Sitting of 8 July 1947

Preamble
The House met at Half-past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  LONDON COUNTY COUNCIL (IMPROVEMENTS) BILL
  As amended, considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  BRITISH ARMY

    Ex-Service Men's Families (Married Quarters)
    Mr. Bowdenasked the Secretary of State for War if he is aware that notice to quit has been served upon approximately 60 ex-Service men's families occupying married quarters at Queen Mary's Buildings, Stillington Street, London, S.W.I; and if he will assure these tenants that alternative accommodation will be found for them before eviction takes place.
    The Secretary of State for War (Mr. Bellenger): Notices to vacate have been served on 40 ex-Service men's families in occupation of these married quarters as the quarters are required for regular soldiers and their families. The question of finding alternative accommodation is a matter for the local authority. I will certainly do anything I can to help the local authority, but I regret that I cannot give the assurance asked for.
    Mr. Bowden: Is not my right hon. Friend aware that many of these families were put into these buildings by his Department?
    Mr. Bellenger: Yes, Sir. We put them into these buildings when they badly
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    needed accommodation, but we warned them then that they would have to vacate the premises when their husbands were demobilised, in order that the buildings could be used for regular Service men, who also require accommodation.
    Mr. Sidney Shephard: Could the right hon. Gentleman say what the position is with regard to those people who are occupying married quarters at Territorial Army headquarters, drill halls, and so on? Are they to be turned out?
    Mr. Speaker: This Question deals only with ex-Service men's families occupying married quarters at Queen Mary's Buildings, Stillington Street, London.
    Wing-Commander Millington: Can my
    right hon. Friend say that, as far as he is able, he will see that after these eviction orders are carried out none of these houses will, in fact, lie empty waiting for new tenants?
    Mr. Bellenger: Most certainly, Sir.
    Commander Maitland: is not this another example of the universality of the tied cottage system?
    Mr. Bellenger: Not entirely. Sir. We have got to house the families of Regular Service men, and where we have given temporary accommodation to others, I think it is only right that they should vacate the premises for those who have a prior right to them.

    Attestation Form
    Mr. Stanley Prescottasked the Secretary of State for War if he is aware that the form of attestation used for the re-enlistment of men on short-service engagement of three years is misleading, in that it implies that a soldier may buy his discharge within the first three months of his service; and if he will take steps to introduce a new form of attestation.
    The Under-Secretary of State for War (Mr. John Freeman): I do not consider that the form of attestation is misleading. It states that discharge by purchase cannot be claimed while a proclamation is in force requiring the Army Reserve to enter upon service with the Colours. Such conditions are still in force. To avoid any possibility of misunderstanding, however, recruiting officers have been specifically instructed to draw recruits' attention

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    before attestation to the fact that they cannot at present claim discharge by purchase.
    Mr. Prescott: Is the hon. Gentleman aware that, quite apart from the case I sent him, I have since had two further cases of soldiers who have been misled by this form of attestation; is he further aware that soldiers are not legally qualified; that the clause is very badly drafted; and will he take steps to amend it, in view of the fact that it leads to a great deal of dissatisfaction among Service personnel?
    Mr. Freeman: Even if the clause is badly drafted, it reproduces the terms of the Army Act, for which the hon. Member must share responsibility.
    Mr. Prescott: Is the hon. Gentleman aware that many soldiers who try to, and intend to, enlist are not lawyers and do not understand the Army Act; and will he take steps to redraft this clause in common sense language?
    Mr. Freeman: No, Sir. I have taken steps to draw attention to the point made by the hon. Member, and I think I can give him an assurance that the position will, in fact, be satisfactory in future.

    B.A.O.R. (Newspapers)
    Lieut.-Commander Clark Hutchisonasked the Secretary of State for War whether he is aware that the supply of British daily newspapers to B.A.O.R. is both irregular and inadequate; and if he will take steps to improve the arrangements for the distribution of British newspapers to units in Germany.
    Mr. J. Freeman: Every effort is made to send a regular and sufficient supply of British daily newspapers to the Rhine Army, and I am not aware that the existing arrangements are unsatisfactory.
    Lieut.-Commander Clark Hutchison: If I bring some cases to the hon. Gentleman's attention, where the arrangements are not satisfactory, will he look into the matter?
    Mr. Freeman: Yes, Sir.

    North Africa
    Wing-Commander Hulbertasked the Secretary of State for War how many British troops now remain in North
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    Africa; and to what extent these numbers are likely to be reduced in the near future.
    Mr. J. Freeman: Apart from Egypt, the only British troops in North Africa are stationed in Cyrenaica and Tripolitania. It would be contrary to practice to give the number of these troops. They are being reduced in proportion to the general run down of the Army.

    Personal Cases, India
    Mr. Rogersasked the Secretary of State for War why the claims of subconductor K. Shiebert, 5630077, in respect of employment in India, have not yet been settled.
    Mr. J. Freeman: The claims made by this warrant officer in connection with his Army service in India have all been settled to his satisfaction. The only outstanding claims are in respect of his employment as a civilian foreman in a clothing factory. These items are now the subject of correspondence with the Indian civil authorities, and I have enlisted the aid of my right hon and noble Friend the Secretary of State for India in order to settle the matter with the minimum further delay.
    Mr. Rogersasked the Secretary of State for War how many cases raised by hon. Members in connection with soldiers serving, or having served, in the Indian Army are awaiting replies from the authorities in India.
    Mr. J. Freeman: This information is not readily available, and could not be obtained without a disproportionate amount of work, as records of cases raised by hon. Members are not maintained in my Departments classified by Commands.

    War Graves (Relatives' Visits)
    Wing-Commander Hulbertasked the Secretary of State for War when facilities will be given to relatives of deceased Service men to visit graves overseas.
    Mr. Bellenger: I regret that I am not yet in a position to make a statement on this matter, but I hope to be able to do so in the near future.
    Wing-Commander Hulbert: When the right hon. Gentleman makes his statement, will he state whether any financial

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    assistance will be available to relatives who cannot otherwise afford to visit graves overseas?
    Mr. Bellenger: That will be part of the announcement.

    Requisitioned Property, Brighton
    Mr. Teelingasked the Secretary of State for War whether he is aware that the Brighton Corporation have entered into an agreement to purchase the Stanmer Park Estate from the trustees of the Chichester Estates; that this purchase should be completed by a certain date; when his Department will hand back the property; and, if they wish to retain part of it, when he will see a deputation, already chosen, from the corporation to discuss the derequisitioning in all its aspects.
    Mr. J. Freeman: I am aware that the Brighton Corporation are negotiating to purchase Stanmer Park Estate from the trustees of the Chichester Estates, but not whether this purchase is to be completed by any particular date. The question of derequisitioning Stanmer Park is still under consideration. It may happen that the War Department will have a requirement for a small part of this estate, but any such proposal would have to be considered under present arrangements by the Inter-Departmental Committee on Service Land Requirements. When I have had an opportunity of examining the final results of the present investigations, my right hon. Friend will inform the hon. Member when he can see a deputation.
    Mr. Teeling: Is the Financial Secretary aware that, as far back as 4th June, he was sent a letter stating that the corporation wished to meet him before the War Office came to a decision on this matter? Does he realise that this is a question of only 100 acres out of 5,000 acres? Would it not be quicker if the corporation were informed what are the requirements of the War Office, and then for the matter to be adjusted in a friendly fashion?
    Mr. Freeman: There is still a doubt whether we require this area or not, and I think it would be worth the while of the hon. Member to wait on the off-chance that we may not want it.
    Mr. Teeling: While not suggesting whether the 100 acres are required or not, will the Under-Secretary try to find out
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    before any decision is made what 100 acres are most suitable to the War Office and also to the Brighton Council, because at the moment we are at variance on which 100 acres it should be?
    Mr. Freeman: I apprehend the hon. Member's point. I will ask my right hon. Friend when would be the most appropriate time to receive a deputation.
    Mr. Marlowe: Why did the Under-Secretary refuse to see the corporation before coming to a decision? Would it not be better to see the corporation first?
    Mr. Freeman: I think we are talking about different decisions.

    Group 57 (Release)
    Mr. Hobsonasked the Secretary of State for War if Group 57, whose release date is between 22nd August and 12th September, will be delayed in the case of men stationed in India.
    Mr. J. Freeman: So far as I can foresee, no Sir.

    Bellahouston Park
    Mr. Rankinasked the Secretary of State for War if he has any further statement to make with regard to the derequisitioning of Bellahouston Park.
    Mr. Scollanasked the Secretary of State for War if any decision has been taken on the release of Bellahouston Park from military requirements, as the citizens of Glasgow are disturbed at the long delay.
    Mr. Bellenger: Instructions have been issued for all that part of Bellahouston Park which is under the control of my Department to be derequisitioned at once.
    Commander Galbraith: In view of the agreement reached between the right hon. Gentleman's Department and the Corporation of Glasgow, does he not consider there is a moral responsibility on his Department to get the other Government Departments out of the park?
    Mr. Bellenger: I will do what I can to induce other Departments to vacate their portions of Bellahouston Park, but I suggest that the hon and gallant Member also tries some of his powers of persuasion with the Departments.

    Nursing Groups (Release)
    Mr. Sorensenasked the Secretary of State for War how many nurses and sisters are still engaged in duties connected with the Army; how many of these are working overseas; and whether he will give an indication of the dates when nursing groups will be demobilised.
    Mr. Bellenger: Two thousand five hundred and thirty-one, Sir, of whom 1,581 are serving overseas. The release of age and service group 54 is to be completed by 31st August.
    Mr Sorensen: Will my right hon. Friend agree that nurses and sisters should not be sent back if they have to go back for only two or three weeks?
    Mr. Bellenger: I think it is uneconomic to send them back far overseas if they have a short period to serve, but I would remind my hon. Friend that in September we shall be 24 per cent. short of our total requirements, even if no further groups are released.

  PRISONERS OF WAR

    Meetings (Attendance)
    Mr. H. Hyndasked the Secretary of State for War whether camp regulations permit German prisoners of war at' Victoria Park to attend the weekly Fascist meetings held at the gate of that park.
    Mr. Bellenger: There are no regulations forbidding prisoners of war to attend any public meetings which may be held in parks during their off-duty hours.
    Mr. Hynd: Does not my right hon. Friend agree that his very excellent efforts to educate these German prisoners of war into the British way of life are being frustrated by allowing them to attend such meetings?
    Mr. Bellenger: I should have thought that part of the education into the British way of life was to allow free speech, and to permit them to attend all meetings. I can only hope that their powers of discrimination will enable them to go along to more appropriate meetings.

    Voluntary Workers (Middle East)
    Mr. Skeffington-Lodgeasked the Secretary of State for War whether he
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    will arrange for those prisoners of war in the Middle East who have experience in agriculture and who wish to volunteer for work in Britain on the same basis as their fellow prisoners already in this country to do this as their turn for repatriation comes round.
    Mr. J. Freeman: No, Sir. I do not consider this would be practicable.
    Mr. Skeffington-Lodge: Is my hon. Friend not aware that it is unfair for prisoners of war in the Middle East to be denied the same facilities for staying here to work in agriculture as are accorded these prisoners who are among us here?
    Mr. Freeman: It is not solely a question of those who wish to remain here, but of suitability. In the case of prisoners in this country, the farmers with whom they are billeted apply for their retention. That would obviously not be practicable in the Middle East.

    Camps (Leave Radius)
    Mr. Dribergasked the Secretary of State for War if, now that German prisoners are allowed to use public transport, he will relax the rule that they must not go more than five miles from their camp, bearing in mind that some camps are more than five miles from the nearest towns.
    Mr. Sorensenasked the Secretary of State for War if he will reconsider the limited radius of five miles from camp that has been, and is still to be, allowed to prisoners of war during recreation hours; and whether commandants will be instructed to increase the radius where camps are more than five miles from a town.
    Mr. J. Freeman: The suggestion made by my hon. Friends has already been widely applied, as Commands "have authority at their discretion to extend the five-mile limit specially to include a town or other area the prisoners of war may want to visit.
    Mr. Driberg: While realising that it has in fact been widely applied, may I ask whether my hon. Friend would not give a general ruling, since individual commandants vary considerably in severity?
    Mr. Freeman: No, Sir, we must take account of local conditions. If the hon.

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    Member has a specific case in mind, we will look into it, but we ought to have this safeguard behind us.

    British Women (Marriages)
    Mr. Skeffington-Lodgeasked the Secretary of State for War whether his attention has been drawn to the sentence of 12 months' imprisonment imposed on Werner Wetter, a 22 year-old prisoner of war, by a court martial at Droitwich, in respect of his association with a British girl; and whether, in view of its severity and the youth and good record of the prisoner, he will have it reviewed.
    Mr. Pagetasked the Secretary of State for War whether the sentence passed by a court martial at Droitwich on Werner Wetter has yet been reviewed and with what result; and whether he will take steps to enable Werner Wetter to marry the mother of his child.
    Mr. H. D. Hughesasked the Secretary of State for War if he will review the recent court martial sentence passed on a German prisoner of war for improper association with a British girl, to make it passible for them to marry; and if he will revise these regulations affecting prisoners of war.
    Mr. Bellenger: My attention has been drawn to the case referred to. The proceedings of the Military Court have not yet been received at the War Office, but as soon as they have been received they will be carefully examined. I am, therefore, unable to make a statement at the moment. As regards the last part of the Question by my hon. Friend the Member for West Wolverhampton (Mr. H. D. Hughes), I would ask him to await the reply which I am giving to Questions by my hon. Friends the Members for Epping (Mrs. Manning) and West Leyton (Mr. Sorensen).
    Mrs. Leah Manningasked the Secretary of State for War why his Department exercises sex discrimination against English women wishing to marry German prisoners of war, when no such embargo is placed upon marriages between British serving men and German girls.
    Mr. Sorensenasked the. Secretary of State for War whether a decision has now been reached respecting the possibility of German prisoners of war marrying girls in this country; whether German prisoners
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    of war who become fathers of children born in this country will be given opportunity to meet financial obligations arising from their paternity by receiving adequate pay for their work; and if he will state the prisoner-of-war regulations respecting sexual associations.
    Mr. Bellenger: On the question of marriage between German prisoners of war and British women, I would ask the House to await the reply to be given today by my right hon. Friend the Home Secretary to a Question by the hon. Member for Huntingdon (Mr. Renton) Prisoners of war regulations have hitherto forbidden prisoners to have sexual relations with British women. These regulations will now be amended to accord with the announcement to be made by my right hon. Friend. The pay of German prisoners of war is related to their status and the work which they do, and I do not see any justification for differentiation in that matter between those who become fathers of children and other prisoners of war.
    Mr. H. D. Hughes: Does that reply mean that the fraternisation rules in general, governing prisoners of war, are now to be amended to enable those of good conduct, who have been screened, to have normal human relations with the British public?
    Mr. Bellenger: That is about right.
    Mr. Sorensen: Is not the right hon. Gentleman aware that considerable effort is being made to try to bring home responsibility to men for paternity of their children, in Germany and elsewhere? Does he not think that these German prisoners who have become fathers should be given an opportunity to earn money to carry out their financial obligations?
    Mr. Bellenger: The difficulty is that while they are prisoners of war they are governed by prisoner-of-war rules. I hope that the men who undertake paternal responsibility—and the women— will understand that.
    Mr. Sorensen: Does the right hon. Gentleman also apply that to our troops in Germany?
    Mr. Bellenger: Yes, Sir. I hope that our troops thoroughly understand it, and also the German women by whom they have children.
    Mrs. Manning: Will the statement which is to be made deal with the important question of marriage? My Question deals specifically with people wishing to marry. I want to know whether the statement will deal with that point; otherwise we must pursue it now.
    Mr. Bellenger: Yes, Sir. I said in my original reply that my right hon. Friend was making a statement today on the question of marriage.
    Mr. Parkin: Should it turn out that the Home Secretary's statement provides for relaxation of the marriage restriction, would my right hon. Friend bear in mind the desirability of amending the regulations which prevent British Service men from coming home from overseas, on compassionate grounds, to marry British girls?
    Mr. Bellenger: That is another question.
    Mr. Skeffington-Lodge—
    Mr. Speaker: We cannot continue on this Question for ever.
    The following Question stood upon the Order Paper:
    Mr. RENTON,—To ask the Secretary of State for the Home Department what are the Government's proposals with regard to German prisoners of war and British women in this country who wish to marry.
    At the end of Questions:
    The Under-Secretary of State for the Home Department (Mr. Oliver): With your permission, Mr. Speaker, I will reply to Question 68. My right hon. Friend has considered, in consultation with my right hon. Friend the Secretary of State for War, various questions which marriage between German prisoners of war and women in this country would involve, and he is anxious that the implications of such a marriage should be fully appreciated. As the law stands, the woman, if British, would lose her nationality on marriage to a German. No provision could be made for her to live with her husband who, as a prisoner of war, would have to remain in a camp or hostel under military control; and there could be no relaxation in his favour of restrictions applicable to other prisoners of war. Moreover, no undertaking could be given that the husband would be allowed to remain in this country when he would in ordinary course
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    be due for repatriation. If, therefore, a prisoner of war makes it known that he wishes to marry a woman who is resident here, steps will be taken to see that the considerations which I have mentioned are understood by both parties, and if, nevertheless, they determine to marry, no obstacle will be placed in their way.
    Mr. Paget: Is not the position that where prisoners of war who have been engaged in agriculture wish to remain here and farmers wish them to stay they are given permission, and will that apply to men who desire to marry?
    Mr. Oliver: No promise can be given with regard to the time when the prisoners of war are to be repatriated, and it would be improper to make a promise, that if a prisoner of war married a British girl he would be entitled to stay here.
    Mr. Skeffington-Lodge: Will the Minister relate what he has just said to the specific case mentioned in my Question No. 19 to his right hon. Friend the Secretary of State for War, about which public opinion is most seriously disturbed?
    Mr. Oliver: If my hon. Friend is referring to the case which has received a great deal of publicity, all I can say is that the statement which I have just made and the conditions contained in it would be just as applicable to the person whom he mentions as to anyone else.
    Mr. Sorensen: If a British girl marries a German prisoner of war who is subsequently repatriated to his own country, will she still be allowed to remain here if she wishes, in spite of the fact that as the result of the marriage she has become a German citizen?
    Mr. Oliver: The answer is that as a British-born subject she would be allowed to remain.
    Mr. Symonds: Can the Minister say how soon we may expect the promised legislation to enable a British woman to retain her British nationality if she wishes when marrying an alien?
    Mr. Oliver: I think that my right hon. Friend the Home Secretary made a statement in August of last year about amending the law relating to the nationality of married women, but since conversation? are taking place with the Dominions on the matter, it is impossible to say at this stage precisely when legislation could be introduced.
    Mrs. Manning: Can my hon. Friend tell me whether my constituent must now make application to the Department to marry this man, or whether some step is to be taken through the War Office for the German prisoner to get into touch with her?
    Mr. Oliver: The precise procedure at the present moment I cannot possibly state. Having regard to the statement which has been made, I have no doubt that the lady in question will take the earliest possible and the proper steps to find out the right mode of procedure.
    Mr. John Paton: Cannot the case be reviewed in order that the girl may be able to take those steps?
    Mr. Oliver: That is more a question for the Secretary of State for War, because there was no breach of any regulation imposed by the Home Office. I suggest that the question should be referred to my right hon. Friend.
    Mr. Skeffington-Lodge: We cannot have all this passing the buck. Is my hon. Friend prepared to use his influence to have this disgraceful sentence of 12 months immediately quashed?
    Mr. Oliver: The concluding words of the answer which I gave were to the effect that no obstacle would be placed in their way in regard to matrimony. So, therefore, all I can say is, in view of the statement which I have made, that steps will be taken.
    Mr. H. D. Hughes: In view of the fact that the Secretary of State for War referred to the Home Secretary the point whether this sentence would be reviewed, can we now have a reply from one of the two Ministers concerned?
    Mr. Chetwynd: Does my hon. Friend think that stone walls and iron bars are obstacles to getting married?
    Mr. Rankin: So far as I have been able to follow the reply, there was no reference to one condition about which I would now like to inquire. Will steps be taken to ensure, in the event of the British girl wanting to marry the German prisoner of war, that he is actually available for marriage? I am raising the point because it actually arose in the case of a constituent of mine.
    Mr. Oliver: The availability of a spouse does not seem to arise out of this answer.
    Mr. Gallacher: Is it not the case that if a marriage takes place in these circumstances, it must take place in prison, which is very undesirable, because if the prisoner is allowed out in order to get married the authorities cannot take him back into prison again? I would ask the Minister whether he will arrange for the marriage to take place outside.
    Mr. Oliver: That comment is nonsense.
    Captain Crookshank: While the original reply which the hon. Gentleman gave is obviously fully in accord with the existing rules and regulations, may I ask him if he will take account of the feeling of the House that the present practice needs to be looked into? Will he ask the Home Secretary and the Secretary of State for War to review all these cases, and particularly will he look into the question of quashing this particular sentence?
    Mr. Oliver: In view of the statement which has been made, I should have thought it would have followed as a matter of course.
    Mr. Hector Hughes: Does the part of the Minister's reply about placing no obstacle in the way of this marriage mean that the couple may marry in prison or out of prison? Where?
    Hon. Members: Answer.
    Mr. Skeffington-Lodge: On a point of Order. Owing to the fact that the Minister's—
    Hon. Members: Answer.
    Mr. Speaker: I think the hon. Member is raising some point of Order.
    Mr. H. D. Hughes: On a point of Order. Is there any means by which the House can get a reply from the Secretary of State for War to the Question put to him early in Question Time and deferred for later answer by the Home Secretary, but to which no answer has been given?
    Mr. Bellenger: Perhaps I might be allowed to remind the House that the Question put by my hon. Friends was as to the sentence imposed upon this particular prisoner of war. I then said that the proceedings had not reached the War

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    Office but that as soon as they did reach the War Office, I would look into them. The question answered by the Under-Secretary of State in his statement was upon an entirely different matter. He has given his answer, and I have said in my answer that we would relate our regulations to his answer.
    Mr. Skeffington-Lodge: As the Government have not come up to scratch in the matter of satisfaction, in answering this Question, I beg to give notice that I will raise the matter on the Adjournment upon the first opportunity, so as to make sure that we get an answer.

  PALESTINE CIVIL SERVICE (STAFF ORGANISATION)
  Mr. W. J. Brownasked the Secretary of State for War what Civil Service staff organisation is officially recognised by his Department as representing clerical and allied grades employed in his Department in Palestine.
  Mr. J. Freeman: The Civil Service Clerical Association.
  Mr. Brown: Is the Under-Secretary satisfied that his representatives in Palestine fully comprehend the implications of official recognition of an association by a Department?
  Mr. Freeman: I have no reason to suppose otherwise. I shall be glad to consider any matter the hon. Member wishes to bring to my attention.

  POLES, UNITED KINGDOM

    Rations
    Mr. H. Hyndasked the Secretary of State for War whether Polish troops in this country and the Polish Resettlement Corps are still receiving rations on the same scale as the British Army.
    Mr. J. Freeman: No, Sir.
    Mr. Hynd: Do I understand that these men are now on the same ration scale as civilians?
    Mr. Freeman: They are not on exactly the same scale of rations, because military rations are not easy to reduce to terms which are comparable, but they are on a similar scale.
    Mr. Beswick: Do these men pay for the rations they receive?
    Mr. Freeman: No, Sir.

    Armed Forces
    Mr. H. Hyndasked the Secretary of State for War what will be done with the 5,000 Polish troops who will neither join the Polish Resettlement Corps nor return to Poland.
    Mr. Bellenger: I would refer my hon. Friend to the statement made by my right hon. Friend the Home Secretary on 10th June.
    Dr. Stephen Taylorasked the Secretary of State for War how the cost of pay and allowances of £54 a month on an average each for the 5,000 Poles still in uniform and on Service pay in this country compares with the cost in pay and allowances of a group of British Service men of comparable rank.
    Mr. Bellenger: My hon Friend is under a misapprehension. The average monthly cost per head of pay and allowances for members of the Polish Land Forces in this country is only a small fraction of the figure mentioned in the Question. Generally speaking, the pay of members of the Polish Land Forces is lower than the pay of British Army personnel with comparable rank and length of service.
    Dr. Taylor: Is my right hon. Friend aware that I worked out the figure of £54 on the basis of an answer he gave me last week, in which he stated the total pay and allowances and number of Poles on Service pay in this country?
    Mr. Bellenger: I guessed that my hon. Friend had done that, and that is why I gave him this answer. The difference between him and me is that he has worked out this sum wrongly.
    Dr. Taylor: With due respect to my right hon. Friend, may I remind him that I have done the sum right? He gave figures of £240,000 and about 6,000 Poles, and it was a matter of simple arithmetic. Where does the extra money go?
    Mr. Bellenger: I think my hon. Friend used the wrong method in arriving at his answer. The total sum which I mentioned in my previous answer does not relate only to pay and allowances of recalcitrants; it covers many others.
    Major Bruce: My right hon. Friend said "generally speaking." Can he give us an instance of where members of the Polish Armed Forces are paid more than members of our Forces?
    Mr. Bellenger: Not without notice, but, generally speaking, they are paid appreciably less.
    Mr. Gallacher: Will the right hon. Gentleman work out a method of getting these men back to Poland, and thus save a lot of money?
    Mr. Bellenger: I have worked out a method, but, unfortunately, so many do not want to go 'back to Poland.

  NATIONAL INSURANCE SCHEME (APPOINTMENTS)
  Lady Grantasked the Minister of National Insurance when he expects to advertise for applications for appointments under the National Health Insurance Scheme.
  The Minister of National Insurance (Mr. James Griffiths): An invitation to apply for posts in the Ministry of National Insurance will be issued, within, I hope, the next fortnight, to all full-time approved society staffs who are wholly or mainly engaged on National Health Insurance work. There will, however, be vacancies in my Department for others with suitable experience, and I expect to be ready to advertise in the early autumn for applications from such persons.
  Mr. Gallacher: Will applications be accepted from the Housewives' League?

  WAGES (GOVERNMENT POLICY)
  Mr. Osborneasked the Minister of Labour if he will make a further statement on a general wages policy; and, in particular, what is the Government's attitude to further wage increases that are not dependent upon output.
  The Minister of Labour (Mr. Isaacs): The Government's policy in this matter remains as stated by my right hon. Friend the Prime Minister in the reply which he gave the hon. Member for Holland and Boston (Mr. Butcher), on
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  21st January last. As regards the second part of the Question, the subject of output per man year is discussed in paragraphs 132 to 136 inclusive of the Economic Survey for 1947. These paragraphs contain the Government's views on this matter, both in relation to the question of payment and to the other factors involved.
  Mr. Osborne: Is the right hon. Gentleman aware that since the Economic Survey was issued, a lot of water has gone under the bridge, and that there has been a great demand for higher wages on the part of people who are not producing, which must inevitably lead to higher prices and general inflation?
  Mr. Isaacs: Everybody who goes to work, if not producing, is helping in distribution and so on, and to that extent is contributing to the needs of the community.
  Mr. W. J. Brown: is the right hon. Gentleman aware that paragraphs 132 to 136 of the Economic Survey tell the House of Commons that the Government have not got the necessary figures on the subject of payment by results? That was some months ago. Have not the Government got them by now, and are they not in a position to make a declaration of policy?
  Mr. Isaacs: That is another question.

  NATIONAL SERVICE (EVASIONS)
  Mr. John Fosterasked the Minister of Labour why the summonses issued during the war against three Maltese brothers named Eugene, Carmelo and Attilio Messina for evasion of national service were never enforced; and what steps are now being taken to prosecute these evasions of national service.
  Mr. G. Isaacs: The summonses against these three men in respect of failure to submit to medical examination under the National Service Acts were not enforced because the men could not be traced. The warrants were subsequently withdrawn as the age of call-up was lowered. They would not now be called up to the Forces on account of their ages, and it is not proposed to reinstitute proceedings against them.

  EMPLOYMENT

    Liverpool and Bootle (Transfers)
    Mr. Keenanasked the Minister of Labour how many unemployed workers, men and women, registered at the Liverpool and Bootle employment exchanges were sent to employers outside the Liverpool and Bootle areas during the months of April, May, and June this year; and how many of those sent to employers returned home having been less than one week at the work they were sent to, or had not started work.
    Mr. G. Isaacs: During April, May, and June this year, 3,135 men and 359 women, registered at employment exchanges in Liverpool and Bootle, were transferred to work in other areas. Of these, 168 men and 33 women are known to have returned home within a week, or did not actually start work.
    Mr. Keenan: Is my right hon. Friend aware that it is considered in the area that the authorities are not selective enough, and that some of those who are sent away are bound to return?
    Mr. Isaacs: The hon. Gentleman will be interested to know that 3,300 people stayed on the jobs they were sent to, and that only 33 women and 168 men came back during the three months.

    Poles (Coalmining and Agriculture)
    Mr. Scott-Elliotasked the Minister of Labour how many Poles have been placed in employment since 1st January, 1947; and how many of these have been placed in coalmining and agriculture, respectively.
    Sir Frank Sandersonasked the Minister of Labour the number of Poles in this country who have already taken up work in the mines and in agriculture respectively.
    Mr. G. Isaacs: 23,746 Poles have been placed in civilian employment, all but 461 of whom have been placed since 1st January; 2,042 of these have taken employment in coalmining, and 3,936 in agricultural work.
    Mr. Scott-Elliot: Is my right hon. Friend satisfied that, as far as possible, these Poles are being placed in essential
    2024
    industries which are in serious need of male labour?
    Mr. Isaacs: Yes, Sir. The most essential industries at the moment are mining and agriculture, and the numbers coming in are increasing. There are over 2,000 actually in the mines, 956 in training, and the training output is about 300 a week.
    Mr. Osborne: Can the right hon. Gentleman say whether the Poles who have gone into the mining industry have been allowed to join the miners' union?
    Mr. Isaacs: Not without notice.

    European Voluntary Workers
    Mr. Scott-Elliotasked the Minister of Labour how many foreign workers imported from Central Europe have been placed in employment since 1st January, 1947; and how many of these have been placed in textile, agriculture, and hospital services respectively.
    Mr. G. Isaacs: Of the 6,330 European volunteer workers placed in employment from 1st January, 1947, to 30th June, 564 were placed in textiles, 2,268 in agriculture and 1,836 in hospital work.
    Mr. Scott-Elliot: Can my right hon. Friend do anything to speed up the placing of these workers in the cotton industry, which needs them so badly?
    Mr. Isaacs: Yes, Sir, I am doing what I can, but it must be recognised that this is one of the most difficult of all problems. These people have to have some capacity for the work, and must be trained, and a major problem is the making of camps available from which they can get to and from work in a reasonable way.
    Mr. Prescott: Can the right hon. Gentleman say how many of those in the textile industry are in spinning and how many in weaving?
    Mr. Isaacs: Offhand I cannot, but I will gladly get the information and send it to the hon. Member.
    Sir Ralph Glyn: Can the right hon. Gentleman say how many displaced persons wish to work in this country instead of staying in Germany?
    Mr. Isaacs: Not without notice, but we are bringing over everybody who desires to come here.

    Disabled Persons
    Mr. Walter Fletcherasked the Minister of Labour what steps are being taken to ascertain the total number of disabled unemployed in the country; and, when these figures have been obtained and examined, what steps he is taking to provide employment within physical reach of these disabled men.
    Mr. Isaacs: A count is taken each month of the number of disabled persons recorded at employment exchanges as unemployed. On 19th May last the number was 64,754. Special steps are taken to put disabled applicants in touch with suitable employment, or to give them vocational training if that is required For the severely disabled special provision is made by the factories of the Disabled Persons Employment Corporation.
    Mr. Fletcher: in view of the large figure given by the Minister and of the considerable uneasiness throughout the country on the question of the employment of the disabled, will the Minister, at an early-date, make a more comprehensive and detailed statement on this matter, which affects nearly everyone in the country?
    Mr. Isaacs: I hope that it will be possible to do what the hon. Gentleman asks, because this is a very interesting piece of work. The total number of persons on the register is 700,000, and 64,000 is not a large proportion of that number, but far too many to be left without any work. The problem is to get special factories built to take these workers.
    Viscount Hinchingbrooke: Does not this large number show that the Act of 1944 is not working very satisfactorily?
    Mr. Isaacs: It shows quite the contrary. The number is so small as to show that the Act is working very effectively.
    Mr. Leslie Hale: Is the Minister aware that the work being done is very greatly appreciated indeed and is very important, but as there is some evidence that it is not being done with all the speed with which it could be done, will he pay special attention to the speedy employment of disabled persons in factories where they are most needed?
    Mr. Isaacs: That is the problem, and the main reason which is holding up the job.
    Mr. W. Fletcherasked the Minister of Labour how far the absorption of 3 per cent. of disabled men by industry, whether State-owned or private enterprise, has been implemented; and to what extent the 3 per cent. or any proportion thereof that have been absorbed are disabled men taken on as new employees, or existing employees who are now to be regarded as disabled men.
    Mr. Isaacs: Employers on the whole are carrying out their obligations to employ 3 per cent. of disabled persons. The number of persons registered as disabled who were in employment at 19th May was about 700,000. I know that many of these obtained their employment as a direct result of the statutory provisions, but I have no information as to the precise number.
    Mr. Fletcher: Does not the Minister realise that in cases where Government or non-Government employers are taking into account those employed before, 3 per cent. is really an illusory figure, and does not mean that 3 per cent. of the new unemployed are being absorbed?
    Mr. Isaacs: It was fair that many employers who had taken back their badly disabled people should be permitted to count them in the quota number, and I know of an industry where the proportion is as high as 15 per cent. of the firm's employees; in Government service, about 4½per cent. Speaking generally, the employers have played the game in this matter.

  SCOTLAND

    Housing Advisory Committee (Meetings)
    Major Guy Lloydasked the Secretary of State for Scotland the reasons why the Housing Advisory Committee has not met since July, 1945.
    The Secretary of State for Scotland (Mr. Westwood): Since July, 1945, the Scottish Housing Advisory Committee has met on three occasions, namely. in December, 1945, March, 1946, and July, 1946, and has submitted three important reports, the last of which was published in April of this year. I hope to avail myself of the Committee's services on further inquiries as occasion arises.
    Mr. Stephen: Can the right hon. Gentleman say why there has not been a meeting of the Zonal Conference recently?
    Mr. Westwood: Not without notice.

    School Camps
    Sir William Darlingasked the Secretary of State for Scotland how many school camps are conducted as Scottish National Camps Association, Limited; where they are located; and if he has any plans to relate them to agricultural training, nature study and seasonal agricultural operations in the future.
    Mr. Westwood: School camps are conducted by the Scottish National Camps Association at West Linton in Peeblesshire, Gorebridge in Midlothian, Abington in Lanarkshire, and Aberfoyle and Meigle in Perthshire. When pupils are in residence their studies' are modified to take account of their surroundings, and advantage is taken of the opportunities for outdoor studies, which have included, as well as nature study, visits to farms, mills and the like and the observation of seasonal agricultural operations. Pupils have also taken an active part in the cultivation of the vegetable gardens at the camps. Further developments on these lines are contemplated, but as the camps are best suited for pupils under 12 years of age, the provision of agricultural training in any formal sense would not be appropriate.
    Sir W. Darling: In view of the fact that some 50,000 will be required for the potato harvest in Scotland this year, would the right hon. Gentleman consider next year the organisation of these camps with a view to particular regional necessity?
    Mr. Westwood: That would not be ruled out, but only children over 13 can be employed for potato lifting, in accordance with the recent Bill which has been passed by this House.

  NATIONAL FINANCE

    Currency Offences (Conviction)
    Mr. J. Fosterasked the Chancellor of the Exchequer whether the foreign currency involved in the conviction of a Maltese, named Messina, for offences against the Defence Finance Regulations
    2028
    during the war was ever surrendered to the authorities.
    The Chancellor of the Exchequer (Mr. Dalton): Yes, Sir, in September, 1946

    Foreign Currency (Travel Ration)
    Mr. H. D. Hughesasked the Chancellor of the Exchequer the amount of currency made available for expenditure by British travellers for commercial and non-commercial purposes, respectively, since the introduction of the basic travel ration and in any recent period.
    Mr. Dalton: About £8 and £11 million, respectively, in foreign exchange in the year ending October, 1946, and about £5 and £7½ million in the following six months.
    Mr. Hughes: Can the Chancellor say how much of this was available for expenditure in hard currencies?
    Mr. Dalton: None of this is necessary in regard to the sterling areas, which were excluded from the beginning. The greater part would be in what we customarily call hard currency areas.

    Sterling Exchange
    Mr. Bossomasked the Chancellor of the Exchequer (1) if he has now considered the evidence sent him of the price at which the pound sterling could be bought at the Chase National Bank in New York; and if he will make a statement;
    (2) if he will instruct his representatives to go to a national bank in New York, Brussels and Berne and ascertain at what price English £'s can be purchased in terms of the national currency and not on the so-called pegged rate of exchange; and if he will report the result of these inquiries to the House.
    Mr. Dalton: The evidence which the hon. Member has sent me refers to the price of sterling notes abroad, whereas my answer to him last Tuesday referred to the price of sterling on bank accounts, in which the vast majority of transactions are settled. The price of sterling notes abroad is usually below the official- rate, because, except for the £20 allowed to travellers, these notes may not legally leave or enter the United Kingdom.
    Mr. Bossom: I can see the Minister's point, but would he in future place in

    2029
    the Statistical Digest the price which anyone has to pay for an English pound in the places I have named, according to the bank and also in the black market, because there is a great reflection on our credit with the rest of the world if that is allowed to go on without an answer from the Chancellor.
    Mr. Dalton: No, Sir, I would rather not publicise this information, which is in our hands, of course, because it might put ideas into the heads of people who otherwise might not think it worth while to purchase British sterling notes abroad. I think that if the hon. Gentleman thinks it over, he will realise that it would not be very advantageous.
    Mr. J. Foster: Is the Chancellor aware that, as I understand it, it is quite legal for a non-resident coming into this country to have a certain amount of pound notes, and that these are quite legitimately acquired at a discount rate?
    Mr. Dalton: I said nothing to the contrary.

    Income Tax (Postwar Credits)
    Captain John Crowderasked the Chancellor of the Exchequer if he will consider extending the arrangement' whereby arrears of Income Tax can be set off against postwar credits for 1945–46 so as to include postwar credits for previous years.
    Mr. Dalton: No, Sir. I am afraid I cannot adopt this suggestion.
    Captain Crowder: Would the Chancellor consider hard cases, especially that of a constituent of mine who thought he was receiving allowances and is now being charged Income Tax on what he understood was free of tax money?
    Mr. Dalton: The difficulty is that we adopted this plan, as I explained last year, as a quite exceptional measure not on its merits, but in order to ease the heavy pressure of work in the tax office, and merely to save labour, and it would not be desirable to extend it because that would give preferential repayment of postwar credits to persons who are in arrears with their Income Tax, which, I would not wish to do.

  CIVIL SERVICE

    Approved Associations (Regulations)
    Mr. Henry Straussasked the Chancellor of the Exchequer whether the Civil Service (Approved Associations) Regulations, 1927, are still in force, or on what date they were repealed.
    Mr. Dalton: They were repealed on 4th July. 1947.
    Mr. Strauss: May I ask the right hon. Gentleman two questions: first, does he realise that in the 13 months that have elapsed between the repeal of the 1927 Act and last Friday, civil servants remained subject to all the alleged disabilities imposed by Section 5 of the 1927 Act; and, secondly, is it the Government's intention to replace the regulations which he has now revoked by any others.
    Mr. Dalton: The answer to the first part of the question is that this was a very disputable question of law.
    Mr. Strauss
    Mr. Dalton: It is no good the hon. and learned Gentleman shaking his head, because it was, and I say that because we had conflicting legal opinions offered. In any case the Government's intention when abolishing the tyrannical Trade Disputes Act, 1927, made it abundantly clear that any trade union which wished to affiliate with the Tory Party could have done so.
    Mr. Strauss: Is the right hon. Gentleman aware that the specific point that has now arisen in view of which he revoked these regulations last Friday was brought to the Government's attention during the Debates last year, and the statement of the law then given from these Benches was never disputed by the Law Officers of the Crown.
    In view of the extraordinary answers given by the Chancellor of the Exchequer, I beg to give notice that I shall raise the matter at the earliest opportunity.

    Pensions
    Mr. Channonasked the Chancellor of the Exchequer whether he is aware of the grievance of retired civil servants because the recent increase in their pensions only represents a small percentage of the recent increase in the cost of living;

    2031
    and whether he anticipates it will be possible in due course to make a further increase in these pensions, so that they bear a closer relation to the present value of money.
    Mr. Dalton: The Pensions (Increase) Act, 1947, which became law only last February, substantially improved the rates of increase authorised by the Act of 1944. I can hold out no hopes of further concessions.
    Mr. W. J. Brown: is the Financial Secretary aware that, although it is quite true that the 1947 Act somewhat improved the position of pensioners because of the amount of increase given to them both under that Act and under earlier Acts, it still leaves them worse off than before the war, because of the great increase in the cost of living; and does he think that is right treatment for old servants of the Crown?
    Mr. Dalton: This matter was discussed in the House—the hon. Gentleman was amongst those who took part—and the decision of the House was that the Act as amended was just and fair in all circumstances. I can hold out no hope whatever of reopening the matter.

    Temporary Officers
    Mr. George Wallaceasked the Financial Secretary to the Treasury if married women terminating temporary Civil Service employment through domestic reasons and having completed seven years' service will be paid a war gratuity similar to women becoming redundant.
    The Financial Secretary to the Trea-sury (Mr. Glenvil Hall): No, Sir. The Superannuation Acts only authorise payment of a retiring gratuity after seven years' service to temporary Civil Servants discharged on redundancy or as part of a re-organisation of the Department by which economy can be effected.
    Mr. Wallace: Is my right hon. Friend aware that women retiring through domestic reasons have the same grounds for equality as those who are retiring for reasons of redundancy?
    Captain Crowderasked the Financial Secretary to the Treasury how many temporary clerical officers in the Civil Service are to be given permanent
    2032
    established positions without examination; and what percentage of the total number of vacancies does this figure represent.
    Mr. Glenvil Hall: 4,500 temporary clerks between the ages of 30–50 are being selected to fill 15 per cent. of the vacancies for established clerical officers which have accrued during the war years. In addition, as a separate operation, 10,000 temporary clerks are to be selected from those with five or more years service to fill posts which have hitherto been graded as temporary and which are now being given established status.
    Captain Crowder: Can the Financial Secretary say how this scheme affects those redundant Post Office workers, about whom I have had some correspondence with him, because they have to go in for an examination? Are there any free places for them?
    Mr. Glenvil Hall: I could not say without notice.
    Major Bruce: Will my right hon. Friend say whether this is the start of a general plan to loosen up the rules in regard to establishment, and whether this is likely to be applied in the future to the Royal dockyards?
    Mr. Glenvil Hall: This a plan to which this House assented, and it is set forth in paragraph 37 of Command Paper 6567.

  NEWSPAPER SUPPLEMENT (STATIONERY OFFICE ADVERTISEMENT)
  Mr. Hurdasked the Financial Secretary to the Treasury why His Majesty's Stationery Office took advertising space in a supplement dealing with the Royal Agricultural Show at Lincoln, which was published in Paris by the Continental "Daily Mail" on 27th June and was on sale at the show, while newspapers published in this country were denied the opportunity of publishing special supplements for the show.
  Mr. Glenvil Hall: The space was taken by the Stationery Office in the ordinary course of business and at the suggestion of agricultural interests in this country to make better known on the Continent and to visitors from the Continent the agricultural publications of His Majesty's Government. I have no information that

  2033
  newspapers published in this country were denied permission to publish special supplements for the show.
  Mr. Hurd: Are we to take it from the Minister's reply that, on future occasions, if a British-published newspaper asks for facilities of this kind, they will be granted?
  Mr. Glenvil Hall: That is a hypothetical question and in any case it would not be for me to decide.
  Sir W. Darling: Has the Financial Secretary formed any idea of the number of French agriculturists who read the Continental "Daily Mail?"

  TRADE AND COMMERCE

    Flannel Cloth
    Mr. Prescottasked the President of the Board of Trade what is the allocation of flannel cloth for men's and women's wear, respectively.
    The Parliamentary Secretary to the Board of Trade (Mr. Belcher): Flannel of different types is used for a wide variety of garments for adults and children and there is no reservation of specific quantities for men's or women's wear.
    Mr. Prescott: Does not the hon. Gentleman think that it is rather fantastic that there should be plenty of women's trousers but very great difficulty in getting men's trousers? Will the right hon. Gentleman agree that trousers are more suitable to a man than a woman, and what will he do about it?
    Mr. Belcher: I have no desire to go into the aesthetics of the matter, but I am inclined to agree with the latter part of the hon. Gentleman's supplementary question. We have asked the Wool Control to make representations to the manufacturers, as they have done, and ISSS hope as a result we shall shortly see a change in the balance as between men and women.
    Mr. Baldwin: Is the Minister aware that the reason for the shortage of men's trousers is that the same type of trousers for women are allowed to be charged at 10s. more than men's trousers?
    Mr. Belcher: That is borne in mind.

    Japanese Textiles (Payment)
    Mr. Prescottasked the President of the Board of Trade why payment for the 64,000,000 yards of Japanese cotton textiles was made in dollars; and what was the total sum involved.
    Mr. Belcher: This was a condition 01 sale by the United States Commercial Corporation, which had provided the raw cotton, and the cloth could not have been obtained otherwise. The total amount expended was 14½ million dollars.
    Mr. W. Fletcher: Will the Minister say why, for that portion of the cloth which represents work in Japan, he agreed to pay dollars when the workers are being paid only in yen?
    Mr. Belcher: I am afraid the answer is that it was the only way of obtaining the cloth which was needed by our Colonies.
    Mr. Prescott: Is it a fact that the purchase price was based on the American price, and will the right hon. Gentleman say how it comes that we pay on an American basis when production costs in Japan are 25 per cent. below American?
    Mr. Belcher: That is rather a different question. At the present moment it is very difficult to say what is the manufacturer's price in Japan. We paid the price we were asked, and we paid in dollars because it was the only way to get the cloth which was needed by our Colonial territories. We could not supply it ourselves.

    Retail Traders (Deliveries
    Commander Nobleasked the President of the Board of Trade to what extent the delivery of goods by retail traders has been resumed; whether the expense of this service is allowed for in the margins of retail profit fixed by his and other Departments; and whether he is satisfied with the present position of the delivery system.
    Mr. Belcher: I have no exact information as to the extent to which retailers have resumed delivery services and I am not in a position to express an opinion on their adequacy. Some allowance for delivery costs is made in the margins fixed for retailers, but not on a scale

    2035
    designed to encourage a return to the elaborate service given by some shopkeepers before the war.
    Commander Noble: Does the Minister think that some increase in delivery would help to relieve the congestion in the shops?
    Mr. Belcher: That may be the case, and as I have said, there is an allowance for delivery charges in the present margin. In view of the present shortage of labour in the manufacturing and producing industries, we do not desire to encourage a return to the over-plus of labour in the distributive industry.
    Sir W. Darling: Is not the hon. Gentleman of the opinion that it would be better to extend the system of retail delivery than extend the queues in front of the shops?

    Clothing Coupons
    Mr. Symondsasked the President of the Board of Trade if he is aware that an extensive black market in clothing coupons results from loose coupons being acceptable by post; and if he will consider the possibility of introducing emergency measures, such as making it compulsory for an intending purchaser to present clothing book and identity card in person at the time of purchase, with exemptions for invalids, the disabled, etc.
    Mr. Belcher: I doubt whether acceptance of coupons through the post offers any appreciable encouragement to illegal trafficking, and we should be loth to impose the added burden on both shopkeepers and the public which the suggestion made by my hon. Friend would involve.

    Teapots (Shortage)
    Mr. Orbachasked the President of the Board of Trade whether he is aware of the shortage of teapots in the London area; if he will take steps to remedy the position; and, if it is not possible to get teapots immediately, whether he will secure that the manufacturers make available teapot lids.
    Mr. Belcher: Teapots are in short supply in London as elsewhere. Fuel allocations to the potteries have recently been raised and production of both teapots and lids should now steadily pick up.
    Lieut.-Colonel Sir Thomas Moore: Could the hon. Gentleman also arrange, in conjunction with the Ministry of Food, to make good the shortage of tea with which to fill the teapots?
    Dr. Barnett Stross: While I am very grateful for hearing that there has been an increase in the allocation of fuel to the potteries, may I ask my hon. Friend to what extent that increase has been made, and what percentage there has been?
    Mr. Belcher: If my hon. Friend is asking what the percentage increase in fuel has been, I am afraid I do not know, but the allocation for the pottery industry is the same amount of fuel now as they had last year. It took effect from 1st June, and there has been an increase in production.
    Mr. H. Strauss: In view of the shortage of paper, will the hon. Gentleman bring to the attention of his civil servants the word "scarce" instead of "in short supply"?
    Mr. Orbach: Could my hon. Friend arrange for a supply of lids for teapots, apart altogether from teapots with lids?
    Mr. Belcher: The trouble about asking for a supply of lids is that probably they would not fit the pots anyhow. In any case, my experience is that spouts are broken as often as lids, and I am quite satisfied that the right thing is to secure complete teapots.

    Argentine (Textile Imports Ban)
    Mr. Orbachasked the President of the Board of Trade what official notification he has received of the ban on importation of textiles imposed by the Argentine Central Bank; and, in view of our large purchases in that country, what steps he proposes to take to balance our trade.
    Mr. Belcher: Reports have been received from His Majesty's Embassy at Buenos Aires of the recent suspension of exchange permits for imports from all sources of textiles and other consumer goods. We share the concern of the United Kingdom exporters at this sudden blow to the restoration of our export trade with Argentina and His Majesty's Ambassador has already made our views known to the Argentine authorities.
    Mr. Oliver Stanley: Would the hon. Gentleman say on what date this ban was first imposed?
    Mr. Belcher: I am afraid that I cannot, but I believe that it was within the last four weeks.
    Mr. Orbach: Can the Minister give a list of the different items upon which the ban has been imposed?
    Mr. Belcher: Not without notice.

    Department (Correspondence)
    Sir Waldron Smithersasked the President of the Board of Trade if he will give an estimate of the cost to the taxpayer in staff, wear and tear of equipment, and paper and postage, of answering 1,125,000 letters a month.
    Mr. Belcher: The figure of 1,225,000 letters a month covers the whole of the Board of Trade's correspondence, including statistical returns and applications for licences, patents, payment of war damage, and so forth. I regret that I can give no estimate of the over-all cost of answering this correspondence, since the proportion of staff time devoted to this purpose varies so widely according to subject. The cost incurred by the Board for letter paper, envelopes and postage is estimated at about £105,000 a year.
    Sir W. Smithers: Cannot the Minister see that it is quite impossible to control the details of everyone's private life and business from Whitehall, and that nationalisation is breaking down, especially in the administration?
    Mr. Belcher: I can only assure the hon. Gentleman that we have no desire whatever to control anyone's private life. All we are concerned with is answering the legitimate inquiries of the public.
    Sir W. Smithers; Am I in Order, Mr. Speaker, in asking whether the answer given by the hon. Gentleman to the effect that he does not know the expense of this is not most disgraceful?

  FOOD SUBSIDIES
  Mr. Osborneasked the Minister of Food how much extra food subsidy will be incurred by the recently-announced reduction in price of bacon, butter and cheese at a time when the Government are
  2038
  having to pay more for these commodities; and what is the present approximate total cost of food subsidies.
  The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): The additional subsidies which it is estimated will be incurred during the financial year 1947–48 are: Bacon, £6¼ million; butter, £4 million; cheese, £6½ million; In answer to the second part of the Question, I would refer the hon. Member to my reply to the hon. and gallant Member for Stockport (Wing-Commander Hulbert) on 7th July.
  Mr. Osborne: Are those figures relative to the recent changes in these three commodities, and is there any check placed on the Ministry of Food by the Treasury as to how high these subsidies can go in total?
  Dr. Summerskill: As I think the House has been told on many occasions, these figures are in accordance with the Government's policy of stabilising the prices of food in this country.
  Mr. Godfrey Nicholson: Would it be possible for the hon. Lady to give an answer to the last part of the Question?
  Dr. Summerskill: I would remind hon. Members that the answer—which was given only yesterday—is £392 million.

  GAS COOKERS
  Lady Grantasked the Minister of Works whether there are any surplus gas cookers still available which could be reconditioned and offered to the public, who are unable to obtain new cookers.
  The Parliamentary Secretary to the Ministry of Works (Mr. Durbin): Almost all gas cookers in the hands of Government Departments are still required for Government purposes. Any cookers not required for Government or other public purposes are sold to the public by tender or auction.
  Lady Grant: Is the Minister aware that the price of new cookers is quite beyond the purchasing power of the ordinary public, and as hire-purchase is not permitted, will he reconsider the position with a view to making available to the public certain gas cookers which are apparently not in use?
  Mr. Durbin: Our Department is under heavy pressure to provide for priority purposes all kinds of domestic accommodation for which these gas cookers are required.
  Mr. Manningham-Buller: Can the Minister give an assurance that there are not gas cookers in large quantities on aerodromes vacated by the Royal Air Force which are just left there for anyone to come and take away?
  Mr. Durbin: Such cookers come within the responsibility of my Department only when the camps are declared redundant for Air Force use.
  Mr. Manningham-Buller: Can the hon. Gentleman say that there are none at such camps?
  Mr. Durbin: It is not possible to say that, as we are not responsible for their distribution.

  SERVICE PENSIONS REGULATIONS
  Mr. G. Wallaceasked the Minister of Defence if he will take steps to amend Service Pension Regulations so as to qualify for widows' ordinary pension wives of such serving officers as have remarried after retirement from the Services
  Mr. R. J. Taylor (Lord Commissioner of the Treasury): I have been asked to reply. This is one of the points now under consideration in connection with the general review of the postwar conditions of service in the Forces.

BUSINESS OF THE HOUSE
Ordered,
"That the Proceedings on the Foreign Marriage Bill [Lords]be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)"— [Mr. Herbert Morrison."]

ORDERS OF THE DAY

  SUPPLY
  [11TH ALLOTTED DAY]
  Considered in Committee.
  [Major MILNER in the Chair]

  SUPPLY
    CIVIL ESTIMATES 1947–48
      CLASS 1

        TREASURY AND SUBORDINATE DEPARTMENTS
        Motion made, and Question proposed,
        "That a sum not exceeding £1,609,811, be granted to His Majesty to complete the sum necessary to defray the charge which will come in course of payment during the year ending on the 31st day of March, 1948, for the salaries and other expenses in the Department of His Majesty's Treasury and Subordinate Departments, including additional salary payable to the Chancellor of the Duchy of Lancaster and the expenses of representation in India."[Note.—£865,000 has been voted on account.]
        Motion made and Question" That the Chairman do report Progress and ask leave to sit again."—[Mr. Whiteley]—put and agreed to.
        Committee report Progress; to sit again Tomorrow.

  IMPORT PROGRAMME
  Motion made, and Question proposed, "That this House do now adjourn."— [Mr. William Whiteley.]
  3.41 p.m.
  Mr. Eden: The main purpose of this Debate, which I now initiate, is to seek from the Government replies to essential questions in respect of their import programme and their consequent economic policy. I am quite sure the House will agree that it is indispensable that we and the nation should have full information upon these issues. In other words, we must know what the Government's policy is, and only then can
  2042
  this House and the nation judge as to its adequacy or otherwise.
  When last Monday the Chancellor of the Exchequer made his statement, which will be fresh in the memory of the House, I told the right hon. Gentleman rather on the spur of the moment, though he was kind enough to give me a copy of his statement, that the implications of that statement were difficult to follow. After the lapse of a week and after the publication of the very sketchy figures which were made available to us last Thursday, that is still my position. I do not know what the Chancellor's purpose was in making that particular announcement last Monday. I cannot think that he had it in mind that the cuts which he proposed would have any material bearing on the problem of our balance of payments. They were much too trifling to influence that to any material extent either way. It may be that his purpose was to warn the country of the seriousness of the position. If that were so—and I could not complain of that—then the right hon. Gentleman ought to have followed up his statement by a personal conference with the Minister of Food, for any service which the Chancellor's statement may have done on Monday in warning the nation was completely undone by the contents and tone of the speech of the Minister of Food the very next day.
  Mr. Gallacher: It was a very good speech.
  Mr. Eden: Of course, from the hon. Gentleman's point of view it was a very good speech, but the point I am making is that it bore no resemblance to the statement by the Chancellor of the Exchequer the day before. The hon. Gentleman may prefer the Minister of Food to the Chancellor of the Exchequer. It is not for me to enter upon such delicate matters. It is only for me to draw attention to the discrepancy and to ask which happens to represent the policy of His Majesty's Government. I read with great interest— and no doubt the House did—the letter of the Minister of Food to "The Times." It is always interesting when Ministers write to "The Times." It was a letter in which he explained that "the coming years" do not include "the coming year." Of course, I accept that statement—if I understand it—but, even so, that was not the passage in the right hon. Gentleman's speech which surprised me

  2043
  most. The right hon. Gentleman had already said, before he reached that point,
  "There is no need whatever for the housewives or the people of this country to feel that they will find it difficult or impossible, as is sometimes suggested, to obtain, partly from at home and partly from abroad, the food which they need."—[OFFICIAL REPORT. 1st July, 1947; Vol 439, c. 1187.]
  Judging from the volume of one's letters, some housewives are finding it pretty difficult now. [HON. MEMBERS: "The Housewives' League."] That is not a point I wish to argue now. However that may be, can the Minister of Food or the Government possibly reconcile his statement with the known worsening of our balance of payments, and, in particular, with the more rapid expenditure of our dollar resources, since it is from the dollar countries that a great part of our foodstuffs now come? I therefore say to the House that there is a complete divergence between the Minister of Food and the Chancellor in that respect, and I shall be glad to have it cleared up. I give my vote, for what it is worth, to the Chancellor of the Exchequer.
  I now turn to the figures of the Chancellor of the Exchequer. Those he has made available to us are for the 12 months from the middle of this year to the middle of 1948. They show that in this period the Government calculate that the total cost of our imports, after making allowance for the cuts the Chancellor announced on Monday, will be about £1,700 million. In the same period the Government are planning—perhaps I ought to say, are estimating—an export programme which will bring us between £1,300 million and £1,350 million, thus making a deficit of between £350 million and £400 million. Even accepting that those figures are realised, which I must say on the basis of past experience is very doubtful, this deficit is a very serious figure. I must remind the right hon. Gentleman the Lord President that in the Chancellor's own statement in which he sets forth these new figures, he has himself admitted that the Government's previous export target —a 40 per cent. increase in volume over the 1938 figures—which was timed to take place at the end of 1947, cannot now be realised until the middle of 1948. I am sure he is right in what he says.
  The right hon. Gentleman must realise that this past experience shakes our con-
  2044
  fidence in his new figures. If the other estimate was wrong, what reason have we to suppose that the present is right, and what assurance have we that the Government's present budgeting is going to be any more accurate than their budgeting last February, when they were warned by the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) and the hon. Member for Chippenham (Mr. Eccles) that they were over-optimistic? For the sake of argument let us suppose that the Government's statement is accurate and that the overall deficit is £350 million to £400 million for the next 12 months. Even those figures still fail to give information on the most difficult aspect of the whole situation. While our total adverse balance of payments is admittedly serious enough, the problem of hard currencies, in particular of dollars, is even more grave. This will be none the less true, as far as I can see, after sterling becomes freely convertible on current account on 15th July. I now quote from the Economic White Paper issued last February, After all, it still retains a certain historic interest. It said:
  …our dollar position is much more difficult than would appear from our total balance of payments."
  Why is that? The White Paper explains. It was because in February we were drawing about 42 per cent. of our imports from hard currency countries and exporting to them only about 14 per cent. That disequilibrium in our balance of trade, especially with the American continent, has not, so far as I know, improved in any way since February. If anything, I think it has grown worse. Let me try to put it another way. The most recent figures which the Government have given seem to show that our global adverse balance of payments has been running at the rate of something like £700 million a year. On the other hand, the rate of our drawing on American and Canadian lines of credit appears to have been running recently at the rate of £900 million a year. At that rate the American and Canadian credits seem unlikely to last much beyond the end of this year.
  The next item which seems to me of great significance, and which is completely ignored in the Chancellor's statistics, is the balance of payments upon invisible account. Once again I shall base myself on the historic document, the White Paper published last February. Then the

  2045
  Government estimated that our net income on invisible account for this year might be about £75 million as against overseas Government expenditure of £175 million. that is, a deficit of about £100 million per annum. That invisible deficit does not appear to be included in the Chancellor's figures, yet it is an important item, particularly because it includes our expenditure in Germany, a large part of which is in dollars. Moreover, since then, I ask the House to note, further debits on invisible account have arisen in the shape of releases from the accumulated sterling balances. It seems to me essential that the Chancellor's figures should be expanded to include the invisible items. I therefore ask the Government for figures to show what is the estimated invisible deficit for the year to June 1948; secondly, perhaps even more important, what will be the added drain on our dollar resources on this account?
  Under that head, if we are to have a lull picture, we must also know what is the estimated effect upon our dollar resources of fulfilling the convertibility agreement on 15th July. What, for instance, does the right hon. Gentleman calculate will be the sum involved in his agreement with Egypt, and what will be the extent of the dollar liability for us under this head for the rest of the year? I have tried to work out these things as best I can for myself, and I suggest to the Chancellor that, at a minimum, the increased amount for invisible deficit that should be added to our total deficit is somewhere between £100 million and £150 million. If that is so, that additional deficit ought to have been shown in the original figures; if it is not so, I shall be glad to be corrected in due course. I cannot attempt—nobody can without the official figures—to calculate what the additional dollar strain must be of this invisible deficit, but, clearly it must be serious and no doubt the Government can give us an estimate.
  I have given reasons why the Chancellor's figures fail to give us the full picture. Now I want to put some questions to the Government about the figures themselves. I ask, first, for some information as to the assumptions upon which the estimate of the volume of our imports and exports is based. I understand that the import programme allowed for the total volume of exports is not materially different from the estimate for this
  2046
  calendar year given in the Economic White Paper. That programme provided for expansion of imports to 80 or 85 per cent. over the 1938 level. If this is still the calculation, does it make any allowance for the rebuilding of stocks which during 1946, both in food and in raw materials, were run down at an alarming rate? Let us not forget in this connection—and I ask the House to bear this in mind—how seriously the known shortage of our stocks, because the whole world knows about it, affects our bargaining position in all these international negotiations. If that is the calculated rate of imports, what assumption have the Government made about the trend of world prices? The Chancellor in his figures blames the increase of 16 per cent. on the total cost of our import programme upon the increase in world prices, yet between December, 1946, and May, 1947, prices have advanced by only about 11 per cent. Why, then, this further margin? Are the Government calculating on a further rise in the level of world prices?
  Secondly, as to our exports. The Government say" they hope to reach by the middle of next year a target of 140 per cent. volume of our 1938 exports— a target, in other words, which they set originally for the end of this year. I ask the Lord President what allowance, in making this estimate, have the Government made for any decline or for the disappearance of a sellers' market? This, surely, is of vital importance. Already there are reports from business men, in steadily growing volume, of increasing competition in practically every line of goods, and it is becoming more and more difficult to sell our goods. Some countries have recently announced their intention of placing embargos for the time being on a number of articles such as textiles and motor cars—the Parliamentary Secretary to the Board of Trade made a statement about it just now—and they are lines of goods in which we are interested. Finally, we have the high and reputed authority of the President of the Board of Trade—I have the quotation here if anybody wishes to challenge it-that the end of the sellers' market may be quite close. The President said on 25th June:
  "So everywhere we receive the warning that the sellers' market is disappearing. It has already disappeared so far as some commodities are concerned."

  2047
  So I ask the Lord President, in estimating the volume of exports next year as 140 per cent. above the 1938 level, has any account been taken at all of the disappearance of the sellers' market? If no account has been taken, those figures will be of no more value than those given to us last February.
  The Government ought to tell us what they expect in relation to the export drive of each industry. I must remind the Lord President that in the White Paper, now several months old, the Government announced their intention of arranging discussions on their targets with each industry. What has been done about that? Have those discussions taken place? Have new and realistic targets for each industry been drawn up in the light of the imminent decline of the sellers' market? What are the new targets to be set for industry? We ought to have this information. It will be for the benefit of industry and to those engaged in it that all should know what is expected of them, and we were told last February that this was to be done. We are now in July. What has happened? Has any progress been made? What are the targets for each industry and, in particular, what are the precise calculations in the case of the textile industry? What increase in the total volume of production do the Government expect? What steps are they taking to make available to that industry the necessary coal, and, certainly no less important, the necessary number of operatives?
  Now as to coal, it is quite clear that there cannot be—I do not think anybody will dispute this—an increase in exports of the kind which the Government contemplate unless the coal production is substantially above the target of 200 million which everybody has denounced as too low. Is that anywhere disputed? If it is not disputed, then this export figure depends upon our getting an output of coal in excess of 200 million. What are the hopes of that? I shall have another word to say about coal in a moment. Equally important with coal is the question of operatives. That again raises the question of inducement. The Chancellor of the Exchequer dealt with this problem at the Margate Conference. It is, indeed, the heart of the whole matter so far as exports of textiles are concerned. I hope
  2048
  I shall not embarrass him by saying that I think the Chancellor's words at Margate were very wise:
  "The executive is in favour of relative inducements and advantages for the undermanned industries."
  I think that is right, but it is not enough. Mr. Deakin said exactly the opposite. What I must ask the Government, because we are concerned with national policy, is where do we stand on this matter now? Is the Chancellor to have his way, or is Mr. Deakin to have his way? We do not know—we have never been told—but we shall be obliged for information on that point. Unless that matter is dealt with, it is useless verbiage for the Government to talk of increased production of textiles.
  Let me sum up the facts as I see them. We have at the moment a total deficit on our overseas balance of payments running at an annual rate of £600 million to £700 million. That is our global deficit; our dollar deficit is apparently a good deal worse. Yet we are drawing nearly half our supplies from dollar countries. We cannot live beyond our means indefinitely. If we were to try now to live on the result of what we export at the present day, I calculate that we would have to make cuts in our import programme equivalent to eliminating all tobacco, all petroleum products, all newsprint, all consumer goods, and at least half of our food imports. That is what we are at present earning. The results of that in unemployment and malnutrition do not require to be described by me or by anyone else. The dollar loans seem likely to run out by the end of the year. There will be nothing left to fall back upon but our reserves of gold and free exchange, which we must at all costs keep as a banker for the sterling area. That seems to me to be the problem in all its grimness. It is for that reason that we on this side of the House have asked for this Debate. What is being done about it? What can be done about it?
  First, let me say that no one, I imagine, can be happy about the way in which our dollar resources have been expended up-to-date. No one will deny that the main purpose of these dollar loans, certainly that which influenced many of us on this side of the House, was the rehabilitation of our economy

  2049
  They were intended to give a breathing space during which we could restore our own trade.
  Mr. Stubbs: Food.
  Mr. Eden: I am coming to that also. It is perfectly impossible to reconcile that with our dollar expenditure in the last half of last year—5 per cent. on machinery, 7 per cent. on films, 32 per cent. on tobacco. That is not what this House had in mind when it voted for that loan. I accept the intervention of the hon. Gentleman. No one in the House thought that the dollars were going to be spent exclusively on machinery; of course we did not. We knew that great sums were intended for expenditure on raw materials, and also to keep our factories going, and also on foodstuffs to Maintain the health of our people. But expenditure on nonessentials has been excessive, as indeed the Government have themselves belatedly and half-heartedly realised. Our criticism, therefore, is that their policy has been one of piecemeal expedients, rather than comprehensive and realistic planning.
  In the light of this, I want to look at the cuts the Chancellor announced last Monday. Let the House compare the new import programme with the old estimate for the year 1947. Then the House will find that the effect of the increased Tobacco Duty is calculated to mean a saving of about £10 million. The saving on film remittances has not been estimated yet, but I find that the total cost of these remittances calculated for 1947 was only £18 million, and clearly there is not very much scope for substantial savings there. So far we have not been given an estimate of the saving on petroleum products at all. I hope we may be given one.
  As for newsprint and paper-making materials, which appears to be the one definite new Government decision, the total value of imports in these items for the first five months was only £1.2 million and £7.9 million respectively. According to the best calculations that I can make, the total saving in respect of newsprint, even if supplies to newspapers and periodicals are cut by a quarter, cannot amount to more than £1 million. I would like to know if I am wrong in that figure. If that is so, does the House not consider that at a time like this it is of the utmost importance that the nation should be
  2050
  given the fullest information about the urgent and vexatious economic problems that confront it? I must say that if the Government are going to make these reductions, they are going to make their task almost impossible. Even if the saving were important, I should hesitate about cutting newsprint severely at a time like this, but, when the saving is absolutely negligible in relation to our total deficit, I cannot see how on the grounds of public interest it can possibly be justified.
  What effect can the cuts so far announced, have on our problems? So far as I can see, the sum total of what the Chancellor announced last week cannot amount to more than £25 million or £30 million over the year, when our total deficit is running at the rate of £600 million or £700 million, and our dollar deficit running substantially higher. This is merely tinkering with the problem, if I may borrow a much abused word.
  May I turn to the new economic theory, which appears to underlie Government actions, as explained by the Lord President of the Council at his Press conference last week? It is apparently wrong for us to make substantial cuts in our imports, for this might betray a lack of confidence and help to promote a general reduction of world trade. Does that apply to the cuts which the Chancellor now proposes? If not, some of them, such as those in-films and tobacco, might have been made a long time ago. It is all very well for the right hon. Gentleman to talk about not giving a shake to international confidence, and not reducing world trade. I, personally, applaud the right hon. Gentleman's purpose, and think it a good purpose, but the only way we can serve his purpose is by increasing our own production, and balancing our payments in that way.
  There was another statement attributed to the right hon. Gentleman at his Press conference last week which caused me a great deal more concern. He is reported to have said:
  "If I am asked, Are these import cuts leading to others, still worse, or will they really see us through?' I must reply, 'It does not rest with us to answer that'."
  That is a very dangerous statement for one of His Majesty's Minister's to make. To argue that any further cuts would be a bad thing for world trade as a whole, and then to fling the reins on the horse's

  2051
  neck, and put the blame for any resulting breakdown on the rest of the world, is not government, it is the negation of government. Our job is to analyse the facts, and make our own contribution to their solution. The first unpleasant fact is this. In the long run, if not in the relatively near future, we shall have to consume very substantially less, unless we can produce very substantially more. I would like the Lord President, not to say that it does not lie with us, but to dwell upon the steps which we can ourselves positively take in respect of our balance of payments and to get as close as possible as we can to paying our way. I have one or two points I would like to make in that connection.
  First and foremost, comes the question of coal. Shortage of coal is putting a break upon industrial activity in every sphere. The Government's programme of 200 million tons this year is quite inadequate for our needs. Everybody accepts that; the trade unions have said it, the employers have said it, everybody has said it. Yet, on present showing, would I be wrong in saying that there is no certainty even that that figure will be reached? Let the House consider, in contrast, what the position was even as recently as 1941. In that year the total production of deep-mined coal was 206 million tons. If we add to that another 9 million tons, which represents current opencast production—there was no opencast production in 1941—one finds a total for 1941, comparable to our present position, of 215 million tons. What a difference it would make to our economy if we were certain that we would have that amount of coal this year. Yet in 1941 there were fewer men in the industry and less machinery to produce it. Those are facts which we ought not to shirk, and from which we cannot escape.
  Here is really the most urgent problem for the Government. They have inaugurated the experiment of the five-day week. After the first burst of enthusiasm, it appears from the figures and from Minister's speeches—which have been very rough to some of the miners—that production has fallen short of what is required to meet even the 200 million tons target. I say to the Government in all seriousness that the one thing which this country will never forgive will be a repe-
  2052
  tition next winter of the fuel crisis from which we suffered a few months ago. Therefore, I ask the Government what is now their estimate of the coal production in the coming months, and what action they propose to take, if any, to raise the level if that level continues below our minimum national needs? That is the most important question which I have to address to the Government today, because it is really fundamental to all our economy. The Government know it as well as I do.
  In the economic Debate last March the Minister of Labour—I am sorry he is not here—repeated the statement of the Minister of Fuel and Power that the Government offered no objection in principle to the five-day week, provided that arrangements could be made to see that we secured the output of coal which was necessary to meet the country's needs. I have no quarrel at all with that statement, but that output is not. so far as I can understand it, forthcoming at the present moment, so that when the Minister of Fuel and Power is reported in "The Times" as saying, on Sunday, that the five-day week had come to stay, no matter what anyone said. Here are two completely conflicting statements. On the one hand, there is one which says that we want the five-day week, that we believe that it will result in increased production and that its continuance depends in a measure upon that increased production or sufficient production for the nation. On the other hand, we have the Minister of Fuel and Power saying the other day that it has come to stay no matter what anyone says. We must know which of these two statements represents the policy of the Government.
  I have another point to put about our present position with reference to the nondiscrimination undertaking in Article 9 of the American Loan Agreement, which is repeated in spirit in the commercial policy proposals. I wish to recall to the House some of the words which my right hon. Friend the Leader of the Opposition used about this in the American loan Debate. I think the House will agree that there is no one who knows more about opinion in the United States than does my right hon. Friend. He said:
  "This is really a proposal upon which earnestly trust the steady gaze of the just minded people of the United States will be

  2053
  attentively fixed."—[OFFICIAL REPORT, 13th December, 1945; Vol. 417, c. 714.]
  That was a very wise comment, for the significance of the non-discrimination undertaking has been completely altered by events. As I have said, the loan was originally intended to last until we had restored our trading position. In fact, as is only too obviously true, the dollars are running out much faster than was originally intended.
  In present circumstances, the strict observance of this non-discrimination undertaking is leading to many anomalies and difficulties which could never have been foreseen at the time of the loan negotiations. I do not think that the right hon. Gentleman will dispute that. It applies particularly to a number of Empire products. There are even instances in which our inability to purchase certain commodities from America owing to our shortage of dollars has compelled us to reduce in similar proportion our purchase of these commodities from Empire countries. I am sure that that could never have been the intention of the negotiators of the loan. I am sure that if my right hon. Friend's advice had been followed, that is to say, if the "steady gaze of the just-minded people of the United States" was fastened upon those facts, they would see and understand our difficulties. I ask whoever is to reply for the Government to give the House some account of this matter, and to say what action, if any, has been taken.
  I have made no mention of the Marshall offer. That is not because I wish to cast any doubt upon its validity or to detract from its importance. I know that the House will understand the significance of this historic offer, which may be the only means whereby economic catastrophe can be averted. I have made no reference to it for quite a different reason, because our concern at this moment should, above all, be with our own actions, our own responsibilities, what we can do to help ourselves. If the Marshall offer should become a pretext for continuing upon our present wholly artificial basis, for refusing to face the facts and for shirking the necessary hard decisions, then in the long run, I say to the right hon. Gentleman, the additional breathing space it gives us may prove to be more a loss than a blessing. We cannot become the permanent pensioners
  2054
  of the United States. We have a role of our own to play in the world, as the heart and centre of a great Empire. If we are to carry out this duty, we must, sooner or later, pay our own way, and to do this we must be able to sell British goods in adequate volume in a competitive world market, and it is our ability to do this which is the crux of the whole problem which now confronts us.
  Are we doing everything in our power to produce the goods for export and to sell? I fear that we cannot pretend that we are As I have said before, an increasing number of our business men already report growing competition in price and quality in overseas markets. The problem of our level of costs, our level of prices, is of supreme importance. The index of wholesale prices in this country has been rising steadily since this Government took office. There can be no doubt that recent wage increases, which may well be justified in themselves—they may be, I do not deny that at all—[An HON. MEMBER: "Do you think that they are justified?"]—I ask the hon. Member to apply his mind to my argument. I am not saying that they may not be justified. I am asking the House to contemplate their consequence, which must be to give a further impulse to the present inflationary movement. In the economic Debate on 10th March, the President of the Board of Trade said:
  "we cannot afford increases in wage levels or shorter hours unless they increase productivity per man year."—[OFFICIAL REPORT, 10th March, 1947; Vol. 434, c. 994.]
  Can this be said of all the recent agreements to increase wages and reduce hours? We should all like to see these increases, but are they correct policy at a time when we are living to an ever-increasing extent on borrowed money?
  Let me sum up what I have to say. I say, first, that the cuts which the Chancellor announced the Government propose to make in our import programme are utterly inadequate to bridge the gap that at present exists in our balance of payments. Meanwhile, our dollar resources are being spent at an alarming rate. What do the Government propose? Alternative courses are open. I would even venture to tell them what, to the Opposition, they seem to be. They can propose further cuts to reduce the gap. If that is their policy they ought to declare it now. They ought to tell the nation what those cuts

  2055
  are and for how long they are to be endured. Alternatively, the Government can go on for a little while longer as we are now, living largely in excess of our income, in the hope that the success of the Marshall offer will save them from having to make further import cuts. If that is their policy, equally the House and the country ought to be told. The nation is entitled to know. The nation is perfectly prepared to examine any constructive plan to meet our problem, but the first condition is that the nation should be told of that plan. Up to the present I must tell the Government that that condition has not been fulfilled.
  I want to conclude on a note which I fully understand will not be acceptable to Government supporters. I hope they will allow me to put this point of view because it is one which I most sincerely hold. The other day, the Paymaster-General, speaking in the country, said— I think quite accurately and I endorse his words:
  "Economically we are in a jam. We must get through the next 18 months or smash."
  Speaking from these benches, I say to the Government that we are as concerned as anyone on the opposite side of the House for the future of our country. Nobody could watch recent developments of events unmoved. I believe that the Government would be wise and would be acting in the best interests of the nation if at this moment they decided to put aside for a while—perhaps for the period which the Paymaster-General regards as supremely critical—the pursuit of purely party legislation, and decided to try to unite the nation in a joint effort to rebuild our prosperity. I know that hon. Gentlemen opposite will not agree with that, but I must put it because I deeply believe in it. The present task is certainly sufficiently formidable for any Government. The right hon. Gentleman knows as well as I do how heavy is the pressure on the machine, how formidable are the tasks, how fully taken up is the time of his best civil servants. I must add that if the Government persist in pursuing party legislation now—I am not saying this as a threat: I am stating it as a fact—inevitably they are going to divide the nation into probably two almost equal halves. I conclude by saying that if they will show themselves to be something
  2056
  bigger than party men, they can do a service of lasting value to the State.
  4.24 p.m.
  The Lord President of the Council (Mr. Herbert Morrison): I am sure that all hon. Members will entirely agree with the right hon. Gentleman that the discussion which we are having today, arising out of the statement made by my right hon. Friend the Chancellor of the Exchequer with regard to the import programme, is one of very great importance. The right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden) has, quite rightly, raised a number of issues upon matters to which he attaches importance and which he thinks should be considered by the House. In the course of my wider observations giving the general economic situation in relation to the import programme as we see it, I shall cover a number of the matters to which the right hon. Gentleman has referred. If he will forgive me, I will leave some of the other matters which are more detailed and within the sphere of the Treasury, to be dealt with by my right hon. Friend the Chancellor of the Exchequer. Time is needed to look up some of the actual figures to which the right hon. Gentleman referred. I shall give some figures and others will be given by my right hon Friend.
  We were asked whether the assumptions that the Government have taken in regard to the volume of imports and exports included stocks. As indicated by the Chancellor's statement, stocks were taken into account. Indeed, in the course of his statement he said:
  "We count, however, on increased imports of animal feedingstuffs and fertilisers, and on rebuilding some of our stocks which have run down very low.".—[OFFICIAL REPORT, 30th June, 1947; Vol. 439, c. 961.]
  Therefore, as far as was practicable, the stock position was taken into account in the Government's deliberations on this matter. With regard to any calculation about world prices, it is exceedingly difficult to be certain what the further movement of prices will be. No doubt, some prices will show a further rise but there are signs in some cases that certain prices are tending to break. Indeed, so far as the world is moving to a buyer's market that is bound to be the effect. No Government can be in a position to be sure, with any degree of accuracy, what will

  2057
  be the statistical and monetary effect. J can only say that so far as it has been possible for the appropriate Departments to form an impression as to the probabilities, the element of rise and fall in prices has been taken into account, but I very much doubt whether a figure could be put upon it.
  With regard to the export drive, the Board of Trade have been steadily in consultation with the export groups. They are constantly discussing this matter with a view to both industry and the Government making the best possible effort towards increasing exports. In the course of these talks, they sometimes arrive at targets, though I doubt very much whether it would be wise to give figures relating to individual targets of individual industries. However, I can assure the right hon. Gentleman that consultations on a cooperative and friendly basis between industry and the Government are taking place steadily with a view to getting to the desired purpose, namely, the maximum practicable degree of export trade—a matter to which we have attached the greatest importance ever since we have been in office and to which many Ministerial references have been made.
  The right hon. Gentleman said that, as far as he could calculate the value of the imports of newsprint over a certain number of months, he could not see that the saving could be greater than £1 million at the outside. I am advised that that assumption is wrong and that the figure will be somewhere between £2 million and £3 million, or roughly about four times that number of dollars. I would like to assure the House that the Government have come to this conclusion about newspapers with the very deepest regret. We are exceedingly sorry about it. We had to seek to choose as channels of economy those which would do the least damage either, as the right hon. Gentleman said, to the physical welfare of the people or the economic welfare of British industry. If the series of subjects for economy which the Government have considered is taken into account, I think it will be seen that, as I shall show in the course of my observations, we have sought to do it on that basis.
  If we are forced to economise in food consumption, which is the raw material of labour power, just as other raw materials are the raw materials of indus-
  2058
  try, or if we are forced to cut the supplies of raw materials needed for industry or supplies of machinery needed for industry, we begin to get into a terrible vicious circle. It is not a thing to walk into if we can possibly help it; it is not a thing to hurry about. Such a vicious circle would make it impossible for our people to put forth the physical effort to enable our industry to give us the amount of production which is undoubtedly necessary. In any case, on the production side the Government began a very strong drive to get the additional production which, I entirely agree, is a vital element in the problem of imports and exports.
  In the coal industry, which, I quite agree, is the biggest single element in our industrial well-being—there are some other elements that are almost as important, but undoubtedly, this is the biggest single element—we have devoted the utmost energy to getting the maximum production. I think it would, yet awhile, be too early to say whether we shall get the 200 million tons. I know that others have said that it should be 220 million tons or even more. The Government made their estimate of 200 million tons in the best of good faith as to what they believed would be a reasonable objective, or was within the sphere of practicability. Others thought it should be higher, and nobody is more delighted than I am that others think that it should be higher. It is far better that they should think it should be higher than that they should think it should be lower, especially as they include a number of people on the labour side in this and other industries.
  But I think it is too early to say whether we shall achieve the 200 million tons. Quite frankly, I cannot be sure, but it would be premature at this moment that I should make a statement as to whether we shall reach the 200 million tons or not. I only say that it will want a very great effort to get the 220 million tons, and, quite certainly, it will want a very great deal of effort even to get the 200 million tons. It is of the most vital importance that we should do that. We must not get it out of our heads that without it we will be quite unable to get through next winter without the inconveniences of last winter— [Interruption.] Well, the inconveniences

  2059
  and great dislocations, if the right hon. Gentleman prefers it. I quite agree, but I think we must be careful to remember that that is not the sole objective of the drive for coal. We really want more than that. We need elbow room in our own industry, and we need to supply the nation, not only for our own sake, but for the sake of Europe and the whole world economy, with an adequate amount of coal for export such as we formerly had. I entirely agree about that.
  The right hon. Gentleman has referred to certain alternative courses to which he attaches importance. I shall indicate the alternatives which are inherent in the consideration of this problem. Finally, he asked that we should set aside party legislation in order that the nation might be united in those essential economic measures which he thinks do not involve party political considerations. The matter we are discussing today does not of itself involve party political considerations, and I should have thought that, over the sphere of production and our balance of payments, and all the problems arising out of it, there is really plenty of room for all good men to pull together. But, if I may say so, I think it is unreasonable of the right hon. Gentleman to carry that argument—when there is no party conflict over a good deal of the sphere of economic activity—to the point of saying that the only way in which all good men can pull together is for some good men, that is, us, to drop legislation which we do not introduce for party reasons as such. [Interruption.]Well, the right hon. Gentleman can think we are right or he can think we are wrong. Of course, the Opposition think we are wrong; that is the way of an Opposition, just as we think we are right.
  But to assume that the Government are bringing in certain legislation with which the Opposition does not agree, for partisan and party political motives, is quite wrong. We are bringing in this legislation because we believe that it is in the interests of the nation. It is perfectly competent for the Opposition to say—and, whether it is so or not, they will go on doing it—that they do not agree, and that they believe that the legislation is pernicious. It really is unreasonable to say to us, as was implicit in the right hon. Gentleman's statement—and he will
  2060
  correct me if I am wrong, because I do not want to be unfair—that, if there is to be support day by day from the Opposition in this matter of the nation's vital economic life, which really does not involve partisan or party political considerations, then the Government ought to pay the price for that support, and that it should be a condition of that support that we should not bring in legislation with which the Opposition disagrees.
  Either that line of argument leads to a Coalition, which, with all sincerity, I do not believe and never did believe would be in the interests of the nation, or— [HON. MEMBERS: "Hear, hear."] This unanimity is charming, and the universal agreement that there should be no Coalition is almost a Coalition in itself. Anyway, we are agreed about that. This line of argument either leads to that conclusion, or to the conclusion that the Government of the day, returned by a great majority and with the support of the electorate, should not bring in legislation which they believe is in the interests of the nation, unless that legislation is approved by the Opposition party opposite.
  Mr. Eden: Will the right hon. Gentleman allow me? He has put a gloss, unwittingly, no doubt, upon my words which I never intended. I am not seeking to make a bargain, least of all to promote a Coalition. This business is the responsibility of the Government, and I only drew attention to the words of the Paymaster-General. All I did say was that the unity amongst all parties possibly provided a basis within which it might be wise not to pursue party legislation for the time being, but I repeat that it is entirely a matter for the Government to decide. We shall continue to play our patriotic part, whatever the Government may do.
  Mr. Morrison: I am sorry if I put any gloss on what the right hon. Gentleman said. It is quite possible that it is a little habit of both of us from time to time to put a little gloss on what the other side has said, but, if I did, the right hon. Gentleman has taken the gloss off, and it is for the House to decide what is the broad conclusion between my gloss and the right hon. Gentleman's anti-gloss.
  I must first impress upon the House that the import programme provisionally decided upon for the period from the middle of 1947 until the middle of 1948

  2061
  is, I agree, only an interim programme. The facts about it were circulated by my right hon. Friend the Chancellor of the Exchequer last Thursday. The programme for the year mid-1947 to mid-1948 is, as the right hon. Gentleman opposite said, £1,700 million. This is an advance in money of £232 million, or about 18 per cent. on the programme for 1947 set out in the Economic Survey. The volume of imports envisaged for the year mid-1947 to mid-1948 is much the same as for the calendar year 1947. The great expansion in cost is, as the House will readily conclude, attributable to prices. The policy adopted in framing this programme has been to provide what is required for the health of the people and for the growth of industrial production, but to cut out less essentials ruthlessly. Tobacco, films, and consumer goods will represent only £85 million out of £1,700 million—a mere 5 per cent. will go in those three items, according to our estimates. Of the consumer goods, only a small proportion come from hard currency countries.
  Now I turn to the criticisms of the Government's balance of payments policy. They boil down to five. The first argument against us is—this is quite often heard even now, though I agree it did not come from the right hon. Gentleman today—that the American loan was a mistake, and that we ought to have done without it. There are some people who believe that now, and did at the time. Considering the difficulty we have had in keeping going, even by drawing on the loan, it is up to those who use this extraordinary argument to show how adequate alternative supplies could have been found in the time. Some of those critics thought that the answer lay in a more extensive development of British Commonwealth and Empire resources. To them, I would say this—that if the people who have been talking so energetically about developing the Empire had taken as practical and vigorous steps to develop it in all the years that they were in power as this Government have already taken since V-J day, there might have been some shred of hope that Empire resources could have been mobilised adequately in time. But, owing to past neglect, this, unfortunately, is not the case. Others said we ought to have refused wider international commitments and relied on
  2062
  driving hard bargains, country by country. It must now be clear to all that even if such a policy had been justifiable, the immediate bargaining strength of this country would not have supported such a line of action.
  The second line of attack has been that the credits and resources available to carry us over the transition from the war have been inadequate. That we freely admit. When our representatives went to Washington for the loan negotiations we estimated we should need 5,000 million United States dollars to see us through until our production had recovered sufficiently to enable us to pay our way. What we actually got was three-quarters of this sum—1,250 million dollars less than our estimated needs. Again, the purchasing power of this already reduced sum was further reduced by a rise which we estimate to be 40 per cent. in United States prices. The persistent boom conditions further compelled us to accept second, third and fourth choices at high prices, instead of what we most urgently wanted. Then we were compelled by events to assume a cripplingly high proportion of the common burden arising from the war. As one example, no less than 8 per cent. of our expenditure in the United States in the past year has gone to feed the Germans. The Government agree with their critics that the hard-pressed British economy has been weighed down further since the war by additional burdens and misfortunes, which we were entitled to hope we might be spared. But no Government could have avoided these evils without running into even greater ones.
  The third line of criticism is that the loan has been frittered away on nonessentials—and that, I think, we have already heard some observations about. The loan was, of course, always intended to aid in financing our normal import programmes, until our exports rose sufficiently to pay for them. That was the purpose. The loan has, therefore, been spent on items in the programme. The smallness of the cuts which we have been able to make without threatening national production and health is evidence of the relatively small proportion of the loan which has been going on nonessentials. Those who say the loan should have been spent on such items as steel, mining and manufacturing machinery,

  2063
  entirely overlook the supply conditions in the United States, where these things are almost unobtainable.
  The Government did not feel it right to impose, shortly after the war, any greater degree of austerity than actually had to be imposed on this country. Many who are now criticising us for not having cut down more drastically on what they call inessential imports are the very people who, a year ago, were carrying on campaigns against the rationing of bread —which, incidentally has saved us a tidy sum in dollars—and in favour of un-rationed petrol, which would have cost us a great many more dollars, not only directly, but indirectly, by creating extra home demand on our engineering and other industries at the expense of exports. People who took this line, who decried the need for maintaining controls through this critical period, and sought in every way to represent the Government as enforcing unnecessary austerities, really have no right to turn round now and criticise us for not having enforced even sharper austerity earlier.
  Some critics take the line that we should have made faster progress in expanding production and achieving our export targets. There is room for fair difference of opinion here, and certainly the Government would not claim to have been perfect. Undoubtedly, mistakes have been made, and things have been done more slowly than we should have liked to see them done. On the other hand, if some of those who are now such fervent champions of greater production had, while they had control of the destinies of this country before the war, thought fit to bring our basic industries up to date, to make reasonable provision for research and training, and had been more active in combating the mass of restrictive practices and habits of mind so common at that time, the task of the Government in securing a greater expansion in production today would have been infinitely easier.
  If production is now universally recognised as national duty No. I that is because the Government, without as much help from others as I should have liked, have placed it firmly in that position on the national agenda by a sustained campaign. Not that we have done so badly in production. Demand has been im-
  2064
  mense, and the difficulties of meeting it have been unparalleled. How many people even now realise, for example, that in the first five months of this year, when load shedding and electricity restrictions were in full force, we consumed 6 per cent. more electricity in Great Britain than last year, and 61 per cent. more than in the record prewar year? Without direction of labour, without ample supplies of the raw materials and foodstuffs to which we are accustomed, we have done more to restore and to outstrip prewar production than any other country which felt the impact of enemy explosives and revolutionised also its whole economy for war, as we did. Of course, we must and will intensify our production drive to meet this emergency. Every extra ton of home production of foodstuffs can save us a ton of imports. Every extra ton of coal above home needs is a vital contribution to exports.
  Every increase of manufacturing output adds, directly or indirectly, to the margin which we can squeeze out for export. We have squeezed such a margin out of textiles. The raising of the export rate of textiles to £250 million a year will mean that on the present rate of production the amount of textiles available will not permit of more than four coupons a month being left to the home consumer. But the President of the Board of Trade informs me that, owing to the good recovery of the textile industries from the fuel crisis, he will be able to start the new ration period on 1st October instead of 1st November as he previously announced. But he asked me to add that, unless, however, the present slight rate of increase in textile production is not only maintained but accelerated, there can be no increase in the home clothing ration. The Government are well aware of the urgent need for comprehensive and drastic action to break bottlenecks and to get the national output moving upwards in a big way. But although that is all very relevant to the subject of our import programme, it is a matter which was debated in the House of Commons last week, and I do not propose to dwell further on it today.
  The point I want to make now is, that while an immediate increase in output would do much to simplify our balance of payments problem, increased British output alone could not solve it. For one

  2065
  thing, it would not, in the short run, increase the capacity of most other countries either to pay for our exports to them or to supply us with the additional food and raw materials which our increasing economic activity requires. For another thing, the gap in our balance of payments is at present far too wide to be closed by any increase in production and exports that can be expected in the early future. The plain truth is this: increased production and exports are unquestionably the long-term solution; but, equally certainly, they cannot provide the entire short-term solution. They cannot enable us to pay our way in time. On a short-term basis, unless other means are found of closing the trade gap, further cuts will be inevitable. We may even have to face some cuts which will reduce our economic activity greatly, and so themselves prevent the rise in production for which we are all striving.
  That brings me to the final criticism that has been made of the Government's import policy—that the cuts in our import programme are too little and too late. If one looks only at the arithmetic of dollars, that criticism is unanswerable, but, important as subtraction sums in dollars have, unfortunately, 'become, there are other important things to be considered. The first duty of this Government to our own people, and also to the world, is to keep Britain in full production, in full employment, in good health and in good heart. To starve our industries or our workers, or to take the heart out of the British people, or to throw overboard abruptly a number of our most expensive overseas commitments, would be to play into the hands of the trouble makers and the enemies of democracy, and to strike a blow against world recovery and the prospects of world peace. The Government are quite clear, having given deep and prolonged thought to this matter, that they should not impose cuts of a scale which would require a drastic adjustment of our standard of living until it is perfectly clear and certain that this is the only course open to us.
  The problem which confronts us is this. The deficit for the year mid-1947 to mid-1948 is of the order of £450 million.
  Mr. Oliver Stanley: Is that the total?
  Mr. Morrison: That is the total. That probably accounts for the slight discrep-
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  ancy by the right hon. Gentleman on this figure. Anyway, it may contribute to it. To balance our accounts, therefore, we should have to cut imports to about 25 per cent. below the level now contemplated. This is the gap that must be filled. But the problem is that it cannot be filled by cutting imports. If we cut imports too far, great adjustments become necessary in our production and in our whole standard of living. But we cannot indefinitely go on importing what we cannot pay for, and I must tell the House, quite frankly, that it may come to this—and a tragically bad day it would be for us, for Europe, and for the world's hopes of prosperity.
  It is most important that we and the whole world should get the perspective of our problem right, because it is also the perspective of the whole world's problem. There are, in fact, many different problems mixed up with one another. Two are fundamental. The first of these is, recovery in production of all kinds all over the world. Until that is complete, shortages and famine will persist, productivity will be reduced, prices will be inflated, and all sorts of undesirable expedients will be forced on all but the economically strongest countries. The second is the establishment of world monetary and credit conditions which enable full employment, high production, and expanding and balance of trade to flourish. Until that happens, there can be no security on earth, economic, political or military, and even those who may temporarily be living in plenty will all the time be living on the edge of a volcano.
  The importance of the problem of getting more commodities produced and distributed quickly cannot be over-rated. It is all very well for us to set up long-term organisations to assure the future security and welfare of. mankind, but if the producers of the world do not expand their production more quickly in the next three or four years, the whole opportunity of building a tolerable civilization may be lost. Time is all-important. Not only Britain, but the world, must produce or perish.
  We, as the nation most inextricably bound up in world trade, suffer particularly from world shortages. I will take just one example—cereals. The Coalition Government planned, even before D Day, to start restoring the production of British livestock products by modest import? of

  2067
  animal feedingstuffs. We were defeated first by shipping difficulties, and then, after the end of the war, by the threat of world famine which forced diversion even of coarse grains to human consumption. Widespread droughts and other natural disasters were added to war devastation of the great wheat and rice growing areas of the old world, and we were forced to find dollars not only for the whole of our own great imports of wheat, but for those of India, the British zone of Germany and even our normally rice-eating Colonies. We were, therefore, hit in three ways by the cereals shortage, which set back our own plans for agricultural reconversion, added millions to the quantities of food imports for which we had to pay and the price we had to pay for them, and compelled us to buy in dollars what could otherwise have been bought for sterling. The Government responded actively to this situation.
  Just over a year ago I crossed the Atlantic to concert with the United States and Canadian Governments measures for bridging the gap between world cereal requirements and supply. I was very strongly criticised from the benches opposite. I hope that some of those who made this criticism will note what has happened since. We have had bread rationing in this country, but, contrary to the prophets, we are still alive in spite of it. Famine in India has been averted by narrow margins, and the economic conditions for political settlement have just been maintained. In Europe also, famine has been held in check, although in some of the ex-enemy countries, owing to difficulties which the House has often discussed, the situation has been very bad. But the big thing is that world cereal production has expanded.
  In the United States alone, under the leadership of the Secretary for Agriculture, Mr. Clinton Anderson, whom we look forward to welcoming here at the end of this week, they have planted four million more acres and they are bringing in now the biggest harvest in history—1,400 million bushels of wheat. In Canada also, on whose never-failing efforts we rely for most of our daily bread, the farmers have done great things and are reaping enough this year to secure us the promised supplies under the Anglo-Canadian Wheat Agreement. The world supply of wheat
  2068
  has been expanded and its use economised sufficiently to avert world famine, but the cost in foreign exchange has been enormous and it has left all the wheat importing countries impoverished. Our very success in combating the famine in food has contributed to the famine of foreign exchange in the consuming countries; for, one of the worst things about these shortages is that they are so unevenly spread. In the United States and in the Western Hemisphere generally, production as a whole is more than 50 per cent. higher than before the war. In war ravaged Europe and in Asia, on the other hand, production on the average is still well below the prewar level. This disparity in the rate of economic recovery and expansion is the fundamental reason for the balance of payments crisis which now threatens the world.
  The only remedy, pending the restoration of European agriculture and industry, lies in devising some means whereby billions of dollars worth of North and South American production can be transferred across the Atlantic without the necessity for immediate payment in the form of an equal and opposite flow of European goods. Up to now it has been found possible to finance an enormous flow of excess exports from America by a variety of means, for example, by U.N.R.R.A. supplies, by special loans such as those to the United Kingdom from Canada and the United States, and by countries dipping into their remaining reserves of gold and dollars. By these means a breathing space has been won during which the countries of Europe— and let no one underestimate this—have made substantial, if gradual, progress towards the restoration of their production. But now U.N.R.R.A. is dead. The reserves are becoming exhausted, and still the process of recovery is far from complete. Some new way has to be found of maintaining supplies until the Old World can stand on its own feet. The institutions set up at Bretton Woods, the International Bank and Monetary Fund, while they may have a valuable contribution to make even in our present difficulties, cannot by themselves meet the emergency needs of the period of reconstruction.
  For this, therefore, something different is required, to which our wartime experience may provide a clue. In war,

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  after the United Kingdom had faced the enemy alone through its second winter, a new system was devised to ensure that those who could contribute to the war against the Axis should not be prevented by book-keeping considerations. The essence of this system of mutual aid was the maintenance of maximum war effort by each country contributing its full available resources whether of manpower, materials, or credits. As we all know, this system proved an important element in victory, but it also proved to be the key to a tremendous domestic prosperity, such as the countries concerned had vainly tried to attain by orthodox methods in time of peace. It is a paradox, most conspicuous in the case of the United States, that enormous apparent economic sacrifices and burdens were shouldered while standards of civil consumption were, in many cases, little reduced and often actually increased.
  The world has learnt from this that the test of a modern economic policy is whether or not it keeps the economy running at somewhere near full capacity or not. The price of letting an economy be throttled down right below capacity is so vast, and the sacrifices it imposes so heavy, that anything which keeps the wheels turning pays for itself. War demanded, and brought about, a rational system of international finance. Under this system, the apparent great sacrifice through aid to other countries was much more than made good by the enormous stimulation of demand resulting in more economic production, stability of employment, and a high and steady national income.
  Whether the analogy of mutual aid is applicable to the present situation, or whether some more appropriate method can be found of maintaining the life-giving flow of goods and services, I do not know. One point has, in any case, to be borne in mind. Mutual aid was accompanied by something resembling overall planning of allied military and economic resources, and would have been impossible if the countries which gave more than they received had not been confident that the others were pulling their full weight. Now, once more. it is essential that the countries of Europe should prove their will and ability to win through. They must agree on methods to help themselves and each other, in accordance with a co-
  2070
  ordinated economic programme designed to free them from abnormal dependence on imports and make them economically healthy. Only on this basis is it reasonable to expect the full co-operation of the United States and other countries from whom the bulk of the assistance required to restore the economy of Europe must be drawn.
  From a strictly business standpoint our recent conduct as a nation may seem extremely foolish. We were foolish enough to go to war for a principle without being attacked, and to spend our accumulated wealth in holding the line against Fascism until other countries, whose values and vital interests were equally threatened, were brought in. We then mobilised more completely than any other country, and refused to compromise our effort by attending to such details as whether we were going to have enough electricity after the war, or how soon we could get back our lost markets. Having emerged victorious we then gave away vast sums to others, while we had to borrow money at interest to carry over the period until our own production and exports could be restored. A good deal of this borrowed money we proceeded to pass on to our starving ex-enemies in Germany, to our enemy Japan for cotton cloth for our Colonies, and to our suppliers in the Argentine and such sterling area countries as India and Egypt to meet their dollar needs. We behaved, in fact, as a one-man international monetary fund, helping the world to carry on until the balance of payments problem could be solved. And we did all this as an act of faith. Had we failed to do the first part of it, we would have lost the war; and had we failed to keep up the effort more recently, the peace would already be past saving.
  Trade is an exchange of goods and services, and it must be two-way. We have a record as the world's best customer, and its biggest lender for development in every continent. Unfortunately, we have over-strained ourselves, and we cannot do more than we are doing. We can, however, still contribute a great deal. We can provide important manufactures which are required in every country to restore production. We can also provide vital raw materials such as rubber and wool. Although we are in no position to make an immediate contribution of coal to other countries—

  2071
  apart from what we send them embodied in exports of manufactures—we will redouble our efforts to resume coal exports to the Continent at the earliest possible moment. There are other ways in which we can help. Appalling as our shortage of dollars is, measured against the prospective gap in our balance of payments during the next two years, we have many valuable assets for the common pool and we will make them available in the most practicable and acceptable manner, provided—I emphasise, provided —others are willing to put in their resources according to their ability also.
  Time is very short. In these matters the best is the enemy of the good. We cannot hope for a fully comprehensive agreement before the twelfth hour strikes. Therefore, we must go for the best agreement we can get before the clock strikes, as it will, this autumn. Fortunately, the crisis can be dealt with in two complementary parts. First, there is the worldwide problem of raising production: that can be tackled through the United Nations, and by direct talks. Our representatives have made great progress, even in Eastern Europe, in reaching practical arrangements for the development of exchange of commodities and manufactures, and nothing seen in the headlines about diplomatic deadlocks must be allowed to hold up this healing process. It is when we come to the balance of payments that we must, following the regrettable breakdown in the Paris talks with Russia, be content for the time being with a more limited objective.
  While production is a vital interest for all countries, and world trade is a general world-wide interest, the bulk of world trade is carried on by a relatively small number of countries. It is these countries. naturally, whose economies are vitally affected by the present shortages of dollars and of other currencies, including sterling —for sterling is a hard currency to some countries, just as dollars are to us. The countries whose economies are of this pattern are the ones which have the greatest understanding of world trade and the greatest interest in putting it on a sound basis. If such countries can agree on methods of maintaining and expanding trade through the present strains and difficulties, they will, in the process, show the way to others and demonstrate the groundlessness of fears that measures,
  2072
  whose sole object is the expansion of production and trade, may have some sinister implications. They will thus provide a magnet of commercial attraction to which other countries will be drawn.
  Do not, therefore, let us be held back from seizing quickly and surely what can be grasped now by the fear that we may be perpetuating divisions in the future. The truth is really just the opposite. If we do not create the nucleus of a sane world economy now, the lack of it will force even many who would be disposed to co-operate into hostile or suspicious groups and compel them to take crude and damaging measures in the hope of self-preservation. We, therefore, as a great commercial nation, are staking our whole future on the creation of a sane economic system. We cannot, and will not, believe, after all the sacrifices made by all the peoples for a better world, that anyone who hopes to build democracy in peace will again let loose on the world the demons of trade restriction, unemployment, and famine.
  Our progress, since what was called victory, takes us from one crisis to another —[HON. MEMBERS: "Hear, hear."] yes—as the bills which we were forced to sign as the price of victory come in for payment. Perhaps we may feel, and perhaps history may judge, that the people of this country deserved something better after their single-handed stand for freedom in 1940. Certainly, for the individual citizen, and particularly for the housewife, this continuing succession of crises is a bitter and severe test. Very often there is a temptation to vent on His Majesty's Government the irritation and frustration which we all feel, and to speak as if these things were due to some extraordinary wrong-headedness or incompetence. But I think the House will recognise that any Government which had the terrible responsibility of guiding the country through these postwar days would have been up against much the same immense problems, with much the same inadequate resources. Unfortunately, the breathing space has been further curtailed, and the emergence of worldwide order has been further postponed, by events outside the control of anyone in this country. Our production and exports have lagged far behind our needs, and we must increase them vastly and rapidly if disaster is to be avoided.

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  Nevertheless, we need not be ashamed of what we have achieved in the last 18 months even, though it has riot been nearly enough. We have regained our prewar volume of exports, we have beaten many prewar production records, we have set up a standard of orderly industrial relations which is the envy of the world, and we have contributed a vast effort, despite great difficulties, towards the relief and reconstruction of Europe and of Asia. All of us in this country are entitled to face the, future, whatever it holds, with confidence. We are standing, as in 1940, for what we know is right and sane against prospects which to any other people would look madly discouraging. We do not know how many trials and hardships these next months will bring, but whatever they may be, we will weather them successfully, provided we do not deviate from the only track which leads in the direction of a sane and prosperous world.
  5.20 p.m.
  Mr. David Eccles: I am sure that the House welcomes the first important speech by the Lord President of the Council since he was compelled to go away sick. We are very glad to have him make a long speech again, but the position which he reveals is appalling. The Lord President of the Council has spent three-quarters of an hour telling us that there is an unbridgeable gap between imports and exports, and that there is nothing we can do about it except wait for more help from America. This Debate was, I understood, designed to tell the British people what they had to do. We thought that we were to have from the Government at least some outline of their plans to deal with this terrific problem which is coming upon us; instead of which the Lord President of the Council says that the cuts so far made are of small importance, and that there is nothing else we can do but simply wait and see what turns up. That means, unfortunately, that there is no concrete policy of the Government for us to criticise, comment upon, or support, and that we are left exactly where we were yesterday, with nothing more whatever to bite on.
  On this side of the House, it is no surprise to see that the figures given by the Chancellor of the Exchequer last Thurs-
  2074
  day should reveal this enormous gap, which is widening instead of closing. I hope to show to the House that it is not possible to close this gap unless the Government are willing to scrap their financial and economic muddling, and in its place to unite the nation behind a policy which is both inspiring and practical. I believe that that can be done. Months ago, we on this side said that the combination of bad luck, low output and, above all, incompetent government would drive us to the edge of this precipice. I have no heart to quote the many warnings which we gave. When one has repeatedly pointed out to someone one cares about, what will happen if he goes on keeping bad company, and then it docs happen, there is no pleasure or consolation in saying, "I told you so."
  We are now in a critical position, such as we have not been in for hundreds of years in our history. How have we got where we are? We have passed two long, shabby years since peace and Socialism arrived together. How can it be that in July, 1947, we are more dependent upon the charity of another Power than we have even been before, and how can it be, unless supplies of food and raw materials are assured us by another enormous American loan, our standard of life must be cut to a starvation level, when every home in the country will feel privations which hardly 1 per cent. of the population have even imagined? The Lord President produced three alibis in order to cover up the responsibility of the Government. First of all, he blamed events over which, he said, the Government have no control. For example, he blamed the rise in prices in other parts of the world. I must tell him that many competent Americans say that the rise in their export prices is in no small part due to the buying methods of His Majesty's Government.
  The Lord President of the Council then blamed events which took place before the Labour Government came into office. Presumably he was referring to the prewar management of the coal mines, when we never lacked coal. Thirdly, he produced a new kind of excuse, namely, that all other governments are as short of dollars as the British Government. It never seems to occur to His Majesty's Ministers that their own policy has been a major factor in undermining our capacity to produce, and in robbing us of the strength

  2075
  to lead Europe in peace as we did in war. My hon. Friends will deal faithfully with these alibis in the course of the Debate. All I should like to say is this: If the captain of any vessel, finding himself in a position of peril, said to the crew that they could be quite sure it was not the fault of their officers that they were in danger, that he hoped an American lifeboat would come and pick them up, and that anyway, they could console themselves with the thought that other ships were going on the rocks as well as theirs, a captain who used that language could never inspire his men to make the effort to save themselves. I like that word "effort." In our village in Wiltshire, when we want to raise money for some object, maybe to repair the church roof, or to pay for an outing of the Women's Institute, we do not sit around waiting for a cheque to come down from the big house. We organise an effort. We are always organising efforts for this and that, and we should be ashamed to imitate the Lord President's attitude of waiting to see whether enough dollars come in under Mr. Marshall's offer to pay for maintaining the whole of our standard of life.
  Mr. H. D. Hughes: Has not the hon. Member seen the poster entitled, "Extra effort now means better living sooner."
  Mr. Eccles: I have seen the poster, and I have also noted that it has had no effect. The Government's business is not to do as the Lord President did today, go on whining about the bad old days when these crises did not occur, or blaming events over which the Government may or may not have control. Their business is to organise an effort, and it is about the kind of effort they should organise that I wish to speak.
  Nobody knows whether the Government are to receive a large gift under the Marshall offer, or if they do, whether it will be given with or without conditions. Even supposing the dollars come pouring across the Atlantic with no strings attached, I do not think we ought to take them, unless at the same time an adequate effort is being made to put ourselves in a position to pay our own way within a limited period. I say that for two reasons: first, because charity without self-help deadens the character and destroys the will to recover. Right hon.
  2076
  Gentlemen opposite have been quick to tell us how odious to them is a hospital maintained by voluntary contributions, but they do not seem in the least disturbed at the prospect of British Socialism being maintained by contributions from a capitalist State. May I again quote the remarks made by the Lord President of the Council in his Press conference? They set the whole tone for his speech in this Debate. He was reported to have said:
  "It does not rest with us whether any further cuts in imports are made or not."
  That expresses perfectly the pious resignation of a perambulating mendicant. More dollars can only put off the day of reckoning. They cannot heal our economy, bewildered, frustrated, and vivisected by this Socialist experiment. That is one reason why we have to make an effort of an altogether new kind, and in a greater degree than we have yet contemplated.
  The second reason is this: Great Britain must be seen to be making an effort of this kind, if democratic Europe is to be inspired to do the same. If we sit down under our troubles and wait for a general world solution, which is, apparently, the Lord President's panacea, the ravaged Continent of Europe will not muster the faith and energy required to surmount her still more troublesome difficulties. It is up to us to give Europe a lead in peace, as we did in war. What is the situation which calls for the effort? In the old days, Governments only adjusted their actions to economic events when they occurred; it is now necessary for Governments to imagine situations, and prepare for them, before they occur. I see no reason why one cannot imagine fairly accurately what will be the situation when the American Loan runs out. My right hon. Friend the Member for Warwick and Leamington asked some searching questions about the figures which the Chancellor gave, and which purported to portray this situation. It is vital that we should have answers to those questions, so that we may know more accurately what will happen. But in anticipation of that information I think one can discern, in outline, what will happen when the Loan runs out.
  Unfortunately, as my right hon. Friend pointed out, it is not possible to take, as a working basis, the Chancellor's most recent estimate. As usual, the Govern-

  2077
  ment make statistical comment very difficult by changing the period to which their revised figures refer. They never compare like with like, and are earning a bad reputation for statistical trickery. However, taking the figures as they were presented, the estimate for imports for the next 12 months is £1,700 million. That is a prodigious figure, but no doubt is much more accurate than the figure in the Economic Survey, and I would accept it on the basis of the present economic policy. On the other hand no one ought to accept the estimate for exports. If we are to export £1,350 million worth of goods in the next 12 months our monthly rate of exports must rise from £90 million last month to £125 million in June, 1948. That is a jump of something over 35 per cent. and nobody with any sense of reality believes that it can be done.
  I want to ask the Government some questions about this export figure, which as it stands seems to destroy the value of their balance sheet. Do they expect the increase in exports to come out of home consumption? If so, our shops will be empty. If, on the other hand, they expect the increase to come out of increased production will they tell us how much more coal, let alone labour and materials, will be needed to sustain so big an expansion? Further, do they really believe that we can sell this great increase in exports against the trend of world markets? Coming from the general to the particular criticism of this figure, in what direction do the Government think that this expansion can possibly take place? In the Chancellor's statement last Thursday, nothing was said about coal, which is produced by a nationalised industry. The right hon. Gentleman singled out a privately owned and managed industry, the textile industry. What are the figures of our textile exports? The most we have ever yet done in one month is £19 million, and the Government say that they hope for a 20 per cent. increase. That is £4 million. What is £4 million against a monthly deficit of over £50 million? It is useful as an addition, but it is nothing more. That is the only concrete suggestion which the Government have made. Therefore, taking a realistic view—and I am sorry that it is a gloomy view—I do not believe that we should put our exports, over the next 12 months, higher than £1,200 million, even if coal produc-
  2078
  tion reaches 210 million tons, which it will have to do if we are to hit that export target.
  Certain conclusions follow: When the American credit is exhausted, presumably early next year, the dollar deficiency will be running at nearly £50 million per month. It will remain at that figure so long as any of us can foresee. The effort we have to make is to close a hard currency gap, after the Loan has run out, of over £500 million per annum. The size of this gap makes unpleasant things only too plain. Little cuts in imports, little increases in exports, will be like trying to put out a blaze with a water pistol. If the Government's statement does nothing else it should clear away the last lingering hope in the minds of hon. Members opposite that we can ride this storm without a major change in our economic policy. It must now be obvious to all that if the standard of life which we have been enjoying since the end of the war—and I refer to all sections of the people—is not to be cut to ribbons the maldistribution of our resources, and low level of productivity, must be dealt with before the last instalment of American aid is expended. This consideration is, I think, the signpost to the sort of effort we must make.
  I believe that we should only ask for help from America, and take it, for two purposes. First, to acquire capital goods of all kinds to expand our productive power; second, to add to our supplies of consumer goods while our normal supplies are getting back into their stride. I stress the words, "normal supplies." What we ought not to do is to ask for help from the United States to swell our supplies of consumer goods over and above the total for which we are likely to be able to pay, after a definite and planned period of reconstruction. That is what we have been doing. We have been spending, on consumer goods, far more than our current or prospective income. We have been borrowing, not only for reconstruction, but for over-consumption, and until this large inflationary element of over-consumption is faced, and got rid of, there can be no health in the British economy. In other words, the choice is between deflation and greater production. That should be the signpost to our effort. I do not believe that the United States will indefinitely send us consumer goods in such quantities that we are able to enjoy

  2079
  a standard of life beyond our own capacity of production to support. I hope that they will send us capital goods in order to expand our productive capacity. I hope that they will send us enough consumer goods to tide us over while the build-up is being achieved. What they are not likely to do, and what we ought not to ask them to do, is to send us a volume of consumer goods that masks from the British people a fundamental lack of balance in our economy and stifles, rather than stimulates, our will to put our own house in order.
  This is a tough conclusion, because it means that more consumer goods as an incentive to greater production are ruled oat from the Government's policy. For the time being, the best we can do is to stabilise the standard of life of workers in the essential industries. Others will have to consume less, and expenditure on non-essential items, like gambling, which has thrived so on the Chancellor's inflationary policy, will have to be severely cut. We shall have to spend our money on home-grown food and not on fags, films and football. Many capital projects which are today under contemplation will have to step down in the queue, and their place be taken by an all-out drive to increase production of food and raw materials at home and in the Colonies.
  This means hard going for several years, and it means also that the Lord President's new planning staff cannot make any plans which have any hope of success until there is a great revival of the spirit and will to work, first in the coalmines, and then throughout the whole country. These planners can publish whatever allocations, programmes and targets for production they like, but they will all fail, as all the Government's targets have failed up to now, unless the general policy of the Government is changed, and is charged with the power to inspire their own supporters, let alone the anti-Socialists, to work loyally and to spend their money on essential things.
  Mr. Fairhurst: Is the hon. Gentleman suggesting to the Government that they should impose direction of labour?
  Mr. Eccles: I have no such suggestion to make as that direction of labour should
  2080
  be imposed. What I desire is that a spirit of loyal co-operation should be created. I do not wish in this Debate to traverse the controversial aspects of Socialist economics. On these benches we do not believe that nationalised industries can ever escape the occupational diseases that flourish when large-scale organisations are infiltrated by politics. Whether these diseases are deadly or not, the fact remains that the particular administrative methods by which the Government have sought to impose their brand of Socialism have enormously slowed up production.
  The House may be interested to hear what industrialists in all parts of the country told members of the Conservative Committee who were responsible for the Industrial Charter. For the purpose of finding out how production could be increased, we held a large number of provincial conferences, attended by all sections of industry at all levels. The consensus of opinion was astonishing. The consensus of opinion from Scotland, Wales and England was that business wants firm government at the centre, with maximum freedom at the circumference. Employers, technicians and wage-earners all described to us how, under the Labour Government, they were checked and bewildered by the muddled and conflicting policy at the centre, accompanied by maximum interference at the circumference. I am not asking in this particular instance, for the Government to drop all legislation, although I wish they would, but I am asking them to cut out this indecision and incompetence at the centre of administration. If they do not, there is no hope that they will ever succeed in mobilising the productive resources of the country. This indecision and incompetence cannot stop so long as the Government pursue a doctrinnaire economic policy. By its very nature Socialism is a method of controlling production in detail. One cannot be a good Socialist and allow an employer to get on with his own job without some kind of control, and it is the knowledge that that is so, and the working out of this attitude of mind in practice that is holding up our production from one end of the country to the other.
  To take one example—the production of food from our own soil. When in the war we wanted aircraft and bombs to

  2081
  destroy lives, the Government saw that the labour and material, and houses for the labour were provided. We expanded the aircraft industry five or six times. In peacetime, when for two years it has been obvious that we need home-grown food to save imports and to preserve the health of the people, what comparable energy in administration has been put into the production of food from British farms? I could give a good many instances. Today, in my own county of Wiltshire, essential spare parts for agricultural machinery are in disgracefully short supply. Every farmer knows that when the Labour Government took office, pressure was taken off the accelerator of home food production. I hoped that we should hear from the Lord President about the drive to produce food. We heard nothing at all.
  The outline of the effort which we have to make is clear enough. The Government must not be afraid to tell the nation the facts, and all Ministers must give the same interpretation of these facts. If that is done, the people will be able to imagine—that is the essential point—the situation that will face them when the loan runs out. Once they can do that clearly and unmistakably, they will be willing to follow a bold and practical lead in defeating inflation and stepping up production. But everyone knows that such a national effort cannot be married to a bitter party programme. I have one question to ask the Government: Do they believe that production and recovery can be achieved in any other way than through national unity? Do they believe that strength is achieved through unity or disunity? Last Monday, the Chancellor told me that, crisis or no crisis, he did not believe that any economic policy could be found that would unite the people. If the right hon. Gentleman is correct nothing can save us from disaster. I am sure that he is wrong, and time will show who is right.
  5.49 p.m
  Mr. Ronald Maekay: I would like to take up some of the points made by the hon. Member for Chippenham (Mr. Eccles) which reflect on the Lord President of the Council, but, no doubt, my right hon. Friend is well able to look after himself. The hon. Member for Chippenham made the point that what we were getting from America
  2082
  was of no great value to this country because of the high prices in America, which were really our own fault, and that our method of buying from America had resulted in the loss of a certain amount in the value of the money loaned to us. If this is true why have prices of consumer goods risen as well? If we look at what has happened in America during the last 18 months, I think that it is fairly clear what is the cause of the rise in prices that have taken place. It is a very specious argument for anyone to suggest to this House, that the methods adopted by the British Government have been responsible for a rise in prices, when the rise has extended to a field in which the British Government have not been concerned.
  I should like to come more to the main general political point both of the right hon. Member for Warwick and Leamington (Mr. Eden) and the hon. Member for Chippenham. They seem to put the whole problem on political grounds. They argued that because we have a Socialist Government in Great Britain, which is applying Socialism to a small part of the national economy, we are launching into the economic blizzard which is confronting this country today. I wonder how it is that in the past when Tory Governments have been in power there have been adverse balances of payments. There were such adverse balances for the three years before the war, but I am not saying that they were necessarily due to the Tory policy at that time; they were due to the change that had taken place in the part and place this country occupied in the world during the years between the two wars. That is a factor at which we have to look this afternoon.
  I was amazed at the right hon. Member for Warwick and Leamington devoting the whole of his time to saying that we must get back to what Britain has done before. The hon. Member for Chippenham said that we had to lead Europe as we did in the war. We did it then because we had Lend-Lease behind us to the total of 30 billion dollars for the five years, or £5,000 million during each year of the war to enable us to tide over our balances which we have not at the present time. The whole of the argument this afternoon was that we should be blamed for the present situation without any regard to the situation which went

  2083
  before. I want to examine this problem of the economic position, because we have to look at the facts, if we are going to make any useful contribution to this Debate.
  We are, rightly, pressing for increased international trade. The right hon. Member for Warwick and Leamington says that we must try and sell our goods in world markets at competitive prices as we did before. Let us look at that, see what can be done and see what it means. First, let us in international trade separate raw materials and foodstuffs from manufactured goods, because they are entirely different. Since 1913 the production of raw materials and food has gone up by about 50 per cent. but the trade has gone up by only about 25 per cent. Since the turn of the century there has been a fair increase in the amount of international trade in foodstuffs and raw materials, but when we look at manufactures the position is entirely different. The production of manufactured goods has gone up from 1913 by 100 per cent., but trade in them has gone down. It is pretty well a straight line for the world as a whole, but if we look at the main industrial countries like Britain, America, Germany, Belgium, Switzerland and Sweden—the eight or nine main industrial countries of the world—we find that the amount of trade in manufactures has gone down. The only logical conclusion to be drawn from this position, if we look at the position for 30 years, is to ask ourselves whether the trade in manufactures is going to be bigger and bigger from year to year. We have to realise that with the development of mass production, even though manufactured goods have multiplied by double as against foodstuffs and raw materials, the trade in them has gone down.
  We are asked to manufacture for exports and to increase our target by 140 per cent. over the target in 1938. We know, however, that in 1938 we were exporting raw materials and other things like coal and some foods that we are not exporting now, so the target of 140 per cent. is much larger than it seems at first sight. It is 170 per cent. or 180 per cent. above the prewar figure, and when we look at that figure, we should remember that we are trying to secure it in a world in which trade for manufacturers is declining, not because of a Socialist Gov-
  2084
  ernment in Great Britain, because it was declining in the days of Tory Governments before the war, but because of the change in our industrial position in the world. Let us remember that at the end of the 18th century we were producing one-third of the manufactured goods of the world; now it is 10 per cent. When people say that we must lead Europe, they should realise that we are only producing manufactured goods to the extent of one-third of what we did at the beginning of the century and the suggestion becomes an absurdity.
  There are one or two things which I should like to ask the Chancellor of the Exchequer, and with which I hope he will deal when he replies. In the first place, I should like to ask what is the justification for thinking that in the next 25 years —and I am looking at the problem from a long-term point of view because the short-term problem can be tided over if we know that we are going to be all right in the long run—we can naturally increase our share of world trade when the things on which we have concentrated for our export trade in the past, in the field of international trade, have been going down from year to year.
  Mr. Boothby: The hon. Member seems to have some confidence that the short-term position can be overcome, and I should like to ask him how he thinks that that will be accomplished.
  Mr. Mackay: In reply to the hon. Member for East Aberdeen (Mr. Boothby) may I put this point—if we cannot solve the long-term problem we cannot solve the short-term problem, and that must be perfectly obvious. In the second place, our deficit of last year was about £400 million—I am now speaking from memory —of which £300 million came from Government expenditure overseas. Another £50 million came from the fact that we bought foodstuffs from Canada and America which we would normally have got in such years as 1938 from Denmark, because Denmark was supplying Europe which was poor as a result of the war. In the same way we had to buy wheat from America and from Canada, which, normally, we would have got from Australia, because Australia's wheat went to India on account of last year's famine. These are but short-term problems. We do not expect to spend anything like £300

  2085
  million on Government expenditure abroad this year. We shall be able to buy more dairy produce from Denmark and less from America, and we are buying more wheat from Australia this year. In consequence we will have to buy less from Canada and America.
  Mr. Stanley: Does the hon. Gentleman say that everything is very much better this year?
  Mr. Mackay: No, I do not say that everything is very much better this year, but Denmark is sending dairy produce here this year. She did not send it last year.
  Mr. Stanley: We have to pay tor it.
  Mr. Maekay: But it is not in the hard currency area, and, therefore, it is much easier to deal with the problem in that way. In other words, we are getting back to the normal channels of trade in which this country was before the war.
  Mr. Stanley: If all that is so, how is it that our expenditure of dollar credits is continually rising?
  Mr. Mackay: The right hon Gentleman knows perfectly well why it is continually rising. In the first place, it is because we are importing more things from America, and consequently the price is greater than we intended. Secondly, the price has risen 40 per cent. as against what it was nine months ago
  If I may, I should like to get back to the point I was making when I was interrupted by hon. Members opposite. I was saying that we have to bear in mind that the whole problem of our position in the world is very different from what it was, and it is completely nonsensical for hon. Members to stand there and talk about the political policy that this country has adopted, when they are failing to recognise the changed position in which this country finds itself. There are good reasons for thinking that we will not get beyond the 1929 figures in international trade, and that being so, it must affect the whole position of this country in regard to manufacturers.
  That brings me to the second point which I wish to make. If we recognise the changes that are taking place with regard to international trade, we shall find that we have to think out our economic problems entirely afresh. We have not only to achieve a very big reorganisation of our own industry here, but must look
  2086
  around for areas where we shall be able to obtain the raw materials we require, while at the same time supplying them, with the complementary goods in a way we have not been doing. The reason we are up against the problem of manufactures is that We have not a big market in this country. The United States, with 120 million people, has a market for mass-produced goods of a kind which we do not possess in this country, and we have to take steps to extend the area of our trade, so that we shall obtain a market big enough to mass-produce the goods with which we are dealing.
  Hon. Gentlemen opposite have been carrying on this Debate on the basis of chiding the Lord President of the Council for having said that it does not matter what we are doing here since it is the rest of the world which will settle the question. If hon. Gentlemen opposite would give a little more thought to this problem they would realise that matters are indeed very largely out of our hands, and very much in the hands of the United States and dependent upon the way in which they are going to trade. It. is obvious that we have never been a very big exporter to the United States, and it is not very necessary now that we should be—provided that America is going to buy raw materials from other countries with whom we trade. After all, before the war, in times of a different economic position in the world as a whole, the U.S.A. used to buy raw materials from Malaya and places like that to which we could sell, and until that process is restored we cannot look hopefully at the problem of international trade.
  As I say, it is a problem which is not in our own hands. I do not wish to go into a lot of figures, but I think they should be looked at in this connection. Recently the Department of Commerce has been giving figures of American trade for the first three months of this year. They show exports of about 4.5 or 4.6 billion dollars with imports of 1.6 billion dollars, and the suggestion is that over the year the exports will total 20 million million dollars with imports at about seven or eight million million, leaving a difference of some 12 billion dollars, of which about five can be dealt with by gold and other things, leaving a gap of some 7 billion dollars.

  2087
  This is the fact which is to return prosperity to this country. It those exports get into circulation and if the dollars are provided by America in some way— not necessarily to this country by direct exports from here, but by trade with the other 50-odd nations of the world-then there is a possibility that we shall be able to increase our exports to a certain extent. But the problem is in their hands much more than in ours. When we look back over the last 20 years—as we must, because since 1929 the world has never recovered the production achieved before then—we find the drop in world production between 1929 and 1931 was about 40 or 45 per cent. In previous world crises it was only 6 or 7 per cent., and afterwards, when things became better again, the previous peaks were passed. Never since 1929, however, did any one country get back its employment, production or trade to the standard of 1929. World trade never returned to the same levels all through the decades of the Tory Governments up to 1939
  Mr. Osborne: And the Socialist one too.
  Mr. Mackay: At least the Socialist Government at that time attempted to handle the problem in a way in which it was never handled by Tory Governments. If we look at these figures in this way, and realise that it was only the production of the war that brought about a recovery in employment—full employment if you like —and in production, it will be seen that a recovery in trade was secured only because billions of dollars were given away. When we look at this problem in this way, I want to know what has been done in the world and in this country to provide the purchasing power or the demand which was lacking in 1929, which brought about the crisis of purchasing power which was never present up to 1939 and returned only as the result of the production of the war, and the handling of the finances of the world based on lend-lease. Short of that there is no other way of doing it today. It is a world problem and it is no use hon. Members opposite chiding the Government for not taking steps to put it right.
  In conclusion, I should like to make two or three suggestions which seem to me to be important at this stage. I think that all hon. Members must reconsider
  2088
  the whole economic position with which this country is faced and which is not only due to two wars, because they have merely accentuated an economic development which was going on and which has made our position completely different from what it was in 1913. When we consider that change we realise that there are a large number of export industries which will no longer be export industries. When I was a boy in Australia, for example we used to import steel from Britain, but now Australia can export steel to us more cheaply than she can import it from Britain. This is part of the industrialisation which is taking place in all the younger countries. such as Brazil and Canada, and because of that exports which used to come from this country are not doing so today. Perhaps we ought to give up trying to export motor cars and export instead prefabricated steel houses in which other countries do not compete with us.
  We have to look to those industries which can provide mass production and cut down the imports of raw materials needed for other industries that cannot go in for mass production. Here is a large field in which a great deal of rationalisation has to be done. It is the problem of the Socialist Government to see that finance, plant and equipment are available to reconstruct British industry in such a way that it can enter other fields. That is not the only problem. The real need is to obtain a big market. We talk about the three countries in the world—
  Mr. Osborne: Can the hon. Gentleman explain how the remarks that he has just made fit in with his statement that Australia could export more steel cheaper than we can?
  Mr. Mackay: I did not say that Australia could export more in quantity, but more cheaply. She does not, of course, produce 12 million tons of steel as this country does. She produces a much smaller amount more efficiently, for the reason that she has the iron ore which we have not in this country, and because her equipment is more up to date.
  The matter of equipment will be put right here when we take over the steel industry. I might add, as an hon. Friend reminds me, that Australia has had a Socialist Government for a very long time.

  2089
  My final point is that we must extend our markets so that we can have an area for trade which is large enough to permit of mass production. The secret of American success, I suggest, is not so much that the Americans are more intelligent than Europeans or that they have more raw materials. In fact, if one looks at the figures one finds that there is actually a greater quantity of raw- material in Europe than in America. The secret is in America's free trade market of 120 million people. So far as the world is concerned, Russia is looking to herself to develop her production and her standard of living in her own way and will not be a big factor in world trade. However, we now have the Marshall offer which is leading to a meeting of European States, and the only way in which this problem can be solved ultimately is not by a bargaining between the States of Europe but by a real economic union of the States with which this country trades so that we may have a market in mass produced commodities not of 48 million people, but of 250 million or 300 million, so that we can get mass production going in the right way. With Europe tied up with Britain in that way, we should have a complementary market and should not then be so dependent on America as we are now.
  6.9 p.m.
  Mr. Turton: I think that the last two speeches were the most gloomy to which I have listened in this House since Philip Snowden spoke in 1931. The hon. Member for North-West Hull (Mr. Mackay) spoke as if we were bound to decline, however competent or incompetent the present Government might be. I do not think that that is quite the same policy which he and others put to the electorate at the last Election. That is a very great change which I have noticed in this House in the two months I have been away. If hon. Members would go to the country— [Interruption.]—if I went away for another two months, I would gladly go. What is the position? The hon. Member for North-West Hull (Mr. Mackay) talked as though British goods were not wanted throughout the world.
  Mr. Mackay: All I did was to point to the fact that whereas we used to have two-fifths of the world's trade, now we have hardly one-fifth of it.
  Mr. Turton: At one stage the hon. Member was talking about production going down and at another about British goods not being required, and he cited Australia and Brazil. The fact is that British goods are required urgently in many parts of the world. We must somehow do our best to get greater incentives to production. I cannot think that the gloomy speeches from him and from the Lord President of the Council will be the best way to get Britain to meet the crisis with which we are faced today.
  What is the hope? We are to have cuts in imports, and even greater cuts in the autumn unless something else turns up. The Government's policy is one of a vicious spiral of self-mutilation. It began with the American Loan Agreement. Under that Agreement, the Government really made this policy inescapable, unless they had taken greater steps to turn over from manufacture to agriculture. What happened under that Loan Agreement? We were borrowing large sums in the hope of borrowing time It was thought to repay in dollars in 1951. I presume that the Government hoped and expected that they would be no longer in power. [Laughter.] What other hope have they, in regard to repaying? Hon. Members laugh, but what hope have the Government of repaying in 1951, the dollars they borrowed, by starting to make interest payments?
  Under Article 9 of that Agreement we have sealed all hope of Britain's export trade getting under way and of our having greater incentives to production. It is not merely a question of capital goods and of raw materials. The great need today is to have more incentives to production and more goods in the shops. Until we get those goods in the shops, we shall not get greater production or the balance of payments levelled out. The first point put to me is, "How can you get greater incentives to production with-not impairing the dollar position?" Is the House aware that many countries, especially in South America, cannot take our exports because they are short of sterling balances? I recently visited Chile and Peru, where that is the position. The people said to me, "It's all very well to try to sell us British goods, but we cannot buy from you, because you will not take our goods."

  2091
  His Majesty's Government have had applications before them for many months for importations from those countries, and have either turned them down or have not replied to them. As a result of that policy, export orders cannot be taken from those countries in South America. A fortnight ago, when I was coming back, I stopped at Jamaica. What is happening in Jamaica? Why is there so much unemployment there at present? Are the Government adopting towards Jamaica the same policy of denying to this country what they call luxury fruit, because of the dollar position? Is it because we cannot get pineapples from the Portuguese, that we cannot get fruit from Jamaica? I hope that when the Government reply is given, we shall be told something about our policy of getting luxury imports from South America and from Colonial territories.
  So far as I can see, we are using the same yardstick for both America and the Colonial territories and South American countries. That is a great mistake for the people of England. The Government could give us more goods in the shops by bringing in those imports of wines, glass, barley and beans from South America, which those countries are trying to sell to us, but we cannot do it under Article 9 of the Loan Agreement, by which we said that we would not discriminate against America through any other country, either inside or outside the Empire. I want to turn to another way in which we could help to balance our imports and exports. The Economic Survey White Paper lays down in paragraph 107 that the Government's policy, both to save foreign exchange and for good farming was:
  to switch our production, as rapidly as the cereals position permits, from the production of crops for direct human consumption to the production of livestock and livestock products, especially pigs and poultry. The import of £1000 worth of feeding stuffs will save nearly £2,000 worth of imports of livestock products."
  I could not agree more emphatically than I do with that paragraph, over any other paragraph in that White Paper. What have the Government done in pursuit of that policy? How far have they changed over from finished food products to the raw material of feedingstuffs? Let me give one example, of which the House
  2092
  may be well aware—our friend the dried egg. In the last live months we have imported some 40,000 more cwts. of dried eggs than were imported last year. Comparing 1947, with 1946—
  Mr. Leslie Hale: Will the hon. Member forgive me for interrupting him? Surely, it was the hon. Members on the benches opposite from which we heard such a row about the shortage of dried eggs, which were described as great need of the people? If the hon. Member had been here during the last two months, he would have heard the full details of the shortage of refrigerator space which makes the transport of fruit a matter of extreme difficulty because the utmost economy has to be exercised in shipping.
  Mr. Turton: Those seem to be two quite disconnected interruptions. We complained that the British housewife was being deprived of eggs. For many months we heard my hon. Friends on this side of the House demanding more feeding-stuffs so that more eggs could be produced. I have heard no such claim from those benches at all in that connection. Why is it that in these five months we increased our imports of dried eggs from 130,000 cwts. to 170,000 cwts.?
  Mr. Hale: If the hon. Gentleman wants the figures—
  Mr. Turton: The hon. Gentleman is interrupting again. I have an idea that he may get an opportunity to make his own contribution to the Debate, when he may demonstrate, if he can, the holes in my argument. We have spent £6 million already this year on dried eggs. That is hardly carrying out the Government's engagement to change over from finished products to feedingstuffs. Let us look at the other position—the maize that could have produced those eggs. In order to produce 170,000 cwt. of dried eggs—I am subject to correction—one would require 100,000 tons of maize. I believe that is fairly accurate. That would cost £2,200,000 instead of £6 million. Was that maize available? What is the position? The crop of maize in the United States last year was six million tons more than the. year before. Out of the mammoth crop of 86 million tons, how much maize have the British Ministry of Food got from the United States for this country? The answer is 45,000 tons.
  Mr. James Callaghan: Shame.
  Mr. Turton: I heard an hon. Member shout "Shame." It is shameful. I am very glad that it is admitted. When I went to the Argentine to find out what we were doing about getting maize from there the first thing they said to me was, "Why are you not getting it from the United States? Out of that huge crop of 86 million tons, surely you can get maize for the British farmer?" What it the position in the Argentine? In the Argentine this year the crop of maize is five million tons more than last year. The estimated crop is 8,600,000 tons instead of three million tons. The buyers this year are much fewer. When I was in the Argentine in March, Mr. Zoutendyk, representing the South African Government, declared that he did not want a single cwt. of maize. Last year his Government got 367,000 tons.
  What have we done in our buying policy? We have bought 127,000 tons of maize. That is all the maize that has been landed from the Argentine to this country. When I was there, there was a report in the Press that the maize exports to England had been cut from five million tons to 700,000 tons. Thinking that was an inaccurate report, I asked the Chairman of the Purchasing Commission to contradict it, as it would have a wrong effect in this country. What the Press really meant was that out of the export surplus of five million tons, we were only asking for 700,000 tons of maize. Surely, we ought to get more than that. I believe one of the reasons the Argentine Government are not going to take our textiles is that we are not buying maize from them as we should.
  Mr. Hale: Surely the hon. Gentleman—
  Mr. Turton: I have already had one interruption from the hon. Member for Oldham (Mr. Hale) and shall be delighted if he will make a contribution when I have finished my argument. I will allow him to interrupt if he still wishes to do so. Surely we should encourage the buying of maize from the Argentine for British poultry? What is stopping the imports coming? [HON. MEMBERS: "Nothing."] There is the fact. Two months ago they thought we could take one or two million tons. We have taken only 127,000 tons. I believe that in a Debate last week the Minister of Food said that he was satisfied with the system
  2094
  of buying feedingstuffs from overseas. lf so, he is very easily satisfied. The poultry farmers of Britain will not be easily satisfied. There was a golden opportunity to buy maize from both the United States and the Argentine. From both countries there has been a most dismal failure. Let me make this suggestion to the Government.
  The Minister of Agriculture (Mr. T. Williams): Before the hon. Member leaves the point about all these millions of tons of maize available in South America, is he able to answer the question he submitted to the House: why have the purchases already made not been despatched to this country? The hon. Member has been in that area and perhaps he can tell us that. The House ought to know that of the 700,000 tons already purchased, under 50,000 tons have yet been shipped.
  Mr. Turton: That is a perfectly fair point. There is certainly a slow turn-round in shipping in the Argentine. What the right hon. Gentleman must realise is that other countries are facing that and are getting the maize and having it shipped away. We were slow in putting our demands forward. We have asked for less than the Argentine Government thought we would ask. The Argentine Government believed we would ask for far more of the five million tons than we did, and there have been in the Argentine these statements about Britain cutting her demands for maize which have certainly done this country a great deal of harm in South America. If the Government had announced early in March that they would take one million tons or 1½ million tons of maize, it would have had a tremendous effect on the Argentine Government and on our poultry farmers. [HON. MEMBERS: "Not on the price."] The price is another matter. I entirely agree. I have no approval of the blackmailing methods adopted for raising the price. Apart from that, realise this. It is three times as cheap to buy the raw material. maize, as to buy the finished products in the form of dried eggs. Certainly protest at the way in which we are having to pay in the Argentine for the sacrifices we made in war, but do buy. Buy the maize. It is there. The Minister says that there are hold-ups. Other countries have got over them. Surely the British Government equally can do so?
  As the Minister of Agriculture interrupted me, I will make this point. It is

  2095
  no good merely chipping on £10 million, £15 million or £30 million from our import programme. We have to make some really great switch-over. I believe the only way to do that is in relation to this question of food. Grow more food at home instead of importing it from abroad. Three things are required to do that. They are the incentives of better prices, better wages and more feeding-stuffs. We have a wage increase coming into operation some time next month. That must be levelled up by better prices for the producers.
  Finally, we must give the farmer the wherewithal to produce—the feedingstuffs. I know that in the Argentine the Government are buying through a State Purchasing Commission. Mr. Miranda believes that he can make more profit out of foreign countries when they buy through government bulk purchase. I know that. I am not suggesting that at the present time in the Argentine we can buy other than by bulk purchase, but I believe that if we let private individuals buy more generally in other countries, we would get more feedingstuffs for the farmers. I believe that on the West Coast of America, if there were not Government buying, we could buy barley and oats as we used to do from Chile, but somehow we have failed to do that these last few years. As far as we can get a cure for our ills without a change of Government, the cure is to get greater incentive to production in the shape of more goods in the shops and, on the agricultural side, to change over from cereal production to beef, pigs and poultry. It is practicable because there are abundant cereal harvests in North and South America.
  I ask the Government not to despair, not to give these dismal speeches such as we have heard from the Lord President of the Council, which contain no answer to any question, no hint of a policy for the country, but are just a grovel to America for more loans, more money, and to Britain the prognostication of cuts and further cuts. I believe there is a great future for this country. British goods are in tremendous demand all over the world. British goods are preferred to American goods. If this country were allowed to be free and to go forward under a free Government, I believe we could still lead the world.
  Mr. Leslie Hale: Before the hon. Member sits down, will he deal with the point I have been trying to put to him? Surely, he is aware that the distinguished chairman of the West Midlands Coal Board when Minister of Food, made the earliest contact with the Argentine for the purchase of maize and that first they explained they were short of fuel and then of transport; that arrangements were being made and that then a one-man Conservative Government was formed in the Argentine which repudiated all these arrangements and instituted a system of local bulk selling in the sense of not selling abroad, and that arrangements for selling were repudiated. Does he not think an alteration, not of this Government, but of the Government in the Argentine, would be desirable?
  Mr. Turton: I did not catch the whole of the hon. Member's remarks.
  6.33 p.m.
  Mr. Benson: I have listened with great care to the speeches of hon. and right hon. Members opposite, and apparently they are agreed upon three things: first, that the Government are responsible for the position in which we find ourselves; second, that the nation will not co-operate unless we accept a Conservative policy; third, that there must be an increase in agricultural production. [An HON. MEMBER: "And prices."] No, they are not agreed upon that, The hon. Member for Chippenham (Mr. Eccles) wanted a cut in prices. I do not think, if we treat this matter realistically, that there is any serious hope of balancing our import-export gap by any attempt to increase agricultural production. It would help, but our food bill alone, according to the Government estimates, is £840 million. Any possible help that agriculture can give us in the next 12 months will be negligible and our major problem—or what ought to be our major problem—in this Debate, is to see if we can find some way out of the extraordinarily difficult position in which the country finds itself.
  I do not think it will be helpful to attempt to make a quantitative assessment of the adverse balance that is likely to occur during the next 12 months. All sorts of possible variations may arise— a fall in prices, the possible development of a buyers' market—so to make any attempt to assess accurately the future is

  2097
  quite hopeless. All we know is that, however well things go for us, that adverse balance is sufficiently large to be desperately serious. We have dollars and gold resources and possible help from the Colonies and the Dominions which might enable us to pay our way for the next 12 months. After that, unless we can get a new dollar loan or the Marshal plan matures, we are faced with the fact that we have to close that gap in one way or another.
  Now to gamble upon our getting another dollar loan, or to gamble that the Marshall plan will mature is far too great a risk. The only safe assumption that we can make is that within a maximum of 12 months we shall have to deal with our import-export balance ourselves. If we get help from America, so much the better, but we cannot risk the gamble. We have about 12 months' breathing-space in which to close the gap ourselves, and not much more. There are two methods only by which we can do that. They are not mutually exclusive. We can reduce imports or increase exports, or do both. I do not believe we can balance, unless we are utterly compelled to do so, by cutting imports. Do not forget that our imports at the moment are only 70 per cent. of prewar. So far as actual material imports are concerned, we are pretty well cut to the bone now, and to impose a further £400 million or £500 million cuts on the import of food and raw materials—because the fripperies will not go anywhere near it—would be to reproduce the hungry 1840's in the 1940's.
  We have to export more. That is the only practical solution we can contemplate. This is essentially a short-term problem. We cannot possibly hope that some great upward surge of production will take place in the next 12 months. Coal output is the limiting factor there. It is impossible to re-equip our industries with modern machinery within the next 12 months. There is, then, only one alternative, that we must not, as the hon. Member for Thirsk and Malton (Mr. Turton) suggested, put more goods in the shops, but we shall have to export British production which at present is going into the home market. That is what I offer as a fairly simple, logical proposal.
  Mr. Piratin: What kind of things?
  Mr. Benson: I have not overlooked that point. We have to send British manufactures into the export market. In 1940 we organised for war effectively; in 1947 we have to organise for export. If we put the same energy into it, we can do it, but the Alpha and Omega of export is that we must get our present hopeless unbalance of our labour forces right. At the present moment everybody knows that our labour force is hopelessly out of balance. We have this extraordinary situation, this fantastic situation, that while our textile industries, both woollen and cotton, have an unlimited supply of raw materials and are desperately short of labour, in light engineering, where there is a grave shortage of raw materials, there is a vast inflated amount of labour. It is so great that there is more labour than raw materials for it, and the result is that our light engineering industries are really working at half pressure.
  I do not think anyone will suggest direction of labour. I have never suggested it, nor have I heard it suggested from the other side of the House, but in our present situation, although we do not wish to accept direction of labour, we are not therefore compelled to allow industries to waste labour, material, or fuel. I see no reason why we should not get a kind of negative direction of labour by preventing the production of goods which we cannot afford and cannot sell abroad. There is only one method of dealing with this. I am told that the possibility of regulating production from the raw material presents very grave administrative difficulties. That comes from the Board of Trade, and I am prepared to accept it. I suggest we should make a much more direct approach to the matter. We can approach it from the retail side, and make a whole schedule of articles which should be forbidden to sell in the British market. If they can export them, well and good, but if they cannot export them, let them close down that industry.
  The amount of junk and unnecessary articles in our shops today is astonishing. I took the trouble to walk through one of the largest general stores in London, and on the ground floor I found acres of floorspace, and heaven knows how many assistants, selling all kinds of expensive knick-knacks, and all sorts of odds and ends—cigarette lighters at a

  2099
  guinea a time, ladies' compacts, beautifully made, every possible and conceivable shape of ashtray and every kind of house ornament, and personal ornament. We cannot afford at the present time to waste the labour going into these articles, and the materials and fuel that go to the making of them. If they can be sold abroad, well and good, but if they cannot, let those particular branches of industry close down, and let labour find its way into the industries which are absolutely essential for our very existence. I know such suggestions are going to be unpopular. They are going to cause friction, but they are not going to be so unpopular as an attempt we might have to make, if we do not use this breathing space to bridge the gap by cuts in food and raw materials. We are in the position at present from which we cannot extricate ourselves without someone feeling the draught. The question is how can we extricate ourselves with the minimum hardship' and the maximum advantage to the standard of living of our country? We cannot afford at present the labour needed for making, handling, and selling these unnecessary knick-knacks and fripperies, which involve a large amount of labour.
  There is an assumption that this country is very badly off for clothing. That may be true so far as underclothes are concerned, and certainly so far as cotton goods are concerned, but I have never in my life seen this country better clad than at the present time. We have a large market abroad for British woollen goods. I go so far as to say that if we made allowance for juveniles, and for suits worn out by hard manual work, we could put an end to the selling of men's cloths for the next two years, and create no hardship whatever to the consumer— [HON. MEMBERS: "Oh."] We should be shabby, possibly we are shabby now, but, quite frankly, I would rather go about with my elbows out than go hungry. Some hon. Members do not seem to realise that what we are now discussing is—are we, or are we not, going hungry in 18 months time? [An HON. MEMBER: "Or less than that."] Or less than that. There is a vast reservoir of goods which we can deflect from the home market, or a reservoir of labour to make saleable exports without
  2100
  reducing the basic standard of health in the country.
  Dr. Morgan (Rochdale): No.
  Mr. Benson: My hon. Friend the Member for Rochdale (Dr. Morgan) might think that cigarette lighters are necessary—
  Dr. Morgan: My hon. Friend said "health."
  Mr. Benson: Are they necessary for health?
  Dr. Morgan: What is the use of quoting a particular item in answer to a general statement? My hon. Friend is arguing that certain things can be done without detriment to public health. I say we have reached the limit of sacrifice.
  Mr. Benson: Nonsense. A shortage of food is more disastrous than shabby clothes.
  There is another reservoir which can be tackled. That is in the motor trade. There, engineering labour can be of great value, because our heavy engineering is desperately short of labour. Now, as always, our motor industry is a chaos of disorganisation. There is no standardisation, and there never was standardisation. The result is that our motor cars, in contrast to those of America, although we pay half the rate of wages, are double the price weight for weight, not because of the cost of raw materials, but of the excessive labour involved in making them. The industry employs hundreds of thousands, and after two years it is in just as much chaos as it was before. It may be producing more cars, but it is not rationalised. We cannot afford the thousands of men wasted in the motor industry because of lack of standardisation. If we are to re-balance our labour force, we have to impose ruthless rationalisation, ruthless standardisation, upon this great and important industry. Why it has not been done already I have not the foggiest idea. I admit that these suggestions are likely to be unpopular. Once again, I say that they will not be so unpopular as the alternative if we do not balance our import-export trade and do not get dollars. It is the lesser of two evils.
  It seems to me that it would be far wiser, rather than gamble on getting dollars, that we should attempt to put ourselves into a position to export adequately

  2101
  while our dollar resources exist, that is during the next 12 months. We have 12 months in which to face up to this problem. I have put forward an unpleasant and unpopular suggestion, but I claim it is the only suggestion of a large enough character to meet the problem we have to face.
  I hope that the Financial Secretary to the Treasury will convey to the Chancellor the point that no matter how we balance our trade, no matter how we succeed in filling the gap, the effect of filling that gap is bound to be inflationary. The fact that we have been able to import some £400 or £500 million worth of goods per year without paying for them, has been equivalent, so far as the problem of inflation is concerned, to taxation of £400 or £500 million, and no matter what steps we take about the problem we are discussing, whether it be cutting imports or increasing exports at the expense of the home market, the balancing of our trade will produce a great exacerbation of the problem of inflation The problem of balancing belongs to the Board of Trade. The financial problem that will arise from it belongs to the Chancellor. I hope we shall realise that we cannot achieve the first aim without taking the appropriate financial steps to see that it does not throw our price structure completely out of balance.
  6.53 p.m.
  Mr. Clement Davies: the speech of the hon. Member for Chesterfield (Mr. Benson) was the most realistic and certainly the most constructive speech which I have heard in this Debate. It was a real constructive effort to' understand the problem and to put forward suggestions for solving it. The Lord President of the Council began his speech by saying that this was a most important Debate. The occasion for it was the statement made by the Chancellor of the Exchequer on 30th June, that not only had we to regulate our imports, but that our position had now become so critical and serious that certain imports would have to be cut. One would have expected that the Government would today have directed the attention of this House and of the country to the problems that face them, to the reasons for them and to the way in which the Government propose to tackle them. One would have expected that all
  2102
  the more because as recently as yesterday, the Lord President of the Council announced to the House the names of a Planning Board, which it had long been suggested was one of the essential things to deal with the situation.
  Not one word about the problem which has caused the situation, or the steps which are necessary to meet it, came from the Lord President of the Council this afternoon. It was an incredible speech. He divided it into three parts. The first part was what I might call the usual cut-and-thrust of Debate across the Table with the right hon. Member for Warwick and Leamington (Mr. Eden). Then came a very serious statement, probably the most serious that has been made at that Box since the termination of the war, that we may be face to face, in a very short but unnamed time, with a serious cut, both in food and in raw materials Then came the third part, an accurate summary and analysis of the world situation from 1939, ending, to my great joy, with a restatement of the best Cobdenite principles. But of what was to happen in regard to the immediate situation which is confronting us, which had led to the Government, through the Chancellor, making that announcement about the cutting of imports immediately—not a word.
  There is not the slightest doubt that we are passing through a great economic crisis. It is obvious that the crisis is increasing in its seriousness. The hon. Member for Chesterfield was quite right in the warning he gave as to what might be the eventual crisis. We have been going on in this way, of being given, in successive periods of about three to six months, some kind of warning that a new crisis is facing us; there is some new factor or figure which gives a sudden jerk to the people of this country. We all know that this is due originally to the world war, its length and the upset it has caused, but this sort of jerky crisis, springing up every now and then, really condemns the Government for their failure to carry out a proper system of administration throughout the period they have been in office.
  The first duty of a Government is to administer. They should then introduce such legislation as is necessary to make that administration more effective and more economical. It seems to me that what they have done is to clutter up themselves and the Government machine with

  2103
  a whole host of Measures. With a number of these I certainly agree in principle; I have said so and have voted for them, but I feel that it would have been better to postpone some of them to a more appropriate time. The Government themselves have had a tremendous burden put upon them individually, but they have also placed an even greater burden upon the Civil Service, which inevitably means that we shall not be able to have that effective administration which we should have with a fresh, active body of men.
  Let us consider what is the position today. It is difficult to steer between the Scylla and Charybdis of optimism and pessimism. The "Economist" rightly pointed out the other day that while "pessimism overwhelms one's judgment, optimism stupefies it. It is right that we should first consider the position at home before we consider the position of this country face to face with other countries; its trade and what is the balance of its import and export trade. The first significant point is that in 1946 there was a drop in national income of something like £400 million. I have not the figures for the first six months of 1947, though I imagine that they are much more serious than those for 1946. In 1946 there was a drop of almost 5 per cent., in spite of the fact that something like 3½ million men and women were demobilised and the major part of them put back into industry. There they received higher wages than in the Armed Forces where we regard them not as adding to the wealth of the country but as taking it away.
  Though there was a steep rise in wages of somewhere between 65 and 70 per cent., the total net investments in 1946 amounted to only £700 million. The gross investments were £1,300 million. The inevitable conclusion is that there has been a fall in productivity of something between 20 and 30 per cent. Despite the fall in national output, consumption increased during 1946 by nearly 10 per cent. and now it is nearly equal to what it was in 1938. That means that there has been a far greater increase in consumption than is compatible with effective industrial reconstruction. There has been a failure not only to carry out the proper reconstruction but to make known what is needed for reconstruction.
  2104
  One turns next to the most important matter of coal. The least amount to see us through the winter is 200 million tons. I think that everyone feels that that in itself is not really enough to meet every situation. Now it appears that we shall not achieve even the 200 million tons this year. I agree that the recruiting for the mines has been quite remarkable, but that is not enough. There must be a real concentration upon coal production. The Government might with advantage pay attention to the remarkable report produced by the Parliamentary and Scientific Committee upon the proper utilisation of coal and not rely so much upon production. Steel is also in short supply. One does not really know which of the two commodities is the most important except that one realises that the supply of steel must depend upon the amount of coal available.
  One or two hon. Members have already mentioned the shortage of labour in essential industries and the maldistribution of that which is available. The hon. Member for Chesterfield called attention to that point today and Mr. Will Lawther spoke about it yesterday. Something must be done about that. We are short not only of labour for the export trade but of labour for the manufacture of the necessary goods required for consumption in this country. Hon. Members must remember the possibilities of inflation. There are roughly £1,000 million available over and above the value of the goods and services which can be purchased, and the urge is tremendous. All these are major factors in relation to the position at home.
  Let us turn to the position as it is affected by other countries. In 1946 we thought that what was necessary, in order that we might get back to normal and restore parity between exports and imports, was that we should boost our exports up to 175 per cent. of the 1939 volume. Some people thought that that was not enough for the good reason that, almost inevitably, prices were bound to rise. At any rate, that was the target figure set by the Government. We failed, and failed completely, to achieve that target in 1946. The best that was achieved was in the fourth quarter when we reached only 111 per cent.—64 per cent. below what we wanted. In the third quarter we reached only 104 per cent. That left us with an adverse balance of over £300 million. The only way in which

  2105
  we could get over that difficulty was by drawing upon the American loan.
  Towards the end of 1946 the Government must have made their calculations for 1947. We got those figures from the Government in February and March. What they then said was that they hoped that in the coming year we would reach a. target of 140 per cent. by the last quarter. That would mean that there would be an adverse balance—because we could not reach the 175 per cent.—of somewhere between £350 million and £400 million. I am certain that the programme was drawn up before the fuel crisis and the blizzard. Those are probably the main reasons why we cannot possibly achieve the figure of 140 per cent. by the end of the year.
  What have we achieved so far? In the first quarter we only got parity with 1938. In April we dropped to 98 per cent. and now in May we have gone up to 104 per cent. The Government are unduly optimistic if they think we can reach 140 per cent. by this time next year. What is the position? As has been pointed out, prices abroad are rising. One need only refer to the figures given by the Chancellor of the Exchequer. The value of the £ is decreasing. There is less faith in it in other countries. What has been the position since the Government made their estimate about what was required? In the White Paper, they estimated that what would be required this year to provide the same volume of imports as they proposed to buy was £1,380 million, but, owing to the increased prices, as the Lord President pointed out, that has now to be raised to £1,700 million, a difference of £320 million. Although there has been a slight drop in certain prices, and the Lord President is quite right that the sellers market is going, nevertheless, we cannot gamble. There has been too much gambling on hoping that all will go well in the future.
  What does that mean? It means that, during the last two months, the adverse balance has been, not at the rate of £400 million, but at the rate of something like £700 million—£300 million worse than was estimated—and the overall adverse balance at the end of this year is expected to be £650 million. These figures are so appalling and so astronomical as to be almost meaningless. The drawings have been at the appalling rate of £900 million,
  2106
  so that, in one 12 months, we should have exhausted the whole of the original amount that we thought we were borrowing from America. The original amount we thought to get was £1,000 million, but, in truth, it has turned out to be something in the neighbourhood of £700 million. The position will be further aggravated beyond 15th July. The sellers' market is already disappearing, and it will be difficult then to find a ready market.
  May I also add a word on export trade? It will be still more difficult to get markets in future unless the quality of our exports is maintained at the high standard which made our goods famous before the war. These are the factors and this is the position which faces us, and it is a formidable challenge which we have to face. What has been lacking, and what ought not to have been lacking, is the bold courage to say, as the hon. Member for Chesterfield (Mr. Benson) was saying a short time ago, and to do, if necessary, the unpopular thing now, to look forward and say that these things have to be done, however unpopular they may be, so as to save the situation from becoming worse month by month. What there has been, instead of that, is timidity and a great deal of contradiction. Very rightly, the right hon. Gentleman above the Gangway referred just now to the two voices —the voice of the Chancellor one day. almost contradicted by the speech of the Minister of Food the next day. One of the members of the Government, for example, the President of the Board of Trade, called attention to these very matters and was warning the country about the dangers and difficulties, only to be contradicted by somebody or other, speaking a day or two later, and saying: "Really, everything in the garden is lovely; we have never been as well off as we are today." Both cannot possibly be right, and I wish they would speak with one voice.
  In March, when we had a Debate on this subject, the President of the Board of Trade announced—and this was the one concrete announcement which he made then—the appointment and strengthening of the Economic Planning Board. Incidentally, I blame the Government in allowing some of the finest planning material, if I can call them that, to be dispersed immediately

  2107
  after the war. We had the greatest difficulty in persuading the then Government of the need for a Ministry of Supply, and then we had the greatest difficulty again in persuading the Coalition Government to appoint a Ministry of Production. These experts did extraordinarily good work, and the Government got the finest men together, yet, when the war ended and they knew that the problems ahead were going to be far greater, they allowed them to disperse. Now, the President of the Board of Trade says, "We are really going to reconstruct this Economic Planning Board. What is really needed is an overall plan, and we are setting to work straight away with the appointment of this Board." Two weeks later, the right hon. and learned Gentleman announced the appointment of Sir Edwin Plowden, and said that the Board would be working by the end of that month. We heard no more about it until the Lord President mentioned it again later, and until yesterday, when he told us the names of those who have been appointed to the Board. It was perfectly obvious that they have not begun their work, and yet, on rath March, the President of the Board of Trade said that this was going to be done at once.
  Why has there been this delay, when we were faced with the fuel crisis and the blizzard in February and March, and nothing seems to have been done until yesterday? The Lord President of the Council used one phrase which I remember; it was a most striking phrase: "Time is against us." Yet, who has been wasting all this time until the appointment of this Board? If the members of the Government, and those who support them, claim to be super-planners, here was their opportunity to give a lead to the country, but we have yet to know what the plan is. All we know is that a Board, which has not yet met, has been appointed.
  The Chancellor has now announced these cuts, which one paper summed up like this:
  "Less tobacco, less news, less petrol, fewer clothes, more exports, more work, no plan and no policy and no promise."
  I think that is a fair summary of it. We really want to know what the Government are proposing to do. What we are blaming them for is because, so far as we can see, there has been no planning, no direc-
  2108
  tion and no guidance of any kind whatsoever. The cuts proposed by the Chancellor were also described, and perhaps best described, in a paper very friendly to the Government—a very lively weekly, "The Tribune"—as "fiddling palliatives. "If we stop the whole of tobacco and luxury imports, if we add the cost of all these things together as they appear in the statement made by the Chancellor of the Exchequer—petroleum products, £55 million; tobacco, £50 million; consumer goods, £35 million.— they do not come, all told, to £150 million, but the gap is £650 million. All that we are proposing to do is to cut out possibly something between £20 million and £25 million. This reminds me of a case where a great expert doctor is called in to a case of illness. He says, "Well, the patient is in a very bad state indeed. Something really radical has got to be done. The first thing I propose to do is to have his toe nails or finger nails cut. That is all. What I am going to do after that, I cannot tell you. But I will appoint a few more doctors, and, some day, they will say -what else should be done."
  Far more than that is needed. We have no right to throw all our responsibilities on to America. Let us also remember that the great and generous offer—it is only a suggestion at the moment—which has come from Mr. Marshall depends, in the first place, upon our ability to draw up a real balance sheet of our assets and liabilities, and for every one of the countries of Europe to do the same, and not merely to leave it there. We should then put forward a new balance sheer on the footing that we will help one another, in so far as we possibly can. After that, we should then see what is needed from across the Atlantic to help us once more to get on to our feet and to get on with our work. But, even then, it is not Mr. Marshall who decides; it is Congress that decides, and, as the hon. Member for Chesterfield so rightly said, we have no right to gamble on the American offer. We must pull ourselves together, and see what we can do to help ourselves
  We cannot cut down food and we cannot cut down our raw materials. If we cut down the food, and thus lower the standard and capability of men to produce the things we need, and if we cut down the raw materials needed for

  2109
  the manufacture of goods for export, then we are cutting our own throats. What, of course, we have to do, is to increase our production. But, in the meantime, we must put our own house in order. As the hon. Member for Chesterfield said, we are, at the present time, misusing a great deal of our labour and materials. Let us cut out the luxury articles, although they will not amount to much in any case. What has really happened is that we have undertaken to do more in this country than we can possibly carry out.
  What I want the Planning Board to do, in the first place, is to consider whether the proposed capital outlay throughout the country cannot be very considerably reduced, and a good deal of it postponed. Secondly, I want them to consider whether it is possible to reduce our commitments abroad. There is not the slightest doubt that our commitments with regard to the Armed Forces are far more than this country can sustain. It is also necessary for the Planning Board to overhaul the many subsidies which are now being paid. I think that if they can be cut down without undue hardship—of course, there is bound to be a certain amount of hardship involved—it will help to balance our budget, which is not really balanced, and will reduce our inflationary position. We must bring down the demand until supplies are sufficient to meet it.
  Because we have overplanned, and have undertaken to do more than we can carry out, we are having bottlenecks. In his address to the Economic Society, Sir Hubert Henderson, who has given a great deal of help to His Majesty's Government, said that the excess of demand over supply is, through consequent bottlenecks, lessening the output of the nation to an extent greater than that which was lost before the war through having more than a million people out of work. That is a serious matter. What has happened is that more has been planned than can be carried out, and there has been a consequent scattering both of labour and material. The result has been bottlenecks here and there, which, in turn, means that we have not been getting the amount of production we could have got. That eminent economist, who has given invaluable help to the Government both during and since the war, said:
  "The loss in the national output amount? to a million men."
  2110
  We know that the Planning Board have been formed, and that they will get to work, and will work full time. I was surprised to learn yesterday that, apparently, the members of this Board will only charge their expenses. If they are doing national work, the nation should pay them; it should not be left to some individual private firm to do that. They should be full-time appointments. The first thing necessary for the raising of individual output is for everyone to know that such a raising of output will solve the problem. It was the deep consciousness of everyone of us of the perils that we were facing during the war, and, therefore, of what was required from us, which carried us through that war. We have got to instil into the people the deep consciousness of what this situation is going to mean. Give them the facts and the figures, and let them see what are the trends and what is happening.
  We want closer co-operation between the management and the employees, and a better understanding. Where we find that obsolete systems of work or pay are stopping production, we should abolish them. Finally, we should consider again what incentives are needed in order to increase production. Above all, the Government should give us the overall plan. I do not mean that they should go into details on a low basis, but on an overall basis. We want the leadership and the guidance. If that is done, I have not the slightest doubt that it will be possible for us, to overcome our great difficulties and perils, as this country has always done in the past. Given proper guidance, proper direction, proper leadership and proper inspiration this country will pull through triumphantly.
  7.27 p.m.
  Mrs. Castle: The right hon. and learned Member for Montgomery (Mr. C. Davies) has, during the course of a rather far-flung speech, repeated the accusation with which the right hon. Member for Warwick and Leamington (Mr. Eden) opened his attack on the Government—the accusation that confusion and timidity had been shown. If he wants to see confusion and timidity face to face, he should come over here, and listen to the speeches of right hon. and hon. Members opposite. In the course of the last hour or two we have heard such a con-

  2111
  fusion of counsel and of attack as must have created in the minds of those who, having been told that this Government have no policy, were looking to the Opposition for one, a feeling of doubt and despair.
  At one point, we had the hon. Member for Thirsk and Malton (Mr. Turton) telling us that the Government have been far too gloomy, and that what was needed was more incentive for production. Only a little while earlier, the hon. Member for Chippenham (Mr. Eccles) shook a finger at us, and, in tones which I hope the '' Daily Express "was noting, said that incentives are now ruled out; we have been buying too much; we must have more austerity. Yet those of us on this side of the House who, for the past two or three years, have been trying to instil in the country a proper appreciation of the situation which faces us, and have had to go into our constituencies and say to the men and women there," You must do without this; you must wait for that, because you cannot have all the pleasant things at once that we would like to give you, "have had our work bedevilled by an attempt from hon. Gentlemen opposite to organise discontent on a scale which would disrupt the whole effort of this country.
  Clearly, the main job which we should be doing today, whatever our various remedies for this situation may be, is to attempt to create within the country that background and that atmosphere against which the greater efforts for production will be forthcoming. But the Opposition have a responsibility in this which, up to now, they have totally failed to discharge. That is obvious from the way in which during this Debate they have used any stick with which to beat the Government, regardless of whether the sticks cancelled each other out in the long run.
  Mr. Martin Lindsay: Labour Members did not do that when they were in Opposition, did they?
  Mrs. Castle: I am ready to give way to any interruption, but I prefer not to be called at across the Chamber.
  Mr. Callaghan: Hon. Gentlemen opposite are ill-mannered.
  Mrs. Castle: Now we once again have evidence that there is totally lacking in
  2112
  hon. Gentlemen opposite realisation of just what the problems are with which our country finds itself faced at the moment, and of the obligations which lie upon all of us.
  Mr. Walter Fletcher: At the invitation of the hon. Lady, may I ask her if that really is the conclusion which she draws from the speech of the right hon. Member for Warwick and Leamington (Mr. Eden)?
  Mrs. Castle: I fully agree that the right hon. Member for Warwick and Leamington is a most charming inquisitor, but, as far as I could follow it, his speech was a very amiable summary of questions rather than a positive statement of an alternative policy. Never once, in all the major Debates we have had on food, on shortages, on all the other problems that have faced us—not for the first time today, but cumulatively over the past two years—never once have we had from hon. Gentlemen opposite a statement of policy. I want to suggest to them that, whereas they come along and catechise the Government, and accuse the Government of want of moral courage, saying, "You dare not do unpopular things," that is just what this Government have done. They have done one unpopular thing after another, and they have done it knowing the political risk that that involves. We have all done that in our constituencies, explaining one difficulty after another. And yet hon. Gentlemen who make that accusation have not the moral courage to go into the country to tell the people that these truths are economic truths which any Government would have to face.
  I want to suggest to hon. Gentlemen that, if they think that, by doing this, they are going to get some kind of political hush money in the form of a Coalition, they have another think coming, and that all they are preparing for themselves, should they succeed in their policy of disruption, is a situation which they are going to find totally unmanageable from their political point of view. Therefore, I want to get across tonight, if I can, a fact that it is vital the people of this country should know. These are inescapable economic facts, and the problem is a world problem. In their lack of knowledge of this, hon. Gentlemen opposite stand almost alone in the world: they

  2113
  alone, not only in Europe, but in America, too, have failed to realise—even in the discussion today they have failed to admit it—that the problem that faces us economically is a world problem. Europe knows it. Even America knows it.
  The failure to recognise that fact bedevils attempts at reaching a conclusion as to what should be done to enable us to go forward to national salvation. We all of us know—although some have not the political courage to admit it—that the problem we face immediately is a problem of the fundamental unbalance of world trade which has been left us by the war. During the war years, as we know—these are objective facts—we had a situation in which the United States of America went forward from strength to strength; but she has not only gone forward to that strength internally: she has gone forward to a situation in which her external trade with other countries has become completely out of balance, and this tendency which was exacerbated during the war period, is still getting worse. In 1946, America's total receipts from exports were three and a half times the prewar figure, while her expenditure on imports had less than doubled, which means that in the current year three is a gap between the import expenditure of America and her export receipts of from seven billion to eight billion dollars.
  Now that is the problem which faces the world, and it is not only this country that is feeling the effects of it. We are now seeing the evidences in all sorts of quarters to which hon. Gentlemen opposite have pointed as lands of plenty that the poor Britisher should envy for their security and for their comfort. We are now finding that many countries, held up to us as examples of stability during the past two years, are now having to draw in their horns. Sweden, Argentina, Brazil—one country after another is clapping on import restrictions. One country after another is finding that the dollar disbalance in the world is catching up with it, too. And all the time, concurrently with this, we have the situation in whch the world competition for dollar goods is forcing up the prices. So we have been falling back, regardless of the internal productive situation of this country, in the attempt to break even on our balance of trade.
  2114
  What are we to do in this situation, which is world-wide in its scope? Because as a country we have obviously to face our own immediate problem for ourselves. It has been made perfectly clear by previous speakers—but hon. Gentlemen opposite have dodged facing up to it—that we cannot balance our immediate trade account by any cutting of the luxury imports which have been talked about so widely and rather wildly, without any proper analysis of the real effect on the situation. Our exports are running at the moment at only £1,100 million, and our import bill this coming year has risen to £1,700 million. Even if we drastically reduced our luxury items—if petrol were cut by half and all tobacco and all the consumer goods and all the films were cut—we should still find the problem practically untouched. It is also clear that, with food and raw materials bulking so largely in our trade account, there, and there only could substantial economies be made so far as imports are concerned. I believe—this is something I have said frequently in this House—that we are working on a very narrow margin of safety so far as food is concerned. I have always said it. But I am not pretending that this is a criticism of the Government. It has been unavoidable. Hon. Members on the opposite side of the House have known that all along yet we have been badgered by their irresponsible talk, not only in the House but in the country. We have always known the margin to be a narrow one.
  Anyone who has tried to balance the budget for weekly food for a family must know that it is a business of working in fractions, and that there is no margin which we can cut with any safety. But it is also true that the Government's alternatives in this situation have been very limited. What we have also tried to point out, against the propaganda of hon. Gentlemen opposite, is that this situation obtains side by side with one in which we have a food import Bill which is mounting to astronomical figures. Our difficulty has arisen over the fact that basic foods have been in short supply and have been the subject of international allocation. We could not just raise our own share by waving a hand. But the Food Minister has fulfilled his promise faithfully to the country that he would do the utmost to supplement the deficiencies

  2115
  in basic foods by bringing in a wider variety of foods not subject to international allocation.
  In this new import budget which faces us today we see the complete folly of the Conservative Party's attitude to food in the past. Although they have said that the quantity available was inadequate, the quantities of food which have been coming into the country have been remarkable. Certain basic foods have been below the pre-war level but, nonetheless, enormous quantities of wheat, flour, meat and fish, including canned fish, have been coming in. We have had three times the prewar quantity of condensed milk, in addition to which we have had large quantities of dried fruit, fresh fruit, vegetables and all the other things that we, could find to supplement the diet of the people. We now know that the total has reached a height that we cannot at present exceed. Yet hon. Members opposite have been telling Britain that she is starving. What will be the psychological consequence of such a statement at a moment when we are. trying to organise a production drive, and when we are trying to get people to put their backs into their jobs? We are now finding some of the propaganda of hon. Members opposite coming home to roost.
  Every pronouncement of the Opposition on every crisis that has faced this country has been a contradiction of a previous pronouncement. When we face the need to meet a national emergency, what do we get? When the suggestion is to cut newsprint, we are told, "That is dictatorship and the Gestapo, and is keeping the public uninformed of what is happening." We then decide to cut tobacco. Yet hon. Members opposite voted against the Tobacco Duty when the moment came for doing an unpopular thing which required' a little moral courage. Then a cut in the petrol allowance is suggested; but time after time, hon. Members opposite have tried to cadge easy popularity in their constituencies by clamouring for the withdrawal of petrol rationing altogether. If anybody suggests touching raw materials the industrialists howl in a body, and as for cutting food, we are told that Britain is already starving and that we shall all just collapse if we get less. So we must have no cuts at all? Oh, no; that is failing to give a necessary warning to the nation.
  2116
  It is obvious that, if we want to solve, the nation's problem we shall have to go ahead without the help of hon. Members opposite. I believe that the Chancellor's programme is the only possible programme in the immediate situation. If we have to cut imports to an extent which will be effective to deal with this crisis, we shall face a very serious situation indeed. It will not be the fault of the Government but, nonetheless, it will be a tragic situation, because if we cut raw materials we shall be faced with unemployment among men who are eager and anxious to work, and if we cut food I believe we shall cut to the bone and endanger health. Therefore, I think my right hon. Friend is right, and I am waiting for hon. Members opposite to come off the fence, on one side or the other, before this Debate is concluded. We must face these restrictions, realising that this is nothing more than a breathing space and that we must use this breathing space to expand production and build up our exports to the maximum, although it is extremely unlikely that anything sufficiently effective can be done in the time left to us. I beg the Government to use this breathing space to tell the people just how short time is, and how urgent is our need. I ask the Government once again not to listen to hon. Members opposite and to ignore the suggestion that it is not the Government's job to build good publicity services It is the Government's duty to build publicity services This is a world problem and a national crisis, and the Government should have an effective publicity machine for stating the facts. Facts are not propaganda but are the driving force which alone will give us the productive effort and return which we need.
  It is also to be hoped that during this period, America will realise that it is in her own interest that the world disbalance of trade should be corrected. I wish to make it clear that, in my view, any aid which we get from the United States must come from the United States' assessment of her own self-interest. We do not need any charitable gesture from America because if we suffer as a result of this dollar disbalance, the effects will be felt as crucially in America as they will be here. There must come to us from America aid that carries no tags with it. I have no time to deal with the justification of the attitude of those of us who

  2117
  voted against the first American loan. Personally, I think we showed a wisdom beyond our years. We foresaw the rising of prices in an uncontrolled American economy, the drain of convertibility, and the dangers of non-discrimination, and if any further help comes to us from America with any tags of that kind it will carry the seeds of its own defeat. We were right when we said that the terms of the American loan were unnecessarily harsh, and that if they had been resisted those terms would have had to be improved. I believe we can take our stand on the viewpoint that, just as this is not only a British but a European problem, it is also an American problem. I believe that view is gaining ground in America. The "Washington Post" the other day pointed out that:
  "American prosperity at this moment cannot afford a break in our 15 billion dollars a year_ export market."
  The "Washington Star" said:
  "Unless something like a peace-time version of Lend-Lease is adopted, the chances are that there will be no way of advancing our exports to foreign countries desperately in need of them—a state of affairs which would be dangerous for Europeans and for us alike."
  There are some signs at the moment that what the economists call a "readjustment" of American trade is having to take place internally, that a recession from boom conditions is beginning to take place, and that American industrialists appreciate that the Marshall plan may be a useful means of maintaining their sales by seeing that the markets of Europe including this country, are not allowed to dry up for lack of dollars.
  Therefore, I welcome the Chancellor's statement. I believe it is the only stand we can adopt, that what we need is a recognition that, as we cannot afford to cut our imports of food and raw materials at the moment, we must use the breathing space to strive towards independence. I ask hon. Members opposite to reconsider their role in the situation of national urgency and to make quite sure that they are not trying to rock the boat over into national disaster.
  7.50 p.m.
  Mr. Spearman: I think my hon. Friends must have made a considerable impression upon the hon. Lady the Member for Blackburn (Mrs. Castle). She complained of differences of opinion expressed on this
  2118
  side of the House, but if she reads HANSARD tomorrow she will find a good deal of difference between the constructive speech of the hon. Member for Chesterfield (Mr. Benson)—who made a considerable contribution towards showing that if we continue in the present direction we are facing disaster and starvation, to which the hon. Lady referred —and her speech, which seemed to me to be more noted for its loyalty to the Government Front Bench, in whose present infallibility she seemed to have complete confidence, in spite of her admission of their mistakes in the past.
  I do not think hon. Members opposite will agree very much with what I want to say tonight, but I do not think there can be much disagreement on the first two points I wish to make. The first point is, that the cuts announced by the Chancellor, whether they are well planned or badly planned, are trivial compared with the ghastly gap in our trade balance. After listening to the Chancellor making that statement last week I thought he had the appearance of a man very alarmed at the prospect of being attacked by a tiger, and making every preparation to destroy a mouse. My second point, to use the words of the Paymaster-General, is: "We are in a jam." It is my fear—and I think the fear of all of us in this House, although perhaps not of the public as a whole—that at the present time about one-third of the vital imports we are getting are coming on tick, and that our available resources will be exhausted within about a year.
  The disturbing thing about the jam we are in is that it has not been foreseen. I am referring not only to the exuberant optimism so often expressed by the Chancellor of the Exchequer—who, until the beginning of this year appeared to be full of easy enthusiasm—but I should like to quote the right hon. and learned Gentleman the President of the Board of Trade, with whom exuberance is not generally associated. Last February the right hon. and learned Gentleman said:
  "I certainly am an unrepentant optimist, subject to the one proviso that we frankly face our difficulties and take the necessary steps to overcome them."
  Later on, he went on to say:
  "What we must guard against, and guard against at all costs, is a foreign indebtedness that we cannot discharge or an inability to import essential foodstuffs and commodities

  2119
  from abroad, without which we can neither live nor work."—[OFFICIAL REPORT, 28th February, 1946; Vol. 419, c. 2213.]
  It seems very clear to me that when the right hon. and learned Gentleman made that speech on 28th February, 1946, he foresaw what might come if steps were not taken, and he never anticipated the failure of his colleagues to take the necessary steps.
  The Lord President of the Council complained of criticisms of Government incompetence which has brought us to the position in which we are today. I think we would get much further forward if we could make a correct diagnosis of why we are in this position, and it is for that reason that I feel that any of us who speak—although we have no resources of information other than those available to the public—serve a useful purpose if we try to suggest reasons why we are in this position today, because that may perhaps elicit from the Government, who have at their disposal all the available information, some authoritative confirmation or denial of our suggestions. I would not suggest that it is due entirely to the incompetence of the Government; but I do maintain that it is very largely due to their incompetence that we are in this position today. Quite obviously, a very substantial reason is the enormous rise in American prices. However, I have made an examination of the variation in prices between March, 1945, and March, 1947, of the major commodities which we import from America and Canada, and I suggest to the right hon. Gentleman who is to reply tonight that if we bought everything during the last year at 1945 prices, we should not have saved more than about £100 million. I put that forward as a suggestion. If that is so, then it is certainly an important contribution towards our present situation, but not a dominating one.
  The second reason why we are in this position today, as I suggest, is because of our expenditure abroad. And for that the Government must take some responsibility. The Bank of International Settlements said in its last publication that the United Kingdom, since the end of the war until March, 1947, in postwar grants and credits, has spent £740 million. That is a colossal figure: about three-quarters of the whole of the American loan. I have
  2120
  no doubt at all but that they were most worthy causes to which the money was contributed. But has not the day arrived when we have to forget our rich past, when we were able to be a Lady Bountiful and dispose of our resources throughout the world? I think that at the present time that £740 million is an extravagantly large sum to have spent in that way. They have not included in that sum the very large amount spent in unrequited exports, the amount of exports we have sent abroad, for which we have only had a cancellation of debts. For example, in the first quarter of this year we have sent more exports to India, for which we received no return at all as far as I am aware, than we have to the United States and to Canada put together. The third expenditure abroad to which I want to refer briefly is that enormous expenditure in our administration of Germany. I believe that is due very largely to bad administration. I understand that this very week we are blowing up the great Krupp's works, which might otherwise have been used for constructive purposes. There are millions of semi-starving Germans doing nothing but spending their time in enforced idleness, who, given a better administration, could be employed in producing coal and steel, and other necessities, which would not only keep them, but would enable us to be relieved of an immense financial burden, and perhaps make some contribution towards the great cost which they have inflicted on the rest of the world.
  The third and final point to which I wish to refer, and by far the most important, is the question of exports. The Lord President seemed to think it very unlikely that our exports could, in a measurable time, match our imports. I remind him of what the Chancellor of the Exchequer said, or was reported to have said, as lately as 27th September
  "We hope before very long to pay for all out imports from our earnings from exports."
  Indeed, the Chancellor may turn out to be very right, but, not quite in the sense he wishes. If we have never done this before for 40 years, it looks to me as if we may have to do it in future, at the price of importing only a fraction of what we need. Why is it that our exports have disappointed the Chancellor of the Exchequer? I suggest for a variety of reasons. First—and in this I am very

  2121
  largely in agreement with the hon. Member for Chesterfield—a wrong allocation of labour. I refer the House to the excellent table at the back of the Economic Survey, which shows the present allocation of the labour force of the country. The number of men employed in the export trade is 1,476,000. There is general agreement that we have got to raise that figure somehow or other, to about two million, if we are to get our exports up to the required level. The Services are not taking materially more people than before the war, and I do not think we can make any cuts there. Distribution has a smaller number compared with before the war, and textiles and clothing and other consumer services are in the same position. If we turn to the investment side, we find a huge increase of over half a million. These people are engaged in the investment industries, engineering, building. It is an admirable thing to rebuild our houses and re-equip ourselves, but I suggest we are living beyond our present resources. It seems quite clear that we cannot afford at the present time to have 3,600,000 people engaged in these occupations.
  The main reason for the production failure, which was referred to by my right hon. Friend the Member for Warwick and Leamington (Mr. Eden), is the lamentable shortage of coal. I suggest that there are many Members opposite who now consider that the fuel crisis which occurred last year was not inevitable, that if the recruiting campaign had been made earlier, and if proper allocation had been made we should not have had the crisis. There is general agreement throughout the country that the coal situation has been mishandled, and if that had not been so, we should have been very much better off today. Another major factor in the production failure is that we are trying to do more than we can afford. We have run down our stocks too much, and the result has been a series of bottle-necks, causing an enormous amount of concealed unemployment. We have tried to increase our exports by 75 per cent. raise consumption, and spend vast sums on capital equipment. All this adds up to more than our resources can manage, and nothing is more wasteful than to try to do more than we are capable of doing, because in that way we merely achieve less than we should.
  2122
  Our national spendable income is vastly greater than the country can afford. That, I think, is the great responsibility of the Chancellor of the Exchequer. We would criticise any Government which did not maintain the purchasing power of the people up to the rate of the resources available, and, therefore, we must criticise this Government for allowing an excess of purchasing power over our available resoources. I would refer the Chancellor of the Exchequer to some very wise words of a former colleague of his in prewar days. In an interesting article in the "Sunday Times" this week, he stated:
  "The main instrument of control at our disposal, and the instrument which so far has been most surprisingly neglected. is the financial instrument. The Government has direct control over a vast field of capital investment. It has powerful indirect control over consumption expenditure via taxation and price policy."
  It is a surprising thing that the first Socialist Chancellor of the Exchequer should so neglect taxation as an instrument of planning. He has asserted it in one respect, and that is in regard to tobacco.
  Mr. Deputy-Speaker (Major Milner): The hon. Member is not entitled, on the Motion for the Adjournment, to refer to matters of taxation which involve legislation.
  Mr. Spearman: I was trying to illustrate the failure of the Chancellor of the Exchequer to plan the financial policy of the Government in a way which would enable the maximum production of the country to be achieved. The Government are guilty of a gigantic and immensely costly error. When they came into power, in 1945, they are calculated the resources of the country. They believed that the immense technical improvements following the war would lead to a great increase in production, and to be fair many outside the party thought the same, they have been proved wrong. They also took the view that Socialism was some sort of magic wand which would inevitably lead to far better planning and control of our resources. They believed that the combination of these things would lead to this country being a far richer nation than we actually are. We have got to cut our coat according to the cloth, and the size of the cloth is very different from that which was anticipated in 1945. The Government are in a

  2123
  dilemma. There are perhaps two voices in the Government. One is saying" Let us be honest. Let us realise our mistakes, and let us cut our losses. It may be unpopular, but let us do it, whatever may be the cost at the next election. "The other voice, which is perhaps rather smaller, is saying," Let us hang on. We might as well be hung for a sheep as a lamb. Providence will not let down the first Labour Government. We have a vast quantity of gold, we can use it up to carry us over two years, during which time something may happen, and American prices may come down." American prices may come down, but that will not put us right. If American prices come down, we are likely to face a change-over from a sellers' to a buyers' market.
  Then there is the question of another American loan. What my right hon. Friend the Member for Warwick and Leamington said will be echoed all round this House. We do not want to be old age pensioners of the United States. I am not sure that they are prepared to take us on as pensioners. The hon. Lady the Member for Blackburn (Mrs. Castle) was quite wrong when she suggested that the Americans were willing to pour money into this country to save their own economic situation. That seems to me to be very old fashioned economics, and it is particularly surprising coming from the Socialist Benches. Is she suggesting that in that capitalist country conditions are so perfect that there is no call for a higher standard of living?
  Mrs. Castle: On the contrary, I said the direct opposite. I pointed out that the failure of capitalist economies to raise the purchasing power of their people forces them to find export markets for their surplus products.
  Mr. Spearman: Perhaps the hon. Lady is thinking of the economic situation before we realised how these things could be done. Certainly, no Power, whether totalitarian, Communist or Socialist, realised effectively before the war how to raise the purchasing power of its people up to the standard of existing resources. That was discovered by Lord Keynes, but I have not time to go further into that matter now. That position is entirely changed today. As an ex-President of America said, a short time ago. America
  2124
  is now either exporting or consuming too much, or producing too little. They have a wealth which we do not know, perhaps due to their wiser administration, but there is no great abundance in the United States today, and I do not think we should rely on their pouring money and goods into this country. They will only help in order to create political stability in Europe, and only help us if we ourselves are moving towards solvency.
  As the Lord President said, I agree that there is no prospect immediately of meeting the gap between exports and imports, but if we can move rapidly in that direction we shall be justified in asking for, and accepting, a loan from America, as we would be showing prospects of solvency in the future. I do not believe that the public are yet sufficiently aware of the very gloomy prospect ahead of us. If we have to wait until public opinion can exert itself—as it will eventually then the disease of poverty that we can see ahead may make great strides. We may reach a degree of impoverishment from which recovery will be very difficult, and as a result of which the suffering of our people will be very great. I appeal to right hon. Gentlemen opposite to come down to earth, to admit their mistakes, to scrap their 1945 plans and put forward entirely realistic plans for the future.
  8.13 p.m.
  Mr. Hobson: The hon. Member for Scarborough and Whitby (Mr. Spearman) has followed the lines of most speakers today in that he has not been unduly critical of the Government; indeed, the only speech condemnatory of the policy of His Majesty's Government has been that made by the hon. Member for Chippenham (Mr. Eccles), who advocated deflation, and the cutting down of imports, with a consequent rise in unemployment and a reduction in the wages and standard of living of our people. We experienced some of that in 1931, and it did not solve the crisis then and will not solve our present difficulties.
  I agree entirely with what the hon. Member for Scarborough and Whitby said about the Ruhr. It is absolutely insane folly to destroy what remains of the Krupp's works and His Majesty's

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  Government, despite the Potsdam Agreement, ought to stop the destruction of the remaining steel works in Germany immediately. Not only Britain, but Europe and the world, are crying out for steel. There is labour and coal and the iron of Lorraine available there, and I hope that even at this late hour there will be a reversal of policy by the Government which will give employment to the German people and enable us to get the raw material we need. After all, steel is no more a material of war than cement.
  It has been interesting to note that during this Debate Members have not blamed the Government for the present situation, which is not new. Before the war, our imports and exports never balanced. It was only because of our invisible exports that we balanced our Budget, and those invisible exports were due to shipping, insurance, and investments. What is the position of those three items today? Over half our merchant fleet was sunk in the war but, despite that, we have already recovered to two-thirds of our prewar tonnage—a commendable achievement of the Government and particularly of the engineers on the Clyde, the Tyne. Tees-side, etc.
  So far as investments and insurance are concerned it is very difficulty to remedy that situation. That has been because we forfeited our investments and insurance in order to meet the cost of the war. In other words, we mobilised financially in the same way as we mobilised our manpower as part of our common sacrifices to the winning of the war. In 1942, our dollar resources were down to 74 million, but by 1944 they had risen to 421 million, and at the present moment they are considerably in excess of that figure. It is apparent that we cannot continue to live on loans. Something has to be done. The Chancellor of the Exchequer put forward a scheme whereby there would be certain cuts. We are glad to see that there are not to be any drastic cuts of food. We cannot afford to cut food any more. We have gone as far as we possibly can in that direction, and the people of this country have the right to expect their present food standards to be maintained. I think that they appreciate the difficulty. That has been proved, for, despite the philandering of hon. Members opposite with the Housewives' League,
  2126
  there is still no effect electorally, so far as Parliamentary elections are concerned.
  I am also glad to see that there is to be no drastic cut in raw materials. We cannot do that. If we were to cut cotton, we should cause unemployment and prevent the development of the export of textiles. I think that there should be an examination more particularly by the Board of Trade of the imports of certain minerals from the hard currency areas, especially in connection with lead, chrome and manganese. I think that they could be obtained on more advantageous terms from soft currency areas. I have particularly in mind Spain and Australia. [HON. MEMBERS: "Oh."] Oh, yes, Spain. So far as machinery is concerned, I think that we could cut down imports of machine tools and agricultural machinery. We have the resources here to make them. We are urgently in need of the importation of steel. I am very concerned about the allocation.
  For instance, there seems to me something wrong if we have to buy ships from abroad. If our shipyards are not yet on short time, they are not working full blast as a result of the shortage of steel. I hope that something will be done to ensure that our ships are a permanent export. If there is one thing that Britain can do, it is to build ships and sell them. It has proved that to the world. I would rather see steel allocated to the heavy engineering industries than to the light engineering industries—because I am not so sure that cars are going to be a permanent export like ships. I think that the same applies to turbines, generators, switch gear and locomotives. British heavy engineering is unsurpassed and our only rival in the field, Germany, is down and out. There we have a source of permanent export trade. We could export these heavy engineering goods to hard currency areas. They are far better than the Americans ever made, and I hope that some consideration will be given to that.
  With regard to textiles, I do not think we are taking sufficient care to import certain textiles, particularly raw materials. I refer particularly to flax. The imports of flax were less than half they were in 1937. I think that it should be possible to get flax from Belgium and Northern France, and to increase our flax sowing in Northern Ireland, because linen is a very fine paying export to hard currency areas.

  2127
  I hope that consideration will be given to that. The same applies to jute. I think that the imports of jute are less than half what they were in 1937.
  I know that there are difficulties with regard to exporting from India, but I hope that with the improved political situation there representations will be made by the Government to secure increased imports of that commodity for Britain. A great deal has been said about labour. We reject direction of labour. The hon. Member for Chesterfield (Mr. Benson) suggests closing down certain luxury industries, and he referred to cigarette lighters and ash trays, but the number of people employed on things of that kind is not very large. I suggest to His Majesty's Government that they should freeze the supply of raw materials to non-essential industries. This could be done through the Ministry of Labour, and further, with regard to the textile industry, I should import—although I do not like using the word—many displaced persons. I believe that the Slovenes, in particular, would make admirable workers in our cotton and woollen mills, and I hope, therefore, that the attention of the Minister of Labour will be directed to that subject.
  There is a tremendous waste of labour in certain industries. Great play of every sort is made with regard to the over-staffing of the Civil Service, but I reject it entirely. Where we can have a very close examination is in the field of local government. What is the position? In 1939 there were 846,000 persons employed; today the figure is 1,028,000, excluding trading services, which seems to me a colossal increase, particularly in view of the fact that many of the extra services placed on local government as a result of the war are now discontinued. I suggest to the Chancellor of the Exchequer that when this question of the block grant is being discussed with his right hon. Friend the Minister of Health some condition should be made with a view to securing efficiency in local government and economy in labour; make it a weighting factor. Further, they are working a 37-hour week, which is less than anyone except school teachers, and I think that hon. Members of this House who are on local authorities should do something with a view to restoring the working week to 40 hours.
  Mr. Carmichael: A statement of that kind about local government employees is quite wrong.
  Mr. Hobson: That is the position at the moment. I am referring to the London area, and my statement excludes the numbers who are engaged in transport, gas and electricity, but it does include nurses and teachers, and I am particularly concerned with regard to clerical workers who at present are enjoying a 37-hour week in the London area as against those in the Civil Service, who work 40 hours. I think attention ought to be drawn very sharply to this waste of labour. Finally, I want to suggest that when the planners are in session they should give our vital industries a target to which to work. I am convinced that, as the result not so much of Government propaganda as of the reasoning of the workers themselves and the talks which they are given in their trade union branches, they will respond and we shall be able to close the gap which we all deplore so much at the present time, and which is a source of paramount concern to His Majesty's Government.
  8.24 p.m.
  Mr. Molson: The Lord President of the Council certainly painted an extremely gloomy picture this afternoon. He did not attempt to suggest that this country would emerge from the present crisis in an easy way, yet his long speech ended without any constructive proposal as to what the Government intend to do. Two important periodicals which are supposed to represent the point of view of the Government have recently written on this subject. First, there is the "Tribune." I believe that the Chancellor of the Exchequer is one of the comparatively few intellectual Members of the party opposite who do not own shares in that paper.
  Mr. Stanley: Perhaps he has nominees.
  Mr. Molson: My right hon. Friend suggests that possibly the Chancellor has some nominees who hold shares on his behalf. The Chancellor looked indignant this afternoon when someone suggested that his cheap money policy was encouraging gambling in this country, but when it comes to the Government we find the "Tribune" saying, in an interesting paragraph entitled "Gambling on Marshall":

  2129
  "It the crisis hits us with a bang and no real help is coming from outside, the country will be able to take it and accept a regime of the sternest austerity with a backs-to-the-wall defiance more easily than a drawn out period and carefully dosed with staggered misery. Clearly the Government gambles on the success of the Marshall offer to come to our rescue."
  The hon. Member for Devonport (Mr. Foot), in his interesting article today in the "Daily Herald"—which I hope the Chancellor also reads—
  The Chancellor of the Exchequer (Mr. Dalton): I do.
  Mr. Molson: —indicates that in his view the Government should continue to spend the American loan until it runs out and not adopt a policy of austerity before then. I hope that when he replies tonight the Chancellor will make it quite plain whether we are right in understanding the Lord President of the Council's speech as meaning that the Government do intend to go on as long as the loan lasts, relying upon the Marshall loan if it is forthcoming to save this country from the disaster which would overtake it if we were suddenly confronted with the inability to pay for the food and raw materials which we required.
  Why are the Government taking that line? If they took the kind of line which we on this side of the House would recommend, it would be placing too great a strain on the solidarity of the Labour movement. It is quite obvious that the economic survey of last March was written by what one might call the Socialist planners on that side of the House. When they referred, for example, to the impossibility of increased wages and shorter hours unless there was a corresponding increase in production, that was obviously the point of view of the Chancellor of the Exchequer and, certainly, of the President of the Board of Trade. The hon. Member for Dundee (Mr. Cook), in a very remarkable speech last December urging a great increase of production in Dundee, said:
  "To keep costs down you must give a little bit extra to cover the five-day week. These are hard facts, a complete reversal of the things we were told over the years."
  One of the troubles of the Government is that now they have taken office they find it necessary to preach a gospel opposite to that which they preached when they were in Opposition. What has been
  2130
  the record of the Government, and in particular of the Ministry of Labour, presided over not by a theoretical Socialist, but by a practical trade union official? There has been, for example, the five-day week for miners. We were told at the beginning that it was conditional upon there not being a reduction in the output of coal. In the Economic Survey, the Government emphasised that the whole of their programme was dependent upon there being a great increase in the production of coal. Now, the country and the miners are told that the five-day week is to stay, whether there is a decreased or an increased output. It would be interesting to hear from the Chancellor of the Exchequer tonight whether the Government now take the view that it will be possible to maintain the five-day week even if the zoo million tons target is not reached.
  We have the same trouble about railways. Last December, again, there was an account in a Scottish newspaper of the way in which a particular colliery and its shops had to close down for lack of wagons. In the adjoining column of the same newspaper it was reported that the wagon repairers 44-hour and five-day week was to start in the summer. During the last week we have heard of an increase in the wages of railway workers. We sometimes hear it said that shorter working time means an increased output, but there are some occupations, of which transport is a notable example, in which obviously there cannot be an increase in the speed, in this instance of trains or lorries, or their loading, in order to make up for the reduction in the working time.
  At a time when we are told by the Government that we are coming into increasing difficulty over exports, it is naturally serious that there is a great increase in the cost of transport upon our railways. When we consider the matter of exports and imports, surely we must see that the real cause of the trouble is the wage inflationary policy that has been followed by this Government. If they want increased production, a reduction in the working time is not necessarily the best way of obtaining it. If, as was made plain again in the Economic Survey, a larger proportion of the con-sumption goods of the country will have to be exported if the target is to be reached, to go on increasing wages and, therefore the potential consuming capacity of the

  2131
  home market, is not the best way to make additional consumption' goods available for export.
  I believe that the failure on the part of the Government during the last four months to put into effect the principles laid down in the Economic White Paper is responsible for the increasing gap between payment for imports and the volume of exports. Some of my hon. Friends, including my right hon. Friend the Member for Aldershot (Mr. Lyttelton) emphasised the other day that it was largely the lack of consumption goods that had done away with much of the incentive of the workers to increase production. Anything which tends to increase the minimum wages without at the same time increasing the amount of goods available in the shops naturally has the effect of reducing incentive. Wages are still not to any noticeably greater extent based upon output than they were before the White Paper was issued.
  Mr. Gallacher: There is too much babbling about the workers.
  Mr. Molson: Whenever the hon. Member for West Fife (Mr. Gallacher) gets up to speak he says a great deal about the capitalists. He might be prepared to listen to an argument put forward from the other point of view. What we want in this country is unity and everybody making his contributon. The hon. Member himself might be prepared to support his own Government and to respond to their appeal to go about urging increased production.
  Mr. Follick: His Government is in Moscow.
  Mr. Molson: Quite right. I forgot. The hon. Member for West Fife sometimes conceals himself among the Social Democrats opposite. The effect of rationing consumption as evenly as possible over everybody, does not give any increased share to those who are skilled or who increase production by their additional efforts. I could not help noticing a certain tendency in a number of the applications recently made for increased wages. The last example I saw was in the case of the building industry. There was an application for a ninepenny increase in the rate of pay for the unskilled workers, compared with an increase of 6d for the skilled workers. Anything which tends to
  2132
  even out earnings without regard either to skill or to production must necessarily tend to reduce incentive.
  There was a remarkable article published in the "Economist" about a year ago called "The Carrot and the Stick." It suggested that the way in which production in this country in the past had been stimulated and increased was that there were both economic and other sticks against those who were not skilled and did not labour and did not exert themselves, and there was a carrot for those who did exert themselves and there was reward for thrift. The general effect of the policy of the Government over the last two years has been to take away the stick, about which I make no complaint, but it has not had the wisdom to provide for the people of this country the carrot which might take its place.
  8.38 p.m.
  Mr. Dryden Brook: Most hon. Members who have taken part in the Debate have covered a very wide canvas. I want to confine myself to a more limited object. All the speakers have been unanimous in putting forward the idea that it would be difficult, if not impossible, to make any major cuts in our imports. Therefore, concentration has been on the notion that we must proceed by increasing exports. Several hon. Members have referred to the textile industries as being the likeliest industries to which to lock: for that increase. I shall, therefore, confine myself to the severely practical problem of trying to indicate to the Government some measures by which production can be increased in that textile industry in which I have spent the whole of my working life—the wool textile industry.
  The first problem I want to deal with is that of the fuel supply. Based as it is at present upon the 1946 consumption, it appears that it should be adequate to cover the needs of the industry, but that does not take into consideration its incidence in respect of individual firms or groups of firms. It cannot take into consideration, for example, the fact that in the spinning section of the industry during the war there was a considerable amount of concentration, and spinning is at present the bottleneck in the industry. Now those firms who were concentrated only began work in 1946, and, owing to labour difficulties, they were not able in

  2133
  that year to get within measurable distance of their productive capacity; as a matter of fact, some of them have not yet got back to a normal labour force. Therefore, the Government will have to look at the fuel supply problem with a good deal more flexibility than can be obtained by the 1946 proposal. The consumption needs of these firms will have to be treated on an individual or group basis.
  To take another example, I was discussing this problem only yesterday with a spinner in my own constituency whose firm has begun recently a night shift from 5.30 to 9.30 which is made up of married women who go into the factory, after the children have come home from school, to work for four hours. Fortunately for that firm, it has turned over to oil consumption, but supposing other firms in the district which are on coal consumption are to be successful in operating a similar scheme, they will be unable to do so on the present allocation of coal. Secondly, there is the labour problem over the whole field of textiles. The immediate problem in respect of the wool industry is that we want something like 17,000 additional hands, and suggestions have been made that displaced persons, and other people from abroad, shall be brought in. The difficulty is that of accommodation. In my own constituency the military authorities have two establishments-—the Halifax Barracks, and another which was used during the war as a convalescent camp. Each of those could be made capable of accommodating 1,000 displaced persons who, brought to the town, would help to solve the labour problem. The Government will have to make up their minds to deal ruthlessly with the Service Departments over this problem of demand for space. They will have to decide, in accordance with the Debate which has taken place today, that priority No. 1 in this country in the near future will be the increase in production, and that can only be done by increasing the number of workers inside the textile industry
  Another problem is that of carpets, which are one of the best export propositions we have in this country today. There we have the problem of interlocking industries. The problem of jute has been mentioned by a previous speaker. Jute is one of the great necessities in the carpet
  2134
  industry for backing, and there was not found during the war period a really successful substitute, particularly from the export point of view. Yet the jute industry of Dundee is only working some 50 per cent. of its capacity. The success of the carpet export industry is bound up with being able to resuscitate the jute industry in Dundee to somewhere near its prewar capacity.
  Again, there is the problem of the bottleneck of spinning, both in the woollen and worsted sections of the industry. A man with whom I was discussing this problem yesterday told me that in the carpet industry, at their works, they could put more looms to work today, that it was possible for them to get weavers on to work immediately, but that they could not get the yarn. Yet at the same time that this firm could not get yarn, there was a woollen yarn spinner who could supply them with the yarn but who wanted a small quantity of card clothing for one of his carding machines. He applied to the Board of Trade a little time ago to spend £38 in value, and was told to apply again in six months' time. That sort of thing will not do, because I am informed by people in my own constituency who are manufacturing card clothing that at the present time they are manufacturing 80 per cent. of their goods for export. These are interlocking problems in one particular industry. The Government will have to look into these problems industry by industry. They must make up their minds whether it is best to export a comparatively small amount of card clothing, or to increase the supply of manufactured goods to a far greater amount. There are many problems like that which need going into, and I beg the Government to take into consultation people inside and outside the House who are connected with the industries concerned, and who have knowledge of their problems, in order that they may make a better job than they have done up to now.
  8.47 p.m.
  Mr. Douglas Jay: I agree with my hon. Friend the Member for Chesterfield (Mr. Benson) that what we are discussing today is whether we will have to make severe cuts in food or raw material imports in 12 or 18 months' time. I believe the policy the Government

  2135
  have announced so tar is in all the circumstances an inadequate contribution to that problem. Nothing that the Lord President of the Council said today has weakened me in that opinion. We have also had almost no constructive suggestions from the party opposite. The only positive suggestion I have been able to notice from that side of the House is the proposal that the Government should abandon the main elements of their Election programme. I cannot agree with hon. Members opposite, who apparently think, as the hon. Member for Chippenham (Mr Eccles) did, that that would have an inspiring and uniting effect on the workers of this country. If the Opposition really think that that would unite the workers, their sense of political realism must have declined even since the General Election. I also fail to see what effect it would have on our balance of payments if nationalisation schemes were dropped. You cannot sell your Election programme for dollars; and nobody would respect you if you tried.
  Nevertheless, faced with a deficit running to about £50 million a month, I think we have to make further cuts, and, unlike the party opposite, I would like to make some concrete and unpopular suggestions to that end. I have no time to go into the background of the problem, but we should remember that in 1946 a balance of overseas payments was more nearly achieved than the official estimates we had suggested. The situation only took a turn for the worse in the first five or six months of this year. If I understand it aright—and the Chancellor can tell us whether it is correct—the trouble has not mainly arisen in the last three or four months from a deterioration in the balance of trade. Expenditure on dollars in the first few months of this year has very greatly exceeded the visible import surplus, or even the import surplus if we take into account the invisible items. The truth is that dollar scarcity has developed all over the world, and this country has been forced in these last few months to supply dollars to all sorts of other countries, partly in order to buy goods for them, and partly to meet other commitments. That is a process which cannot be allowed to go on The only basic solution is, of course. some large-scale collective proposals for dollar loans from the United States on the basis
  2136
  of the Marshall plan. No one will dispute that. But I wish also to suggest to the Chancellor that this really is not the moment to take the Marshall proposals as an excuse or pretext for not making any further cuts in our imports.
  I would, therefore, suggest that we should have more drastic action along the following lines. First, I believe that we could prune our Government expenditure abroad rather more severely than we have yet done, not merely military expenditure, but other expenditure. I believe, in particular, we ought to tell the Government of the United States now that our dollar expenditure on Germany particularly cannot continue beyond the end of this year if the Marshall proposals fail. Secondly, we have got to be much more tough in moving towards the actual freezing of the sterling balances. So far as one can judge from the figures, we have allowed a considerable amount of dollars to leak away in the last six months by rather tender treatment of some of our ex-Allies or some of those countries on whose territory we fought the war. The Chancellor has moved in that direction with the Egyptian Agreement, but I think he should go further and faster. Thirdly, I hope we shall be a little more intelligent in our interpretation of the non-discrimination Clause in the Anglo-American Agreement. These things are always a matter of interpretation. Surely, it is no more good ethics than good politics or good business to begin by interpreting an agreement against oneself. Fourthly, I would grasp the nettle now, and make a series of economies in our expenditure of foreign exchange.
  In two minutes I can only mention briefly some of the things which I believe should be done. I believe we could reduce the figure of £75 per head which we allow tourists going out of this country to £40 or even £30 a head. I know it can be said that all these suggestions do not save much and will hurt someone; but if we are to follow that shallow line of argument, we shall certainly move, sooner or later, into a crisis. Secondly, I believe that the time has come when we could also put back the petrol ration for the ordinary motorist to the point at which it stood last year. Again, I do not see why we should not require the motor industry, if it can sell in export markets, to raise its proportion of output exported from the

  2137
  present 60 per cent. to something like 90 per cent., and to make the allocation of steel for motor cars on that basis.
  Finally, I would not shrink at this stage, seeing that the prospect is one of really severe food cuts 12 months hence if all does not go well, from making further cuts, even in food, with the exception, of course, of the staple foodstuffs and the inessential foodstuffs which derive from what are called war-shattered countries. I am not satisfied that we cannot make some further cuts in less essential foodstuffs from the dollar area.
  That is a list of the things which I think we could do. I do not put this policy forward as an alternative to the most energetic possible prosecution of the negotiations for the Marshall plan. As I see it, we are now in a difficult spot, which is likely to get more difficult. I believe that we should move forward on both these fronts simultaneously, to protect ourselves, on the one hand, by an energetic effort to bring the Marshall plan to fruition, and meanwhile, by some defensive economies along these lines, to save foreign exchange while we can still do so.
  8.55 p.m.
  Mr. Oliver Stanley: The hon. Member for North Battersea (Mr. Jay) in the brief period available to him has made some interesting suggestions for future economies. No doubt the Chancellor will deal with them during his speech, and will tell us why he has not included them in the list he has presented to us. I want to turn to the more general points which have been raised in the course of this Debate. I think everybody in the House, on whatever side he sits, has shown himself to have been impressed by the seriousness of the situation which we are discussing. It was for that reason that all of us waited with great anxiety for the speech of the Lord President of the Council. I should like to associate myself with those who have congratulated the right hon. Gentleman on his return and on his being able, after such a long interval, to address this House again. We are indeed pleased to see him back.
  Having said that, I must add frankly that it is all I can say about the speech he made. I had not intended, and I do not intend, to talk about the past. I am far more interested, and I think the House and the country are far more in-
  2138
  terested, in the present and, above all, in the future. Yet the right hon. Gentleman's speech was devoted almost entirely to the past. I think that the only excursion into the future was when he told us that there would be no Coalition. That is a statement rather reminiscent of the not-so-young lady who refuses a proposal which has not been and is never likely to be made to her. Certainly his speech was most interesting. I hope that a more appropriate time will come when we can deal with the past, because we too have a great deal to say about it. Many hon. Members on this side of the House will welcome the opportunity, which certainly will come, to deal with the curious view that the right hon. Gentleman took of some historical events.
  I would say only one thing about the past. The right hon. Gentleman laid great stress, as indeed did many other speakers from the opposite side of the House, upon the impotence of this country in these circumstances to act alone. We have been told from all quarters how much depends upon America, how much depends upon the freedom of world trade, and how much depends upon the decision that this or that country takes about this or that aspect of their economic affairs. How different is the attitude to the present of hon. Members opposite from their attitude to the past. No such alibis were allowed in the 1930's. No arguments that a Conservative Government in those years were not able single-handed to stem a world depression have ever been allowed for one moment. Everything that went wrong has been put down by right hon. and hon. Gentlemen opposite to the action of His Majesty's Government and to them alone, it is indeed a curious change in the attitude they adopt to the 1940's, and they will not complain in future if they are judged by the standards that they have applied to other Governments in the past.
  I turn to the first of the two main questions which the Government have to answer today. What exactly is the position of the country now? Too often in the past the Government have spoken with conflicting voices. The sombre utterances of one day are offset by the sunshine perorations of the next. Grim facts are overlaid by easy hopes. The example to which many speakers have called attention already is that which

  2139
  took place last week. Many other examples could be chosen, but that is not only the most recent, but, to many of us, the most dramatic. I remember the atmosphere in this House on Monday of last week when the Chancellor of the Exchequer made his statement. It was an atmosphere of grave anxiety, and that, presumably, was the very atmosphere which the Chancellor wished to create, first in this House and then in the country. The next day, I happened to be absent during part of the speech of the Minister of Food. I returned only for the peroration, and I found, instead of that anxiety, the House, or, at any rate, one-half of the House, laughing, cheering, optimistic and smiling. Really, that peroration was the most extraordinary performance. Attention has already been called to one of its phrases. I want to call attention to another, because it seems to me that, for a Minister in the position of the Minister of Food to have made that statement, shows an irresponsibility almost amounting to dishonesty. Here is the phrase which he used in his concluding passage:
  "Nothing has been more encouraging and heartening to me in the negotiations which have been conducted on my behalf with these various countries than to find that, keen as we are, and we do not deny it, to buy their foodstuffs, they are at least as keen to buy our manufactured exports."—[OFFICIAL REPORT, 1st July, 1947; Vol. 439, c. 1188.]
  At the time he made that statement, he must have known that Argentina, a country with which we have, perhaps not the biggest, but among the biggest, trade in foodstuffs, had put a complete embargo both upon our motorcars and upon our textiles, the two main sources of our export credits. Let us consider the people in Lancashire, who know that this has been done, who know the difficulties that it has created for them, and who read in the papers the next morning the speech of the Minister of Food. How can we blame them for wondering whether the Government really know what is going on in the world today? It is that kind of divergence between the views which are expressed which does lead to confusion and frustration throughout the country.
  We have had some argument today about the actual rate of deficit which is now running, and I should be very glad if the Chancellor, in his reply, could, once
  2140
  and for all, give a definite figure which will stand challenge or argument. I am not myself so much concerned with the figure for the physical deficit which appears in the statement which he circulated last week. The difficulty about that is that it depends upon one certain set of figures and one conjectural. It depends upon a more or less ascertained rate of imports, but also on a rate of exports which is only the prognosis of the Government, and, having had, within the last few months, a conjecture prophesied as to exports which has proved entirely wrong, we can hardly be expected to accept as stated and accurate fact a new conjecture which, so far as we can make out, is based upon the same assumptions and the same rough and ready methods which led to the gravely mistaken prophecy of only three or four months ago.
  Nor, I think, is it necessary now to go into the complications of the difference between our deficit with hard currencies and our overall deficit with the world. The fact is that when convertibility comes about, our overall deficit is going to become, to all intents and purposes, our dollar deficit, because countries today are making, and will make, to the limit of their power, use of that convertibility to exchange sterling into dollars. Therefore, the main question we want answered is, what is the rate today at which we are drawing upon our dollar credits? That is the all-important figure, and the one which determines at what date our dollar credits will run out. Thereafter, we shall be face to face with the stark necessity of the situation. It is difficult for us to come to any accurate calculation, but the sort of figure that most people have in mind is that of £900 million a year; that is to say, that at the present time, we are drawing on our dollar credits at the rate of £900 million a year. I would ask the Chancellor of the Exchequer, when he winds up this Debate, either to confirm that figure, or to give in its place the correct and accurate calculation. So much for the actual position of our dollar deficit today.
  But I am even more concerned about the relative position. The worrying thing to me is not only the magnitude of the sum now, but the fact that it is worse than it was a year ago. As the hon. Member for North Battersea said, the gap last autumn was less, and the deficit was

  2141
  running at a lower rate than had been budgeted for at the beginning of the year. That meant that if the credit of, say, last autumn was continued, and if only we were able to maintain the exertions which had brought us to that position, then, eventually, the whole dollar position would right itself, and the gap would be closed. In other words, all we needed was time. But, since last autumn, there has been a complete reversal of that trend, and we are now running, not only at a greater rate than last year, but at a rate which has been increasing over the last few months. Indeed, the gravity of that change is, as I think the right hon. Gentleman himself said, that time is no longer on our side, and to buy time in which to continue the trend which we see today is only to buy some slight delay from disaster. In those circumstances, I think it is impossible to over-estimate the gravity of the present position.
  I remember that at Question Time in the House the other day one of my hon. Friends behind me used the word "desperate" to describe our present position. One right hon. Gentleman opposite—I think it was the Prime Minister—took exception to that term. I agree that if it was meant in the literal sense and its strict derivation from Latin—-that there was no hope—then it is not a term I should use, because I will not admit, and certainly do not believe, that there is no hope for this country. I am confident that, even yet, we can get out of our difficulties. But if it is used in its ordinary meaning, the meaning of the old saying, "Desperate situations require desperate remedies," then I regard it as only too apt, because I believe we have reached the position where there is no longer any room for easy optimism and for the sort of belief, "Oh, it cannot happen here." Only by making something happen here, can we hope to escape from the disaster which faces us.
  I read in a speech only this morning, one of the best descriptions of the present situation I have come across. It was as follows:
  "We cannot afford to meander through our difficulties and to hope for the best."
  That was the description given to the action of the Government today, not by one of us on these benches, but by a gentleman who, I believe, is an ardent supporter of theirs, Mr. Lawther, of the Mineworkers' Union, when speaking to
  2142
  the miners yesterday. I agree entirely with him. We cannot afford to meander through our difficulties. The time has come when we have to take some definite decision as to what we are going to do.
  So we come to the second question which I want the right hon. Gentleman to answer. In a situation so grave as this, what does the Government mean to do about it? Certainly, if they mean to do anything, nobody has yet told us what it is they mean to do. We have heard no suggestions at all of any-policy which measures up in any degree to the needs of the existing situation. What have we heard suggested at all? First of all, the cut in imports, which was the immediate cause of the Debate which we are now having. But if that is meant as an effective immediate cure for our position, then, on the face of it, it stands condemned for its inadequacy. It is not only a pill to cure an earthquake; it is a very small pill to cure a large earthquake. What does it amount to?
  I have no doubt the right hon. Gentleman will give us figures—which we certainly cannot assess for ourselves, so indefinite have been the statements made so far—of what will be its effect. What does £25 million amount to? At the present rate of our deficit it means that we postpone the exhaustion of our dollar credit for something between 10 and 14 days. Who can pretend for one moment that that is a proposal that is really significant? I quite understand that as complementary to other measures, as part of a general scheme whereby parts of the deficit are to be dealt with in other ways, it might be a useful addition; but, standing by itself, it clearly could have been no effective remedy. I, personally, feel it very difficult to realise why the Chancellor of the Exchequer made his statement at this time at all. Was it psychological? Was it in order to give the country a shock? If so, it has failed for two reasons.
  In the first place, the subsequent statements made by other Ministers have destroyed much of the effect; and, secondly, it is so calculated that, in fact, the ordinary man in the street feels— and will continue for some time, at any rate, to feel—no immediate effect from it at all. Films: they are not to be cut until a subsequent order at some indefinite date. The Press: well, no doubt that will cause great inconvenience, and.

  2143
  I think, a good deal of national injury, but. no doubt, the Press will arrange that the features that the majority of the people like will continue. The cut in petrol: well, that is chiefly to fall on the Services. Textiles: hopes are held out that increased production will make a reduction unnecessary; and indeed, we are told today that there is to be some advancement of the rationing period. All that remains is tobacco, and the tobacco austerity was imposed, not when the statement was made last week, but when the Budget was introduced some three weeks ago.
  The second new feature of which we have been told is the planning machinery, and the new council of which we were told yesterday. But it is becoming a usual concomitant of any economic Debate that we are told of some new bit of planning machinery which is set up. In March we had the chief planning officer of the Government; in July we have the chief planning council to advise the Government; and, no doubt, the right hon. Gentleman's ingenuity will find for subsequent economic Debates some further extension of the system which is only paralleled by that entomological parallel which, as hon. Members know, can go on ad infinitum.
  Finally, there is the hope that everybody will work harder and that we shall produce more—a hope expressed today by the right hon. Gentleman the Lord President of the Council in almost exactly the same terms in which it was expressed by other of his colleagues in the economic Debate last spring. The fact is that, so far as we and the country can judge at the moment, the Government have only one policy with which to meet this crisis, and that is to have no policy at all, but to go on causing as little inconvenience and hardship and creating as little unpopularity as possible, and to see if anything will turn up which will make a policy unnecessary. It is a gamble and, if it is to be taken at all, it must have some reasonable chance of- success.
  What are the two things for which the Government are waiting? The first is American help. I will say very little about that, because it is a delicate matter, and no one wants to make it more difficult. I doubt very much, however, if some of the speeches made from the benches opposite today, threatening
  2144
  America with what will happen to her if she does not give us help, are likely to be of very great service. But while I agree that, in any case, American help is essential for a solution, I am also convinced that American help is not a solution in itself. In the situation in which we are now, with the trend against us, with our position deteriorating and with the gap increasing, it is no good buying time, because to do so is merely to create a decision which sooner or later must be taken. The other thing for which the Government are waiting is the fall in commodity prices. It may come. It is true to say that so far it has come, largely not in the commodities we buy but in the commodities we sell. We must remember that when it does come it will not be entirely on the asset side, but that with the fall in commodity prices will also come a fall in our export value, and that the dislocation which any major fall will cause in our markets will have an extremely bad effect.
  I have every sympathy with the Government in their position. If they take a decision at all, it has got to be a major decision, and any major decision in the unpleasant circumstances of today must be an unpleasant decision. It is not worth dealing with the matter at all unless the Government deal with the major questions which have been raised in all quarters of the House today. I can see any Government hesitating to do so, but I do not believe that the decisions, unpleasant as they are, will become any less unpleasant by putting them off. That has never been our experience. We are now faced with the same sort of decisions as faced the Government in the early days of the war, and our experience was that decisions which we did not take at the time, and which we postponed, only became more difficult and more unpleasant when finally we had to take them.
  I appeal to the Chancellor to give us a full answer to the question which everybody in the country is asking today, namely, what are the plans of the Government for dealing with the situation in which we are? The Chancellor is a very adept Parliamentarian. No one is more successful than he is at evading awkward questions. I know to my cost, because in the last two years it has often been my fate to wind up just before the right hon. Gentleman. I have asked him a great

  2145
  many questions, and I cannot remember one to which I have had an answer. He has all the Parliamentary gifts. He has banter and blarney, with the aid of a certain amount of bias, and with them he evades the questions of his opponents and excites the plaudits of his friends. I do beg him sincerely tonight not to do that. This is a serious occasion, and we want to hear from him.
  I can assure the Chancellor of this, I think on behalf of all my hon. Friends behind me, that no one will be more pleased than we are if he is able to tell us tonight of a policy which we believe and conceive to be adequate to meet the situation in which we find ourselves. It does not matter if that policy is hard, as long as it is realistic. It does not matter if that policy promises little, as long as it evades nothing, as long as it is a policy really designed to meet the needs of the times and, above all, a policy designed to unite and not to divide the nation. I can assure him that if he does produce a policy of that kind, he will find support in all quarters of this House, and in all quarters of this country. On the other hand, if, after he has spoken tonight, we are left in the same position as we are at this moment, if we are given no indication of any plan to meet a situation whose gravity must be apparent to all of us, then I can only say to him that all the censures which are open to an Opposition will precede by only a very short time all the anger which is felt by a nation realising too late, that it has been bedevilled and betrayed.
  9.21 p.m.
  The Chancellor of the Exchequer (Mr. Dalton): We have had a Debate in which, during the time that I was in the Chamber —and I have been here for the major part of it; and I hope that this will not be thought to be a patronising form of words, because I say this quite sincerely—there has been an exceptionally high level of thoughtful contribution to the matter which we all regard as most serious, important and urgent There have been speeches made from both sides of the House, which are certainly worthy of further thought and study; many suggestions have been made and many points raised. I would mention in particular my hon. Friend the Member for North Wembley (Mr. Hobson), who made an exceptionally interesting speech. Other hon.
  2146
  Members, including the hon. Member for The High Peak (Mr. Molson) and the hon. Member for Scarborough and Whitby (Mr. Spearman) also made speeches which will certainly be studied closely for their suggestions by the Ministers concerned. I propose, first of all, to pick up the Debate, so to speak, where we began it, and I shall not avoid answering the questions which have been put to me by the right hon. Member for West Bristol (Mr. Stanley), the conclusion of whose speech was curiously mingled emotionally between appeasement and menace. I will answer his questions, and he must take his own decisions on my answers, whether he likes them or not. I will also answer the points put at an earlier stage of the Debate by the right hon. Member for Warwick and Leamington (Mr. Eden).
  I was asked: Why did I make a statement last week at all? The answer is very short and simple. It is, that each year—I think this was so under the Coalition also; it has certainly been so since the Election—we make an import programme to the best of our power and foresight to run from the middle of one year to the middle of the next; that is the import programme year. Last year a similar statement was made at about this time of the year. And if my memory serves me aright—though I have not checked this—similar statements were made from time to time in preceding years. Certainly, it was done last year. The Government judged that the House was entitled to be told this year, as last year, when the moment came for fixing the import programme for the next 12 months, what the Government intended. In that sense, therefore, my statement was a routine statement, made at the accustomed time; and I think I would have been wrong not to have given that information to the House and the country.
  It so happens that this statement also coincides not only with the middle of the calendar year, when it was appropriate to make it, but with a time of great anxiety for all—in both this and many other countries—at the prospects for world trade in the next few months. It is, therefore, not unnatural—and we naturally make no complaint; indeed, for my part I welcome the fact—that this matter has been further debated today. The right hon. Gentleman asked me.

  2147
  following that statement, for further particulars. I gave them in a circulated answer which appeared in the OFFICIAL REPORT. I gather today that he thought I ought to have given fuller and more detailed figures. I could, of course, have given more, and I will give some more figures in a moment. I thought I was giving what he asked for, after carefully studying what he said. However, I am glad to supplement it tonight, by giving information, much of which may have been published before, but which, at any rate, it will be convenient for me to bring together.
  Let us begin with the import programme. The import programme is about the same volume, as we have planned it now for mid-1947 to mid-1948, as that which was contemplated for the calendar year 1947 when the Economic Survey was prepared. We have not proposed any substantial variations in the total volume of imports, although we propose certain changes in the composition of the total; it is the same total volume, as near as may be, as was proposed in the Economic Survey. As I have said, there are certain changes in composition; prices have gone up further, which is why it costs more foreign exchange. We must be clear whether that decision by the Government is criticised or not. Either the volume should be the same, as we are making it, or it should be greater than we contemplated before, or it should be less. No one, I think, will argue that it should have been increased. No one has argued that tonight. The question is whether at this stage we should plan for substantially the same volume, or propose at once— and I emphasise "at once"—to reduce the total volume of our imports. My hon. Friend the Member for North Battersea (Mr. Jay), in a very brief, compact and compressed speech, put a large number of positive suggestions for reductions. The argument he has put has not commended itself entirely to the Government when taking this decision, but I admit at once that all the proposals he made are the type of proposals which we should keep constantly before us, as and when we may need, in accordance with the changing situations, to revise our import programme from time to time. Although we have made that import programme for the year ahead, which is the convenient
  2148
  and customary unit, changes in the conditions which we are dealing with may arise before 12 months have passed, which will require some modification of it.
  One or two hon. Members have argued that we should at once have cut the total volume of imports. It is very difficult for the Opposition as a whole to argue that we should at this stage cut the total import volume. There has been talk about many voices, and attempts are made —it is part of our game here, and we have all done it—to distinguish between the emphasis of one Minister speaking on a subject, and another Minister speaking on some other aspect of the subject. The Opposition have been challenging the President of the Board of Trade for not putting more consumer goods into the shops. They have been carrying on a campaign against excessive austerity, and some of the criticisms they have made of my right hon. Friend the Minister of Food were to the effect that there was not enough food. Lord Woolton is twittering away outside.
  Therefore, it does not lie with them, unless there is a serious discrepancy between speeches of the leaders of the Conservative Party and the oracle of the central office, to say that we should now be cutting down the volume of food imports. I think it is reasonable for thoughtful Socialists to say that perhaps we should cut our volume of imports, but it is not reasonable for Conservatives to say the same thing. I maintain that at this moment it was the right thing not to cut into our import programme. I would like to say a word or two about prices. The terms of trade have been steadily moving against us for some time, and that is one of the handicaps from which we are suffering. That is not the fault of this Government; it would not have been the fault of a Conservative Government if we had been blessed with one; it is nobody's fault except what is vaguely called world conditions, and so on.
  Now I would like to supplement the information which was circulated in the OFFICIAL REPORT in reply to a request by the right hon. Member for Warwick and Leamington. The Board of Trade index of import prices, taking 1938 as 100, had by June, 1946, steadily risen to 203—just over double prewar—and has risen further to 241 in May this year. The export index shows a rise from 196 to 225. Therefore.

  2149
  imports are forging ahead. Import prices are rising, and so are export prices. But import prices are always a little further ahead, and that means that the terms of trade are constantly moving against us. One of the things which we do not count upon, but which we are hoping for, is a change in the terms of trade so that if the relative relation was reversed our import prices might move down faster than our export prices.
  I would like to touch upon the world aspect of this matter. There is a world aspect as well as a United Kingdom and British aspect. I will deal faithfully with both. But the world aspect is that two years ago the people who were calculating the future miscalculated. They assumed—we all did it; many people from other countries, meeting in international conference and for discussions, did it—that the rate of recovery of the world as a whole, from the effects of the war, would be more rapid than it has been. World recovery has been exceptionally slow. In parts of Continental Europe we under-estimated the damage done by the enemy, and the necessary damage done by ourselves and our Allies by way of counter measures to put the enemy down. We also underestimated the damage done in many parts of Asia, and I am thinking now of Burma, the whole of the S.E.A.C. area in the war, and so on. That has thrown out the time table to which many people were working.
  We are now gradually getting into the situation in which there is a spreading shortage of dollars throughout the world. That is why we are finding some of the disagreeable events such as that mentioned several times today, namely, that certain markets, to which we looked forward for an increase of our exports—the Argentine is one example, and there are others—are finding themselves so short of dollars that in view of their own national interests, as they think, they are compelled to restrict imports from this and other countries. It is no special bar against this country; it is a general bar which affects other exporters as well. As someone said to me, wishing to put it in a very simple fashion, and, I think, putting it very well: The nations are gradually getting more and more like a lot of children playing marbles, except that one of the children is getting all the marbles, and if one child is getting all the marbles, the game cannot go on unless something is done to distribute the marbles
  2150
  among the other children. That is the way it affects us—and I have tried to put it in a simple way
  I have been asked about convertibility. The "Financial Times" has lately published in pamphlet form some very excellent articles showing in some detail why the extra weight falling upon our dollar reserves consequent on convertibility on 15th July is likely to be much less than many people might suppose. This is largely because it has to some extent been provided already by a number of bilateral agreements with various countries with which arrangements have been made in advance of 15th July. I think that, in a large measure, 15th July has already been discounted, and the additional burden of assuming these new obligations under the Anglo-American Loan Agreement will be noticeably less than many people may suppose. In another direction, before 15th July, and having no reference to the Anglo-American agreement, the pressure on our dollars has enormously increased.
  That leads me to the answer as to the rate by which these dollar stocks are now falling. Before I give the answer, I would like to lead up to it by explaining why, in the last few months, this position has noticeably worsened. The hon. Member for North Battersea hinted at it, and he was quite correct. In the last six months—to resume what I said just now—a great number of countries all over the world have been suffering more and more from dollar starvation, and they have to seek to get United States dollars from wherever they can gather them, for the purpose of balancing their inequality of trade, in so far as they are attempting to buy more United States products than they can pay for. We have been purchasing large quantities of wheat in this country from Canada and meat from the Argentine. We have seen signs increasingly as the months have gone on that Canada and the Argentine—to mention two only among a large number of countries—are suffering from this dollar starvation. Both Canada and the Argentine now expect to be paid for much of what they send to us in United States dollars, and this is one of the heaviest pressures we have been sustaining in the past months.
  Mr. Eccles Mr. Eccles rose—
  Mr. Dalton: I would rather continue. To answer the series of points raised by the hon. Gentlemen opposite—I was asked a question by the right hon. Gentleman who has just spoken and I want to give the answer. He said, "What is the rate at which the dollars are now being used?" In fact, it is, of course, the lines of credit which are being drawn upon and not any reserves lying behind the lines, on which I prefer to say not too much now. It is the lines of credit being drawn upon, and it is in relation to that that the question was put. The right hon. Gentleman thought that he had worked it out to something in the order of £900 million a year. I have also worked it out and it is not quite as bad, but not very much better, than the right hon. Gentleman said. As near as may be, in the first two quarters of this year, the rate of drawing down on the United States plus the Canadian dollar lines of credit, taking the two together, has been some £400 million worth of dollars. Multiplying this by two we find an annual rate. which may or may not be continued, of some £800 million. That is the answer, and the right hon. Gentleman will never again say that I have evaded him. Indeed, he could not have a straighter answer than that.
  This is, of course, a very serious figure, greatly in excess of anything which any of us contemplated would occur or would be tolerable. As my final statement of this part of the case, I want to repeat that this would not have occurred if we had not been getting—instead of the increased multilateral trade, to which many people looked forward—increasing multilateral paralysis, which is what the world is suffering from today; increasing multilateral paralysis of trade due to the fact that in the Western Hemisphere—to put it simply—those competent producers in North and South America, who stood aside from the ravages of the war, happy lands where no invader marched and where no bombs fell, although brave men sailed away from them to fight in Europe, these countries, unscorched by bombs and devastation, have been in a relatively most favoured position.
  What is deterring many of our efforts is that the scorched areas on the Continent of Europe and in parts of Asia have been so badly scorched that they are not yet making that contribution we had hoped
  2152
  for to the pool of wealth of the world. Therefore, since the supplies are coming forward so slowly and inadequately from these other parts of the world, the great bulk comes forward in conditions of world scarcity from the two Americas, and the prices of their products remain high and drive up the cost to us and to the other countries, which are unable to make their contribution to the pool or to benefit as they would be able to benefit in a real multilateral trade system because they have so little to put in and must, to sustain themselves and to survive, draw so much at such high prices from the favoured Continents across the Atlantic.
  Mr. Eccles: The Chancellor said that the Canadians now insist on being paid in free dollars for some of the wheat which we buy. If that is so, does it mean that they are unwilling that the credit should be drawn on at a rate determined by His Majesty's Government, and that therefore the actual drawings on the dollar credits are greater than the £800 million he has mentioned?
  Mr. Dalton: No, Sir, it does not mean that at all. It means exactly what I have said, but I am prepared to supplement the information I have given by telling the hon. Gentleman that I aggregated together in my answer to the right hon. Gentleman the drawings on the United States and Canadian lines of credit. It is also possible to state them separately, and I am quite prepared to give the corresponding figure. There is nothing to conceal here and no one is scoring by obtaining answers to questions. I am, perhaps, the only person who knows the answer to some of these particular points. I will give the hon. Member for Chippenham an answer to his question. In this same period, the first two quarters of this year, the drawings on the Canadian line of credit totalled 160 million dollars or, roughly, £40 million.
  I am not going to say anything which would suggest or could bear the interpretation that as between His Majesty's Governments in the United Kingdom and Canada there is anything less than the most helpful, harmonious and constant cooperation. The Canadian Government have done tremendous things to assist us and it would ill befit anybody here to suggest anything else, but they have their difficulties. They, too, are suffering like

  2153
  a great many other states—although much less strongly—from dollar starvation. So, to take another example, are the Swedes, another strong nation who kept out of two wars and have not been ravaged and scorched, but who have had to place very severe restrictions on imports against our goods and American goods just because they are running short of dollars.
  I have emphasised this aspect because it is part of the world problem, and it is no evasion of the Government's responsibility to point out that fact and to elaborate it a little. What follows, I think, is that if this increasing paralysis, as I have called it, is to be dispersed, it can only be by some international cooperative effort. No one country alone can do it by itself; we must all seek to join in arrangements to do it. I will not go into great detail on the question of cuts because in reply to the questions which have been put to me I am able to say at once that nobody, not even I myself, would suggest that the various cuts in tobacco, newsprint and the like, which I announced to the House recently, are more than a quite small contribution to a very great problem. None the less, if we are to keep the total volume of our imports about steady there is also a case, in the view of the Government, for doing a shift over within the bounds of the total volume from the less essential to the more essential. We would rather have more food in the total volume and less fags, and, possibly, less flicks—as the right hon Gentleman put it the other night.
  On tobacco it is possible to under-esti-mate what has already been done, and I should like to give the House these figures. Our purchases of tobacco in the calendar year 1946 amounted to £70 million. I am sorry to have to make the comparison in this manner but it is inevitable from the framework of the discussion. The amount we are budgeting for in the import programme from mid-1947 to mid-1948—I think the contrast is a reasonable one—is only £40 million. We are making a reduction of £30 million on £70 million, which is cutting it by nearly half, and I will explain to the House how we are doing that. On the basis of a cut in smoking in this country of 25 per cent. we get a reduction in purchases of 40 per cent. because we shall deliberately run down stocks. If there is less smoking going on a given stock
  2154
  will last longer. There is need for less in the pipeline—[Laughter]—the pipeline that leads to the pipe—and at the same moment we can live on the stocks and not need to replenish them. Therefore, it is noticeable, I think, that among a number of other items, we are able to save in respect of tobacco alone £30 million a year. I pass on from that point because I claim that it is better to have £30 million worth of credit than of tobacco and to be able to build up stocks of food that have run down very low.
  I pass on from that to consider what it is that we should do. The right hon. Gentleman asked what we were going to do. [HON. MEMBERS: "Hear, hear."] I notice that there is an air of expectancy. Would it be the first time that it has been declared that our purpose is by all means open to us, and in co-operation with all who are concerned in these matters, to stimulate and to press for a reduction of non-essentials to the utmost? It would not be the first time. That has constantly been said, and I say again that we are taking steps in that direction in our economic life. Is it really thought that if we had not nationalised the mines we should be getting more coal produced? We must have more coal, and certainly we should not have had a ghost of a chance of getting even the present output. Certainly, there is no chance of building up our output to the level that we desire unless we re-equip on a sub stantial scale those out-of-date and long neglected collieries. I am not seeking to go through the list, but, what is the complaint we get from every manager and every practical man in the industry? Their mining gear is old and they are short of up-to-date machinery. The only way that that can be dealt with is through the efforts that we are making now. We shall certainly bend all our efforts to stimulate, by all means that we can, the production of coal.
  I will not go through the list, but the same is true of all our more essential requirements in our national economy. Having spoken of the international aspect, I say with equal emphasis that no one nation alone can cure the paralysis from which every nation is tending to suffer, but that every individual nation must make its individual effort with its own powers to build up its own production. We shall do that here, and we hope that

  2155
  all good citizens will help us, regardless of their politics. We do not put it higher than that.
  A lot of these matters can be perfectly well conducted without reference to political controversy at all. There are technical matters of how industry can be stepped up and brought up to date. Indeed, this Government, and I myself as Chancellor of the Exchequer, have done our best in various directions to make easy the re-equipment of industry. I mention cotton in particular. Large sums have been set aside, of which the House as a whole has approved, for the more rapid re-equipment of the spinning section in particular, in the cotton industry and of bringing about new amalgamations or more effective union and the like. All that is well in hand.
  In regard to farming, I do not want to pitch this case too high, but I doubt whether the farming community as a whole has ever felt that a more effective and useful Bill has been passed though this House, to give them security in regard to prices, and to create the conditions in which the best production can take place, than the Bill which was recently conducted through this House by my right hon. Friend the Minister of Agriculture.
  As the Lord President of the Council said, What about the Empire? We are doing our utmost there.
  Sir Waldron Smithers: To throw it away.
  Mr. Dalton: If the hon. Gentleman, or any of his Friends, had dug and delved in the Empire in their day as we are going to do, the Empire would be a more productive place than it is. A shameful thing about some parts of the Empire, particularly in Africa, is that there are such great natural riches that have lain neglected for so long. We are setting out to cure and to deal with that. I insist on making that point here.
  Mr. W. Fletcher Mr. W. Fletcher rose—
  Mr. Dalton: May I just finish this point, and I will give way? It used to be suggested that this party was not interested in the Empire and that the party opposite had a monopoly of interest in the Empire. That was never true. It certainly is the case that until my right hon. Friend
  2156
  the Minister of Food the other day propounded his scheme for the growing of groundnuts in East Africa, there were never the wits nor the enterprise opposite to do it. It is the Labour Government which have in the last weeks and months brought forward more far-reaching schemes for the development of our Empire than ever before in its history.
  Mr. Stanley: As the right hon. Gentleman appears to want to make a party matter of this, may I ask whether he has entirely forgotten the £120 million which was given to the Colonies as a free gift during the Coalition Government and which, I think, ranks higher than the £100 million, which is a repayable loan?
  Mr. Dalton: We will see, but this is a wicked animal which when attacked defends itself. I will make a non-party speech as long as we do not have partisan reaction—only just so long. I must get on. I have other things to say. This Government is determined to stimulate production in this country and in the Imperial territories for which we are responsible, particularly Africa, and that will be pursued with all the energy and the vigour at our command. I hope we shall not entirely lack support among good citizens—I will put it broadly—in what we seek to do.
  With regard to the other action which we are taking, my right hon. Friend the Foreign Secretary is taking an extremely prominent and vigorous part in bringing the nations of Europe together, in order to make a coherent economic plan for stepping up their own production and the efficiency of agriculture and industry in each of the European countries. I have high hopes, and I think all good citizens will have high hopes, that the right hon. Gentleman will succeed. There are tremendous possibilities here also of bringing together countries shattered by the war and countries which in the past have pursued narrow nationalist policies behind high tariff walls shut away from their neighbours. There is at least a chance, under this new scheme now being developed in Europe, that we shall be able to get a higher production and a greater efficiency in the continent of Europe. If I may summarise what we propose to do, it is that we propose to do everything within our own power to stimulate our own industry and agriculture and our own Colonial territories; and also we propose

  2157
  to have the maximum co-operative effort which we can achieve with other nations equally bent upon that increased production which alone can be the basis of higher standard of life for all of us.
  This is the final point which I think it well to make, because it has been said that the Government are to blame for some of the difficulties arising from its financial policy. If we were planning for a mere return to the situation we had between the wars, if we had made our plans for two million unemployed in this country, and if we had made our plans for a state of affairs in which we had none of the recent improvements in the social services, then indeed our task would not seem so difficult—it would be just as difficult, but it would not seem to be so difficult—because, our people not having the money to buy, as they have now, we should not have been conscious of the shortages in the shops. [HON. MEMBERS: "Oh."] The shortages of money in people's pockets would have concealed, as they did years ago, the realities of the situation. The policy which we have pursued has brought clearly into the light and consciousness of men the difficulties from which we are suffering. They are the shortages of goods and services required in order that men shall live a happy, prosperous and decent life, and it is towards the conquering of those shortages that we shall direct all our efforts.
  In conclusion I say this. This import programme is a provisional programme. It will indeed be necessary from time to time to re-examine it, to consider on the one hand how far our targets for exports and the like are being achieved, and on the other hand to reconsider the volume of imports we are proposing to bring in. We shall conceal nothing in the study of those things. We shall conceal nothing from the people of this country, and shall continue to tell them the facts, as we have in the past. I have made only too many speeches on this subject, along with a number of other hon. Members. We believe that these people of ours will in peace as in war go forward and face with a determination and courage whatever dangers and difficulties lie in front of them. The purpose that we must achieve within a measurable time—a short and measurable time—is that we must fight our way through to a position in
  2158
  which, whatever we need to purchase from across the seas, we pay for by exports from this country, whether visible or invisible. That is the aim. We shall try to achieve it as quickly as we possibly can and, meanwhile, I hope the right hon. Gentleman will admit that I have answered his questions, whether he likes it or not.
  It being Ten o'Clock, the Motion for the Adjournment lapsed without Question put.

  FOREIGN MARRIAGE BILL [Lords]
  Considered in Committee [Progress, 4th July].
  [Major MILNER in the Chair]

  FOREIGN MARRIAGE BILL [Lords]

    CLAUSE 3.—(Provisions as to Dominions.)
    Amendment proposed, in page 3. line 25, at the end, to insert:
    Provided that any reference to a member of the naval, military or air forces of His Majesty shall be construed as including a reference to a member of the said Forces raised in a Dominion who is temporarily attached under Subsection (2) of Section four of the Visiting Forces (British Commonwealth) Act, 1933. to a part of the said Forces raised in the United Kingdom."— [Mr. P. Noel-Baker.]
    Question, "That those words be there inserted," put, and agreed to.
    Clause, as amended, ordered to stand part of the Bill.
    Clauses 4 to 7 ordered to stand part of the Bill.
    Bill reported, with Amendments; as amended, considered; read the Third time, and passed, with Amendments.

  SUNDAY CINEMATOGRAPH ENTERTAINMENTS
  Resolved:
  "That the Order made by the Secretary of State for the Home Department, extending Section I of the Sunday Entertainments Act, 1932, to the City of Ripon, a copy of which Order was presented on 4th July, be approved."
  "That the Order made by the Secretary of State for the Home Department, extending Section I of the Sunday Entertainments Act, 1932, to the Borough of Huntingdon, a copy of which Order was, presented on 4th July be approved."
  "That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act,

  2159
  1932 to the Borough of Wanstead and Woodford, a copy of which Order was presented on 4th July, be approved."
  "That the Order made by the Secretary of State for the Home Department, extending Section 1 of the Sunday Entertainments Act, 1932, to the Urban District of Oakengates, a copy of which Order was presented on 4th July, be approved."
  "That the Order made by the Secretary of State for the Home Department, extending Section I of the Sunday Entertainments Act, 1932, to the Urban District of Woking, a copy of which Order was presented on 4th July, be approved."—[Mr. Oliver.]
  Motion made, and Question proposed:
  "That the Order made by the Secretary of State for the Home Department, extending Section I of the Sunday Entertainments Act, 1932, to the City of Manchester, a copy of which Order was presented on 4th July, be approved."—[Mr. Oliver.]
  10.4 p.m.
  Mr. G. Lang: I beg to object, Mr. Speaker, to the approval of this Order for Manchester on the grounds that the poll at Manchester was entirely inadequate, and I hope to show briefly and to persuade my right hon. Friend that it was in no sense a valid poll. As you, Sir, would quickly inform me if I were to do so, I cannot, and I do not desire on this occasion-to discuss the merits or demerits of the Sunday opening of cinemas. I am only concerned here with the question of whether this poll was properly taken, whether it was carried out in accordance with the Act and the statutory rules, whether it was, in fact, a proper expression of the local veto of the citizens of Manchester. I very much regret that it should be in that city that this unfortunate occurrence should take place.
  I wish to draw the attention of the Home Secretary, formally, for I am sure he is well aware of it, to the section of the regulations which deals with the number of polling booths to be provided in relation to the number of electors. It says that in polling districts of not more than 500 electors only one polling station shall be provided, and goes on to point out that if there are more than that number the council may provide an additional number of stations. That means there must be one provided for each 500 electors. It cannot mean that there are less, and, therefore, must mean that there is one or more. In Manchester, with an electorate of 498,905 there were actually provided 61 ballot boxes, whereas in Liverpool, with something like the same
  2160
  electorate, there were 674 ballot boxes. These 61 ballot boxes, catering for all those electors, gave an average of one ballot box for just over 8,000 electors. The actual hours of polling were from two o'clock to eight o'clock—only six hours —in which people were able to vote, with only 61 ballot boxes for roughly half a million people. How that could be interpreted as a real attempt to ascertain the will of the citizens of Manchester, I cannot see.
  But the story does not end there. Not only was there a totally inadequate number of ballot boxes, but the whole scheme broke down. I have no desire in any way to attack the learned Town Clerk of Manchester, who was the returning officer. I am quite sure he did what he thought was right and used his judgment in what he believed to be the best interest, but the plain fact is that the whole thing was in confusion. There was a stupid economy about the whole arrangements. The notice was bad. The Town Clerk himself, who has been most fair, says there were large posters about giving wrong instruction in regard to the polling stations. They were not issued by the Town Clerk, but by the cinema people. They did, as the Town Clerk says in letters I have from him, cause considerable confusion, and there were not enough advertisements issued on the part of the Town Clerk to counteract that and properly inform the people. So we had a stupidly small number of ballot boxes, and great confusion as to where people could go. In addition to that there was the greatest incompetence inside the polling stations. One has considerable sympathy with the Town Clerk who, having been criticised earlier because he had employed paid officials to do this job, now engaged all sorts of people, including unemployed people, and found—this is always the case—that the price of generosity is gross inefficiency.
  So the arrangement inside the polling stations broke down, and the Town Clerk himself said he was obliged, late in the day, to send 75 experienced officials to do what they could. That, of course, was too late. The result was that people who actually queued up at six o'clock, failed to vote by eight o'clock, and thousands of people in Manchester, those who were in favour of Sunday cinemas as well as those against, were deprived of the opportunity of saying what they wanted. I have met

  2161
  no one from Manchester who does not agree that the whole business was a complete fiasco. I have had a large correspondence, and so, I am sure, has the Home Office. Unless the experience of my right hon. Friend is very different from mine, not a single person has written in defence of this vote. It is essential that when Acts of Parliament like this are passed, and the will of the people is to be taken, it should be done in the most favourable circumstances, so that whatever the result there shall be no sort of feeling that there has been a rigged or incompetent election, or that anybody has been prevented from doing what he wished to do. I say emphatically that this election in Manchester was a complete farce. Less than 5 per cent., or about 5 per cent. of the people voted. True, there was a majority in favour of Sunday cinemas. I concede to my right hon. Friend, if he desires it, the gift of saying that under favourable conditions the majority might be larger, but that is not the point at issue. The point is much more important than whether people should see Greta Garbo or anyone else on Sunday; it is that where an Act of Parliament provides for the expression of the will of the people, the will of the people shall be expressed. There was no real opportunity of doing that in this election.
  If this poll is allowed to remain it must become a sort of by-word for these things. I hope it will not. I hope that my right hon. Friend will feel that he is justified in saying that this poll should be taken again so that Manchester people will be able to go to the benefits or what they may be of cinema entertainment on Sunday with a clear conscience, if they still desire to do so. I will not read any extracts from letters I have had because I expect my right hon. Friend ha? received them, and although he is extremely difficult to move, he is, as I have said in the House before, a very fair Minister, who listens to all representations, and who pays full attention to all that is put before him. I am sure that he has carefully considered this. But in these elections it looks to me as if the supporters of the cinema industry take the law very much into their own hands. They have far more freedom than we have. When we fight our constituencies we are fenced in by the Corrupt Practices Act. There are some things which we must not do, and there are things which
  2162
  we might do in ignorance which might cause us to be unseated. Such things nave happened. Be that as it may there is nothing here to prevent vast expenditure of money.
  I ask my right hon. Friend if it is not possible for him to consider, with regard to the purity of this business, whether the same restrictions should be applied? If we are to be fenced in, so should the cinema industry be fenced in, and there should be no loophole for the rigging of an election or the doing of improper things. I appeal to my right hon. Friend, whose fairmindedness gives me great confidence, on the grounds that there were far too few polling booths—61 for a population of nearly half a million, which was utterly ridiculous, that they were inadequately staffed, as the Town Clerk frankly admitted, that the hours from two to 8 p.m were far too short. In many other places polling took place over 12 hours, and in one place over 13 hours. I know that the Act says that the polling booths must be open from six to eight p.m. Just before that Act was passed I lost my seat in this House; otherwise that Measure might not be on the Statute Book. I did more than anybody else to keep it off the Statute Book in 1929 and 1930. I would not like Members to know what we resorted to upstairs in order to do that. There was a very competent chairman to see that there was nothing improper, but every advantage was taken of what we were allowed to do.
  I ask my right hon. Friend whether he does not feel that in all the circumstances, in view of the great dissatisfaction that has been caused—and as a neighbour of Manchester I am zealous for Manchester's good name—[Interruption]—these things would never have happened in Stalybridge— [Laughter.]Hon. Members may laugh but "so good" is Stalybridge that since I came to this House my right hon. Friend has had to take control of the police force. I hope that the Home Secretary will make it easier for Manchester to have a proper ballot with a fair result and be obliged to blush in front of nobody—not even the hon. Member for Stalybridge.
  10.15 p.m
  Mr. Harry Thorneycroft: I hope to show that the Statutory regulations were properly observed

  2163
  when the poll took place. If there was any confusion at all, it was caused by the church militant. In the earlier part of this year the two contending parties, that is the Church Council of Manchester and the Cinema Proprietors' Association, approached the Town Clerk when the question that the temporary order should be made permanent was first advanced. They got together and they agreed to the continuation of the opening of cinemas provided that the Cinema Proprietors' Association would agree to certain suggestions made by the organised churches in Manchester. Amongst those agreed conditions were stipulations that children would not be admitted to cinemas on Sundays before four p.m.; that the present gentlemen's agreement observed during the war, that children should not be admitted to cinemas on Sundays unless accompanied by a parent or guardian, was to continue; and that no horror films were to be shown, the cinema proprietors agreeing to try to raise the general standard of the films shown on Sundays.
  A permanent joint committee representative of the Association and of all the churches in Manchester was to be set up. The committee was to review from time to time the conduct of the cinemas and of the audiences on Sundays. But one or two of my hon. Friends who were not prepared to join this council got together and decided that in no circumstances were the citizens of Manchester to have the privilege of seeing pictures on Sundays. As a consequence they attended the town meeting, caused a frightful uproar, objected to the way in which the Lord Mayor put the question at the end of the meeting, and shouted that it was their determination to go to a poll. Before the war, it was the practice in Manchester to give a chance of a job at a fairly decent rate of pay to the unemployed section of the community. In those days, perhaps a better educated type of man was unemployed—the clerk, and so on. It was found that they could be trained easily and that they were competent to do the job. In the poll that took place in 1946 the clerks and presiding officers were recruited from the local government officers employed by the corporation. Some of our friends made quite a to-do about that. As a result, the city
  2164
  council decided to use the unemployed again.
  It is true that the unemployed were recruited for this purpose on the occasion of the poll on 8th May. The ballot started at two o'clock in the afternoon and ended at eight. The parties whom I have already named agreed that that was a good and sufficient time in which to allow the poll to be carried out properly. In the afternoon our friends— these militant Christians—got busy again. They organised congestion at the polling booths. They got together in large parties at agreed times so that the staffs inside the booths would be embarrassed and handicapped in dealing with the voters. They also began to demonstrate how useful they could be in this direction by telephoning the local newspaper office and asking them to send photographers so that the queues outside the polling booths could be photographed and their pictures appear in the paper on the following day. I do not think there is any hon. Member for the City of Manchester who could be brought forward tonight to say that the poll was improperly conducted. We do agree, as the Town Clerk readily conceded, that it could have been done better, but the whole of the statutory regulations were properly observed. I ask that the House shall support the Home Secretary.
  10.20 p.m.
  Mr. Janner: I do not want to participate in the controversy between the two hon. Members who have just spoken, but there is one very interesting point which they have raised on which I may, perhaps, be enlightened. In Section 11 of Statutory Rule and Order 828, it is stated:
  "The returning officer shall provide a suitable number of polling stations at each polling place."
  and paragraph (b) says:
  "Where the number of electors in the borough or urban district, or (if the borough or urban district is divided into polling districts) in any polling district, is not more than 500, only one polling station shall, unless the council otherwise direct, be provided for the borough or urban district or polling district."
  Obviously, that cannot mean less than one, and, if the council decided to have more, it will mean more. Then it goes on to say:
  "and so on for each additional 500 electors or for any less number of electors over and above the last 500."

  2165
  It seems to me that what was intended by that paragraph was one polling booth, at least, for every 500 electors. It cannot mean anything else, because, if it did, it would be less than one for the first 500, and, confusing as the Subsection is, it does seem to me that, in the ordinary interpretation of the Statute, mean that there is to be at least one polling booth for every 500 electors. That is what it seems to me to mean, and I am only asking for an explanation. I would like either my hon. Friend who has just spoken to answer that, or my right hon. Friend the Home Secretary to say what it means.
  10.24 p.m
  The Secretary of State for the Home Department (Mr. Ede): I think I ought, first, to explain to the House exactly the position in which the Secretary of State stands in regard to these Orders. It is a most peculiar requirement of the Sunday Entertainments Act, 1932, in paragraph (7) of the Schedule to which it is stated:
  "A draft order submitted to the Secretary of State in accordance with the foregoing provisions of this Schedule shall be laid by him before Parliament."
  Therefore, I have no other duty, once I receive the necessary certificate from the returning officer, than to lay the Order before Parliament. I presume that, if I thought that the Order had been in some way improperly obtained, or that irregularities had occurred, it would be my duty to move it, and then invite the House to defeat me in trying to get the Order through. I have listened to the impressions of my hon. Friend the Member for Stalybridge and Hyde (Mr. Lang) with regard to his murky past in this matter, and with regard to what he has done in the way of defeating the Corrupt Practices Act. I want to say that I think he has given to the House this evening an altogether prejudiced and unreliable account of what actually transpired in Manchester. My hon. Friend says that inaccurate posters were issued. But accurate posters were issued by the Town Clerk, and, in fact, I have here a statement by the Town Clerk in which he says:
  "On the day on which the requisition for a poll was received, the newspapers and the Cinematograph Exhibitors' Association were given a list of the polling stations which would be used. Furthermore, the usual posters were exhibited throughout the city, correctly informing the public where they
  2166
  must vote. But, unfortunately, the public naturally observe what they read in the newspapers and what they see on the screens at the cinema houses more readily than they do posters on hoardings or on church notice boards."
  All of us know the anxieties that we have had in the past with regard to the issue of the poll card, in order to be quite sure that it shall be an absolutely accurate document, and the difficulties that we incur on occasion during an election when a school which is to be used as a polling place has entrances in two streets—where it happens to be on a corner site—and where we have always known it as a school in a certain road and have put the name of that road on our polling card, and then suddenly find that the returning officer has used the name of the other street. In the days when election petitions were more frequent than they are now, the fact that an inaccurate description of a polling station had been given was often made the basis of a petition.
  It seems to me that, on this occasion, the Town Clerk issued accurate posters. It should be made quite clear that the Town Clerk is not the returning officer. The Lord Mayor of Manchester is the returning officer. Although I have no doubt that he acts through the Town Clerk, the responsibility rests on him. Accurate posters were issued, and if people had taken the trouble to consult them they would have known where to go. If they allowed themselves to be misled by unofficial documents, then I do not think that anybody can blame the Lord Mayor. He discharged his duty in issuing the accurate posters.
  With regard to the point raised by my hon. Friend the Member for West Leicester (Mr. Janner) and by my hon. Friend the Member for Stalybridge, I read that Subsection to mean that it is the duty of the council to consider what polling stations are necessary, and that, if they come to the conclusion, on their experience of taking polls, that it is a wasteful expenditure of the ratepayers' money to provide as many polling stations for elections of this description as they do for Parliamentary and municipal elections, they are entitled to vary the number either way. Manchester had some experience of polls in connection with the Borough Funds Act, and the rules applicable here have, in fact, been taken

  2167
  from those which have been used for polls under the Borough Funds Act as to whether private Bills shall, be promoted for presentation to Parliament. They have never—and I regret to hear of it in regard to Manchester, which is a city for which I have the greatest respect—treated these polls except in the most light-hearted vein. In 1932, about 13.2 per cent. of the electorate went to the polls, and there must have been something exciting, because in 1938, 5.3 per cent. went to the poll. So that, compared with the 1938 vote, the poll on this occasion was not unduly small.
  Mr. Scollan: Does not my right hon. Friend think that 5.3 per cent. is uncommonly large?
  Mr. Frederick Lee: As the polling booths are normally in day schools for municipal and Parliamentary elections, would this have meant that the children would have had a day's holiday?
  Mr. Ede: Well, that would have been popular with the school children, and no doubt with the teachers as well. But what happened in this case? The City of Manchester, in dealing with polls of this sort, has carried out the procedure. Accurate information was issued as required by the Statute, and it is to be regretted that, in a matter of this kind, so small a number of the electors should have taken the trouble to vote. But I am informed by impartial observers that the description given by my hon. Friend the Member for Clayton (Mr. H. Thorneycroft) of what happened on the day was accurate. An organised effort was made by certain people in the city— not, I understand, officially connected with any particular body but people who think that the days of Eatanswill should not be allowed entirely to disappear—who organised a demonstration. They thought, no doubt, that in these days of publicity, a pictorial record ought not to be lost to posterity, and there was an organised effort to make the poll as difficult to take as possible. Surely it is the experience of all of us who have fought elections, or been in any way connected with them, especially in populous boroughs, that there have been such incidents. It is not an infrequent thing to find that the poll closes with a number of people who have postponed going to the polling booth until
  2168
  so late an hour that they find they are excluded by the people who have gone just ahead of them. In my younger days in politics, "Vote early and vote often was the rule, the second being a rule very largely observed in Ireland. But in these days, most of us put on our polling cards, Please vote early." We do that because we desire to prevent those rushes at the end of the day.
  I must point out to the House that the requirement under the regulations is that the poll must be open for the two hours from six to eight p.m. That was a regulation drawn up in 1932 by my predecessor, Sir John Gilmour, and it has remained in operation ever since. In this case, the Lord Mayor of Manchester decided to take the poll from two to eight p.m., which is three times the minimum required by the regulations. I cannot help thinking myself that in any populous cities and in other areas where many of the electors live a long way from their work it might be desirable to have an earlier polling hour so that people who wish to do so can record their votes before they go to work. But these hours of 2-8 are not unusual in this kind of poll.
  My hon. Friend raised one other matter with which I think I ought to deal. I am myself gravely disturbed at the amount of money that is spent on the polls by both sides. It will be within the recollection of the House that a few years ago the Lord's Day Observance Society received a request and from that time onwards these polls have been contested by the opponents in many areas with a great deal more vigour than they were before. But undoubtedly the supporters of Sunday cinemas who are quite unrestricted, as my hon. Friend said, by any corrupt practices or illegal expenditure Acts, do spend very considerable sums of money on this kind of poll. In addition, as I understand it, there is no restriction on the provision of vehicles and in many ways these polls are taken in a way that would not be tolerated in connection with the ordinary municipal or Parliamentary elections where a return of expenditure has to be made. I hope that the practices on both sides will cease, otherwise I am sure that this House will expect that some steps shall be taken in order to prevent some of the publicist methods that are employed in certain of these polls.

  2169
  I have been in communication with the City of Manchester. I have taken steps to inquire into all the complaints that were made to me. I have come to the conclusion' that having regard to the practice of the City of Manchester in polls of this kind, the poll was conducted in accordance with precedent and tradition and in the way that has been observed with regard to the promotion of private Bills. I think that is the appropriate standard by which to judge these polls, and my own recommendation to the House is that this Order should be confirmed. I am convinced, as my hon. Friend the Member for Stalybridge has said, that if we reject the Order and compel the City Corporation of Manchester to go through all the motions again the results, as far as the presentation to this House is concerned, will be exactly the same. We should be asked again to confirm an Order and all we should have done would have been to put the inhabitants of Manchester to the expense and inconvenience of holding another poll, but I do hope that some of the scenes which characterised the polling on this occasion will not become an ordinary feature of our public life in this country. I also hope that throughout the country both sides will observe greater discretion in the way they spend money and in the methods that are employed in some of these polls May I commend the House to confirm the Order.
  Mr. Lang: May I ask the right hon. Gentleman this one question because he has been very interesting. Does he really think that 61 polling boxes for an electorate of half a million should be commended because it might go out after this Debate that this is a fair proportion.
  Mr. Ede: That is a matter the responsibility for which is placed on the turning officer and on the city council. I am reluctant myself, in view of the history of polls of this kind in this city, to say that it was inadequate. I am quite sure that if the people who organised the processions between seven and eight had devoted their energies to getting the same number of people to the poll between two and seven, a great deal of the inconvenience would have been avoided.
  Question put, and agreed to.
  Resolved:
  "That the Order made by the Secretary of State for the Home Department, extending Section I of the Sunday Entertainments Act, 1932, to the City of Manchester, a copy of which Order was presented on 4th July, be approved."

  HOUSE REPAIRS, BIRMINGHAM
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. J. Henderson.]
  10.41 p.m.
  Mr. Wyatt: After the affairs of Manchester have had a good airing this evening, I would like for a few moments to turn the attention of those hon. Members who remain to the affairs of an even larger and more important provincial city, namely, Birmingham. I wish to raise the subject of housing repairs. It is a question which I feel is possibly being neglected, or overlooked somewhat, in view of the energy being directed to the new housing programme; but the majority of the people in the country, certainly in Birmingham and in my constituency, will have to live in the same house for the next 10 or 15 years at least, and perhaps in many cases for longer.
  My constituency, Aston, is a typical area of Birmingham. It is a slice of working-class houses in an industrial area, and it is the case that the houses are in a bad state of repair, and a great number of them were condemned before the war. Aston is not going to be affected by any development scheme whatever—at least, not for a long time. Thousands in that constituency have no chance of getting new homes for at least a generation. There are nearly 15,000 houses in the area, and the Birmingham health department is confident in asserting that nearly every one of them requires repairs of some sort or another. There are at this moment more than 2,000 statutory notices outstanding in that area which are waiting to be carried out. These notices at the moment are issued only in respect of very serious defects, or where there is some danger to life. These houses were bad before the war, very largely owing to the neglect of the landlords of that time. Now' owing to the impossibility of carrying out repairs during the war and the bad weather at the beginning of this year. they are in an absolutely appalling condition.

  2171
  Thousands of them have holes in the roof; they have no spouting; there is no paint to hold the woodwork together; and in many cases the foundations are splitting. It is normal in many streets for householders to put buckets to catch the water which flows almost unhindered through the roofs.
  What is the procedure when one has a house in that condition, with holes in the roof and no spouting left upon it? The tenant goes to the public health department and complains about the state of the house. The sanitary inspector goes along to look at the house to see whether or not the complaint is justified. I should mention that there is now half the number of sanitary inspectors in Birmingham compared with the number before the war, which makes their job even more difficult to carry out. After the inspector's visit, about a week later, if the complaint was justified, he serves a statutory notice, or arranges for a statutory notice to be served. Two months later, if nothing has been done—and in most cases nothing has been done—the inspector goes along to the house again; and then a further notice is served on the owner.
  There is great delay after that, a delay of as much as two months. Then follows a summons which obliges the owner or his agent to go to court. A court order is made which usually gives more time to the owner in which to complete the repairs. The delay is perhaps 28 days, or sometimes more. It is only when that order has not been complied with that the local authority can step in and do the job itself. The local authorities are, naturally, very loth to bring many of these statutory notices to the summons stage because they do not have the materials to complete the job in any case. That is why there are, I think, only 30 summonses outstanding in my own constituency of Aston. Normally, the interval of time between the first appearance of the defect and the actual repairing of it is six months. In many cases the delay is as long as 18 months. I have cases which were outstanding when I became a Member of Parliament and which are still outstanding today. Delays of 12 months are quite frequent.
  One of the most general excuses which the owners and their agents give is that there are no materials with which to do
  2172
  the job, and that they cannot get the labour. That is not always true. it is a good excuse for the lazy or neglectful agent or owner who does not intend to spend any money on these repairs. But it very often is true, and it is nearly always true in Birmingham. The chief deficiency, the chief shortage, is the shortage of slates. It is now practically impossible in Birmingham to buy slates for housing repairs. Permits are frequently issued for slates but are not honoured. Sometimes slates of 16 by 10 are available, but they are no use, because it is slates of 24 by 12 which are needed. I know of several repairers in my own area who have spent a lot of time trying to get these slates, with no result. They have tried to use asbestos sheets, but the owners have frequently refused to allow that. Another shortage is of zinc for spouting and flushings. Another very important shortage is of cement and adamant. The same applies to lavatory pedestals, and paint, for wood. There is, of course, in addition, some shortage of labour for house repairs.
  One of the basic troubles in this matter is that the Ministry of Works seem to have made the erroneous assumption that jobs costing under £10 do not really require special facilities for obtaining materials because the amount of materials needed is so small; but if you have a whole street full of jobs under £10—and there are whole streets in my own constituency where one could count 60 houses in need of such repairs—at least as much material is needed as for a new house. Of course, it is not available.
  I am beginning to believe very strongly that one of the troubles is that too much material is being diverted to new houses. Some will have to be diverted back again to repairing and reconditioning old houses. I think it is only fair to point out, on behalf of the people who will have to live in such houses for a great many years to come, that in my area there are still nearly 600 houses out of 15,000 which have no water laid on; that there are 3,500 which have no lavatories; and 11,000 which have no baths, let alone bathrooms. That is a typical area. Something has to be done to make them habitable if they are to be lived in for another 20 years. In Birmingham, 4,000 statutory notices are being served every month, but they are not being met, and nothing is happen-

  2173
  ing. One hundred and fifty licences are being issued in Birmingham every day. Ninety per cent. of these are for house repairs, but permits are not always issued, and if they are, certainly not honoured. I suggest that the Government should set in hand at an early date a complete programme for re-conditioning houses throughout the country. These people pay rates for new houses to be put up which they will not be able to live in for 20 years. It is asking very much of people to remain patiently under these conditions and to expect them to get cheerfully out of beds on which rain has been pouring all night, and then to be told on their way to work, to work harder when they are probably suffering from rheumatism as a result of the conditions in which they are living.
  I think that more pressure will have to be put on landlords as well. There is a tendency for landlords to say: "The Rent Restriction Act still applies; why should we spend money on repairing a house when we cannot get it back by putting the rent up?" It is a psychological attitude which one can understand, even if one cannot sympathise with it. I feel that more flexibility is required in the administration of the present regulations with regard to materials such as plasterboards for ceilings. It would be a great help if we were able to use plasterboards for ceilings; but we are not allowed to do so because they are all allocated to new houses. There is a good supply of plasterboard in Birmingham that could be made available for repair work, but it is not allowed to be used because it is all waiting for new houses. The wretched repairer has to try to get laths and plaster and he has to try to obtain the labour to put the plaster on. I think these difficulties should be ironed out.
  My right hon. Friend the Minister of Health has said on one or two occasions that slates and other repair materials are available. That is totally untrue and certainly it is not true of the other materials I have mentioned. I ask him if he will give some hope to these people, who are really desperate for want of these repairs and are living in appalling conditions, that their needs are not being forgotten and that something will be done to make more materials available.
  10.53 P.m
  Mr. Shurmer: I do not want to take up the time of the House for more than a couple of minutes. I feel very indebted to my hon. Friend who has raised this question because, as a member of the Birmingham City Council for 26 years, I know something about this awful property repair problem, and there is a great need here. My hon. Friend has not stressed the fact that there are five great central areas in which people are living in the most appalling conditions. As I think I said in my maiden speech, there is a need because it may be quite a number of years before we can house the 59,000 people who will require houses after we pull down the slum houses.
  There are 32,170 houses in these slum areas. Over 19,000 are back-to-back houses, many of which have been standing for nearly 100 years in back streets, and 24,600, that is, 76 per cent., have been declared unfit by the medical officer of health. Four thousand are without separate water supply and over 18,500 are without separate sanitary accommodation. It means bad enough sanitary arrangements in a house that has one family using the sanitary convenience when it needs to be repaired, and more especially is it so when 30 or 40 people are using one convenience. I spent part of my time living in courtyards for a number of years, and used to do street by street, courtyard by courtyard, trying to get repairs done. What is the matter? The law wants tightening up. There is not the slightest doubt that if we find a butcher who is selling bad meat, we seize that meat and fine him. Yet we allow landlords to own slum property which is detrimental to the health of the people. We impose only a small fine on them and let them excuse themselves and say they are unable to find the materials and are unable to get the labour to carry out the work.
  I know that my hon. Friend the Member for Ladywood (Mr. Yates), who represents a slum district, and was a colleague of mine on the Birmingham City Council, wishes to say a few words. I would emphasise that it is time that the Public Health Act, 1936, was altered. We ought to be able to take over the property if the excuse is that the landlords are refusing to repair houses. Thousands and thousands of houses need slates, extra

  2175
  spouting, eave spouting and down spouting, and one can go into any house in the central area and find people having to use buckets, and living under inhuman conditions. I hope the Minister will see that in Birmingham, where thousands made a good war effort, houses will be given a little patching up until we can sweep the slums away. A little bit was done by the Germans. I wish they could have done more without the loss of life.
  10.56 p.m.
  Mr. Yates: I also am grateful to the hon. Member for Aston (Mr. Wyatt) for raising this matter. We Members of Parliament for Birmingham have felt for several months past the tremendous anxiety the people are experiencing in the City of Birmingham, and for that reason, having sent many letters to the medical officer of health regarding the unhealthy conditions of the houses, we felt it necessary to raise the question in this House. On 23rd June, the hon. Member for Moseley (Sir P. Hannon) and I raised the question with the Minister of Works, who was asked if he was aware of the shortage of necessary materials for carrying out essential repairs. His reply was:
  "I am not aware of any serious difficulty in meeting these needs."
  I must say I was extremely amazed at that answer, and I want to ask the Parliamentary Secretary to note particularly that, as a result of many complaints we received, I wrote a letter to the medical officer of health for the City of Birmingham, Dr. Newsholme, asking him what the position was, and this was his answer:
  "There is at the present time very great shortage, in particular of slates, so that we have the utmost difficulty in getting repairs, even to serious damage to roofs. I understand from the chief sanitary inspector that builders are obtaining substitutes in the form of asbestos sheets. In other cases, we have knowledge that builders have had to take slates from outhouses in order to repair holes in a roof, rightly regarding the latter as the more urgent requirement."
  That is the opinion of the medical officer of health, and I have also with me the report of an agent, responsible for many hundreds of back-to-back houses, in which he says in one instance:—
  "We are applying for a licence to put the work in hand, and in the meantime we have given instructions to the builder to strip the washhouse roofs, salvaging the slates for use
  2176
  on the main roofs, and to cover the washhouse roofs with corrugated iron."
  I say it is a misdirection of labour, and I ask that an inquiry should be made so that this great anxiety shall be removed from the people of Birmingham.
  11.0.p.m.
  The Parliamentary Secretary to the Ministry of Health (Mr. John Edwards): I am grateful to my hon. Friends for raising this matter. There are perhaps one or two points of detail which they may permit me to look into and upon which I will write to them. I should not seek to contest for one minute—I myself have lived in Birmingham, though it was some years ago—that there is a great number of sub-standard houses in Birmingham, that people will inevitably have to go on living in them for many years, and that there is a vast programme of patching up which could be done if we had the materials. I know there is a limit to the patience of those who are contributing their rates and taxes to the building of the new houses. I know there is a limit to their patience when they have to live under all too dreadful conditions; but I am sure my hon. Friends would not expect me to anticipate the considered statement that my right hon. Friend promised on the subject of reconditioning in general. I must confine myself to the more limited aspect of the subject—the business of repairs.
  Of course, one could give a general answer which would not be acceptable to my friends. One could say we have not unlimited building resources, that the available resources are being used to the full and that, therefore, any substantial expansion of repair work could only be at the expense of new house building. As everyone knows, over the last few years huge pent-up demands for repair and maintenance to existing houses have accumulated throughout the country, but I must insist that until at least the worst of the housing shortage has been overcome, repairs, except for essential and urgent work, must continue to be deferred. But I would ask my hon. Friends to believe that a substantial amount of work is being done in Birmingham, and I want them to take note of it. I think it would be as well to put on record what is in fact being done. In December last the number of licences issued by Birmingham Corporation was 1,383, to a value of

  2177
  £65,690. In January, the number of licences was 1,881, to a value of £100,350.
  Mr. Yates: Would the hon. Gentleman say whether they get the material? Licences may be issued but do they get the material?
  Mr. Edwards: I will come to that point, but at the moment I am giving figures about what is being done. I will not give the figures for February or March because the totals were approximately the same. But the April figures jumped to 3,472, to a total value of £148,210; and in May the figure was 3,295 and the total value £158,940. I know that not all licences are for housing repairs and maintenance work, because the figures include small non-housing jobs where the value of the work is under £100. But I do want my hon. Friends to appreciate that there has been a heavy rise both in the number of licences granted and the value of the work under licence. This may be partly accounted for by the take-over by the corporation of some licensing functions formerly exercised by the Ministry of Works, but corporation officials themselves, at zonal conferences we have held, have said that the major part of the increase was due to the licensing of more house repair work.
  The second thing we have to bear in mind is the head of labour for use for this purpose. The total labour force in Birmingham, on housing work, is estimated to have averaged during the last 6 months some 6,600 men. It was distributed as follows: new building by local authorities, 1,350; new building by private enterprise, 750; repair to war damage houses and conversions, 1,850; temporary houses, 600; repairs and other work under licence, 2,000.
  It will be seen that the head of labour engaged, broadly speaking, on the provision of new units of accommodation is approximately 4,500, compared with 2,000 on repairs. The number on repair work represents a higher proportion in Birmingham than anywhere else in the Midland region. Taking the figures I have given for licences and for the head of labour, I would suggest that the volume of repair work now proceeding in Birmingham is at as high a level as is consistent with the present limitations, and is certainly not lagging behind in comparison with
  2178
  anywhere else.—[An HON. MEMBER: "You do not know what you are talking about."]—The hon. Member says that I know nothing about it. The figures I have given for the number of people engaged on repair work, most of which is work of a type to which the hon. Member was referring, is higher in proportion in Birmingham than in other parts of the Midland Region.
  Mr. Yates Mr. Yates rose—
  Mr. Edwards: No, I am not going to give way. I have a bare measure of time in which to reply to the points that have been made.
  Mr. Yates: The Parliamentary Secretary has not referred to the statutory orders.
  Mr. Edwards: Then let me refer to the statutory orders. I was disturbed, and a little perplexed, by the figures my hon. Friend gave for delays. I could not understand why the delays should be of this order. I had assumed that when the local authority had made an order, they could step in, after the time put in the order had expired, unless the person on whom the notice had been served had decided to appeal against it. I am advised that in a great number of cases it would be competent for the local authority—the limit under the notice having expired—to step in and do the work itself, and to charge the cost of it to the person on whom notice had been served. Be that as it may. The important thing which I think, perhaps, one ought to say in this connection, is that one understands perfectly well the shortage of materials at present. With the large amount of war damage, necessarily absorbing large quantities of slates and plasterboards, with the difficulties that we have, particularly with the production of cement—of which stocks have fallen very low—with all these things, one understands that there are difficulties in supplying materials. But let me say to my hon. Friends that I am not satisfied that the provisions which we have made for trying to ensure the supply of materials for repairs of the kind that have been described have, in fact, been properly worked out in all these cases. When my right hon. Friend says, as he did, that he was not aware of the specific instances, he was naturally speaking of

  2179
  the information we have had. I would ask that the procedure we have laid down should be followed, and that the Ministry of Works should be asked specifically to deal with any shortage, and I have an assurance from them that they will do everything they can to speed up the supply of materials.
  Finally, I would like to say that the Building Materials Priority Scheme is under review, and I would assure the House that in any revision the need for materials for essential repairs will be kept
  2180
  in the forefront of our minds. I appreciate the difficulties, I share the sense of impatience of the people who have to live in these conditions, and I would ask my hon. Friends to support us in anything we may do to tighten up on these matters, and to put the screw on any landlords who are avoiding the exercise of their duty by excuses which are not always as valid as they might seem.
  Question put, and agreed to.
  Adjourned accordingly at Ten Minutes past Eleven o'Clock.

PRISONERS OF WAR
  Repatriations
  Repatriations
  Sentenced German
  Sentenced German
  Relaxation of Restrictions
  Relaxation of Restrictions
BRITISH ARMY
  Circulated Document
  Circulated Document
  Practice Firing, Lentney Fort
  Practice Firing, Lentney Fort
  Married Quarters (Civilians)
  Married Quarters (Civilians)
  War Graves (Relatives Visits)
  War Graves (Relatives Visits)
TOWN AND COUNTRY PLANNING
  Atcham Airfield, Shrewsbury
  Atcham Airfield, Shrewsbury
  Oil-Fired Power Stations
  Oil-Fired Power Stations
  NATIONAL ASSISTANCE BILL
  NATIONAL ASSISTANCE BILL
  INTERNATIONAL LABOUR CONFERENCE (GREEK DELEGATION)
  INTERNATIONAL LABOUR CONFERENCE (GREEK DELEGATION)
  DISABLED PERSONS, LIVERPOOL (TRAINING)
  DISABLED PERSONS, LIVERPOOL (TRAINING)
SCOTLAND
  Hotels and Boarding Houses (Domestic Staffs)
  Hotels and Boarding Houses (Domestic Staffs)
  Road Work, Bin Forest
  Road Work, Bin Forest
  Housing Programme
  Housing Programme
NATIONAL FINANCE
  Pensions Increases (Application)
  Pensions Increases (Application)
  Tobacco Duty (Pensioners)
  Tobacco Duty (Pensioners)
  Clerical Workers (Qualifications)
  Clerical Workers (Qualifications)
CIVIL SERVICE
  Non-Industrial Staff Groups
  Non-Industrial Staff Groups
AGRICULTURE
  Prisoner of War Labour
  Prisoner of War Labour
  Requisitioned Property, Buckinghamshire
  Requisitioned Property, Buckinghamshire
  Transport Drivers' Strike, Kent
  Transport Drivers' Strike, Kent
  BANK BOOK (SOLDIER'S GRATUITY)
  BANK BOOK (SOLDIER'S GRATUITY)
TRADE AND COMMERCE
  Imported Salt (Local Authorities)
  Imported Salt (Local Authorities)
  Japanese Cloth (Purchases)
  Japanese Cloth (Purchases)
  Italian Marble (Imports)
  Italian Marble (Imports)
  Token Import Scheme
  Token Import Scheme

Preamble
The House met at half past two of the clock, The LORD CHANCELLOR on the Woolsack.
Prayers.
The Lord Monteagle of Brandon—Sat first in Parliament after the death of his father.

EARL LLOYD-GEORGE OF DWYFOR.
THE LORD CHANCELLOR THE LORD CHANCELLOR informed the House that he had received from the Senior Registrar in Bankruptcy a certificate that Richard, Earl Lloyd-George of Dwyfor, was on the 4th day of July, 1947, adjudicated a bankrupt.
The same was ordered to lie on the Table.

STAFFING OF GOVERNMENT DEPARTMENTS.
THE MARQUESS OF READING THE MARQUESS OF READING had the following Notice on the Order Paper: To ask His Majesty's Government, what increases or decreases in the number of non-industrial civil servants have taken place, and in which Departments since January 1, 1947? The noble Marquess said: My Lords, in view of the very complete return contained in Command Paper 7139 on the Staffing of Government Departments I do not propose to put my question.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD PAKENHAM): My Lords, I am very much obliged to the noble Marquess.

CROPS ON IMBER TRAINING AREA.
VISCOUNT LONG: My Lords, I beg leave to ask the question of His Majesty's Government which stands in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government, the total acreage released up to date for agricultural purposes within the Imber training area and, further, whether His
126
Majesty's Government can state as to the condition of the crops grown on this land since it was released.]
THE PARLIAMENTARY SECRETARY, MINISTRY OF AGRICULTURE AND FISHEREES (THE EARL OF HUNTINGDON): My Lords, the total acreage released up to date from the Imber Training Area by the War Department is 3,066 acres. The condition of the crops is considered to be average for this type of land.
VISCOUNT LONG: My Lords, I thank the noble Lord for his reply. In view of the contradictory statement the noble Earl has made in regard to crops compared with the statement made last year by the noble Lord who answered for the War Office, who informed your Lordships that this land was unsuitable for crops, would he cause a further investigation to be made to see whether more acres could not be released especially in view of tie urgent necessity of getting more food in this country?
THE EARL OF HUNTINGDON: I will certainly look into the question.

MARKET LAVINGTON DAMAGE CLAIMS
VISCOUNT LONG: My Lords, I beg leave to ask the question of His Majesty's Government which stands in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government what damage was done to cottages and houses at Market Lavington during the bombing practice and whether the occupants have received compensation and been given priority for repairs?]
LORD HENDERSON: My Lords, I am glad to say that in the main only very slight damage was caused to houses in the Market Lavington district by the bombing exercises of May 9. About forty claims have been received, most of them for repairs to ceilings and broken windows, and eighteen have so far been settled: I hope that most of the others will be settled shortly. I understand that the local authority are giving priority to the release of materials for repairs. I should like to express my regret that damage and alarm should have been caused by this bombing practice.
VISCOUNT LONG: My Lords, I thank the noble Lord for his reply. He has said that only slight damage has been done; yet forty claims have been so far received. May I ask the noble Lord, having regard to the fact of the warning given to the Government last year that life was endangered, whether the whole question of this practice will be reconsidered as to whether it is really necessary and, if it is necessary, that we may be told so? And may I also ask that compensation for damage should be immediately paid and priority given in future for this work to be carried out at once?
LORD HENDERSON: As regards the noble Viscount's question about the necessity for this practice being carried out, I will certainly have the matter looked into. I think the reply I have already given, to the effect that compensation is paid where damage is done and materials are issued on priority, meets his views.
SUNDAY ENTERTAINMENTS ACT, 1932.
CITY OF MANCHESTER ORDER;
CITY OF RIPON ORDER;
BOROUGH OF HUNTINGDON ORDER;
BOROUGH OF WANSTEAD AND WOODFORD ORDER;
URBAN DISTRICT OF OAKENGATES ORDER;
URBAN DISTRICT OF WOKING ORDER.
LORD WALKDEN: My Lords, I beg to move that these Orders be approved.
Moved, That the Orders made under the Act by the Secretary of State for the Home Department, for extending Section one of the Act to the said areas, be approved.—(Lord Walkden.)
On Question, Motion agreed to.

ELECTRICITY BILL.
2.37 p.m.
Order of the Day for the Second Reading read.
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I rise to move the Second Reading of this Bill. I can state quite sincerely that I believe the case for this Bill is literally overwhelming. In the year 1943, in the month of March, the then Prime Minister of what he rightly
128
described as "the Great Coalition" referred to "the broadening field for State ownership and enterprise, especially in relation to monopolies of all kinds." How the field can broaden unless it is going to take in such monopolies as this, I cannot conceive. Sir John Anderson, in the course of the last Election, publicly stated that he was in favour of the nationalization of the distribution of electricity. And I hope to receive support for the broad principles of the Second Reading quite outside Government circles. We received the support of the Liberal Party for both the Second and Third Readings of this Bill in another place, and I hope my noble friend, Lord Rennell, is going to-day to lend me his powerful support in favour of the Second Reading of this Bill.
It is not stating it too highly to say that the system of electricity distribution in this country to-day is chaotic, and to say that is not to belittle the work which the local authorities and electricity companies have accomplished—but I wonder how much more they would have accomplished if they had not been handicapped and prejudiced by a legislative structure which is hopelessly out of date. In 1926, following the Weir Report, there was established a national system for the generation of electricity, and I think everybody must admit that the Central Electricity Board, handicapped as they have been by the divorce between ownership and control, have yet rendered most useful service. But nothing comparable has been done with regard to distribution. In the year 1936 a Commission was appointed, presided over by Lord McGowan, who had associated with him the late Sir John Snell and Sir John Morrison. That powerful Committee published a Report on this problem. I take that Report as the text of everything I am going to say. I accept all the facts stated in that Report and though, to some extent, as I shall show presently, I differ from the Committee's conclusions, I think it is right to say that in the eleven years since 1936, the date of their Report, we have passed through a span of experience far greater than that of a normal period of eleven years.
The Report rightly states that the object to be aimed at is efficiency. Efficiency always tends towards a reduction in costs. It is quite certain that the future will bring a greatly increased demand for electricity and that in its turn gives scope for future reduction of costs, but I am

129
not going to hold out great hopes of that cheap and abundant electricity in the near future of which we have heard so much for so many years and experienced so little. With the rising cost of coal to-day and with the greatly increased capital costs, it would be idle to imagine for a moment that you are in a field in which by a stroke of a wand you can bring about cheap electricity. Those very facts make it all the more essential that the system of distribution should be as efficient as it can be, so as to reduce the cost as far as may be possible, and there can be no doubt that given equal efficiency in management, large-scale operation has inherent advantages over small-scale operation. Paragraphs 99, 100 and 101 of the McGowan Report bear that out quite plainly.
Among other advantages they mention, in the first place, improved technical layout and economy of capital expenditure. I would point out that the more we can eliminate boundaries, the better chance we have of bringing about cheap distribution. Secondly, diversity of load. One may say in general the larger the area, the better the chance of securing diversity of load, but a factor which often prevents this at the present time is the absurd situation which arises when a power company supplies a particular section of the consumers within an area already supplied by some other undertaking. Admittedly this situation is due to the restrictive and anomolous legislative structure, but that is only one more reason why that structure should be superseded.
The McGowan Committee go on to point out that financial resources are easier to secure in cases of large-scale operations, and that centralized purchasing can be achieved. You have a better chance of dealing with personnel. And last, but by no means least, the better supply of electricity to rural areas. I need not elaborate on the importance of this from a national point of view. The McGowan Committee felt very strongly about it, and they devoted a section of their Report to the unsatisfactory position. I commend to your Lordships paragraph 125, and paragraphs 372 onwards of that Report, where you find these facts set out.
I would add to these desiderata that research can and should be undertaken on a large scale that the standardization of
130
voltages should be completed; and that something should be done to simplify and standardize the present methods of charge. At present each undertaking has its own system of charging, and the variety is extremely great. Inside one undertaking there may be as many as twenty or thirty methods of charging, many of which are unnecessary refinements, and are very confusing to the consumer. We have found it impossible in the past to get agreement amongst undertakings on this subject. A Committee of the Electricity Supply Associations did consider the two-part tariff, and made recommendations in 1931, but the undertakings were under no obligation to follow up the recommendations, and they almost entirely ignored them. Consequently, as we all know, in an area such as London the charges differ very considerably from district to district for no apparent reason. In general it may be said that the methods of charging adopted by the electrical undertakings have not been worked out scientifically on any basis of cost whatever.
There has been a considerable amount of experiment in this field, and perhaps this partly accounts for the great variety of methods adopted. But rationalization is over due, both to eliminate this excessive variety of tariffs, and to make them more "easily understanded of the people." The McGowan Report states, rightly I think, that the success of the Central Electricity Board in regard to generation and main transmission is not conclusive evidence that the distribution of electricity should be organized on a similar basis. But it is apparently conceded that the analogy and experience of the national system for generation affords some evidence, albeit not conclusive, in favour of the introduction of a comparable system for distribution. But the facts prevailing in the industry to-day are such that any large-scale system of distribution is impossible. Let me tell your Lordships the facts. There are to-day in this country 563 different electricity undertakings: 370 are local authority undertakings, and 193 are company undertakings. They vary in size from an undertaking having a supply area of a few hundred acres, and selling only a few thousand units per annum, to an undertaking such as the North-Eastern Electric Supply Company, having

131
an area of 5,640 square miles, and selling—including sales to the Central Electricity Board—upwards of 1,800 million units per annum. That company—and I believe it to be an efficient company—covers a larger area than the average area of our fourteen regions, which is just over 5,000 square miles. Incidentally, Edmundson's Electricity Corporation operates, I think with efficiency, over a scattered area of not less than 15,000 square miles. Amongst these undertakings there is a complicated and overlapping system of jurisdiction, companies and local authorities being hopelessly intermingled. In some cases the area of an undertaking is an island inside another undertaking. The result of that is that there is a large number of widely varying systems of tariffs and voltages—distribution voltages vary between 100 and 480 to domestic and power consumers.
It is quite true that, since the date when the McGowan Committee reported, there has been a definite improvement towards the reduction of the number of electricity undertakings—including some voluntary amalgamations—and towards a standardization of voltages and services generally, but, as franchises are now falling in, I see little chance of any further reduction in the number of undertakings. I see, on the contrary, a very real risk of a sharp increase in their number. Your Lordships will remember that franchises were granted to the electricity supply companies by special Acts dating roughly from 1900 onwards and generally for forty-two years, after which the right devolved upon the local authority to buy out the supply company. These franchises are just beginning to fall in, and if the rights of purchase extending over the next ten years were to be exercised, the number of local authority undertakings would increase by no less than 500, and the companies would decline to 148, most of those being the smaller and less efficient companies. I emphasize this because this is the situation which confronts us unless we do something about it. I will tell your Lordships on that assumption what the number of undertakings will be in ten years' time. There will be no fewer than 878 local authority undertakings, and 148 company undertakings, making a grand total of 1,026 undertakings in all in ten years' time. There-
132
fore, I say, that the disintegration which confronts us unless we take steps to prevent it would tend to even greater chaos than the chaos which exists to-day.
In this situation two facts, I think, are obvious. The first is this. There is no need for any further inquiry. The facts are known; they are stated in the McGowan Report. It is for us to find some remedy. The second fact is this. It is hopeless to rely on any voluntary scheme of reorganization. May I read to your Lordships paragraph 132 of the McGowan Report? It says:
"Past experience has demonstrated beyond question that any attempt to carry through on a voluntary basis a scheme of reorganization on the general lines we have recommended, would be bound to fail."
In paragraph 45 they recall a similar observation of the Weir Committee:
"Five years of patient and capable effort have been unavailing. Co-ordination has not been achieved. The advisory bodies created under the Act have agreed on technical schemes, but local interests have prevented the carrying out of those schemes. Delay and procrastination are widespread, and the policy of suasion can only be written down as a failure."
In those circumstances, the McGowan Committee suggested two alternative methods of dealing with the present chaotic system of distribution, and, so far as I know, they are the only two methods possible. The first is this: Immediate and complete reorganization on a regional basis under public control, by the setting up of regional boards which would buy out all the existing undertakings. That is paragraph 88. The second suggestion made in the McGowan Report is the retention and utilization, where possible, of the larger and more efficient of the existing undertakings (both public authorities and companies) and the absorption by such undertakings of the smaller and less efficient undertakings. That Committee, reporting as they did in the year 1936, were in favour of the second scheme and since eleven years later we are rejecting their conclusions although accepting their facts, it is well to consider why they prefer the second to the first alternative.
I have read the Report very carefully and there seem to be three reasons. The first is that a scheme of complete reorganization would result in a serious and unnecessary dislocation to the supply industry. I will consider all these reasons in a moment. The second reason is that

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the payment of compensation might involve an undue burden upon the new authorities. The third is that such a scheme should not be proceeded with unless the industry were generally inefficient and unprogressive. Let us consider those three reasons. As to the first, I tell your Lordships quite frankly that in any scheme of reorganization there is a risk of dislocation. Indeed, I would say that a good scheme differs from a bad scheme in rendering that risk as small as possible. But the McGowan Committee themselves did not doubt that a substantial measure of reorganization was bound to take place. They emphasize that regrouping of undertakings must be carried out on a comprehensive scale and they are satisfied—I quote their words:
"that a substantial measure of simplification and co-ordination of the present structure is necessary if the fullest measure of development is to be achieved …"
That is paragraph 97. Whatever course we adopt, therefore, we are confronted with a risk of some dislocation, but I believe that our present scheme has reduced that risk to a minimum.
I pass to the second reason—namely, the risk of excess payment of compensation. I think it would be sufficient for present purposes if I were to say that I gather that your Lordships on the Opposition side are of the opinion that we have satisfactorily avoided that risk in this Bill. As to the last reason— namely, that we should not proceed with such a scheme unless the industry were generally inefficient and unprogressive, frankly I do not follow the argument. Let it be assumed that the electricity supply industry has pursued a progressive and enterprising policy. It is stated in paragraph 93 that the electricity supply industry has made remarkable progress, particularly during the last ten years, notwithstanding its complicated and, in many cases, uneconomic structure. The problem surely is whether it would not have made even more remarkable progress if it had not been handicapped by an uneconomic and complicated structure.
I cannot accept the validity of those three reasons for the adoption of the second as opposed to the first alternative. Moreover, whatever force they had in 1936 I am confident that they no longer have any force in 1947. See if you will what happened following the pronouncement of the McGowan Report. The then
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Minister of Transport, Mr. Hore-Belisha, promulgated proposals on the basis of the second suggestion in the McGowan Report—namely, the taking over by the larger undertakings of a number of the smaller undertakings. Mr. Hore-Belisha proposed to group the undertakings in this country into some thirty districts, sub-divided into seventy-six groups. I think I am not going too far when I say that those proposals achieved the unique distinction of being heartily disliked by everybody. I remember in the case of my own constituency, Ashton-under-Lyne, the proposal was that they should lose their supply system, of which were intensely proud, and with good reason, and that they should be taken over by, or at any rate be amalgamated with, Oldham. I have not a word to say against Oldham, but the healthy rivalry between the Lancashire towns is such that when I heard my constituents talking about these proposals, I sometimes thought they would rather be taken over by, or amalgamated with, the devil himself.
In the result nothing has been done, and it is now for us to provide a solution. Your Lordships sometimes accuse the Government of having a bee in their bonnet about nationalization. Well, there is another disease which is just as bad, and that is having a bee in your bonnet which leads you to say that in no circumstances whatever can nationalization be the right solution, and that disease in a case of this sort is a very serious one. I take the view that each case must be considered on its own merits. I would add this, that if ever there were a case which to an unprejudiced person is plain and demonstrable it is this case, and if it is not this case I would very much like to know which case it is. That is why we have decided to adopt the more radical solution indicated by the McGowan Report, and I am confident that the times are such that we must not hesitate to adopt bold measures of reconstruction. There comes a time in the history of a nation when he who tinkers is lost.
VISCOUNT SWINTON: Is that the "tinker's cuss"?
THE LORD CHANCELLOR: In fact, the acceptance of the alternative proposal indicated by the McGowan Report no longer fills the bill.
VISCOUNT SWINTON: I said: Was that the "tinker's cuss"?
THE LORD CHANCELLOR: There is one further consideration to be borne in mind in considering the McGowan Report. Remember that they did not offer their Report as affording any permanent solution of these problems. They contemplated that in due course the entire industry should come under public ownership, and their solution was at best only a temporary solution. The solution we put forward in this Bill is intended to be a permanent solution, and so long as we can secure that the efficiency which has been shown in the past is continually increased in the future we can, by getting rid of this chaotic and obsolete structure, bring about a far better prospect of being able to supply electricity at a cheaper price than would otherwise be possible.
Before I come to the details of the Bill I would add this. The Bill was discussed at length in another place. There was no guillotine. A very large number of Amendments were suggested and a very large number of Amendments were accepted. Although it may be that there are still some points in which the Bill can be improved, yet on the broad structure of the Bill I beg to say that this is the solution which should commend itself to your Lordships. I would point out that having read the whole of the debates—not always very edifying—I have yet to see any alternative solution propounded. There has been none—none whatever—and I do not suppose we shall get one to-day.
That brings me to the consideration of the structure of this Bill. Part I of the Bill deals with the establishment and functions of the British Electricity Authority responsible for generation, main transmission and general policy control, and of the fourteen area boards responsible for distribution. It also covers the necessary modifications to the functions of the North of Scotland Hydro-Electric Board, whose scope is extended so that over their district they become responsible for all generation and distribution. The noble Lord, Lord Morrison, in the course of the debate to-day is going to deal with the position in Scotland, and I can safely leave that to him.
The first aim of the Bill is to put an end to the present multiplicity of un-
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co-ordinated units in the industry, the sizes of which bear no relation to the technical requirements of the electricity supply. In the second place, the Bill completes the provision of centralized generation and main transmission which was begun in 1926. Clause I accordingly lays down that it is the duty of the Central Authority
"as from the vesting date to develop and maintain an efficient, co-ordinated and economical system of electricity supply for all parts of Great Britain except the North of Scotland district. …"
And it is the duty of each area board
"as from the vesting date to acquire from the British Electricity Authority bulk supplies of electricity and to plan and carry out an efficient and economical distribution of those supplies to persons in their area who require them."
Then follows, in Clause I (6), a recital of the principles which the boards are to follow in carrying out their functions. I invite your Lordships' particular attention to paragraph (b), which provides that they are to
"secure, so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity";
and also to the provisions at the end of the subsection that they
"shall also promote the welfare, health and safety of persons in the employment of the boards."
In Clause 2 the boards are given additional functions: First, the duty to promote research, and next the duty to care for the training and education of their employees, both directly and by assisting others. Then, in subsection (3), the Central Authority is given power to manufacture electrical plant and electrical fittings and to deal in electrical plant and fittings, subject to the important proviso that they may not manufacture for export. The power to manufacture is possessed by a number of the companies whose assets are to be transferred to the Central Authority, and although it may well be that this power will not be used, there can be no reason to prevent the Authority from inheriting it and retaining it in reserve as a weapon of defence. In this and the next few subsections there is a number of subsidiary and enabling powers, which are largely in common form in such Bills as this and do not call for special note.
Clause 3 deals with the constitution of the boards, in regard to which I should

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point out certain special features. The members of both the Central Authority and of the area boards are appointed by the Minister; therefore the status of the area boards is not simply that of agents for the Central Authority. Within the necessary limitations of co-ordination by the Central Authority they have their own separate existence. Then in order to make certain that there shall be close understanding and co-operation between the Central Authority and the area boards, between the generating authority and the distributing authorities, it is provided that four of the area board chairmen are to serve in rotation on the Central Authority. Finally, in order to ensure a similar understanding and co-operation between the Central Authority and the North of Scotland Board, the chairman of that Board is to be a permanent member of the Authority so long as he holds office. I believe that these arrangements will make for close and harmonious working in an organization where there must be room for progress and initiative at all levels.
As regards the area boards, it is to be noted that provision is made for the chairman of the consultative council for the area to be a member of the board. The consultative council are dealt with in Clause 7, but I must mention them now. One of the most important aims of the Bill must be to win the confidence of the consumer, and these councils are designed for that purpose. It is clear that their value and status will be enhanced by having their chairmen serving on the area boards—a provision that will also ensure that the deliberations of the council will be able to proceed with a proper background of knowledge of the facts and problems confronting the area board.
These councils are much more than channels for complaint; they are intended to provide democratic machinery in close touch with the requirements of each area, which will enable the consumer to know what is going on and to make his requirements known. We regard this experiment as one of great importance and we hope that it will put an end to the feeling of helplessness which besets most consumers when confronted with a large public utility organization.
I would draw your Lordships' attention to the provisions in subsection (2) (a) of Clause 7, that not less than half the
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members are to be drawn from amongst members of local authorities in the area. They will of course have been elected to those authorities, and their representative character will not be impaired by the fact that they will be chosen by the Minister from a panel. This device of the panel is a mere piece of machinery, and a necessary piece of machinery, because in each area there will be upwards of 100 local authorities of different kinds, and we have not yet evolved any means of bringing so many authorities together and getting them to agree upon a relatively small number of representatives—in this case probably between fifteen and twenty persons.
Whereas the local authority representatives may be fairly regarded as representing mainly the domestic consumer, the remainder of the council is to be representative of other important interests within the area. Finally I would point out to your Lordships that under subsection (9) of Clause 7 we make provision for the appointment of local committees and representatives, so that the consumer will be able to feel that he is no less closely in touch with the affairs of the undertaking than he is at the present time. Indeed, I venture to say that he will feel a good deal more closely in touch than most of us feel at present.
Going back now to Clause 5, we come to the powers of the Minister, and in order to dispose of some of the criticism is frequently made against such powers, I would stress that it is not contrary to the interests of the consumer that the Bill provides that the Minister should give general directions to the Central Authority on matters which appear to him to be requisite in the national interest, since by these means the conflicting claims of various types of consumer may be given such priorities as will ensure the speediest recovery of the country and its entry once more into settled economic conditions. Without, however, going to such lengths as the issuing of directions, the Minister can indicate to the Central Authority the general trends and economic conditions which must be taken in account during the consultations, for which provision is made in the Bill, between himself and the Central Authority. It is to be hoped—and here I think I shall carry with me those noble Lords who are normally in opposition—that the

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occasions when the Minister finds it necessary to give directions will be few and far between and that they will tend to become even fewer and still further between. But for the moment I confess that these powers to the Minister seem to me to be essential.
Clause 6 gives to the Central Authority a general power of supervision over area boards for purposes of co-ordinating distribution of electricity and of exercising a general control over policy. This is a necessary corollary of the main duty of the Central Authority to develop and maintain an efficient, co-ordinated and economical system of electricity supply. Clause 8 makes provision for reports by the Central Authority.
Part II of the Bill is concerned with the method of taking over existing undertakings and the payment of compensation. We are bound to consider that at some length at later stages of the Bill but I do not think that at this stage I need go into details. Then there is provision in Clauses 31 and 33 for the setting up of a special arbitration tribunal to deal with those matters for which arbitration is provided under the Bill. Part III of the Bill sets out the permanent financial structure of the industry, and gives the Central Authority certain co-ordinating powers, and contains in Clause 37 provisions relating to the fixing and variation of tariffs, which should be of great interest to the consumer. We embody in this part of the Bill provisions against undue preference which your Lordships have pressed on me in regard to various comparable Bills.
Part IV contains some important matter. Clause 49, for instance, deals with the supply of electricity to railways. Clause 50 deals with that important matter which to-day is nobody's business—namely, the possibilities of district heating, and that may be a means by which we can save fuel. Clauses 53 to 55 deal with conditions of employment, pension rights and compensation. They are most important clauses, but I think by now they are almost in common form. No doubt we shall have to look at them critically and carefully. Clause 57 dissolves the Electricity Commissioners, originally constituted by the Electricity (Supply) Act, 1919. They have, for nearly thirty years, supervised the electricity supply industry, and I think by
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and large they have done exceptionally good work. I think we owe them a great debt of gratitude and, in many respects, one is sorry to see them go.
That is, in very broad and very brief outline, the case for the Bill, as I see it, and a very short exposition of the principles. As I see it, if ever there was an instance in which there is a case for nationalization of an industry it is this. There has been no alternative put forward. There is not an alternative, and I confidently commend to your Lordships this Bill as being the right and only solution of his difficult problem. I beg to move that this Bill be read a Second time.
Moved, That the Bill be now read 2ª.— (The Lord Chancellor.)
3.12 p.m.
VISCOUNT SWINTON: My Lords, the Lord Chancellor has expounded the provisions of this Bill with characteristic lucidity. He has also painted an impressionist and somewhat imaginative picture of the present position. I think the position can be more shortly, and perhaps more accurately, stated in the following terms. Flushed and inspired with his success in anticipating the coal crisis, and providing the country with coal during the winter, the Minister of Fuel and Power now seeks to take the whole production and distribution of electricity in this country into his protective custody! Now, in public administration as in business, justification is by works and not by faith, and in a rash moment Mr. Shinwell accepted that test. He said—and I have been careful to verify all my quotations:
"We cannot afford to take risks. If we should fail with coal, we cannot hope to promote further schemes of nationalization."
What is the Minister's standard of failure and success? If his handling of the coal situation to date is to be counted success, then heaven help the electricity of this country. If it is to be counted failure then, with his own words, he is not justified in this Bill.
What has become in all this of the Lord President's rule—the test which Mr. Morrison has asserted frequently—that it is up to the nationalizer to prove the case for nationalization? We know that the Lord Chancellor prefers to shift the onus of proof, a rather unusual doctrine proceeding from such a quarter; but let us accept the

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challenge. Though I have no interest myself in the electrical enterprises of this country, I have, as all your Lordships have, a deep interest in the consumers of electricity. Let us accept the test and shift the onus of proof, and let us accept the challenge, because I think it is very easy for the defendant industry in this case to show cause why it should not be nationalized. This is no case of an inefficient or unprogressive industry. This is no case where an industry has failed the consumer. Consumption has increased tenfold in twenty-five years. Up to the outbreak of war, consumers were being added at the rate of 800,000 a year. The costs have gone up; that is to say material and wages have been greatly increased; but the price to the consumer has gone down. The price went down steadily before the war, was held certainly and never raised by the companies during the war or after, as I understand.
Could you have a better case of efficiency, proof of efficiency, than that? I say, without fear of contradiction, that here is a record, in spite of great difficulties, impossible to beat, and hard to match in any other industry serving consumers in this country. I observe that the Minister himself thought at Election time, and after, that we were all going to be fold that electricity was going to be so much cheaper. I have not heard that in the careful speech of the Lord Chancellor. I doubt whether I shall hear it from any responsible quarter on the other side. There is no suggestion now that if this Bill goes through electricity is to be cheaper. Efficiency no one has challenged. The Lord Chancellor himself has said that these people were efficient, and of course that is so. Municipalities and companies have been efficient. With regard to thermal efficiency, the ton of coal to-day does what two tons did a few years ago, and if the Minister of Fuel and Power would devote himself to his proper job of getting coal, and produce coal of better quality, a ton of coal would do more even than it does to-day. Frequencies have been standardized. The voltage would have been standardized but for the war, and there has been considerable progress in the rural areas, which the Lord Chancellor just lightly sketched in as part of the background to the impressionist picture.
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If he would like me to do so, I will come a little closer to this. I say without fear of contradiction—and I will in detail justify it if challenged—that what has been done in rural areas has been done by the companies. I could show by chapter and verse, comparing a company like the Wessex Company with the carefully selected projects of State enterprise, that free enterprise compared on the basis of such matters as areas served, number of people connected, the cost at which it has been done, the price charged and the failure to come upon the State for a subsidy, that what these companies have done compares in the rural districts very favourably with what State enterprise has done in carefully selected areas. Much more would have been done, but everything was held up in the war.
Let me take another test, that of profits. The Lord Chancellor was very silent upon this—apart from a little jest. I do not know whether to admire most in the Lord Chancellor's speeches the way in which he develops a relatively strong point or the way in which he carefully avoids a multitude of weak points. But let me take this one that he slid over very carefully. Profits have been steadily ploughed back into the business—I did not hear anything about that in the noble and learned Viscount's speech. For all the things that are said about it, British industry holds a pretty fine record of ploughing back profits into business. That is the strength of our industries to-day, and you will not find a better instance of that than is provided by the way in which these particular companies have steadily ploughed back a large proportion of their profits into the business, with the result that the capital actually employed in the business today is far greater than appears in the balance sheets. The consequence is that when you speak of a 6 per cent. or 7 per cent. dividend upon the declared issued capital of a company, if you look at the real capital invested in the business, taking account of what has been ploughed back, you find that the result is something Very different.
To regard money ploughed back has always been a Treasury test. I have lived in these circles for many years, and I know that the Treasury people very wisely and carefully have always said: "If you have got to fix a profit, what you have got to look at is not the nominal issued capital, but the capital actually employed

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in the business." I invite you, my Lord Chancellor, to look at that to-day in considering whether your proposed compensation is fair or not. I ask you to consider what is the real capital employed. How many millions have been ploughed back? If you do that you will find that the real rate of dividend on capital employed is not 6 per cent., 7 per cent., or 8 per cent. but is much nearer 3 per cent. or 4 per cent. Then, my Lord Chancellor, as the head of the equity law of this land, consider whether your terms are just and fair.
The Lord Chancellor made great play, as I thought he would, with the fact that there are too many companies and too many authorities. There is no dispute about that at all. Of course, the distribution requires consolidation and co-ordination. I am bound to say that I thought the Lord Chancellor was a little bit unfair in the picture which he painted of frightful chaos. At any rate, it was a chaos that got us through the war. The electricity supply of all the great munition factories did not fail during the war. I dare say there were too many companies, but is not the fact that they did not fail something of a tribute to the people conducting those enterprises? I shall have a word or two more to say about that in a moment. As the Lord Chancellor told us on another occasion—he can always make the right speech on the right occasion—what matters is not ownership but co-ordination. I agree with him at once. The right way is by means of right-sized units. But the fact that there are too many undertakers and distributors in this country to-day, either company or municipal, is not the fault of the wretched companies. I agree, and we can all take our share of the blame, it is the fault of Parliament. It is Parliament who have prevented a proper amalgamation. Of course, if there had been no war Parliament would have legislated, but the fact that we in Parliament failed to legislate is no reason for condemning the undertaker or for legislating in the wrong way now.
The Lord Chancellor said that something has got to be done. I agree. But that is no reason for doing the wrong thing. If we lay politics aside, practical men could easily reach the best solution. The Lord Chancellor says that there is only one solution. I see that the noble
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Lord, Lord Walkden, is not in his place. He had a few things to say the other day about mistrusting converts. He is very wise to absent himself now. But the Lord Chancellor, with the zeal of the convert, is prepared to die for dogma. We should be very sorry to see his martyrdom or his suicide, but what we complain about is that he wants to pile everyone else on his funeral pyre when he does die for his dogma.
The Electricity Commissioners working on the lines of the McGowan Report could give us a very good scheme. If I may say so respectfully, the Lord Chancellor when it suited him brought the McGowan Report into his speech, but when it did not suit him he was very ready to reject it. It does seem to me, if he will forgive my saying so, that there was a certain Jesuitical casuistry about his line of argument. He accepted all premises but rejected all conclusions. It is easy to make the best of both worlds in argument if you are prepared to do that. May I say in passing that one of the advantages in adopting the lines of the McGowan Report instead of this Bill would be that you would keep gas and electricity in competition, which is a most desirable thing to do.
Then it is said—and I was really most surprised at the Lord Chancellor repeating this argument—that you must nationalize now (the McGowan Committee were against this) because some of the local authorities would this year or next year have power to take over local undertakings, and in the next two years a number more would be able to take them over. Therefore, it is said: "We must have this Bill; we must do something." I think it was Lord Melbourne who said: "When someone tells me that I have to do something, I know that he wants me to do some damned silly thing." I ask your Lordships to excuse me for quoting such a strong expression. Now I do not adopt that extreme Whig or Liberal laissez-faire principle, but the fact that we have to do something does not mean that we have to do something very stupid.
The perfectly simple answer to this is to suspend this power of the local authorities to take over for a year or two while we settle the right scheme of amalgamation. That would be perfectly in accordance with precedent. After all, my

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Lords, this Government by legislation or regulation have suspended for the time being most of our rights and liberties. It would not be a great extension to pass a one-clause Bill—perhaps it could be done by Order in Council—suspending for the time being the power of the local authorities to take over. I will not use this argument because the Lord Chancellor did not use it, but there was the profit motive. This argument was not produced to us by the Lord Chancellor; but it was presented a great deal in another place. It is running a little thin to-day. You cannot apply it to the municipalities who own whatever it is—60 per cent. or more; but anybody who knows anything about electricity knows that this is, above all, the one industry where, if you are to make a profit, you must increase the volume of your consumption. No electricity company can make money unless it expands and increases its volume, and, all along, the industry has teen strictly controlled.
There will be many speakers who will speak with a more detailed knowledge of the industry here than I have, but I think I have said enough to show that, on all counts on which the case for nationalization can be claimed, it has failed on the broad issue; and even if it did not fail as completely as it does on the broad issue, it fails entirely in that the time for such a Bill could not be worse. The fact that we are in difficulties, that demand in electricity exceeds supply, surely makes it, above all, the wrong time to make a major change and upset of this kind. As the Lord Chancellor has admitted, any change involves a great deal of temporary dislocation. That is the common experience of all amalgamations: the greater the change the greater the dislocation. That was one of the great arguments in the McGowan Report; but there has been time to change since the McGowan Report.
Let me refer the Lord Chancellor to a more recent Report made by a committee appointed by a Socialist Secretary of State, a great Secretary of State, perhaps the best Secretary of State for Scotland I have ever known—Mr. Tom Johnston. He appointed a Committee in 1942 called, I think, the Cooper Committee and they reported this:
"We have examined the different aspects of the problem …. Theoretically, there
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would be a superficial attractiveness in a complete reorganization of the entire Northern Area under a scheme by which all the existing undertakings, whether belonging to companies or to local authorities, would be acquired and merged in a public corporation with new and wide powers. But for the same reasons which influenced the McGowan Committee to reject the same solution of a similar problem we do not recommend so drastic a proposal—the obstacles to which in our view substantially outweigh the theoretical advantages which would be secured."
Mark these words:
"Such a scheme—"
this is 1942—
"could not be carried into effect without very serious and needless dislocation of electricity supply, and we are not satisfied that the consumers would derive any compensating benefits."
That is wise, unprejudiced advice. At this moment, when we want everyone working on emergency plans to see us through, when we want the knowledge and experience of the undertakers and, not least, their local knowledge of these emergency arrangements between an electricity company and the local manufacturer, I wish to heaven these people would get away from their dogmas. Anybody who his anything to do with these practical matters knows that if you want to get, as we did get in the war, arrangements which will work in the particular locality to tide over a difficult time of two or three winter months, you must get the manufacturer on his job to see that he works in together with the local electricity supply people. That is the way in which you get your temporary solution. In the words which have been referred to in a White Paper which I think has now become rather obsolete, this at any rate still remains true: "Let us put first things first." This is the industry which is to be put into the hands of a Minister who has certainly not solved the coal problem, and vast powers are to be put into the hands of that Minister. May I repeat the refrain of his own test?
"If we fail in coal, we cannot hope to promote further schemes of nationalization.'
I am thinking here not only of electricity companies or of the municipalities who produce; I am thinking also of the domestic consumers, the industrial consumers, and the production campaign which is vital. These consumers hitherto have had an appeal to the Electricity Commissioners. That right of appeal to

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an independent authoritative tribunal is equally important, or more important, when you set up a single State monopoly. I am not decrying advisory councils; they are all very well; I think they will help, but they are not a substitute for a real court of appeal any more than a nice conciliation meeting between the solicitors of two parties to a case to see if they can reach an agreement is an alternative to a court of law and ultimately to an appeal to the Lord Chancellor on the Woolsack. It is their right of appeal which really counts and yet here everything is left in the Minister's hands. The appeal from Cæsar is to Cæsar. How inconsistent! Take the Transport Bill that we are still discussing in this House. There—just as there is now an appeal to the Electricity Commissioners—the charges are to go to an independent transport tribunal, and the Minister and the Transport Commission are to be bound and the consumers are to be bound by that independent tribunal. There is nothing of the kind in this Bill. There is no end to the Minister's powers. The appetite grows with eating. Most of us to-day have some difficulty in satisfying our appetites; not so the Minister. The rest of us are rationed; he alone is free.
Take the appointment of the boards. The Lord Chancellor again has skated rather lightly over that. Under the Bill, all the appointments vest in the Minister. I agree that he must appoint the Central Authority. Nobody else can; that is right. But in this House we have debated at great length on the Transport Bill and have expressed the strongest opinion on that Bill that the appointment of the executives, who are the equivalent of these boards because of general directions of policy, the co-ordination of policy, should be made by the Transport Commission. This House decided in its great weight not only of vote but of opinion—there hardly was an argument raised against it—that the appointment of these boards and executives should be in the central authority and not in the Minister. I shall not repeat—it is unnecessary—the arguments which I and others deployed to the House of the administrative analogy to show why that should be so. Your Lordships considered the question and decided it. The Minister himself in the Coal Industry Nationalisation Act accepted a similar arrangement. He
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appoints the Coal Board; the Coal Board appoints these local boards throughout the country. The Minister has himself recently supplied the strongest possible reinforcement of the argument why the Central Authority, and not the Minister, should appoint the boards. If these boards are to succeed they must have the very best and most experienced men, and politics should never be allowed to enter at all into consideration—never.
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): On neither side?
VISCOUNT SWINTON: Yes, on neither side. I accept that completely. But the noble Lord is very interesting. Does he mean that nobody is to be appointed to the boards who holds any political opinion. He has to be, if your Lordships will forgive my saying, a political eunuch.
VISCOUNT HALL: Nonsense.
VISCOUNT SWINTON: Then indeed we shall be in a strange position.
VISCOUNT HALL: Sheer nonsense.
VISCOUNT SWINTON: Politics should not enter in either way. Then under this rule a man should not be debarred from a board when a Tory Government are in, if he is a keen nationalizer, and not debarred from a board when a Socialist Government are in, if he is against nationalization. If he has technical, commercial, or market efficiency, he is the man for the job. Now let me read to the First Lord the Minister of Fuel's speeches on this point. I have gone into them with great care, and he can check me now. The Minister has said he will not appoint a man, however able and experienced he is, if he is opposed to nationalization.
VISCOUNT HALL: I would ask the noble Viscount whether he will say that the appointments to the Coal Board were political and I believe all of the appointments were appointments of men who were in favour of nationalization. That is the real test.
VISCOUNT SWINTON: I have not the least idea of the political views of the gentlemen on the Coal Board. I am not complaining about the Coal Board—
VISCOUNT HALL: But who appointed the Coal Board?
VISCOUNT SWINTON: The Minister. But he is going to appoint on quite a different principle here.
VISCOUNT HALL: Nonsense.
VISCOUNT SWINTON: It is no good the noble Viscount becoming fractious. I do not wonder. If I were accusing him of doing this kind of thing he would have every right to be indignant and to reprove me and repress me. But I am going to quote to him now what the Minister, who under this Bill is going to appoint these boards, has said very clearly in Parliament are the principles on which he will proceed, and if the noble Viscount is to repudiate this I shall be very much interested. The Minister of Fuel has said quite definitely that he is not going to appoint men to an Electricity Board if they are opposed to nationalization. Here is the quotation, which you will find in the Third Reading debate:
"If I have to appoint electricity boards it would be quite improper to appoint to a board a person who is definitely opposed to the nationalization of the industry."
I hope he will not have to make these appointments. But I want to be quite fair, and the noble Lord will admit that I am, on the whole, a fair controversialist. The Minister elaborated the point. He said:
"We must be certain, even if there is a difference of opinion among the members of the electricity boards, that at any rate they are concerned about promoting nationalization with due regard to public interest. How is it possible to appoint a person who has declared over and over again he is against nationalization, and that it is going to prove a failure, to a board of management. A technician will be employed by the boards "—
not on the boards—
"as a technician, but to allow a person who is against the proposition to run the industry—well, we are heading for trouble if we do. I do not intend to head for trouble."
That indeed would be a pleasant change, but trouble is just what the Minister is heading for if he pursues this course.
What a contrast to what the Lord President said, that we must keep politics out of this and must have the best commercial men. This is indeed the closed Shop—a new kind of closed shop—a policy of full employment if you vote Socialist. The Minister made by this the discreditable insinuation that an honest opponent of nationalization would sabotage a scheme if he accepted the post. My Lords, I pick my words. That may be the
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technique of a Communist or a crypto-Communist: it is wholly alien to the way of life, to the conception of duty, and to the sense of decency of the ordinary Englishman, of the common man. No decent man would dream of accepting a post on one of these boards unless he were prepared to give his whole heart and energy to making it a success. I have spent a little time over this challenge of the Minister but I think not too much time on so grave an issue. The Minister has supplied an unanswerable argument for vesting the appointment of the boards in the Central Authority.
I must say one word about compensation, which the Lord Chancellor slid over with a witticism. The old accepted principle of ascertaining a fair value is departed from again. Stock Exchange values are to be taken where available. Whatever argument could be raised on the Transport Bill about the railways has no application here. Why should not an electricity company receive what is the true and fair value for the business as a going concern, having due regard to all the circumstances, the length of its franchise and everything else? There is no question of buying—I have forgotten the elegant phrase about the railways used by the Chancellor of the Exchequer—"the whole bag of tricks" or something—I have not the exact delicate phrase; perhaps Lord Woolton has it in mind. But here the State is buying not only valuable fixed assets which have greatly appreciated in value but expanding businesses as well. No fewer than 140 companies will have to settle by agreement or go to arbitration, because they have what is called non-quoted assets. Observe what you are doing, you are going here to penalize those who have been most conservative in their policy. I do not mean politically Conservative, which no doubt Mr. Shinwell would think right, but companies of whom many have for years anticipated and followed the advice of the Chancellor of the Exchequer to plough back a large part of their profits into the business.
I have confined myself to broad issues and questions of principle. There are many matters which we shall have to consider in Committee. We will certainly not shirk our duties in this matter, and we shall have the advantage of our discussions on the Transport Bill. Most of your Lordships—and I suspect the

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majority of people in the country to-day—will feel that there is little or no case for this Bill; certainly, I am sure, the great majority of people feel that it is disastrously the wrong time to introduce it. The Government have great and grave responsibilities to-day; they do not grow less, but accumulate. Surely, they are singularly unwise to add this to their commitments. However, if they insist, we will try to improve the Bill. It is the wrong kind of ship, but if, in this stormy weather and these uncharted seas, they insist on setting sail in this strange craft, we will try to make it as seaworthy as possible.
3.52 p.m.
LORD RENNELL: My Lords, I apologize to the noble and learned Viscount on the Woolsack for not having been here in time to hear his opening remarks. It is not for me to anticipate what your Lordships will feel about what I have in a very few words to say. I understand from the noble Viscount who has just sat down that he is opposed to the Bill, but he is not opposing the Bill. I do not propose to follow him down that road because, for my part, I accept the Bill. I think there are certain arguments which even the noble and learned Viscount, the Lord Chancellor, did not bring out in the course of his speech, which are pertinent, and to which I would like to refer. The electricity industry in this country, as I see it and as I think a number of foreigners see it (and sometimes we may judge what we are doing here more effectively through the eyes of foreigners than through our own eyes, and I must say that I agree with them, looking back over the last twenty or thirty years of the electricity industry here) is rather like Topsy—it has "growed." It has not been very systematically developed. The reasons why, I will come to in a minute. Perhaps it is not the fault of the industry.
There is another aspect which I think is pertinent to this particular Bill. It is that electricity legislation seems to have been passed—if one can judge of it in general terms—always rather after the event, instead of in anticipation of developments; in other words, the legislation which has governed the generation and distribution of electricity has run after developments rather than guided them. For instance, it is indeed a remark-
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able fact—I think I am right in saying this—that the last principal piece of electricity legislation in this country was passed as far back as 1926, twenty-one years ago. Even if the five years period of the war is eliminated, it still leaves a gap of about fifteen years during which there was no major electricity legislation. In the course of that time there were, of course, a number of inquiries, which I am sorry to say, by and large, led to nothing except recommendations. As the noble Viscount who has just sat down said, that is the fault of Parliament and not the fault of the industry. But, nevertheless, it is a fact. It seems to me, as a consequence, that where there is a gap of such duration as twenty years since the last major piece of legislation, the next piece of legislation, whatever it is, will have to catch up on those years. If the industry is going to serve the community in the future, it will have to anticipate developments and guide them. I believe we are probably on common ground there, and I do not think the noble Viscount who has just sat down will disagree with me on that.
So we come to a point at which a piece of major legislation is necessary. Here again, I think, the so-called private enterprises, the public utility companies themselves, accept as a whole that a piece of major legislation is overdue, if for no other reason than that to which the noble and learned Viscount on the Woolsack referred—namely, the possibility in the immediate future of an increase in the number of electricity undertakings, rather than a diminution. In trying to see why this has happened, I wonder whether a piece of major legislation could not have been promoted earlier by the public utility undertakings—the private ones, if you wish, or the whole of them—before now. They did not promote any because, of course, they did not agree, and they could not agree. I dare say it is arguable that the larger electricity companies could have got together to promote such a piece of legislation, but there would have been antagonisms among the smaller companies, just as there always have been antagonisms against amalgamations in the terms referred to in the McGowan Report. In other words, even on what might be called the private side of the electricity industry in this country, there has not been unanimity by any manner of means; and as between those undertakings and the

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local authority undertakings, taking each side as a whole, there has, of course, been even less unanimity, if that be possible.
It seems to me a pity, if one looks back to 1926, that when the generation and distribution of electricity was integrated, so far as companies were concerned, the local authority undertakings were not brought under control at the same time. Your Lordships know better than I do why they stood out. You also know who were the protagonists against bringing the local authority undertakings into the national electricity scheme. Those whom that hat fits, I suggest, should put it on, instead of criticizing the fact that this did not take place in 1926. I think I am right in saying that in no sense was it ever the fault of the public utility electrical companies. But the result is that there has been this antagonism between two sides, this bilateralism in the electricity supply of this country, which has created a situation which to-day is virtually untenable and which is not only entirely unfair to the community as a whole but monstrously unfair to the public utility companies.
Why is it monstrously unfair? For the very simple reason that as the franchises fell in, local authorities took over their own supplies, and they have always had the easiest and most profitable end of the business. They have always had the dense populations to deal with; they have always been able to sell electricity without any difficulty, to somebody living 5 feet, 10 feet or 10 yards away from his neighbour. Who has had the difficulty? It is those who have supplied rural areas—and how many of those are local authority undertakings? Your Lordships know the answer as well as I do; but may I remind you once again of what I have said? The people who are mainly responsible for this state of affairs are those who opposed bringing the local authority undertakings into a general national scheme. The result has been not only costly to the country as a whole, but also not very creditable.
We are a very tight, small island with over-all a very dense population. Even if the more barren and deserted areas of the United Kingdom are taken into account, the density of the population per square mile is still very great. Yet we have never been able to supply rural areas with electricity at a reasonable price, and
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we have not been able to do that for the reasons I have stated. It seems peculiar that in so tight and small a place we should, for over forty years, have avoided this issue of a unified scheme. Politically every Party is in part to blame for this, and I do not think it is any good going back and attributing blame to the failures of the 1926 Act and earlier Acts. I think we must accept that that is so, and, having accepted it, also accept that a major, and therefore, possibly drastic, piece of legislation is now necessary. Prior to the war it might still have been possible to devise another scheme, but times change, and the past—which is perhaps the only thing which is always with us—remains ineffaceable. We cannot go back to-day to a scheme which might have been workable seven years ago. Therefore, I do not propose to pursue that rabbit any further, because I frankly think it is a waste of time.
Before going on to the second part of what I have to say, however, I must add one thing. When all the best advocacy has been made for continuing the present system of private enterprise, when instances have been advanced to show how efficient the Central Electricity Board, the big central generating stations and distribution by the grid have been, there remains the unanswerable fact—or the fact which I have never seen rebutted—that large bulk buyers, the industrial buyers, have, by and large, not been satisfied with the service which they have obtained from the Central Electricity Board. I will not quote names, but I could quote two large industrial concerns in this country, both of them in the first flight of efficiency. One of these concerns set up its plant depending wholly on bulk electricity bought off the grid, and regretted that decision from the day it started working, both on account of the service and, above all, on account of cost. That concern has, in the course of its extensions, decided to put up its own generating plant to supplement what it receives, because it is too late now to replace it. The second is a group of undertakings, again among the most efficient certainly in this country and perhaps in the world. Every one of those factories has built its own generating station, and not one depends upon the grid for its electricity supplies. There must be some reason for that. It must be that the service they were getting

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or the price they were being asked was not good enough, and we must accept that fact. And what has been the result? The result has been that each one of those separate factories, in order to maintain its own efficiency and safeguard against breakdown, in setting up its generating plant has had to instal stand-by plant of 50 per cent., 70 per cent. and sometimes even 100 per cent. in excess of its requirements. Those stand-by plants are, by and large, idle for perhaps ten months a year, and that capacity for generation is being lost to us.
LORD BARNBY: If I might interrupt the noble Lord, could he give the names of the undertakings?
LORD RENNELL: I will give them afterwards.
LORD BARNBY: I ask that because it seems that there is a large generating capacity available in the country which is not being used.
LORD RENNELL: I will deal with the noble Lord's question later on.
VISCOUNT RIDLEY: Would the noble Lord say whether they did not wish to purchase current from the Central Electricity Board, or is he only saying that they did not wish to purchase from the supply undertaking of that area because the price was too high?
LORD RENNELL: That is so; they were not willing to purchase from the grid which ran through their area.
VISCOUNT RIDLEY: That would mean purchasing from the supply undertakings?
LORD RENNELL: Yes. The conclusion I draw from that is that what was possible in the way of a central organization is no longer possible. To pass from that to this particular scheme is, of course, quite another story. My own inclination, and probably that of a great number of my friends, would have been to see not so much a nationalized industry as a national industry—and I think there is some distinction. The alternative of a public corporation for the whole country, divided into two parts, the generating end and the distributing end, was perhaps a feasible alternative. Frankly, I do not think it is a feasible
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alternative now, not because it would not be workable but for a simple and inescapable political fact—namely, that the other alternative, adopted and contained in this Bill, was clearly and fairly set forth before the electorate at the last Election. We may or may not agree with it—noble Lords opposite obviously do agree with it—but it was set forth, and of all the parts of the programme of the present Government I think it is fair to say that nationalization of electricity in some such form as this did commend itself to the electorate as a whole.
That being the case, the possibility of choosing the first of the alternatives in the McGowan Report, as opposed to the second one which the McGowan Report discarded, is not in fact a practical argument to-day. I therefore conclude on this point by saying that a case undoubtedly can be made out for drastic legislation at this stage. A case can be made out and will be largely agreed to by people in the industry itself that a reorganization of the industry as a whole is necessary; and I must add that the country appears to desire a scheme partaking of nationalization. I accept that the country does wish that, and I feel, therefore, it is necessary to support this Bill in broad terms—but not in all its details.
However it is probably not germane on a Second Reading debate to deal with points which will fall to be brought up in the Committee stage, except for two which I think are serious blots on the Bill in its present form. One is the last point to which the noble Viscount, Lord Swinton, referred, and that is the method of appointing and organizing the area boards. I wish I could understand what was at the back of the Government's mind in having the top authority appointed by the Minister—and rightly—and the next set of authorities, at a lower level, also appointed by the Minister. In the case of the Transport Bill, I have not heard anything from the Benches opposite, or in the debates, both here and in another place, which I have read, which explained this curious theory of the Minister appointing both the subordinate and the principal authority. Had it occurred only in the Transport Bill, I think it might have been argued that the different aspects of transport—road, rail, canal and so forth—were not of the same sort, but competed with one another to such an

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extent that the Minister felt he had to have a finger in each of those pies, to maintain some sort of coherence in the Transport Commission. But in this set-up of the electricity industry no such argument holds good. The area boards are carrying out in their areas electricity work and nothing else. It is true that they are engaged in distribution rather than in generation, but it is all electricity. There is no difference in kind; they are dealing with precisely the same trade. If ever there were a case for separating the area boards from the Central Authority, it is here. There must be some reason why this curious device has been chosen, and I hope that the noble and learned Viscount, the Lord Chancellor, when he concludes the debate, will be able to enlighten us, because I cannot see any rhyme or reason in it. It may be that there is a reason why the Minister wants to have all the appointments in his hands, but even if there be reasons I hope that the Government spokesman will state them. I have not yet heard of them.
The second point in which this Bill contains a very serious fault, is in the matter of compensation. It is arguable that a valuation of the physical assets and maintainable revenue of the four or five railway groups in this country might be very difficult to achieve, but the practice of valuing a public utility organization, both in this country and in other countries, is common form. It is known how it is done, and it is a perfectly easy thing to do. You can not only value the maintainable revenue, but you can obtain a very close forecast of an increasing revenue. The basis for valuation is there. The basis proposed in the Bill seems to be a shot in the dark and not a basis at all; to take the Stock Exchange valuations seems to me to have no ground whatsoever, in logic, in justice in equity, or in finance. I defy the Government to find a financial ground to justify their valuation.
I have referred to these points only because I think they are major issues. There is a number of other points, which I shall hope to see raised or raise myself on the Committee stage: notably, that what everybody agrees should be one of the purposes of the electricity authority is not stated as one of its purposes—the increasing of the supply of electricity to rural areas. This was recommended by
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the Scott Committee, and every noble Lord who has had anything to do with agriculture and land will have noticed that not a single reference has been made to increasing the use of and cheapening electricity in rural areas. That omission seems to be quite incomprehensible. I would conclude by saying that I, with my friends here, accept this Bill and do not oppose it.
4.18 p.m.
THE EARL OF LYTTON: My Lords, we have listened to two speeches in defence of this Bill. The noble and learned Viscount the Lord Chancellor made out what he called a good case; indeed he congratulated himself chat it was an over-whelming case in favour of a substantial measure of reorganization of the electricity industry. I agree that there is a case for substantial reorganization of the industry; but I could find in the noble Viscount's speech nothing whatever in defence of this particular Bill. The noble Lord who has just spoken said that there was need for a more systematic development. I agree with him; but he said nothing about this Bill at all, except to point out the blots in it. The only reason, I gathered, why he was supporting it, was that the Government had a mandate at the last Election to Carry out wide schemes of nationalization. That, of course, we also accept—and that is the explanation of the action of my noble friend on the Front Bench; that is why he "is opposed to but not opposing the Bill."
The objects of the Bill, or, at any rate, the objects which are set before those who will have to administer its machinery, are very modestly stated at page 3 of the Bill, in subsection (6) of Clause 1, and, as the Lord Chancellor reminded us, those objects are the development and cheapening of supplies as far as practicable. For that purpose this Bill is not needed. There are exiting undertakers who are developing the electricity supply, and at a progressive cheapening of the price. The only thing that they require in order to accelerate the development and, still further, to reduce the price, is additional plant to make good their war losses, and, above all, the fuel to work their undertakings. If yon want more and cheaper electricity at once you can get it by giving us more coal, a better quality of coal and coal

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at a lower price. But nothing was said in the Lord Chancellor's speech to show how that could be brought about, and there is nothing in this Bill which will produce a better quality or a cheaper fuel.
The real and only object of this Bill is to change the ownership of the present sources of supply. It is a purely political object. In other words, it is "a manifesto of doctrine or policy masquerading in the guise of a Bill," the very thing to which the Lord Chancellor took strong exception in the case of Lord Reading's Bill. If I were to make a proposition to the noble and learned Viscount, and if I were to offer to improve the time-keeping of his watch, and, at the same time, save him the necessity of winding it up every night, he might perhaps think there was something attractive in the proposition. But he would be very much less enthusiastic, I am sure, if I went on to explain that I intended to bring about that result by transferring the watch to myself, and giving him in return something of much less value. He would probably call that unfair and I do not think he would love me any better if I then said: "But, see how mercenary you are trying to make money out of my benevolence." But that is precisely the way in which the Government are treating the present undertakers of electricity in this Bill.
I want to deal first of all with the justification for this Bill, a justification which is not stated but which is implied in the Bill. The noble Lord, Lord Morrison, speaking on the first day of this Session, when he was moving the Address, used these words:
"In my view, the vital and real test of whether private enterprise or nationalization of industry is the better policy for the nation to pursue is to be found in the efficiency in which either method serves the public."
I accept that test. It is the test I would myself apply when examining the merits of this Bill, and I venture to submit to your Lordships that the electricity industry will stand up to that test better than any other.
When you come to think of it, there is hardly a single industry or a single public service in the country to-day which can be called efficient by pre-war standards; but with regard to their failure, such as it is, the question of
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ownership has nothing whatever to do with the matter. Let me take two examples. The postal and telephone service of the country at the moment is inefficient. It is more expensive, it is less reliable, and it does not come up to the pre-war standards. That is a service under Government control, but nobody suggests that the Postmaster-General is to blame for the non-delivery or late delivery of one's letters. Everybody knows that it is due to war conditions over which the owners have no control whatever. Let us take the railways. They are, by comparison with pre-war standards, inefficient to-day. There are fewer trains, more overcrowded trains, and unpunctual trains; but no one suggests—or no one would have the right to suggest—that that is the fault of the railway directors. The Post Office would be no more efficient if it were under private ownership, and the railways would be no more efficient if they were under Government control. Ownership has nothing whatever to do with the efficiency or inefficiency of these various industries.
The electrical industry has had precisely the same war conditions to contend with. It has lost a large proportion of its employees. Its plant has been damaged or destroyed, and its normal development has been arrested by the curtailment of its capital expenditure. Yet, in spite of those conditions, in spite of conditions which would have justified a failure to fulfil its obligations, it has not failed. I admit that the Lord Chancellor in his speech did not say that it had failed. I do not think any Minister speaking in Parliament, where he could be corrected, has claimed that any of the existing undertakings have been inefficient; but other members of the Government, Ministers speaking outside, have not always been so careful. I remember the Chancellor of the Exchequer, for instance, in his Budget speech sneeringly remarking that private enterprise had not shown itself very enterprising. But, even if these things had not been said, the charge is implicit, if we accept Lord Morrison's test, in the Bill. I wish to challenge that contention.
I can, of course, speak only for a certain area of which I have personal knowledge, an area in Central London, small in extent, but an area which was vitally important during the war, since it included both Houses of Parliament, Buckingham Palace, and all the Government Depart-

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ments. Other noble Lords, no doubt, will be able to speak of other areas, larger in extent, and giving a supply to the rural districts. I am only what the Minister of Fuel and Power called "a namby-pamby director, here to-day and gone tomorrow." I do not know what he meant by that. Anyhow, I am here to-day, and, if this Bill passes, I shall be gone tomorrow. But before I go, I owe it to my colleagues who have shown their confidence in me by choosing me as their chairman, I owe it to the staff and the workers generally, who have served us faithfully and well, to repudiate the suggestion that there has been any lack of foresight in developing the business, any slackness in that development, or any inefficiency in the management or administration.
To do that I am obliged to submit to your Lordships a very few facts which completely dispose of any such allegation. The area of the two companies, of which I am chairman, in Central London, one a generating and the other a distributing company, suffered more than any other in the country during the war. Our generating stations were, throughout the war, enemy targets, and they were hit no fewer, than 175 times. In our distribution area 2,500 bombs were dropped, doing considerable damage. Out of the claims for war damage for the whole country, amounting to £10,000,000, claims amounting to £1,000,000, or 10 per cent., came from this area alone. We have never received that compensation, and the damage, of course, has been only partially replaced. But in spite of what happened the supply never failed. There was one occasion, on a Saturday night, when our main station which supplied the Whitehall area, received a direct hit and was completely destroyed. Yet the Government Departments received their supply by Sunday morning, and all consumers over the whole of that area were connected up by Monday morning.
Not only was London never deprived of its electricity, but we exported electricity, over the grid, to war factories as far away as South Wales. If we had failed, those factories could not have fulfilled their obligations, and we should have lost the war. Only their own employers know at what a price in heroism, skill and energy on the part of the people concerned, those results were achieved. The continuity of the supply was accepted
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by the general public as a matter of course, and the fact that it was so accepted is a measure of the confidence which consumers and the public generally had in the industry. I do not say that under national ownership those men would have done any less well. They would, of course, have done just as well. But I submit that they could not have done better under any system, and that the industry completely stood up to the test of the war.
So much for the workers. But you may say to me: What about development and what about price?—those are the things with which this Bill deals. I will give your Lordships only one figure under each head. First as regards growth: the London Power Company was established in 1926, and in the years that have passed since then the maximum demand has increased 270 per cent. and the units sold have increased by 540 per cent., or from 420,000,000 to 2,700,000,000. That indicates something of the growth or development of the company. Now with regard to price. As a result of the measures taken by the London Power Company there has been a progressive cheapening of the supply, and in the twelve years up to 1938, the generating costs had been reduced by 60 per cent. Of course the downward tendency was halted in the war, just as it was in every other business, but, even to-day, costs are lower by 40 per cent. than they were in 1926, and that in spite of a rise in the price of coal of 150 per cent. since 1938. I challenge Lord Morrison, or any other noble Lord to say that those figures show that private enterprise was unenterprising or unsuccessful.
I come to my second point—the time chosen for the introduction of the Bill. When the Government took office there was a shortage of almost everything, and, in consequence, we were faced by a succession of crises. We had a food crisis, a fuel crisis, a financial crisis, and the remedy for all these crises, as the Government are always pointing out, is increased production and a united national effort in dealing with the peace crisis, just as the nation dealt with the war. What we need are more houses, more coal, more exports, more gas, and more electricity. There are agencies already in existence which could supply all those things, if only the Government would give them the necessary help, and with the Government help they could

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have produced more immediately. Instead of devoting all their energies to increasing production, to helping producers, and to uniting all classes in a national effort, the Government have wasted time on political propaganda, have hampered producers with vexatious interferences, restrictions, regulations and forms, and have sown controversy instead of encouraging unity. Finally, they have removed all incentive to further production by describing any attempt to carry on industry at a profit as almost criminal.
This Bill is another example of political propaganda. It will not produce a single additional unit of electricity. It cannot help either producers, consumers or workers immediately, and if I am told that the object of the Bill is not the immediate cheapening of or an immediate increase in, the supply, but that that is a long-term policy, then I say that the existing undertakers could also produce more as a long-term policy—but they could have produced it very much more quickly.
I come to the third point that I wish to make, and that concerns the administrative machinery set up in this Bill, which it is claimed is going to give us so much greater efficiency. There is to be one central authority and fourteen area boards for the whole country. I would ask your Lordships to note that these area boards are to have no funds for capital expenditure, and no autonomy in the spending of capital. How can that possibly produce greater efficiency? Let me explain to your Lordships what takes place in a company to-day. At the beginning of the year, the chief engineer submits a programme of capital expenditure and the works which he proposes to carry out. The programme is discussed by the board and, when approved, he then knows exactly what work he has to do. He can place his orders and he can get on with the work. But what is going to happen under this Bill? If an engineer wants, perhaps, to put down a new main, or set up a new transformer station, he cannot work out any budget of capital expenditure. He has to go to the engineer of the area board for every single item of capital expenditure, and the engineer of the area board then submits this scheme, together with others which he may have received from other districts, to his area board. The area board then can do nothing. It has to pass on the proposal to
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the engineer of the Central Authority. The Central Authority then has to consider this particular item of expenditure with items from all over the country—England, Scotland and Wales— which are made as proposals to the Central Authority. If fresh capital is needed to carry it out, then the Central Authority itself has to go to the Treasury. It is a fantastic arrangement.
It is impossible to say that that is going to make for efficiency. The noble and learned Viscount the Lord Chancellor, I am sure, would never suggest for a moment that that was in the minds of the McGowan Committee when they suggested the setting up of regional authorities. This House is full of noble Lords who have great experience in the working of industry, and I would ask you, my Lords: Can any one of you undertake to carry on a business without any money for capital expenditure and without any responsibility for the capital expenditure which you incur? Not one of you, for a moment, could conduct any business at all on those lines. It is quite fantastic, and, of course, it cannot be the intention of the Government that that should be the system. They must have in mind some degree of financial autonomy for the area boards, but there is nothing in the Bill to tell us what it is, and we are entitled to know. Let me tell your Lordships that our own engineers are very anxious about this matter. They come to me and say: "How are we going to do our work under this new system?" I cannot tell them, but they are entitled to know. I do hope that before all the stages of this Bill are through somebody on behalf of the Government will give us some idea of the sort of way in which these area boards are to conduct their business.
My fourth and last point is this. I have said that there is anxiety amongst our engineers. There is also very considerable anxiety amongst our workers. Under the existing system of ownership and management, our workers have very many and substantial benefits. They enjoy the benefits of a pension fund, of a sick pay scheme, of a staff assurance scheme, of long-service grants, of an efficiency bonus, of co-partnership benefits, of a health service with clinics attended by a doctor and a nurse, of canteens where they may get their food, of educational facilities and of a sports ground for recreation. All these things, of course,

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cost a great deal of money, and expenditure upon them by one company alone amounts to £100,000 a year. Our workers want to know: Are these benefits going to be continued? There is nothing in this Bill to assure them that they will be, except that: reference in subsection (6) of Clause 1 to which the Lord Chancellor referred in his opening remarks—namely, that it shall be the duty of the boards to promote the welfare, health, and safety of persons in their employment. As a result of the benefits which they at present enjoy, there has always existed the happiest possible relations between management and employees in our company, and we want to know whether this will continue. I would ask the First Lord of the Admiralty, when he comes to reply, if he would give us an assurance that all existing benefits to workers in the industry will be continued.
As is the case with Lord Rennell, there are some points of detail which I should be disposed to criticize when we get into Committee; but. I can leave them till then. On the broad general principle which is applicable to the Second Reading, I repeat that no justification has been put before us for changing the ownership of electricity undertakings. No proof has been submitted to us that any benefit will result therefrom to either consumers or workers and, by the controversy raised in this Bill, a great impediment has been imposed upon national unity. My interest, my Lords, is in the industry, and in the welfare of those who have served me well and faithfully. I have no doubt that they will serve the State equally efficiently and equally loyally, but I have grave doubt whether, under this machinery, they will be able to render service as successful as they have done in the past. I say I have no confidence that that is possible, but I may be mistaken and, if I am mistaken, and if it is going to be possible to cover the bare bones of this Bill with human material—human material which has both authority and efficiency—if the right men are going to be put in and politics are going to be kept out, and if, as a result of that, we are going to get a greater development of electricity and quicker reduction in the price with diminished measures for the welfare of the workers—if all those goals are going to be achieved, then I shall be ready to forgive everything. I will forgive the slur on existing
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undertakers which is implicit in this Bill; I will forgive the Minister's rude references to directors whom I know to be a body of upright men, honest trustees and stewards of the responsibility which they have undertaken; I will even forgive the loss of my own employment and my own income, and I will sing my Nunc Dimittis with a good grace.
4.49 p.m.
LORD BRABAZON OF TARA: My Lords, I should like to speak from this Box because one is less conspicuous and it is very convenient; I should like to say that anything I say from it is not on behalf of the official Opposition, in the same way as many things that they say are not my views either. I would like to start by congratulating the Lord Chancellor on his introductory speech. It is quite extra ordinary and always remarkable to me to hear the way a skilled lawyer can make a good speech on a bad case. The question of nationalization goes to two extremes. Some people go so far as to say the best way to wage war is by private armies, and the other extreme say it is best to nationalize all children. And of course the right policy lies somewhere in the middle. And the line shifts. The line of nationalization is very difficult sometimes to determine.
To-day the telephone service has been mentioned. Are we all quite happy that that is best run as a nationalized institution, when we have a very remarkable system in America which is run by private enterprise? That is something on the border line, and I am not pretending for one moment that electricity is not also on the border line. It is of course now, admittedly, a necessity of life but noble Lords will remember that it was not always thought so. If you look at the construction of some of the companies you will see they had to pay 6 per cent. for preference and 5 per cent. for debentures. That did not show much confidence in electricity, if that was what the ordinary investor thought of its chance of success. One thing people sometimes forget is that electricity generation in this country was born of private to enterprise and if it had not been for private enterprise there would be no electricity to nationalize. It is a pity not to pay tribute where tribute is due.
The Conservative Government in 1926 set up the grid, a most imaginative

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measure. It found a somewhat heterogeneous industry with everything in separate compartments, stations generating at different voltages and frequencies and all entirely independent. It was an imaginative Act that inter-connected the production of electricity, set up selected stations and the Central Electricity Board and standardized frequencies. But there again, if it had not been for that Act, the nationalization of electricity would not have been a possibility. It would be the same as nationalizing furnishing shops. There would have been no co-ordinating machinery whereby you could take over the whole of the industry. I do not think that even on this side we have paid sufficient tribute to the Baldwin administration who passed that imaginative and instructive Act. I well remember it because it was criticized so violently from the point of view of defence and the noble Earl, Lord Lytton, only to-day referred to the fact that though his power station was destroyed during the war, within a few hours he had been able to get current going owing to the interconnection.
I do not think anybody would dispute the Lord Chancellor's point that larger areas are wanted. That was a recommendation of the McGowan Report and it has been a pity that joint electricity authorities have not been set up over England. But do not let us pretend that the objection to that was just that the municipalities would not lie down with the companies. The jealousy between the municipalities was just as violent as was the dislike between private enterprise and the municipalities. Only one joint electricity authority was set up, the West Midland, and it has been a success. I think we ought to pay tribute to this area where the companies and municipalities have shown the world that such a thing could be a success.
In a question like this timing is of the essence of the problem and we have had no technical reasons put forward why there is an advantage in nationalizing the whole of the country to-day in one step. We have come to the conclusion, naturally, that this is not a measure which is based on the genuine desire to get a good supply of electricity, but on purely political doctrines. We are going in for a great venture and it might have been done much
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more smoothly, with a certain amount of good will and co-operation. If another Minister had been responsible for the Bill, the situation would have been very diffierent from what it is to-day. The Minister says that if you differ from him —God knows, we are still allowed to differ from the Ministers—on a subject of which you know something and he knows very little, you are automatically a knave. I hope legislation in the future will not be based on penalizing those people who differ from the opinions of Ministers. Tribute has been paid from both sides to the efficiency of this industry, because it has done well. Nobody can pretend it has not done well and we wish it to do well in the future. If you are going to make a success of such a scheme you must get the co-operation of everyone and all should feel in their bones that they have had a fair deal.
Let us glance through the industry and see what the general feeling is. First of all the Electricity Commissoners. Of course everybody has quarrelled with the Electricity Commissioners but they have done great work, with no politics. They have come down on this undertaking or on that, but have always stood respected and above all criticism. They have had great names, that of the late Sir John Snell, the present Sir John Kennedy and Sir Cyril Hurcombe. We may quarrel with them but the industry as a whole looks on them with the greatest respect and I regret, as the Lord Chancellor regrets, their disappearance. Secondly we come to the Central Electricity Board. That was a Board set up, if you remember, with so many safety valves that it was thought it never would work. But it has worked. They have been great wholesalers of electricity. They have played the tune on the selected stations and I think an immense amount of praise is due to them for the imaginative way in which they have dealt with generation from the selected stations. Are they going to be pleased because they are wiped off the map together with all their staff?
I turn to the great municipalities. The municipalities who generated electricity were immensely proud of their own stations. How they loved to boast of their efficiency and it is very remarkable that just because their political views in many cases happened to correspond with

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those of the Government of the day they did not protest at having their generating stations torn away from them when they were so devoted to them, and loved them so much. As a matter of finance, I hope this example will not be copied by private people—that the more you owe the more money you get from the Government, because the municipality that has charged its citizens to pay for its station gets no money at all, whereas, if you have supplied electricity cheaply to your citizens and not paid for your station, then the taxpayer is going to foot the Bill.
Then we come to the question of the companies. I am a director of the County of London Company. When I was a junior Minister in the Ministry of Transport, I used to quarrel with old Sir Harry Renwick with violence; and it is very curious that sixteen or seventeen years afterwards I was asked to become a member of that company. I hope nobody will think that my policy during my tenure of office had anything to do with the prospect of becoming a director sixteen years afterwards. There is a family. Sir Harry Renwick, after all, was one of the great pioneers of this industry, who put down the station at Barking, which is not only the biggest in England, but the biggest in Europe. That was the result of the imaginative hard work of a managing director and a chairman. He is now succeeded by his son, Sir Robert, who is carrying on that great company in the traditions of his father.
I ask your Lordships: What basis, in equity, has the Minister, in view of the hard work of those people, to take away the Chairman's job without any compensation whatsoever? Have they not done more than any technician has done in the whole of the industry? What right have the Government to penalize Sir Robert, and put him out of that job, which he has performed so well? It can be based on nothing but the vindictive malice of the Minister. Sir Robert, first of all, honestly opposed nationalization. That is no reason for penalizing anybody, or putting them in gaol. But the trouble with Sir Robert is that when he forecasts something he is invariably right, and the Minister is invariably wrong. That is very galling, but it is no reason for incorporating hate into a Bill.
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We now come to the manufacturers. How delighted the manufacturers are going to be that now they can have the stimulating influence of the Government competing with them. That will cause them great joy. Last, and of course least, there comes the consumer. In the old days the consumer could appeal to the Electricity Commissioners against high charges. Now the Government are going to set up some sort of organization whereby nobody will get anywhere. That is quite certain, because it has been proved throughout the world that by nationalization you are not going to get cheaper current. That is one of the most farcical ideas that was ever put forward. Perhaps the consumers are going to be pleased if they get any electricity at all. What with the present costs, and the rationing (now so fashionably called shedding"), they will be happy if they get a couple of watts a week. I think I can say, without fear of contradiction, that never did any measure start with more universal than does this one. I have too much of love for this great industry not to regret that, if the political world makes it necessary to nationalize the industry, it should be done in the way that this Bill proposes to do it. It is the Minister's triumph that he has made every section of the industry disappointed, downhearted and sour.
5.7 p.m.
LORD MORRISON: My Lords, after the most enjoyable and forthright speech of the noble Lord, Lord Brabazon, perhaps it might suit your Lordships' convenience if I were to carry out the promise made by the noble and learned Viscount the Lord Chancellor, that I would intervene to explain the position of Scotland in regard to this Bill. Before I do so, may I thank the noble Earl, Lord Lytton, for having referred to a few sentences of mine in the first debate of this session in your Lordships' House, when I said that "whether public or private ownership is better depends, in my opinion, on which is the more efficient." I only wish to say that I see no reason, either in respect of this Bill or anything else, to detract from what I said, or to change my opinion. The noble Earl gave examples, particularly of his own business. I have little knowledge of that, but such little knowledge as I have leads me to think that it

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is highly efficient, and the work that it did during the period of the war was unforgettable and unsurpassed. But efficiency, it seems to me, is like the curate's egg—it may be good in parts. From the point of view of Great Britain, I feel that no system can be regarded as entirely efficient which leaves large parts of the country entirely without electricity.
Dealing with the Scottish position, I may say that many Bills come before your Lordships' House during the Session of which it is said: "Another injustice to poor old Scotland!" Whether that remark is always justified is a tempting subject for debate. I am afraid if I embarked upon that now, it might generate an electric storm in your Lordships' House. So I will content myself with a much milder assertion, which I hope may be accepted. It is this. There may be occasions when Bills applying to Great Britain do less than full justice to Scotland, but this Bill is not one of them. As your Lordships are aware, this measure provides for the nationalization of the electricity supply industry in Great Britain. Outside the North of Scotland district, generation will be the responsibility of the Central Authority, and distribution will be entrusted to fourteen area boards, which will receive bulk supplies of electricity from the Central Authority. In the case of the North of Scotland district, generation and distribution will be the responsibility of the existing North of Scotland Hydro-Electric Board. The rest of Scotland will be covered by two area boards—
VISCOUNT ELIBANK: Under Whitehall.
LORD MORRISON: I am coming to that in a moment. The North of Scotland Board came into existence, as your Lordships will remember, as a result of the Hydro-Electric Development (Scotland) Act, 1943, which received general approval of both Houses of Parliament. Very fortunately for the Board, their first chairman was a member of your Lordships' House, who I regret is not with us this afternoon, the noble Earl, Lord Airlie. To the devoted work which he did while he held that office the general regard in which the board are held to-day is in no small measure due. In the last fortnight I have had an opportunity of
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seeing some of the work of the Hydro-Electric Board in Scotland, and wherever I went I was impressed by the voluntary statements I heard of the excellent job of work done by the noble Earl, Lord Airlie, while he was chairman of the board.
The Board are a non-profit making public board, and accordingly fit into the Government's proposals for the nationalization of the industry. In addition to their duty of generating and distributing electricity, the Act of 1943 placed an obligation upon them to co-operate in the carrying out of measures for the economic development and social improvement of their district. They were, therefore, more than authorized undertakers in the ordinary sense. It was the desire of Parliament that they should contribute to raising the standard of life, and to developing the resources of a part of the country in which, for many years, depopulation, unemployment and a considerable measure of poverty, have been crying out for remedy. The present Government have decided that the special responsibilities of the Board shall continue under the new plan. The development of the water power resources of the Highlands of Scotland in the wider interests of the social and economic welfare of the Highland area is a task, I submit, different in character and calling for a different outlook from the task of organizing the electricity industry in other parts of Great Britain.
The Board at present consists of five members, of whom one is a full-time deputy chairman and chief executive officer. Four members are appointed by the Secretary of State and the Minister of Fuel and Power acting jointly, and one member is appointed by the Central Electricity Board from among its own members. Under the Bill it is proposed to increase the membership so that the new Board shall consist of not less than five nor more than nine members, all of whom will be appointed jointly by the Minister of Fuel and Power and the Secretary of State for Scotland, and they may be either full-time or part-time members. The increase in membership is necessary because of the heavier responsibilities which will devolve upon the Board under the Bill.
It is proposed to extend the area of the North of Scotland district under this Bill to include the city of Dundee, the

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county of Kinross and those parts of the counties of Angus and Perth that are now outside it. The district will then consist of the cities of Dundee and Aberdeen, the counties of Orkney, Zetland, Caithness, Sutherland, Ross and Cromarty, Inverness, Moray, Nairn, Banff, Aberdeen, Kincardine, Angus, Perth, Kinross, Argyll, Bute and parts of Stirling and Dumbarton. It will have an area of about 21,600 square miles—73 per cent. of the total area of Scotland—and a population of about 1,165,000–23 per cent. of the total population. At present the Board are responsible for developing the water power resources of their district and for the distribution of electricity outside the areas of other authorized undertakers. They cannot, however, distribute in the areas of other undertakers or acquire existing undertakings otherwise than by agreement. Under the new arrangements the whole generating resources of the district will be integrated under the Board's control, and the distribution of electricity can be planned as a single enterprise. The Board will acquire the large undertakings now administered by the Grampian Electricity Supply Company, and the Corporations of Dundee and Aberdeen.
The potential production of electricity from water power in the Highlands is greatly in excess of the amount required to meet the needs of the district, and accordingly the Act of 1943 provided for the sale of surplus energy to the Central Electricity Board at a guaranteed price which would insure a profit to the North of Scotland Board. This arrangement was designed and accepted as fair and reasonable to the Highlands to enable the Board to develop the distribution of electricity in the sparsely populated areas of the North of Scotland district, in which distribution is economically impossible without financial assistance from outside. The need for this arrangement continues, and is indeed increased, by the addition to the areas within which the Board are responsible for distribution of further sparsely populated districts now within the area of supply of other undertakers, but still without an electricity supply.
Under the Act of 1943, the Central Electricity Board must pay for electricity bought from the North of Scotland Board roughly what it would have cost them to produce it at a new steam station, and at
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that time this was considered a reasonable assumption. Since 1943, however, there has been a substantial rise in capital costs, with the result that the guaranteed price then arranged will no longer show a sufficient margin of profit to enable the North of Scotland Board to promote the necessarily uneconomic schemes for the distribution of electricity in the remote areas of the Highlands. To meet this situation a new clause was inserted in this Bill in Standing Committee enabling the Secretary of State and the Minister of Fuel and Power to add a percentage to the price now guaranteed in the Act of 1943. This provision deals with the immediate future. The new clause also provides for a statutory review of the guaranteed price arrangements of the Act of 1943 to be carried out before 1953, by which date the North of Scotland Board will have been in existence for ten years.
Although the Bill proposes that the Hydro-Electric Board shall continue as an independent Board it will be essential that there should be the closest co-operation between the North of Scotland Board and the Central Authority, and that the work and policy of the two Boards should be properly integrated. Accordingly, the North of Scotland Board will be subject to the direction of the Secretary of State for Scotland in the same way as the Central Authority will be subject to the directions of the Minister of Fuel and Power, and it will be the duty of the two Ministers to keep in touch in regard to the policy to be followed in matters of common concern. Further, the chairman of the North of Scotland Board will be ex officio a member of the Central Authority, and the authority and the Board will be placed under a statutory obligation to appoint a joint technical committee.
There is one other important respect in which the work of the two bodies will be formally integrated. It is proposed that new constructional works in the North of Scotland district should continue to be authorized by constructional schemes under the Act of 1943. These schemes are at present approved by the Electricity Commissioners and confirmed by the Secretary of State. It is proposed that approval by the Commissioners should be replaced by approval by the Central Authority as the national body, which will have at its disposal not only the technical resources to enable it to

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judge of the technical soundness of the schemes, but also a comprehensive knowledge of the electrical resources and requirements of the whole country. As a safeguard against the remote possibility that the Central Authority might withhold approval of a constructional scheme on other than valid technical grounds, the Bill proposes that the Minister and the Secretary of State should, in such a case, be able, after hearing both parties, to direct that the scheme may nevertheless be submitted for confirmation and considered on its merits by the Secretary of State in the light of objections and of the report of any public inquiry.
VISCOUNT ELIBANK: Is the noble Lord speaking about the North of Scotland, or the South-West and South-East?
LORD MORRISON: I am now confining my remarks to the North of Scotland Hydro-Electric Board. The Amenity and Fisheries Committees, appointed by the Secretary of State under Section 9 of the Act of 1943, will continue to advise the North of Scotland Board and the Secretary of State on amenity questions and the preservation of fisheries. Under Clause 7 of the Bill, consultative councils are to be set up for the area of each area board to watch the interests of consumers of electricity, and each council is required to appoint local committees or representatives to cover adequately all parts of its area. Similarly, a consultative council will be appointed by the Secretary of State for the North of Scotland district.
Generally, the North of Scotland Board will continue to function under the powers of the Act of 1943, the Central Authority taking the place of the Central Electricity Board as the purchaser of its surplus output, and the Secretary of State acting, in most cases, in place of the Electricity Commissioners. But it is also proposed to give the North of Scotland Board most of the new powers which are being conferred by the Bill upon the Central Authority and the area boards, with the Secretary of State taking the place of the Minister of Fuel and Power. The provisions of the 1943 Act requiring the preparation, approval, and confirmation of distribution schemes as a preliminary to the supply of electricity in any area have, however, been dropped. The procedure is not appropriate in the case of a Board
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with the wider responsibilities for distribution now proposed; and the Bill therefore places the Board under a general obligation to supply electricity in their district, subject to the directions of the Secretary of State.
As regards finance, the North of Scotland Board will continue to be responsible for raising their own capital. Under the Act of 1943, they may borrow, without statutory restriction of amount, with the approval of the Electricity Commissioners; but the Treasury may guarantee their borrowing only within a maximum of £30,000,000. Under the Bill, the Board may borrow with the consent of the Secretary of State up to a total of £100,000,000 apart from compensation payable for the transferred undertakings), and the Treasury may guarantee loans up to this amount. As at present the Board are bound to balance their budget over a period of years, and the charges made by them for electricity are subject to regulations made by the Secretary of State. The effect of the Bill, so far as concerns the North of Scotland Hydro-Electric Board, can be summed up as follows. The North of Scotland Board will, under the general supervision of the Secretary of State, exercise in the North of Scotland district the functions which are elsewhere to be given to the Central Authority and the area boards. In addition, they will continue to have those wider responsibilities for Highland regeneration which were placed upon them by the Act of 1943 under which they were set up.
May I add here a very short summary of what the Board have already done? Since their establishment in 1943 work has begun on four major hydro-electric schemes, estimated to cost upwards of £16,000,000. The installed capacity of the generating plant proposed is 374,000 kilowatts with an estimated average annual output of 706,000,000 units of electricity. Other major schemes are in preparation. In addition, four smaller constructional schemes, the output of which will be used locally, have already been approved. Thirteen local distribution schemes have been approved, and work has begun on a number of them. Other schemes are with the Electricity Commissioners, awaiting approval, and many more are contemplated. The Board have also anticipated the nationalization plan by acquiring already, by agreement, the existing electricity undertakings at Rothesay, Lerwick,

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Fort William, Wick, Kirkwall, Tobermory, and Arran.
Your Lordships will have noticed that up to now I have dealt almost exclusively with the position under the Bill of the North of Scotland Board. For the rest of Scotland, the provisions of the Bill, as explained by the noble and learned Viscount, the Lord Chancellor, apply exactly as they do to England and Wales. I am, of course, aware that in another place Amendments were moved at various stages, having as their object the setting up of a Scottish region under a Scottish board, responsible in Scotland for all generation and distribution and possessing the powers proposed to be given to the North of Scotland Board under this Bill and under their own Act of 1943. After very full debates, both in Committee upstairs and on the floor of the House, these Amendments were lost. A Second Reading debate in Your Lordships' House may not be the time to reply to the arguments used in another place. Indeed, they were in my opinion effectively replied to in another place, so much so that your Lordships may not find it necessary to repeat them here—but, of course, that is not for me to decide. Many of the arguments to which I refer—and I do not say this in any offensive sense—were based on Scottish nationalism, which is not what we are discussing to-day.
Confining myself strictly to this Bill, therefore, I will say only that the general policy of successive Governments—Conservative, National and Labour—and endorsed by successive Parliaments, has been that the control and co-ordination of electrical development is a matter to be dealt with on a Great Britain basis. Technical considerations and the need for ensuring an orderly development of generating capacity and of the grid system, support the view that the national boundary between England and Scotland has, in this connexion, no special significance. I admit readily that the setting up in 1943 of the North of Scotland Hydro-Electric Board was an innovation on this general policy. But, as I have already explained, this was a special task of an entirely different kind in the interests of the regeneration of the Highlands of Scotland.
The chairman of the North of Scotland Board is to be a permanent member of the Central Authority. The chairmen of
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the two area boards for the South-East and South-West of Scotland, will take their turn on the Central Authority. These Scottish boards will have a wide measure of autonomy; they will be advised by Scottish consultative councils and, so far as they are answerable to anyone, they will be answerable to a Central Authority upon which the Scottish point of view will be adequately represented. I apologize to your Lordships for having spoken at greater length than I intended. May I conclude, as I began, by saying that while it may or may not be true that Scotland does not always get a square deal in our legislation in the British Parliament, I hope I have convinced your Lordships that there can be no complaint on that score in the provisions of this Bill?
5.28 p.m.
VISCOUNT RIDLEY: My Lords, I am afraid that I cannot make any comment on what the noble Lord, Lord Morrison, has said with regard to Scotland. I know very well that many of your Lordships from over the Border will have a lot to say from time to time. The only comment I want to make is that in Scotland they have at least an independent body, whereas we in England have not; so that on this occasion it is not Scotland that is in a worse position than England, but the other way round. In introducing the Bill, the noble and learned Viscount, the Lord Chancellor, referred, when he was describing the range and size of companies operating in this country, to the company of which I am now chairman; he quoted it as one of the larger undertakings. I do not want to say too much about this particular enterprise, except to take the opportunity of saving that things are done much better in the North of England than they are in the South—or even in Scotland.
A short comment may be of interest, simply for the reason that this undertaking is approximately of the size and character which is suggested as typical of the area boards that are to be set up over the whole country. In fact, to all intents and purposes, the area is the same now under the company's activities as it will be under those of the area boards. Important differences are the inclusion in the area of the company of a number of separate supply undertakings conducted by municipalities, some of them with generating stations. I listened with great interest to

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the introduction of the Bill by the noble and learned Viscount on the Woolsack, and I felt very much in agreement with nearly all he said, certainly in the first part of his speech.
Going back to the McGowan Report, I think that there is no doubt that that Report correctly shows the situation of the industry as it was then, and pointed to one or two alternatives by which it could be improved. I notice that in these proposals the Government have adopted neither of those alternatives. And I would, respectfully, rather disagree with the Lord Chancellor, because I think later when he was speaking he said that the Government, having rejected the proposal of the McGowan Committee, were adopting the alternative which the McGowan Commission did not choose: that is to say, the alternative of a regional boards system. I cannot suggest—and neither do I think that many of your Lordships can—that there is not an absolutely clear case for very much larger areas of supply in this country. The simple question is the number of staff, the number of items of equipment, the size of the undertaking, and so on.
The arguments are inconclusive, but the difficulty comes in, and always must come in, on such a rearrangement: how are we to set up the new authorities to be responsible for these larger units? Here I differ very strongly indeed from the Government proposal. I do not differ on the question of ownership, but I differ very violently on the particular extent of the Central Electricity Authority. It is very much the same discussion as that which we have recently had on the Transport Bill; and no doubt we shall have it again. The question is: To what extent is it wise to direct and control this great national enterprise from a Central Authority? The very assumption of national ownership implies control or direction, to some extent at any rate, from the Government through one or other Ministry—whichever Ministry are mainly responsible for that undertaking. What is the reason in this case for interposing an Electricity Authority? Why have the Government jumped away from the rejected alternative of the McGowan Report and gone straight to a Central Authority, treating the regional or area boards as minor or less important units
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in the new method of running the thing? About that I feel very unhappy.
As I have said, the company to which I have referred is of the same size, character and magnitude as will be the undertaking of an area board. The latter will not have control of generation. That is another point that I hope I may be able to refer to later, but I cannot conceive any number of people running an undertaking of that size without something approaching the financial and other autonomy which such an undertaking has at present. I see no reason why in this Bill they should not be given that, but I see no signs whatever of a situation that can possibly work. I have made a few notes showing the matters over which the Central Authority can give directions to the area boards. There are eleven of them. I will not worry your Lordships by reading them all through. They are all important matters, such as direction on tariffs, on what to do with their surplus revenues, and how much of their reserve they are to put to the Central Area Reserve, and so on. Many of them have been raised by various of your Lordships who have spoken, and they are matters which will no doubt have to be discussed in Committee.
I do not believe, however, that any number of Amendments in Committee will do any good unless we really accept the principle that the only way to make this plan work is to have these area boards as completely autonomous independent units. Such a system should be adopted, keeping as the central co-ordinating body the Central Electricity Board. And the Board should carry out their functions much as they do now—supply the other grid, act as the wholesalers and the overall controllers of the companies in so far as their generation is concerned—that is to say, the people who decide approximately how much is to be generated at each station. That seems to me a perfectly adequate balancing system of achieving adequacy of supply throughout the country. On the other hand, the Electricity Commissioners can still survive as the judicial authority responsible for all matters which concern the public, their requirements as to the cost of supply, and so on, as they are now.
I would be interested to know what has caused the Government to go so far as to annihilate the practical usefulness of these

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proposed regional boards. The Lord Chancellor, when speaking in reference to this Bill, said that no alternative had been proposed. I do not want to misunderstand him, because I do not think he was speaking at that moment on the question of nationalization or national ownership, but rather on the structure of the Bill. If I am right, however, and his remark was intended to refer to the method of running an industry under national ownership, I can state quite clearly that other methods have, in fact, been proposed. Under a system of national ownership by the public, by means of regional boards of this kind—or area corporations, or call them what you like—owned by the public, and giving a good deal of obedience to general directions from the centre, it would be perfectly possible to build up a system, either of fourteen, as proposed, or, as some say a few more. My only experience is that the undertaking I know of is probably the right size for one board. For the rest of the country I believe it is generally thought that somewhere about thirty boards would be the right number. Whatever the number, however, if the area of each were arranged so far as possible to include urban, industrial and rural, and a certain amount of mixed consumers, it would be perfectly possible to contrive these independent authorities. They could be independent of each other, and independent of the centre, except through commercial activities with the Central Electricity Board, and except for the general directions as to policy which would come from the Ministry of Fuel and Power.
That is probably too far from what is in this Bill, but that is the kind of thing which can be made to work. It might be of interest to mention that such a scheme was proposed to the Minister of Fuel and Power by the company to which I have referred, founded on their experience as a large area supply undertaking. They proposed publicly owned area boards to get over the difficulty of mixed company-municipal ownership, and so on. So that has been suggested. I have never heard from the Government a specific defence of the organization which they propose in this Bill. Further, there is, I think, one other real mistake, and that is in the way in which this Bill is to work. It relates mainly to the
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operation of the generating stations. I gathered the impression from what was said by one or two noble Lords who have spoken that they saw the present system as generation being done by the Central Electricity Board. Of course, that is not so. The Central Electricity Board are in a position to influence or, in fact, to order, the power companies to make more or less as is required, to take, more or less from the grid from time to time, or to put more or less into the grid. One of the things which an experience of a large area of supply, particularly in an important industrial area, shows, is the absolute necessity of working in the generation and distribution together. This is not a political question, nor a question of public or other ownership. At present when there is a question of electrical supply to any large industry— such as, for example, steel making, which is a very complicated and involved process—all sorts of difficult questions arise. There may be a question of heat available for various processes, a question whether waste heat should be used for generation or not, a question whether there should be a stand-by plant or not, and it automatically leads to a complicated bargain or arrangement between the supply undertaking and the steel makers. This inevitably means that the supply undertaking must have knowledge of, and a good deal to do with, the generation of electricity as such.
Another point. There are many personnel who have to work together. Variations in load go straight from the consumer to the man in the generating station; they go all through the same system. A lot of the transmission lines are very frequently used as distribution lines. It would not be possible if distribution and generation are separated in ownership—or perhaps I should not say in ownership but in management. A lot of the equipment is common to both parts of the undertaking. Spares and maintenance activities are common to both. I regret to see that a Bill which it is said is a Bill to promote efficiency starts by pulling to pieces the only example we have of a completely integrated system of generation and distribution over one of these large areas. I believe that to be wrong. I would have liked to see an attempt to evolve gradually a system whereby generating systems were operated by the companies distributing

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over these large areas, so that we could get the maximum of speed and efficiency in running, and also the maximum of flexibility in meeting the demands put upon the industry. I would make this comment in reference to that point. The McGowan Report never envisaged a division of those two functions. I do not know—I would very much like to know—for what reason this arrangement is proposed in the Bill. Why is it thought that greater efficiency will be achieved? What are the savings which it is expected will result—and so on?
One word on the position of the consumer. At present there are maximum price arrangements, basic price arrangements and limited profit arrangements relating to the selling price of electricity. Most efficient undertakings have those. The consumer has the right of appeal ultimately to the Minister. I would suggest that whether or not there are these consumers councils as proposed in the Bill—without any power, one must remember—it is really public opinion which at present keeps prices reasonable. It is not the actual fact that a number of consumers—I think it is twenty—can appeal for a hearing to the Minister that has a great influence on prices. Is it not the truth that people are apt to say: "I would not go and live at such and such a place, the price of current is so high," and that that is what really counts? Supply undertakings know when that sort of thing is being said and they know that their responsibility is to meet the demands of the people, so that they can increase their business as much as possible. That is another reason why, in the interests of the consumer, one wants to see areas kept separate and autonomous. It is true that no area directly competes against another to supply the same individual, but areas do compete against each other in the matter of their reputation and good name, which is something that they get from the customers.
I would now like to say one word on the question of supplies in rural areas. Whatever may be said, we have got a long way yet to go in meeting all the requirements of farms and houses and cottages and buildings on farms in the country. I would suggest that a reason why we have not already got any further is simply this. It must cost more to take a supply to one
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or two houses at a farm some way from a village than it does to connect the urban consumer direct over a very short distance. At present this can be done; up to the war it was being done; and even during the war a certain amount of connecting of rural consumers was being carried out. But it is a very expensive matter, and the price is usually more than the rural consumer can pay. The capital cost of connecting is high and it brings the total price of electricity to more than the urban consumer pays. I always believe that a reason why companies in the main have not extended their supplies more than they have done to that class of consumer, and spread the extra burden over their urban consumers, is that so many of them have the knowledge that the municipal authorities have power to buy up that part of their undertaking in the municipal area.
The rural consumer, I suggest, cannot be supplied with his current at a reasonable cost, unless it is generally and publicly admitted that the urban consumer has to pay a little more. There are no two ways about that. I should be very sorry to see it suggested that this difficulty should be met by way of a subsidy from public funds. But I have no regret in suggesting that it ought to be explained to the urban consumer, that just because he lives in a congested town among a lot of other people, who also use electricity, he has no right to get his electricity cheaper than anyone else. I suggest that that would be a test of this new system. I suggest that it could well be applied, knowing that this new system is secure in the future, knowing that its supply area is certain for many years. The only way to get current for the man in the country who needs it, at a reasonable charge, is to charge a little more—and it would not be much, I think—to the man in the towns.
I have felt bound to be very critical of what is proposed in this Bill but I think I have explained to your Lordships the reasons for my criticisms. Whether you agree or not with the suggestions that the McGowan Committee made in their Report, the important thing clearly seems to be that we should have larger autonomous areas. Who owns the undertakings I do not really very much care, whether it is the public or private people, but what does seem important to me is that they should be run independently, efficiently, and with enterprise. And that

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is a state of affairs which I am quite convinced under this Bill can only be obtained by all strings pulling into the centre, a state of affairs which will be extremely difficult to achieve.
5.51 p.m.
LORD TWEEDSMUIR: My Lords, I listened with very great interest and respect, as I always do, to the noble and learned Viscount the Lord Chancellor in his introductory speech. I hope he will excuse me for saying that I could not divorce myself from the conclusion that this was another example of His Majesty's Government's inability to distinguish between a reasoned measure of State control and outright State ownership. I could not escape the conclusion that they considered that nationalization was an end in itself, which is a view to which we can never subscribe; and that monopoly, if public, was desirable, whereas monopoly has two faults which you cannot eradicate, because they are inherent: one is an arbitrary attitude towards the consumer, and the other is the inevitable marketing of a second-class or, in this case, more expensive product.
In listening to the Lord Chancellor, I could not help feeling, too, that this is legislation not dealing with the present, or with the future, but directed rather against the past. It reminded me, if I might quote a rather recondite simile, of the American War of 1812, which was declared three days after the causes of war were removed, and the fighting was continued six months after the Peace Treaty had been signed. I hope I shall not disappoint the noble Lord, Lord Morrison, if I use a few arguments that other people have used before. He appears to be in high good humour, so perhaps he will not mind. I am quite well aware of that Amendment which was moved in another place, which would have had the effect, if accepted, of making Scotland a separate electrical entity. It was defeated, albeit, by only one Scottish vote; but that it was defeated, I entirely accept. I listened to his description of the state of affairs in Scotland with very great interest indeed; but there is one thing he left out and that is the present position of electricity in Scotland at this very date.
Scotland is in a very unusual position in that we have great, and unusual, advantages of climate and geography for the
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generation of hydro-electric power, and going back to the figures of 1942 and 1943, the cost of electricity in Scotland was, per unit, 26 per cent. cheaper than in England, and in fact to this day Scotland is an exporting country of electricity. It possesses that powerful advantage. It has been said, and I think with some truth, that much of Scotland's economic trouble in the past has been due to a too great dependence being placed upon heavy industry. Now a supply of cheap electricity is a most powerful inducement for light industry to move to that country. I agree with the noble Lord, Lord Morrison, when he said that we must not be immoderate in our demands, or we must not be too selfish about the advantages which we enjoy. I do not agree with very much else that he said. I do not agree that full justice has been done to Scotland, though I agree that injustice has been done on previous occasions. I associate myself with the tribute to the noble Earl, Lord Airlie, and all that has been said about the North of Scotland Board. No one wishes it well for the future more than I do. I am very glad to see it retain that measure of autonomy that we would wish to see it have, but I do not agree with the noble Lord that the border has no significance.
He ran very briefly over the position of the two southern areas of Scotland because they did not support his argument quite as well as the position of the North of Scotland Board. They have passed, as so many things are passing now, to the ultimate control of Whitehall. Railways, it may well be argued, have been controlled from London for many years past. That is not the case with electricity in Scotland, which is situated in Scotland, and of which Scotland is now to be deprived. And so we see a Bill of nationalization, bringing with it its inevitable denationalization of that country. The southern border of the North of Scotland Board, and the northern border of the two southern areas have been drawn, I think, in a most uniquely inapposite fashion. It may be argued that borders will always cause hardship; someone has to draw that border. But this one is drawn through the most heavily industrialized parts of the country. It is a unique piece of blundering.
What Scotland needs—and it is a very moderate request—is resident, responsible management not expressed in assurances,

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which are poor provender, but in concrete statutory provision. Regarding the area boards' resident and responsible management, "resident" can be easily defined, but "responsible" I think can be reasonably defined as the power of a board of management to select, and engage, and dismiss, its own staff; and the power to buy its own equipment and machinery, and considerable discretion in its power of borrowing. Having wandered my way through the verbal jungle of this Bill, it appears to me that the area boards have that control over the engagement of their personnel. As for their buying of their own equipment, I understand that when the Central Authority has gone into the business of manufacturing electrical plant, they will receive it from them. As for control of borrowing, they are denied even the right of the ordinary citizen, as such, to run up an overdraft without asking anyone's permission; they may borrow temporarily on overdraft, I understand having first got the permission of the right honourable gentleman, the Minister, and the Treasury. Those powers are not sufficient autonomy to stimulate and safeguard the initiative that you need to make an organization of this kind work, and I entirely agree with my noble friend Lord Ridley in what he said.
Perhaps Lord Morrison is rather hard to convince and I do not normally read long quotations. I will not read a long quotation now, but I think it would be not a bad thing if he gave some thought to it. This is a short quotation from a Supplementary Report by the Committee on Church and Nation, of the General Assembly of the Church of Scotland, dated May of this year. The noble Lord, Lord Morrison, I think, stressed the need for taking things on a Great Britain basis:
"Large-scale organizations easily mistake their own interests for the interests of the community, which they exist to serve. The issue arises not from the intentions of those who support such schemes: it develops rather from the logic of events. Schemes of nationalization must, therefore, be accompanied by large measures of devolution and decentralization of control, if they are not seriously to imperil the attainment of a genuine democracy."
That has put that point much better than I can put it.
Before I sit down I should like to say one word on the subject of centraliza-
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tion, not just as it affects Scotland, but because centralization is an evil whose effects are most apparent, and are first apparent, at the perimeter. That evil influence creeps from the rim of the wheel, by the spokes towards the hub. Many years past, this has been apparent in Scotland. It started nearly a hundred years ago, but it is recognized in the last few years for the strangling and stultifying thing that it is. Every one of these nationalization Bills increases it with a tragic, and horrible, momentum. The time is not far distant when no expenditure of public money can be undertaken without reference to some remote being in Whitehall, whose only qualification is that he has never been there. As more and more jobs are centralized in London the time is coming—in fact it has come—when a man of genius and ability, and energy, cannot rise to the heights to which his qualities entitle him, by staying in that part of the country in which he was born, but he must inevitably be drawn to London. It starts at the perimeter and its evil effects have been apparent for some years, but noble Lords on this side who do not agree with centralization and monopoly will agree with me, that what is happening there is the touchstone of what will happen in this country, not only in northern England but gradually creeping into its centre. It is our duty to see that the Bill goes out a better Act than it comes in a Bill. I fundamentally disagree with the premises on which this Bill is based. I believe it is built on foundations that will not bear its weight and will eventually break down and be replaced by one, at a later stage, better suited to the needs of the country, being better and more truly planned.
6.2 p.m.
LORD BARNBY: My Lords, the noble Lord who has just sat down dealt with the North of Scotland part of this Bill and spoke with knowledge and sympathy for Scotland in replying to Lord Morrison, who surely showed his courtesy to the House in speaking with such care on the non-inclusion of the North of Scotland in the Bill. Lord Morrison failed all the same, in spite of his usual persuasiveness, to satisfy those who are doubters about the propriety of that part of the Bill. I am not interested in any electricity undertaking but I am a member of the Central Electricity Board, nominated as

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such by the Minister. It will be understood that for that reason I want to intervene in this debate.
I approach the Bill with the experience which no one else has had in this House of how the centralized direction of generation can work. There are other members of your Lordships' House who as Ministers have been familiar with the administration of the Act of 1926. There is certainly no absence of talent and knowledge as to the workings of electricity undertakings and all will admit that the contributions of the noble Earl, Lord Lytton, and the noble Viscount, Lord Ridley, will have sufficiently dealt with the details beyond what, as Lord Morrison has pointed out, has been so fully covered by discussion in another place. Anyone who heard the Lord Chancellor introducing this Bill would say that an impartial listener might well be convinced by the habitual lucidity of his exposition and by the ease with which he avoided any of the difficulties of the Bill, that it was a very natural thing for the Government to introduce this Bill and to introduce it in this manner. I approach the Bill with fundamental misgivings that an extension of the bureaucratic administration may well imperil the hopes of greater relief to the electricity consumer in the future.
With the general underlying principles of centralized direction and control I have no quarrel; in fact, I would associate myself with much of what Lord Rennell has said in what I felt was a most constructive contribution to this debate. After giving support to the principle of the Bill, he was certainly pretty vehement in the way in which he tore some parts of it to pieces. I regret that I interrupted his speech, but he made a statement I understood to be at variance with the facts. But he was good enough to say he would have me informed of the matter later. If I was in error I tender my apologies in advance. The first thing I turn to is the Central Authority. Having seen how the Central Electricity Board works and the strict impartiality and freedom from politics of its work, there are grounds for misgivings, which were mentioned in another place but cavalierly brushed aside. In this particular matter we have the instance of a start that has been made.
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I would emphasize what Lord Tweedsmuir has just said, that the responsibility of this House is to improve the Bill. I would seek at some stage of the Bill a definition of the status of the British Electricity Authority. There seems to be confusion about nationalization and public ownership. Lord Rennell drew a distinction between nationalization and national ownership. The Minister of Fuel and Power, in Hansard, says of the Central Electricity Board, "It was a nationalized concern to deal with generation." There is a distinction between ownership of telephones and ownership of mines, I believe. One, I believe, is owned outright by the Treasury and the other is owned by a public authority. I have heard in this House several noble Lords refer to the Central Electricity Board as a national undertaking. The £70,000,000 which has been raised by the Central Electricity Board for the erection of the grid and generation have been all furnished by the pubic without any Government guarantee. The man in the street has put up the money. Is it therefore correct, as the Leader of the House himself has said, to describe it as a nationalized undertaking? I have quoted the Minister of Fuel and Power, and I do hope some clarification of the statement may be made.
Before I leave that part of the Central Electricity Board, I would like to express my gratitude for the tribute paid by the a noble and learned Viscount on the Woolsack to the past achievements of the Central Electricity Board, which I am convinced are well merited. Had anybody taken the trouble to read the Annual Reports of the last nineteen years of the Central Electricity Board, they would be convinced of how well that authority worked. I would like to ask what is to be the tenure of office of the Central Authority under this Bill? This point was disregarded in the case of the Transport Bill. No explanation was sought at any stage of the Bill of a clear definition, in advance, of what were the intentions of the Minister. What are the powers of removal? If that be entirely at the pleasure of the Minister, I would ask your Lordships to consider what is the degree of independence which is going to motivate the members of that board. I agree with the noble Lord, Lord Rennell, and other speakers, that it is certainly

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preferable to keep the generation and distribution separate. The experience of the Central Electricity Board over the past twenty years has brought out that point most clearly.
Again I revert to the Central Electricity Board. They are subject, indeed, to departmental consents. But the property is vested in a board composed of persons nominated by the Minister under authority of Parliament, without the power of removal. They have, therefore, an independence of action, and I venture to think, from the past achievements of the Central Electricity Board, it is clear that all actions inspired by technical desirability have only been modified to the extent of public relations considerations by the other independent non-technical members of the Board. I should think that no body so constituted as the Central Electricity Board would ever disregard a direction by a Minister which would definitely assist its efficiency. I refer to the words of the Leader of the Opposition. He challenged the constitution of the members of the Central Authority. I must refer to the position of my chairman of the Central Electricity Board with whom I have not discussed my intentions to-day. I think it would be natural to expect that from one who has loyalty to his chairman and a belief in his ability which, in this case, is shared by the whole industry.
I would ask your Lordships' indulgence to quote a leading electrical publication, which recently referred to the resignation of Mr. Harold Hobson from the Central Electricity Board, and to an interview which they had sought with him. I quote:
"He informed us that his withdrawal from the electricity supply stage at the present critical time was dictated by one reason, and one reason only. It was a protest, inspired by his conviction that the appointment of Lord Citrine as Chairman of the British Electricity Authority, was made primarily for political reasons."
He protests in the only effective way open to him against what he regards as the introduction of political patronage into the administrative control of one of the nation's basic industries.
"Mr. Hobson added, that his action had been in no way influenced by the issue of nationalization—he was prepared to serve the B.E.A. in other circumstances—nor by any personal considerations relating to Lord Citrine,
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whom he has never met, and no criticism of the latter was implied. The issue was purely one of principle."
It then goes on:
"Are we in fact witnessing the incipient infiltration of political patronage into the nation's industrial affairs?"
It is natural that this electricity authority should pay attention to the feelings of current thought running through the industry, as reflected by its leading journals.
I feel in regard to this Bill, that the responsible position of the Minister does not qualify him and his officials to be in a position to deal with electricity from the technical point of view. The essential difference between the Central Electricity Board and the proposed British Electricity Authority is that it would seem the new body will be subject to political pressure. That is the more distressing as electricity supply is a technical matter and has hitherto been kept entirely free from politics. I regret that as a result of this the chairman of the Central Electricity Board was obligated to tender his resignation. I mean no disparagement to the member of your Lordships' House to whom I refer, Lord Citrine. I attack the appointment, not Lord Citrine. I have known him intimately for a long time and have genuinely admired his qualities. The Turner-Mond Conference, of which I was one of the seven employer members, which, with the seven representatives of the trade union movement, produced such an outstanding report, gave me my early assessment of Lord Citrine's talents. But he has not the technical knowledge to carry out the difficult and technical task which the head of this great undertaking requires. It pains me that the Minister of Fuel and Power, in another place, should suggest by a reply of his that the present chairman of the Central Electricity Board was expected to accept a subordinate position, with his great technical knowledge and experience which lay at the use of the nation. How could he accept such a position? It seems that it is clearly an instance of a political appointment. I naturally feel doubt as to whether that offers as good a promise as the practice followed in the past by His Majesty's Government in regard to the Central Electricity Board.
I beg the indulgence of the House to refer to the admirable statistical work of the Central Electricity Board over the last

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nineteen years. I feel they have done an outstanding job with exceptional accuracy. So it is that I feel great resentment against the insinuations that the Central Electricity Board's faulty calculations led up to what history will come to know as the "Shinwell Crisis," producing all the industrial loss that came to this country in the spring. There were repeated warnings against an insufficiency of coal stocks; there was a forecast that industry would be reduced to a thirty-five hour week by the spring if other action was not taken. Providence intervened to assist the Minister to allege acts of God in the weather as the cause. He had repeated warnings; he was given caution after caution that he should forbid the production of electrical heaters which would overload the productive capacity of the grid, but he took no action.
I want to refer to the area boards. I support what was so clearly set out by Lord Ridley. I am convinced that the area boards should have greater authority and should have imposed upon them some measure of financial responsibility. I dislike a nationalized undertaking if it is to be anything like the telephone system. The telephone system in this country, apart from its gross inefficiency, is contributing tremendously to the waste of time, the loss of effort, the sense of frustration, and the loss of man hours. It does not plough its big profits back into improving its services, but they are taken by the Chancellor of the Exchequer. I hope the members of the Government will remember what the noble Lord, Lord Rennell, and the noble Earl, Lord Lytton, emphasized, that the profits of this great industry have been generously ploughed back. Will the Government profit from that example and so remove one of the great anxieties of those who, like myself, fear that what happens in the case of the telephone system will happen here to the disadvantage of the electricity consumer?
6.23 p.m.
LORD LLOYD: My Lords, I should like to begin by supporting what has already been said by the noble Viscount, Lord Swinton, and others about the timing of this Bill, because I feel that that is one of the most important things about the whole business. No good General—if I may use a military analogy—chooses the moment when the battle is hottest to reorganize his whole Army, least of all
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his fighting troops. Any General who did that would lose not only his job but the battle as well. Nobody who heard the recent grim statement by the Chancellor of the Exchequer in another place can doubt that this country at the present time is fighting in the economic field for its very existence. What is more, the battle has not yet reached its height. That is coming in a few months' time, when the rigours of winter descend upon us again and the American Loan runs out. Yet this is the moment which has been selected by His Majesty's Government to pass legislation which will dislocate first of all the whole of our transport industry, and, secondly, our electricity. The noble and learned Viscount, the Lord Chancellor, himself admitted that there was a grave risk of dislocation in the electricity industry, and I suggest that these industries are the front line troops in this battle. I said that any General who did such a thing would lose both his job and the battle. I think it would be hypocritical of me to suggest that we on these Benches would grieve if His Majesty's Government lost their job, but we are rather concerned lest the nation should lose the battle.
I will turn now to what I feel are the demerits of this Bill. They have been dealt with very fully by other noble Lords, and I do not propose to detain the House a moment longer than I can help. First of all, I must state that here we have the Government setting up another State monopoly. Noble Lords opposite, or rather their Party, have in the past been very critical of private monopoly, and I myself do not understand the argument that once a monopoly becomes a State monopoly everything in the garden is lovely. It seems to me that if a private monopoly is bad, a State monopoly, which is both larger and more powerful, is worse. I would direct my argument to the evidence in this Bill that it is a monopoly. Mention has been mace before of the way this Bill affects the consumer. That has been gone into fully by other noble Lords, and I will not elaborate that point. But I do not think there is any doubt that the protections the consumer has had in the past have gone. His first great protection in the past was competition, and I submit that in this industry there has been healthy competition between the companies and municipalities and, what is

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more, healthy competition between electricity and gas. Great tribute was paid to that by Lord Simon of Wythenshawe who considered that that competition ought to continue. Under this Bill competition within the industry will be removed, and I do not believe it will do the consumer any good. What is more, competition with gas is going to be removed, if I understand the Government spokesmen aright.
Then there is the question of tariffs which has already been dealt with by other noble Lords. I think that the consumer will be a great deal worse off if tariffs are going to be settled by the area boards without reference to anybody. In that case the boards can charge what they like. There is going to be no impartial tribunal except this consultative council, which, like all the bodies under this Bill, is not an elected body and not even an expert body—it is a body nominated by the Minister. Again I draw the attention of your Lordships to what was said by the noble Viscount, Lord Swinton, about the Minister's statements in another place. I do not want to say any more about those statements, because I think the more they are relegated to decent obscurity the better. All I can say is that I do not believe that those remarks are going to inspire a great deal of public confidence in any body nominated under this Bill.
There is one other point to which I wish to refer, and that is the question of undue preference. In the past there has been very strong statutory protection for the consumer as regards undue preference. The provisions in the Bill are undoubtedly a whittling down of those former statutory provisions, and what is more, so far as I can see, there is no guarantee that the Central Authority should not give undue preference to one body as against another in the supply of bulk electricity. What is more, there is absolutely no guarantee that they should not give undue preference to the vast railway undertakings, at the expense of domestic consumers and others.
Another point to which I would refer briefly is what I believe to be the inefficiency of these State monopolies. Noble Lords have referred to the coal monopoly in this country, but I do not want to be unfair, because perhaps it is a little early
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yet to judge the Minister. But we have a perfectly good example in France. In France there is a State monopoly which, I am creditably informed, in its first year has not done too badly. It has lost only about 18,000,000 to 20,000,000 milliards of francs—but I expect we shall have better results later on. I should like to direct the attention of your Lordships' House to the debate in the Chamber of Deputies which took place quite recently. I have a whole string of quotations, but I will not bother noble Lords with them. However, I think this one is fair comment on the whole debate, and it is the speech of M. Rene Mayer, who is a radical deputy. This is what he said:
"The whole framework of electricity is enormous, and it is very difficult, as we have recently seen, for a man to direct from Paris the transport and distribution of electricity to the smallest villages. I add that, for some time in the country districts, it has been extremely difficult to obtain from the services of the local nationalized electricity concern, the least bit of work or even a reply, even when the request is only whether it is possible to obtain a plug, because considerable centralization has developed for financial or other reasons, and it is impossible at present for local electricity concerns to take decisions which have practically all to be sent to Paris, from whence they descend with extreme slowness."
That is what the French thought about it. The French have a word for it!
I submit to the noble Lord opposite that that weakness is plainly apparent in this Bill. Noble Lords have already spoken about this, and I believe that one noble Lord mentioned that there were five stages in the development scheme which had to be gone through before anything could be done about it—from the area Board to the consultative council, from the area board to the Central Authority, then to the Minister, from the Minister to the Treasury if it contained any financial element, and then back to the area board. No major item of capital expenditure could be spent by the area boards without going to the Central Authority
I feel that there are other defects which have been dealt with, but that will do me for this evening. I feel that these are very considerable defects in any Bill. I wonder what compensating merits this Bill has to make up for these defects. This is a young and efficient industry, and I feel it is rather more immoral and one of the worst of the seven deadly sins to violate a young and innocent girl like

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this industry than an old and hardened courtesan like the coal industry. This is a young and efficient industry, though I agree that it has its defects. We all agree for example that D.C. should have been abolished, and forms of tariffs and voltages standardized; that there should have been a reduction of undertakers and an enlargement of areas. But we concentrate so much on the defects of this industry in this country, and we do not look at other countries outside. Everybody says that the electricity industry in this country is so bad. Yet in the United States, which I imagine nobody could think of as a very backward country technically, you find that the percentage of the population who are actually connected to the electricity mains is 22, whereas the percentage of the population in this country actually connected is 24. These figures are slightly fallacious, because that is the percentage of the population; but when you get to the houses actually connected in the United States there ate 80 per cent., compared with 69 per cent. in this country. That is not a very great disparity. After all the United States is one of the foremost countries in the world.
Let me take these various defects. There is the standardization of voltages and the abolition of D.C. I do not think anybody can say that great progress has not already been made in abolishing D.C. and in standardizing voltages. There is more to be done—but we do not need this Bill to do that. As regards the standardizing of the forms of tariff, when the industry's plan was launched in 1944, it was said that they could go a long way towards standardizing forms of tariffs within five years; but this also hangs on the enlargement of areas, and on getting rid of some of the enormous number of undertakers. With great respect, I think that the noble and learned Viscount, the Lord Chancellor, rather exaggerated the picture when he spoke of this enormous number of undertakers, because although I agree with his figures, in point of fact 90 per cent. of the electricity is supplied by about thirty companies and seventy-six municipalities. The others are so small that they supply only the remaining 10 per cent. I think that is a fair picture. I suggest that we do not need this Bill to effect a high measure of rationalization of this industry. Of course, as the noble and learned Viscount
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said, it is quite hopeless to rely on voluntary effort. That has been tried in the past and failed. But we on these Benches believe that it is unnecessary to change the ownership. We believe that if the Electricity Commissioners were given the necessary powers of compulsion, of defining special areas, of removing redundant undertakers and of allowing them to be acquired by the larger ones, this could be done without any of the dislocation which is inevitable under this Bill.
There is another point. When the Government went to the electorate two years ago they gave a promise, to which I have already referred, to put these things right; and they gave another promise, They said specifically in their manifesto Let us Face the Future: "The public ownership of electricity undertakings will lower charges." That was a remarkable statement which, so far as I can understand, has been repudiated, first by the Minister, and now to-day by the noble and learned Viscount, the Lord Chancellor. He said there was no prospect of charges being lowered. Yet I must point out to the Government that it was on this promise that they obtained their mandate. We do not question their mandate now; we are not going to obstruct this Bill. But we are entitled to say: "Here is one of the chief things upon which you won the victory; and now you come and tell us there is no question of cheaper electricity."
I would like to ask the noble and learned Viscount to give us more details about the impossibility of giving the rural areas cheaper electricity. It is quite impossible to give cheaper electricity unless you make up the capital charges either by charging the industrial consumer or the domestic consumer more. I think that is generally admitted. Certainly it is quite true that the Post Office, which is another nationalized undertaking, charge more in the country than in the town. Let me quote the Assistant Postmaster-General. He said in another place on July 26, 1946:
"Where the cost of a delivery to a few outlying houses would be prohibitive in relation to the number of letters received no delivery will be made."
He said again:
"In rural areas where technical conditions permit, a kiosk will be provided if the local

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authority will contribute £4 per annum for five years towards the cost of providing the kiosk."
Does the noble and learned Viscount intend, or does he not intend, to give cheaper electricity to the rural consumer? If he does, how does he intend to do it? If he says he does intend to do it, I should like to know why. I should also like to ask whether he thinks that this Bill will speed up rural electrification. I understand from experts that the main obstacle to rural electrification is shortage of materials, and I believe that the companies or industry as at present organized or as reorganized in the way that we have suggested can do the job a great deal quicker than the Government will be able to do. They have already got plans to do this as soon as the materials arrive, and all those plans are going to be torn up and the whole thing has got to be unscrambled and started again.
I feel that the Government have made out no case in this Bill. I feel, in fact, that this Bill contains some admirable principles in the first clause, but it does not condescend to detail anywhere throughout the Bill. The noble Lords who were here on the Second Reading of the Preservation of Rights Bill introduced by the noble Marquess, Lord Reading, will remember that it was precisely this that the noble and learned Viscount the Lord Chancellor described as an electoral manifesto. I do hope that the noble Viscount, Lord Hall, in his reply will put in the details which are so lacking in the Bill in order to save the noble and learned Viscount on the Woolsack from what must plainly be an extremely embarrassing predicament. We all know the feelings of the noble and learned Viscount about electoral manifestos.
In conclusion I should like to refer to Mr. Hilaire Belloc's Cautionary Tales for Children which I happened to be turning through the other day. I found this very interesting little poem which is rather appropriate to this occasion. It concerned a noble Lord and it also deals with electricity. Mr. Belloc wrote the following:
"Lord Finchley tried to mend the electric light himself:
It struck him dead, and serve him right.
It is the business of the wealthy man
To give employment to the artisan."
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That is a very simple little quatrain but it does seem to me that it might have a moral for us here to-day. It seems to me that the noble Lords opposite are trying to mend the electric light themselves. I hope it will not strike them dead, but I believe they would do much better to leave it to the artisan—the industry which really understands it. By all means rationalize the industry. Give the Electricity Commissioners more powers, but do not mess the whole thing up in the way that it is being messed up in this Bill. That is the moral of this little poem of Mr. Belloc's. All I can say is that if they do it and we do not get any electricity it will serve them right, and we shall suffer.
6.45 p.m.
LORD LUCAS OF CHILWORTH: My Lords, I feel almost as if I should apologize to noble Lords opposite for interrupting the monopoly which they have enjoyed, not only during the Second Reading debate upon this Bill, but the debate upon the two previous Bills which have gone through this House. I intervene upon this occasion, because I want to approach the problem which is confronting us from the point of view of an industrialist, as I am quite free to admit, unlike the majority of noble Lords who have already spoken, that I have no financial interest in this industry. But, before I do so, I would like to make some comments upon the remarks of the noble Viscount, Lord Swinton. When the noble and learned Lord Chancellor introduced this Bill, he said there had been no practical alternative put forward to it, and he did not expect one to be put forward in your Lordships' House. In so far as the noble Viscount, Lord Swinton, is the spokesman for the official Opposition, he certainly did not put one forward, because his only alternative, if alternative it could be called, was to cancel the franchises at present held and set up another committee of inquiry, I presume, to find out—
VISCOUNT SWINTON: I am not going to interrupt the noble Lord, because he can read my remarks in Hansard tomorrow. But what he is saying now bears no relation to what I said.
LORD LUCAS OF CHILWORTH: That was my impression.
VISCOUNT SWINTON: Only to you, but to nobody else.
LORD LUCAS OF CHILWORTH: Perhaps the noble Viscount will bear with me if I quote him again. I think he said also that the time is not right. Of course, the time never is. It was never right for the nationalization of the coal industry, it was never right for the nationalization of transport. No time is ever right for change. But again I am going to quote the noble Viscount, because I think he was less than fair to the Minister when, in a quotation he gave of what the Minister said—and I am quoting the Minister:
"If we fail in coal, there is no case for any other nationalization "—
the noble Viscount, I am sure quite unwittingly, inferred that the Minister was referring to the coal crisis, whereas the Minister, when he made that remark, was referring to the setting up of the National Coal Board, and the Minister meant that if the National Coal Board failed, there was no further case.
VISCOUNT SWINTON: Has the National Coal Board been a success?
LORD LUCAS OF CHILWORTH: I think, with the characteristic fairness which the noble Viscount always shows, he should at least allow the National Coal Board a little longer than the few months they have been in existence in order to judge whether they have been a success or a failure. There is one other thing that I wish to take up with the noble Viscount, because he has said—and he has repeated what Opposition speakers have said right through the discussions on all these Bills—that noble Lords on this side of the House are smitten with some dogmatic mania, that for us it is nationalization for nationalization's sake. The noble Viscount made the claim that he is a fair controversialist, a claim which is quite justified. Therefore, in fairness I think he will admit this, that while he has, perhaps, not a very great opinion of the politics of noble Lords who sit on this side of the House, at least he will admit that in the hard school of industry and commerce some of us have gained useful experience and have not been altogether failures. It is because of our experience in the field of industry and commerce, and the hard school of practical experience as working industrialists, that we have been driven to the conclusion
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that these main basic production industries must come under public control if the future economy of this country is to be saved.
I speak upon this subject as a working industrialist. The noble Lord who has just sat down mentioned our economic position. Worried though I may be about the dollar position of this country to-day, in relation to the American Loan, I am still more afraid of our competitive position as an exporting country. The cry goes up upon every hand for more productivity. Our basic problem is how to increase the productivity per head per hour of our people. It is a popular exhortation to-day to say "work harder"; suggesting that the working man is not pulling his weight. Increased productivity per head of the population in this country rests on many things other than human sweat and elbow grease. It depends upon the increase in the horsepower available at the hands of our workers, and after the nationalization of the coal industry, or bringing it under public control, call it what you will, the very basis of the availability of horsepower to the worker of this country rests upon bringing the generation and supply of electrical energy out of private hands or the multiplicity of municipalities ant bringing it under one central control.
It is true, with regard to all the schemes of public ownership, that you cannot have proper co-ordination of these basic industries with anything other than single ownership. It is an impossibility to get co-ordination when, as the noble and learned Viscount the Lord Chancellor pointed out, you have 563 supply authorities, which is the case to-day. The secret of our success in the future as an industrial country will rest upon these basic industries being organized, not for private profit—and before any noble Lord opposite gets up to correct me on this point; let me say that I do not quarrel with the private profit motive; I condemn its blindness and its short-sightedness, which result in its not being able to see that the good of every citizen of his country rests upon the prosperity of the country as a whole—but for the good of the community as a whole.
Comparisons are made between productivity per head in this country and in America. The British workman is a

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better workman than the American workman. He works harder than the American, he works longer hours than the American, and he gets half the money of the American. Why is it that the standard of American productivity is twice as high as that of British productivity? It is because the horse-power available to the hand of the American worker is two to three times greater than the horse-power available to the hand of the British worker. If you think we are going to re-equip our country, if you think that we are going to get the requisite horse-power available to the hand of the worker under any system other than that which is being propounded by His Majesty's Government, then I, from my own experience, say that I believe you are mistaken.
The noble and learned Viscount who sits on the Woolsack in my view made, in his opening speech, an unanswerable case for nationalization, and it was reinforced by the speech of the noble Lord, Lord Rennell. It was an unanswerable case for bringing the electrical energy supply and distribution industry of this country under one central authority and one central ownership. Nothing I have heard to-day of the murmurings of the Jeremiahs, of the pre-judgments of failure—
VISCOUNT SWINTON: Lamentations.
LORD LUCAS OF CHILWORTH: Yes, of the lamentations at the Wailing Wall—the Wailing Wall that is erected every time we talk about bringing public utility to the service of the people, and not for the continuation of private profit. The effect of those murmurings and those wailings is, I suspect, that the bulk of the discussions that are to follow upon this Bill will be devoted to the compensation clauses and not to the improvement of the industry as a whole.
But let me go back for a few moments to the McGowan Report, and examine the state of affairs as that Committee saw it in 1936. There were, we are told, 635 separate undertakings, 43 different voltages, ranging from 100 to 480 volts. Voltages and systems and charges varied from street to street. On one side of the street, there would be alternating current and on the other side of that street direct current. On one side of the street the Charge would be 4½d. per unit and on the
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other side it would be 9½d. per unit. The current, in both cases, might well be generated at the same station, but in one case the supply was bought by a private supply company from a municipality, and through that transaction the price of current was doubled. That, in the words of the noble and learned Viscount, the Lord Chancellor, was a chaotic position.
If we attempt to allow this industry to develop under the existing legislation the confusion will be worse confounded. Take the question of the standardization of voltages. There are many great areas in this country to-day that have to labour under the disadvantage of having the obsolete direct current system. For those areas plant is absolutely unobtainable and many of the factories and workshops, while anxious to increase their production, are unable to obtain motors to use D.C. Although, as noble Lords have said, a great deal of standardization has been done, I know, from personal experience, that for twenty years local supply authorities have been going to change D.C. to A.C. I personally, in one of my works in one end of a certain town, have to operate on D.C., while at the other end of the same town I operate on A.C. From one works for twenty years I have filled in forms on the assumption that the local authority will at some time replace all those D.C. motors, but nothing has been done, and to-day I cannot buy one scrap of equipment under about two years, because, unfortunately, I have to labour under an obsolete system.
The noble Lord who has just spoken made a great debating point upon the matter of charges. The noble and learned Viscount, the Lord Chancellor, has been—if I may use such an expression in your Lordships' House—"chivvied" with regard to what he said to the effect that there could not be any diminution in charges. When noble Lords talk about charges at times like this they ought to try to bring a sense of proportion to bear. The equipment per kilowatt now costs double what it used to cost in pre-war days. It was £20; now it is £40. Charges of generation have gone up. Coal has gone up. I say that under the scheme set out in this Bill, prices will be far less than they would be in the future if we allowed the present system to go on.
VISCOUNT SWINTON: This is very different from what we heard at the time of the General Election.
LORD LUCAS OF CHILWORTH: There is one other point upon which I wish to touch in connexion with charges. Far too many municipalities in the past have utilized their electricity undertakings for the relief of rates. I am very glad to see that in the future the charges for electrical energy under this Bill are going to be based upon costs. We have to see that all consumers have electrical energy at the least possible cost. It is useless to try to work out our future economy by putting up industrial costs for the purpose of subsidizing rates and other fiscal matters. Other points are hire-purchase charges, service charges, and the cost of fittings. All can be substantially reduced.
I thought that the noble and learned Viscount, the Lord Chancellor, was rather apologetic when he mentioned the manufacturing powers under this Bill. I think he said something to the effect that such powers might only be used as a defensive weapon. I hope that they will be used as an offensive weapon, because I know of no field of consumer goods which has been more prone to exploitation than the field of electrical goods. I will cite one case. One of the ordinary electric lamps used here was produced by a firm in this country allied to an American firm, using exactly the same material and machines as were used in America. The production cost pre-war of that lamp was 1.92 pence; the packaging and the distribution to the retail shop cost another 2 pence. By any reasonable standard of profit, that lamp could have been sold to the British public for 6d., which was exactly the price at which it was sold by the American manufacturing concern to the American public. The tightest ring with which we have to contend in British industry made the retail price of that lamp 1s. 6d., and that is what has gone on throughout British industry.
In some areas, through the interlocking directorates of supply companies and equipment manufacturers, where you find the unit rate the lowest, the charge for equipment is the highest. We have to see that our generation plant and all those things which go to make up industry's plant are manufactured at the lowest possible price. I hope that His Majesty's Government may find the wireless valve industry a profitable field to enter. One of the biggest questions demanding inquiry to-day, is the question
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of standardization. If you have anything to do to-day with the production field you know that the, standardization of equipment is one of industry's greatest problems. The noble Lord, Lord Lloyd, talked about plugs in Paris; I do not know much about plugs in Paris, but I know a lot about plugs in British industry, and it is about time we had a little standardization. I think it was the noble Viscount, Lord Ridley, and again the noble Lord, Lord Lloyd, who mentioned rural areas. I congratulate him upon the excellent debating points which he made; they were excellent. But what is the reason why the rural areas have been so neglected—because only 10 per cent. of the total current consumption is consumed outside urban areas. Why? The reason is that the existing schemes of electrification have left untouched the unprofitable areas. Is it not an indictment against the private profit economy, because, where it is not profitable to run electricity, electricity is not run.
LORD LLOYD: May I interrupt? I would not entirely dissociate myself from what the noble Lord said, but I would like to draw his attention to this fact, which I know is a fact, and I think it ought to be put in its right perspective. It might be so up to a point, but you will find also amongst farmers the most extreme conservative attitude towards electricity altogether. I know of one company that have 700 farms on to which they could have laid electricity with the greatest of ease. That is good for industry.
LORD LUCAS OF CHILWORTH: One of the ways to get over that kind of conservatism is price: price gets over a lot of things, even conservatism. I agree with the noble Lord that we shall never cure the dispersal of population problem in this country, we shall never stop the herding in the towns, and we shall never disperse industry to get people to live in the country until the amenities of the town can be bought to the countryside at the same price. That must be the long-term policy of this Electricity Authority. I do not think it can be done for many years ahead, but it has got to be done. We have got to bring electrical equipment into the homes of the countryside as well as into the homes of the towns. Have you ever realized what it costs to-day for

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the housewife to equip herself with what have almost become essentials—refrigerators, washing machines, etc.? I made some inquiries during the week, a fortnight ago, when we had our English summer, as to the amount of food that had to be thrown into the dustbins of this country through lack of refrigeration. If we can get our production up to such a height that every citizen in this country can possess himself of the same amount of these goods as his American counterpart can to-day for the same working effort, our cost factor of mass production is practically solved.
VISCOUNT ELIBANK: You will have to effect that by restricting exports.
LORD LUCAS OF CHILWORTH: That is another subject altogether which, I understand, will be debated in your Lordships' House in a few weeks' time; but I do not hold for one moment to the theory that has been expounded in your Lordships' House that the relative price of these appliances in this country and America is so favourable to America because of her large home consumption. There is a potential in this country for all these things that will give us an optimum figure of mass production where all the production cost savings have been realized. I know—and every noble Lord who is interested in the engineering industry knows—the difference between the prime cost of producing a refrigerator to-day and the cost which the British public has to pay is nothing short of a scandal. And that is true of a number of these things.
I will not detain your Lordships any longer except to say one word upon this subject of research. I hope that some of the benefits of research carried on by this authority will be reflected in the cost of the products to the consumer, because it is about time they were. My final point is this. I am delighted that in this Bill there are so many good things being done to safeguard the interests of employees. I was very surprised when the noble Earl, Lord Lytton, said that there was nothing about the interest of employees except the reference in Clause 1. If the noble Lord will direct his attention to Clauses 53 and 54, he will see that all the fears he expressed about the treatment of ex-employees of the Central Electricity
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Board are really of no substance. I hope that His Majesty's Government will not be deterred from their course of action in regard to this Bill, and that one day they will be able to bring the prime factor of British industrial efficiency to a much higher level than that at which it stands to-day.
[The sitting was suspended at ten minutes past seven o'clock and resumed at twenty minutes before nine.]
8.40 p.m.
LORD ROCHDALE: My Lords, the noble Lord who spoke last said he was approaching this subject from the point of view of a practical commercial user of electricity. I want to approach the problem from the same point of view, only I must admit that the time your Lordships take up these days makes it extremely difficult to be very practical! Listening to the noble Lord, Lord Lucas, it seemed to me that the major point he made was the importance of having enough horsepower available in the hands of industry. No one could agree with him more than I on the importance of that fact. To-day, with our shortage of manpower, it means that if we are to produce more we must use more machinery; and if we use more machinery we must use more horsepower. I would remind your Lordships that in the early days of the war, there were a number of major power stations authorized and put in hand. But in the first critical days, after a very considered opinion had been taken by the highest authority, it was decided, in the interests of the production of tanks and other armaments, to discontinue for the time being the work on these power stations. Had that decision not been necessary much of that additional horsepower would be available for use by industry to-day.
Be that as it may, I would like to approach the problem from rather a different point of view. It is one that has been stressed by noble Lords, but to my mind it is of such importance that it cannot be raised too often. Before the war, in planning new factories, or when the time came when old factories were to be re-equipped and they had to extend their own power plant, many industrialists came to the decision that rather than make their own electrical current, they would use purchased supplies of electricity. They thought that by so doing

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they would have an economical and reliable source of current without the need of tying up considerable capital in stand-by plant. The experience of the noble Lord, Lord Lucas, must have been unfortunate, and the noble Lord, Lord Rennell, quoted certain cases where the experience of certain industrialists using purchased current was not too happy. I can also quote a number of cases—and I believe there are a number more—where the users of electricity purchased from local suppliers have had fully justified the hopes they entertained when they decided to use that form of current. I believe that in a number of cases one would find that the partnership of industry and the local authorities or companies supplying current has proved to be a happy one.
Of course the proof of such a statement depends on experience, and particularly experience gained during periods of greatest difficulty. But I have no reason to suppose that the period of the war, for instance, did anything to disprove that; and it seems to be true of experience gained during the very difficult period last winter when we had the fuel crisis. The difficulty that might have occurred then was overcome, I think, owing to the flexibility of the link between commercial users of electricity on the one hand, and the providers on the other. That flexibility having been built up locally between these two parties, owing to the very close personal contact that had been developed between them, adjustment as between their two sets of problems was made easier. What I am concerned about now is whether that personal contact—the flexibility of the link between the suppliers and the users—can be maintained under the present proposed Government scheme.
I am not saying anything here with regard to the unification of the production system. From the technical point of view, the development that one sees going on would appear to be nothing more than the logical conclusion of present trends. Certainly so far as the production of electricity goes, from the point of view of the centralization of the distributive side, some amalgamation and re-organization is obviously necessary. But this present system seems to me to be a system of over-centralization, which will, to use the simile I have just used, weaken the flexible link, and make it
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stiffer and, therefore, less adaptable to changing circumstances. I would like to give your Lordships an example of the sort of thing I have in mind. During last winter we had the fuel crisis. I particularly want to emphasize that I am not referring to the periods of load shedding; that was another matter altogether, due to lack of productive capacity. What I am referring to is the long stoppages of industry due to the fuel shortage.
I would like to take that period as an example of What I have in mind. I know of a number of industries—and there must be many in similar circumstances—where you cannot just turn off the switches and stop the industry. The problem is much more difficult than that, and much more complicated. On the other hand, it is not a problem that cannot be easily solved, provided that the two sides concerned get together. Take an industry—like so many—which consists of a number of successive processes, where the success of one process is intimately connected with the satisfactory completion of the next. Take, for instance, an industry where a material is going through some process in which the material is made wet. If it is allowed to stand there for any length of time before it is dried it may be changed by mildew, or some similar action. If it is allowed to stand there, the industry will suffer very considerably. It may be necessary for certain departments to run on, may be even for some days, after the rest of the industry has been allowed to stop. These problems to which I have referred can easily be overcome, provided that the two sides—the providers of electricity, on the one hand, and the consumers, on the other—are allowed to get together, and have freedom to use their own discretion as to how they are to settle the matter.
That is where I have some doubt as to whether the present system will work. I have no doubt that it will be argued that the technical officials, the local electrical engineers acting on behalf of the area boards, will be very keen to watch for these problems. It may even be argued that the very same men who had to cope with these problems in the past will have to deal with them in the future. But the question I would like to put is this: Will they be given the same degree of discretion that they have had with the local companies in the past? Is it not very likely that, with the absorption of a, large number of small companies into the

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jurisdiction of the great big area boards, matters will too often be referred back to higher authority, just at a time when decisions are urgently needed to be taken on the spot? Is it not even more likely that during the early years individuals will be uncertain how far they can act on their own with safety, and that the tendency will be, "When in doubt, for safety's sake refer it back"; and therefore reference will be made back and back and decisions will not be taken?
I suggest that that is not an unfair criticism to make of these technicians. It is only the human thing for anyone to do who wants to keep his job and to carry on with it. But from the standpoint of the interests of the commercial users, that attitude is going to be a dangerous one, and not an easy one to combat. The problems I have in mind are obviously not the sort of problems that can be settled by the consultative councils, or even by their local representatives who are referred to, I think, in Clause 7 of the Bill. Their machinery is quite different. Their machinery, as I understand it, has to be methodical and thorough, and is for dealing with quite different problems. They may, or may not, be available for that purpose.
I realize that I may be accused of being unfair in taking as my illustration the recent fuel crisis. I admit that I have taken an extreme case, but, on the other hand, I have not seen or heard anything to make me feel sure that we shall not have recurrences of that sort of thing in the future. Therefore, whatever may be said for or against the extension of the monopoly of power production, and accepting also the need for very considerable reorganization on the distribution side, I am quite convinced that as the Bill now stands the degree of centralization and simplification has been overdone. I would like to see local distribution given a far bigger degree of independence and autonomy. However, the Bill says otherwise, and I suppose that is how the Bill will go through.
Therefore, all I would like to urge now is that when the system is put into operation the Minister will go out of his way—and I emphasize that, because it will not be an easy thing to do—to see that the technical officials who are in constant touch with the local problems of industry
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will be given considerable latitude as to the discretion they can exercise on their own. I will go further than that. I hope that the discretion will be made not merely permissive but obligatory. I know it may sound somewhat of a contradiction to have an obligatory discretion, but what I have in mind is that the man who is continually referring things back in order to save his own skin should be looked upon with disfavour, rather than the man who, as a general rule, takes decisions on his own, even though he occasionally may make mistakes. If that is not going to be the prospect in the electrical industry, then I see a very grim outlook for the industry—and a grim outlook at a time when we all require the maximum production from industry.
8.56 p.m.
LORD HAWKE: My Lords, I am sorry there have been so few speakers from the Benches opposite, because we delight to listen to them, and we particularly delighted to listen to the noble Lord, Lord Lucas. I doubt whether for the last forty years there has been such anti-trust oratory as he produced—not since Mr. Sherman produced his famous Act. I have no doubt that the noble Lord will write his name in history at some future date by bringing forward a private Bill on the subject. He dealt at considerable length with shortage of electrical equipment, and that shortage is one from which we all suffer. Both in my business capacity and my private capacity, I have long been waiting for a supply of electric motors. I do not blame the unfortunate electrical supply industry, who have an unprecedented demand from the four corners of the earth as well as this country for electric motors—the tools of trade.
There is one point on which the noble Lord rather slipped up, perhaps inadvertently. He spoke about single ownership and State ownership. In practice State ownership is not single ownership, because, as I have had occasion to point out to your Lordships several times, the ramifications of Government are such that State ownership is in fact ownership by anything up to a dozen different Government Departments; and the only singleness about it is when you get to the top, to the Prime Minister, and he is a man who has not got time for very much co-ordination.

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Therefore in practice State ownership is not single ownership. To recommend State ownership as a panacea is not the same as to recommend single ownership.
I do not know whether a note of envy crept into the noble Lord's remarks at one stage. I think that even a Socialist industrialist might be tempted sometimes to break the Tenth Commandment and covet his neighbour's lamp ring; but to a man of such great enterprise as the noble Lord, who perhaps has in his background something of the profit motive, I should have thought he would have "muscled in" by now, if there was much in it. When we get these nationalization measures before us, I become presumptuous. I presume to adopt a role, and my presumption is the greater for the rarity of the character I assume: a good sensible Socialist. There are not many of those people, and they are all in this House. Having said that, I ask myself, "Is this how I should have done it?" And the answer varies from a qualified affirmative to an uncompromising negative. I regret to say that in this case the answer is an uncompromising negative. I believe that in the practice of surgery the great danger to the patient is that of shock; that surgeons go to great lengths to avoid giving shock; that every operation produces it; and that where two or more major operations are concerned, the good doctor will generally fatten up the patient between the two, so as to minimize this risk of shock. In this Bill there are two factors of violent shock, and no attempt has been made to administer them separately. The patient will not have time to fatten and recuperate.
The first great shock is in the transfer from private employment to public employment of many thousands of employees. At the bottom of the pyramid the shock will obviously be the lightest, but nobody who has had the experience can deny that for an executive with any degree of responsibility the transfer will come as a very violent and profound shock. The prohibitions and restrictions will be most irksome at first, and months of frustration will result. I do not believe that any noble Lord who has had such an experience will deny this fact. A wise Government, composed of good sensible Socialists, I think would have been sufficiently careful and solicitous of
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the patient to see that the inevitable shock was the only one for the time being. So far from this, however, they have deliberately produced a further great shock, which, I submit, was not at all inevitable, in the complete re-alignment of the industry. However desirable the good sensible Socialist might think this is he would never have taken this step without consolidating his first step—the transition from private to public employment, the consolidation, the running in; then—and only then—would he have thought about re-aligning the industry. In any new big organization the most important things to get right are the men and the financial provisions, because if you do not get the financial provisions right you will not get the men.
Now let us see whether the financial arrangements are satisfactory and conducive towards getting the right men into the organization. I would first of all refer your Lordships to Clause 36, subsection (1), where there is a most astounding provision, that this great organization of area boards and the Central Authority is to make both ends meet "taking one year with another." What on earth does that mean? Taking one year with which year? It is quite meaningless to me, and I had hoped that the noble Lord, Lord Piercy, perhaps, coming from the salons of the Old Lady of Threadneedle Street, might have been able to explain some of these things to us. The phrase as it stands reminds me of the theme song of South American Chancellors, "To-morrow it will balance," but it does not remind me of the habits of the Old Lady in my youth; I do not think she was very ford of opening accounts with people who dealt with their finances in that way.
Let us consider the area board. The Central Authority has to exercise a general control over the area boards and can demand to approve of their capital expenditure. It has control over their tariffs and over their surplus revenue; it supplies current to them at any price it likes; and it can order them to work either at a profit or a loss. In other words, the area boards are complete puppets of the Central. Authority, a situation which the noble and learned Viscount, the Lord Chancellor, summed up in what I think is a delightful Whitehall euphemism, that "they have certain co-ordinating powers.'' Under these conditions, what man of

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experience and spirit is going to serve on these area boards? The only hope is to give the area boards more incentive to do their job properly, and more financial powers than seem indicated in the Bill.
When we come to the Central Authority we find that it, in turn, is subservient to the Minister in important respects. The Minister is empowered to direct how the Central Reserve Fund, and also its surplus revenue, shall be treated. Moreover, the Central Authority cannot interfere in the area reserve funds without the approval of the Minister. The Central Authority cannot borrow without the approval of the Minister, and in framing large programmes of capital works the Authority must consult the Minister. In fact, the authorization of capital works, and the funds from which those capital works can be done are, in the case of the Central Authority and the area boards, equally tied up. Now will the Minister, who is in the hands of the Treasury, be able to loose these powers by correct devolution? There are stories, perhaps quite untrue, that men in the Coal Board who have been in the habit of authorizing thousands of pounds on their own authority are now circumscribed to quite paltry limits. If this sort of thing is to happen in regard to electricity, then, of course, we shall not get the right men.
The borrowing powers of the Central Authority are immense—they go to £700,000,000. But enormous borrowing powers are the fashion nowadays. It is easy to produce a Bill with many millions in it, and to persuade the public that those millions mean benefits and progress. In fact, of course, until they are translated into action, they mean nothing of the kind. The capital programmes under other Bills are equally large—Transport, Coal, Colonial Development and so on, besides the acquisition of stocks. These figures are beginning to fill me with considerable alarm. There is a dirge in my heart, in fact! I think it is a mistake to take it for granted that it is going to be easy to raise these enormous sums by any legitimate means. One wonders whether the savings of the people will be sufficient to provide the money. It is worth remembering that by calling in Government finance we may save a fraction in interest, but we do
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narrow the field. We tap only those savings which are destined for safety first investment. We exclude savings which seek to take a risk in search of a gain.
Many holders of compensation stock, too, will seek to exchange their holding for more remunerative risk-bearing securities. Unless they are to depress the price—and the price is one at which the Central Authority will be constantly issuing new bonds—there will have to be a volume of savings to take up all this stock, both old and new. I wonder whether there will be sufficient savings. The Electricity Authority will not be the only people in the market. One cannot get away from the basic principle that if one wants to provide capital for future benefits one has to forgo present consumption by taxation, by inflation or by savings; and it seems to me that, if these vast capital programmes are to be implemented we shall for a generation remain under a crushing burden of taxation, or under a progressive inflation, unless we adopt the third course, which is to make saving more attractive. A wise Frenchman in March, 1939, said to me: "It is not Goering's Air Force I fear; it is the Maginot Line." Finance is the Maginot Line of all Governments of the Left.
9.11 p.m.
LORD WOLVERTON: My Lords, on rising to address your Lordships to-night on Second Reading of this Bill, I should first of all like to declare that I am a director of an electricity supply company. Having done so, I would like to support the remarks on this side of the House in condemnation of this Bill. I think it has been said many times to-day that it over-centralizes industry, and it completely divorces generation from distribution. It does not give adequate powers of protection to the consumers; the compensation terms are definitely unfair to the shareholders; and it leaves the possibly displaced staff through its reorganization in a very dubious position, because we do not know what compensation we are to have—it is all to be done by a regulation which we have not yet seen.
Having said that, I should like to say next that the industry as a whole has been most efficient. That can only be judged by the results, which are well known to your Lordships. Its war record was excellent, and I think that all sides

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of the House will agree with that. I am not one who is going to say that it cannot be made more efficient, because I think it can, especially on the distribution side; personally, I have always supported the famous McGowan Report. I agreed with that Report, and I think a great number of the industry agreed with it too. Had it not been for Munich and the war, I think that that Report, with its main recommendations, would have been implemented by now, because the Government of the day had already issued a White Paper on that Report. I personally should have liked to see that done, but it could not be done, as is well known, because of the outbreak of war.
Now, if I may, I should like to turn for one moment to the Bill. I particularly want to talk to-night on Clause 1, subsection (6), paragraph (b): That the Electricity Boards shall
"secure, so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity."
As the Bill was first introduced into another place, under the policy clauses, in that paragraph (b), there was nothing at all about rural supplies. They were brought in only after an Amendment by the Opposition had been accepted. A little pamphlet called Electricity Transformed, which I confess cost me the modest sum of threepence, which is well known to noble Lords opposite and which was published, I think, in January, at the time of the introduction of this Bill, says in its opening paragraph:
"The growing use of electrical equipment of all kinds has been one of the outstanding developments of the past fifty years. In the towns, at least (for, as this pamphlet will show the rural areas have been sadly neglected in the matter of electrification)."
In the paragraphs dealing with rural electrification, the final paragraph on page 17 says:
"Rural electrification, to be a success, must be conceived imaginatively and executed over extensive areas of country. The present structure of the industry is entirely unsuited to the task and, hence, rural electrification has been only a dream for the past forty years."
The noble and learned Viscount the Lord Chancellor, at the end of his speech this afternoon said of rural supplies "last but not least." I would agree with him, and what I want to do is to try to convince your Lordships that this was really not a dream and that a great deal has been done during the last forty years. I
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will quote some official figures published either by the Electricity Commissioners or by the Institute of Electrical Engineers. By 1939, according to figures issued by the Institute of Electrical Engineers, which I consider to be a body very competent to give them, 1,100,000 rural houses had been connected to the mains. The Institute went on to say that 67 per cent. of rural houses had a supply available, 73 per cent. of those which had a supply available were connected to the mains, and 49 per cent. of all rural houses were supplied. I think that in itself is a fairly good record. I would like to say a word about farms, because I know your Lordships are interested in this subject. The Minister of Agriculture in another place in April, 1946, said that 69,000 farms in England and Wales had been connected to the mains up to that time, and I understand from the industry that the figure now stands at about 85,000 farms. That is about one-third of the number; 150,000 more farms have to be connected. But it is certainly not a dream to have connected nearly 85,000 farms and 1,100,000 rural houses.
I would like to deal for a moment with the relative prices charged, because that is an extremely important point. The average price per unit for municipal undertakings (I am taking the Electricity Commissioners' figures up to 1939; I could not get later ones as they were not published during the war) for lighting, heating and cooking for domestic supplies, in 1924 was 3.77d. It dropped in 1939 to 1.42d. The price charged by the companies, which have a majority of rural areas inland because they were the enterprisers in these areas (the municipalities could have had them in the early days but they did not want them but took the plums in the towns) fell from 5.23d. in 1924 to 1.90d. in 1939. There was thus a difference of only 0.48d. between the two prices in 1939. The cost to the rural areas was less than a half-penny more per unit. Perhaps with those few words I have been able to convince your Lordships that the industry certainly was net dreaming. I have been in it for fifteen years, and I very much object to those words.
May I say a word on the future plans of the industry on the rural side? In 1944, before the end of the war and certainly before the famous Coalition broke

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up, the electricity supply companies and the National Farmers' Union got together a co-ordinated committee to see how best they could frame a five-year plan to tackle the 150,000 farms which were still without a supply. They published in 1946 a report, which I have here, which I think is well known to your Lordships. Very briefly, that report, which received the complete approval of the National Farmers' Union and the electrical supply companies, recommended that £72,000,000 should be spent in the next five years, if supplies of materials were available. The amount was split up in this way. The industry was to pay £45,000,000 for new mains, averaging about £300 a farm; and the farmers themselves were to pay £27,000,000 for electrification of the farms and for motors and general equipment. That scheme has been started, and quite a lot has been done.
I would like to take up just a moment more of your Lordships' time and tell you something of the colossal amount of material that this scheme involves, even if the industry is nationalized—and it is material which is not there. Over the next five years' period it would take something in the neighbourhood of 900,000 wooden poles, 100,000 miles of copper conductor, and approximately 750,000 horsepower of electrical motors. It is not the fault of the supply authorities that the electrical motors are not there. As the noble Lord, Lord Hawke, said, there is a tremendous demand in this country and throughout the world for electrical motors, and there is a great shortage in the manufacturing line, and in labour, as we all know. Those are some of the figures involved in this gigantic task. In my own company—the Edmundson group—we are getting only something like 60 per cent. of the poles we require. As I think is well known now, pre-war, in 1939, something like 800,000 new consumers were connected per year, but now the number is only about 200,000. It is not because they are not there to connect, but because the material is not there. I thought it right to point out those few things to your Lordships now, and to give you some facts on rural electrification, to try and justify—and I think I have justified it—my view that the industry has certainly not been dreaming.
9.23 p.m.
LORD ADDINGTON: My Lords, this Bill concerns so very closely the interests of local authorities that it seems to me essential that their views should be expressed in this debate. At this late hour, I will put them forward as briefly as I can. First, I would say that they support, generally, the opinions which have been very widely expressed on this side of the house, that the proposals in this Bill will not benefit the consumers and are by no means the best that could have been devised. Accepting the announcement made by the Government in November, 1945, that it was their intention to bring under national ownership the electric supply industry, the General Purposes Committee of the Association of Municipal Corporations set up a special sub-committee. That sub-committee made the following proposals—which I will summarize—which were submitted to the general Council of the Association in October, 1946.
They first recognized that the obligation of regulating and supervising the generation and supply of electricity throughout the country would be placed on a central body set up by Parliament. That is what is being done under this Bill in connexion with the Central Authority. The Committee went on to recognize that the country would be de-limited into districts most suitable for securing the proper co-ordination of distribution, each of which would be under the control of a district board—which has become the area board of the Bill. They then go on to recommend that within the districts so delimited the actual distribution and supply of the electricity should be under the control either of single local authorities or combinations of local authorities, as the circumstances may require. These recommendations were sent to the Minister of Fuel and Power, and they are, it seems to me, alternative suggestions such as the noble and learned Viscount, the Lord Chancellor, was seeking for at any rate some of the proposals made in this Bill. They indicated a system of distribution worked for the people by their elected representatives, who know the needs of the district, and by whom those needs could readily be made known. I would submit further that they are far more democratic proposals than any of those laid down in this Bill.
With regard to the general basis of compensation, I would only add one

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thing to what has been said from this side of the House—with which I am in complete agreement. This Bill gives least to those local authorities who follow the most sound and conservative principles (in a financial and not in a political sense), and penalizes those who have ploughed back their profits into their undertaking and so kept their loan charges as low as possible. I would like, for a moment, to try to clarify the position of the local authorities regarding this additional sum allocated for severance and for other financial burdens, about which there has been some misunderstanding on the consultations which have taken place.
I am advised that both the Associations of Municipal Corporations, when they had a meeting with the Prime Minister and certain of his colleagues, and the Association of Urban District Councils, in a letter which they wrote to the Prime Minister in March, 1947, did raise the general question of the losses that would be incurred in this respect. But between those dates and the announcement, I think by the Minister in Standing Committee in another place, that the sum of £5,000,000 would be given, there were no consultations whatever as to the amount of additional compensation or how it should be calculated. I understand that neither of the Associations concerned consider that sum anything like adequate. Consultations, it is true, are now taking place between the financial advisers of the Associations and those of the Ministry as to the manner in which this sum of £5,000,000 should be distributed among the local authorities who are electricity undertakers. But I submit that the Government, before putting this figure of £5,000,000 into the Bill, should have taken steps to see both that the amount was fair and adequate, and also that it could be distributed equitably among those concerned.
9.29 p.m.
VISCOUNT ELIBANK: My Lords, I am sorry that the noble and learned Viscount, the Lord Chancellor, is leaving the Chamber at this moment, because I shall have to refer to certain things he said in his speech. However, he will be able to read it in Hansard to-morrow morning. As is usual, I should like to make a personal statement in regard to my connexion with the electrical industry. For about fifteen years I have been
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Chairman of a holding company which controls and directs a number of electrical supply undertakings. In this capacity it has been my duty and privilege to make myself acquainted with many details and principles connected with electrical supply and I have naturally come into contact also with many problems affecting the electrical industry as a whole.
The Bill before your Lordships' House deals with the nationalization of the electric supply industry, which includes the plant, equipment, and machinery that provides the bulk of the current for retail distribution throughout the country. What is proposed is that existing supply undertakings and the municipal undertakings shall be expropriated by the State from their present owners, on a basis of compensation which is not only inadequate and unfair to shareholders and ratepayers alike, but which has never before been applied by any British Government. The Minister of Fuel and Power callously said recently in another place that even if the shareholders lost something, the consumers would gain by it. He does not seem to care a "tinker's cuss" (or should I say more than one hoot?) about the shareholders. And what reason has the Minister of Fuel and Power given for this revolutionary change of ownership? Is it because the industry has been badly administered and failed to progress or do its duty by the community that it is roughly seized by the throat? Or is it that His Majesty's Government are so obsessed by the word "nationalization" that, looking round, they said "Here is some ripe fruit; let's pluck it"?
What actually happened? The noble and learned Viscount, the Lord Chancellor, referred at the end of his speech to what he stated was the fact that no other project had been propounded in lieu of nationalization. I challenge that statement. It is quite inaccurate. I will repeat what I was saying, now that the noble and learned Viscount is back on the Woolsack. I was saying: Is it that His Majesty's Government are so obsessed by the word "nationalization" that looking round they said "Here is some ripe fruit; let's pluck it"? The noble and learned Viscount said at the end of his speech that no other project had been propounded in lieu of nationalization. I am

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sorry that the noble and learned Viscount was so badly briefed, because that is not accurate.
What actually happened was that the power companies, the provincial supply companies and the municipalities all put forward projects to the Minister of Fuel and Power suggesting that the industry could be organized. The Minister of Fuel and Power responded by approaching the industry and saying to them: "I am going to nationalize you. Will you help me to nationalize yourselves?" Naturally, the industry said: "We do not believe in nationalization, and why should we help you to nationalize us?" The next thing that happened was that the Minister of Fuel and Power met leading representatives of the supply industry. He arrived at this meeting, which was a private meeting—it has been disclosed throughout the industry, and there is no reason why I should not make this statement to-night—and he opened the proceedings by saying: "I have come here to nationalize you. I am going to nationalize you. I do not care whether you like it or not. I am going to nationalize you, and I have not come here to talk to you about how I am going to nationalize you; I have come here to talk to you about how you are to conduct your business in the interim before you are nationalized."
Representatives at that meeting vainly attempted to secure from the Minister some information as to how they were to be nationalized, and he would give them none. In his usual arrogant manner he said that he was not going to do so; and the meeting broke up. That is the actual fact. I have had to make this statement because of the statement of the noble and learned Viscount at the end of his speech that no other project had been propounded. I will deal again with that a little later. I have searched the speech made by the Minister on the Second Reading debate in another place for any valid reason for the nationalization of the industry, and I have found none. The nearest he went to any good reason was when he said:
"Whatever Government had assumed office in July, 1945, it would have had to introduce legislation to reorganize the distribution of electricity."
I think the noble and learned Viscount on the Woolsack referred to that same
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fact. There is no one who will disagree with the Minister's contention that in due course some form of reorganization was necessary. I entirely agree with it, and we all agree with it. It has been going on since 1935. In 1936 we started to telescope a great many electrical supply companies, and that went on until 1939. War intervened and we were stopped. The Government of the day believed that with war coming, we should face up to the war in that position rather than continue any reorganization; and so we left things as they were. As one noble Lord said to-night, our record as an industry during the war, and the way we faced up to the problems and difficulties of the war, is absolutely impeccable. I do not believe anyone will gainsay that.
We agreed that reorganization was necessary, but the Minister went on to dismiss, also in the same speech, with contumely, the McGowan recommendation that any reorganization should avoid "unnecessary dislocation." There again I disagree with the noble and learned Viscount on the Woolsack, because he said that whereas dislocation was necessary, this would give the least amount of dislocation. There are other ways in which reorganization could have been effected. They were put up to the Minister, and they would not have given anything like the dislocation that will be involved under nationalization. I submit that the scheme in this Bill will involve the maximum amount of dislocation at a time when industry as a whole—and this has been very fully urged to-night—can least afford to have added to its many difficulties and problems the delays and troubles that are bound to occur in the process of changing from private and municipal ownership to wholesale nationalization the electricity upon which most of our industries depend.
Take, for instance, the arrangements under the Bill to delimitate the country into fourteen areas. Two of our largest electrical groups, the Edmundson and the County of London, which have already been mentioned in the debate, will be affected to the extent that one will be split up among seven of those areas, and the other will be split up among four of them. Anyone who has knowledge of administration of the distribution of electricity will have no illusions as to what this will mean in dislocation. It

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Will mean not merely dislocation, but dislocation for a very considerable period, until the disjointed sections are re-orientated into their new spheres. No one with any experience of business and amalgamations will expect that that will go no further, but will anticipate that, in a lesser degree, this disintegration followed again by reintegration will, under nationalization, occur in most parts of the country, with its attendant degrees of dislocation.
The McGowan Report, to which the noble and learned Viscount referred as his Bible—though he did not follow it as his Bible in all respects—recommended thirty districts and seventy-six groups, as against the fourteen areas under the Bill. That was in 1935. We are now in 1947. We all agree that things change in twelve years. We all agree that the numbers of areas and districts recommended by the McGowan Report are too high to-day, and that they would have to be reduced in number. I submit that fourteen is too small a number of areas. I have read the relevant clause in the Bill and I should like to see that particular clause amended so as to make it more flexible and elastic in the light of experience, in regard to the number of areas that can be established. I do not want to dwell upon this point, but I do want to support those noble Lords who have urged that the area boards should, within legislative limits, be as nearly autonomous and given as wide powers as possible to develop their areas.
The fact that the electrical industry has advanced and developed under this "pernicious system" of private enterprise and municipal enterprise—as noble Lords on the other side would regard it—is due to its having had machinery of a sufficiently flexible nature to permit of advancement all the time. If money was required, it was poured in. The noble and learned Viscount, the Lord Chancellor, does not believe that that was the case, hut it was. Engineers had very wide authority to act and to go back to their boards for further powers, and everything was done in order to promote the good of the industry and the advantage of the consumers. The fact that in 1927 there were 2,500,000 consumers in this country, and that in 1945 the number of those consumers had increased to 11,000,000, is surely proof that
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the policy of the electrical companies and the municipalities was a progressive one, and one under which the industry thrived.
I should like to ask the Lord Chancellor, or the noble Lord who is going to reply, whether he is really of opinion that private companies, municipalities and power stations have failed in the responsibilities laid upon them under the various Electricity Acts. I put that question quite deliberately because, in my view, that should be the only good and fair reason for forcibly wresting from companies and municipalities their electricity supply undertakings, nationalizing them and compensating the owners on an unfair basis. If his answer is that the companies and municipalities have failed the nation and the consumer, then how does he reconcile that answer with the facts and figures which I will not now lay before your Lordships' House, because a good many of them have already been given— I think Lord Wolverton, who has just spoken, gave a number of them. However, I would like shortly to give two or three of these figures to emphasize my case.
For instance, in eighteen years the consumption of electricity has risen from 7,000 million units to 35,000 million units, or five-fold. In 1927 there were 2,500,000 consumers, and in 1945 there were over 11,000,000 consumers. What is also remarkable is that the price has fallen, in spite of the declining quality of coal—and it is very bad indeed. Some of the coal that is brought to the power stations to-day is hardly usable. When this industry is nationalized if, by the mere fact of putting a Bill on paper, the Government think that they are going to increase or improve their supplies, they certainly will not make them cheaper; they will become dearer and, unless they can improve the quality and quantity of the coal that is brought to the power stations, they will make a dismal failure of it.
Great play has been made by the Government that they are going to electrify the rural areas, and that the electricity supply companies have failed in this. Again Lord Wolverton has given some figures here, and I should like to state shortly these facts. The only rural areas which have been developed electrically by municipalities in England and Wales are the rural areas lying immediately around

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the towns of Norwich, Bedford and Luton. Otherwise the whole of the rural development in this country—and it is considerable—has been effected by the private companies. Private companies have in their areas 278 consumers to the square mile as compared with 1,813 consumers in the square mile in the municipalities. In 1939, out of 2,225,000 rural houses, 1,100,000 were taking supplies, mostly through the supply companies; there were another 450,000 for which supply was available, leaving under 1,000,000 to be supplied. As Lord Wolverton has said, the companies, in collaboration with the National Farmers' Union, about a year ago arranged to expend £72,000,000 on the electrification of rural areas. What happened? Everything was held up. The money was there; we were ready to go ahead and it was all arranged, but it was held up because of this wonderful Bill which is before your Lordships' House to-night. I venture to predict that it will be laid up for another two or three years because the supplies such as materials, which were at any rate available to some extent then, are not available now; and the whole thing will fall to the ground in probably two or three years.
I want now to take the case of the consumer, and I submit that his interests are quite inadequately safeguarded under this Bill. At the present time, if a consumer, whether industrial or domestic, has a grievance about charges or services he can appeal to the Electricity Commissioners, a body of electrical experts who have access to and keep duplicates of all the accounts of undertakings; and they can make an investigation or hold an inquiry if necessary. From their decision he has a right of appeal to the Minister of Transport, although in practice this is seldom sought. The consumer, moreover, is further protected by the maximum charges laid down under the Acts by the Electricity Commissioners. This protection he will lose, as, under this Bill, the Electricity Commissioners may be abolished. The Minister of Fuel and Power, who for some reason unknown apparently has his knife into the Electricity Commissioners, has definitely stated that it is his intention to abolish them; and to-night we have heard from the noble and learned Viscount, the Lord Chancellor, that this is the case.
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If the Minister does abolish this ultimate safeguard to the consumer, he proposes to put in their place something which, in my opinion, will be quite illusory and unsatisfactory. He proposes to set up in each area consultative consumers' councils and these amorphous bodies—I call them so deliberately—consist of laymen with no technical experience. Apparently the consumer who feels aggrieved by his treatment by an area board will have the right to place his case before the consumers' council. And if they are satisfied they will pass on the complaint to the Central Electricity Authority, who then become judge and arbiter in one. These seven wise men who comprise the Central Electricity Authority, who are responsible for the whole electrical developments of the country, are to have added to their gargantuan task the consideration of appeals from aggrieved consumers. I have no doubt that they will have a sub-department to deal with them, but nevertheless the ultimate responsibility, as I read the Bill, will lie with the Central Electricity Authority.
I see that by Clause 64 the Minister may hold inquiries, so possibly the appeal may be to him. I have tried to read this Bill and to understand it, but I am not quite certain where the appeal lies, and I hope the noble Viscount, in replying, will tell us what actually is the procedure. I submit that this duty should continue to belong to the Electricity Commissioners who should be kept in being. If the Minister dislikes the Electricity Commissioners so much that they must be abolished—and he acts as an autocratic dictator very often—then another body, a rates tribunal or some such body, should be set up to take their place. I hope that this will be discussed on the Committee stage.
Another question on which your Lordships should reassure yourselves before the Bill leaves this House is that of securing pensions for staffs on retirement, including payment for loss or suffering where that arises. I am not very clear on these matters and perhaps the Minister would say something in replying. Clause 54, subsection 1 (b) allows regulations to provide, among other things, for the continuance, amendment, repeal or revocation of existing pension schemes. As the clause stands it is permissive, and not mandatory; consequently the option to

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make regulations may never be exercised, in which case the whole clause will simply fall to the ground. Employees are very anxious about this—not only my own employees, but throughout the industry. They have brought this point to my notice, and have asked that the clause be made mandatory and not merely permissive.
There is another point to which I must refer briefly. It is that certain directors, whom the Minister of Fuel and Power euphoniously describes as "Namby-pamby" directors (I do not know what he means by that, but that is his delightful term) are to be thrown out of office on vesting day without a stiver of compensation. This is a point which received much consideration in another place. It may not be an issue with which we can concern ourselves here, owing to privilege, but nevertheless I am going to take this opportunity to register my strong condemnation of the Government's attitude in this matter of compensation to those directors; it is unworthy of any British Government who profess to see justice done, and to be influenced in their actions by fair play.
There is another matter which I wish shortly to discuss, and that is the question of Scotland under this Bill—a matter which was dealt with by the noble Lord, Lord Morrison, this afternoon. Personally, I cannot understand why, under this Bill, Scotland is to be truncated and partitioned. The noble Lord, Lord Morrison's speech this afternoon left me with the impression that he was merely reading out a brief; that he had no personal interest as a Scotsman in the matter, and that he was laying before your Lordships' House the views of the Minister, without really having studied them or accepted them. I read the speech of the Minister of Fuel and Power on the Third Reading in another place, and I found not a single argument in it to justify the act of truncating Scotland. I listened to the noble Lord, Lord Morrison's speech, and I found no justification there. He told us about the North of Scotland. We all agree that the North of Scotland is being treated very well. But the whole of his speech was devoted to the North of Scotland. I was not interested—nor were my noble friends interested—in the North of Scotland perse, because we knew that the North of Scotland was getting a fair deal. What we are interested in is the South of Scotland,
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from where I come. The noble Lord proceeded to tell us—and this is an interesting fact—that 73 per cent. of Scotland, containing only 20 per cent.—
LORD MORRISON: 23 per cent.
VISCOUNT ELIBANK: 23 per cent. of the population of Scotland—were to look after their own affairs. But in the other portion—that is 27 per cent. of the area of Scotland containing 77 per cent. of the population—
A NOBLE LORD: 73 per cent.
VISCOUNT ELIBANKMy figures are accurate to within 2 or 3 per cent.—was to go to England. The Government were to have the plum, and the advantage of all that. That was to go to Whitehall, and they were to gain the benefit of it. I am not going to detain the House for very long on this point, but there are a few practical facts which I wish to place before the Minister. He never attempted to argue the South of Scotland case at all. He tried to cast a glamour over his South of Scotland statement by telling us a great deal about the North of Scotland. It did not work a bit. We were not taken in by it, and I wish to tell him that, from a practical standpoint, the connexion between Scotland and England is confined to the main transmission line which runs South from Dumfries through Carlisle to the North West England industrial area. The grid consistently exports current from Scotland to England via this line. On the Eastern side there is no effective interchange of current between Scotland and England at all. Berwick and North thereof are supplied from Edinburgh and the Lothians. South of the Tweed there are broad stretches of moorlands North of Alnwick, and South Northumberland is naturally supplied from Tyneside.
Therefore, there is only one useful trunk line connexion between Scotland and England and it is a necessary connexion. It is used daily to export hydroelectric power from Galloway to England. It is in fact an essential physical connexion between the Scottish transmission system and the English, and overwhelmingly—and I want to emphasize this—the chief beneficiary is England and not Scotland. If we wish to look after our own electricity and to export it to England under conditions which would be arranged between the Ministers, why

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should we not? Why should we be tied once more to Whitehall under this centralizing disease which obsesses the Government when it comes to any nationalization scheme so far as it effects Scotland? Just before leaving the subject I would like to refer to a personal matter. Electricity in my house in the Tweed Valley in the South of Scotland, seven miles from any town, tucked away amongst the hills and moors, costs me less than it does in my house in London with its vast population. That is the position to-day. What is going to happen under this nationalization? We are to be tied to Whitehall, and I have no doubt that unfortunately I, with others, will have to pay more for my electricity in the Tweed Valley than I did before this Bill came on the Statute Book.
I do not want to delay the House any longer, but there are a good many other points which one might discuss, such as financial clauses, the vesting day, and so on, but there will be an opportunity of doing that on the Committee stage. I wish to conclude with these few words. I desire again to emphasize that industrial consumers to-day are largely dependent upon the efficiency of their electricity supply for the progress and development of their many industries which are so important in their effect upon the whole economic life of this country. Whilst I am critical of this Bill and dislike it and its set-up intensely, and whilst I am not at all optimistic, as are the Government, of the luscious fruits which are to fall from its branches, but on the other hand venture to predict that the price of electricity under it will be dearer and not cheaper, I realize that we must accept it. But I say that there will be any amount of dislocation in the near future as soon as operations under the Bill commence. I realize, nevertheless, that nationalization of the electricity supply industry has come, and that we have to accept it in the light of the mandate given. I accept the mandate, and its adoption by the machine majority in another place. I realize, however, that the details of the Bill have been improved in the other place, and it is now, I believe, our duty in this Chamber of revision to see what we can do to improve it still further. It is in that spirit that I propose to take my part in its passage through your Lordships' House.
10.6 p.m.
LORD BALFOUR OF INCHRYE: My Lords, we have had approximately six hours of debate on this Bill. Two days were spent on Second Reading in another place; there were twenty-four days in Standing Committee and three days on Report stage in another place; and I personally, and I think many other noble Lords on this side of your Lordships' House, are waiting for an answer to two vital questions. They remain unanswered as regards any speeches of Ministers in the other place, or, with respect, any remarks from the noble and learned Viscount on the Woolsack—or from the sole supporter from the Back Benches on the Government side who spoke to-day. The first of the two questions is this: Who, except for the Government, is clamouring for this Bill? The second question is: Who will benefit, except the Government, from this Bill? Those seem to me to be perfectly reasonable questions, to which we are entitled to an answer, and in the spirit of which we can examine the proposals of His Majesty's Government.
The Government have adduced no reason for bringing forward this Bill nationalization being the success or other-ward put forward by the noble Lord, Lord Lucas, who took to task my noble friend Lord Swinton for his statement regarding what the Minister of Fuel and Power had said in relation to the test of nationalization being the success or otherwise of the experiment in coal. There was some little difference between the noble Lord and my noble friend, but I think there was general agreement on this: that the Minister of Fuel and Power said that the case for or against nationalization rested on the success of the Coal Board. The noble Lord, Lord Lucas, made a plea for time in which the Coal Board could prove whether or not it could be a success. The sole supporter of the Government on the other side of the House was pleading for time in order to test out the theory upon which the success or failure of this Bill is to depend. According to the noble Lord's own argument, the best thing his own Government could do—and we hope he will advise his Front Bench to do it—would be to suspend the Bill until the Coal Board can prove that the nationalization of coal was or was not successful. That was the only

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justification we have had to-day for the introduction of this Bill.
Everyone, of any Party, admits that reorganization of the electricity industry is due. The noble and learned Viscount the Lord Chancellor said that there was need for nationalization as there was "need for a major operation because of the purchase rights of local authorities falling in over the next few years." That was one of the main points made by the noble and learned Viscount in his speech, but I would like to remind the House that under the existing legislation no local authority can exercise a purchase right without the consent of the Electricity Commissioners. This consent is withheld in cases where the exercise of purchase rights would be deleterious to the general interests of the industry and the community; so that that point which the Lord Chancellor made seemed to me to be a rather weak one upon which to base the need for this Bill.
The next point upon which the noble and learned. Viscount based his case was largely the McGowan Report. The noble and learned Viscount seemed to me to ignore the rejection by the McGowan Report of nationalization as a solution In the speeches in another place and in the country there has been a sort of aura of nationalization put round whenever the McGowan Report is mentioned, but in fact that Report came down against nationalization.
I think it is worth a moment to give your Lordships the exact quotation on that point of the McGowan Report. It says:
"We are of opinion that a reorganization of such a revolutionary character would only be justified if it were beyond a doubt that the constituent bodies in the electricity supply industry, as distinct from the organization of the industry as a whole, were generally inefficient and unprogressive, and incapable of being improved on a more evolutional basis."
And then the Report went on:
"On the contrary, there has been abundant evidence to show that, taken as a whole, the electricity supply industry has made remarkable progress, particularly during the last ten years, notwithstanding its complicated and, in many cases, uneconomic structure, and the trade depression from which the country is now emerging,"
The noble and learned Viscount the Lord Chancellor also ignored a very pertinent comment—
THE LORD CHANCELLOR: I hope the noble Lord is not suggesting that I ignored that. I pointed out those words, and pointed out that I accepted the facts of the Report, but differed from the conclusions it gave, and I gave my reasons.
LORD BALFOUR OF INCHRYE: would not wish to misrepresent the noble and learned Viscount. He certainly drew attention to the findings of the Report, but it seems to me did not give sufficient weight to the conclusions, which were thoroughly against nationalization. Also he did not mention the 1942 Cooper Committee which was set up to investigate the findings of the McGowan Committee on hydro-electro development in Scotland. Lord Cooper's Report said this:
"We should not have hesitated to advise even this drastic solution if we could have supported it by the prospect of resulting increased efficiency and cheaper supplies, but we have no grounds for holding out any such prospect."
So, with respect to the noble and learned Viscount, the Lord Chancellor, it does not seem that the second point upon which he based his case for nationalization is a very sound one or provides a good foundation for the Government's contention that this Bill is in the interests of the industry. Other than the Government, let us examine for a moment who clamoured for this Bill. There are 362 local authorities who have municipal employees and, so far as I know, the operatives in those municipal undertakings are not clamouring for nationalization. There has been no evidence. In the remainder of the industry, except for the Trades Union Congress, which votes for nationalization as a sort of duty, there has been no great public clamour for nationalization from the men engaged in industry. I think it might be fair to say that relations have been good, and it has been what is termed in the Navy, a "happy ship" The relationship between capital and labour in this industry has been happy. The noble Earl, Lord Lytton, in a very moving plea for the interests of the employees in the particular concern with which he is connected, seemed to me to strike a note that has been characteristic of all the important employers in this industry, throughout their many years of handling its problems. Let us look next at the undertakers. The local authorities are not clamouring for this Bill. A good many of them consider that they are

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getting somewhat of a raw deal, that they are getting poor terms—the noble Lord, Lord Addington, has dealt with that particular aspect in a very effective way—and the proposals for taking over have not received the approbation of the Association of Municipal Corporations.
The private enterprise undertakings certainly do not want it. That, I trust, has been made convincingly obvious in this debate. And the Government cannot say that this is an inefficient industry. Those engaged in the industry have every right to be proud of their achievements in the past. We have had in speeches which have been made in this debate to-day examples of the public spirit of those whose concerns are going to be nationalized, and who oppose nationalization on the grounds that they feel, not that their own interests are going to be affected but that the public welfare is not going to be served by the steps which the Government are taking in the way that they have been in the past. Certainly, the consumers are not clamouring for this Bill. The charges to them have gone down over a period of years, in spite of the costs of production going up. Noble Lords have given some very striking figures to-day showing how, in spite of the increased costs of coal and of other increased costs, prices to the consumers have steadily fallen and services have been extended.
This brings me to my second question: Who is going to benefit? The first person whose case I would take is the poor consumer. There was a regrettable absence of reference to consumers' interests in another place—the Lord Chancellor did not devote much time to this but, of course he had a large field to cover—and not much mention of them anywhere. What is the position of the consumer? The statutory safeguards which he has enjoyed hitherto are going to be removed. The competition which has existed hitherto between electricity and gas is going to be wiped away. Now the consumer is going to have no protection at all from State monopoly, except an appeal to the devoted appointees of the Minister. I say "devoted" in no personal sense; I mean devoted to the cause, which the Minister sponsors, of nationalization. The Minister is going to appoint every person to whom the consumer will have any appeal in the future.
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It seems to me to be a very poor lookout for the industrial and private consumers.
As has been made clear in the debate, there is no promise of cheap and abundant supplies of electricity. One would have thought that if the Government were really going to introduce a Bill aimed at benefiting the community, their primary purpose would have been to give cheap and abundant electricity. But in another place there was tremendous resistance to the insertion of anything in the Bill with the purpose of providing cheap and abundant electricity, and in fact there is now, as we have heard to-day from the Government side, every prospect of higher costs. Lord Morrison said that large areas of England were without any electricity. Another noble Lord, I think, spoke of the cost of equipment per kilowatt having increased from £20 to £40. Undoubtedly costs are going up.
LORD LUCAS OF CHILWORTH: I think, if the noble Lord will forgive me, I made the comment "cost of equipment per kilowatt".
LORD BALFOUR OF INCHRYE: Cost of equipment per kilowatt has increased from £20 to £40. Then there seems to us, on all sides, little chance of electricity being any cheaper for the consumer.
LORD LUCAS OF CHILWORTH: It will not be so expensive.
LORD BALFOUR OF INCHRYE: The noble Lord says "it will not be so expensive." I am not so sure what the difference is between not being so expensive and being cheaper. It is not much good saying to somebody, as at the last Election, "Let us face the future and vote for the Labour Party, in order to get cheaper electricity", and then to tell him, "Your electricity may not be any cheaper but it will not cost you any more." That does not seem to be a very comforting idea. These proposals certainly give no benefit to the industry; and they give no benefit to the technicians who will now be working in an over-centralized industry. Quite apart from whether we like Government ownership or whether we do not, it seems to me that one of the dangers inherent in our new development of planned industry is this centralization, with which my noble friend Lord Rochdale dealt so effectively—the centralization of control. It is in-

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herent in any kind of monopoly, whether it be State or private enterprise, and here you have this inherent tendency towards centralization without any of the safeguards of competition that the ordinary industry has to accept. The only parties who benefit are the Government. When I say "benefit," I mean benefit politically; I would not dream of questioning the integrity of any Minister or anyone concerned with the proposals.
LORD LINDSAY OF BIRKER: If the Bill is as bad as it is, would the noble Lord explain how the Government will benefit politically by bringing it in?
LORD BALFOUR OF INCHRYE: I will tell the noble Lord; because there are going to be 148 paid jobs and 300 to 400 other jobs, some of them paid, some of them not paid, all in the giving of the Minister, and, human nature being as it is. I would like to remind the noble Lord of another Hilaire Belloc rhyme—we have had a most delightful Hilaire Belloc rhyme from Lord Lloyd. Here is another, and no doubt the noble Lord, with his educational knowledge, will remember "Little Lord Lundy." With respect to Hilaire Belloc, one could read "Little Lord Lundy" like this:
"We had intended you to be
The next Vice-Chairman but three;
The stocks were set, the boys were squared,
The T.U.C. was all prepared;
But as it is my language fails—
Be off and govern Southern Wales."
The noble Lord asked me where the danger of patronage was, I think.
LORD LINDSAY OF BIRKER: Which noble Lord asked you that?
LORD BALFOUR OF INCHRYE: In effect. You asked what was the political danger.
LORD LINDSAY OF BIRKER: No, I did not. All I asked you was how the Government were going to benefit politically. You have said so far nothing about that.
LORD BALFOUR OF INCHRYE: The rewards which are in the giving of the Government—
LORD LINDSAY OF BIRKER: That will not benefit them politically.
LORD BALFOUR OF INCHRYE: Certainly it is political patronage if, as the
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Minister of Fuel and Power said in another place—and this has been quoted to-night—
"The outlook is that you will take those who agree with you politically, and only those who agree with you politically, and put them into the jobs."
If those in charge of the administration at the noble Lord's University only put in those who liked their particular sort of learning, how very biased would the learning become at a University which acts in this way. If the Minister of Fuel and Power chooses only those who broadly think politically as he does, how very much will the industry become affected.
LORD LINDSAY OF BIRKER: Does the noble Lord really think that "corruptly" and "politically" mean the same thing? He seems to.
LORD BALFOUR OF INCHRYE: Not at all. I have said nothing about corruption at all. I have been very careful about it. I have said that political patronage, to quote another place, "jobs for the boys," is, I consider, a bad and wrong thing and not in the interests of the industry, which should be run only for the technical benefit and advantage of the industry.
I want to turn for a moment to the question of compensation terms. These are a travesty of justice. We have asked for a proper basis of valuation. If the Labour Party stand for fair compensation it seems to me that there can be no answer to the point that fair compensation should be based on what a thing is actually worth, and not upon a price on the Stock Exchange, which may vary up and down according to various factors: it may be too high or too low. Nevertheless, that has been refused in principle. About 143 companies out of 188, whose shares are not quoted on the Stock Exchange, are to have a basis of valuation for being taken over as between a willing buyer and a willing seller which the Government have denied to the others. It is interesting to note the reason the Government have advanced. They say that arbitration would take too long; it would be too complicated. It is the first time, I believe, that the Government have said, "We like justice, but we have no time for justice in Britain." That is in effect what they are saying.
It was equally so with the £5,000,000 which is to be given to the local authori-

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ties. They have not the time to work out a scheme. It is like throwing a £5,000,000 bone to a dog. They hope that it will be all right; it may be enough, and it may be too much; but nobody knows. And the reason they have advanced for being unable to obtain any accurate estimate is that there will be no time. I want to say one word of regret about the abuse that has been bandied about concerning directors of these companies. I am not a director of a company—
LORD LUCAS OF CHILWORTH: Would the noble Lord tell us by whom? In this House?
LORD BALFOUR OF INCHRYE: In another place, not here; and, generally, in speeches up and down the country. The Ministers spent four days appealing here for our co-operation and help in their industrial drive, and then in their week-end speeches undo every bit of good their speeches in Parliament have done. The abuse that has been heaped on this body of directors is unfortunate. They have made a new crypto-criminal class of directors by undermining the integrity and the probity of these directors, many of whom have given forty years of service to industry. I hope it will go on record in this House that we pay full tribute to these men who have rendered such good service.
Finally, I would say that I agree with the noble Lords who have said that this is the wrong time for this Bill. I think that it is a bad Bill, but if it had to be introduced this is the wrong time. It is a political Bill, introduced for a political purpose, not for the benefit that it was to bring to anybody working in the industry or receiving current from it. We have a fuel crisis looming ahead, and there could be no more dangerous time for this Bill to become law. The noble Lords opposite, and their colleagues in the Government, had the pamphlet Let us Face the Future, on which they obtained their mandate for this Bill. We on this side accept that mandate and we shall do our best, when the Second Reading is given to the Bill, to try to improve it so that when it does come out it is a better Bill than it is at the present time. Let us face the future, but let it go on record that we face the future with less confidence than before that our
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darkness will be lightened by better and cheaper supplies of electricity as a result of this ill-timed and ill-prepared measure which we are debating to-night.
10.31 p.m.
VISCOUNT HALL: My Lords, we have had a very long and very interesting debate. From the speeches which have been made there can be no doubt that there is a distinct division in your Lordships' House on the principle of nationalization. I am a nationalizer. It is rather interesting to note that of the seventeen speeches which have been delivered (and, if I may say so, from the point of view of their delivery; and their point of view, they have been very good speeches) only four have been made in favour of the Bill. I am convinced in my own mind that the case for the Bill was so very ably stated by the noble Viscount, the Lord Chancellor, and, indeed, by the noble Lords, Lord Rennell, Lord Lucas and Lord Morrison, that, however eloquent I may be, or whatever arguments I may adduce, there is no danger of any conversions from the Opposition side of the House. Therefore, I think it would be much better if, instead of what might be regarded as repeating arguments which have already been made, I deal in the time at my disposal with the points which have been raised in the course of the debate.
I want to pay tribute to the noble and learned Viscount, the Lord Chancellor, because I think his speech was very full, and very lucid, and made out a complete case for the Bill. I listened with a good deal of interest to the speech of the noble Viscount, Lord Swinton. I question what was the purpose of the speech—as to whether it was to criticize the Bill, or really to denounce the Minister, because some 50 per cent. of the noble Viscount's time was used in denunciation of the Minister. I feel painfully surprised, I must say, that so much time has been taken up in your Lordships' House in dealing with this question of patronage. I think it may be said of both Houses, and, indeed, of the Civil Service generally, that one of the greatest insults which can be hurled, particularly at a Minister or a member of either House, is that he is using his power for the purpose of providing jobs for his friends. I must say—not that I am going to take up much time—that I would like to cross

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swords with the noble Viscount as to which of the political Parties have done most in the appointment of members from their own sides in connexion with any positions which it has been necessary to fill. I am convinced that the Party to which I belong will have nothing to regret. A certain amount of the noble Viscount's time was taken up in regard to the question of coal.
VISCOUNT SWINTON: Will the noble Viscount permit me to interrupt? I do not wish there to be any misunderstanding as to exactly what I said about the Minister. I quoted the Minister's own statements. I challenged the First Lord of the Admiralty to deny those statements, and my challenge was this. I said that there should be one test and one test only for appointments to these Boards—efficiency in the job. The Minister has said—and the noble Viscount will not deny the quotations I have given; they are here in Hansard—that he would not appoint to a Board a man who had opposed nationalization. I am saying nothing about corruption at all. But that was a disgraceful thing to say, because it is denying to this nationalized industry the chance of making use of the ablest men, and confining it to men who have been "Yes-men" all through. Let the noble Viscount not try and get away with any separate allegation; that is the sole allegation I made against the Minister. I make it; I stand by it.
VISCOUNT HALL: I take the noble Viscount's challenge. Shall we take the set-up of the Coal Board?
VISCOUNT SWINTON: No, we will take the set-up—
VISCOUNT HALL: Please—I have certain rights in this House.
VISCOUNT SWINTON: You have if you want to mislead. I want to know what is to be done with this Bill.
VISCOUNT HALL: I am going to take what the Minister himself has done in relation to the appointments of the Coal Board, and whether you take the Central Board, or whether you take the regional boards, it cannot be said that there has been a single appointment which has been made on the basis of the statement made by the noble Viscount. Let me come to the question of coal—and this was stated by the noble Lord, Lord Balfour of
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Inchrye. The test of nationalization is to be based upon the success of our nationalized coal industry, a coal industry which has been nationalized for a period of six months; which has been faced with very great difficulties, and indeed has suffered considerably as a result. I am not going to charge the colliery companies with inefficiency, but I would like to put certain points with regard to the noble Viscount himself in connexion with the situation in which the coal industry finds itself to-day; and no one should know more about it than the noble Viscount.
The coal industry is in the condition in which it is to-day for the reason that for almost a generation it has been one of the most unattractive industries in this country. Unattractive for what reason? Because of the conditions in which the miners have been employed over a very long period. One of the things which burned into the very soul of the miners of this country—and here the noble Viscount has some responsibility—was 1926. That will never be forgotten by the generation which had to suffer it and the generation which will succeed it. It was during the period of the administration of the noble Viscount that that calamity happened, for he was the President of the Board of Trade and the Minister in the Cabinet responsible for that situation. I wish I could follow this further, but it is as well when the noble Viscount is hurling his charges about a Minister to look to his own record.
VISCOUNT SWINTON: If the noble Viscount—
SEVERAL NOBLE LORDS: Order, order.
VISCOUNT SWINTON: If the Minister does not wish to give way on a personal challenge, I will not ask hint to. I am in no way ashamed of my record in the General Strike and the part I had in breaking that revolutionary attempt. But this is wholly irrelevant. The sole point I have made is that in this Bill the Minister has said that he will not appoint to any electricity authority any man who has been opposed to nationalization.
LORD LUCAS OF CHILWORTH: He has not said it in this Bill.
VISCOUNT HALL: Perhaps the noble Viscount is not ashamed of his work in crushing the General Strike, but he should

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be ashamed of the fact that for six months the miners of this country were locked out and starved into submission—and that is what they will never forget.
I regret, too, that the noble Lord, Lord Barnby thought fit to raise this question and centred it round the name of Lord Citrine. I am a stranger to the practice of your Lordships' House, but it is the custom in another place that if a Member intends to mention the name of another Member by way of criticism, he would wish to give the person to whom he is referring notice of his intention to do so. I am not sure whether the noble Lord did intimate to Lord Citrine that he was going to quote the passage he did quote concerning Lord Citrine 's appointment, and was going to attack that appointment and bring up the question of political patronage. If not, then I think an injustice was done to the noble Lord, Lord Citrine.
LORD BARNBY: The noble Viscount obviously invites a reply. He is noted as a fair-minded man, and with the permission of the House I feel bound to reply that I developed a theme which had already been dealt with by the noble Viscount, Lord Swinton. I specifically prefaced my remarks by saying that I made no criticism of the noble Lord, Lord Citrine, himself. On the contrary, I went out of my way to pay him compliments, in his regrettable absence from your Lordships' House to-day. I specifically said that I criticized the appointment and not the noble Lord.
VISCOUNT HALL: The noble Lord has not replied to the question I put as to whether he had notified the noble Lord, Lord Citrine, to the effect that it was around his name that the question of political patronage was to be raised.
LORD BARNBY: I, too, have spent some time in the other place, and I believe it is not excluded that quotations may be read out in the course of a debate. I would remind the noble Viscount, Lord Hall, that I read a report from a very highly-regarded trade paper and in the course of that report it was unavoidable that I should refer to the noble Lord, Lord Citrine, I did not give him any notice because I did not know the circumstances beforehand.
VISCOUNT HALL: I am afraid that I should not take it quite as lightly as the noble Lord. The criticism centred round the name of Lord Citrine.
LORD BARNBY: It was a question of technical efficiency. If the noble Viscount, or any member of this House, suggests that Lord Citrine has technical electrical qualifications comparable to those of Mr. Harold Hobson, President of the Central Electricity Board, I offer the challenge.
VISCOUNT HALL: Perhaps the noble Lord will just listen to what I have to say. The noble Lord, Lord Citrine, is said not to have the technical knowledge for the post of Chairman. I do not know whether the noble Lord, Lord Barnby, is aware that Lord Citrine himself served in the electrical industry and for years he was employed at a power station. I should have thought that the knowledge of a person who had served such a long period as he served in the industry, and who is now a man of vision, of character, of integrity, and great ability, would have been an asset to any body of which he was called—not asked, but called—to undertake the administration. It is surprising that Lord Citrine has been singled out. It is by no means the case that a very high degree of technical knowledge is needed to be a Chairman.
I do not want to be misunderstood, because I want to pay him great credit for the way in which he has conducted his duties, but did Sir Andrew Duncan have that knowledge when he was appointed Chairman of the Central Electricity Board? He was, by all accounts, a very successful Chairman of that very highly technical industry. What is the difference between the two men? Of course, the noble Lord cannot reply. There is no difference, except that one has come from the employers' side and one has been brought from the workers' side. I dislike taking so much time on what, after all, is a personal matter to the two persons to which I have referred, but I do so in fairness—and if there is one thing that your Lordships always stand for it is fairness—to persons who have not the opportunity of defending themselves. So I make no apology for raising the matter as I have.
A certain number of questions were raised, and I will endeavour to deal with

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them. A number were raised in regard to the appointment of area boards by the Minister and not by the Central Authority. May I point out that electricity has two main aspects? First, the generation and the main transmission, and, secondly, the retail distribution to consumer. The first of these responsibilities is that of the Central Authority, the second is the responsibility of the area boards. The Central Authority and the area boards are partners in a joint enterprise. It has not been brought out in the course of the debate that the Central Authority will be strengthened by four chairmen of the area boards who are always to be found as members of the Central Authority sitting in rotation on that Authority. That is provided for in subsection (2) (b) of Clause 3. It is intended that the Central Authority, which I repeat includes four area board chairmen, will lay down the general long-term policy of distribution. The area boards will have the responsibility, within the framework of that policy, for distributing electricity in their areas, and they will have full autonomy in so doing. So to carry out these important functions they must have a proper status. They must not be the creatures of the Central Authority, and for that reason it is necessary that they should be appointed by the Minister himself. They are really independent of the Central Authority in that way.
It must also be remembered that the presence of area board chairmen on the Central Authority is intended to provide for a two-way traffic of advice and experience between—as I have called them—the two partners in this enterprise. In any such arrangement it is clearly desirable that these partners should be as nearly as possible on an equal footing, and that is an additional reason for providing that the appointments in the case of the chairmen of the area boards should be made by the Minister. It is for no other reason but that they should be treated as partners in this great adventure. The noble Viscount, Lord Swinton, raised the question as to whether we ought not to suspend local authorities' purchase rights. He was dealing with the franchise. This has, in fact, been done and the rights have repeatedly been extended under special enactments. But local authorities are at present insisting on exercising their rights and receiving further
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extensions. Whatever Government came into office after the war would have been faced with one of two alternatives: to let local authorities exercise the rights which Parliament gave them in 1882, or to bring in legislation to override those rights. Such legislation was only possible as part of the scheme of reorganization.
Quite a number of questions were directed to the matter of rural development; and indeed very few noble Lords, in the course of their speeches, did not refer to it. The noble Lord, Lord Rennell, raised the matter in the course of his speech, and he is, I know, aware that—
LORD RENNELL: My Lords, my only excuse for asking the noble Viscount to give way for a moment is to thank him for correcting me on that point. I am aware of the subsection in Clause 1 of the Bill. I was perhaps a little exuberant in saying that no reference had been made to rural development. But I was disappointed at the very restricted terms in which that reference is made and by the use of the words "so far as practicable." I withdraw the statement that there is no reference to it.
VISCOUNT HALL: The Bill provides for a very large extension of the supply of electricity in the rural areas and that is the intention. I fully appreciate the difficulties with which the companies have been faced, and indeed with which local authorities have been faced, in extending their activities to the rural areas. I myself am interested, though only as a. ratepayer, in a very successful electrical undertaking. Indeed, I was one of those who, by virtue of being a member of a local authority, was responsible for initiating the scheme, and I think that at the present time it is one of the most remunerative and most successful distributing schemes in the country. And I may add that I do not expect any reduction in electrical charges. I could not get them, for if I did I would not be paying anything for my electricity. So successful is this undertaking that I only wish we could extend it and extend its advantages to other areas.
I am referring to the Mountain Ash district in South Wales where I get electric current for lighting. Owing to the profits made in the first two quarters of the year, for the second two quarters of the year they reduce the tariff to something like a farthing or three-halfpence a unit—and

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give back the consumers a very good Christmas box. They have their statutory reserve fund and the interest on that, together with the profit, enables them to do what they are doing. But a different state of affairs exists in a neighbouring urban district which was not so successful in introducing a system of assisted wiring—and indeed of free wiring—to bring in the consumers. In that neighbouring district the price is about three times what it is in the one I have mentioned. Going across to Merthyr, a district which is not unknown to the noble Viscount, Lord Kemsley, where you have a private company—and of course he believes in private enterprise in his district—private enterprise means that they are charged about three times as much for their electricity as I am charged.
Then, when you go down to the rural areas of West Wales, what do you find? Very few houses have the advantage of an electrical supply, and where they have it they pay something like sevenpence or eightpence, and in some cases ninepence a unit for it. Here is a service which should be placed at the disposal of almost every person in this country. I say that under this Bill there is a very much better chance of that being done than if you leave it to the companies. Please do not think that I am suggesting for a moment that the electrical supply in this country has been inefficient; it has not. But that does not signify that something more could not be done for the people of this country if we had the kind of organisation and unification which this Bill is to provide. Your Lordships will be aware that the Bill provides for borrowing powers amounting to £700,000,000 and it is expected that some £400,000,000 of the £700,000,000 will be spent by the area boards in the development of the distributive side. If that can be done then I think that the Bill ought to receive its reward. After all, it cannot be done except by subsidizing private companies or local authorities, or by the State coming in.
Reference has been made to the Post Office. Of course, the Post Office could never pay what it costs to collect and deliver letters in some of the rural districts of this country if it were not for this great national scheme. In this matter I should have thought that there was that friendliness and, indeed, that desire to
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assist one another. Why should I have electricity because I live in an urban district, and a friend of mine, because he lives in a rural district, doing as useful work as the fellow in the urban district, not have it? He just cannot get a supply of electricity in these days. There is something wrong.
LORD LLOYD: Would the noble Viscount forgive me, but I would just like to get this quite clear? Are these rural prices to be reduced—I am only asking for information—by putting up the prices either to the urban or to the industrial consumer? I ask that only because, in connexion with some of the larger industrial consumers, the noble Viscount will appreciate that a very small rise in the price may make an enormous difference to an industrial consumer who uses millions of units a year. And when we have to consider our export programme and the prices of our goods I want to have that clear.
VISCOUNT HALL: It will mean that the area boards will put up their schemes; they will have to cover the whole of their area, and in those schemes they will have to state the cost of supplying electricity to those areas. It may be that they will have, in some way, to spread the additional cost over the urban and town populations. I should think that is the only way in which it can be done.
LORD LLOYD: It will certainly happen.
VISCOUNT HALL: It might; but it has not been done until now. These people have been deprived of their supply, and that is why it is so necessary for this to be done.
Another question I wish to raise is on the financial control of the area boards. I understand that the area boards will be financed from the Central Authority; it is the central authority who will have the power of raising money. I have been informed, however, that the area boards will put in their estimates in exactly the same way as Government Departments, towards the end of the financial year for the next financial year. And the area boards, after the estimate is carried through and they satisfy the Central Authority, will obtain the money they require for carrying out their schemes without the rigid control of the Treasury.

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That is the method of financing the area boards. I am sorry that I have taken up so much time. I was very impressed by the speech of the noble Earl, Lord Lytton; and what he had to say about his company on the welfare side of the workpeople; indeed, I think that could be said to a large extent of a large number of industrial concerns, and I want to assure him that provision is contained in the Bill for the purpose of protecting pension rights and all the welfare and health work to which he referred. I am not so sure about the question of co-partnership. The benefit to industrial workers through a system of co-partnership is made up out of the profits of the concern. I understand that will be looked at and that those engaged in such schemes will possibly have some kind of compensation paid for any loss they might sustain.
I should think almost every speech from noble Lords opposite dealt with the question of compensation. It is not for me at this late hour to deal with the question of compensation to private companies, or the lack of compensation to local authorities which was so well put by the noble Lord, Lord Addington. The Committee stage is the time when we can have the real "dust-down" on this question, and I have no doubt that noble Lords opposite will put the case very strongly. I conclude by saying that I have no illusions at all about nationalization. I am convinced in my own way that there are certain industries in which we should have State ownership. The noble Lord, Lord Balfour of Inchrye, asked, "Who is clamouring for this Bill." The electors sent into Parliament with an overwhelming majority their representatives of a certain Party for the purpose of nationalizing certain industries. And we propose to do it. I would like to ask the noble Lord, whilst there is a clamour, is there any opposition to it? I know of no objection apart from the opposition expressed by certain representative bodies. I know of no meeting of industrial workers, even in the areas where the electricity plants exist, and I know of no hostility to this Bill.
LORD BALFOUR OF INCHRYE: The electors voted chiefly on a wide programme, including not so much the nationalization of electricity as the cheaper electricity which was promised because of
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nationalization. Secondly, as to whether there has been any protests: The people have not yet felt the effect of the Bill. When the consumers do then the protests will start.
VISCOUNT HALL: The noble Viscount took pains to explain how many days were required for the discussion of the Bill in another place, and the newspapers have been full of it for the last six months.
THE MARQUESS OF SALISBURY: I doubt whether protests would have made any difference to the Government. They had many protests against nationalization from the road hauliers, but the Government took no notice.
VISCOUNT HALL: I am not so sure that there have been protests from the majority of the road hauliers.
SEVERAL NOBLE LORDS: Oh!
VISCOUNT HALL: I have seen large hoardings with posters, paid for by certain vested interests. But, after all, noble Lords do not fully realize the power that the industrial workers have in their own trade unions in making their opinions felt. If there was any hostility at all, either against the Transport Bill or this Bill, believe me, the industrial workers of this country are not nearly so quiet and modest as noble Lords think in letting other people know their views. They would quickly express themselves in that way.
May I come to this point? This industry is to be nationalized; rightly, I think, noble Lords think wrongly. I am convinced in my own mind that it will be for the great benefit of the people of this country. There has been a great deal of State control of this industry from the very early days, when the old pioneers never realized that the industry would grow to the position to which it has grown in the economic and industrial life of this nation. There is no industry which is contributing more to the comfort and the ease of work in the homes of the majority of the people of this country. I say whatever may be said about some little defect here, or some little defect there, that here is a great national service which should be placed at the disposal of every person in this country who can use it. It ought not to be based upon how much he can pay: it should be there. I can hear what the noble Viscount opposite is saying. I wish he would just behave himself a little bit. I do not want to subsidize it.
VISCOUNT SWINTON: I am extremely sorry. I thought I had correctly apprehended the noble Viscount. He said it should not depend upon whether the man could pay for it. I thought that meant that it was to be subsidized. I am glad if I misheard him.
VISCOUNT HALL: I think the noble Viscount really knows more about finance than he pretends he does. That is one of the reasons why the area boards will be appointed. It is not a question of a State subsidy at all. It is a question really of giving facilities to the people to have their houses connected. 150,000 farms doing important work in this country, are at present unconnected. Why are they not connected? It is because of the question of finance. One noble Viscount shakes his head, and another noble Lord nods in agreement.
VISCOUNT ELIBANK: The noble Viscount has made a mis-statement.
SEVERAL NOBLE LORDS: Order, order.
VISCOUNT HALL: I have taken up too much of your Lordships' time. I would ask noble Lords to march with the great progressive minds in this country. You have done a grand job, but the time has come when these changes must take place. I think the change which will be brought about as a result of this Bill will be in the interests of the great mass of the people of this country.
On Question, Bill read 2ª, and committed to a Committee of the Whole House.
House adjourned at ten minutes past eleven o'clock.