emphasise this.

Some comment has been made as to how far and to what extent the Plan can he implemented. That depends on the degree to which it is recognised by industry itself as necessary. But at least the Government have the power in the public sector to make a considerable contribution. The public sector covers 45 per cent. of all investment and one-quarter of the total employment. Therefore I agree with noble Lords who have indicated that we have too much exhortation. We need some example, and I believe that the example can well be shown in the public sector. In the private sector, too, it is accepted that the Government have some influence upon the process of fiscal incentives, and the location of industry. But most important will be persuasion; and the most important persuasion is through example.

I wish to speak only briefly upon two aspects of this Plan, manpower policy and industrial investment, which are interrelated. As has already been said, by 1970 there is the expectation of a manpower gap of 200,000. Although the Plan makes it quite clear that labour resources are likely to be stretched in the next five years, it is my personal view—and I join with other noble Lords who have made similar comments—that there are many hidden reserves of labour in this country. There is a great deal of under-employment of existing labour and a good deal of over-manning.

At a recent conference promoted by the Foundation on Automation it was stated publicly by a responsible, well-known businessman that in his view—and he spoke from experience—it was possible, using all the latest techniques and large-scale methods of preparing raw materials, to run a modern steelworks so as to employ only one-third of the manpower at present engaged. I am sure that this does not apply only to the steel industry. To my own knowledge and experience there are many industries where there is a considerable wastage of manpower, and I believe that wastage of manpower and of labour is the cardinal sin of British industry to-day.

The responsibility is not confined to one sector; nor does that responsibility rest solely on the shoulders of labour or management. I believe that to-day there is a great deal of "hogging" of skilled labour to an extent that it is making some contribution to distorting the economy. We find many industries that are not so labour-intensive willing almost to bribe skilled labour in order to retain it, and thus causing serious embarrassment in many of our highly labour-intensive industries upon which the economy of this nation depends. I believe that it is in this particular field that we can make the greatest contribution to the development of this country.

I know that in previous speeches in this House I have expressed the point of view that although mechanisation is tremendously important, even more important is man management. It is much more important than even the introduction of new machines, because unless we can get the right attitude of mind, the right approach, on the part of labour, a great deal of the value of the introduction of those machines can be lost. I believe that restrictive practices constitute one of the major log jams holding up the flood of prosperity that modern knowledge and science can bring. At the same time, one must recognise that these restrictive practices were begun out of a need for protection; and over the years they have been sustained by justifiable suspicion, and encouraged by ill-gotten gains arising out of artificial scarcity. I have not the slightest doubt that, with the maintenance of restrictive practices, there will be increasing difficulty in achieving the objectives stated in the Plan.

My noble friend Lord Brown said lie felt that fear of the future was one of the reasons for the retention of restrictive practices. I agree with him. Only confidence in the future can persuade industry to abandon restrictive practices and learn new skills, and I believe that the Plan will help to create this confidence. I hold the view (and this may even, to some extent, run counter to the spirit of the Plan itself) that the shortage of manpower can be a stimulant to progress. I believe that we can meet the manpower shortage by increasing the power given to the men.

Reference was made by the noble Viscount, Lord Eccles, to the United States. It is true that productivity per man in the United States is far greater than it is here; but so also is the amount of capital employed per unit of labour. The responsibility for the lower amount of capital per labour employed in this country is not the responsibility of workers or trade unionists. I believe that the gap of 200,000 in the projected demand for labour is both a threat and an opportunity, and I am glad to see that the present Government recognise that fact in the building up of training centres, with the development of housing, redundancy compensation, and so on.

Mobility of labour is of tremendous significance in the development of this Plan. Mobility of labour involves social as well as economic problems. Possibly not sufficient importance is being given to the social aspects of labour mobility. It is very easy to say that it is necessary for a man, in the interests of the national economy, to move from one part of the country to another, or even from one district to another. But that involves social considerations, and therefore, parallel with all the plans for economic development there must of necessity be social plans. In that regard, I would agree with the noble Lord that education plays a vital part.

The Plan also highlights the importance of increasing industrial investment. I think that every noble Lord who has spoken has underlined that fact. We must devote an increasing proportion of our wealth to capital development, but it is equally important to ensure a comparative assessment of the potential productivity of those investments. It is all very well to say that we must devote more to capital investment, but it is necessary to know in what particular direction, and to what purpose, those investments are applied. For instance, my noble friend Lord Citrine made reference to the electricity industry. I am no expert, as he is, on the electricity industry, but I quote them as one illustration to prove my point without arguing the case.

One-tenth of the national investment is in the electricity industry, over £600 million a year, rising to £700 million. Electricity calls for five times the investment we have in the gas industry, but it has only twice the turnover. That may be completely justified—I do not know. I should imagine it is; but it gives some indication of the glaring differences which can arise from the productivity of investments made in particular fields. That the Government are conscious of this is indicated by the promotion of the new fuel and power policy, and I am sure that that particular point will be borne in mind. I mention it only to indicate the vital necessity that the Government should accept a measure of responsibility in this field of capital investment. Because let us remember that, although we wish to encourage private investment, we cannot always be certain that a private decision on investments of necessity coincides with the national interest; not always do we find that the private decision is in accord with the long-term national interests.

Finally, I would emphasise a point that I have made before; that is, that I believe that, great as are the difficulties which present themselves to-clay, greater are the opportunities before this nation, in the form of its inherent skills, skills in the hands and the minds of the workers, and, I believe, in management. One must always keep in mind that the initiative for innovation lies basically with management. We have need for rapid technological development, and for development of automation. All these things involve, as I said a few moments ago, dislocation of people's lives. Therefore, it becomes increasingly necessary to develop to a much higher degree than is the case to-day joint consultation in industry. All too often in the past, management played its cards very close to its chest. I think it is necessary, and will be increasingly necessary, to develop some means whereby labour will have a clearer conception of what it is all about. I believe that it will be possible to do a great deal to encourage economic development and stimulate that interest which is vital if we are to secure the full co-operation of labour, if labour is brought into the picture, not to manage, but at least to have some understanding of the basic ideas that lie behind management policy. That in itself will make an enormous contribution to the successful outcome of this Plan.

6.28 p.m.

LORD HANKEY

My Lords, I should like to join those who have congratulated the Government on their quite remarkable achievement in producing this Plan, in consultation with both sides of industry, in such a short time. To those of us who have spent years in Whitehall, it is almost incredible that they should have been able to do it, and I think it is a great achievement. I should think it would be an invaluable background for investment decisions in every board-room in the country.

I do not agree with those who have suggested that this Plan might have been more imaginative, or drawn us towards higher targets. The thing which attracts me about this Plan is that it is eminently practical, and I believe I speak for many of the young people of this country when I say we are interested in it only if it can be carried out and made effective. We really look to the Government, to the other political Parties, and to both sides of industry to co-operate in making it effective. We have to realise that we are falling behind all our trading partners in Europe, and that we are landing ourselves in a situation where our whole foreign policy is affected by our poor economic position, and where our standard of living is not likely to go on rising unless we can make a better showing. I am impressed by the wide range of action involved in the Plan. There is a fascinating Check List of Action Required on page 17. I think it sticks out a mile from this little list that, if we are to make a success of this Plan, everybody must be persuaded to cooperate. We are all in this together.

My Lords, there are obviously many hazards which may prevent the Plan from being made effective and carried out. I believe that there should be a system of assigning priorities to these hazards and that we should try to insure ourselves against failure, at least on account of the most dangerous hazards. If we do this, no doubt we shall solve our problems as we go along. Obviously exports form one of the major hazards. One cannot plan exports. I would take this opportunity to thank the noble Lord, Lord Brown, for what he said in his admirable exposition of what is being done. I am among those who believe even more ought to be done. I should like to see our effort doubled in this direction because I believe this is one of the main hazards. It is interesting that when Germany's economy expands her exports always seem to lead the way. When the very similar British economy expands it is imports which lead the way. What a curious contrast this is! I have thought of suggesting that the Government might like to send a small mission, composed of an eminent economist, an eminent businessman and an eminent trade unionist to Germany to try to find out where the difference lies. I shall have another word or two to say about Germany in a moment.

The internal hazards which the Plan has to face are perhaps more calculable, but I think we ought to double-bank and treble-bank our precautions against the worst of them. For instance, the power and gas supply, about which the noble Lord, Lord Citrine, spoke so ably, is absolutely fundamental. If power fails, everything stops. I hope that the planned margins will be found adequate for this. I do not think that our experiences last week were very reassuring, and I looked in the Plan to make sure of the outlook. I thought the passage about this, at page 49 of Part II, was not very reassuring, either. I would urge that this aspect of the Plan be looked into, even though power stations take five years to build and it is difficult to do very much between now and the end of the period. This is the nationalised sector, and I think the Government should accept responsibility for seeing that no major failures occur. With all respect, I am glad the Prime Minister and the First Secretary are dealing with it personally. I would hope that the power industry would find means of distinguishing between different classes of consumer. It is quite wrong that in- dustries should be stopped in the middle of the afternoon, especially when they are producing for export.

Another hazard, obviously, is communications and ports. This is a particularly important question for the United Kingdom, which is so very dependent on exports and imports. I agree with what the noble Lord, Lord Winterbottom, had to say on this subject. The Plan recognises the importance of developing our ports and communications, but I believe this ought to be stressed even more strongly. Here again, I have not been entirely reassured that we are going to catch up. The port of Rotterdam is well ahead of either London or the Mersey, both in the time of turnround of ships and in the tonnage handled. It is partly a matter of equipment, partly a matter of organisation—as we know from the Devlin Report—and partly a matter of labour relations.

In the winter of 1945–46 I went to see the Polish Minister for Foreign Affairs, and he said to me, "Is it true that 73 ships are held up in the Port of London by an unofficial strike?" I had to say it was true and then he said, with a definite light in his Communist eye, "But it is a revolution, isn't it?" I said, "On the contrary: it is the dearest prerogative of the British working man to be able to go on strike". Many of us have been thinking a good deal about this question, and I believe we have begun to change our minds somewhat since I made that remark twenty years ago. I do not know whether it is very much of a "right"—perhaps it is a "licence"—to be able to take unannounced action which throws your workmates out of work. In a way, it seems to me that we are living in a sort of modern Wars of the Roses. There was a time when the Barons and the other Lords used to fight all over our country and they reduced it to an extremely sorry state, until the strong Tudor Monarchy with a purposeful Government brought law and order back to our land. Perhaps there is a parallel here, and we ought to be examining whether we cannot in due course reintroduce a certain element of law into labour relations.

The hazard of wild-cat strikes is completely incompatible with planning. Our remarkable trade union leaders—and we have some of the best trade union leaders in the world, who have helped country after country to reorganise their trade unions—do not have a chance, in the conditions in which they have to operate, to see that agreements are carried out and that discipline is preserved. Large parts of Scandinavia have been Socialist for years and have successfully introduced the rule of law into these questions. It is not easy, but it can be done. Germany has been Conservative for years. It has done much the same thing, incidentally with British encouragement in the early days after the war.

I entirely agree with what the noble Lord, Lord Peddie, said in his very interesting speech. We need a better system of communications between the factory floor and the board-room. It is interesting that in Germany there is, generally speaking, only one trade union for each industry, which makes the situation easier. The trade union is represented on the board; and in the coal, iron and steel industries 50 per cent. of the directors are in fact from the trade union side of the industry. I know that the position of the trade unions is the subject of very high consideration at the present time, but I hope we shall not have to wait until the Greek Kalends for action to be taken in this regard, because it is essential to carry, out the Plan and we cannot afford to delay.

May I say one word about a somewhat smaller point because I believe it is important for the balance of payments, and that is the question of stock-building? This is a relatively small item, as will be seen from Table 1.1 on page 15, but it is a very volatile one and has considerable influence on the balance of payments. In this Plan we are allowing for only very small increases in the next five years, presumably because the Plan starts in a period when stock-building has been high. The British ratio of stocks to production is in actual fact exceptionally high by modern standards, and I personally would expect there to be a definite rise in stocks with any rise in economic activity such as the Plan foresees.

This is a disequilibrating factor in our country, because the more active the economy becomes, the higher the imports for stocks and the greater the strain on our already strained balance of pay- ments. But what else can the businessman do if, because of disturbances in the components industries, he is not sure that his components will arrive on time or that his raw materials will not come in because of disturbances in our ports? What can he do but keep large stocks? And the better his business, the larger his stocks. Therefore, it might follow that we cannot expect an improvement on the lines foreshadowed in the Plan, unless we can improve this general situation to which I have already referred.

I am very glad that the Plan lays emphasis on management education. The business schools set up in London and Manchester by the Fund for Management Education deserve our fullest support, and I hope that they will have the greatest success possible, now that they are beginning to get moving. The United Kingdom has very few raw materials and it has no large home market in modern terms, given the requirements of computer-based industry. What we have is genius and brains, on both sides of industry and at all levels. But it is essential to train our people and to give them freedom to operate. I warmly agree with the words which the noble Lord, Lord Winterbottom, used on this subject.

I must confess to some personal interest in this question, because I am Vice-President of the European Institute of Business Administration at Fontainebleau. There, with the help of Harvard and the Ford Foundation, we are trying to produce a new race of businessmen trained to operate the very latest techniques of business management in English, French and German in any part of Europe, including the United Kingdom. There is a first-class British contingent every year. I believe that this is a valuable addition to the facilities for management education available here, and rather particularly so where the needs of export industry are concerned. I believe that it ought to be of interest to the Board of Trade and other Departments.

To conclude, I hope that this Plan will usher in a new era of co-operation between Government and industry. I do not think that industry can be expected to know which way the wind is going to blow, and it is valuable for it to have the advantage of Government forecasting techniques. I think that the Government cannot generally be expected to know how the businessman sees current problems; and that they ought to be prepared to help him, and, what is more, to help him to make a profit; for unless he makes a profit, things will not get done at an adequate tempo. I believe that it is very important to avoid rigidity and to keep our approach to the Plan really flexible. I am glad that it is to be reviewed year by year, on a five-year basis; I do not believe that any other approach to planning is of very great value. We need to explain this Plan frequently to our countrymen and explain why we need their co-operation in it. I believe that it is essential to rally a massive public opinion behind it.

In conclusion, my Lords, may I apologise that I have an absolutely unavoidable official engagement to-night. I am extremely sorry that I shall not be able to stay until the end of the debate.

6.45 p.m.

LORD TAYLOR

My Lords, the noble Lord, Lord Hankey, said the Plan was to be reviewed every year for the next live years. Is he right? I am not sure that he is. I thought that this was the very question my noble friend Lord Winterbottom was asking when he said, "Is it going to be a rolling Plan?" I should like to reinforce that question, and to ask my noble friend Lord Shepherd whether, in fact, it is going to be a Plan which is brought up to date every year, projecting forward another five years; because I think it is. I am sure that that is the way to do it, and it will, of course, get better each time it is done. Doing this is rather a depressing task, because one looks back and sees the mistakes one has made, as we have seen with the Hospital Plans which have been prepared in precisely this way. We have seen how wrong one can go when one starts planning. But, of course, that is no reason for not doing it.

My noble friend Lord Winterbottom gave us a beautifully succinct, clear speech, with the whole of which I agreed, and he praised the authors of this Plan, as did the noble Lord, Lord Hankey, for the speed with which they have produced it. I feel that it is a miracle; it is a wonderful piece of work. If now, like my noble friend Lord Winterbottom, I say a word of criticism on one or two points, it is not because I do not think it is a beautiful piece of work: I think it is a first-class piece of work.

The first point I would raise is the point that he raised, about the somewhat frivolous spending of the profit we shall achieve on the consumer side out of this Plan. I suppose it is only fair to bear in mind my noble friend Lord Brown's remark that it is a forecast that we can probably alter if we want to. The Plan, for example, assumes that the consumption of tobacco is not going to change. If it does not change, I can tell you one thing that is going to happen—the admissions to hospitals for carcinoma of the lung will go steadily up. That can be forecast with a high degree of certainty. This is also a confession of failure of the Ministry of Health's efforts to reduce the consumption of tobacco. I think the only way to reduce it is by penal taxation so that it becomes as much a luxury to smoke as to drink three-star Hennessey brandy. That is the only way we are ever likely to get consumption down. That is the way gin drinking was got down in the eighteenth century. Propaganda helps a little, but I think it is something that we ought to do, in our own interest.

The noble Lord, Lord Winterbottom, mentioned entertainments and services—up by £663 million. These are not all entertainments; some of them are. Betting is included in that. So also are private education and health schemes. Again, these are forecasts of what is expected to happen on present trends. Whether they ought to happen is something we should consider quite a bit; whether it is right that over the next five years we should spend a good deal more on private education and a great deal more on B.U.P.A. and so on, are things we ought to consider very seriously. And the fact that they happen to be included in the Plan does not mean they have to happen, because this is only a forecast.

The point I want to make concerns closing the manpower gap, to which Lord Winterbottom referred, as did my noble friend Lord Peddie. Two hundred thousand people is what is wanted. We can do something here. In 1962, fourteen working days were lost for every insured person, totalling 300 million working days lost through ill-health, excluding 3-day, and under, certification. That is equivalent to one million people out of industry. I do not know that we can stop it all. Much of it is absolutely unavoidable. Many people do not lose any working days, and a great many lose a great deal more than the average of fourteen. One of the tragedies is that people go to the doctor for a certificate, and get one for a week or a fortnight or three weeks—multiples of weeks occur all too often.

Even allowing for the increase in population and for ageing, this is substantially more than the loss in 1952. This means that something is going wrong. There is a preventable and avoidable element in loss of working time owing to sickness or alleged sickness. Some diseases, as a cause of loss of working time, have become rarer during this period, among them tuberculosis, rheumatism, skin diseases and gastric ulcers. Gastric ulcers have become much rarer. It is an odd thing that among higher executives they are becoming quite uncommon. Perhaps these higher executives are behaving more sensibly. On the other hand, other diseases have become more common as a cause of loss of work. Injuries and accidents, including back injuries, are among these. There is heart trouble and coronary thrombosis. The latter is no longer a director's disease; quite commonly it affects the operatives, and is also common on the factory floor. Bronchitis is the biggest single cause of lost time in men. Then there are neuroses, psychosis and debility.

How far can we help people not to lose this working time? I am certain we can do quite a lot about it. There is evidence that people are more willing than previously to take time off and to seek the doctor's help in doing it. It is simply a product of greater economic security. And who can blame them? But still, there is something wrong. The state of the weather and pay-day have an effect on the amount of work time that is lost. This is, in part, a reflection on the state of the morale at the workplace—the readiness to take time off.

Here, I would agree with the noble Lord, Lord Sherfield, on the importance of small factories. I agree again with my noble friend Lord Brown, that worship of the small factory is a bad thing; but a good small factory is a jolly good thing. Certainly, if you take a factory or an office or a nurses' home, the smaller it is the lower, as a general rule, is the incidence of lost time. In the smaller units people feel a much greater personal responsibility. If I had to dispose of 3,000 men in industry I should prefer to do it in three 1,000 man-units rather than in one 3,000 man-unit. If I could do it in five 600 man-units, so much the better.

I want to take four examples of actual causes of loss of work and loss of time from work, and show what we can do about it. Take injuries to the hands and feet: these are the commonest of all injuries. People take time off to visit the doctor and to go to hospital. Often it is not medically necessary. If proper treatment is available at the works, including X-rays if necessary, this time lost can be reduced substantially, though not, of course, to zero. Secondly, there are injuries to backs, the next most common group. If a person goes off work with a bad back he is almost always off for three weeks or more. If these people can be kept at work they do well. If there is a physiotherapist available at their place of work to give them half an hour's treatment three times a week, they can be kept at work. If they have to go to hospital they lose half a day's work every time, and possibly more, because a journey may be involved. The waiting lists at hospital are such at the physiotherapy departments that they may have to wait six or eight weeks, by which time their back is better anyway.

It is said—and this is the usual medical approach to things now—"We must use our resources in hospital, because this is where the serious illness is, and we can concentrate it there." If we are thinking in terms of national survival, I believe we ought to spare a little of our resources for use in industry in order to assist that survival, because I think we can close that 200,000 gap simply by getting rid of avoidable absence from work.

Now neuroses. These are a cross which many of us have to bear; they are also a habit that we can indulge. If we can stick it out at work, most of us do better. In regard to minor ailments, there is a good deal of propaganda to catch things early—"Best be on the safe side"! If the worker knows that he can be seen at work by a doctor or an experienced nurse, he is usually prepared to go to work rather than take time off to visit his doctor for a minor ailment. Again, this seems to me to make sense.

So I have been making a case for the provision of proper treatment services at work as an essential part of the National Plan for increased production. You will not find it in this book. You will find quite a lot about the hospital service and general practitioner services, but you will not find one word about industrial medicine. It can be done without any appreciable drain on medical manpower, by using local general practitioners on a planned part-time basis. I know this, because I have done it. Of course it can be helped by using part-time married nurses in group services. Why is it not being done? It is done in most large factories, though not all; and it is done in the six group services for small and medium sized firms.

These group services are all either self-supporting or well on the way to being self-supporting; but none of them would have started without priming grants from the Nuffield Trust or the Nuffield Foundation. We cannot ask the Nuffield Foundation to go on doing this. I think it is now up to the Government to take the next step. It is not going to be a costly step. I am not asking my noble friend Lord Shepherd to announce tonight that he is going to do it; but I hope that within the year we may see many of these group services brought into existence—not suddenly, but as the opportunity offers over the country, three or four or five a year. I do not see why it should not be done. Certainly, if no legislation is introduced, at least legislation should be decided upon in the course of this year. We cannot do it everywhere at once; it must be a patchwork quilt. The cost of launching one of these services will probably be under £50,000, whereupon it will become self-supporting from the contributions from industry, and it can look after 15,000 or 20,000 workers. One cannot compute the value of each local service in saving national manpower and in raising industrial morale.

There is one lesson that the noble Lord, Lord Gladwyn, has taught me—namely, that if you want to get anything done you have to keep at it again and again. I intend to keep at it again and again. I have said some of these things before; no doubt I shall say them again. But I am quite sure that with Her Majesty's present advisers we shall get what we want in the end.

6.59 p.m.

BARONESS PHILLIPS

My Lords, when the noble Lord, Lord Byers, spoke a little while ago in this House he referred to industries that had a "black book" in which any member of the staff could enter suggestions to overcome bottle-necks or write something concrete for improving the industry generally. It is in this rather humble way that I submit my few remarks to try to assist on this Plan. I am afraid I am not an experienced politician and therefore I have no criticism of the word "plan". It seems to me to be as good as any other. The National Plan is an exciting book, completely readable and straightforward, and it sets out precisely what the Government mean to do. Unfortunately, one cannot say this of every Government document. I particularly like the phrase The Plan is a guide to action. It must show who is responsible for what. Then I would select one passage for attention, which I think nobody else has yet dealt with, which says that the Government will examine ways of helping married women and older workers who wish to do so, to take or to remain in paid employment. Employers should take steps to make use of these additional sources of labour. There is little doubt that the woman is going to be the main gap-filler. Since we have arrived at the happy situation where there are more men than women, it will undoubtedly be the married woman on whom we shall have to call for the main source of labour in the future. I believe I am correct in saying that at least one-sixth of present employees are women, and that at least half the women who are working at present are married. Our task in this Plan is to get more of these women back to work—paid work—outside their own homes. The first thing we must think about is the care of the children. Discussion on this matter has often been bedevilled by the slightly puritanical attitude that has been taken up on whether it is right or wrong for mothers to leave their children. Facts have shown that married women go out to work mainly because they need the money, and I have no doubt that this state will continue for quite a while, but in the present situation we need them in order to bridge the gap.

What facilities exist to care for children while their mothers are at work? In some enlightened industries and hospitals there are facilities for caring for the children, but there are far too few nursery schools provided by the Government. I respectfully ask Her Majesty's Government to look at this matter now. The Secretary of State for Education and Science, speaking in another place, said that he would encourage local authorities to set up new nursery schools as well as new classes if suitable existing premises were available, and it would show that it would add to the number of new teachers. This is very laudable since we want teachers. But there is also a shortage of nurses, midwives and of all kinds of social workers, and it seems to me wrong that a decision of this kind should rest with one Ministry, particularly when it is an interested party. I would emphasise that the position must be examined urgently. What are some of the other facilities a mother needs? I have a letter with me which highlights one of the many problems which the mother has to cope with. This mother says: Equally important, to me, is to organise holiday camps for children of working mothers, especially those who have to bring up the children on their own. They are already confronted by many problems and this additional one, not to know what to do with the children during the various school holidays, creates unnecessary stress on the mother, the child and also the employer for very many reasons. This is not a unique problem. It is a problem which is already with us in some measure and which as time goes on will become more and more a matter which must be dealt with.

I am not at all sure that all local authorities use their permissive powers in this respect to the limit. So much of the solution of the problem of caring for the children obviously lies in the provision of nursery schools. I have a letter from a young woman wishing to take up teacher training. She had been employed before marriage, up to 1959, in local government and she asks that her past superannuable service be transferred to the teachers' scheme. But no. The Ministry replies that unless a teacher enters the service within twelve months of leaving pensionable local government service this cannot be done. What curious logic and what inflexibility! If we do not look at once into the need for interchangeability of superannuation and pensions schemes, we are going to lose many able workers. At the moment many young men and women are unable to take the risk of changing from one appointment to another, because of possible loss of pension. If we are serious about the need to build up manpower, this is something we must look into.

I come now on to the question of insurance. The married woman can contract out of the insurance scheme, but the employer must pay the same rate for both full-time and part-time workers. Many married women would be willing to do part-time work if it were available. I believe that this is one of the areas which need investigation. I am entirely with noble Lords who stressed the value of the small employer in this small unit, but he can hardly afford to pay for a full stamp for his employees if he is employing all part-time workers. I run my office on part-time workers. If people work for only half the week they work twice as hard during the time they are there. This seems to me to be a mathematical equation. Probably they are also inspired by the fact that they enjoy their work, but nevertheless it does work as I have said.

Let us look at the system of contributions and at the position at retiring age—these are some of the reasons why women do not come back to work and this is why I am presenting these points. Like the noble Lord, Lord Taylor, I shall present them again and again until the Government take notice of them. A woman pays less, but she draws less and certainly on most occasions she earns less. If her husband is sick or unemployed, an earnings rule is applied which is similar to the one which this Government have now taken away from widows. Then, a woman usually retires five years earlier than a man does, although she lives longer. Nobody has ever explained that to me. If she manages to get work in the first five years after retirement the age exemption tax clause, which enables income below £390 to be free of tax, does not apply to her. She has to wait until she is 65. In other words, she gets the benefit of equality with a man at a period when she does not particularly want it. She is forced to retire at 60; the man at 65.

This brings me to another problem which confronts this group generally, and that is the situation regarding the single woman at this age. Many single women leave paid work in order to care for elderly relatives. The tax allowance is so small that it does not cover the cost of a resident housekeeper, always assuming one is available, and there are not enough home helps available to enable these women to continue in work. I have been doing some research with Dr. Webster of the National Council for Single Women and the figures we obtained are revealing. Taking the year 1962, 13,000 persons received National Assistance because they had to remain at home to care for sick and elderly relatives, and naturally the majority of these were women; a further 10,000 were single; 800 were divorced 500 were separated. Fifteen hundred of them were between the ages of 30 and 40, over 3,000 between the ages of 40 and 50, and 5,700 between the ages of 50 and 60. Surely there is a wastage here.

These women would far rather be in paid employment than drawing National Assistance in order to look after elderly relatives if some other method could be found to care for them. One single sentence in a letter I received on this problem highlights the whole question: Women over 60 are not included in this category as they are past normal working age. Why do we have to keep to this extraordinary idea? We have a shortage of manpower but we still keep the same retirement ages—age limits which were surely conceived in a period of unemployment, when often younger men and women could step into higher positions only if compulsory retirement was operated. A completely different situation exists to-day, and will do in the future, and employers and trade unions must shed their 1920 ideas. At present every difficulty is put in the way of a man or woman who wishes to carry on working after reaching retirement age. The earnings rule operates and they have to pay back a shilling for every shilling of their pension. That is probably a higher tax than even Mr. Clore pays. I believe that we are losing valuable workers in this group, as well as doing a terrible thing to the individual's morale, because work is a great therapy and it often gives the only dignity which some people have throughout life.

We speak of the problem of old people but, surely, we create this problem if an able man is put out of work at 65 because of some arbitrary decision. It seems quite cruel and stupid, and a salutary thought is that many of your Lordships would not be considered able to hold down paid work. Unfortunately, the Ministry of Labour has disbanded its committee concerned with the older worker. I am asking Her Majesty's Government to revive this committee at once, to take positive action to encourage employment, and to get the employment exchanges to publicise part-time and other jobs suitable for this group. I do not believe that at this moment help is given or interest shown when voluntary groups, and old people's welfare committees, try to get these older people working.

If women are going to be used in greater numbers, this seems to me to be the right moment to ask for equality in pay. The British Government have honoured this principle in the international sphere, but we have yet to achieve it within our national set-up. It is bad enough that in industry, on average, a woman collects £8 against £16 paid to a man; but from documents sent to me from the Institute of Personnel Management I now find that the middle salary for men is £2,008 while the middle salary for women doing the same job is £1,278.

Finally, is industry using labour sensibly? I noticed that the noble Viscount, Lord Eccles, referred to people doing half jobs. I seriously feel that there are a lot of people working at completely unnecessary jobs at an age at which workers are vitally needed. I have here a paper of the Incentive Marketing Association—these are the people who deal with the premiums or the gimmicks which are given to you, whether you want them or not, when you buy, for example, a packet of soap. In looking through the advertisements, I cannot think it is vital at this moment for people to be making plastic spoons, kinky dolls, or bathroom accessories, in order to stick them on a packet to thrust at the shopper, who probably does not want them anyway. I think that if we are going to solve our problems we must apply much more imagination to some of the very small points that I have raised. But I have every faith that the Government will do this, and that this Plan will indeed be a guide to action.

7.13 p.m.

LORD COHEN OF BRIGHTON

My Lords, when I saw my position in this discussion this afternoon, I thought to myself: "Everything will have been said by the time I rise." But I must say—and I think your Lordships will all agree—that the last two or three speeches have raised new points in our minds. They have been exciting and very enlightening in the matters that have been put before us.

May I say to my noble friend Lady Phillips that I strongly agree with her remarks about women in industry. Many years ago, with the help of the late Lady Astor, we started, under my chairmanship, the first Macmillan nursery school in Brighton. With the enthusiasm we had then for nursery schools, and for giving women the opportunity of having their children looked after, we thought that this was going to be the first of many. Over the years we have managed to get one other nursery school started, and I think that what is true of my town is true of towns up and down the country. The powers are permissive, and far too seldom—hardly ever—do the local authorities use those powers to provide the necessary nursery schools. There is no doubt at all that, were those schools available, there would be a very large number more women available for industry.

Having said that, I should like to stress one further point. I believe that it is unwise for the nursery schools to be used in any way for children under three. I think that from nought to three the child should be with the mother. Vital as it is to increase the working population of this country, it is just as important—in my view, very much more important—that in those first three years of life the child should be with its mother. But we must increase the number of nursery schools for children above that age, and make it not permissive but mandatory for the local authorities to provide them up and down the country. I think your Lordships will all agree that the National Plan shows a watershed in our economic planning of this country, and of its resources. It is the first time that we have had a comprehensive plan for the years ahead. Perhaps I am going to say something which is incorrect, but I am one of those who feel that if, as was suggested a little earlier, this Plan is to be revised annually, that is a mistake. The whole basis of a Plan must be that one can look ahead and know fairly reasonably what is going to happen in the years ahead.

I have the problem, year by year, in a very large organisation, dealing with the provision of finance for housing and investment, of trying to see how the years ahead will affect us. It is exciting to see in this Plan the suggestion that we can look ahead in that particular market; that is to say, that we shall know year by year, from now until 1970, how we are going to deal with the problem of housing. Do not forget, my Lords, that in the inter-war years the industry which had the greatest effect on the growth of this country, the industry which was the most important to the economy of the country, was the housing industry. In those years between the two wars, between 1921 or 1922 and the beginning of the Second Great War, the housing industry meant more to the economy of the country than any other industry that we had.

Therefore, I think it is vital that we should be able to look ahead, and should know fairly reasonably what is going to happen in the years ahead, so far as private houses for sale and, more particularly, local authority housing, are concerned. I hope that we shall never again see what happened in the early part of this year, when hundreds, thousands, or tens of thousands of houses were erected and people could not acquire them because the lending organisations ran short of money, and because local authorities seemed to be slowing down their process of building more and more houses. So the part of the Plan which I regard as very important indeed is that relating to housing.

But the Plan is important from another point of view. We are suffering from a labour shortage, and if we are to develop our economy, and particularly if we are going to deal with exports in the direction that is indicated in the Plan before us, we must get more people into the right kind of industry, because it is not merely the amount of production that is important, but also what we produce. What is important is the type of goods that we produce. Take machine tools, for instance. It is ludicrous that we are importing machine tools into this country. We should be exporters of machine tools. As regards business machinery, my organisation is acquiring a computer. I am not sure whether or not we shall have to go abroad for it, because the foreign machine is more efficient. That point has not been decided, but it is my job to find the most efficient machinery that I can. Then there are dictating machines. Some of the foreign machines are a little better, in some ways, than some of the English machines. Machines of that kind ought to be produced in this country.

We must therefore move from one group of industries to another a very large number of workers; and we must train them in the industries which can help develop the exports. But it is no good moving workers from one group of industries to another, and possibly from one area to another, unless we can be sure that they want to go—and they will not want to go unless they can be given the homes in which to live. It was said earlier in the debate that a man must have the opportunity of carrying on a normal life when he is changed from the industry to which he has been accustomed to another. Take the miners, for instance. If they are to be trained for other industries, and if they are to be removed from Wales to somewhere else, as they may well have to be, they must be given the amenities—and better amenities than they have at the moment.

There are two ways in which we can do that. There will be those who will want to acquire their own homes; and secondly, there will those wanting houses provided by the local authorities. Here, I see a great problem. Some years ago I was concerned with the position in Bristol. The aircraft industry there wanted a number of fresh workers, and the problem was how to house them. The local authority said, "Very well, a proportion of the houses we shall be building next year we will reserve for the workers in the aircraft factory". The people in the town who were on the housing list, and who had been waiting for housing, created so much excitement and so much trouble that the local authority had to go back on that promise. We have to face that problem; and, when moving workers from one town to another, if there is a housing shortage, we shall definitely have to increase the allocation of building there and make it abundantly clear that those houses are for the workers who come in with a particular industry.

Even then, I believe, we shall face a certain amount of difficulty, because, although we are hoping to increase the rate of construction to 500,000 houses a year by 1970, 1970 is not to-morrow. And even at the rate of 500,000 houses a year, bearing in mind particularly the very large housing lists of some of the largest local authorities in this country, we shall not have dealt with the problem by 1970, or anything like it. That is a difficulty that we have to face. However, it is perfectly clear to me (although I do not know whether everyone will agree) that quite a number of workers could be taken away from agriculture as we get larger units in farming, more modern methods of milking in the parlour (although they are not so very modern; after all, I did it this way about fifteen years ago, when I was farming about 400 acres), combines and so on. As we have trade unions in farming, we can, I think, get more efficiency with fewer workers. Mining, inland transport and so on—all those could come into what I think is necessary, and that is mechanical and electrical engineering, construction, public administration, health and education.

This question of education is something that we must consider very carefully, for if we are not going to develop and extend our education, if we are not going to spend more money on the colleges of advanced technology, on the universities and on higher education generally, we shall never be able to achieve the objects suggested in the National Plan, and after 1970 we shall not go ahead in the manner that we all desire. I think the vital question we have to think about when considering the future of this country is more and more money for education. I am interested in the University of Sussex. We have been, I will not say terribly set back but partly set back by the restrictions that have been placed on us there so far as education is concerned. I was at a meeting on Monday at which we were trying to put one building here and another building there, and deciding whether the areas where our students were going to live should be used for educational purposes and the like. Sussex is not very badly hit, but some of the other universities are very badly hit. We must think more and more of the development of both higher education and the colleges of technology, and certainly the universities of our country.

It was said earlier that we have set aside rather too large a sum for the fun and games of the people—and every one of us agree when we see the development of betting shops. As a member of a planning committee, it absolutely shocks me month after month to see the applications for betting shops that we receive and which we just cannot refuse because we are not allowed to do so if the magistrates say they can have them. We see the growth of betting shops, the growth of bingo halls and the growth of every kind of gambling. We were told that when the betting shops started there would be less gambling. There is very, very much more than there ever has been. It is becoming an evil in this country. Now casinos are growing up. Those who run them have found a very clever way of dealing with the problem of how to set up a casino in this country. Again, I cannot help referring to my own town, where there is the exciting idea of a marino. This sounds delightful until you are told that there is going to be a great big casino there so that the people can come along and gamble. When you talk to the students of the University of Sussex they say, "It is going to be very bad for us if the other chaps can go and gamble"; and we must try to cut that down. So far as the other fun and games, if I may call them that, are concerned, you must give the workers something to look forward to.

The noble Lord, Lord Taylor, referred to smoking. As one who does not smoke and who hates it, I say that it is education, again, that is going to deal with it, not restriction. Many of your Lordships will remember the experience of America during the prohibition era. You cannot legislate too far in advance of public opinion, but perhaps we could take some of the money that is going to be used for useless purposes and apply much more of it to education. I am sure that that is extremely important from the point of view of this country.

Then I am delighted to see in the Plan that it is suggested that the Defence Budget shall be limited to £2,000 million, as compared with £2,400 million previously. Every one of us will agree with that, although there are some who, like myself, will query whether that limitation or restriction is adequate. I have said before in this House—I said it in my maiden speech—that I believe we must consider this question of the Far East; and, in considering that, we must also remember that there are nearly 40,000 men employed out there. Then there are all the troops in Germany, and the like, who would very much add to our manpower if they were available in this country.

Next there is the question of roads. The other day I was at a meeting dealing with the planning of the Southern part of England, and I was a bit shocked when, on this question of planning, we were considering Southampton, if ever there was a necessity to build a new road, that new road is necessary at Southampton—but there is no money. Just imagine Southampton, one of the most modern ports in this country, with exports going out from it and with imports coming in. The exports originate, to a very large extent, from the Midlands and the North. The road from Southampton goes direct to London. You have to go through London, with its congestion of traffic, and get out at the northern end. I see the shaking of a head, but that is so; and at this planning committee we said that we wanted a direct road from Southampton to the Midlands and the North because it is so necessary for the development of the port.

I know this is a trite saying, but I believe every one of us would agree that the sooner we can spend more money on the roads of this country, the better it will be for us. At the same time, however, we have to co-ordinate rail traffic and to go very much further as regards the liner trains—very much further. We have to deal reasonably and sensibly with any opposition to them that may arise, and try to work with the unions; but there is no doubt that we must use those very much more for transporting goods throughout the country.

Finally, my Lords, I think this Plan shows a sense of urgency, a sense of drive. I think it is valuable for the people of the country not just because of the proposals in it but because of the indication that it gives that this Government mean to drive the economy ahead. When you talk to people—and this is not a political point—they say, "We feel that this Government are trying to do something; trying to bring some drive into the economy". Therefore, it is not only the wording that is there but the enthusiasm that it may create.

I believe that it is a very valuable document, a document that is going to give us the opportunity to drive ahead; and I believe that we shall achieve the 25 per cent. increase in production during these few years. It will not be an easy job, but I believe that we shall do it. And we shall do it partly because of the proposals in this document, and partly because the people will feel a sense of purpose, a sense of drive, a sense of enthusiasm, a sense of something being done. That is what we have to get over to the people. It means harder work, not only for the workers but for management. And here may I say that we must try more than ever before to learn the expertise of business management in this country. I have a little experience of meeting the great captains of industry. Sometimes they are very intelligent and farseeing men; sometimes they are not. Sometimes one is surprised that these very highly paid and highly placed captains of industry should be in their particular industries.

My Lords, we have to get away from that; we have to see that the top men of the industries are not there because of family connections but because their ability means that they should be there. If we get the drive that is engendered from this Plan, I think we have a good chance of carrying out something which has been needed for a very long time, something that will give us the chance of increasing the production of this country by 25 per cent.; something that will put more wealth into the hands of the people and provide something of value to the whole of the community.

7.32 p.m.

LORD HILTON OF UPTON

My Lords, may I, like many other noble Lords, begin by thanking my noble friend Lord Winterbottom for initiating this debate and giving us the opportunity of discussing this most important subject? May I also congratulate him on a really first-class speech, which I am sure the whole House thoroughly enjoyed? At the end of his speech he referred to the fact that we in this country did not have equality of sexes. My noble friend Lady Phillips also referred to this point, as did my noble friend who has just sat down. I was interested in this, and entirely agree with what my noble friends have said on this subject. Recently I was in Russia and I found that the Russians really believe in sex equality, in equal jobs for the sexes, in both manual work and managerial posts, and in equal pay for equal work. I thought when I was there that we in this country, who so often regard our women as second-class citizens, might learn a lesson in the equality of the sexes which is preached and practised in Russia. My noble friend Lord Cohen of Brighton also referred to the fact that nursery schools could help to bring more women workers into industry to help to achieve the objectives of this Plan. This is something that goes on almost 100 per cent. in the parts of Russia that I visited: there are many nursery schools in order to allow the women to play their full part in industry.

I think that this country owes a real debt to my right honourable friend Mr. George Brown for introducing this Plan. During my very brief speech I want to use two texts from the Bible. One of them is: Your old men shall dream dreams; your young men shall see visions. In my opinion, this country has suffered for a long time past because we have had too many dreamers. I do not say that they were always old men, but they were people with old ideas who did not believe in planning—that is, until the more recent years. I will agree with the noble Lord, Lord Drumalbyn, who referred to this, that in 1961 Mr. Selwyn Lloyd did start to think along the lines of planning. Perhaps during the past two or three years some of the more enlightened ones in the Conservative Party have become more converted to the idea of a planned economy. But, there is no doubt about it, for years among the Conservatives (especially in another place) "planning" was regarded as a dirty word. I repeat that we have suffered from the dreamers in the past. Now comes a young man, George Brown, with a vision—a vision which I believe, if given the full support of every section of the community in this country, can put this country back on its feet.

I agree that it can be improved. In fact, I thought my noble friend Lord Taylor made a very good suggestion when he referred to retaining those workers on their jobs who now sometimes have to leave to see their doctors about disabilities which are sometimes not so severe as they appear to be. I think the Plan can be improved by constructive criticism. Most of the speakers that I have listened to—during the last part of the debate, at any rate—have made suggestions on how to spend the additional money which we hope the Plan will produce by the 1970s.

As the 13th speaker in this discussion, I intend to speak for only a very short time. But I want to refer to how the additional money is to be produced so far as agriculture is concerned and, in particular, to the part that the agricultural workers will play in this Plan. In my opinion, agriculture is asked to make more than its fair contribution towards implementing this Plan. May I just briefly remind the House of the splendid record of agriculture in recent years? We have increased production by 85 per cent. with a labour force reduced by some 25 per cent. We have produced half the country's food needs at an annual value of £1,800 million. This is a record of which all those engaged in agriculture are justifiably proud. In the Plan, agriculture is expected to increase production by a further £200 million per annum by 1970. This by itself will be quite a contribution to overall increased production and will effect very great savings in imports.

But it is not just a straight increase in production that agriculture is asked to make; we are asked to increase produc- tion by this amount with a very great reduction in the labour force. My noble friend, Lord Cohen of Brighton, after a very long stay, has just left the Chamber; but he suggested that agriculture could release a good many men to work in industry. This is what we are asked to do in the Plan; and on behalf of the workers on the farms in this country who regard this as a challenge, I should like to say that we accept this challenge and I suspect, though I cannot speak for the farmers, that they will do all they can to play their part in agriculture to produce this extra £200 million a year. We regard this as a challenge and accept it. We are prepared to do our bit to get this increase with a greatly reduced labour force so as to enable more workers to go into industry and produce more in their new jobs. I hope, my Lords, that when by 1970 the results asked for have been achieved, the farm workers will not be forgotten when the extra "cake" is available for distribution.

My second text is this: Where there is no vision, the people perish. Unless we support this Plan and make it work, I contend that this country will suffer, though it may not perish. I am convinced that if every section of society—management, workers, Government, and the rest—is determined to make the Plan work, we shall turn the vision into reality and once again put back the word "Great" before "Britain".

7.40 p.m.

THE EARL OF DUNDEE

My Lords, I have already spoken once on the National Plan, during the debate on the Address, and at the end of this very long debate I shall not add much now. I should like to congratulate the noble Lord, Lord Brown, on his maiden speech from the Government Front Bench—not a very bashful "maiden" but, as the fashion is now, confident and sophisticated. I am sure that the noble Lord is a very great acquisition to Her Majesty's Government. My noble friend Lord Eccles said that now there are two Browns in the Government, and I think it is easy to see which one is "Capability Brown".

The noble Lord spent some time discussing whether this document ought to be described as a Plan or as a forecast. I would say that it contains a great many propositions which are quite unexceptionable and with which no one could disagree: for example, that we should increase exports, keep down prices, and try to rectify our balance of trade and increase our gross national product, and so on. It also contains a number of conjectures about the economic statistics which may in the next five years be published by the various industries. I suppose that nobody would be more surprised than the authors of the Plan if all these conjectures should turn out to be correct, especially as some of them have already been overtaken by events.

I noticed one passage in Part II of the Plan which I thought worth marking. It was about the Industry Annexes which form the subject of Part II. It states: Since for the most part, the annexes had been completed by mid-July, it follows that they do not take account of possible effects of the economic measures announced by the Government on 27th July, 1965. The effect of these measures is, however, discussed in Part I. When we look, my Lords, at Part I, on page 56, where this subject is also referred to, we see that it states: The investment projections for the period up to 1970… are thus a combination of the public sector programmes with estimates of the amount of private investment that would be involved in achieving the growth target. These projections were made before the Government's announcement, on 27th July, 1965, of short-term measures to assist the balance of payments and reduce the pressure of demand in certain overloaded sectors of the economy. The course of investment in the early part of the Plan period will be affected by these measures. In the public sector there will be some smoothing out of the growth of investment, which had been planned to rise steeply in the early period and more slowly towards the end. Private investment may also be affected. I like the phrase "there will be some smoothing out…". I do not think I have come across it before in official publications, and I think it far more graceful than the usual official phrase about "flattening out the curve" or, "levelling out the curve." It is also more amiable and gives one a sense of contentment.

As my noble friend Lord Eccles said, another aspect concerning the evidence of this Plan is that witnesses have been prevailed on in cross-examination to alter their evidence upon the assumptions which the examiners desired them to accept. I should say that this Plan is rather like the curate's egg. The curate said, "Parts of it, my Lord, are excellent." We do not know how many parts of the egg were excellent, but we can be sure that the whole of it was not quite up to date. Probably it was not very well cooked. Certainly it did not contain the germ of future dynamic action.

What I like about the Plan—and I think this applies to 60 or 70 per cent. of it—is that it continues so much of the Conservative planning taken over from the last Government. I think that is a very meritorious feature. Perhaps it is the reason why the Tribune described it as "The Plan that never was." It certainly contains less Socialism than some people might have expected.

These massive planning organisations which have been taken over by the Government are of great importance to our economy. There is the managed currency; the practice of adjustment and manipulation by the Government of capital expenditure in the public sector, with the purpose either of reflating or deflating the economy, as circumstances may require; and N.E.D.C., which the Government have taken over, and which now plays a very important part in the economy; and all the E.D.Cs., the "Little Neddies", whose function has been described as indicative planning, the collection and dissemination of evidence, which is of great value to all sections of industry when making their own individual plans.

What I do not like so much about the Plan is that the people who have drawn it up do not seem to want to do any better than the former Government did. They do not seem to have any ambition to excel their predecessors. The total increase in national production aimed at is 25 per cent. In the last six years of Conservative Administration, it was 251 per cent., so there is no new growth, nothing but the aspiration to continue the achievement of the last Government. And we all know that economic aspirations are not always translated into achievement.

LORD BROWN

My Lords, would the noble Earl give the figure for the whole period of Conservative Administration, and not just of six years?

THE EARL OF DUNDEE

Yes, my Lords, but it would take too long. The figure for the whole period was a growth of more than double in the G.N.P.—the gross national product—but one would have to make a calculation to allow for the change in monetary value, which I do not propose to do at this time of night. I took six years, not because I wanted to forget about any other period, but because it happens to be the same length of time that is contemplated by the Plan, and that, therefore, seemed to be the most reasonable comparison. If the noble Lords opposite and their Party are right in describing our achievement as "stagnation", then it would be necessary to describe this as stagnation-minus, because it is less than was achieved under the late Government.

If we take education, we see on page 192 of the Plan, that the expected increase in education expenditure up to 1970 is only 32 per cent., and that is the same as the Conservative Plan up to 1968, two years earlier. And we must remember that since our plans were drawn up the school-leaving age has been raised, and it has become evident that the number of A-level students coming on will be a good deal more than was anticipated in the Robbins Report. If we look at the table of projected investment, on page 57, we see that expenditure on electricity increased from 1960 to 1964 by 13.2 per cent., and that from 1964 to 1970 it is expected to increase by 3.2 per cent. Of course, there may be special reasons for this. There may be a special programme that had to be carried through and it is not necessary to continue it. The increase in gas was 10.8 per cent. from 1960 to 1964, and is put at 7.3 per cent. from 1964 to 1970.

What is more serious to my mind is the question of roads and housing. Capital expenditure on roads, which increased by 18.6 per cent. from 1960 to 1964, is estimated in the Plan to increase only by 9.7 per cent.—only half as much in a longer period—from 1964 to 1970. These, let me remind your Lordships, are comparisons of aspirations with achievement, and all that has happened so far by way of achievement under this Government is that last July the road programme was cut down by about £50 million or, rather, about £50 million of projected works have been postponed for six months. If we take housing, we find that the increase in expenditure from 1960 to 1964 was 9.3 per cent., while the proposed increase from 1964 to 1970 is only 4.8 per cent. If we take that comparison on a stagnation basis, this Plan would, indeed, be stagnation-minus. Of course, the truth is that in every respect—in social services, in economic progress and in prosperity—the period of the last Government was a period of unprecedented expansion and of well being for this country; and if this Plan can achieve even half as much, the present Government will probably think that they have been doing very well. Certainly, they do not propose to do as much in this Plan.

The only other general criticism I have is that the Plan does not contain any ideas about what to do if it succeeds. As noble Lords know, for many years since the war our great economic problem has been how to avoid "Stop-Go". We have always found that when we have a period of exceptionally high industrial production it is accompanied by a very large volume of imports; there is an adverse balance of trade; our reserves or credit assets are not sufficient to enable us to go on expanding without a sharp loss of confidence in the pound and, therefore, we have to apply measures of restriction.

That was done after the period of expansion in 1954–55, and again in 1957. There was another period of expansion in 1959–60, but in 1961 we had the same difficulty and had to apply measures, not of recession, but of restricting expansion, which was a great pity. Then in 1963, when Mr. Maudling was Chancellor of the Exchequer, when plans for reflation were again made, a great deal of attention was devoted to measures which could be taken to prevent the necessity for another period of "stop". Those measures were frequently and publicly described by Mr. Maudling.

He made currency arrangements with the International Monetary Fund, with the Swiss, and by the "Swap" Agreement with the United States, to provide us with extra liquidity amounting to something like 4,000 million dollars, in order that the adverse balance of trade which he anticipated in 1964 might be fully covered. The Report of O.E.C.D. this year points out that the resumption of growth did entail some worsening of the balance-of-payments situation. It also says that the rapid worsening of the position of the balance of payments in 1964 was in large measure the reflection of these domestic trends—that is, that the expansionary policy must clearly be judged to be excessive, but it goes on to say: that they were so excessive was not apparent to many observers at the time. That is perfectly true, and one of the observers to whom it was not apparent was O.E.C.D. themselves, because, in their Report in 1963 they criticised us for not spending enough on causing expansion—and so did the Party of noble Lords opposite, when they were in Opposition. The point is that Mr. Maudling expected this deficit and took measures to provide for credits which would cover it.

When the change of Government took place, the new Government stated in their White Paper that there was no pressure on resources calling for immediate action. As your Lordships know, I have always held the view that it was not necessary to take any financial measures at that time and that we should have gone on using these credits, hoping that continued expansion would repair the position sufficiently to prevent any lack of foreign confidence before long. But I am not going to pursue that now. What I want to do is to ask your Lordships to consider for a moment what is likely to happen, if all the most sanguine hopes of this Plan are realised.

Suppose that we do, in a few years' time, pay off our borrowings of £900 million—and may I say, in passing, that it would, I think, have a deflationary effect on world economy. But supposing our creditors wanted paying, and we paid it off; supposing that is done, and that we get our balance of payments rectified, and by 1970 we achieve this permanent surplus of £250 million a year, what will happen if that goes on? What I think will happen if nothing else is done is this. If we have a surplus of £250 million every year, somebody else will have a deficit of the same amount—that is bound to be so—and the people who have the deficit of £250 million a year will proceed to correct their trade balance by stopping buying our exports.

LORD BROWN

My Lords, the noble Earl cannot have it both ways. I am criticised because the Government have restricted overseas investment. I men- tioned that if we get into a balanced position, of course we shall start increasing our overseas investment. It is an extraordinary thing that we should now be harangued for the possibility that we may achieve the surplus and then not use it wisely.

THE EARL OF DUNDEE

What we have to do under the Plan is to build up a larger reserve. What I was going to say about foreign investments was this. I cannot agree with what the noble Lord said in his speech, that if you do not have a surplus on your foreign trade account it is disastrous (that is the word he used) to make foreign investments abroad when you have not the money to pay for them. That is a view which may be taken by some of the "Gnomes" of Zurich or Paris or New York, but I should not have thought it was a view that would be taken by the noble Lord. It is not at all a disastrous procedure. If everybody were to take the view that he could not invest money abroad unless he had earned a surplus on his balance of payments, we should never get any growth in world economy.

LORD BROWN

My Lords, I am sorry to interrupt the noble Earl for the third time, but if he looks at Hansard tomorrow he will find that I did not say you can only invest when you have a surplus. I said that the balance-of-payments position is the factor which governs your overseas investment policy. Those two things are not the same.

THE EARL OF DUNDEE

It seems to me to be the same statement. I do not think it is wrong or disastrous that we should invest money abroad although we do not happen in that year to have a balance-of-payments surplus. I think if all nations were to act on this, what I would call the Gnomes-of-Zurich principle, world trade would stagnate.

What I regard as one of the great omissions from this Plan is that the Government do not seem to have any idea of the necessity of getting a wider international credit base for world trade. That was one passage in the noble Lord's speech which I felt was much too narrowly nationalistic. Although I do not think the noble Lord in general is nationalistic, I think that particular argument of his was. It is one defect of the Plan that it does not give enough prominence to the need for internationalism in commerce, if the problems of world economy, including our own, are to be solved. Nor does it give enough prominence to the need for encouraging more competition in this country and giving greater incentive to savings.

I believe that the Government would be well advised to follow the advice which is now being given by the Conservative Party: to undertake a reform of the Companies Act, and to alter the corporation tax for the purpose of encouraging enterprise and incentive among small companies, instead of helping the large and easy-going ones; and to try to reduce, instead of increasing, the volume of taxation. In our expansion we increased expenditure enormously on social services, on public expenditure and on investment of every kind, and at the same time we managed to reduce taxation from 32 per cent. to 25 per cent. of the gross national product. In my view, personal taxation has now reached a point—in fact, I think it has now passed that point—where it starts to be a serious handicap to efficiency and enterprise, which are the things we most need in order to get our exports up and our trade position rectified. I believe that if this Plan would remedy these defects, and try to pay a little more attention to the need for more competition, lower taxation and a wider international outlook in our economic policy, then, instead of limping lamely along behind the Conservative achievement which was reached by the last Government, it might equal or even exceed it.

8.6 p.m.

LORD SHEPHERD

My Lords, the Government are grateful to all the Members of the House who have taken part in the debate this afternoon, and to my noble friend Lord Winterbottom for having introduced it. I would, however, express one disappointment. I have been in this House for some time and I have listened to many debates on the reform of your Lordships' House. When there has been any suggestion as to a radical change of its membership, it has been immediately claimed by those who wish to maintain it as it now is that we have a great wealth of experience available to us; that there are men capable of coming to this House and to Parliament and letting the Government and the country know what are the great issues at stake.

We have had this debate. From the Benches opposite, the noble Lord, Lord Drumalbyn, the noble Earl, Lord Dundee, and the noble Viscount, Lord Eccles, have spoken for their Party. I can understand some of their difficulties. My criticism is not made to them as a Party. But there are many captains of industry who sit on the other side, who speak pretty loudly in the Press, using public relations officers to put a point of view across—and, of course, there is never the opportunity for them to be criticised or questioned—but they are not here this afternoon. I noted that on May 6 we had a debate on overseas investments, to which the noble Lord, Lord Drumalbyn, drew our attention, and on that occasion there were ten captains of industry present. None of them is here this afternoon taking part in this debate.

I think this is something that we as a House should take note of, because if we are to play our part, then it is up to Members to take part in the debates. The Government are disappointed in this matter, because all along, from the day we took office, we have said that we wished to listen. We are ready to listen; we are ready to take advice, and we look to the membership of this House to give it. In that respect I would express disappointment.

The noble Lord, Lord Drumalbyn, wanted to know whether this is a target or a plan. Perhaps later on I will give him a Labour Party booklet which refers to this in both terms: because, in fact, this is what it is. It is not a plan in the sense that it lays down all rules and targets and the means to accomplish them: it never set out to do that, and it does not do it. It sets out what the Government, after the fullest consultation with both sides of industry, believe to be the guide lines to the nation as a whole and to one type of industry with another.

Why is this, in our view, important? If you are a captain of industry and you must plan five or ten years hence, you must take into account, if you can, what other industries are doing. You are dependent upon them, apart from being dependent on the economy as a whole. One of the interesting things is that where we have published this Report we have found industry coming to the Department of Economic Affairs asking, like other noble Lords here this afternoon, for another Plan. The reason they are asking is this. There are facts and figures in that Plan which have not been available to them, as responsible management, in the past. They want another Plan for the figures that it contains, because without this Plan they are not aware of all the things that are going on within the industry, and it is helpful to them in making their decisions as to investment.

One noble Lord suggested that one of the reasons why investment continues at a good level to-day, in spite of the credit restrictions which have been applied this year, is the fact that this Plan gives them a degree of confidence in the direction in which the Government think that industry and the country should and would go. I would stress that: the direction in which the Government think that industry and the country will go. The facts and figures of this Report have been garnered from industry. It is perfectly true, as the noble Viscount, Lord Eccles, said, that not in every case have the figures submitted by industry been included in the Report—and I suppose he had very much in mind the part dealing with the motor industry. The Government had to make a judgment as to what should be put in the Plan. The manufacturing industry assessed the progress within a 25 per cent. growth at a certain figure. When you went to the individual companies, who may not have known what the other companies had in prospect, and perhaps thinking that their own products had a greater advantage in the market, they gave a bigger assessment of their potential. Therefore, when we saw what was provided by the motor car industry generally, and what was provided by the companies, we had to see, after further discussions, what was the right figure. I said "the right figure" because, as the noble Viscount said, these figures in the Plan are based upon assumptions. It is perfectly true that some of these assumptions will be wrong. But I say to the noble Earl. Lord Dundee, that I hope some of these assumptions will be wrong. I hope we shall be able to go further and faster than what is in the Plan.

We have said in the Plan what we believe is now feasible. I think the noble Earl in some ways made a rather light-hearted approach, and said, "Of course, we did so much better". He said, "Of course the plans that we had for education and the roads are infinitely better than what is in this Plan". Then he went on to say that they were going to reduce taxation. In fact, his Party are now committed to the reduction of taxation: the noble Lord, Lord Drumalbyn, stressed this fact the other evening. But they know that the plans they left for us in regard to housing, education, hospitals, and the like, could have been achieved at the present rate of taxation only on the basis of a 4 per cent. growth. We have achieved that 4 per cent. growth only twice in the whole period in which they were in office.

THE EARL OF DUNDEE

My Lords, does the noble Lord remember that when the figure of 4 per cent. was proposed, Mr. Callaghan said it ought to be 5 per cent.?

LORD SHEPHERD

That is perfectly true. We think it should be higher than 4 per cent., but at the present moment, taking the position of the balance of payments into account, and within the feasible growth of what is available, the 25 per cent. growth for the years 1964 to 1970 seems to us to be the right figure.

The point I want to make to the noble Earl is this. When he was talking of this credit—and I know that he has some dispute with us as to what was the deficit for 1964 of £750 million; I use this not in any Party sense—the deficit for the last five years, 1959 to 1964, on current account was £1,380 million—continual deficit. You may be able to finance one year's deficit even to the tune of £750 million, but you cannot, I would suggest, go on financing by borrowings a continual deficit of trade and on capital account. This is why the Government said from the very beginning that one of the first things we must do is to deal with the balance-of-payment account. It is perfectly true that the measures we took during 1964 and 1965 will have some slowing down effect on what is proposed in the Plan. But we believe that we shall see an increase, and we believe, from all the facts and figures that are now available to us from industry, that the growth figures in the Plan can be and will be achieved.

I want to say this to the noble Viscount, Lord Eccles. This is not a straitjacket plan; it is a guide line. The noble Viscount quoted Mr. George Brown. I could equally quote another part from one of Mr. Brown's speeches, in which he clearly stated that this is a Plan, a guide line, in which we hope to seek co-operation. It will have to be changed according to circumstances as they arise. But there is no reason to believe that this Plan should impose any form of rigidity in the minds of industrialists, financiers or workers. I should like to deal with the point made by the noble Lord, Lord Winterbottom. I hope that this Plan will give a sense of security to the workers. One of the greatest problems in dealing with restrictive practices is that these practices stem from insecurity. I hope that this Plan, showing the shortage of labour—in other words, that their labour will be in demand—will give them a greater sense of security to meet the needs of change.

I will certainly take up the point of the noble Lord about seeing that this information is available in the factories. I certainly like the idea that management and, I think, unions, should participate in this, and should have some form of discussion on the factory floor, as we did in the War, so that the workers will understand what is being done. I firmly believe that once we can get the workers to understand that their position is clear: once they have a greater knowledge of the legislation which was passed in the last Session, and which will be passed in this Session, we shall be able to make tremendous strides in dealing with restrictive practices. Restrictive practices hold back productivity.

We have heard questions about the manpower shortage. Regional development will make a major contribution in this field. I think I should say to the noble Viscount, Lord Eccles, that the 200,000 estimated shortage is based on the present productivity of the workers. But if we can increase our productivity (and I see absolutely no reason at all why we should not do so, particularly when we consider the increases in the standards which now exist on the Conti- nent, due largely to a closer understanding between workers and management), we shall be well over the problems of the shortage of labour. Increased productivity will mean many changes. Certainly, if we are to get manufacturers to invest heavily in machines we shall have to see that these machines are used to the full, and management and workers will have to look at the question of times of work. But these are things with which, with a proper approach by management and the trade unions, I think we shall be able to deal.

On this point, I believe there is a lot to be said for the suggestion made by the Prime Minister some weeks ago about works committees. This may be one of the ways in which we can secure a better understanding. I forget who it was, but someone said that we must try to see that the workers in a factory understand what is behind management decisions; and we will certainly look at that point.

We were asked whether we intend to publish a new Plan. My Lords, it is not intended to produce a new Plan immediately. We believe that we should continue to work to the 1970 objectives, but we shall be publishing a Report next year on the progress made, and no doubt in that Report information will be given as to the changes that have taken place, perhaps with different targets. But as yet there is no intention to produce another Plan. No doubt in the future it will be necessary to look beyond 1970, but we feel at the present moment that we should concentrate our efforts in regard to 1970.

The noble Lord, Lord Drumalbyn, raised a very important point in regard to Government use of manpower. This question is being looked at very actively at the present time, but I am not able to say what result we have achieved. We find all the time, as the noble Lord, Lord Drumalbyn, knows, that where we have to provide essential services, particularly in the educational field, the demand for staff continues to rise, and the servicing of that staff.

In regard to overseas investments, I think that my noble friend Lord Brown dealt with them adequately in a number of interjections. As one who has lived overseas and seen the value of British investment, I should certainly like to see it come back; but, with the deficits which I mentioned earlier, we just cannot continue to let money go out when it is so desperately needed at home for investment in our own industries. The sooner we have a sound basis the sooner we shall be able to make increased investment and, I hope, use that investment to greater advantage. The noble Lord, Lord Drumalbyn also asked a question in regard to the £900 million debt, which he quaintly suggested resulted from the activities of a Labour Government. My Lords, we are committed to repay this by 1970, and again this is one of the reasons why I stress the importance of bringing this country back into surplus as quickly as possible.

In regard to investments grants for industry, as the noble Lord knows, this is a matter to which the Government are giving careful consideration. We are not yet ready to make a statement, but we shall be doing so as quickly as possible. It is clearly the Government's desire to see that there shall be investment for industry, and that any assistance which the Government may give to it shall be of such a character as to give maximum effect to our economy, both in the way of import saving and export growth.

LORD DRUMALBYN

My Lords, would the noble Lord allow me to interrupt him for one moment? He has said that the Government hope to make an announcement on this matter as soon as possible. Of course I will not press him to give any particular date, but can he at least tell us that we shall not have to wait, as I think his noble and learned friend the Lord Chancellor suggested, until the next Budget before we have an announcement on this?

LORD SHEPHERD

My Lords, the noble Lord must not press me, because he knows that it is not many months before the Budget is due to be announced in another place, and if I were to give the answer, one way or the other, it would be a wrong thing for me to do. But we recognise the importance of making an announcement as early as possible, and it is very much in our minds.

I have dealt with productivity, and if I may I should like to pay a tribute to Esso. I do not know whether any noble Lords have been recently to the Fawley refinery but here one sees a remarkable change in the management and workers, and this is due to the fact that the union and management have been able to make a productivity bargain, which is working very well. There are other British firms (I will not mention their names) which clearly show that this productivity increase can be achieved.

My noble friend Lord Peddie spoke about joint consultation with industry, a matter which I have already mentioned. The noble Lord, Lord Wade, spoke about the priorities of education and roads, and said that the priorities should be decided by Parliament and not by the Government. He has been a Member of another place and he knows that the House of Commons does, in the end, control the purse strings. There are many ways in which the voice of the Commons in money matters can be made known to the Government.

My Lords, I think it would be very hard to decide whether roads should have a higher priority than education, or education than hospitals. The Government believe (and this perhaps, is a point that I will take up with the noble Viscount, Lord Eccles, because I think he and I got at cross-purposes in regard to education) that one must obtain a strong economic base and a higher productivity, because it is the only way in which we can meet the tremendous social demands which are placed upon it. I do not think there is anything that divides us, and therefore I say to the noble Viscount that we must have this principle; that we use all the things we can by way of education; we educate a child to a certain level and then that person goes to the university. We hope to see more going into business management. This will have an effect upon industry and the economy; and because it is all part of the wealth of the nation, I should not like to put any priority on any of them.

The noble Lord, Lord Wade, also asked about the selling organisation that the Government have in mind. My noble friend Lord Brown replied to him, but I have had a more recent note to say that the President of the Board of Trade is holding a conference next week and there may be news on this point.

The noble Lord, Lord Citrine, spoke about power. In the coming years power is going to be a vital factor in keeping industry going. There was a time when we used to have a 14 per cent. margin between total production and what was called the normal cold weather demand. At the moment it is just about 8 to 9 per cent. In other words, all our equipment is working flat out, if the necessary maintenance is taken into account. But I understand that by 1967 we should have a very much higher margin, somewhere in the region of 20 to 25 per cent. Therefore, it would seem, on the figures that are available on this matter and the projects forward that are within the Plan, that there will be sufficient electric power capable of meeting the national needs.

The noble Lord, Lord Sherfield, talked about small companies. I would agree with him that small companies have a very important part to play. But if we are going to make an impact in export markets in the face of these larger organisations and combines on the Continent, we shall have to have similar organisations capable of meeting it. I do, however, recognise the importance of the smaller companies. I am worried, as most of us would be, about the question of strikes and the effect upon production levels. But I think we should not overestimate the position regarding strikes. In this connection we certainly compare favourably with many countries in Europe. As the House will know, the Government, in conjunction with both sides of the motor industry, which is an industry particularly vulnerable to strike problems, have set up a Committee, under Mr. Scamp, in order in the first instance to try to remove the necessity for strikes and, if strikes should occur, for their speedy settlement. The Government very much welcome the attitude and initiative of both sides of the industry in this respect.

My noble friend Lord Taylor spoke about the industrial health service. I thought his figure of fourteen days lost per man per year was very significant. I will not reply to that to-day, except to say that a Sub-Committee of the Industrial Health Advisory Committee has been reviewing the system and a report is shortly due, and it will be published. I would suggest to my noble friend that that would be an opportunity to press this matter by way of an Unstarred Question. I will certainly see that all he has said is conveyed to the proper quarters, both at the Ministry of Health and at the Department of Economic Affairs. I will say the same thing to my noble friend Lady Phillips. I would not dare to comment on or question or praise what she has said this afternoon, except to praise the manner in which she said it. But I will undertake to see that her remarks are immediately drawn to the attention of the Department concerned and I will see that she gets a reply. I hope that that will satisfy her.

My noble friend Lord Hilton of Upton spoke about agriculture. We have had a large number of debates on agriculture. My noble friend Lord Champion is beside me, and I will ask him to look at this question and perhaps communicate with the noble Lord. I agree with him that before you can consider expenditure you have got to consider income, and this is very much in the Government's mind.

I fear that I have not answered all the points raised. I have not entered into what I am sure would have been a friendly and interesting debate with the noble Earl. However, there will be other opportunities to cross swords on the statistics and facts and figures. I look forward to it. May I say again, on behalf of Her Majesty's Government, that we are indeed grateful to all those Members of this House who felt it their duty to come and give us the benefit of their advice.

LORD WINTERBOTTOM

My Lords, the hour is late and you will not wish to hear further from me. I should simply like to add my thanks to those of my noble friend Lord Shepherd to everyone who has taken part in this debate. I should also like to thank those people who have paid me agreeable compliments on my introduction of this Motion. I beg leave to withdraw the Motion standing in my name.

Motion for Papers, by leave, withdrawn.