Sitting of 12 November 1947

Preamble
The House met at Half past Two O'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  CIVIL AVIATION

    Corporations (Accounts)
    Mr. J. Langford-Holtasked the Parliamentary Secretary to the Ministry of Civil Aviation, whether he will give an assurance that the accounts of B.O.A.C., B.E.A., and B.S.A.A., will be as rigorously audited as those of any ordinary company, in accordance with the Companies Act, by independent auditors.
    The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren): Yes, Sir.
    Mr. Langford-Holtasked the Parliamentary Secretary to the Ministry of Civil Aviation, when the accounts of B.O.A.C., B.E.A., and B.S.A.A., will be published; and whether these accounts will be in the form laid down by the Companies Act, as amended, or at least in accordance with best modern practice.
    Mr. Lennox-Boydasked the Parliamentary Secretary to the Ministry of Civil Aviation when it is proposed to publish the annual accounts of the three air line corporations.
    Mr. Lindgren: The accounts and annual reports of British Overseas Airways Corporation and British European Airways Corporation for the year ending 31st March, 1947, have been received from the corporations and have been sent to the Stationery Office for printing. The accounts of British South American Airways Corporation are expected within the
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    next few days. They will all be laid before Parliament as soon as they can be printed. As to the second part of Question No. 2, the answer is "Yes, Sir."

    Passenger Services (Fuel Margins)
    Mr. Geoffrey Cooperasked the Parliamentary Secretary to the Ministry of Civil Aviation, if he will consider appointing an independent committee to investigate the conditions under which British Air Transport concerns are permitted to ply for hire and reward, with a view to ensuring that aircraft leaving this country, either under charter or on regular passenger air routes, do not reduce fuel margin's below an adequate minimum, with a view to avoiding a repetition of the Sky Queen incident in mid-Atlantic.
    Mr. Lindgren: No, Sir. It is the responsibility of the person in charge of the aircraft to verify that the fuel carried is sufficient. The regulations are already under review with a view to making them more definite.
    Mr. Cooper: Does the Parliamentary Secretary realise that British air transport concerns may please themselves almost entirely with regard to the ratio of petrol they carry as between fuel-load and pay-load, and does he not think that, in the interests of public safety, something should be done to establish a principle by which operators in this country and others would operate?
    Mr. Lindgren: I could not accept the statement made by my hon. Friend. The responsibility for sufficiency of fuel lies with the captain of the aircraft.
    Mr. Beswick: Could the Parliamentary Secretary say whether the crew of this aircraft had the necessary certificates of competence, and whether those certificates were checked at the English point of departure?
    Mr. Lindgren: There is an investigation now going on in America with regard to this, and I should prefer to wait for the report of that inquiry before I reply to my hon. Friend.
    Mr. Cooper: Does my hon. Friend think that it is an adequate safety precaution to leave the matter entirely in the hands of the pilot?
    Mr. Lindgren: International discussions will take place at I.C.A.O. in September, 1948, as to whether we can secure a definition of "sufficiency" under two headings, one of which is in visual flying and the other in instrument flying conditions.
    Air-Commodore Harvey: Does not the Minister agree that if the responsibility is not left in the hands of the captain of the aircraft, there is the probability that there will not be the degree of safety that exists today? Must not the pilot have the same responsibility as the captain of a ship?
    Mr. Lindgren: That is among the representations which have been made to us.

    Heathrow (Passenger Facilities)
    Mr. Cooperasked the Parliamentary Secretary to the Ministry of Civil Aviation what is the average time taken, from the time of arrival on an aircraft carrying 30 passengers to the time of departure of the passengers from the airport, to pass through the customs and other port formalities at Heathrow; and what steps are being taken to improve the efficiency of the procedure so as to bring up the standard to that which at one time obtained at Croydon Airport and measure up more favourably with the rapid facilities now provided at many European airports.
    Mr. Lindgren: The average time taken at London Airport is 26 minutes, which compares favourably with that at European airports. This time for clearance should be further reduced as soon as an additional building can be constructed and brought into use.
    Mr. Cooper: Does the Parliamentary Secretary realise that, sometimes, up to an hour's delay is occasioned through passengers going through Customs and other formalities at airports, and does he not consider that it is wise to speed up the process immediately, if that is at all possible?
    Mr. Lindgren: Where there is delay, such as has been indicated by my hon. Friend, it is due to passengers being detained for further questioning and inquiry by the Customs, health or currency authorities. I am certain that it is not his desire that Customs, health or immigration officials should be slack in their duties.
    Mr. John Lewis: Is my hon. Friend aware that the answer which he has given to the supplementary question is not, in fact, substantiated by the recent experience of many hon. Members, who have suffered delay; and could he arrange for those people responsible for the efficient administration at Northolt to go over to Heathrow and show them how to do their job?
    Mr. Lindgren: I think the latter part of that question is unworthy of my hon. Friend. In fact, the manner in which duties are carried out at both stations is to the best ability of the officials concerned.

    Depot, Montreal (Cost)
    Mr. William Shepherdasked the Parliamentary Secretary to the Ministry of Civil Aviation what is the cost of the maintenance depot at Montreal; whether these costs are borne in dollars, and how long it is expected that they will continue.
    Mr. Lindgren: The answer to the first part of the Question is £125,000 per quarter; to the second part, Canadian dollars; to the third part, autumn, 1948.
    Mr. Shepherd: Would the Minister say why this enormous sum of dollars has been wasted every quarter, in view of the fact that aircraft have to travel from New York to Montreal, a return distance of 500 miles, without any pay-load at all; and, in view of the fact that 2,000 bombers were serviced in this country during the war, why could not steps be taken for those facilities to be utilised for this purpose before this time?
    Mr. Lindgren: There was no appropriate place at that time in this country and there still is no available place at the present time; one, however, is being made available, in conjunction with the relevant authorities.
    Colonel J. R. H. Hutchison: Does the Minister realise that the self-same aircraft were serviced at Prestwick during the war?
    Mr. Lindgren: No, Sir. All they were given was normal flight maintenance, not servicing.

    Airspeed Ambassador Airliners
    Colonel J. R. H. Hutchisonasked the Parliamentary Secretary to the

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    Ministry of Civil Aviation how many Airspeed Ambassador airliners have been ordered for British European Airways; and whether they are additional to or in replacement of Vickers Vikings.
    Mr. Lindgren: None, Sir. The question is still under discussion.

    Trans-Canadian Airways (Prestwick Airport)
    Mr. Rankinasked the Parliamentary Secretary to the Ministry of Civil Aviation if he will state what reason was given by Trans-Canada Airlines in deciding to withdraw their flight dispatch section from Prestwick Airport as from 1st November.
    Mr. Lindgren: The reason given was the introduction of the new service to London airport via Shannon.
    Mr. Rankin: Is my hon. Friend aware that it is claimed that this service has been transferred to Shannon Airport because of the delay in introducing a meteorological service at Prestwick?
    Mr. Lindgren: My hon. Friend's information is not up to date, because on 14th October, the Trans-Canadian Airways issued a Press statement denying that assertion.

    Ferry Service, Weston-super-Mare—Cardiff
    Mr. Orr-Ewingasked the Parliamentary Secretary to the Ministry of Civil Aviation how many passengers were carried on the Weston-super-Mare—Cardiff Air Ferry Service during the periods October to March in 1937–1938, 1938–1939, and 1946–1947, respectively.
    Mr. Lindgren: The numbers of passengers carried on this service during the periods in question were 2,669, 4,129 and 4,875, respectively.
    Mr. Orr-Ewing: In view of the figures which the Parliamentary Secretary has given, does not he recognise that they are proof of a demand by those in industry and commerce on both sides of the Bristol Channel for the maintenance of this service, and will he reconsider the decision to withdraw the service?
    Mr. Lindgren: The capacity used was only 50 per cent. of that available, and, therefore, in those circumstances, it was
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    not an economic operation. As soon as circumstances permit, a reintroduction of the service will be considered.
    Mr. Lennox-Boyd: Will the hon. Gentleman consider allowing a charter company to tender for that service and to run smaller and more economical aircraft?
    Mr. Speaker: That is another question; the only Question asked was how many passengers were carried, and that was answered.

    Charter Companies (Sub-Contracts)
    Colonel Hutchisonasked the Parliamentary Secretary to the Ministry of Civil Aviation whether he is prepared to put all Government requirements in the matter of using aircraft for travel on Government account to tenders open to charter companies outside the Corporation as well as to the Corporation.
    Mr. Lindgren: This suggestion is already under consideration.
    Colonel Hutchison: Is the Minister aware that, in connection with the recent flight of the Minister, about which there has been criticism, charter companies were not given the chance of quoting, and that, on their own statement, they could have done it much cheaper?
    Mr. Lindgren: In regard to the latter part of the hon. and gallant Gentleman's question, I very much doubt the assertion; in so far as the first part is concerned, the Corporations themselves are always given the first opportunity of accepting the charter. If they cannot do it themselves, they try to put it out to other charter firms.
    Colonel Dower: Is the hon. Gentleman satisfied that charter company services are really being given a fair chance, as the information which I have received is to the opposite effect?
    Mr. Lindgren: The answer is, "Yes, Sir."
    Mr. Langford-Holt: In view of what the Minister has just said, that the Corporations are given the first chance, does that mean that price does not enter into it, or is consideration given to the price quoted?
    Mr. Lindgren: In air transport, as in all other businesses, there are general rules, practices and prices which apply.
    Mr. Rankin: If charter companies are to get the same chance as the scheduled services, will my hon. Friend see that the conditions of maintenance and service staffs conform to those in the Corporations?
    Mr. Lindgren: Private enterprise is never as safe as State enterprise.
    Colonel Hutchison: I beg to give notice that, owing to the unsatisfactory nature of the reply, I propose to raise the matter on the Adjournment.
    Mr. Lennox-Boydasked the Parliamentary Secretary to the Ministry of Civil Aviation whether, in the event of a Corporation being unable or unwilling to run a scheduled service, the Corporations are empowered to sub-contract to charter companies the running of similar services on their behalf.
    Mr. Lindgren: Yes, Sir.
    Mr. Lennox-Boyd: If, as I understood, the answer to this Question was "Yes, Sir," will the hon. Gentleman publish in the annual report a list of those services which the companies are unable to perform, but which they are prepared to tender to private charter companies to operate?
    Mr. Lindgren: Speaking from memory—and I hope the hon. Gentleman will not hold me to it too much—the accounts of the Corporations do show the charters undertaken by private companies on behalf of the Corporations.

    Staff Dismissals, B.E.A.C.
    Air-Commodore Harveyasked the Parliamentary Secretary to the Ministry of Civil Aviation how many of the staff and what categories have been dismissed by British European Airways Corporation since 1st September, 1947.
    Mr. Lindgren: I would refer the hon. and gallant Gentleman to the reply I gave him when he asked a similar question on 12th February last, and when I said that I regard detailed information about staff matters as falling within the field of management.
    Air-Commodore Harvey: I would point out to the Minister that the situation has changed. A great number of these men are being dismissed, and is it not about time that this House was given the details? I have in my hand a letter
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    from a member of the permanent staff of the B.E.A.C. who was given a week's notice without any explanation, and who received a week's pay and no thanks for his service. Is that the way to treat the Corporation?
    Mr. Lindgren: These men have been wise enough to organise themselves inside a trade union, and that trade union is a far more appropriate body to 00k after their conditions than this House.
    Mr. Shepherd: Does the Minister feel that these dismissed employees are as certain of the safety of public employment as he is?
    Mr. Lindgren: Yes, Sir. I only wish all employees in all industries received the same consideration as those engaged in State enterprise.
    Mr. Godfrey Nicholson: On a point of Order. May I ask, Mr. Speaker, whether that last remark but one of the Minister's was entirely, in order?
    Mr. Speaker: I really wondered how far the Question was going, because it only asked what members of the staff and what categories had been dismissed. It was no wider than that.
    Mr. Nicholson: The reply of the Parliamentary Secretary seemed to me to be rather insulting to the House.
    Mr. Quintin Hogg: On a point of Order. Surely, Mr. Speaker, it is within the province of hon. Members to ask supplementary questions which arise out of the answer, as well as out of the original Question?
    Mr. Speaker: I advise the hon. Member to read page 336 of the Rules about Questions.
    Mr. Hogg: Further to that point of Order. This is the third time that we have had legislation by reference. May we not say that we are entitled to guidance from the living voice of the Chair, and not from the dead hand of Erskine May poking out at us in the Library?
    Mr Speaker: The hon. Member may think Erskine May is a dead hand; I think it is a very sure guide.
    Air-Commodore Harvey: In view oft the very unsatisfactory nature of the reply, I wish to give notice that I propose to raise the matter on the Adjournment.

  GERMANY

    Factories (Demolition)
    Mr. Shepherdasked the Secretary of State for Foreign Affairs if he will give an undertaking that no factory will be demolished in Germany until suitable alternative factory and domestic accommodation is available to those likely to be displaced by the demolition.
    The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): The only factories liable to demolition are those which were engaged on the production of war material, for which purpose clearly no alternative accommodation should be provided. The conditions under which such factories are to be demolished require further examination on a quadripartite basis. Pending such examination, the British Military Governor has, for humanitarian reasons, suspended the demolition of surface buildings other than military constructions.
    Mr. Shepherd: May I take it from the reply of the right hon. Gentleman that the requirements which are asked on this Question are being met at the present time?
    Mr. Bevin: I do not want the hon. Gentleman to read into my answer more than I have said.

    N.A.A.F.I. Prices
    Mr. Butcherasked the Secretary of State for Foreign Affairs whether his attention has been drawn to the high prices charged by N.A.A.F.I. to married families in Germany; how far he exercises control over these prices; and whether he proposes to make any cash allowance to assist married families who are compelled to deal with this institution.
    Mr. Bevin: I am aware that there have been complaints from married families that some prices are high compared with prices in England, but I do not propose to deal with this matter by means of a cash allowance. The control of N.A.A.F.I. prices are a matter for my right hon. Friend, the Secretary of State for War.
    Mr. Butcher: In view of the complaint which the right hon. Gentleman has received, will he urge upon his right hon. Friend the necessity for using the
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    utmost control over the operations of N.A.A.F.I.?
    Mr. Bevin: I am constantly in touch with my right hon. Friend on the matter.

    Imported Potatoes
    Mr. Vaneasked the Secretary of State for Foreign Affairs why it has been found necessary to import 50,000 tons of potatoes from Poland for the U.K./U.S. zone of Germany; and whether any charge for this transaction will fall upon the British taxpayer.
    Mr. Bevin: The food situation in Germany makes it necessary to seek imports of foodstuffs which, like potatoes, are cheap in relation to their nutritional value. The United States authorities made the purchase, and no charge will fall on the British taxpayer.
    Mr. Vane: Does the reply of the right hon. Gentleman mean that the enormous surplus of potatoes which used to be grown in the Eastern provinces of Germany have now been reduced into a deficit thanks to the so-called Socialist agricultural policy?
    Mr. Bevin: I do not understand the hon. Gentleman's Question; perhaps he does.
    Mr. Vane: May I put it in another way? Does the right hon. Gentleman's reply mean that thanks to land reform—the so-called Socialist agricultural policy—the very large surplus of potatoes which used to be grown in the Eastern provinces of Germany, and which, presumably, should be available for feeding the United States—United Kingdom zone has now been reduced into a deficit, and that we have to look elsewhere?
    Mr. Bevin: I think the hon. Gentleman well knows that the food of Eastern Germany has not been made available to Western Germany, and that has been the trouble.

    Occupation Period (Control Commission Staff)
    Mr. Butcherasked the Secretary of State for Foreign Affairs if he will give an assurance that the need to occupy Germany for at least five years still exists; and whether he will enter into agreements with selected members of the Control Commission staff on that basis.
    Mr. Bevin: As far as can be foreseen at present, the answer to the first part of the Question is "Yes." As regards the second part, a proportion of the present staff of the Control Commission have agreements covering employment for approximately five years. The question of offering agreements for longer periods is under consideration.
    Mr. Butcher: While I thank the right hon. Gentleman for his reply, may I ask if he could give any indication of the proportion of the staff who have contracts for five years or more?
    Mr. Bevin: I could not give that information now, and I could not state the proportion of the staff who will get longer contracts because the whole question of the Control Commission is in a state of flux, and I have to get the staff down to a level which can be maintained ultimately.

    Multilateral Deliveries
    Mr. Stokesasked the Secretary of State for Foreign Affairs (1) how many machines and processes are still to be removed from German factories for the purpose of Multilateral Deliveries; on what date the actual deliveries will be completed, and how many of the factories so concerned are not included amongst the 682 factories recently listed for dismantling as being surplus to requirements;
    (2) how many factories in the British Zone of Germany have already been affected by the removal of machines and processes for Multilateral Deliveries; and how many such machines and processes were therein involved.
    Mr. Bevin: The Multilateral Deliveries scheme did not involve processes but only individual items of machinery. Two thousand and sixty-six items have so far been removed; 1,894 further items have been requisitioned from the Germans and offered to the Inter-Allied Reparations Agency for allocation. It is not possible to say when removals will be completed. I am obtaining the information on the number of factories affected by these removals, and will communicate with my hon. Friend later.
    Mr. Stokes: Does my right hon. Friend realise that this means that a large number of key machines have been removed
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    from a large number of factories, and that when he makes an examination he will probably find that a far greater number of factories are being paralysed than the 682 enumerated?
    Mr. Bevin: Nothing like the number of factories have been paralysed in Germany by this operation that were paralysed by Hitler in his war.
    Mr. Stokes: Is my right hon. Friend aware that two wrongs do not make a right, and is he also aware that he has not the slightest chance of re-establishing the standard of living in Europe or in this country until he gets German economy going again?
    Mr. Bevin: I quite appreciate that point, but, as I said in the Debate the other day, I am not going to ignore the claims of Allied countries who had their machinery either taken or destroyed, and I intend to give first priority to those people who suffered under Hitler.
    Mr. Stokes: I wish to give notice that I shall raise this matter on the Adjournment.

    Cleansing Materials (Production)
    Mr. Somerville Hastingsasked the Secretary of State for Foreign Affairs if he has assured himself that, when the present shortage of fuel and raw materials has been overcome, there will be sufficient production capacity in the British Zone of Germany to provide all the cleansing materials that the Germans will need when the Henckel soap powder factory in Dusseldorf has been dismantled.
    Mr. Bevin: Yes, Sir

    Illegitimate Children, British Fathers
    Mr. Sorensenasked the Secretary of State for Foreign Affairs whether further consideration has been given to the possibility of securing financial and other assistance for the German mothers of illegitimate children whose fathers are British Service men.
    Mr. Bevin: Yes, Sir. But there has been no change in the position as explained to my hon. Friend in reply to his earlier Questions on this subject, except that there has been an increase in the weight of parcels which may be sent to Germany.
    Mr. Sorensen: As there is some encouragement regarding the similar position concerning American fathers of illegitimate children in Britain, should we not set an example by taking further action to meet the increasing needs of large numbers of German mothers?
    Mr. Bevin: I really think we have done very well in this matter, and I do not think we are behind any other country in this respect.
    Mr. Anthony Greenwood: Would my right hon. Friend discuss with the Secretary of State for War the desirability of making available to German mothers the addresses of British Service men in this country who are alleged to be the fathers of the children, in order that the responsibility can be settled by due process of law?
    Mr. Bevin: I would like notice of that question.

    Denazification
    Mr. Stokesasked the Secretary of State for Foreign Affairs what date has been fixed for the termination of denazification in the British zone of Germany.
    Mr. Bevin: Removal of persons from employment on denazification grounds will be terminated by 1st January, 1948. No date has yet been fixed for terminating the processes of categorization and periodical review, or the screening of new applicants for restricted forms of employment after 31st December, 1947.

  BRITISH MILITARY ATTACHE, MOSCOW (DETENTION)
  Mr. Hollisasked the Secretary of State for Foreign Affairs on what grounds the British Military Attaché in Moscow, Major-General Hilton, was recently arrested by the Soviet authorities.
  Mr. Bevin: The Military Attaché at His Majesty's Embassy in Moscow was detained for several hours on 30th October by the authorities of a factory near Moscow who suspected him of having taken photographs of it. The only circumstance which could conceivably have given ground for this suspicion was that the Military Attaché, who was out for a walk in civilian clothes, used field glasses in looking towards the Lenin Hills. These glasses might have been mistaken for a camera.
  Mr. Hollis: Have representations been made to the Soviet Government?
  Mr. Bevin: Yes, Sir.
  Lieut.-Colonel Sir Thomas Moore: Does the Soviet Military Attaché in London ever wander about in civilian clothes?
  Mr. Sydney Silverman: In order to complete the story, is it not a fact that this gentleman was released as soon as his identity was established?
  Mr. Bevin: Well, it took a little time.

  EGYPT (CHOLERA EPIDEMIC)
  Sir Henry Morris-Jonesasked the Secretary of State for Foreign Affairs whether he has considered the circular letter sent to the hon. Member for Denbigh and signed by the President of the Egyptian Feminist Union (a copy of which letter has been sent to him) accusing the British Army of occupation in Egypt of being responsible for the origin and dissemination of cholera in Egypt; and what steps he is taking to mitigate the effect of such propaganda on our relations with Egypt and other countries.
  Mr. Bevin: Yes, Sir. This extremist attack is unworthy of a reply. It will only be believed by those who are already hopelessly prejudiced against us.
  Sir H. Morris-Jones: Is the right hon. Gentleman aware that he cannot dismiss the matter quite so peremptorily as all that? This lady is not an irresponsible person in Egypt, and surely we cannot allow these statements to pass without taking steps to contradict them. Will the right hon. Gentleman go into this matter again and see what he can do about it?
  Mr. Bevin: I announced last week what we had done for Egypt in this connection. I gave a very full reply. The thanks of the Egyptian Government have been conveyed to me personally by the Ambassador. I cannot always be answering jaundiced people who seek to attack His Majesty's Government in Great Britain.
  Mr. Sorensen: With regard to the statements that my right hon. Friend made last week concerning the amount of assistance we have given, could he say whether that assistance is to continue?
  Mr. Bevin: Yes, Sir, I can add to the information that I gave last week. In addition to the vaccine, we have made over 60 ambulances available. Twelve are free, 25 are on loan, and 25 have been sold on favourable terms. We have also made available the expert assistance of Sir J. Taylor, the distinguished cholera expert and Dr. Bruce White, the leading bactereologist who is at present carrying out research in Egypt. Their knowledge and research are at the disposal of the Egyptian authorities.
  Sir Frank Sanderson: Is the right hon. Gentleman aware that as recently as last Thursday the Egyptian Ambassador stated in a speech, at which the Minister for Economic Affairs and other Ministers and Members of Parliament were present, that he could not express too ardently his appreciation of the great assistance which this country has given to Egypt during this terrible scourge from which Egypt is suffering?

  ILLEGITIMATE CHILDREN, AMERICAN FATHERS
  Mr. Sorensenasked the Secretary of State for Foreign Affairs whether any further action has been taken to secure financial and other assistance for the British mothers of illegitimate children whose fathers were American Servicemen.
  Mr. Bevin: In his reply to a similar Question on 3rd February, my hon. Friend the Under-Secretary explained that it had not been possible to reach an agreement with the United States Government on this matter. Since then His Majesty's Government have been endeavouring to make satisfactory arrangements with welfare organisations and other unofficial bodies in the United States in order to induce United States Servicemen and ex-Servicemen who are the fathers of illegitimate children in this country to recognise their obligations. Some progress has been made, and both our Embassy and the British Consular Officers in the United States are continuing to do all they can to help British subjects requiring assistance of this kind.
  Mr. Sorensen: While I express my appreciation for that reply, may I ask my right hon. Friend whether he holds out any hope that all the British mothers
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  of illegitimate children of American ex-Servicemen will ultimately receive some financial assistance?
  Mr. Bevin: I cannot guarantee that.
  Mr. Nicholson: Can the right hon. Gentleman give any indication how many of these mothers are now receiving any help from America?
  Mr. Bevin: I would like notice of that Question.

  JAPANESE WHALING EXPEDITION, ANTARCTIC
  Mr. Piratinasked the Secretary of State for Foreign Affairs whether he has now received an assurance from the United States Government that they will not authorise further Japanese whaling expeditions in the Antarctic without prior consultations with the other interested Governments, including His Majesty's Government.
  Mr. Bevin: His Majesty's Government have received assurances from the United States State Department that they and other interested Governments would be immediately advised should a Japanese whaling expedition to the Antarctic be contemplated for the 1948–49 season, and such views as these Governments might submit in the matter would be forwarded to the Supreme Commander for the Allied Powers for his careful consideration.

  MALAYAN UNION

    Government Officers (Pensions)
    Mr. Gammansasked the Secretary of State for the Colonies if he is aware of the distress being caused to many pensioned officers of the Malayan Government by the delay in granting an increase in pensions to meet the rising cost of living; and when he expects to make a statement on the subject.
    The Under-Secretary of State for the Colonies (Mr. Rees-Williams): The Government of the Malayan Union has recently notified its decision to bring its pensions increase scheme into line with the amendments made to the 1944 Act by the Pensions (Increase) Act, 1947. The necessary claim forms have teen issued by the Crown Agents for the Colonies. Payments of arrears and of the current increase have, in some cases,

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    already been made, and in all other cases will be made as promptly as possible. It will be appreciated that with the large numbers of pensioners of Colonial Governments who may be concerned some delay will be inevitable before all claims can be dealt with.
    Mr. Gammans: Can the hon. Gentleman say if Members of this House will have an opportunity of seeing what that scheme is?
    Mr. Rees-Williams: Yes, Sir.

    Malaya-Siam Border (Situation)
    Mr. Gammansasked the Secretary of State for the Colonies if he will make a statement on the outbreak of lawlessness on the Malaya-Siam border and also in certain parts of Johore; and if he can give any indication when the situation is likely to be under control.
    Mr. Rees-Williams: With the hon. Member's permission I will circulate a statement with the OFFICIAL REPORT. It shows that the authorities in the Malayan Union have achieved considerable success towards keeping the situation under control.
    Mr. Gammans: In view of the alarming and deteriorating situation in Malaya, cannot the hon. Gentleman make some statement now to give an indication of the position in that country?
    Mr. Rees-Williams: The situation is not deteriorating. It is improving. As the hon. Member will see, the police have been operating in considerable numbers and have had quite a substantial success.
    Following is the statement:
    The police have been steadily gaining the mastery over lawless gangs in Malaya. These operate chiefly in the difficult country near the Siamese frontier, and in central and south-east Johore. In the frontier area the gangs are being successfully intercepted, and the roads are patrolled, by military forces and special trained anti-bandit squads of the Malayan Police. In Johore at least four armed gangs have been operating in recent months. At least two of these have been broken up in successful operations by the Malayan Police, who, with the full cooperation of the military, are intensifying their efforts against the remainder of the gangs. It is confidently expected that
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    the police will be as successful in the campaign against violent crime in the more remote areas, where their resources and organisation are still being built up, as they have already been in large centres like Kuala Lumpur and Penang.

    Banishment Enactments
    Mr. Gammansasked the Secretary of State for the Colonies if he is aware of the concern felt in Malaya regarding the changes which have been made in the use of the banishment ordinance and the effect which they have had in securing convictions against persons guilty of robbery and murder; and if he will make a statement on the subject.
    Mr. Rees-Williams: There have been no such changes. I am satisfied that the banishment enactments in force in Malaya are being as effectively used to combat robbery and murder as in the past.
    Mr. Gammans: Have any instructions been sent to the Governor which would affect in any way the manner in which those enactments are, in fact, enforced?
    Mr. Rees-Williams: No such instructions whatsoever have been sent.

  KENYA

    Civil Service
    Mr. Cooperasked the Secretary of State for the Colonies what steps are being taken to establish a unified civil service in Kenya, recruited and paid according to merit without distinction between different races.
    Mr. Rees-Williams: I would refer my hon. Friend to the reply given to my hon. Friend the Member for Colchester (Mr. Charles Smith) on 5th November.
    Mr. Cooper: Can my hon. Friend make out any case at all for treating members of the same service differently in respect of pay and conditions of work on the score of colour bar?
    Mr. Rees-Williams: When my hon. Friend looks up the reply he will see that the Commission is now sitting on this matter. I prefer to say nothing with reference to it until the Commissioners have reported.

    Land Settlement
    Mr. Skinnardasked the Secretary of State for the Colonies (1) how many Africans have been settled on new land in Kenya since the end of the war; and at what cost to the Kenya Government;
    (2) what Government assistance has been given to the 669 European settlers who have taken up land in Kenya since the war; whether the land they are occupying was previously unoccupied or in European occupation; and whether he will give an assurance that no further Government assistance will be given to new claimants.
    Mr. Rees-Williams: I regret that in the time available it has not been possible to secure all the information required from the Government of Kenya. I will communicate with the hon. Member as soon as I receive it.
    Mr. Baldwin: Is the hon. Gentleman aware that much of the land that has been handed back to the Africans during the last few years is land in a state of erosion, and will he ensure that when in future land is handed back conditions will be laid down to ensure that it is properly cultivated?

    Immigration Ordinance
    Mr. Skinnardasked the Secretary of State for the Colonies what restrictions on immigration are at present operating in Kenya; into what category of permitted immigrants new settlers taking up land for residential purposes fall; and whether the land taken up for such purposes through the European Settlement Board is confined to land unsuitable for farming.
    Mr. Rees-Williams: Restrictions under the Immigration Ordinance are confined to certain classes, such as persons certified as insane, without visible means of support, or likely to become a public charge. The Governor is also empowered to refuse entry permits to persons not intending to take up employment in an approved occupation. The land taken up by new settlers for residential purposes, while not necessarily unsuitable for farming, is usually in residential or urban areas where farming is not normally
    practised.

    PALESTINE (POLICE RECRUITMENT)
    Mr. Boyd-Carpenterasked the Secretary of State for the Colonies whether he is continuing to recruit for the Palestine Police on the terms and conditions set out in the booklet, "Palestine Police as a Career."
    Mr. Rees-Williams: The Government of Palestine is continuing to recruit constables for the British Section of the Palestine Police Force on the terms and conditions set out in this booklet, the title of which has however, been changed to "The Palestine Police Force." It is made clear to candidates when called for interview that, in view of the uncertainty of the future of Palestine, there is now no prospect of a career in the force.
    Mr. Boyd-Carpenter: Is the Under-Secretary of State aware that this booklet states that men can be taken on a three-years' contract? Can he give an assurance that in present circumstances they will, in fact, be able to serve those three years?
    Mr. Rees-Williams: I have a copy of the booklet here, and I have not noticed that particular part to which the hon. Member refers. They are not, in fact, taken on, so far as I am aware, for any particular term. Certainly I could give no such assurance.
    Mr. Boyd-Carpenter: Will the hon. Gentleman look at the top of page 8?
    Mr. S. Silverman: In view of the fact that the Government's announced policy of withdrawing from Palestine, laying down the mandate and all responsibility for it, is universally popular in this country, in Palestine, and abroad, is it not a pity that they should continue to put out documents which can only cast doubt on the sincerity of their intentions?
    Mr. Rees-Williams: The position is that the High Commissioner has to maintain law and order in Palestine for the period in which we are there, and he has considered it essential that recruitment should proceed for the time being. Hon. Members must realise that members of this force are retiring, that they become sick, and so on; and it is impossible for him to carry on the Force unless he can recruit for it.
    Mr. Oliver Stanley: Could the hon. Gentleman say how long a period of training these recruits require, and, therefore, at what date a man recruited now would become an effective member of the Palestine Police Force?
    Mr. Rees-Williams: The normal period after which a man enters into normal duties is, I understand, three months.
    Sir Ralph Glyn: Can the hon. Gentleman say whether he does not think it the appropriate time to issue some instruction to ensure that people who have served in the Palestine Police Force will have their pensions safeguarded in the future?
    Mr. Rees-Williams: That is another question.
    Mr. S. Silverman: In view of the importance of this subject and the inadequacy of the reply, I should like to give notice that I will raise this matter on the Adjournment at the earliest opportunity.

  PACIFIC ISLANDS

    Transport Facilities
    Mr. Parkerasked the Secretary of State for the Colonies what steps are being taken to improve transport facilities between the islands of the Western Pacific.
    Mr. Rees-Williams: A ship was bought in 1946 to provide overseas communication for the British Solomon Islands pending the resumption of normal commercial shipping. Two naval craft have been acquired and the building of another craft is being negotiated to augment the present fleet of small ships used for local inter-island traffic there. As regards the Gilbert and Ellice Islands, two army craft have been bought to facilitate copra trading, and the possibility of acquiring a ship combining cargo and passenger carrying in a regular round-the-Islands schedule is now being considered.

    Food Crops
    Mr. Parkerasked the Secretary of State for the Colonies what steps are being taken to increase the production of the Solomon Islands Protectorate of alternative crops to copra, in particular rice and groundnuts; and what are the
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    results to date of technical surveys financed through the Colonal Development and Welfare Fund.
    Mr. Rees-Williams: The growing of food crops, including maize and tapioca, for local consumption is a first priority, and as the result of an official survey made this year, the Government has decided to launch a three-year demonstration scheme to grow groundnuts for export on a thousand acre farm in Guadalcanal, with rice and other crops included in a three year rotation. Peasant production of these crops is also being encouraged. Cocoa and bananas are alternative crops, but on agricultural and other grounds their introduction is not thought possible at present. Of the two technical surveys so far financed from C.D. and W. moneys, one was abandoned because of the war and the other, which is a survey of forest resources, is now in the report stage.

    New Hebrides (Vital Statistics)
    Mr. Parkerasked the Secretary of State for the Colonies what steps are being taken to collect adequate vital statistics in the New Hebrides; and whether information on the decline in the native population, particularly in Malekula, is sufficient to throw light on the causes and possible remedies of the decline.
    Mr. Rees-Williams: Owing to the size of the various districts of the Condominium, lack of transport and shortage of staff, it has only been possible to undertake the collection of vital statistics to some extent in the south and centre of the New Hebrides group. The 1910 figures of population are not considered reliable, but the probable decline in the native population of Malekula is attributable to severe mortality during recent years from epidemics of influenza and whooping cough. In the more settled areas the population is estimated to have increased during recent years.

  MALTA (FOOTBALL COUPONS)
  Brigadier Mackesonasked the Secretary of State for the Colonies how many letters believed to contain football coupons have been seized or delayed by the postal authorities in Malta during the last year.
  Mr. Rees-Williams: Six letter packets containing football coupons were detained on 30th August and eight more on 9th September. Football pools have been made illegal in Malta under the Public Lotto (Amendment) Ordinance, 1947, which was brought into force on 30th June last.
  Brigadier Mackeson: Is it not a most unfortunate thing that letters written by Service men to British subjects should be interfered with? Could he say on whose authority such action is taken?
  Mr. Rees-Williams: Under the provisions of the Lotto Ordinance.
  Lieut.-Commander Gurney Braithwaite: Do these coupons refer to matches in this country or to those of the Malta Football League which, I understand, is a flourishing institution?
  Mr. Rees-Williams: To football matches in this country, I understand.

  WAR DECORATIONS AND MEDALS
  Sir Ian Fraserasked the Prime Minister when decorations and medals will be issued to those who won them or are entitled to them as a result of the recent war.
  The Prime Minister (Mr. Attlee): Decorations and medals granted as individual awards for service in the war are being issued in accordance with the date of the Gazette announcements. The up-to-date addresses of many recipients are not available. Those who have not received the awards to which they are entitled should send a notification of their present address to the Central Chancery of the Orders of Knighthood, St. James's Palace, or to the Admiralty, the War Office or the Air Ministry, as the case may be. The issue of the Campaign Stars, Defence Medal and War Medal is not expected to begin until late in 1948, and no applications for these should be made at present.
  Sir I. Fraser: Is the right hon. Gentleman aware that many younger ex-Service men are most discouraged and disappointed at having to wait three years for medals; that many refrain from going to ex-Service men's gatherings because they feel at a disadvantage; and would not
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  a bit of colour and symbolism be an advantage in these dreary times?
  The Prime Minister: I quite agree, but there are practical difficulties in the production of this large quantity.

  MINISTRY OF ECONOMIC WARFARE (HISTORY)
  Mr. William Wellsasked the Prime Minister whether arrangements have been made to write a history of the Ministry of Economic Warfare; or whether he will give directions for such work to be put in hand and its results published.
  The Prime Minister: A history of the work of the Ministry of Economic Warfare is in preparation; but I cannot say at present whether, and, if so, when, it will be published.

  ROYAL WEDDING PROCESSION
  Mr. Shepherdasked the Prime Minister which Ministers have given instructions that civil servants on the Royal Wedding route are not to view the procession from the windows, and why.
  The Prime Minister: None, Sir, that I know of.

  ARMED FORCES

    Strength
    Sir Waldron Smithersasked the Minister of Defence whether, in the light of the existing international situation, he will issue a White Paper giving the present position of the Armed Forces of the Crown under, among other headings, numbers of trained men, length of service, recruits, and the number of ships in commission, of aeroplanes in categories, and of regiments of the British Army.
    The Minister of Defence (Mr. A. V. Alexander): No, Sir. Considerable information regarding the manpower strength of the Forces is already reported to the House at intervals. The recruiting figures are also notified every quarter. The extent to which further information about the Forces of the kind mentioned by the hon. Member can be published is at present under consideration in connection with the preparation of Service Estimates, and I cannot at the moment say to what extent this may be possible or expedient.
    Sir W. Smithers: While I appreciate the difficulty, in the public interest, in publishing these figures, can the right hon. Gentleman give the House an assurance that our Forces are adequate to resist aggression, whether it comes from east or west of the "Iron Curtain"?
    Mr. Alexander: I think I had better have longer notice of that one.

    Personnel, Burma
    Mr. A. R. W. Lowasked the Minister of Defence how many men of the Royal Navy, the Army and the Royal Air Force respectively, are at present serving in Burma; including a separate figure for men in Gurkha Regiments.
    Mr. Alexander: The total is 8,753. I will, with permission, circulate the details in the OFFICIAL REPORT. AS the hon. Member is aware, it is not the practice to reveal the strengths of the Forces in relation to areas. I see no reason for withholding the figures in this particular case, but I must ask hon. Members not to regard it as a precedent.
    Following are the figures:

    —

    Officers.

    Other Ranks.

    Total

    Royal Navy

    1

    —

    1

    British Army

    679

    6,111

    6,790

    Royal Air Force

    88

    831

    919

    Indian Army*

    440

    558

    998

    Gurkha Regiments*

    45

    —

    45

    1,253

    7,500

    8,753

    * British personnel only

    Recruitment
    Brigadier Headasked the Minister of Defence whether, bearing in mind recent figures for voluntary recruitment and the future target strengths for the three Services, he is satisfied that the present scheme for National Service is that best calculated economically to provide balanced and well prepared Armed Forces.
    Mr. Alexander: Yes, Sir.
    Brigadier Head: Does not the right hon. Gentleman consider the present targets and rates of recruitment in the Royal Navy and the Royal Air Force such that they will have a surplus of National Service men in future; and does he consider
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    that that surplus will be capable of absorption by the Army?
    Mr. Alexander: I think I have already told the House that those points of difficulty are being examined. I do not think we can debate them at Question time. I hope we shall have them properly discussed on the Estimates.
    Brigadier Head: Will the right hon. Gentleman bear in mind that the problem of the future, as far as he is concerned, is likely to be, "What shall we do with the conscript soldier?"
    Major Legge-Bourke: How is the right hon. Gentleman able to give the answer he has given to the original Question, in view of what the Secretary of State for War stated yesterday, namely, that the target for the voluntary recruitment for the Regular Army has not yet been decided upon?
    Mr. Alexander: I do not think that cuts across it.
    Mr. Emrys Hughes: Could the right hon. Gentleman tell us whether Field-Marshal Montgomery consulted him before he made his recent speech in Glasgow on this subject?
    Mr. Speaker: That does not arise out of this Question.
    Mr. Swinglerasked the Minister of Defence if he will estimate the required ratio of Regulars and National Service men in the Armed Forces to ensure adequate training for the Regular Forces and National Service intakes when the 1947 Act comes into operation.
    Mr. Alexander: The target strengths for the three Services, and the ratio of Regulars to National Service men in each case, are now being worked out as part of the long-term plan for providing properly balanced Forces, to which I referred during the Debate on the Address on 27th October. I cannot anticipate the decisions on particular aspects of the plan.

    Bureau of Current Affairs (Publications)
    Colonel Hutchisonasked the Minister of Defence what steps he is taking to keep political bias out of the publications of the Bureau of Current Affairs.
    Mr. Alexander: In June last, in agreement with the Service Ministers, I gave instructions that the Education Directorates of the Service Departments should, in planning courses of instruction in current affairs, ensure that all pamphlets and other material purchased centrally are examined with a view to excluding biased or tendentious statements of opinion. I have no reason to suppose that this instruction is not being applied in relation to publications of the Bureau of Current Affairs. As the hon. and gallant Member will be aware, the Bureau is an independent body and not under Government control.
    Mr. Scollan: Do the War Office and the Minister of Defence consider tendentious a pamphlet on Scottish Home Rule, with a political bias for it, and would they allow the soldiers to read it?
    Mr. Speaker: The hon. Member is merely asking for an expression of opinion and nothing else.
    Commander Noble: Has the right hon. Gentleman read Map Review No. 24, in which one paragraph, apparently to start an argument, begins with the words, "The Conservatives say"?
    Mr. Alexander: I certainly have not read that particular pamphlet. All these pamphlets are examined by the Service authorities to see if they are biased or tendentious. But I dare say that if one reads further on in this pamphlet it will be found that the other side is quite amply stated.
    Major Bruce: Would my right hon. Friend ensure that the facts in these pamphlets continue to be correctly stated, whether or not they agree with the theories of the Opposition?
    Colonel Dower: Will the right hon. Gentleman endeavour to ensure that these pamphlets confine themselves more to facts than to political opinion; and is he satisfied that these officers are, in fact, sufficiently politically educated to know what is required?
    Mr. Alexander: I cannot be responsible for individual officers' political opinions. I really cannot do that. This is a set of pamphlets prepared by an independent body, and each pamphlet is examined by the Service authorities to make sure that it is not biased. I issued those instructions
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    in June last specially, because of the matters which occurred last April which were brought to our attention in the House by hon. Members.

    Manpower Economy Committees
    Mr. Swinglerasked the Minister of Defence whether the Manpower Economy Committees in the Services are considering such questions as a unified medical organisation and a common transport pool; when they are expected to make recommendations; and if he will report their recommendations to Parliament.
    Mr. Alexander: Each of the Manpower Economy Committees is concentrating on the problems of its particular Service; they are not dealing with inter-Service questions such as those mentioned by my hon. Friend. I have asked for interim reports on their work, and when I receive them I will certainly consider what further information can be made available to the House.
    Mr. Swingler: Will the Minister direct these committees to consider these inter-Service questions, which are highly important from the point of view of economy in manpower?
    Mr. Alexander: I should not propose to extend the terms of reference of these particular committees. The other point is well under consideration.

    Deserters
    Air-Commodore Harveyasked the Minister of Defence how many deserters from the three Services are still at large who deserted prior to V-J Day; and how many have deserted since then and are still at large.
    Mr. Piratinasked the Minister of Defence the number of men in the three Services who deserted before V-J Day and how many since, confining the information to those men who have not yet been caught up or surrendered.
    Mr. Alexander: I regret that this information is not readily available, and could not be obtained without undue labour.
    Air-Commodore Harvey: Is not the right hon. Gentleman aware that a week or two ago he told me that if I put down a Question he would give me the answer:

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    and will he go into it, because it is an important matter about which we should know, as he indicated that the present rate of desertions was very high?
    Mr. Alexander: I said that I would see if the information was available, and, if so, would give it to the hon. and gallant Member. I would have done so with pleasure, but when I came to look into it with the officials I found there were a great number of centres from which quite separate figures would have to be obtained on almost every individual case, and I really cannot see that the labour is worth while
    Mr. Piratin: Would not the Minister look into the matter once again, in view of the fact that this point is so important? A number of prisoners deserted after V-J Day, and though what he said obviously could apply to those who deserted during the war, it could not apply with such strength to those who deserted since. Is not some clemency called for in those cases?
    Mr. Austin: Surely, on a question of fundamental importance such as this, we cannot assess the merits of the case and the injustice being done to these men unless we have the information made available to the House? May I ask you, Mr. Speaker, whether some means can be found of obtaining from the Minister of Defence the information for which we are asking?
    Air-Commodore Harvey: Is not the right hon. Gentleman aware that units spend a considerable amount of time filling in returns; and surely the Services must have this information? Will he not look into it and give the information to the House?
    Mr. Alexander: The hon. and gallant Member himself has senior Service experience, and he knows quite well that one often finds in a case like this one has to start on an entirely new basis of collecting statistics to obtain this particular information. This would involve examining every one of the 21,000 cases which are spread over the whole world. I consider that the work involved would not be justified.
    Mr. Gallacher: Will the Minister consider writing off these deserters as a bad
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    debt, giving them their ration books and trying to get them back into useful civilian life?
    Lieut.-Commander Braithwaite: Are not all desertions notified to the police, published in the "Police Gazette," and struck off as the man surrenders himself; and could not some information be obtained from that?
    Mr. Alexander: We should have to put somebody on to examining every one of those records on that basis.
    Mr. Hector Hughes: Is it not a fact that these men are practically outlawed at present; are they to be kept in this position permanently; and will the right hon. Gentleman devise some means of bringing them within the pale of productive work?
    Mr. Alexander: This argument goes on again and again at Question Time. I have answered it many times. We have made an offer and some thousands of men surrendered. I have given the reasons why we cannot go further. Any man who surrenders voluntarily now will have that taken into account.
    Lieut.-Colonel Kingsmill: Is not the right hon. Gentleman aware that from the card index system which was in force during the war—in which I was proud to share—it is possible to discover the number of absentees and deserters from any unit, certainly as far as the Army is concerned?
    Mr. Alexander: I have given the actual figures to hon. Members again and again. There is no difficulty about that.
    Air-Commodore Harvey: In view of the reluctance of the right hon. Gentleman to give this information, and of the importance of the matter, I give notice that I shall endeavour to raise this, as well as the other matter, on the Adjournment.

    Personnel, Japan (Families)
    commander Nobleasked the Minister of Defence how many families of Service personnel have been informed, since 1st October, that they will not now be able to join their husbands in Japan; when was this decision taken; and what warning was given to these families.
    Mr. Alexander: Eighteen families have been so informed since 1st October. Only nine of these had actually been warned to be ready to sail; they were given about

    385
    three weeks' notice of cancellation. This action was taken as a result of advice received on 10th October from Headquarters, British Commonwealth Occupation Forces, suggesting that the despatch of any further families to Japan should be deferred.
    Commander Noble: Is the Minister aware that in certain of these cases only one week elapsed between the warning of the actual date of departure and the notice that they would not proceed? As this must have been under consideration for some time, and in view of the small numbers involved, could not some preliminary warning have been given?
    Mr. Alexander: I could not answer that point of administrative detail. I hope that the hon. and gallant Member will ask the Question of the Service Department concerned.
    Mr. Assheton: Will the right hon. Gentleman use his influence with the Service Ministers to try to mitigate the hardship which has undoubtedly been suffered in these cases?
    Mr. Alexander indicated dissent.
    Vice-Admiral Taylor: As the Minister is aware, as far as the Navy are concerned, before a wife is allowed to join her husband on a foreign station, he must first obtain accommodation approved by his commander-in-chief. Will he see that in those cases where families were waiting to go out and where accommodation had already been obtained, the husbands are in no way financially embarrassed?
    Mr. Alexander: I do not know of any naval cases being involved in this instance.

  FOOD SUPPLIES

    Canned Foods (Stocks)
    Mr. Osborneasked the Minister of Food if he is aware that supplies of foods which were canned in 1943 are being distributed to the trade; if he is satisfied that unnecessary wastage does not result from keeping stocks so long; and what stock he has which is over three years old.
    The Parliamentary Secretary to the Ministry of Food (Dr. Edith Summerskill): The keeping qualities of canned foods vary with each commodity. A small proportion of the surplus Services stocks which have
    386
    been returned from overseas, and which, after inspection, were considered suitable for distribution, may have been packed in 1943, but the bulk were of later packing. I am satisfied that any stocks held at the present time will not suffer unnecessary wastage.
    Mr. Osborne: In view of the fact that these wartime dumps of food reserves are now being used to maintain our rations, will it mean further severe cuts in our food when they have been used up?
    Dr. Summerskill: That is another question.

    Canadian Gift Parcels
    Sir W. Smithersasked the Minister of Food whether he is satisfied that his White Paper, "Food Consumption Levels in U.K.", reveals a complete picture; and in view of the fact that numbers of people in Canada are generously sending food parcels for which His Majesty's Government is paying freight, and that the White Paper has created confusion in the minds of Canadians about the true position, if he will issue a further White Paper to make it clear whether the continued sending of food parcels is necessary.
    Dr. Summerskill: The answer to the first part of the Question is "Yes, Sir," but I do not think the report has created confusion abroad. It brings out clearly the decline in the consumption of meat, eggs, fats, sugar and fruit, which in one form or another are generally included in these most welcome food parcels.
    Sir W. Smithers: Whatever the hon. Lady may think, is she aware that it is a fact that a very wrong impression has been created among the kind people of Canada, and in view of the further cuts in food which have been recently announced, will she issue another White Paper so that the true facts may once more be put across to the Canadian people?
    Dr. Summerskill: The answer to both parts of the question is, "No, Sir."

    Catering Licence, Plymouth
    Mrs. Middletonasked the Minister of Food why the unanimous recommendation of the Plymouth food committee, that the catering licence held by Anthony Johnson (Photiades), "Imperial Restaurant" should be revoked, was

    387
    over-ruled by the regional food officer in spite of the numerous convictions for food offences that have been made against this firm.
    Dr. Summerskill: On full consideration of all the facts in the case, my right hon. Friend decided to temper justice with mercy and to give this caterer one further chance.
    Mrs. Middleton: Is the Minister aware that these continued prosecutions only lead to publicity and advertisement for this firm, inducing people with means to indulge themselves there and to break the rationing laws? Is she further aware that this is causing great exasperation among the housewives of Plymouth? What is the use of having local food committees if their advice is not accepted?
    Dr. Summerskill: The hon. Lady will agree that we must give these cases very serious consideration, because, where there is a question of revocation of a licence, it might mean depriving a man of his livelihood.
    Hon. Members: Why not?
    Dr. Summerskill: In this case we are giving the man the benefit of the doubt, because, if the hon. Lady will look into the case, she will find that this man only asked a neighbouring butcher to change supplies, and no money changed hands.
    Mrs. Middleton: Is the Minister aware that this is not the first time this firm has been prosecuted—I think it is the sixth time?
    Mr. Rankin: Will the Parliamentary Secretary consider the advisability, where licences are revoked in the case of hotels, of turning them into British Restaurants?
    Mr. Speaker: That is a general question. This Question applies only to Plymouth.

    Rations (Calories)
    Lieut.-Colonel Corbettasked the Minister of Food what is the calorific value of the rations available to the following categories of workers taking account of basic rations, extra rations, and canteen rations: miners, workers in factories having canteens, farm workers, and other working men.
    Dr. Summerskill: Assuming that a worker takes five main meals and five hot beverages a week at his canteen, the average calorie value of his basic rations, including points and sweets and the rations provided through the canteen, would be 3,370 calories a head daily for a miner, and 2,530 to 2,630 for an industrial worker, depending on the type of canteen available. Agricultural workers rations provide 2,600 calories a head daily. Other workers get amounts which depend on the nature of their work and the provision of canteens.
    Lieut.-Colonel Corbett: Does the Parliamentary Secretary realise that those who get the least food value are the men who work on the land, and particularly builders, labourers, lorry-drivers and mechanics, who do not get extra farm workers' rations and have no opportunity to go to canteens?
    Dr. Summerskill: No, Sir. I think the hon. and gallant Member is under a misapprehension. [HON. MEMBERS: "No."] Certainly. During certain seasonal activities, the agricultural worker gets an extra 1,170 calories a day, which makes 3,770 calories a day. On top of that, he gets unrationed foods. I would point out that the hon. and gallant Member has asked me only for the calorie value of rationed foods, and not for unrationed foods, which include such things as fish, all vegetables, pies and so on.
    Lieut.-Colonel Corbett: I beg to give notice that I shall raise this question on the Adjournment.
    Mr. Hurdasked the Minister of Food how much of the pre-war daily intake of 3,000 calories was provided by British agriculture; and to what extent he is looking to home sources to supply the reduced standard of 2,700 calories.
    Dr. Summerskill: Before the war, British agriculture supplied 30 per cent. of the daily calorie intake. Assuming the target acreages for 1948 are achieved, and with average yields, it is estimated that the proportion of the diet, in terms of calories, from home production over the whole year will be about 42 per cent.
    Mr. E. P. Smith: Is the hon. Lady aware that there are a great many "ifs" and "buts" about the Food Minister's estimates of food calories?

    Flour, Grimsby (Complaint)
    Mr. Osborneasked the Minister of Food why flour supplied to the Grimsby and District Bakery Trade Association members has been bad and fusty, so that bread made from it has not been fit for human consumption; and what explanation has been given to the complaint made by the Association, a copy of which has been sent to him.
    Dr. Summerskill: Wheat is sometimes slightly affected by being stowed as part cargo with timber. This shows itself when the flour is made into bread. Although such flour is not injurious to health, the consignment referred to is being withdrawn and a full explanation is being sent to the Grimsby and District Bakery Trade Association.
    Mr. Osborne: Does not the Minister think it is a real scandal that fusty flour should be sent to Grimsby to be made into bread, which the bakers themselves say is not fit for human consumption? Will she see that it does not happen again—at least in that district?

    Roumanian Maize (Surplus)
    Mr. Yorkasked the Minister of Food what were the dates of the visits to Roumania of his officials; when they discovered an export surplus of maize; whether he has yet been officially informed of this surplus; what price is being asked for the maize; and whether he will ensure that methods and delivery dates will be included in any contract.
    Dr. Summerskill: A Ministry of Food representative visited Roumania between 10th and 28th September. He discovered an exportable surplus of maize during that visit. I have not yet received any official offer or other intimation from the Roumanian Government about this surplus. No price has yet been discussed, and the answer to the last part of the Question is, "Certainly."
    Mr. York: Is the hon. Lady aware that a Mr. Pinnock from her Department was in Roumania on 15th September. Can she say whether he had any instructions to make investigations into anything except human food?
    Dr. Summerskill: Certainly. Mr. Pinnock was asked to make full investigations, and as we need maize very badly, he was asked to inquire about surpluses.
    Mr. York: Why did it take the Ministry of Food two months to discover that there was a surplus?
    Dr. Summerskill: The hon. Member is not aware of the true facts. We are waiting for Roumania to tell us what commodities they require from this country, and on 26th October we made further representations, but we have still not heard from them.
    Mr. York: Is the hon. Lady aware that last week she gave me the information that the Ministry of Food were not aware of this surplus?

ORDERS OF THE DAY

  WAYS AND MEANS
  Considered in Committee.
  [Major MILNER in the Chair]

  FINANCIAL STATEMENT
  3.32 p.m.
  The Chancellor of the Exchequer (Mr. Dalton): This is the second time in three years that I have to present to the Committee a Supplementary Budget. My reason today is that we must strengthen still further, and without delay, our budgetary defences against inflation. This need arises from the decisions which His Majesty's Government have taken, and are executing, to increase exports and reduce imports, in order to narrow, as swiftly as we can, the very wide and dangerous gap in our overseas balance of payments, particularly with the Western Hemisphere. The effect of these decisions must be, if taken alone and unsupported by other measures, to increase the inflationary pressure by reducing the supply of goods available in the home market without, at the same time, reducing the total of purchasing power. To help to counteract this is the purpose of the proposals which I am making today.

  REVENUE PROSPECTS
  The Chancellor of the Exchequer (Mr. Dalton): In April last, I estimated the revenue for this financial year at £3,451 million and the expenditure at £3,181 million, with a surplus for the year of £270 million. During the passage of the Finance Bill, I gave further tax reliefs and concessions which reduced this surplus to £258 million. In the first 32 weeks of this financial year, up to the end of last week, the revenue has been £2,013 million and expenditure £1,760 million, giving a surplus, up to date, of £253 million—in other words, within £5 million of what I estimated for the full year. It is a very long while in our financial annals, since a surplus of this size could be shown before the last, and, as the Committee know, most productive quarter of the financial year. It is in the last quarter of the financial year that Income Tax and other revenue flows in most copiously. Indeed, having undertaken a little research into this matter, I find there is no precedent for so large a surplus at this time of the year.
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  It is, of course, too early yet to say much about the final results for the year as a whole; but I am prepared to say that the prospects are reasonably promising. Broadly speaking, tax revenue is coming in well up to our expectations, and non-tax revenue is coming in a good deal better than we estimated. For instance, sales of surplus war stores have realised £126 million up to date, and have, therefore, exceeded already by £31 million, the estimate for the whole 12 months.
  On the expenditure side, Supplementary Estimates have already been presented for £9·7 million, the largest item being £5 million for the Ministry of Agriculture, to help to make good, as the Committee unanimously decided was desirable, the agricultural disasters earlier in the year. The Ministry of Food, not for the first time, are having to pay higher prices than we estimated. World shortages and an almost world-wide inflation are the cause of this. On balance, I expect that the Civil Votes as a whole will show some excess over the Estimates for the year, but, as against this, I estimate that there will be some saving this year on Defence and Supply.

  NATIONAL SAVINGS
  The Chancellor of the Exchequer (Mr. Dalton): I turn aside, for a moment, to consideration of the question of national savings and the gilt-edged market. As the Committee know from the published weekly returns, the net figures of national savings since last April are very disappointing indeed. New savings are not as good as they ought to be, and withdrawals have been much too heavy. I hope that, in the next few months, as a result of the special campaign now being undertaken by the Savings Movement, under the leadership of Sir Harold Mackintosh, we shall see much better results. Voluntary saving, after all, is the most effective and least painful of all methods of relieving inflationary pressure. If we had enough savings we should need fewer other expedients. Not only to buy, but to hold, as a firm investment, Savings Certificates and Defence Bonds, and to build up and maintain deposits in the Post Office and Trustee Savings Banks, is both a civic duty and an act of enlightened self-interest.
  This is no less true of other Government securities. I have been glad to see

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  the recent improvement in the gilt-edged market, and I hope all Members have equally been glad to see it. I hope that this improvement will continue; there is no good reason why it should not. 1st March next is the earliest date for repayment of £300 million of 3 per cent. Conversion Stock. On or before 1st December, I shall make an announcement as to how this stock will be dealt with.

  INFLATIONARY PRESSURE
  The Chancellor of the Exchequer (Mr. Dalton): Too much money running after too few goods is the unavoidable sequel—in every country seriously affected, not only our own—of a major war such as we have experienced. In many countries today there is a break-away inflation, apparently out of control; but the measures which we have taken, including our controls, both physical and financial, have prevented a break-away inflation in this country. There have even been some signs that the inflationary pressure here has been relaxed in recent months. Currency notes in circulation have fallen from the August peak of £1,421 million to a figure of £1,364 million last week. This is more than double the fall in the corresponding period last year. This year, I hope that we may not require any increase in the fiduciary issue to cover the Christmas peak, and that we may be able before long to reduce the fiduciary limit for the first time since 1939. From this and other evidence, some financial writers—and I read them all, but not all with agreement—have recently drawn the conclusion that we were at the beginning of a new phase of comparative monetary stability. But however this may be or may have been some weeks ago, we now face a new situation.
  We must now deal with the new inflationary pressure, which must inevitably be generated by the action we are taking in order to close, from both sides at once, the gap in our balance of payments. Nobody, not even the most skilful statistician, can measure this inflationary pressure, whether old or new, with any close precision. Many estimates are made. There are wide discrepancies between them. I am not, this afternoon, going to put any precise figure upon the inflationary gap which we have to close. But the line of our counter-attack, in so far as this runs through budgetary policy, is very simple indeed. We must reduce the total expenditure, and we must in-
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  crease the total revenue. If there is a heavier inflationary pressure, we need a larger Budget surplus than would otherwise have had to be provided; just as if there were a heavy deflationary pressure, we should require a large budgetary deficit to counter it.

  REDUCTION IN EXPENDITURE
  I will deal first with expenditure, and then with revenue. As to expenditure, it is, of course, too soon—much too soon—to attempt any close forecast of expenditure in the next financial year, which does not begin until the end of March. The time for that lies some months hence. This is the season when the estimates of the various Departments are being prepared for submission to and discussion with the Treasury. That process is going on now. Some of the Departmental Estimates are being received; others have not yet been put forward in detail. But some things can be said now, with reasonable assurance, regarding the next financial year. The reduction of the Armed Forces, which has lately been announced, and the speeding up of the releases should certainly mean a substantial economy in Defence expenditure next year.
  Further, I am glad to be able to tell the Committee that, although the new measures of social security for which we have been preparing during the year—many of which will come into operation in July next—have required new staff, some of them by transfer from other organisations, yet, in spite of this, the total number of civil servants on 1st October last was 32,000 fewer than on 1st January. Also, we may expect a big run-off, in terms of expenditure, on miscellaneous civil items, totalling £320 million, which were shown in last April's Financial Statement under the heading of "Terminal or Temporary Services arising out of the War." On the other hand, we must remember that there are large terminal or non-recurrent items of revenue as well as of expenditure.
  Moreover, as my right hon. Friend the Minister for Economic Affairs has announced, there will be a cut of the order of £200 million a year in the total capital investment programme of the country. All, of this cut, by switching resources from capital construction, especially on long-term programmes, to the production of

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  goods for immediate use, whether at home or for export, will help us either to speed up the export drive or to ease the inflationary pressure by maintaining supplies in the home market. All of it will be serviceable as a counter-inflationary movement; but only a part of it, of course, will actually be reflected in reduced budgetary expenditure by the Government or by local authorities.

  FOOD SUBSIDIES
  I now turn to the food subsidies—an important element in expenditure, on which much has been written and spoken, by persons other than myself, for the last month or two. Last April, I said in my Budget speech that I estimated the total of the food subsidies at £392 million, and that I hoped to keep the actual cost to the taxpayer this year within that estimate. The next day, the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson), speaking from the front Opposition Bench, with the evident approval, as I remember, of hon. Members opposite, said this about the food subsidies:
  "Our national economy will never be on a satisfactory basis until they have been reduced to negligible proportions."—[OFFICIAL REPORT, 16th April, 1947; Vol. 436, c. 202.]
  That is still the view of hon. Members opposite. That is the official Conservative opinion. I gather that is the general view. [Interruption.] I want to know how much support these independent Members on the Front Opposition Bench have got. Returning to the same subject, on 7th August, the same right hon. Gentleman declared that it was absolutely essential that I should make a determined effort to deal with what he called the "running sore of the food subsidies," and he added that these subsidies had created—and this is his phrase—a situation
  "as unsound and debilitating as if, in fact, we were all living on charity."—[OFFICIAL REPORT, 7th August, 1947; Vol. 441, c. 1703.]
  That was his view and the view of hon. Gentlemen opposite. I have noticed that, since then, some newspapers have been running quite a sustained agitation in favour of the withdrawal of these subsidies, or, at least, of a very large reduction in their total. We on this side of the House do not take the same view of these subsidies as the right hon. Gentleman and his supporters.
  We do not regard the food subsidies as being in themselves a waste of money, or a harmful distortion of our economy, or an insidious and debilitating form of charity to those who receive them. On the contrary, in a society such as ours, still disfigured by large inequalities of wealth and of need, these subsidies act, as it were, as a supplementary social service, as a stabiliser and as an equalising and tranquillising factor in our affairs. On this year's estimate of £382 million, they are worth no less than £8 per head of our population—as I said last week in reply to a Question—or 12s. 6d. a week in aid of the household budget of a family of four persons. The food subsidies have played an indispensable part in smoothing our transition from war to peace, which is not yet complete. Their complete abolition or drastic reduction at this time cannot be contemplated.
  But, like all other good things, we have to consider how much we can afford to spend on them from time to time, taking everything into account in our national finances. The cost of the food subsidies rose from £99 million in 1941–42, the first full year in which they were paid, to £198 million in 1944–45. My predecessor at the Treasury, in his last year of office, was spending on food subsidies double the first full year's expenditure of Sir Kingsley Wood when he was Chancellor. In my period of office I have not quite doubled the expenditure of my predecessor in his last year. The cost rose to £266 million in 1945–46, to £345 million in 1946–47, and to £392 million this year. I intend to find that sum this year, but, in present conditions, it would be impossible to justify a further increase. If we were to let this upward drift continue unchecked, it could pull any Budget out of balance. And, as I have said already, it is imperative to have, next year, not only a balanced Budget, but a large Budget surplus. We cannot undertake indefinite and unlimited commitments, either for food subsidies or for any other item of public expenditure. The thing must be planned and accurately estimated. We cannot freeze prices here, particularly the price of imports, regardless of what is happening to prices outside this island. To some extent we can insulate, and have insulated, ourselves from the outside world and the effect of what is going on there. We will continue to try to do so; but we cannot do so to the complete

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  extent which I have indicated, and, for this reason amongst others, it is clearly impossible to decide at present what should be our expenditure on food subsidies next year.
  In our administration of the subsidies the prices of particular articles and the rates of subsidy on each have never been regarded as unchangeable. They have, indeed, been constantly changed by ministerial orders from the Ministers concerned. We must maintain this discretion and flexibility within the agreed total expenditure. We must make the best use of that agreed total in the interests of those concerned. There is also, as I said last April in my Budget speech, and as past practice shows, much to be said for reducing the number of separate commodities on which price subsidies are paid, and concentrating the agreed expenditure, in larger amounts than would otherwise be possible, upon a small number of the most essential foodstuffs. That line of policy we will continue to pursue.
  I would add that not all food subsidies are direct price subsidies. The total of £392 million of which I have spoken includes £33 million for the subsidy on animal feedingstuffs; £18 million for acreage payments to farmers in respect of various crops; and £8 million for subsidy on fertilisers. In addition, £38 million are being paid this year for milk and other vitamin subsidies for nursing mothers, infants and school children. This last payment is an integral and most valuable part of our social welfare service. I hope that there will be no dissent whatever from the view that, whatever else is modified, that expenditure should certainly not be modified in any degree.
  I have been speaking so far about food subsidies. The subsidies on leather, cotton and wool, which come to £33 million, this year, will disappear next year. My right hon. Friend the President of the Board of Trade has already opened discussions with some of the industries and trades concerned, to ensure increased efficiency in these industries, tighter price control than now exists, and lower costs, particularly in distribution. In any case, whatever may be the outcome of these discussions with the trades concerned, it will be some months before any goods made of materials no longer subsidised appear in the shops.
  Looking at our national expenditure as a whole, there will, of course, be some increases next year, following introduction of the National Health Service and the new block grant. There will be an increase in expenditure on education, following the raising of the school leaving age, and possibly in other items. But I am working for a solid reduction in the total, a reduction so distributed between the items as to avoid damage to essential social interests. The Committee will also appreciate that some increase in national expenditure next year will be balanced by equal reductions in the expenditure from local rates, reductions which will lift the heaviest burdens from the backs of those least able to bear them, particularly in the poorer industrial areas and in the rural areas, and will place those burdens on the broad back of the nation as a whole. Next year there will be reductions in the rates all over the country, and the biggest reductions will come where the rates now are highest and the ratepayers poorest.
  So much for expenditure. Now I will turn to the revenue, and to the increases in taxation which I propose. It is past four o'clock and the Stock Exchange will soon be shut.
  Mr. Osborne: It closes at three o'clock.
  Mr. Dalton: Then it is already closed, and it is safe for me to proceed with this part of what I have to say.

  INCREASES IN REVENUE
  In the present emergency, I think the Committee will agree that tax increases in this interim Budget should be simple, straightforward, and capable of being administered with the least expenditure of manpower. I have, therefore, ruled out for this Budget, but not necessarily for future Budgets, all elaborate schemes, of whatever kind and however attractive—and some have been suggested to me which might merit that description and might therefore deserve further investigation—which would now involve highly detailed preparation, serious administrative complexities, additions to the staff of the Inland Revenue and the Customs and Excise, or long Debates on complicated clauses of a Finance Bill. Nothing of that sort I have in mind to propose today. Any large changes in the tax structure must wait until the Spring. My aim on this occasion is a comparatively

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  short and simple Finance Bill, and the tax changes which I shall now propose have been framed accordingly. They are designed to bring in a considerable new revenue but they also form, I hope, a balanced whole, not pressing with undue weight on anything which can accurately be described, in these days of austerity, as a prime necessity of life.
  I begin with the Inland Revenue. I do not propose today any change in the rates of Income Tax, either up or down. In each of my three previous Budgets I have given Income Tax reliefs of a varied character—relief in the standard rate, in the reduced rate, and in the personal allowances, including earned income relief, the child allowance, the special relief for married women's earnings, and the allowance for dependent relatives. In making those reductions I have been anxious to relieve large numbers on whom Income Tax pressed heavily, and also to increase incentive. I should like to go still further in the pursuit of both these aims, and, between now and next April, I shall examine most carefully various alternative methods of readjusting, and lightening in some respects, the taxpayer's burden. I undertake that this shall be closely studied between now and next April. On the other hand, it is essential at this time to safeguard the revenue against being eaten away, with little gain to incentive, by indiscriminate tax reductions.

  INTEREST ON TAX ARREARS
  But whatever has been done already to lighten the burden of Income Tax, and whatever more it may be possible to do in the future, prompt payment of whatever tax is due is both the duty of good citizens and a condition of successful financial administration. I am concerned at the large amount of tax arrears which are outstanding. I am glad that the Public Accounts Committee, in a recent report, have drawn attention to this question. They have observed that the total arrears of Income Tax, Surtax and Excess Profits Tax outstanding at the end of 1945–46 were about £780 million. There has been some misunderstanding of this figure, and I am anxious to correct it. This figure represents not only arrears of tax in the proper sense of the term, namely tax which is admittedly due but has not yet been paid, but includes also
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  a considerable sum in respect of tax assessments which are still, for one reason or another, not yet settled—some of which may lead to litigation in the courts and so on. They are included in the total. Much of the total of £780 million—this point has been made quite clear in evidence before the Public Accounts Committee, and I hope that hon. Members will read it, in addition to the Reports, which are necessarily rather summary accounts of the position—will turn out in the end, for a variety of reasons, not to be payable.
  None the less, after taking all that into account, the total of genuine arrears is large, much larger than it ought to be. I, therefore, urge all taxpayers who owe money to the Exchequer to pay up now, and so to help their country at this critical time. But, as we are often told, admonition alone is not enough. I, therefore, seek to reinforce admonition by incentive. I propose that, as from 1st January, 1948, arrears of Income Tax under Schedule D, and also of Surtax, Profits Tax and Excess Profits Tax, shall bear interest at the rate of 3 per cent. This interest will not be allowed as a deduction in computing income or profits. It will be charged upon all genuine arrears, in the sense which I have described, where the tax due exceeds £1,000—we are not looking for ha'pence—and where the arrears have been outstanding for more than three months from the date when the tax fell due. On tax not paid within this period of three months, interest will be charged as from the due date, or from 1st January, 1948, whichever is the later.
  It is difficult to make any close estimate either of the yield of this new interest charge, or, more important still, of its effectiveness in stimulating quicker payment. But I hope to get some £15 million, and perhaps a bit more, through accelerated collection in the last quarter of this financial year. There are precedents for such an interest charge, particularly in regard to Death Duties. Those precedents date back—for those who are conservatively-minded—to 1894 for the Estate Duty and to 1868 for the Legacy and Succession Duties. I am now proposing to give them a wider extension.

  PROFITS TAX
  I turn now to the Profits Tax. I have noticed, with regret, a continuing and

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  persistent inclination on the part of many concerns to declare increased dividends. This is contrary to advice which I have ventured to offer from time to time; it is inflationary, because it puts more purchasing power into circulation; and it is very disturbing to industrial relations. Moreover, profits as a whole are still running at a very high level. I, therefore, propose to double the Profits Tax on all profits made as from 1st January, 1947, thus raising the rate from 12½ per cent. to 25 per cent. on distributed profits and from 5 per cent. to 10 per cent. on undistributed profits. This will increase the yield of the Profits Tax by £85 million in a full year, bringing its yield next year to just over £170 million. The net gain to the Revenue next year, allowing for offset of Income Tax at the present standard rate, is £47 million. The additional net yield this year is small—it will amount to about £2 million.
  I propose one other change in the field of Inland Revenue. At present, expenditure on advertisement is allowed as an expense against business profits, both for Income Tax under Schedule D and for Profits Tax. But in these days much of the advertising which goes on is a serious waste of money, of labour and of material. There is certainly scope here for economy in the national interest. I, therefore, propose that, for the future, only one half, instead of the whole, of advertisement expenditure should rank as an allowable expense. There will be certain exemptions in the Finance Bill, when we come to it—where we shall naturally, as our custom is, set matters out in greater detail—including advertisement for the export trade, which obviously stands on a special footing, and advertisement in trade and technical journals. I estimate the additional revenue from this change, which will operate at once, at £10 million in a full year, though nothing this year.

  PURCHASE TAX
  Now I turn to Customs and Excise, and in the first instance to the Purchase Tax. Let us begin by taking a backward glance at the changes that have been brought about in this tax since its introduction. A very wide range of goods, including all the prime necessities of life, are already completely free of Purchase Tax. Many were in the original list of exemptions when Purchase Tax was first introduced,
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  and from year to year since then the free list has been extended. The original free list, before this Government came into office, included foodstuffs, industrial materials and machinery, all utility goods—I emphasise this; they are all free of Purchase Tax except the so-called utility fur coats, of doubtful utility—books, cameras for cinemas, household brooms and brushes, and much else. All these articles have been free of Purchase Tax from the beginning—in the case of the utility goods, from their original institution. I recall discussions I had, when I was President of the Board of Trade in the Coalition Government, with the right hon. Gentleman the Member for the Scottish Universities and his predecessor on this matter, and the accepted view was then that utility goods should, by definition, be exempted from Purchase Tax. That has always been the practice, with the one exception I have mentioned.
  Since I have held my present office I have, with the consent and agreement of the Committee—and indeed I have been pressed to go further than I have done—extended this free list considerably, and have exempted from the Purchase Tax pots and pans, as they are colloquially summarised, crockery, kitchen cupboards, cooking stoves, refrigerators, electric irons and kettles—we had quite a battle about that with some hon. Ladies—dustbins and buckets, typewriters and other office machinery—the hon. Member for Bath (Mr. I. J. Pitman) was very keen on that and we agreed to it—fuel economisers—I was anxious to help the Minister of Fuel and Power—wireless sets for the blind, equipment for children's playgrounds, and many other items which had been requested from different parts of the Committee and different Departments of State. [An HON. MEMBER: "And wigs."] And wigs.
  We have given a very wide extension to this free list. It has been right to do that, and I do not now propose to bring back under Purchase Tax any article which is on the exempt list. I have been advised to bring a lot back, but that is one of the bits of advice I have rejected. I am bringing none back. Nor do I propose today to move any article subject to Purchase Tax from one group to another within the ranges of taxable articles. We have, in fact, over the last few years, moved quite a number of articles from

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  one group to another, and generally, as the Committee will recall, in a downward direction; some upward, but mostly down; but I do not now propose any movement of any particular article from one group to another. Such a transfer could be made, if necessary, in exceptional cases, by a Treasury Order under Section 20 of the Finance (No. 2) Act, 1940.
  I hope that the Committee will agree that this interim Budget—it is only an interim Budget; there will be another in a few months' time—is not the occasion for that detailed and most interesting examination, item by item, of the many articles liable to different rates of Purchase Tax. I would hope that we could postpone any such discussion until the main Budget in the spring. At present the Purchase Tax serves three separate purposes. It brings in revenue; it absorbs inflationary purchasing power, and therefore assists the main purpose we have in mind; and it strengthens the export drive, since it does not fall on goods which are exported.
  I propose, leaving the list of items within each taxable class unchanged, to increase the rates of tax as follows: the 16⅔ per cent. rate will be increased to 33⅓ per cent.; the 33⅓ per cent. rate to 50 per cent.; the 66⅔ per cent. rate to 75 per cent.; and the 100 per cent. rate to 125 per cent. These changes will apply to goods delivered by registered manufacturers and traders from tomorrow. They will produce an additional £80 million in a full year and £10 million this year. As regards motor cars, which we discussed at great length on the last Budget, I propose to retain the existing rates of tax on the two classes provided by the dividing line of £1,000 ex-tax, as was agreed, after the long debate, last summer.

  TOBACCO
  I must now turn to a different topic, and once again address a few words to the Committee on the subject of tobacco. When I increased the Tobacco Duty in the April Budget I asked for a reduction of 25 per cent. in total consumption and I appealed—I quote the words I then used:
  "… to all our fellow-citizens to regard this particular economy as a minimum, and as a patriotic duty at this time."—[OFFICIAL REPORT, 15th April. 1947; Vol. 436, c. 88.]
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  I dwelt in particular on the need to save dollars. I am sorry to say that this reduction has not been achieved. After a sharp drop in the first few months, consumption of tobacco has again been steadily rising, and it has now reached a figure of more than 80 per cent. of the pre-Budget level. I said in April—I am quoting my speech again:
  "… we are smoking much more, as a nation, than we can afford."—[OFFICIAL REPORT, 15th April, 1947; Vol. 436, c. 87.]
  This is even more true now than when I first said it. The shortage of dollars has become much more serious since then, and, as the Committee know, we have now stopped the purchase of United States tobacco altogether. Nor can we tell how long it will be before we can afford to start buying in the United States again. No one can tell how long it will be. Food and essential raw materials must come first, before tobacco, in the priorities of our import programme.
  Therefore, although we shall continue to buy what tobacco we can from the sterling area and from soft currency countries outside the sterling area, and although, for the moment, we have substantial stocks, yet, unless we now reduce our rate of smoking, we shall be smoking away our stocks, and rapidly approaching a very extreme shortage of tobacco. I am told that one third of the adult population over 18 years of age do not smoke at all; but it is clear that the other two thirds—male and female—are still smoking too much. In the mass, we are reluctant, even with the discouragement of the higher prices following my last Budget, to look ahead and to modify our habits in this respect, while we still have something in hand in the way of tobacco stocks. I must continue to watch the figures very carefully; but since it is only just over six months since I increased the duty pretty substantially, I do not propose, in this Budget, to raise it again.
  Mr. Gallacher: A hearty vote of thanks.
  Mr. Dalton: I think the Revenue has been benefiting over the last week or two, from some degree of uncertainty as to what the intentions of the Government on this subject might be.

  ALCOHOLIC DRINKS
  As I have resisted the temptation to put something more on smokes, I now fall

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  back on drink. The taxes on alcohol have remained substantially unchanged since 1943. I now propose to increase them as follows. The duties on whisky, rum and other spirits will be raised by £1 13s. 4d. a proof gallon. This means that the price of a bottle of whisky of standard brand bought outside the black market will go up to about 30s.
  Mr. Gallacher: Is that all.
  Mr. Kirkwood: Not half enough.
  Mr. Dalton: On wines as on spirits, the Empire preferences will remain unchanged. The duties on heavy wines will be raised by 10s. a gallon. This will mean an increase of about Is. 8d. a bottle. The duties on light wines will go up by 5s. a gallon—that is, an average increase of about 10d. a bottle. The duties on British wines will rise correspondingly, by 10s. a gallon on the heavy, and 5s. on the lighter, types.
  Then we come to beer. I propose to raise the duties on beer by the equivalent of 1d. a pint on beer of average latter-day strength, and proportionately more on stronger brews—if any there still be or, if you prefer to put it the other way, on beer which is less weak—on beer which, to quote my hon. Friend the hon. Member for Consett (Mr. Glanville), is just not too weak to run out of the glass. The rates of duty will be raised by 19s. 1½d. a barrel on beer of a gravity of 1,027 degrees, and 8½ d. a barrel for each additional degree. In fixing these rates I have had in mind the many difficulties which the retailer has to overcome in maintaining his standard of service to the public in face of rising costs and other handicaps. On the average, the proposal I am making will enable the retailer's margin to be increased by about a halfpenny a gallon or Is. 4d. a barrel. These changes in respect of spirits, wine and beer will come into effect from tomorrow, and should produce an additional £56 million in a full year and £18 million this year.

  BETTING DUTY (DOG TOTES AND FOOTBALL POOLS)
  I pass to another topic. Since my Budget speech last April I have had second thoughts about betting. I then gave reasons, which still seem to me convincing, against any attempt to impose an all-round tax on betting. But I made it
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  clear that I had reached this conclusion regretfully, and, since then, the need to fortify the revenue and to prevent misuse of our resources has become more urgent. Since 1926 when the present Leader of the Opposition experimented, unsuccessfully, as he himself admitted, with a general betting tax, there has been a great increase in the turnover of the totes, particularly the dog totes. The amount staked in this way now represents a large proportion of the total expenditure on betting; and, fortunately, the difficulties which, as I explained last April, stand in the way of an attempt to tax all forms of betting, do not apply here. I, therefore, propose to levy a tax, at the rate of 10 per cent., on all money wagered with the dog totes. The proprietors will be required to deduct this 10 per cent. from the total sum staked, and to hand it over to the Customs and Excise.
  Mr. Piratin: What about the Stock Exchange?
  Mr. Dalton: Perhaps I may take the thing in my own order. I do not propose to levy a duty of this kind on the horse totes—[HON. MEMBERS: "Why?"] Wait, and I will tell you—which operate on quite a different basis. They are owned by the Racecourse Betting Control Board and are not run as the dog totes are, for private profit—a very important distinction. The amount, about 10 per cent., which they already deduct from the sums staked, is devoted, after payment of expenses, to the improvement of horse breeding; and I am advised by my right hon. Friend the Minister of Agriculture that good horses are good exports.
  Nor am I going after the bookies on this occasion. It was, I think, the bookies that the present Leader of the Opposition had in mind when, in repealing the 1926 Betting Duty in 1929, he spoke, in words that have often been quoted before, of:
  "The volatile and elusive character of the betting population, and the precarious conditions in which they disport themselves."—[OFFICIAL REPORT, 15th April, 1929; Vol. 227, C. 49.]
  As I said last April, if we now tried to collect a tax on bets placed with bookmakers, it would be necessary to divert a number of Excise officers from the collection of other taxes, and the ordinary Customs and Excise revenue, which is relatively easy to collect and to control,

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  would suffer. Alternatively, it would be necessary to recruit and train new staff, and to take on more civil servants in order to collect a small sum from the bookies would not be worth while. Too few tax collectors chasing too many bookmakers would only be, I think, a new version of the inflationary merry-go-round, and I am not going to start it up.
  On the other hand, the football pools which have also grown since 1926 to the most formidable dimensions, are now absorbing far too much labour, paper and postage. I have decided, therefore, to bring them also within the field of the new betting duty. The amounts staked with these pools, including pool betting on other events—
  Air-Commodore Harvey: And a change of Government.
  Mr. Dalton: Yes, that comes in too—will likewise be subject to a tax of 10 per cent. to be deducted and paid over to the Exchequer by the pool proprietors. This new tax on betting will come into operation on the 4th January, 1948, and, though the yield is not easy to forecast, I hope to get from this new source of revenue about £15 million in a full year and £3 million in the remainder of this year.
  Mr. Marlowe: Why not tomorrow?
  Mr. Dalton: I am glad to explain to the hon. and learned Member. The Provisional Collection of Taxes Act—the only authority on which taxes can be collected from the day after the Budget—cannot be made to apply to entirely new taxes. The Betting Tax will come into operation on the date I have indicated because it cannot come into operation until after the Finance Bill has become law. That is the only reason for the delay.
  In the total these changes in taxation will bring in £208 million in a full year and £48 million in what remains of this financial year. Not only will they bring in this substantial revenue, and so diminish, to this extent, the inflationary pressure, but they will discourage various forms of expenditure which, on their present scale, we cannot afford in this time of emergency. They will, I believe, impose no serious hardship upon any citizen, and they will be accepted, I hope, by all those who have to pay, as a contribution, which
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  they will not grudge, towards seeing this old country through its present troubles.
  4.30 p.m.
  The Chairman (Major Milner): In accordance with the Standing Order, it is now my duty to put to the Committee all the Budget Resolutions with the exception of the last. I will pause for a moment to enable copies of the Resolutions to be passed round the Committee. I assume it will be for the general convenience that I should just read the number and the heading of each Resolution.
  I. Beer (Excise).
  Resolved:
  "That, as from the thirteenth day of November, nineteen hundred and forty-seven, the rates of the duty of excise charged in respect of beer under Section one of the Finance (No. 2) Act, 1939, shall be increased by adding—

  (a) nineteen shillings and a penny halfpenny to the sums of seven pounds and sevenpence halfpenny specified in Part I of the First Schedule to the Finance Act, 1944; and

  (b) eightpence halfpenny to the sum of five shillings and twopence halfpenny so specified;

  and, in the case of beer in respect of which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty at the rates increased as aforesaid has been paid, the excise drawback allowed under the said Section one shall be allowed at rates increased by adding—

  (i) nineteen shillings and a penny halfpenny to the sums of seven pounds and ninepence halfpenny specified in Part II of the said First Schedule; and

  (ii) eightpence halfpenny to the sum of five shillings and twopence halfpenny so specified.

  And it is hereby specified that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913"
  2. Beer (Customs).
  Resolved:
  "That, as from the thirteenth day of November, nineteen hundred and forty-seven, the rates of the duty of customs charged in respect of beer under Section one of the Finance (No. 2) Act, 1939, shall be increased by adding—

  (a) nineteen shillings and a penny halfpenny to the sums of seven pounds one shilling and a halfpenny specified in Part III of the First Schedule to the Finance Act, 1944, and the sums of eight pounds one shilling and a halfpenny specified in Part IV of that Schedule; and

  (b) eightpence halfpenny to the sums of five shillings and twopence halfpenny specified in those parts of that Schedule;

  and in the case of beer in respect of which it is shown to the satisfaction of the Commissioners of Customs and Excise that duty at

  409
  the rates increased as aforesaid has been paid, the customs drawback allowed under the said Section one shall be allowed at rates increased by adding—

  (i) nineteen shillings and a penny halfpenny to the sums of seven pounds and ninepence halfpenny specified in Part V of the said First Schedule and the sums of eight pounds and ninepence halfpenny specified in Part VI of that Schedule; and

  (ii) eightpence halfpenny to the sums of five shillings and twopence halfpenny specified in those Parts of that Schedule.

  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
  3. Spirits (Excise)
  Resolved:
  "That, as from the thirteenth day of November, nineteen hundred and forty-seven, the rate of the duty of excise charged on spirits by Section three of the Finance Act, 1920, in addition to the duties specified in Part III of

  TABLE

  Description of Spirits.

  Preferential rates.

  Full rates.

  In cask.

  In bottle.

  In cask.

  In bottle.

  £

  s.

  d.

  £

  s.

  d.

  £

  s.

  d.

  £

  s

  d.

  For every gallon computed at proof of—

  Brandy or rum

  9

  11

  2

  9

  12

  2

  9

  13

  8

  9

  14

  8

  Imitation rum or geneva

  9

  11

  3

  9

  12

  3

  9

  13

  9

  9

  14

  9

  Unsweetened spirits other than those already enumerated

  9

  11

  3

  9

  11

  3

  9

  13

  9

  9

  13

  9

  For every gallon of perfumed spirits

  12

  12

  0

  12

  13

  0

  12

  l6

  0

  12

  17

  0

  For every gallon of liqueurs cordials mixtures and other preparations in bottle entered in such manner as to indicate that the strength is not to be tested

  —

  12

  18

  10

  —

  13

  2

  2

  For every gallon computed at proof of spirits of any description not heretofore mentioned, including naphtha and methylic alcohol purified so as to be potable, and mixtures and preparations containing spirits

  9

  11

  3

  9

  12

  3

  9

  13

  9

  9

  14

  9

  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913"
  5. Wines (Customs)
  Resolved:
  "That, as from the thirteenth day of November, nineteen hundred and forty-seven, the duties of customs charged on wines under paragraph (a) and paragraph (e) of Subsection (1) of Section three of the Finance (No. 2) Act, 1939, shall respectively be charged at the rates set out in Part I and Part II of the following Table, and the duty charged under paragraph (b) of that subsection -on wine not exceeding twenty-seven degrees of proof spirit and being an Empire product shall be calculated accordingly.
  the First Schedule to that Act, shall be increased to nine pounds ten shillings and ten-pence per gallon computed at proof.
  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act. 1913."
  4. Spirits (Customs)
  Resolved:
  "That, as from the thirteenth day of November, nineteen hundred and forty-seven, the duties of customs charged on spirits of the descriptions set out in the first column of the following Table by Section three of the Finance Act, 1920, in addition to the duties specified in Part II of the First Schedule to that Act, shall—

  (a) in the case of spirits being Empire products, be charged at the rates shown in the second column of that Table; and

  (b) in the case of spirits not being Empire products, be charged at the rates shown in the third column of that Table.

  TABLE

  PART 1

  Wines not being Empire Products

  Description of Wine

  Rate of duty per gallon.

  £

  s

  d

  Not exceeding 25 degrees proof spirit

  1

  2

  0

  Exceeding 25 degrees proof spirit and not exceeding 42 degrees proof spirit

  2

  4

  0

  For every degree or fraction of a degree above 42 degrees proof spirit, an additional duty

  0

  3

  8

  Sparkling, an additional duty

  1

  2

  0

  Still, in bottle, an additional duty

  0

  3

  6

  PART II

  Wines being Empire Products

  Description of Wine.

  Rate of duty per gallon.

  £

  s.

  d.

  Exceeding 27 degrees proof spirit and not exceeding 42 degrees proof spirit.

  2

  0

  0

  For every degree or fraction of a degree above 42 degrees proof spirit, an additional duty.

  0

  3

  4

  Sparkling, an additional duty

  0

  15

  9

  Still, in bottle, an additional duty

  0

  2

  6

  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913"
  6. Sweets (Excise)
  Resolved:
  "That, as from the thirteenth day of November, nineteen hundred and forty-seven, the duty of excise on sweets shall be charged at the rates set out in the following Table.

  TABLE

  Description of Sweets.

  Rate of duty per gallon.

  £

  s.

  d.

  Not exceeding 27 degrees proof spirit

  0

  19

  6

  Exceeding 27 degrees proof spirit

  1

  4

  6

  Sparkling, an additional duty

  0

  15

  6

  And it is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1913."
  7. Purchase Tax
  Resolved:
  "That, in the case of purchase tax becoming due on or after the thirteenth day of November, nineteen hundred and forty-seven In respect of any goods other than mechanically propelled road vehicles and mechanically propelled cycles, the higher, intermediate, basic and reduced rates shall be respectively five-fourths, three-fourths, one-half and one-third of the wholesale value of the goods."
  8. Pool Betting Duty
  Resolved:
  "That an excise duty of ten per cent. of the stake money paid shall be charged on pool betting (including coupon and other similar betting and totalistator betting), except betting by means of a totalisator set up on an approved horse racecourse by or under the authority of the Racecourse Betting Control Board, and any Act of the present Session
  412
  giving effect to this Resolution may contain provisions consequential on or incidental to the preceding provisions of this Resolution."
  9. Pro-fits Tax
  Resolved:
  "That—

  (a) the rates of twelve and a half per cent., seven and a half per cent. and three per cent. mentioned in Sections thirty, thirty-six and forty-two of the Finance Act, 1947, shall be raised to twenty-five per cent., fifteen per cent. and six per cent., respectively;

  (b) interest at three per cent. per annum shall be payable on unpaid profits tax;

  (c) the said interest and any interest payable on income tax (including surtax) or excess profits tax shall not be deducted in computing profits or losses for the purposes of the profits tax;

  (d) the preceding provisions of this Resolution shall be deemed always to have had effect, except that interest shall in no case begin to run before the first day of January, nineteen hundred and forty-eight;

  (e) half only of the advertising expenses which would otherwise be allowable shall be allowed to be deducted in computing the profits or the losses of a trade or business, for any chargeable accounting period ending after the twelfth day of November, nineteen hundred and forty-seven, for any of the purposes of the enactments relating to the profits tax;

  (f) any Act of the present Session giving effect to this Resolution may contain provisions consequential on or incidental to any of the preceding provisions of this Resolution."

  10. Income Tax (Interest on Unpaid Tax)
  Resolved:
  "That—

  (a) interest at three per cent. per annum shall be payable on unpaid income tax (including surtax);

  (b) the said interest and any interest payable on profits tax or excess profits tax shall be paid without deduction of income tax and shall not be allowed to be deducted in computing the amount of any income or loss far any of the purposes of the Income Tax Acts;

  (c) the preceding provisions of this Resolution shall be deemed always to have had effect, except that interest shall in no case begin to run before the first day of January, nineteen hundred and forty-eight; and

  (d) any Act of the present Session giving effect to this Resolution may contain provisions consequential on or incidental to any of the provisions aforesaid."

  11, Income Tax (Advertising Expenses)
  Resolved:
  "That half only of the advertising expenses which would otherwise be allowable shall be

  413
  allowed to be deducted in computing the profits or gains, or the losses, of a trade, profession or vocation for any of the purposes of the Income Tax Acts, for the year 1947–48 or any subsequent year of assessment."
  12. Excess Profits Tax
  Motion made, and Question proposed:
  "That—

  (a) interest at three per cent. per annum shall be payable on unpaid excess profits tax;

  (b) paragraph (a) of this Resolution shall be deemed always to have had effect, except that interest shall in no case begin to run before the first day of January, nineteen hundred and forty-eight; and

  (c) any Act of the present Session giving effect to this Resolution may contain provisions consequential on or incidental to any of the provisions aforesaid."—[Mr. Dalton.]

  4.34 p.m.
  Mr. Eden: The right hon. Gentleman's most severe critics will never attempt, I think, to deny either his gifts of exposition or, indeed, his gifts of extrication. He has displayed those gifts, particularly the latter, once more on this occasion; but I am not sure that those particular gifts have not added to our troubles and to his. For far too long the Chancellor has failed to make plain to the country the true trend of events, and I cannot feel that even this afternoon he has done so. He has given us a long list of most severe new taxes which will be examined and commented upon, no doubt, in the days to come; but he has been far from giving us a clear picture of how far this heavy new taxation—disagreeable as it is going to be to a great many people—is going to meet the essential problem of inflation with which we are confronted.
  At the beginning of his statement, the right hon. Gentleman spoke as though what he had to deal with was a problem created entirely by the new export proposals of his right hon. and learned Friend, the Minister for Economic Affairs. That is certainly part of his problem, but equally certainly it is not the whole of the problem. Even if the right hon. and learned Gentleman had not, rightly, as I consider, made this new export drive, the Chancellor would still in a measure have had this inflationary problem with which to cope. My criticism of him is that, in all his speeches—and he did it again today—he is inclined to separate our internal financial problem from our international balance of payments, whereas really they cannot be separated, but are part of the
  414
  same problem, and are interlocked. It is no use saying to the British people, "Look what a brilliant Chancellor of the Exchequer I am; look at the domestic account," and then have to put on enormous imposts to meet the balance of payments. In his broadcast last April the Chancellor told the people, when the song was evidently strong in his heart:
  "I am glad to be able to show a large surplus, and this I am sure you will be able to feel is a sign that we have been managing our financial affairs very well. It is one up to the Labour Government, do you not think?
  Do hon. Members really think that his performance today is one up to the Labour Government? If this is the best the Socialist Government can do, the people would like some other administration of the national finances—[Interruption.] I did not say a word about abolishing the food subsidies. I do not suppose the hon. Member for Nelson and Colne (Mr. S. Silverman) noticed the proceedings of the Brighton conference, but, if he had done so, he would have seen the resolution which was endorsed there. For the moment I am not dealing with the Brighton conference, but with the Budget; however, since the question of food subsidies has been raised, can the right hon. Gentleman tell us tomorrow, or whenever it is possible, exactly where we are on this matter, because after his exordium I do not know. The right hon. Gentleman spent a good deal of time in accusing this party of what he supposed it stood for, but, I am not clear what he proposes, and if I understood him aright, he has not come to any decision, except that the sum of money cannot be any greater than at present. Is that the position?
  Mr. Dalton: Broadly, yes. I will answer in detail tomorrow.
  Mr. Eden: No doubt the right hon. Gentleman will expound that later. It is very important that we should be clear about it. It is not much use saying, "How wonderful they are, and how useful, but all the same I shall have to cut them." That does not carry much weight with the people who have to suffer.
  I come back to the subject of inflation. The truth is that for a long time this inflation, and the effects of it, have been cushioned to some extent by the American and Canadian Loans. Those loans provided large quantities of goods

  415
  which were disinflationary in their effect, but now that is over, there is still a more certain inflation resulting. My criticism of the Chancellor of the Exchequer is that all this time he and the Government ought to have been marking this fact to the nation, marking that sooner or later this inflation would take place. On the contrary, they have been preening themselves on these illusory Budget surpluses—they are really illusory—and congratulating themselves, whereas they should have been warning the nation. Then we come down with a bump to reality; in other words, what should be the song in the heart of the Chancellor, has become a dirge in his diaphragm.
  I wish to make one or two brief comments on the taxation proposals themselves. As regards advertisement, at first sight we on this side of the Committee see no objection to the right hon. Gentleman's proposals; but I am bound to say that if, as a result, there is to be less private advertising, I hope that does not mean we are going to have more Government advertising, because it is the gloomiest and the worst advertising in the world. I think that the worst of the advertisements perhaps is "Work or Want." I do not know whether "Keep Death off the Road" had any effect on the right hon. Gentleman's driving, but it nearly caused me to have more than one accident glancing at the lady and her gloomy face. As to the Betting Duty—[Interruption.] If the hon. Gentleman wishes to interrupt, will he please get up and make his point. I have always been willing to give way to hon. Gentlemen. If the hon. Gentleman wishes to interrupt, I think he should have the courage to get up.
  Mr. Medland: I am only trying to point out that what is happening on this side of the Committee is exactly following the example of hon. Members on the other side of the Committee.
  Mr. Eden: On the Betting Duty, I say to the Chancellor that, here again, we shall need to examine, the details of the proposal. There is one thing I should have thought would strike Members in all parts of the Committee. It is that, by his levy on the greyhound tote, that he is really selecting one particular aspect of that type of betting, and he is doing
  416
  it because obviously it is the easiest to collect. I think we should be very careful of that sort of proposition. I do not think we ought merely to levy taxes because they are easy to collect. We have to take account of justice between one and another, and, therefore, on that issue I must say that we very definitely reserve our position. As to the duties proposed in respect of arrears of taxation, we certainly see no objection at all to that course, despite the derisive laughter which came from the benches opposite at our expense.
  There is another thing I want to say on this issue, and that is that an additional contributory factor in our troubles has been the relative failure of the National Savings campaign. I entirely agree with the right hon. Gentleman that had that campaign been more successful, we might have been saved some of these very distasteful duties which have been imposed today. I cannot entirely acquit the right hon. Gentleman, because while there have been going on these inflationary processes, in which the right hon. Gentleman has played his part, as I have told him before, by his excessive pursuit of a cheap money policy, he has ignored them. He has not taken any steps or even warned the nation of what was happening. On the contrary, he has with increasing cheerfulness told us how good was the state of our national finances.
  I am afraid that I cannot judge, from the figures so far given, how far these duties, unpalatable and harsh as they are to be in respect of Purchase Tax, will go to meet the peril we have to face. I do not know whether any hon. Member of this House is able to pass that judgment. That will require careful and thorough investigation. What I am saying is that if you are going to meet this problem of inflation, you have got to do it effectively, and see that the Purchase Tax is not merely transferred from one set of articles to another. We will examine these proposals to see how far they are adequate to meet the problem, and we shall do it purely from a national point of view.
  So far we are disappointed, because we had thought that, instead of merely having a catalogue of new taxes, we might also have had some real investigation of the problems we have to face, and some constructive explanation of how the Chancellor proposes to meet them. I hope

  417
  that before the Debates are concluded we may have a fuller and more adequate explanation than we have been given today.
  4.46 p.m.
  Sir Stanley Holmes: The object of this Budget is to assist the economic plans of the Minister for Economic Affairs for getting this nation out of the very difficult situation in which it now stands. We all hope that the Ministers sec eye to eye, but the fact remains that the plan of the Minister and the Budget of the Chancellor are both two years too late. The economic position of this country was exactly the same in November, 1945, or even in June, 1945, as it is at the present time in November, 1947. When the war ended we had got rid of all, or nearly all, of our overseas investments—nearly all our dollar investments at any rate and our export trade had dropped. We were no longer in a position to find dollars any more than we are today to buy food or raw materials and other things.
  Immediately after the war we should have had speeches from the Government similar to those that we have been listening to from the Minister for Economic Affairs during the last month or so. I can quite imagine that when the Socialist Party got into power after the General Election in the summer of 1945, they wanted to give the nation a "break." Everybody had worked wonderfully hard, everybody was tired, and it was quite reasonable to give them an opportunity of recovering for two or three months, but I venture to suggest that when the American Loan was agreed to in this House in December, 1945, that was the time for the recent speeches of the Minister of Economic Affairs and for a supporting Budget from the Chancellor of the Exchequer.
  I was one of those Members who voted against the American Loan for several reasons, one of which was that I was sure it would be misused, and it has been misused. It has been spent unnecessarily on food, films, tobacco, and petrol for the purpose of bluffing our people that all was well, in the faint hope that before the loan was exhausted something would turn up to save the Socialist Government. Instead of pursuing this suicidal policy, the Minister for Economic Affairs should
  418
  have made—as I have just said—his recent speeches at the beginning of 1946, and the Chancellor in his Budget of April, 1946, should have given him his aid.
  If at that time such a policy had been adopted, the American loan would not have been frittered away. If at the beginning of 1946, we had adopted the austerity conditions now imposed upon us—[Laughter.]—it is all very well to laugh, but that is what we ought to have done—if we had adopted the austerity conditions now imposed, we should have used the American Loan to re-equip our industries with the necessary machinery to enable our factories to change from war production to their prewar work. We should have been able to restore our worn-out railways and make them efficient.
  If I may digress for a moment, I want to say that I think there is no set of people in the country who did finer work during the war than everybody connected with the railways. One regrets very much that today accidents on the railways are occurring which are of a nature somewhat without precedent. Many of them must be due to jumping off points, and similar mishaps, because the railways are worn out. If part of the American Loan had been used to restore our railways, we should not only be riding in greater safety today but also we would be able to contribute far more to the export drive by being able to transport our goods and turn round our wagons more quickly.
  If these austerity conditions had been adopted at the beginning of 1946, the American Loan would have been used properly and it would not be exhausted today. It would still have been contributing to the re-establishment of our national economy and to a gradually increasing standard of living for everyone. The Socialist Government have wasted nearly two years. If the new policy propounded by the Minister for Economic Affairs had been adopted early in 1946, and if the Chancellor of the Exchequer had supported it in his Budget in April, 1946, we should be well on the road to recovery today, whereas instead we have sunk lower than ever in our history, and we are likely to sink still lower.
  It should be observed that Socialist supporters always allege that while everything that went wrong between 1918 and 1939 was due to the policy of Tory

  419
  Governments, everything that has gone wrong since 1945 is due to an act of God. Of course, this is quite ridiculous. It is the policy followed by the Socialist Government in the last two years which has put us in our present position, and which is causing the Government to turn to the people who supported them at the General Election and say, "Your standard of living is going to get worse and worse; you must pay more and more taxes, and we see no hope whatever of any recovery in the near future."
  It was said that this Budget was to support the plans of the Minister for Economic Affairs. The Chancellor of the Exchequer used the well-known argument that what he had to do was to prevent too much money going after too few goods. What can we find in these Budget proposals that will deal with that problem? I thought we should hear of a considerable increase in Purchase Tax on very many articles. I thought that the increase would be far greater than has been suggested. Also, I thought, in regard to Profits Tax, that the Chancellor would put an extra tax on any additional rate of dividend above the rate of previous dividends. That would properly reduce the likelihood of money being put into circulation to chase the goods which are in short supply.
  Is the Chancellor, in his Budget, keeping enough money away from the pockets of the people so that they cannot spend it? Let me take the proposed tax on the dog tote. Will that keep any money out of the pockets of the people? What is likely is that some people will say, "We will not go to the dogs, but we will spend our money on something else." I am very disappointed with this Budget. It does various things in the way of increased taxation, but it does not face the problem of preventing too much money going after too few goods. I join with my right hon. Friend the Member for Warwick and Leamington (Mr. Eden) in what he said. We shall have another opportunity of discussing these matters further when we deal with the Finance Bill.
  4.57 p.m.
  Mr. Tiffany: I am afraid that I cannot go very far in answering the points made by the hon. Member for Harwich (Sir S. Holmes), because many of them obviously are so far from reality that it would be a waste of time
  420
  to deal with them at great length. However, his suggestion that 25 per cent. of the American Loan should not have been spent on food is one that will sound very harsh indeed in the ears of the housewives in the hon. Gentleman's constituency. I think that the hon. Gentleman, in saying that this was foolish spending of the American Loan, was going a little bit too far. His statement that we would have been in a far better position without the loan is also a suggestion that I must refute, particularly in view of the fact that the position in the country now is indicative that we are getting back on our feet. We were able to purchase machinery and raw materials with the loan. Without dollars we should not have been able to get them.
  I do not want to pursue past history; but rather to deal with the Budget statement made by the Chancellor. I fully agreed with many parts of his statement, though I think he played a little game with us in regard to the Tobacco Duty Like many other hon. Members, I was expecting an increase in the duty as a result of the Chancellor's preamble and overture before he made his announcement. I confess that my heart dropped into my boots. Certainly, it was a relief to all of us to find that there was to be no increase.
  Mr. James Hudson: Not to all of us.
  Mr. Tiffany: While I am in agreement with much of what the Chancellor has said, and while he has not impinged upon us to the extent which many of us had been led to expect, nevertheless there is one point that I wish to discuss. The point on which I am not in agreement with the Chancellor is the question of the food subsidies. I am reminded of a statement which the Chancellor made, speaking in this House, on 15th April this year, when he made reference to the cost of living and the subsidies. He said:
  "I have no doubt at all that, up to this point, the policy of stabilising the old cost-of-living index, as we have hitherto known it, has been wise and has been abundantly justified. It has helped to stop inflationary pres sure from becoming an inflationary breakthrough."—[OFFICIAL REPORT, 15th April. 1947; Vol. 436, c. 44.]
  I think the statement which he made then applies with equal force at the present time, that control of the cost of living will still, according to the statement made

  421
  then, be wise and abundantly justified, and that it will still continue to stop inflationary pressure from becoming an inflationary break-through. I think the argument which the Chancellor laid down on that particular matter applies with equal emphasis at the present time. Consequently, I was disturbed when I heard him make the statement that we were blocking the total amount at its present level. I understand that the present level for all subsidies is a figure of £425 million, £33 million of which is for utility clothes. I understand from the Chancellor's statement that the £33 million for utility clothing is going to be swept away altogether.
  Let us have a look at this situation. I have here a list of food import prices showing the percentage increases which have operated. The Chancellor made some reference to this factor in his speech. In 1941, the percentage increase on the 1939 prices was from 23 to 24 per cent., and this has increased year by year until, in 1946, the percentage increase was from 78 to 79 per cent., and, in 1947, according to the information available, this increase in food import prices has been shown each month up to August of this year. Consequently, there has been no indication whatever that there is going to be any cessation of this increase of food prices, and the Chancellor himself has given no indication. Therefore, all the trends show that import food prices will still continue to rise. It has been pointed out that the subsidies we have been receiving up to the present time amount approximately to 3s. 5d. per head; that is, for the total subsidies. Actually, it is the poorer section of the community which gets the benefit of the subsidies—seven millions of them who are not paying Income Tax at the present time, and that section of the community who are in the lower Income Tax groups. It is the old age pensioners who receive a benefit as a result of this particular subsidy, and it is the person who is the single wage-earner with a large family, again, who receives a benefit.
  The Chancellor has stated quite definitely today that so far and no further will he go in relation to these particular subsidies. In spite of the taunts which he hurled at hon. Members on the other side, when asking the Tories for their feelings in relation to subsidies, and whether they were or were not in favour
  422
  of food subsidies, I want to say that the standstill position which the Chancellor has taken up at present is actually an abandonment of the principle that we have accepted—the principle that increased world prices should not be borne by the individual consumer, but should be borne by the community as a whole, and that any increased prices should be distributed amongst the community according to their ability to pay. We have always argued that the basic foods of our people should be available to all, whether rich or poor, whether they be the rich drawing profits, or the poor or old age pensioners, and it was admitted, surely, by the Chancellor when he granted the tobacco concession to the old pensioners that they could not afford any further price increases being placed upon their pension position. Therefore, he should, in view of that position, have continued to safeguard our people against any increase in the prices of food.
  The Chancellor has stated quite definitely that he is absolutely going to do away with the £33 million subsidy for utility clothing. Let us see what this will mean to our people. I understand that the Board of Trade have recently been in communication with the Federation of Curriers, suggesting that the subsidy on tanned skins should cease on 30th November. It has been estimated that, if this subsidy were taken off tanned skins, and if the application of the boot and shoe operatives were met, this would, in effect, mean an increase of 10s. per pair on adult medium grade footwear, and of 15s. per pair on the higher class footwear. This has been indicated by responsible authorities. Obviously, even if this estimate may be a little wide of the mark, it is still a clear indication of what is going to happen to the price of utility clothing and footwear which will have to be bought by our people. I have already stated, but I want to repeat, that this blocking of the subsidies indicated by the Chancellor this afternoon is, in essence, a departure from the principle which we on this side of the Committee have for so long accepted. What the Chancellor is doing, in effect, is placing the whole of our social insurance schemes to some extent in jeopardy, because they will be entirely dependent on what appears to be a continuing rise in food prices.
  In taking this step, the Chancellor, in my opinion, has fallen between two

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  stools. He has listened to appeals from the other side of the Committee that the subsidies should be abolished, and has borne in mind the attitude likely to be expressed on this side of the Committee, and has attempted a compromise. In my opinion, there is no compromise on a matter of this description, and no compromise is possible when dealing with people drawing only 26s. a week in old age pensions. There is no compromise with those people on the lower wage levels, and I seriously suggest to the Chancellor that he should still stick to the principle which we have adopted for so long, namely, that the basic needs of the people should be met, which will not be the case if food prices continue to rise.
  Mr. Charles Williams: This Budget can be fully, properly and truthfully described in a very short sentence— "The Not-Facing-the-Future Budget."
  5.9 p.m.
  Mr. Norman Smith: I sympathise very much with my hon. Friend the Member for Peterborough (Mr. Tiffany) in what he said, which was very pertinent from the point of view of his constituents, but in the jam in which this country finds itself now, it was, I am bound to say, largely irrelevant. I think the same may be said of the Chancellor's Budget, which is wholly inadequate to the situation in which we find ourselves, and so completely inadequate that it may be described with that very hackneyed simile—"a piece of sticking plaster on a cancer." I am surprised that the hon. Member for Harwich (Sir S. Holmes), who does enjoy- some importance in the financial world, should have trotted out a number of threadbare clichés which this Committee must have heard over and over again and of which it must be sick and tired. There are other real and substantial criticisms to bring against this Budget without bringing out the stuff mentioned by the hon. Member for Harwich. The right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden) put his finger on one very weak spot in the whole situation, and that was the complete failure of the National Savings campaign. It is worth while looking into this failure because, after all, if one could make a success of the National Savings campaign, one would be bringing very formidable forces
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  to bear against the impending danger of inflation.
  The reason the National Savings campaign is a failure is quite simple to understand. I have often been asked to go on the platform in my constituency to support the National Savings campaign. I have always refused because I have always thought that it would be thoroughly dishonest to urge other people to do a thing which I do not do myself. In no circumstances would I dream of putting my savings into any sort of security, so-called, which might let me down very badly. If I have any savings, I put them into equities for the reason that there is some hope that if we get an inflationary situation, equities will rise, and I shall not find myself in the position of having put away savings worth a bucketful of commodities, only to discover later on that if I choose to mobilise them they are only worth half a bucket, due to the process of inflation.
  It is not honest to invite people to put their savings into War Bonds or Savings. Certificates unless one can assure them that when the time comes to draw out their savings, those savings will have at least their original value. If my right hon. Friend will give me a little attention, I will make him a suggestion in this connection. The suggestion is that he should recast the whole basis of his savings campaign in such a way as to invite popular subscriptions on the clear understanding that he is going to attach conditions to those subscriptions which will ensure that the lenders will not find that their savings have melted away as the result of an insidious process of inflation. Let him tie up those savings with the cost of living index, provided we have a new cost of living index which is reasonably satisfactory to all. But let the fluctuation be a safeguard only against a rise in cost of living, not against a fall.
  After all, if I save over a long period, I have the right to ask that my savings in the future shall buy more than they used to buy. I have the right to assume that the constant process of technological improvement in industry and the advance of science and invention should cheapen production. I have the right to assume, if I put away £100 in 1947, that by 1957 it will buy a lot more than it does today. Let my right hon. Friend apply his considerable intellectual attainments

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  to this end. It is not for me to suggest the details whereby national savings shall henceforth be tied to the cost of living in a way that people will know that they are not going to lose their money if they invest it in the kind of securities in which he wishes them to invest.
  That would be the beginning of an honest money system. The fact is that the whole money system today is fraudulent inside and out, and that is why my hon. Friend the Member for Peterborough (Mr. Tiffany) has to make speeches of so impotent a character. That is also why my right hon. Friend, in introducing a Budget to deal with an inflationary position, ignores the most inflationary influence of the whole lot—that is, the existence of a colossal national debt. My right hon. Friend says that the difficulties in which we find ourselves—I forget his exact words—were inherent in the circumstances of two great wars. No such thing. We financed both wars by methods which were indefensible, yet my right hon. Friend takes those methods for granted. He assumes that a Government desiring money should get that money either by borrowing or by taxation. He concedes to private banks the exclusive right to create money. The method by which World War One was financed was completely indefensible.
  I mention this because my right hon. Friend represented to the Committee this afternoon that the financial position in which we find ourselves today was an act of God which had to be accepted. No such thing. The late Lord Stamp, formerly Sir Josiah Stamp, wrote a book called "Problems in Finance and Government." On page 242 of that book he wrote, quite casually, that in the first World War people were induced to subscribe to War Loan by raising loans at the bank, either on the security of the loan itself or other collateral. Yes, my father could go to the bank in 1915, having exhausted all his collateral, and say, "I want to buy more War Loan. I have no longer any collateral. You have the deeds of my house." The bank would say, "Very well, Mr. Smith, we will advance you £500 on the security of the War Loan which you are going to buy." The bank would create a credit out of nothing and would lend him the money at one-half of one per cent. less than my father would get from the Government. The late Lord Snowden also gave evidence to that effect.
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  So long as my right hon. Friend concedes to private banks the right to create out of nothing the money they shall lend to the Government at interest, he will be in the jam he is in now.
  What are the Government going to do about this immense National Debt? In 1914, it was £650 million. In 1939, £7,100 million. Today, it is £25,660 million. That is a geometrical progression. What are the Government going to do about it? I have a constructive suggestion to offer, whereby they may relieve the nation of a substantial part of this burden without taking anything at all from anybody, and without inflicting any injustice on anybody. It is pertinent to inquire where, in the second World War, when the methods of bank finance were not so glaringly dishonest as in the first World War, the inflated war debt came from. Same £18,000 million of new debt was created. There were £4,000 million small subscriptions and £6,000 million large subscriptions. When an appeal is made to people on patriotic grounds to buy War Loan, one cannot repudiate the War Loan or revoke it; one has to honour it. But that £10,000 million is not all. There were £3,100 million of overseas sterling balances, £1,000 million of other overseas borrowing, and £900 million added to the fiduciary issue.
  That leaves £3,000 million unaccounted for. If we look at the bank returns we see where that mysterious £3,000 million came from. It was a pure creation of credit by the Joint Stock Banks, who brought it into being by book entry, and then lent it to the Government at interest. In World War One bank deposits went up from £1,000 million to £2,000 million. In World War Two they went up from £2,800 million to £5,500 million, approximately. As the late Reginald McKenna used to say, "every bank loan creates a deposit"; and every time the bank manager gives a client a loan he brings into existence money which did not exist before.[HON. MEMBERS: "No."] Hon. Members opposite do not seem to be quite clear about this. Supposing I want to borrow £1,000; I could do that through my bank manager by presenting him with the deeds of my house, which is worth a good deal more than that. He will say, "All right, Mr. Smith, you shall have £1,000." He will take the deeds, but it will still be my house. He will then proceed to make an

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  entry in a book crediting me with £1,000, which would be new money brought into existence out of nothing. All that is simple. But that is the cause of our misfortunes. During World War No. 2, the bankers brought into existence about £"3,000 million of new deposits and lent it to the Government. If I lend an hon. Member £1 out of my pocket, I take from my pocket that which I lend him, and I am entitled to expect to receive it back. But the banks do not part with anything in respect of those £3,000 million.
  It is not easy to find out the facts of these things. My right hon. Friend can do so, but I cannot. At the end of 1945 the English and Scottish joint stock banks declared that they held £1,500 million of Government securities in one form or another, to the extent that such securities were declared separately. I suspect that if my right hon. Friend would have a downright searching inquiry into the National Debt—all the £25,000 million of it—he would find plenty of prima facie evidence that the joint stock banks have at least £"3,000 million of Government stock. All I am proposing is this: not that it should be confiscated, but that quite simply they should surrender it in return for an equivalent amount of non-interest-bearing certificates redeemable in legal tender. By that means, the taxpayers would be saved from £40 million to £50 million a year, less tax, of interest burden. That would be a substantial beginning towards reducing the National Debt burden. But if we did that, we would have to do one other thing. We would have to deprive the joint stock banks of their right to create and destroy money in the way they do. My right hon. Friend should simply say, "From now on, the banks may not vary their deposits up or down by more than 5 per cent." Once he has done that, he will have got the whole business into' something approaching manageable proportions, and he will have taken a substantial step towards stabilising the monetary system and avoiding future inflation. I beg that he will do that.
  I have one other thing to say on this question of the National Debt. My right hon. Friend has proposed piffling little taxes here and there. He has not got to the real cause of the inflationary trend, which is the propensity on the part of people to spend capital holdings. I could
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  quote responsible authorities. The "Manchester Guardian" recently argued that the pressure was coming less from current earnings than from the spending of the capital holdings, and that view was supported by Professor Hicks in the July issue of "Lloyds Bank Review." Consider what is happening in my street, where houses before the war cost £900. They were built in 1938 or 1939. They are changing hands today for as much as £3,400 in Windermere Road, West Wickham. It is common knowledge that if anybody is lucky enough to sell a house he can get three or four times the prewar value for it. That is pecuniary inflation which is contributing substantially to the present position, and my right hon. Friend has done nothing whatever to meet that sort of inflation or the increase in individual fortunes due to the Stock Exchange appreciation over the last few years which as some of us know, is considerable, notwithstanding the fall in recent months.
  I suggest that my right hon. Friend should impose a non-recurring levy on individual increments of war fortune—not on companies, corporations or collective bodies, but on individuals. He should ask what they had in 1938, what they have in 1947, and levy the increment on a graduated scale. That would meet this propensity to spend capital holdings on current consumption. The very rich have to do that, because they are taxed so highly on the upper ranges of their incomes. I believe that many hon. Members opposite do, in fact, live on their capital. If my right hon. Friend would follow my suggestions, he would get at the inflationary potential at its source. That sort of thing is the real substance of the whole issue, instead of these miserable little taxes on the consumption of this, that or the other. He would convince his own supporters that he was not only penalising the people whom he expects to turn up and vote Labour and who, so far, have been very loyal to us.
  I believe that the inadequacy of my right hon. Friend's proposals is due to the wrong ideology in which he has been brought up, and to the fact that he is surrounded today, not only in the Treasury but also in this House, by yes-men whose views are right away back in the reign of Queen Victoria. It is time that serious attention was given to the social credit proposals associated with the name of Major Douglas. Until that is done, the National

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  Debt will go on increasing in geometrical proportions; we shall go from one inflationary potential to another, and my right hon. Friend, for whom I cherish great personal affection, will have to come to this Committee and confess that his savings campaign is an appalling fiasco.
  The present situation will not always endure. Fortunately, in the next few years, finance will recede as the governing factor in our economy. The efforts of my friends the miners, the steelworkers and the other members of the working class, as well as of the managerial and directing classes—for they are just as much a part of industry—with their compelling technological urge, will produce the physical abundance which in the long run will break down this inflationary potential. Then my right hon. Friend will find that his Purchase Tax, which is an improper fraction, will have become a proper fraction—a price discount, which is the very thing he applies so consistently, so well and successfully in his subsidies on food. The thing can be automatic. I beg of him to pay attention to Social Credit proposals, which alone can rescue this country from the fantastic jam into which we have got ourselves.
  5.26 p.m.
  Mr. Osborne: I intervene in this Debate for two reasons. I am glad the Chancellor of the Exchequer has remained in his place, because I should like to try to answer the question which he raised on food subsidies. He did me the honour of pinning on me the advocacy of their abolition, and I do not run away from it. I want it to be quite clear that I speak entirely for myself and not for my party—I have no authority so to do—but hon. Members on both sides of the House always listen to a Member when he speaks his convictions, whether they please his party or not.
  I believe that subsidies of all kinds ought to be abolished and that the nation ought to cease living in blinkers. The Chancellor has told us that he is going to abolish the subsidies on wool, cotton and leather. In answer to a Question of mine yesterday, the President of the Board of Trade, rather ill-advisedly I thought, said that it had already been decided to abolish the leather subsidy, which would represent 2s. 6d. per pair of shoes. I ask the Chancellor if it is fair and wise to abolish subsidies on wool, cotton and leather and
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  on other utility goods, why is it not equally wise to do so on food? That is a perfectly reasonable question which requires a proper answer. I rest my case on the fact that I think the people of this country are courageous and sound enough to face the facts, ugly though they may be. We should say to the people: These are the facts, let us face them and not look at them as St. Paul said, "through a glass darkly," and "kid" ourselves in this foolish atmosphere. Let us stop living in a fool's paradise.
  The obvious objection to removing these subsidies is that it would hit most hard the old age pensioners and the poorest people in the country. That is true. Food prices would go up, and there would be great hardship on the poorest classes in the country. The obvious answer is that further help should be given to the old age pensioners and to those people who are on the lowest income level. But why on earth should we subsidise the food of the spivs, millionaires, lounge lizards in May-fair, or hon. Members opposite who are getting £1,000 a year, or the Chancellor himself? Why should we subsidise the food of the Chancellor who is receiving £5,000 a year? There is no justification for it at all. If it is said to me that by removing the food subsidies we should put hardship on the old age pensioners, I shall remind the Chancellor that in an answer last week he said that:
  "The abolition of the food subsidies would add about 12s. 6d. a week to the household budget of a family of four."—[OFFICIAL REPORT. 4th November, 1947; Vol. 443, c. 1535]
  To the old age pensioner that represents 3s. 1½d. a week. The Chancellor will take away that hardship from the old age pensioners, if he gave them another 5s. a week extra. By abolishing food subsidies he would cease subsidising men who need no subsidy. I think it is high time that food subsidies were abolished. I will quote to the House the words of the Chancellor himself on this point. In the Budget speech of 9th April, 1946, reviewing the period of 1945, he said:
  "So much for the past; now let us face the future. Prospects for the year 1946, on which we have just entered, are less sombre than some scribes have imagined."—[OFFICIAL REPORT, 9th April, 1946; Vol. 421, c. 1806.]
  The Chancellor was completely and utterly wrong when he said that. His forecast

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  was so bad that in any normal business it would have got him the sack. He completely misjudged and misinterpreted the position. He said in April, 1946, "Things are going to be very much better. The scribes are wrong," Look at the position today. Can any hon. Member say that the Chancellor's forecast in the opening of his Budget speech in 1946 was a reasonable and a sane one? On the cost-of-living subsidies he said in the same speech, only 18 months ago:
  "I would like at this stage to say a word on the cost-of-living subsidies. With regard to these, we are spending a formidable total. We are providing, this year, no less than £335 million for cost-of-living subsidies."—[OFFICIAL REPORT, 9th April, 1946; Vol. 421, c. 1809.]
  I remind the House that I believe that today that figure is something like £425 million. The Chancellor went on to say:
  "The Committee must appreciate that this policy of price stability is costing a lot of money. These subsidies were running at the rate of £250 million a year before Lend-Lease ended, and in my Budget statement in October—"
  that was the right hon. Gentleman's first—
  I estimated that the ending of Lend-Lease would add at least £50 million a year to the cost."—[OFFICIAL REPORT, 9th April, 1946; Vol. 421, c. 1810.]
  The Chancellor would agree that at that date we were spending on food subsidies £300 million, and we are spending today £425 million.
  Mr. John Lewis: Why?
  Mr. Dalton: I should like to get the figures clear. On food subsidies we are spending £392 million. There are certain other cost-of-living subsidies the hon. Member himself has been talking about which amount to £33 million. The £392 million added to the £33 million makes the £425 million which I cited in my Budget speech in April, which makes the total of so-called cost-of-living subsidies for food and other items.
  Mr. Osborne: I am much obliged. I do not wish to misquote the figures, but according to the statement here the total cost-of-living subsidies would be £425 million. A little later in that same speech the right hon. Gentleman said:
  "I repeat that to hold the cost of living steady in present circumstances is still, in the judgment of His Majesty's Government, wise. But we cannot go on doing this indefinitely,
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  regardless of cost. We shall have to reconsider this matter next year. We might even have to do so earlier."—[OFFICIAL REPORT. 9th April, 1946; Vol. 421, c. 1811.]
  I think the Chancellor will agree that that was a promise that these subsidies would be reduced. [HON. MEMBERS: "No,"] Oh, yes. The sense of the whole speech, if hon. Members will re-read it, was that the burden of food subsidies was getting so heavy that we could no longer bear it. However, instead of the amount being reduced it has been increased by another £100 million. Therefore, I cite the Chancellor against himself, and say that the food subsidies one and a half years ago at £300 million were too high, and that, therefore, they ought to have been cut down. I charge the Chancellor with lack of moral courage—[HON. MEMBERS: "Oh."]—Oh, yes—lack of moral courage in not saying the unpopular thing to the country, in not sticking to his guns of 18 months ago, in not saying that we cannot afford to go on paying for food in this manner, in not saying to the people of this country, "You ought to pay a proper price for what you are getting. Do face the facts." I accuse him of lack of moral courage in that respect.
  There are two questions which the Chancellor would be entitled to ask me, and I should like to deal with them. He would be entitled to ask, "How much would it cost if the food subsidies were taken off?" He said on 4th November:
  "The subsidies on rationed foods amount to about £8 a year per head of the civil population. This is the same total as the yield of 3s. 3d. in the standard rate of Income Tax. The abolition of food subsidies would add about I2S. 6d. a week to the household budget of a family of four."—[OFFICIAL REPORT, 4th November, 1947: Vol. 443, c. 1535.]
  We agree about that. We must face the facts, and I do not want to run away from the facts. I do not want hon. Members opposite to run away from them, either.
  Mr. Daines: But the hon. Member does not face them.
  Mr. Osborne: I should have thought the Chancellor would not have regarded this as a joking matter, but as a very serious one, and not as one to fool about with. The next question he would be entitled to ask would be, "Can people afford to pay this extra 3s. 1½d. per head for their food?" That is the real question. Let me quote to hon. Members and the Chancellor the figures given by

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  the Ministry of Labour as reported in the "Economist" of 8th November, 1947:
  "The present level of earnings in April was 103s. 6d., nearly double that of October, 1938, when it was 53s. 3d. The highest groups found in this lot are the printing and engineering groups, with 134s. 8d. and 134s. 6d. respectively for men. Furthermore, the highest paid group of all are the dockers with an average of 152s. 11d. a week in the three months ended 10th April, 1947."
  Hon. Members: Why not?
  Mr. Osborne: I have no comment to make, but I ask hon. Members and the Chancellor this question: Can they say that from wages like that, 3s. 1½d. per week would be an impossible burden? I challenge any hon. Member to deny that.
  Mr. Sargood: Does the hon. Member say every docker is getting 152s. a week?
  Mr. Osborne: I am merely quoting to the Committee the figures given by the Ministry of Labour as reported in the "Economist." If the hon. Member wants to challenge the figures given by the Ministry of Labour, all I can say is he had better get on with it. Therefore, I say that the average family could well afford to pay this 3s. 1½d. per head per week extra for their food. I now wish to deal with the other side.
  Mr. Lever: What about the lower paid worker?
  Mr. Osborne: I have covered that. I said I would look after the lower paid worker and the old-age pensioner.
  Mr. Tolley: How?
  Mr. Osborne: If they needed increased old age pensions and charity, I would give them old age pensions and charity.
  Mr. Lever: I gather the hon. Member to say he would look after the lower paid worker. Could he assist the Committee by defining to us what he considers a wage which can stand the payment of an extra 3s. or so per person? Would he give us some idea what wage he would fix as the minimum below which a man should not be affected by the taking off of subsidies?
  Mr. Osborne: The Chancellor and other Ministers are sitting on the Government Front Bench, they have all the advice of the official staff behind them—
  Mr. J. Lewis: It is the hon. Member's proposal.
  Mr. Osborne: If they were asked, they would say they wanted notice of the Question. Obviously, I cannot give an answer. Perhaps hon. Members opposite would now permit me to finish the point I was making.
  I draw the attention of hon. Members opposite to the October issue of the Monthly Digest of Statistics, in which I refer to two important factors. On page 128 it gives the consumption of tobacco and beer, and I wish to draw the attention of the Committee to the amount spent in this country on those two commodities alone. In 1935 the consumption of beer in this country was, on average, 1.9 million bulk barrels per month.
  Mr. Cecil Poole: Hear, hear.
  Mr. Osborne: That is all very well, out in the last monthly figure given, August of this year, it has risen to 3.11 million gallons per month. The price of beer per pint has increased, bottled from 7½d. to 1s. 1½d., and draught beer from 5d. to 1s. I ask hon. Members opposite to forget their narrow, bigoted party politics, and to come down to facts. If men are willing to, and can afford to drink nearly twice as much beer at twice the price, surely they can afford to pay an adequate price for the milk their wives and children need?
  Mr. Lever: That is why they cannot.
  Mr. Osborne: The second lot of figures I wish to give the Chancellor concerns tobacco. Tobacco consumption during 1935—the first year that is given in the Digest—was 13.72 million lbs. per month. Since the heavy Taxes were put on last April the average, even for the last five months, is 17.2 million lbs. tobacco smoked per month. I remind the Chancellor that in 1935, 20 Players cost 11½d.; today, they cost 3s. 4d.; next April they are likely to cost a good deal more. In 1935 Digger Flake cost 8d. an ounce; today it costs 3s. 4d. If the men and women of this country are willing and able to smoke and drink so much more today than they did in 1935, and at such higher prices, does any hon. Member opposite dare to say that those people could not afford to pay a proper price for their food?
  Mr. Lever: Does not the hon. Member see that that is one of the reasons they cannot?
  Mr. Osborne: I claim that the Government are not saying to the people of this country what they ought to say, namely, "These are the facts. Let us face them and put first things first." Food is more important than drink and tobacco.
  Miss Herbison: Does the hon. Member not know that there are many men who neither smoke nor drink, and who have not sufficient money to buy the milk and vitamins that are given to their women and children at the end of the week?
  Mr. Osborne: I am obliged to the hon. Lady, but I would point out that if she had been present when I commenced my speech she would have heard me try to deal with the case of the lowest paid worker. If she was not in the Committee then, it would, I think, have been more courteous to have kept quiet.
  I still stick to my point, and I believe it to be the core of the problem. We have no right to say to our people, "You can have your food at less than its real cost," when at the same time we are saying to them, "You may buy more tobacco and more beer at inflated prices." The nation is not facing this problem. The Chancellor is helping the nation to run away from it, and I condemn him for so doing. The Chancellor has also said that we spend far too much on gambling—on the dogs, on horses, and on pools. Yet when I raised the question of football pools nearly 12 months ago the Parliamentary Secretary to the Ministry of Labour came here and—I repeat the simile I used before—like Pontius Pilate he washed his hands of it. He was frightened of it. The one thing the Government dare not do is something which they feel would be unpopular. He washed his hands of it, and said it was nothing to do with him or the Government.
  Mr. Percy Wells: Will the increased price of beer be popular?
  Mr. J. Lewis: Was the abolition of basic petrol popular?
  Mr. Osborne: The Government have done nothing unpopular voluntarily. They have done things only when compelled
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  to. A nation which can recklessly and wastefully spend so much money on useless amusement—false spending—ought to be prepared to pay a proper price for its food. I ask the Chancellor and the Committee to look at these food subsidies in the way the Chancellor indicated a year and a half ago. I plead that sooner or later—and sooner rather than later—they should be totally abolished.
  5.48 p.m.
  Mr. Pargiter: I should like to follow the hon. Member for Louth (Mr. Osborne) in one respect. He took up the case of the lowest paid worker, the old-age pensioner receiving 26s. a week, and argued that persons receiving above 26s. a week should not get assistance by way of food subsidies. At least, that is the assumption. All efforts to extract any other figures from him failed completely; therefore, we must assume that that is the minimum figure. It was rather interesting when he came to the higher paid workers, because I think he referred to the engineering group. I wonder if the hon. Member is aware that during the war there were long periods when skilled engineering workers were getting less than dustmen? Will he now say that because they have had a percentage rise they are being unfairly dealt with?
  Mr. Osborne: And who was Minister of Labour when such things were allowed? The present Foreign Secretary was Minister of Labour at the time.
  Mr. Pargiter: I am speaking of the time when the Tory Party were in power; when they were running their wonderful deflationary scheme of going back on to the gold standard, and so on.
  Mr. Osborne: The hon. Member said "during the war."
  Mr. Lever: No, between the wars.
  Mr. Pargiter: When talking of food subsidies we need to appreciate what was their purpose, and why were they generally agreed to on all sides. It was not the proposal of this Government that there should be food subsidies. Why was it done? Food subsidies were introduced in order that there should be no inflationary spiral during the war period. Inasmuch as conditions are now, in some respects, worse than they were during the war period, at any rate so far as the acquisition of foodstuffs is concerned.

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  surely it is a good thing that anything which will tend to stop that inflationary spiral should be done. Indeed, I am disappointed at the suggestion that it has to stay where it is. I believe that if the principle is good, whatever the cost of it may be, it should be followed.
  We have been faced for some time with the situation that costs have been increasing, and there is already a considerable amount of unrest among working people because they are finding considerable difficulty in meeting their commitments. That is due to the fact that prices have increased, and now that they are to continue increasing, I am afraid that we shall almost certainly be faced with increased wage demands. If that happens, the object of the Chancellor of the Exchequer will be defeated. When we have to buy our food overseas in any market where we can get it, at whatever the price, it means that any increases are handed on to the consumers. In certain respects this is justifiable, but in regard to our staple foods, if prices are increased, the subsidies should also be increased. Another point referred to by the Chancellor was the partial failure of the Savings Movement. I was disappointed with the methods he proposes to adopt to deal with that situation. We want to save now to offset the inflationary tendency, and then, in due course, when there is a deflationary tendency, the people will have the necessary purchasing power from their savings to buy more goods.
  I was hoping that the Chancellor of the Exchequer would take his courage in both hands and introduce some system of compulsory saving. Such a system could be tied up with Post Office savings, and a definite promise could be given that in two years' time people could spend a certain amount of the savings they had deposited.
  Air-Commodore Harvey: It was said just now that many of the lowest paid workers are unable to buy food and meet their commitments. How, therefore, could a scheme like that be introduced?
  Mr. Pargiter: I am endeavouring to deal with the position as a whole. It is undoubtedly the fact that there are large numbers of Members on the benches opposite who ought to be saving a good deal more than they are.
  Mr. I. J. Pitman: How does the hon. Member know that?
  Mr. Pargiter: A scheme of compulsory savings, with a definite promise that a certain amount may be drawn at the end of a given period, would have general acceptance. The amount of money which people could draw could be carefully governed according to the volume of goods available. I believe that such a scheme would appeal to the people, but I do not think this Budget contains anything which appeals to the people. I do not think there will be a feeling among the people of the urgency of the situation. I wish that this capital inflationary tendency had been tackled by pretty heavy taxation—by way of Stamp Duties, or something of that kind. I believe that capital appreciation is responsible largely for the inflation which the country is now facing. I hope that the Chancellor will, between now and his next Budget, see if he cannot institute some first-class savings scheme which will ultimately benefit the people.
  I should like the Chancellor also to reconsider the further extension of the Betting Duty. I do not often go to racecourses, but I understand that a particular safeguard there is to bet with a bookmaker in the ring. I should have thought that the simplest thing on earth would have been to put a tax on bookmakers going into the ring. It might not bring in street betting, but at least it would be a step in the right direction. If something were done to legalise street betting, then maybe something could also be done in that direction. After all, we must face the fact that street betting does go on, and if we admit betting on racecourses, we might as well admit betting in the streets. I hope that the Chancellor will consider this question between now and the next Budget. We accept with equanimity the fact that our beer will cost a little more. Perhaps we shall drink a little less, or perhaps we shall drink a little more water. I think that it was a former Chancellor of the Exchequer who remarked that he was amazed at the amount of money people were prepared to pay for water.
  We have to accept this Budget as an instalment. It may have a temporary effect in regard to the inflationary tendency, but I cannot see that it will have a material effect upon our urgent needs at the moment. I ask, therefore, that between now and the next Budget, the

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  Chancellor should consider some more serious measures which will not hit at people who have to buy goods, such as utility clothing and things of that kind, and bring about some real savings which can be set aside until more goods are available.
  5.58 p.m.
  Mr. Lipson: I entirely disagree with the view put forward by my hon. Friend the Member for Louth (Mr. Osborne) that the Chancellor of the Exchequer should have abolished the food subsidies. I applaud his courage for saying it, because he was not advocating a popular course. However, he has not hesitated to express the views which he sincerely holds. On the other hand, I applaud the courage which the Chancellor of the Exchequer has shown in resisting the pressure brought to bear upon him to abolish the subsidies, either in whole or in part. The great majority of economists in this country have been advocating some considerable reduction in subsidies.
  Mr. Dalton: Financial scribes.
  Mr. Lipson: It has not been easy for the Chancellor to resist that pressure, but I think that he was wise in doing so. The real test of the value of maintaining or reducing the subsidies is whether or not it is likely to reduce the danger of inflation. Is it likely to reduce the danger of inflation if the subsidies are removed? In my view, the danger would be increased. It is all very well for the hon. Member for Louth to say that the average working man can well afford to meet the increase in the cost of living which must be occasioned by abolishing the subsidies. He may think so, but the great majority of working men think differently; they are not in the mood these days, and the Government must recognise it, to have the effective purchasing power of their wages reduced in this way.
  The obvious result of any drastic reduction in the subsidies would be a demand for increased wages. That demand would seriously affect our export trade, because the cost of labour is an important factor, and it would also increase the cost of the goods required at home. We have to recognise that even this Budget will call for further expenditure on the part of ordinary men and
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  women. It is not always possible to obtain utility articles, and with the increase in the amount of the Purchase Tax on non-utility articles many people will find that their cost of living will be increased. I was, therefore, very glad, not only that the Chancellor decided not to reduce the subsidies, but to hear him speak so convincingly of the value of the subsidies as a "tranquillising factor," as he called them. If the time comes when this ceiling is passed, and he is proposing not to maintain the subsidies, he must expect some of the arguments which he used today to be brought to his notice once again. If there is any virtue—and I believe there is—in what the right hon. Gentleman said about the value of the subsidies from every point of view, that will apply whether the subsidies amount to the present figure of £425 million, or whether that figure is increased.
  I would say to the hon. Member for Louth that, good as are his intentions, it is administratively impossible for the Chancellor to say, "We will relieve the lower paid worker of any burden that will follow from abolition of the subsidies." It is not administratively practicable to carry out such a policy. Not only old age pensioners, but very many people in the country, are finding it extremely difficult, even as things are now, to carry on, and they would suffer very considerable hardship. I would ask the Chancellor to what extent he attributes the withdrawal of money, which has been put into national savings, to the fact that people require this money now to meet their ordinary expenses? People in good financial positions are able to carry on, because they are living on capital. I believe that is true of very large sections of the community. I do not know whether the right hon. Gentleman has made any kind of investigation into what it is that is making people withdraw their money from national savings, but I should not be surprised if such an investigation did not indicate that many withdrawals were thoroughly justified, that they were due to people having to find money for necessities. If that is so, there is a valid explanation.
  I am sorry that the hon. Member for South Nottingham (Mr. Norman Smith) expressed his disapproval of the National Savings movement. He said he would rather advise people to put money into

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  equities. Does the hon. Member intend to set up as an authority on what equities are sound, and what are not? Does he intend to guarantee that if he advises his constituents, or anyone else, to buy equities, their capital will always be there when they want to realise? Equities fluctuate as well as gilt-edged securities. Over the years, a man who invests his money in gilt-edged securities is far better off than the man who has gone in for equities, and has tried speculation. The temptation may be to go from what are considered sound equities to something not so sound, because the yield is greater, so that people may lose all their capital. No Chancellor can guarantee retention of the purchasing power of money. That is asking too much, even of the present Chancellor. But anybody who invests his money in the National Savings movement knows that he can get his capital back. If its purchasing power is reduced it is due to a change in the value of money, owing to circumstances over which nobody has any control.
  I do not think it is practical politics, at this stage, to introduce a system of compulsory saving. There was a proposal put forward, at the beginning of the war, by the late Lord Keynes, which might have been practicable during the war, but the amount of money raised by voluntary savings was far greater than Lord Keynes anticipated might be raised by a system of compulsory saving. I believe that our people would invest their money in national savings if they had the money to invest. I am a little sceptical about this surplus purchasing power, too much money chasing too few goods. I do not know where that money is, and I doubt very much whether the average household has a surplus of purchasing power.
  However, I think it is our duty, as Members of this House, to do all we can to encourage people to put their money into national savings, because it is one of the surest and safest protections against inflation. If, unfortunately, inflation should come to a very large degree all their savings would go; whatever they had saved, over the years, for their retirement would be of very little value. Indeed, in some countries that has proved a very real danger. We must advise the people, not only in their own interest, but in the national interest, to give all the support they can to the National Savings movement, because in that rests the best hope
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  of preserving the financial stability of this country, the purchasing power of money, and the savings of the people for their old age and retirement.
  6.8 p.m.
  Mr. Daines: It is quite obvious, by the look of the Committee, particularly the Opposition Benches, that the Committee is not particularly desirous of prolonging the Debate tonight, so I intend to be quite brief. I want to return, and draw the attention of the Committee, to the contribution made to the Debate by the hon. Member for Louth (Mr. Osborne). I think all of us admire an hon. Member who while belonging to a party is capable of independent thought, and is fearless in expressing it. At the same time, it seems that the hon. Member has got into the same camp, or category, as the hon. Member for Orpington (Sir W. Smithers). It may be said by Opposition speakers who will follow that they speak for themselves, and not for their party. But I am beginning to develop the very strong conviction that they are saying what their party really thinks, and not what their party says. There are signs that the Conservative Party is a party of many voices, which has inherent contraditions within it.
  The hon. Member for Louth, in his advocacy of a cut in food subsidies, sought to safeguard the position by proposing a further subsidy for old age pensioners in order to avoid the opposition that such a cut would be bound to create. I want to call his attention, and that of his party, to the speech made by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) on the occasion of the last Budget, when he openly declared that the Government were premature in bringing forward their schemes of social insurance and family allowances, and for old age pensioners.
  I think that the country is entitled to know who does speak for the Conservative Party. Is it the right hon. Member for Woodford (Mr. Churchill), the right hon. Member for Saffron Walden (Mr. R. A. Butler), the hon. Member for Louth (Mr. Osborne), or the hon. Member for Orpington (Sir W. Smithers)? I do not want to make too much of this point, but there is already beginning to show in this House, and in the country, a form

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  of political warfare which is not dissimilar to that which showed itself in Europe before the war, and which is already showing itself in the Communist Party on the Continent—the policy of saying a variety of things which are mutually contradictory.
  The right hon. Member for Woodford made a speech last week in which he made the ballot call, "Free the people." That speech was an appeal to go back to laissez faire economy, and a complete denial of the policy which his party, we presume, accepted at the Brighton Conference, when it was proposed by the right hon. Member for Saffron Walden. I think the House must be on its guard against this totalitarian form of propaganda, of giving the people everything at the same time, which is already showing itself in the propaganda of the Conservative Party. I do not intend to cover tonight what I know will be adequately covered later in the Debate—the question of a capital tax, and the various proposals put forward by the Chancellor in his interim Budget.
  If the Chancellor would do me the honour of reading the speech which I made on the Address in reply to the King's Speech, he will find some of my remarks there. I want to deal specifically with that section of his statement today in which he proposed a 10 per cent. cut from the tote on the dog tracks. I welcome his belated conversion; it is a beginning. I would point out to him and to the House that there are certain consequences that must ensue from the operation of this particular form of tax. I admit his main argument, and I do not disagree with his general approach in his Budget speech, that to bring forward in this latter part of the financial year entirely new forms of taxation would require the creation of large organisations and machinery, which would be administratively impossible. But I want to point out certain logical consequences that come from the step that he is proposing. I enjoyed the right hon. Gentleman's speech for its sincerity of tone and its conciseness. It was a speech, I think, that any ordinary layman could understand. Nevertheless, if I were writing for the Press tomorrow I would have as a banner line: "The old firm." "A Bookie's Budget," or "Dalton, the
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  Bookie's Pal." What, in fact, the Chancellor is doing is to give a 10 per cent. subsidy to the bookmaker.
  We are taking a 10 per cent. cut from the tote and the tote competes against the bookie, so the bookie makes his book against the tote. Therefore, by virtue of the fact that the bookies can give a 10 per cent. better price than the tote they will attract the bets from the tote. Similarly, it must follow that the street bookmaker is in exactly the same position. There is one thing about the tote. However much the tote may be objected to on ethical grounds, it is a perfectly clean form of bookmaking, which is absolutely fair to the punter and to the people who run the tote. I am not putting my hand on my heart and saying that I have never made a bet and have never been to a racecourse. I have been to racecourses and I have made bets. I do not go now but I went previously, when I first came to this House, because I was very keen that something should be done about it.
  To come back to the question of the tote, the effect is to increase the chances of the bookmaker. What the Chancellor could have done at the same time was to have adopted the proposal of a stand tax on the bookmaker as a counter to the flow of bets against the tote. The totes are owned by the people who run the tracks, and to safeguard themselves they will levy a further registration fee on the bookmaker which they will collect. My argument is that that should be collected by the Chancellor. That should be followed by giving him a register of all the bookmakers who operate on the courses. From that, we get to the next step: The bookmaker, in turn, has a ring of satellites around him who never pay any tax at all—the man who lays off his bets, his tick-tack man, and his clerk. Today they are escaping Income Tax almost 100 per cent. I call the attention of the Chancellor to a case reported in the evening Press some seven days ago, when, in cross-examination, a bookmaker openly admitted that he never paid any Income Tax on his business as a bookmaker. That was not an isolated case. That is common right the way through the fraternity. What in fact the Chancellor is doing is to subsidise bookmakers and increase their business.
  This new Budget proposal has to be followed up with the proper machinery for

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  levying taxes upon bookmakers, and I accept my hon. Friend's argument that we have also to consider the position of street bookmaking. I believe that what we have to do is to give over this humbugging hangover from Victorian morality, which said that because ethically they did not agree with betting, therefore, it did not exist. We know that it does exist. I say, therefore, that the next step is a register for all bookmakers, with a substantial penalty if they do not register. Generally, I welcome the Budget. In the circumstances in which we operate, and, allowing for the time factor, I think that there is very little else that could be done. On this one point, however, where the Chancellor is introducing a new form of taxation I warn him that he has to follow it through, and, at the time of the next Budget, give us some comprehensive machinery that will really tackle this terrible inflationary pressure and social evil which is doing harm to our people, and produce a scheme which will give us a form of taxation that will be really effective.
  6.19 p.m.
  Mr. E. P. Smith: I am sure that the hon. Member for North East Ham (Mr. Daines) will forgive me if I do not follow him in his learned disquisition on betting and racecourses, which I found extremely interesting and highly entertaining. I want to say that, in common with my hon. Friend the Member for Cheltenham (Mr. Lipson) and as one who has been associated for many years in the manufacture of foodstuffs, I thoroughly approve of a continuance of the food subsidies. If these subsidies were not continued what would happen? Immediately would come a demand for higher wages which could not be justly refused; and these demands, which would have to be granted, would automatically leave out of account the old age pensioner, the unemployed and the lowest paid workers.
  I will give the House an indication of what it would mean to remove the food subsidies. I happen to be associated with a group of pulse mills which are controlled by the Ministry of Food. The Ministry supply us with our raw materials at fixed prices, they take our costings and lay down the price at which we shall sell our manufactured articles. Not very long ago they informed us that they were no
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  longer going to subsidise these particular articles and so they increased the controlled price by practically 100 per cent. over night. What did that mean? It meant that a packet of processed peas went up at once from 4½d. a pound to 9d. in the shops. That is a very small commodity and perhaps it is not worth thinking very much about, but imagine that taking place in regard to a score or more of articles. At once there would be a reign of absolute chaos, and it would come upon the country overnight. I do not approve of much which the right hon. Gentleman does, but I approve of his retention of the food subsidies and I think there is some justification for his saying that he will fix the subsidies at so much and not allow them to go above that because in my view we are approaching the apex of the curve of postwar food prices. When the next 12 months have passed I believe we shall find that the tendency will be for food prices not to increase, but rather to droop and decline so that the subsidies will in a large measure reduce themselves naturally by the reduction in the prices of the primary commodities.
  The other thing which I wish to mention is the question of this 10 per cent. on dog totes. I understand that this is to be a first charge on the totalisator industry. Does the Chancellor think he is going far enough? Will he bear in mind that the living commercial theatre pays an average of 28 per cent. in tax as a first charge on its proceeds, and are not the dog totes getting off rather lightly by comparison? As for the bookies, they are surely in the privileged position of the non-profit-making theatrical companies—they are paying no tax at all! I suggest to the right hon. Gentleman that he might consider in his Budget next spring the possibility of sharply raising the tax on dog totes and, wherever possible, of bringing in the bookies. I suppose I ought to declare my interest in this matter: I never bet.
  6.25 p.m.
  Mr. Carmichael: In common with most of Members I can welcome this interim Budget as being satisfactory. My only objection is that I doubt if we can regard it as one that will make any serious attack on inflation. It will touch it slightly, but in the main it simply means added revenue to the

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  Exchequer. If I can find any satisfaction in this interim Budget it must be that it will give hon. Members of this House an opportunity of expressing themselves in such a manner as to warn the Chancellor regarding his annual Budget. One or two points have already been made. It is quite clear that the majority of the Members of this Committee are definitely opposed to any interference with the food subsidies.
  I am sorry that the hon. Member for Louth (Mr. Osborne) is not here, because I cannot accept this idea of courage which apparently he is reckoned to possess. I do not regard it as courage at all, because if he were left entirely with dictatorial powers, then every person in the land would require to regulate his or her life according to the moral standards he possesses. That would be a very dangerous doctrine to operate in the country, because obviously he is opposed to people who drink, very much down on people who smoke, and opposed to people who engage in betting. With them he would deal very ruthlessly. I can safely say that I am not interested in betting or even in smoking. I was not in the least perturbed today before the Chancellor revealed his plans, but I did see some hon. Members slip out and buy a few packets of cigarettes before the prices went up.
  There is a warning which should be given about the food subsidies. There is an impression abroad, fostered by Tory propaganda, that these subsidies are a sop by the Government to the great mass of the people of this country. It is obvious to Members of this House that if there had been no subsidies there would have been much more trouble in the industrial world. People would have been compelled to demand increases in wages up and down the country, and one of the important factors in that is that once wage demands begin in any of the basic industries there is no ending of it. A vicious circle begins as soon as one gets an increase, the price is altered and, of necessity, they are followed by demands from other industries.
  I regret one thing in regard to the food subsidies namely, that the Chancellor has given the impression that we have reached the ceiling in regard to them. I do not think we can argue that at all. If the Chancellor has been compelled to increase
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  food subsidies over the last two years, there is nothing that justified anyone stating today that these subsidies have now reached the limit and cannot be increased at some subsequent date. I hope it will be unnecessary to increase them, but that can only take place when there is a relationship between the money that is circulating and the amount of goods obtainable. Until we get that there can be no finality on this question of food subsidies. They may go up slightly or they may go down slightly, but it is not easy for anyone to undertake that they will not move in a certain direction.
  May I say a word in regard to the Purchase Tax proposals? I looked at the figure the Chancellor gave in regard to items taxed at 16⅔ per cent. That is to be raised to a little over 30 per cent. I submit that many of these goods affected are goods that go into the great bulk of the homes up and down the country. When we look at the case of goods where the tax is 100 per cent. we find that that has to be increased by only 25 per cent. But what are the goods which have 100 per cent. tax on them? In the main they are the goods like fur coats and such-like that can only be purchased by the very wealthy people. If there is a serious desire to stop spending it is in that quarter that it should be stopped, and, therefore, if there is to be an increase of almost 100 per cent. on the lower commodities which are more generally in use, there should be a bigger increase on the Purchase Tax on these other very expensive goods.
  With regard to the Betting Duty, the Chancellor admitted today that the principle of betting was legal. The question arises now, Where do we stop? My interest in betting is nil from the personal point of view, but we must face this matter as a practical proposition and we are compelled to examine it in detail. I agree with another hon. Member that we have done nothing in regard to this matter other than to bring a little more money into the Exchequer by way of the totalisator. The reduction of 10 per cent. may very well mean the reduction of the odds which are paid, and I think it opens the door to the people who own the totalisators to making a profit. They will readjust their betting in accordance with their costs. I suppose they may even resent the idea that the ordinary bookie

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  gets off without taxation, and in order to level things up there may be an increase in the charge for the bookie's stands on the dog-racing tracks. Actually, there may be a profit come out of it. I do not like the idea of extending the principle of betting, but if we examine this matter upon financial grounds I do not see how we can put a tax upon the totalisator and not on betting of every other kind, where it is practicable to do so.
  On the moral side of the matter I would like to say something which might be regarded as a little risky in certain parts of the country. It might be better to legalise betting, even the betting known as street betting, than to have the form of betting that exists now, and it might be less dangerous. Everyone from an industrial area knows what happens now. All kinds of people engage in street betting, in the most disreputable places they can find. All manner of people are enticed into taking an interest in betting in ways that are not good for the community as a whole. From my little experience upon the Continent and in Ireland I would suggest that where betting has been legalised there is a far better standard and approach to the matter of gambling than there is in this country, where we are supposed to be upon a higher moral plane. It may be risky in some quarters for me to say this, but that is my candid opinion, as one who is not personally interested in betting and who thinks it is about the most foolish thing that people can engage in. Once we have accepted the principle of taxing betting we must accept it in every direction. If we are to examine the matter upon moral grounds we must do so with a much better spirit.
  Compulsory saving is a very dangerous doctrine for anybody to suggest to the Government. If there is a feeling that people have money in the country's hour of dire stress that they do not require, I could suggest a lot of methods alternative to the idea of compulsory saving. If we introduce compulsory saving there will be no end to it. Where should we begin? With people with certain incomes? When we start to examine incomes we must also examine responsibility. Whatever be the attitude of the Chancellor next April in his forthcoming Budget I hope he will not think in terms of introducing compulsory saving of any kind. On the
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  whole, the present Budget will be welcomed. I am satisfied, whatever may be said from the Opposition Benches that it is not the kind of Budget they would like in view of the racketeering going on at this moment.
  6.34 p.m.
  Mr. John R. Thomas: I would like to deal with one or two points raised by the Chancellor, and first with arrears of taxation, referred to in the Report of the Public Accounts Commutes. I suggest that a good deal of responsibility for the arrears rests in delay on the part of the Revenue in reaching agreed assessments. Some of the arrears could be got in much more quickly if there were a speed-up in that respect.
  As regards increase in Profits Tax, I take it that this is the result of the premature cessation of E.P.T. In these times we must welcome, belated though it be, the increase from 12 per cent. to 25 per cent. upon distributed profits. One or two points arise which I think are worth attention. The conditions governing the Profits Tax at the moment bear unduly hard upon working managers and directors. Their salaries are taken into account and are regarded as distributable profits. If the percentage is to be increased to 25, that increase may put a brake upon the production which we need so badly in this particular crisis, and it must have an adverse effect upon production for export if that brake is put on too heavily.
  On the subject of preference shares, I would like my right hon. Friend to make a note of one point, upon which I hope we may have some answer at a later stage in the Debate. It has been necessary for many companies to go to the Industrial Finance Corporations to receive financial assistance for the purpose of assisting production from essential industries and for export. It has been the custom for these corporations to advance the money by way of preference shares at certain rates of interest. It may not be generally known to the Committee that the distribution of the interest on preference shares is regarded, from the point of view of Profits Tax. as a distributable profit, without being able to pay the necessary preference share dividends or interest, but the funds must be there in order to get the industries going. The Government in some way are responsible, because one

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  of these corporations is backed by His Majesty's Treasury.
  Let us take the case in which there is an issue of preference shares at 5 per cent. If we add to that figure another 7½ per cent. or, as is now proposed, 25 per cent., I say that it is a charge which I do not think industry can bear. Therefore, there is room for some mitigation of that charge, as regards the preference shares which are used in that case, and the funds from which are employed as working capital. The general outline of the Budget does not appeal to me, I have been stressing this question of indirect taxation ever since I came into—
  Mr. J. Lewis: Is it not possible to provide the finance by means of debenture stock?
  Mr. Thomas: Of course, it is possible to raise finance by means of debenture stock, but it is quite a different matter. It is comparatively simple if the assets are there to cover the debentures. I was really dealing with the question of working capital. I know of many cases in which the Industrial Finance Corporation made an advance on the basis of preference shares, and, owing to this incidence of the Profits Tax, it was upon my advice that a particular firm went back to the Industrial Finance Corporation and said, "If you do this, we have to pay not only your 5¼ per cent. dividend, but also the 7½ per cent. Profits Tax on distributable profits." That could not have been the intention when the Bill was passed. If that is now added to by the increased percentage, it will make it much more difficult for essential industries to raise preference capital.
  I come now to a problem which is very close to me, that of indirect taxation. One hon. Member opposite accused the Chancellor of being weak. I think the Chancellor is very strong and has terrific courage at this stage to impose further taxation on the lower income groups. I am not suggesting that there are at the moment very many definite alternatives. I will suggest one or two later on, but probably not to meet the whole case. Once again the man who drinks the beer, who fills in the football coupons and attends the dogs is paying the piper. If this anti-inflationary measure is required, it suggests that inflation is' really among
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  the lower income groups only. I cannot accept that view. I do not think that the gradual increase in the inflationary tendency is due to the action of the lower income groups. There is much more responsibility for it among the smaller section of the community which very often gets off scot free on realised capital profits. From time to time a capital levy has been suggested. The economists have advocated a capital levy, and the answer has been—
  Sir Harvie Watt: Will the hon. Member give the names of the economists who have advocated a capital levy?
  Mr. Thomas: I will with pleasure. I refer to the present Chancellor of the Exchequer, for one. I hope that will satisfy the hon. Gentleman.
  Sir H. Watt: It does not satisfy me at all.
  Mr. Lever: Also Professor Hicks of the "Lloyds Bank Review."
  Mr. Thomas: There is a suggestion that a capital levy would be impracticable. There are very good reasons in support of that, but I suggest that there should be some sort of tax on realised capital profits, which is not at all a capital levy under a different name. I have in mind cases of company promotions. One has only to read "The Times" any day. One sees the prospectuses of companies, and one finds that the original shareholders or proprietors have been able to sell an investment of £50,000 and probably get something like £250,000 for their holding. To show that I am not exaggerating, I know of a concrete example where the owner of greyhound tracks in the London area was able to dispose of three or four tracks, having an investment of something like £250,000, for £1 million. That is £750,000 capital profit, and I suggest that that is realised capital profit. It has been obtained. The shares may have been sold to an investment syndicate and later put on the market, which is precisely the same thing as an issue. It eventually gets to the public. That is a case of a cool £750,000 to one man. None of that profit is liable to tax of any kind.
  Mr. J. Lewis: Is that not the same as the man who buys a house for £500 and sells it for £1,500, making £1,000?
  Mr. Lever: That should be taxed as well.
  Mr. Thomas: The cases are not entirely parallel. Very often a man who sells a house for £1,500, if it is his own house, is probably going to another district where he will buy another house for which he will probably have to pay £2,000. As to the capital profits that have been made since the advent of the Labour Government, it is disgusting—I cannot use any other term—to think that this Government has allowed these capital profits to be accumulated over the years and that people have been able to get off scot free without any taxation at all. The Chancellor could very well have imposed a 10, 15 or 20 per cent. tax on realised capital profits. Perhaps the Financial Secretary will pass this on, because it cannot be said that there is any difficulty in the imposition of such a tax. The contracts are there, the documents are available and the bulk of the cash will be realised cash. I do not see why it should be difficult to collect that sum.
  I agree that when we talk about a capital levy and capital profits on certain transactions, it is right for someone to say: What about capital losses; who will bear them? That is no parallel to the argument I am putting forward. Where an individual has been able to realise substantial capital profits, there is no reason at all why that excess of funds should definitely help to swell the surplus of money and the Chancellor should not benefit. I hope that point will be considered. Perhaps we may have some suggestion from the Chancellor as to whether he proposes to deal with it.
  There is one other point. The Chancellor made a case for the 10 per cent. duty on the tote. I know something about totalisators, though I have no financial or professional interest in them. My right hon. Friend used the argument that the 10 per cent. charged on the Racecourse Betting Control tote would in some way impede the development and the breeding of racehorses and stock, which are, of course, a very valuable export. As I understand it, the 10 per cent. Betting Duty is on the investment. That means that for every £100 invested on the tote, whether it be dogs or horses, £10 will go to the State. There would then be £90 left, and the tote would take 10 per cent. of that £90, which is equal to £1 in £10. I submit that would not make much
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  difference to the finances of the Racecourse Betting Control Board, and it would tend to avoid the implication that one section of the betting class is being penalised at the expense of another. I think we should decide what section or group is chiefly responsible for any inflationary tendencies. I feel definitely that the least responsible are the lower income groups and yet they are the people who are always there to be shot at; they are the first people to "take the can," and I think they are "taking the can" on this occasion.
  I will end on the question of National Savings. Here I shall probably appear to be diametrically opposed to my own argument. I suggest to the Chancellor that a 2½ per cent. rate of interest is not sufficient encouragement for the lower income groups to invest in National Savings and Defence Bonds. I know it will be replied that this is the Chancellor's cheap money policy, but I suggest there is a difference. It is this: where an individual is able to invest substantial money, he can invest it in equities because, if they go down and he makes a loss, he is in a position to stand it and, by being able to take the risk of investing in equities, in the long run—irrespective of what the hon. Member for Cheltenham (Mr. Lipson) said a little while ago—he gets a much bigger return. On the other hand, the man with the smaller income, if he is to have an investment at all, must have an absolutely gilt-edged one because he cannot afford to take risks. Therefore, he is denied any chance of getting a greater return on his capital by investing in equities. Surely, it should be possible for the margin, where the income is below a certain standard, to be wider; surely there could be a special issue of National Savings or Defence Bonds with a higher interest, perhaps 3 per cent., 3½ per cent. or 4 per cent.? When the Government-sponsored Industrial Finance Corporation advances money, the rate of interest is anything between 4 per cent. and 5¼ per cent. If that is right for the Industrial Finance Corporation, why not for the lower income groups with lower income opportunities? It would give them a greater incentive. I hope that may receive consideration from the Treasury.
  6.54 p.m.
  Mr. Sidney Marshall: I cannot join the hon. Member

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  for Dover (Mr. J. R. Thomas) in his lamentations because the Chancellor of the Exchequer has not seen fit to go in for a further measure of confiscation of capital—
  Mr. J. R. Thomas: I made no reference to confiscation of capital; all I asked for was a percentage on the increased realised capital profits, which is by no means the same thing.
  Mr. Marshall: It is a similar intention from that side of the House at all times—it is an attack on capital in any shape. Whatever measure is introduced reducing capital appreciation, it is never enough for hon Members opposite because they want to see capital disappear altogether from the hands of the present holders. [An HON. MEMBER: "Nonsense."] However, one must be struck today by the total lack of imagination which the Chancellor has displayed. Obviously, the song in his heart is a very quiet one today because he has only been able to fall back again on the things to tax which have been taxed from immemorial times—beer, spirits, wines, increases in the Purchase Tax. In the tax on the pools and the tote he has exhibited no fresh field of imagination at all; he is merely, for the moment playing with the idea of a former Tory Chancellor who, if he had had in those days the support which now would be forthcoming, would have made a successful, large return on a properly organised tax on betting. It is obviously in the Chancellor's mind next April to introduce some properly organised tax on betting and I shall not be surprised to find that it will be received by the country far differently from the suggestions in the same field made by the Leader of the Opposition when he was Chancellor some years ago.
  I am sorry, however, that the Chancellor has seen fit for the first time to make what appears to be an attack on a great profession—the advertising profession. It is an enormous field of endeavour today and it is recognised as a highly-trained profession. The suggestion he has made that only half of the advertising expenditure of firms shall be allowed to count as legitimate expenditure during the year must hit advertising practitioners very hardly. It involves a large amount of money when half the adver-
  456
  tising expenditure is not to count as ordinary expenditure against profits. I believe it will injure the advertising profession greatly, but I expect someone else m the House will have something to say about this later. However, I hope it will not be the forerunner of a larger measure of taxation on advertising, because the profession employs large numbers of people who are bound to be affected in no small measure. Again, money spent on advertising is well and wisely spent. I could think of many ways in which money is not nearly so wisely spent. Advertising builds up goodwill; advertising means that the manufacturer of goods must at all times be anxious to improve their quality in order that he may get the best return he can from advertising them.
  Mr. A. Edward Davies: May I ask the hon. Member what is the point of advertising commodities today, such as motor cars and other goods, which people have no earthly chance of getting.
  Mr. Marshall: A point very well known. If the hon. Member was in business he would know. I have said already that advertising builds up goodwill—
  Mr. Lever: That is capital.
  Mr. Marshall: And it is a fact that only those people can afford to advertise whose goods are first class. It is well known now that advertised goods are of good quality, and that the money spent on advertising them comes back a thousand-fold because the quality of the goods is maintained as a result of the demand through advertising. I think this is a definite attack on a great and growing profession, and I hope the Chancellor will think twice about it. The attempt of the Chancellor to raise money by this Budget is very poor, it exhibits no imagination, and if it is the forerunner of what we may expect next April, we shall find the Chancellor continuing to introduce measures of purely predatory taxation as he has done in the past and has done today.
  7.0 p.m.
  Mr. Keenan: One or two items in the Budget merit some consideration, and, although they have been mentioned before, and will be mentioned over and over again, too much cannot be said about them. I refer

  457
  in particular to the Betting Duty which the Chancellor has imposed today. The time has arrived when we should be a little more honest and definitely face up to the problem of betting. Hitherto everyone has tried to avoid it, because of the volume of public opinion against it in different religious bodies. Whether we like it or not, I suppose that about 90 per cent. of the people of this country believe in betting. Now that a start has been made, I hope that the Chancellor will go on, so that when the next Budget is introduced a proper attempt will be made, which will not merely touch the fringe of the problem, but will get down to the question of the regulation of betting. I agree with several hon. Members who have spoken that horseracing totes should not have been left out. I am delighted to see the action taken by the Chancellor in regard to pools. I indulge in the pools, and I do not see anything wrong with that.
  Mr. Shurmer: How does my hon. Friend find the time?
  Mr. Keenan: Some folk spend a long time over small things. I could fill in a pool coupon in a few minutes, but I may not always do so if I am hopeful of getting results. One of the greatest criticisms has been that pools have been considered to be a ramp, and now the Chancellor has an opportunity to deal with the question. I do not doubt that the Chancellor will be able to keep some control over pool betting, but we ought to visualise, and I hope the Treasury will visualise, the desirability of bringing the whole question of gambling under control. Whether we like it or not, the majority of our people take part in it, and if it were regulated properly, they would not be fleeced as they are fleeced today by pools and bookies. I hope the Chancellor will have second thoughts about horse-racing totes, which should be dealt with in the same way as the dog totes.
  I would not care if no beer or spirits were ever brewed again, but I think those who drink beer are as much entitled to it as to any other form of amusement or nourishment. [An HON. MEMBER: "Or punishment."] I think those who already indulge in a pint of beer, or glass of spirits, as the case may be, are already paying enough. I do not see why they
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  should have to pay more than they have been paying for water. I do not see the slightest justification for an increase in taxation of beer. That hits the lower Income Tax groups. If we want to provide an incentive to the average worker, particularly in the heavy industries, where it is considered to be important—and is certainly of value—I do not think we should make beer dearer. I hope the Chancellor will have second thoughts on that, and, if there is anything he can alter, that he will alter the increase in the tax on beer.
  I am delighted that nothing is to be done about food subsidies. While he recognised the desire to retain these subsidies, I thought I could detect a threat that in April the Chancellor was going to alter his mind. I do not think there is likely to be any improvement in the general industrial situation of the country by that time. I do not think we will have recovered, although we shall have gradually improved. There will not be a fundamental difference in the standard of the workers by April, and I hope the Chancellor will not take heed of the Press campaign and the stupid attempts made by those in the Opposition this afternoon. The only Member of the Opposition whom I have heard denying that he was in favour of removing the food subsidies was the Deputy-Leader of the Opposition. As a party they are pressing for the removal of the food subsidies, and I was sorry that the Chancellor disclosed his intention—or at least seemed to us to disclose his intention—of changing his mind by next April. I warn him that it would be just as disastrous to attempt to do next April what I am glad he has not done today. That is more important than anything else. As one who has spent a lifetime in the trade union movement, I know what would happen if there were an attempt to remove the subsidies. There would be bound to be a demand for increased wages. The larger the family the greater the help rendered by these subsidies. If the Chancellor has any intention of doing anything different in April, I hope he will have another "think," and do as he has done today.
  7.8 p.m.
  Mr. A. Edward Davies: I find it very difficult to understand what is the Opposition point of view of some of the problems which arise out of the

  459
  consideration of a Supplementary Budget, or, indeed, of the whole basis of taxation and revenue in this country. One has heard them speaking with so many conflicting voices, and I thought the Chancellor did well to remind us this afternoon of some of the things that were said in August by the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson). In the Debate on the State of the Nation, the right hon. Gentleman made reference to the premature timing of such things as granting some help to the old age pensioners, the introduction of some of the social services—namely, family allowances and other things which help families so much—and the raising of the school-leaving age, all of which we on these benches had long looked forward to, and regarded as sound Socialism. On that occasion, the right hon. Gentleman seemed to be speaking for the Conservative Party, but in subsequent Debates we have heard hon. and right hon. Gentlemen on the Opposition Benches dissociating themselves from that view. For example, the other day we heard the right hon. Member for Saffron Walden (Mr. Butler) dissociating himself from that view.
  Here today we have had the Deputy Leader of the Opposition saying that the Conservative Party are in favour of some policy of food subsidies, and he referred us to the Brighton conference. Later on in the Debate, we heard the hon. Member for Louth (Mr. Osborne) who was most concerned about the policy of food subsidies and asked for their abolition. The top and bottom of this is that there is ho considered and agreed view on the part of the Opposition upon this matter, but upon these benches there is an agreed view, as we have heard throughout this Debate. One of our main reasons for the continuance of food subsidies is because as my hon. Friend the Member for Kirk-dale (Mr. Keenan) has said, we know that if they were taken off, there would be a whole spate of demands in the country for wage increases, and instead the problem of inflation being eased, it would get even worse in the course of time. I know that, apart from the old age pensioners, there are many low income groups—for example, railwaymen who have very few pounds a week. Although they have had some further
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  assistance from family allowances, they have a very meagre time indeed in keeping their homes going. After all, the renewal and maintenance of some of the things in the household cause a great deal of spending on articles upon which there is a heavy Purchase Tax. We find that families are confronted with a real problem in balancing their own budgets.
  I do not gather the same meaning as my hon. Friend seems to have gathered about the Chancellor's intention next April. What I thought he said was that while he would have to keep track of this spending upon food subsidies, he would direct his mind to a smaller number of commodities, and that, of course, we could not go on indefinitely spending endless millions in underwriting our food charges. I think we would agree with that, but we should hope that by that time there will be some prospect of an improved food position in the world. We should hope that, instead of food prices rising, there will be some decrease, which will have the automatic effect of reducing the food subsidies in the course of time, without detriment to the generality of men and women in this country.
  I listened with interest to the remarks of the hon. Member for Harwich (Sir S. Holmes), who, I believe, leads a small group of so-called National Liberals. I am sorry he is not in his place at the moment but if I recollect aright, he said that we had frittered away the American Loan. I dissent from that view completely and absolutely. I do not think it was intended to do some of the things which he said it was intended to do. He said he had expected it would have been used in capital development of all kinds, he even went so far as to say that we could have expected a lower record of accidents upon the railways, or at least we could have expected better performance and greater safety on the railways, if some of the money had been spent upon making the track safer and the service better. Surely, he knows that is rather a fantastic expectation after the railways have been run down and almost worn out by their long war service and prewar service, during which time they had perforce to be neglected; but before the war they were neglected for other reasons, and it is quite unreasonable to associate that with the spending of the American Loan, which was intended to give the people of

  461
  this country a temporary break, so to speak, until the nation could get upon its feet again.
  I should look for economy in other directions—for example, for greater economy in the granting of money which we are spending overseas on the Defence Forces. I do not think that my hon. Friends on these benches are in any way satisfied with the proposed economies in this direction. We see there a clear field in which there can be a much greater economy. We should like to have fewer men in the Defence Forces. We see that there are some prospects of being relieved of the onerous responsibility we have been called upon to face in maintaining our obligations in Germany. For example, I understand there is a prospect that America may relieve us of some of the charges we have borne for some considerable time at great inconvenience. I hope that in this matter of overseas expenditure on the Defence Forces and in Germany we shall see ourselves in a happier position by this time next year.
  I hope, also, for a reduction in the cost of food, and that this will put us in a better position. On the other hand, we shall be increasing the production of coal and should be able to export a considerable tonnage by this time next year, and that in itself will have the great effect of reducing the gap of our import/export account. I believe that my faith is not wrongly placed in my miner friends, and that they are going to do their utmost in the days ahead to achieve the target, and to surpass the target. They realise how very much coal is the key commodity, not only in our domestic industry, but in the needs of other countries whose economy is interlocked with our own.
  I should like to remind the Committee of some things which the right hon. Gentleman the Member for the Scottish Universities said on a former occasion when we were considering problems arising from the Budget, and how we should raise revenue. He seemed to say that if our taxation was of a crippling nature on the higher income groups, or upon the earnings off capital, there would be some kind of discouragement which would be to the detriment of the nation, and that men and women would not be prepared to use their talents in the interests of the country, and to that extent we should be less efficient. He said that the men would not react
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  to this necessity for putting their best into industry, or indeed in other fields of activity, unless they were handsomely rewarded, and, as it seemed to me, disproportionately rewarded in comparison with some other workers in industry.
  I want to say that as a Socialist I do not accept that thesis. I do not believe that the motive which leads a man to give his best service to the community is necessarily the financial motive. I hope that the Socialist Chancellor of the Exchequer will follow a policy which seeks to put the financial burden of this country upon the shoulders of those who can best bear it, and to do away with the disparity of the top people who enjoy, as it seems to me, a position of privilege and security out of proportion compared with many of the aristocratic workers, the lower income groups in this country. I hope that this policy will be shaped in such a way that this disparity will be reduced, and I do not—as I have said before—accept the thesis of the right hon. Gentleman the Member for the Scottish Universities that if this is to be the case, it will have the effect of discouraging men and women from contributing to this country's need, and putting their best into industry.
  I believe that there is a new spirit abroad in this country. If we can make the people of all sections of the community understand that our trials and sacrifices are to be shared, and if men are willing to accept a condition in which the frontiers of State interference in the economy of the nation are going to be extended, then men will give their best service to their country because they love their fellows and their country. I think that the right hon. Gentleman the Member for the Scottish Universities was misleading us when he expressed the view that men and women would only give of their best on the basis of disproportionate reward. I hope that his remarks will not be the basis of the policy of Socialist Chancellors in this country. I do not believe that they will be.
  In conclusion, I think that the supplementary Budget presented today is fair and reasonable and forms an ingenious approach to the difficulties of our country. I think that the Chancellor of the Exchequer is to be congratulated. I am sure that the working class people will do their best to support him.
  7.21 p.m.
  Mr. Gammans: I was interested and a little amused by what was said by the hon. Member for Burslem (Mr. Edward Davies) when he talked about the volume of agreement which exists, or is supposed to exist, among his hon. Friends, and contrasted it with the lack of agreement that is supposed to exist on this side of the House. Time and again we have had hon. Gentlemen opposite beating their breasts with righteous orthodoxy and then saying the most outrageous things against their own leaders on the Front Bench. He has just said that he thought that the people of the country would be prepared to work, and that more and more were prepared to work, not for any thought of gain, but for love of country. Look where that leads him. That leads him to a fixed wages policy. It leads him to stabilised wages.
  Mr. Edward Davies: I do not think that it does anything of the kind. I think that the premise in that case would have to be that everybody was satisfied that they were getting a fair deal. But there is a great deal of disparity and dissatisfaction which must be resolved.
  Mr. Gammans: Let us go a bit further. If the hon. Gentleman thinks that people are prepared to work for the love of country, why is it that the Government offer these very high salaries for jobs on the Coal Board?
  Mr. George Wigg: Ex-Tories.
  Mr. Gammans: Why is it that one of the first things the Government did when they came to office was to raise the salaries of Members of Parliament, an action for which they had no mandate whatever? However, I do not want to talk about that. I wish to refer to one point which the Chancellor of the Exchequer mentioned this afternoon and which was referred to by one hon. Member opposite just now. It is the savings movement. I thought that the Chancellor rather skimmed over the seriousness of the situation. When he introduced his Budget last April he made it perfectly clear that unless he raised about £1 million a day—I think he wanted £360 million a year—our whole financial stability would be imperilled. He said, quite clearly, that without this sum we
  464
  would get inflation. We have got inflation, and one of the reasons why is that he has not got the £1 million a day on which he budgeted. I think that up to now the amount he has got is about one half of that sum. What is the reason for that? One hon. Gentleman said, "Let us raise the interest. We would only raise the interest for a certain number of people." It was a sort of inverted means test. If one could prove that one had saved only a little bit of money, one got 4½ per cent., but if one was foolish enough to save a lot more, the rate of interest would be reduced.
  If hon. Members opposite, and their Government, do not know already, I will tell them why it is that people are not putting money into the savings campaign. There are four reasons. The first is that there is a growing lack of faith in the value of sterling. It is not only abroad—we have already seen what has happened abroad—but in this country that people are losing faith in the value of the money they put into the movement. If a man puts 20s. into a movement, he wants to get 20s. worth of purchasing power out of it. People who put money into the Government's saving schemes—into the Chancellor's 2½ per cent.—at the beginning of this year, have lost at least 10 per cent. of it already. The second reason is that people are reluctant to put money into a Government which goes in for gross extravagance. If the Government want people to invest their money in Government Stock, they must satisfy the public that that money will not be grossly misused and wasted in a dozen different directions. The third reason why people are not putting money into national savings is that a growing number disapprove of the uses to which that money is put. They disapprove of many of the Government's nationalisation schemes. They are not prepared to see their money being used to finance those schemes.
  The last reason, in some ways, is perhaps the most important of all. When people save they do not save for no purpose at all. They do not save in the abstract. Most people who put aside money have the idea of drawing it out at some time for some specific purpose. The largest single inducement to most people to save money is the desire to put it into a house. If the housing policy of the Government were so designed that

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  those who were willing and able to invest their money in houses were allowed to do so, then we would see an immediate increase in savings all over the country. As things are, we have the perfectly ridiculous situation that four houses out of every five which are built in this country today are being subsidised whether or not the people who occupy the houses need the subsidy. On the other hand, if the Government were prepared to allow those people who were willing, to put their money into a house, then and only then, would we get an increase in savings month by month.
  Mr. Lever: Would the hon. Gentleman take the subsidies off housing?
  Mr. Gammans: I would take off the subsidies in the case of those who did not need them. What could be more fantastic than that four out of five houses today should be built with a subsidy whether or not the people occupying them need a subsidy? There is no country in the world that could stand a housing policy worked on that basis of economics. The present housing policy will fail for no other reason but that. It is bound to fail if four out of every five houses have to be subsidised by the rest of the community.
  Mr. Edward Evans: Is it not true that almost every local authority has a "points" scheme by which they allocate these houses, and that the prime test is the need for a house?
  Mr. Gammans: I do not see what that has to do with this question.
  Mr. Evans: It has everything to do with it. It knocks the bottom out of the hon. Gentleman's argument that the allocation of houses is not based on need.
  Mr. Gammans: I am very sorry. I must have put my whole case very badly when the hon. Gentleman comes along with an interruption like that. What I say is that if people who are willing and able to put their money into a house were allowed to do so, that would be a great inducement to saving. When people are denied the reason why most of them want to save, then they will not put their money into savings movements. If the Government are worried about savings—and I hope that they are—then they must put right the basic causes which are preventing people from saving today. Let us have a Government which bases its policy on
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  sound finance. Let us have a Government prepared to leave its political prejudices outside the Savings Movement.
  Mr. Wigg: I am obliged to the hon. Gentleman for giving way. If we are going to be asked to put aside our political prejudices, will he address his remarks to the noble Lord the Member for South Dorset (Viscount Hinchingbrooke), whose prejudices are so intensified that he invited his fellow countrymen deliberately to sabotage the savings movement in his own class interests?
  Mr. Gammans: I am not here to address the noble Lord, but to address the Government. The noble Lord is entitled to hold these views if he wants to do so. What I am trying to tell the Government and the Committee is why, in my opinion, the savings movement is proving an increasing flop. The reasons are those which I have just given. People are losing faith in the value of sterling, they are not prepared to put money into a Government which is extravagant, and I want to tell the Committee and the Chancellor that, not only will he be unable to maintain the present level of savings, but that the position will get worse.
  7.31 p.m.
  Mr. Lever: It is a pity that the Tory party always seems to argue on grounds which seem to have little connection with logic. They always pick the 1 per cent. and ignore the 99 per cent. They always seem to see the widows and orphans who hold debentures in railway stocks when nationalisation comes along, and never the multi-millionaire investment trusts; always the few workers who have got a bit more money than the rest and who can afford to pay a little more for their food, and not the great majority of the people of this country who cannot stand any increase in the cost of living. They only seem to pick on the man who can afford to be without a subsidised house, but leave alone the ever-whelming majority of the people who are benefiting from the liberal policy which the Minister of Health has been pursuing in seeing that the houses built after this war are not putting money in the hands of speculative builders in favour of people who have got a bit of money and can outbid those who cannot afford to buy them. They will not convince us by such examples that our policy is not justified.
  Mr. Gammans: Does the hon. Gentleman realise that the Minister of Health in this House the other day was boasting that he was now building houses through the local authorities for the middle classes, and that my question is why the rest of the community should subsidise the middle classes?
  Mr. Lever: Because, as a matter of fact, the middle and professional classes have been very badly hit by the inflationary period in which we are living, and because we, on this side of the Committee, not representing big capitalist interests, but all workers by hand and brain, have vigorously espoused the cause of the middle classes and intellectuals, who have shown a noticeable dislike for the reactionary policy of hon. Gentlemen opposite. They must not tell us that we are narrow and sectarian people because we support the provision of these homes for the middle class people of this country. The more thoughtful Members on this side of the Committee realise that their interests are identical with the interests of the professional and working middle classes.
  We must try to avoid shedding too many tears over the dispossessed widows and orphans who had saved up and bought stock in the railways, and concentrate our attention in the operation of the food subsidies, which benefit the working classes. In one of the most stupid speeches I have heard, the hon. Member for Louth (Mr. Osborne), with a sincerity only equalled by his complete ignorance of current conditions, demanded the immediate abolition of the food subsidies, because, he said, we are subsidising spivs. The hon. Member does not think of the 750,000 men in the mines whose food has been subsidised, but concentrates on a few gentlemen with padded shoulders loafing around the West End. It is interesting to note that, while the pundits of the economic journals have been lecturing the Chancellor heavily on this subject, none of them has had either the effrontery or the courage of the hon. Member for Louth in suggesting that we should take away the subsidies entirely. They have only suggested something like a 15 per cent. reduction. They will toe happy to see that the Chancellor has arrived at the same result, because the Chancellor has got the same money without hitting the
  468
  poorest section of the people by taking it off food, and by putting it on more expenditure for drink.
  So far as football pools are concerned, I have never been an advocate of nationalising them, but I think it is quite a good idea to rationalise them. I think the Chancellor is going to make twice as much profit out of it as the present owners, because I understand that they work on a 5 per cent. profit and the Chancellor will get 10 per cent., and I think that his "suggestion is an advance on the suggestion made by those who wish him to take over these businesses. I think it is right that the Chancellor should be urged to try some more modern approach to get the working people of this country to take more interest in the Savings Movement. I think he ought to offer more favourable terms for small savings, and show some imagination in planning a savings drive and linking it up with better old age pensions and the like. He really must not be afraid to innovate in these matters, but must think out new schemes.
  I think, too, that the hon. Member for Hornsey (Mr. Gammans) has given the Chancellor a very useful tip, which I hope my right hon. Friend the Financial Secretary will pass on to him. The hon. Member tells us that the moneyed people in this country would not plump for 2½ per cent. "Daltons" because they have no confidence in sterling. What are they doing? They are sending money out to South Africa and Eire at the rate of £45 million a year, that we know of. The Chancellor gave me this figure in an answer to a Question, and said that £45 million had been exported by way of capital to South Africa and Eire in the last 12 months. These are the Chancellor's figures, and I should say that it would be a safe bet to double these figures in trying to arrive at the right amount of what has been exported in capital to those countries alone, and there are many other countries to which capital is permitted to go in the sterling area.
  I want it to go on record that this money is going out at an ever-increasing speed, and that, if the Chancellor does not do something about it now, he will have to do something about it soon, sterling bloc or not. I hope he will be firm on this, and will say that this time we will have the door locked before the horse has

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  gone, because, if the door remains open much longer, it will not be possible to lock it, and not only the horses but half the stable will have gone, through the operations of people who have no confidence in sterling and who are taking their money out to South Africa and other areas. I urge him, at any rate, to move now before being compelled to take action later.
  I am glad the Chancellor resisted the suggestion that the Budget should be based on what "The Economist," I think, called a mass attack upon the spending power of the people of this country. The capital inflation that exists in this country now is not due to the spending of the mass of the people but in some measure to the fact that most of the companies in this country today, swollen with large retained war profits and postwar profits, are embarking on new schemes of capital expenditure because they have large sums of money available for the purpose. No physical control can cope with all this spending power in the hands of the companies of this country, especially when conditions are so very profitable from their point of view. I urge upon the Chancellor that he should do something to immobilise the large capital sums which have been accumulated by companies and industries in this country, until times are easier. He must not allow it to go on as it now goes on, spending itself freely and creating an inflationary situation which leads to all sorts of chaos and hold up.
  Mr. J. Lewis: Would my hon. Friend care to elaborate on what those companies are now spending the money? Surely, he realises that there are controls of both materials and labour?
  Mr. Lever: I am sorry that my hon. Friend is so naive. If I were a Minister, I would say that if he would write to me, I would give him a full explanation, but I will tell my hon. Friend, because it is an important point, briefly the position. Huge sums of profits are made by companies, private and public, and are retained by them after paying the standard rate of tax. This money is ploughed back into the business and is available for spending. I submit to my right hon. Friend the Chancellor and to hon. Members, who know perfectly well that is true, that while we have these
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  hundreds of millions of pounds awaiting expenditure, no amount of physical control will be able to stop large amounts being spent lawfully and unlawfully by lobbying and by wangling of all sorts.
  Mr. J. Lewis indicated dissent.
  Mr. Lever: It is no use my hon. Friend shaking an innocent head at me. It only needs the evidence of our own eyes to see what is going on. I hate to do what an hon. Member somewhat naively did a little while ago—refer the Committee to a previous speech he had made in order to have a second audience for what was little cared for at the first hearing. I must, however, refer my hon. Friend to my recent speech on luxury building in order to prove that controls have become ludicrous when there is a vast amount of money available for spending.
  Mr. J. Lewis: Luxury building may be one thing, and that is a matter with which my hon. Friend dealt. Unfortunately, there are one or two inaccuracies which he has not corrected. In this case, I challenge him to give the Committee tonight any concrete example of where, on a large scale, sums of money retained by companies are being expended in the way he suggests.
  Mr. Lever: I find it difficult to be brief with so much Left Wing criticism directed against me and with all this Socialist heckling by the hon. Member for Bolton (Mr. J. Lewis) which has become almost a continuous barrage. I retract nothing of what I said about the grossly extravagant luxury building that has gone on in this country. If my hon. Friend wants examples of it, he must come with me on a conducted tour, and I will show him that practically every luxury industry has ploughed-back money to spend. Luxury and non-essential firms have large sums of money which they have ploughed back to spend and they are spending it. If my hon. Friend really believes that what I am saying is not right, he must come and see me, and I will give him chapter and verse, and add to his economic, financial, political, and general wisdom.
  I have something else to say to the Committee on the question of taxation. I am sorry that my right hon. Friend the Chancellor is not present, but no doubt he can be persuaded to read my words, after he has finished softening the blow

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  to the nation over the air tonight. It is the question of putting the burdens on the backs of those best able to bear it. We have always assumed that the backs able to bear high taxation are those in the high income groups. That is not so any longer; taxation on earned income has already reached an excessive rate and certainly ought not to be pushed any further. The backs able to bear it are not those of the people declaring large sums for Income Tax and Surtax. If anything, I should say that the rates of Surtax on earned income ought to come down. If this shocks any of my hon. Friends, I am sorry, but I am a practical man and believe that a reduction of taxation on earned incomes is desirable at the present time.
  Never mind the spivs; let us talk about company directors and others. As a matter of fact, capital appreciation is a new form of income earning which is much more profitable than ordinary income which is liable to Surtax at 19s. 6d. in the £. Therefore, there is an enormous professional business being carried on now of discovering means o£ capital appreciation which avoids Income Tax, and it is obvious that this a practised on a tremendous scale. The decent ordinary people who earn, say, £3,000 or £4,000 a year—senior civil servants, and people of that sort—get quite a modest living out of their taxed salaries, and the only people who are really wealthy today are those who earn large sums of money which escape tax because they come within some antique complicated rules which make the money received capital appreciation rather than taxable income. Those moneys are not capital appreciation, but a form of earning which people achieve, and add to their income. I place no blame on the individuals who benefit but on the system which allows their capital profits to escape tax. The further thing that becomes obvious is that my right hon. Friend the Chancellor ought to get down to the question of making people pay tax on their real incomes, and stop these various wriggles, legal and illegal.
  I beg my right hon. Friend not to be afraid to act, not to be lethargic and advised by over-cautious conservative advisers, who have regularly been proved wrong over the last 30 years and are likely to be proved wrong as long as he
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  is in office. He should call in the currency, change it, and eliminate millions of black market and tax-evading money which exists in this country and which is being spent, much to the aggravation of people who pay their taxes and live reasonably honourable lives. My right hon. Friend must not, simply on the grounds of some administrative difficulty, fail any longer to do this. I appreciate what he says about not getting a new horde of officials; but, of course, a few officials in charge of the right financial controls will save ten times that number of officials operating physical controls.
  I did not expect that my right hon. Friend the Chancellor was going to perform a social revolution in this intermediary Budget, but we expect a lot more from him in the Budget next year. This is not a spectacular Budget. On the one hand, he has managed to hold on his course in the things that matter, but I certainly do not think that the penny on beer should be imposed. He could get the same amount of tax by putting more on whisky and gin, without harming the great majority of the people who drink those fluids. In any case, most of them do not get it at 25s. 9d. a bottle; they buy it mostly in nips at their pubs, hotels and clubs at about £5 a bottle, and another 10s. on whisky and gin would have saved him this penny on the beer. I hope that my right hon. Friend, with that resilience which is one of his most marked and attractive characteristics, will make the necessary alteration in respect to that matter.
  While I warmly congratulate him on his having stood firm against an immense reactionary-pressure from all sides, and especially from economic pundits, I must ask him to realise that we on this side of the Committee expect a great deal more from him on the control of capital and tax evasion, the calling in of the currency, and the realisation that the working people of this country—in spite of what was said by the hon. Member for Louth, who has just made his reappearance, but, unfortunately, not in time to hear my views on his speech—honestly cannot afford to have any more burdens placed upon them. If more burdens are placed on them, they will rightly demand more wages, and an inflationary spiral will be set in motion. Hon. Members on these back benches will object to any further burdens being laid upon the working

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  people of this country. While congratulating the Chancellor, I hope he will take notice of the various points that have been raised, and that any matters he has left a little in the air in this interim Budget will be cleared up in the Budget which we expect from him next year.
  7.53 p.m.
  Major Tufton Beamish: I shall not detain the Committee for any length of time. In fact, I intend to speak for only 30 seconds. I want to make one remark for the information of the Chancellor of the Exchequer, who I am sorry is not here this evening. I very rarely visit the cinema, but after the last Budget speech I decided to pay one of my rare visits, and the choice was clear. I went to "The Road to Utopia." This year, after listening to the right hon. Gentleman's speech, as soon as I leave the Chamber, I am going to see "Gone with the Wind."
  7.54 p.m.
  Mr. Monslow: I will endeavour to emulate the hon. and gallant Member for Lewes (Major Beamish). I would like to congratulate the hon. Member for Louth (Mr. Osborne) on having exposed the Tory policy. Now we know what it is.
  Mr. Osborne: The hon. Member must be fair. I said that I was speaking for myself, not for my party.
  Mr. Monslow: I listened to the hon. Member for Hornsey (Mr. Gammans) with certain misgivings. I would say to him that his speech concerning the Savings Movement was a most disreputable and unpatriotic speech. I also thought that his observations with regard to housing subsidies rather implied the trend of mind which would leave housing to the rent racketeers.
  Mr. Gammans: Would the hon. Gentleman say what was disreputable or unpatriotic in what I said about savings?
  Mr. Monslow: I say quite frankly that, to my mind, the speech was clearly indicative of a trend of mind which was advising the people of this country not to save. The Members of the Tory Party, who sometimes express themselves in two voices, have been endeavouring to make political capital out of the crisis not only of our own country but of the world. They blame the present Government for
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  all our economic ills, but if they were asked to take over the functions of Government they would shudder and run away from such responsibilities.
  Mr. Osborne: Resign and see.
  Mr. Monslow: The right hon. Member for Woodford (Mr. Churchill) has made two rather important declarations during the last few days. He said that the longer the dismissal of the Labour Government is postponed, the worse it will be. I want to contrast that statement with the declaration of the hon. Member for Lonsdale (Sir I. Fraser). He said:
  "Britain's industrial production is 10 to 20 per cent. greater than in 1939 and we have more men and women at work than ever before. Britain has made a remarkable recovery from the exhaustion of war and it is time we patted ourselves on the back."
  We thank the hon. Member for Lonsdale for that admission of the great work done by the Labour Government. What a pity these two Tory spokesmen did not compare their notes before expressing themselves.
  The Chancellor dealt very effectively with the statements of the right hon. Member for the Scottish Universities (Sir J. Anderson) both inside and outside the House. The right hon. Gentleman said that food subsidies were a running sore and the Government had acted too hastily in paying even the existing level of pensions and allowances, and that that expenditure should be ruthlessly pruned. The people with fixed incomes—I refer to those with allowances and pensions—can rejoice tonight that we have a Labour Chancellor of the Exchequer, for that statement proves beyond any question of doubt the sort of interim Budget we could have expected if it had been introduced by the right hon. Member for the Scottish Universities.
  The Chancellor has not only protected the interests of those with pensions and allowances, but he has also protected the great majority of the workers. He has not accepted the dictation of the City and the financial magnates who have been pursuing him for weeks and urging the freezing of wages. That policy would never have been accepted by hon. Members on this side of the House. The decisions taken on Inland Revenue, Customs and Excise Duty should have been taken earlier, and I believe that it would have been more desirable if the

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  Betting Duty had been 20 per cent. instead of 10 per cent. Few Chancellors have framed a Budget amid such insistent advice from their enemies. I am glad the Chancellor has rejected the advice of these self-appointed counsellors.
  In this interim Budget, in spite of the economic crisis my right hon. Friend has not placed on the shoulders of the working people more burdens than they can bear. True, it is a deflationary Budget, but not on the lines suggested during recent weeks by the City and by Tory Members. Let us examine what would have happened had hon. Members opposite been in power. Food subsidies and controls would have been removed. There would have been no limitation of profits. There would have been a reduction in the Surtax and a cut in the social services. In the difficult economic crisis through which this country is passing, the Chancellor deserves our highest commendation for keeping in check the wolves who, had they been responsible for the Government today, would have devoured the ordinary men and women.
  7.58 p.m.
  Mr. George Wigg: I want to congratulate the Chancellor on the interim Budget which he has introduced, and on the triumph which he has achieved over what I will call the tyranny of so-called informed opinion. In days and weeks past the Conservative Press have been demanding an interim Budget which would bring about cuts in the food subsidies and the building up of Purchase Tax on articles of every day use. Had the Chancellor taken that line and accepted the advice that was so freely offered to him, it would have brought about major doubts in the minds of many of my hon. Friends on this side of the House. The Conservative Party have still to learn the lesson of the General Election of 1945, but I must confess that in recent months there have been signs that they are beginning to realise there is a lesson to be learned. The more intelligent of them know that as long as there is a policy of full employment and there are no labour surpluses, the conditions do not exist for the return of the Conservative Party to power.
  In the 20 years between the two wars the balance of political power in this
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  country did not rest at 10, Downing Street, but in the City of London, where the control of credit was exercised. Today the credit instrument, the fiscal instrument, has been brought under control by the Treasury. The balance of political power no longer rests in the City of London but is in the hands of the miners, because the basic commodity in short supply is not gold, nor credit, but coal. If anyone thinks for a moment—anyone on the benches opposite—that the miners of this country would work better for a Tory Government than they would work for a Labour Government, all I can say is they would believe anything.
  Air-Commodore Harvey: They did work better before the war.
  Mr. Wigg: They did not work better before the war—except under the scourge of unemployment and bad conditions, the fear of which drove them to break their backs in the strike of 1926. I have no doubt that that is what hon. Gentlemen opposite want them to do, and have been manoeuvring to ensure in the last few weeks. If the Chancellor had walked into the trap very carefully prepared for him—very ably prepared for him by such organs as the "Economist" and "The Times"—and had, in fact, cut the food subsidies or put a tax on electricity and gas, he would have been guilty of a major crime—it would have been a crime—of a Labour and Socialist Chancellor carrying out a Tory policy. I want to say to those who have built up considerable reputations as economists—I confess that they are considerable reputations—that if they want to introduce unemployment in this country, if they want to cut food subsidies, if they want the Tory policy carried out, then let the Tory Party do it. At all costs the Labour Party must keep away from such a policy.
  I am very glad, and my heart has been considerably lightened, because of this Budget today. It shows that the Chancellor has stood up not only, as I have said, to the tyranny of informed opinion: he has also triumphed over the Treasury. I say that because I am quite certain that very considerable pressure must have been put on him in the name of financial orthodoxy. Having looked at what the result of the policy of the Budget is going to be in this fiscal year, I wonder why an autumn Budget was introduced at all,

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  because the total amount is so small that, really, it could have been left over to the Budget that will be introduced in the spring. Therefore, the great interest for me in this Budget is not what is in it but what has been left out.
  It is a fact that we have avoided the Tory trap. We have avoided the trap of 1931 when the Tories played exactly the same game. Then they used the May Committee, a Committee composed of all the great financial interests which, despite the Tories' industrial charter, still hover and always will hover in the background behind the Tories, shaping their policy—the gentlemen who have subscribed the million pounds and who want something back for that. They are not the widows and orphans, but they are the fellows who shape Tory Party policy. They want something and that something is not industrial democracy but industrial discipline, which would mean the re-creation of unemployment. That is the policy outlined for us by the "Economist." We have not had the Tories coming out to endorse that policy today. But the right hon. Gentleman the Member for the Scottish Universities (Sir J. Anderson) has got very near it. Less intelligent hon. Members of the party opposite—the very honest Members like the hon. Member for Louth (Mr. Osborne)—have come out today and have told us what they would do with the food subsidies if they had power. Now we know where we are. We know now that there is a clear-cut division between us, and that if hon. Gentlemen opposite had their way they would cut the food subsidies.
  Mr. E. P. Smith: I do not think the hon. Gentleman had the advantage of listening to what I said on the subject.
  Mr. Wigg: I am sorry. If the hon. Gentleman disagrees with the policy of his party, let me congratulate him and ask him to come over here, because clearly there is no place for him on those benches. I have voiced my congratulations to the Chancellor on his courage, and on the renewal of his Socialist faith which, I must confess, sometimes in the past I have had reason to doubt. There is much joy over a repentant sinner, and there is great joy on these benches tonight. If he had followed the alternative policy, I should for the first time, have been forced to go into the Lobby against the Government, because if the country
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  wants a Tory policy, let the country have it and the consequences; but I would not be a party to carrying it out.
  Having voiced my congratulations to the Chancellor I want to sound a note of condemnation. I think that the Betting Duty, as the Chancellor has outlined it, is unsatisfactory. Occasionally I am an innocent punter—and one who never backs a winner. I have been to dog race tracks three or four times, but I lave never backed a dog that won. However, I have observed that the practice of going to dog race tracks and backing dogs is one which gives enjoyment to a considerable number of my constituents, although we have no dog track in the constituency. When I have been to dog race tracks I have found that the majority of people who go to them are workingclass folk having an evening out, risking a nimble bob; and I do not think they are any the worse for that enjoyment. I think it is fundamentally wrong that the Chancellor should tax them, the working class, while those who go in for the more aristocratic form of betting on horse racing should escape.
  I am astonished that the Chancellor, who is, after all, an extremely intelligent person, should come to the House and use the argument that there is a difference between dog track races, because they are private ventures, and horse racing, where the totalisator is run by the Betting Board. In the long run, whether one puts a bob on a dog or two bob on a horse, it is the punter who is going to pay, not the Betting Board, not the race track not the dog track. Furthermore, from my observations, the man who goes to the dog track gets much more value for his money. He can take his wife or his girl and enjoy a meal in reasonably comfortable surroundings.
  Mr. McKinlay: Is my hon. Friend speaking as a Socialist, or as a track representative?
  Mr. Wigg: I am speaking as a Socialist, because I object to a tax being imposed upon the working class, whilst the more leisured and wealthier sections of the community can escape from it. If the hon. Gentleman expects me to see any particular measure of Socialism in the working of the Betting Control Board, all I can see is that he and I differ on fundamentals. My point at the moment is that

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  I think the Chancellor's argument that dog racing should be treated differently from horse racing, merely because one is owned by a private company and the other by the Betting Control Board, is quite fallacious. The wealthy citizen who wants to have a bet has only to pick up the telephone and contact his agent, when he can wager what he likes. There can be no doubt but that in the course of every race run under the Jockey Club or the National Hunt Committee thousands of pounds change hands. That money ought to be taxed, although I recognise that it is extremely difficult administratively.
  I certainly think it would be possible to reintroduce a fairly steep tax on the book-making fraternity. The fact that the Chancellor would find the amount of money thus brought in comparatively small is, to my mind, quite irrelevant. In this world, it is not sufficient merely to be just; one must appear to be just and to give the impression of doing one's utmost to be just. The way this tax is to be administered will cause a great deal of resentment—I must confess, quite rightly—for those people who spend some of their evenings at the dogs will feel they have been picked out for special treatment, whilst those who go horse racing are escaping. Therefore, I say to the Financial Secretary that whilst I approve, and indeed applaud, the measures taken by the Chancellor, at a later stage I shall put down an Amendment to bring horse racing within the provisions of the Finance Bill; and I hope that one of my hon. Friends who has greater knowledge of the bookmaking question than I will join with me, so that we can exercise our ingenuity to see how the bookmaking fraternity can be included.
  8.12 p.m.
  Mr. Scollan: I have only one or two points with which I desire to deal. The first is with regard to the fear of inflation. Inflation is here, and has been here since about 1940; but it has been kept under control, largely by controlled prices and the scarcity of goods which have been rationed. Surplus money chasing scarce goods has found an outlet in some of the very places which my hon. Friend the Member for Dudley (Mr. Wigg) has been denouncing—in the pools, the greyhound-racing tracks and on the racecourses. A larger circulation
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  has certainly taken place among those who operate the black market. The unfortunate thing about having all this money in circulation is that once it gets to certain proportions, it becomes the source and springboard for a large black market, thus undermining the faith of the people in the control and rationing system, which has been successful up to now.
  It is not very difficult to understand, when the people of this country learn that the worthless mark in Germany was given a fictitious value of 40 to the £, and that we lost some £59 million in a kind of black market transaction which took place, how easy it is to take a step in the same direction here. That certainly is an easy step, when there is this accumulation of money, and when the newspapers are concentrating on telling the people that gangs are going round buying up cattle, sheep and pigs and having them slaughtered and sold on the black market at fanciful prices with which the ordinary dealer cannot hope to compete. Up to the moment no plan has been devised to deal with that situation. So long as we allow only a certain amount of money to circulate, a stop is put to many of the transactions which might otherwise take place. At the same time, it simply blocks certain channels through which the money might escape, and it is now merely accumulating.
  The Chancellor ought to examine the question of changing the currency completely. I do not know what the objections are to doing so, but not so very long ago the Chancellor had to come to the Committee and tell us that we had to give £20 million worth of silver to the United States, which we owed them, and that to do so the small change currency must be altered; we had to abolish the silver coinage and introduce cupro-nickel. To my mind, that was a much harder task than would be simply changing the form of the pound note. As a matter of fact, I have often wondered why we did not change it when the Bank of England was nationalised. During the 1914–18, war when the Bank of England and the Joint Stock Banks of this country could not pay their way and closed down, we had to use postal orders and to introduce Treasury Notes, which had a picture of the Houses of Parliament on the back, showing that they had the backing of the whole nation. The first thing that happened after the

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  war finished was that the Bank of England reasserted its authority and withdrew the Treasury Notes, issuing notes with a picture of the Bank of England on the back. The first thing we should have done when we took over the Bank of England was to reassert the authority of Parliament, and to bring out currency with a picture of the Houses of Parliament on the back. I suggest that the Chancellor of the Exchequer might seriously consider the reintroduction of Treasury Notes. It would force the people with large accumulations of currency to come forward and claim the new currency in place of the old. So long as we have this floating money, we shall have this sore of the black market.
  I am very much concerned about the operation of the Purchase Tax. In this connection, a case which came to my notice quite recently is rather interesting. A woman showed me some dockets she had for bedding. She told me that she had had them for six weeks, but that she had not been able to get a utility bed. I told her that I thought it rather strange, and I went to one of the places which makes beds. I was told by the man in charge that the woman had been to see him, that he had offered to sell her a bed with Purchase Tax put on, but that she wished to wait her turn for a utility bed.
  It is obvious that if she had bought the bed it would have cost her four or five times more than a utility bed, which she could not afford. I ask the Chancellor of the Exchequer seriously to go into this question, because after six years of war and two years hardship after the war—[An HON. MEMBER: "Under a Socialist Government."] Where was the hon. Member living during the war? Did he not know that there was a war going on and does he not know that it was the war which created the world shortage of goods? No matter what Government was in power, it could not have produced a single grain more wheat than there is today. All these things are in short supply for two reasons. First, the materials are in short supply, and secondly, the necessary labour is directed into other channels at the present time in view of the national emergency. I suggest that the Chancellor of the Exchequer could, with advantage, withdraw the Purchase Tax on such things as bed linen, bedding and beds, and all those other things which by now have
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  become absolutely worn out, and for which the housewives are clamouring today.
  I was disappointed that the right hon. Gentleman increased the price of whisky. In prewar days the price of a bottle of whisky was 12s. 6d., and the retailer did very well out of it. The price then jumped to 25s. 9d. a bottle, which was not a controlled price, but a price fixed by the trade as being fair, one which would pay the tax and allow the retailer a fair margin of profit. What has happened? I believe that the city of Glasgow is one of the greatest whisky-drinking cities in Britain. I am not saying that discreditably; it is our national beverage. Yet there is no public house in that city where a person can buy a bottle of whisky at 25s. 9d. If he wants a bottle he has to pay £2 10s., or £3, or even £4. What is the point of the Chancellor allowing people a "rake-off" like that, when the money ought to go to the country?
  The Chancellor could have put another 20s. on a bottle of whisky, and nobody in Glasgow would have complained. They would have said, "At least, my boy, you are not getting it." In this business, there is no control of any kind. The average man, going into a public house in Scotland, has what he calls a half of whisky. Formerly, that meant a quarter gill, but now the publican gives him a dash of whisky. He measures it out so that he gets £2 10s. or £3 for each bottle he sells, or even more. Take the man coming out of a steel works, who has been working very hard all day. He goes into a public house for his half of whisky, and there stands his lordship behind the counter, dressed up like a dish of fish, with a big gold albert across his chest, master of all he surveys. He hands out a little cash of whisky, and exploits the steel worker to the tune of 2s.
  The Government take steps to control the butcher. They tell him to charge so much for his meat, and no more. They take steps to control the baker. Why should the publican be free to rob the people of anything he likes? [An HON. MEMBER: "Because he is a sinner."] Yes, and that means that the Chancellor is the patron saint of sinners, because he has been very kind to them. My right hon. Friend has made a mistake about putting another penny a pint on beer.

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  Scots people believe that all the beer should be sent to England, and the whisky kept in Scotland. I do not know whether the Chancellor drinks beer, but most of the beer sold in England is simply coloured water. It is the kind of stuff which used to be shown in chemists' bottles in their shop windows. But I am serious in what I have said about bedding. In many houses in the country the bedding is finished. People cannot get dockets; prices are simply prohibitive, and I believe that the increased Purchase Tax will aggravate the evil. Steps should be taken to mitigate that evil.
  8.24 p.m.
  Mr. Medland: I do not propose to keep the Committee long tonight, but I want to address a particular question to the Chancellor on his Budget speech. Before doing so, however, I would like to reply to what the hon. Member for Hornsey (Mr. Gammans), who has left the Chamber, said about the National Savings Movement. The reason the National Savings Movement is not getting such good results as it did two years ago is because of the underground movement against National Savings. It is because there is a great falling away of the members of the Conservative clubs who were collectors and the street collectors. For some remarkable reason, they seem to have lost their enthusiasm. Whether that is inspired or not, I do not know, but when I recall the speech of the hon. Member for South Dorset (Viscount Hinchingbrooke), I have every reason to be suspicious that that is one of the main reasons for the loss of National Savings. We were a long time in our street before we could get our collector back, and until we did get someone, we were losing savings. That, I am quite sure, is happening all over the country.
  I address myself to a specific part of the Chancellor's speech, and I hope that I shall receive a reply tomorrow. In introducing his Budget, the Chancellor indicated that not only had he to put on taxes, but he had to make some savings, and he began by saying that his big savings were to be through the reduction of the Armed Forces. Then he informed us that there was to be a reduction of £200 million on capital construction. In other words, the capital expenditure by
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  public authorities, public organisations generally, and the utility societies was to be reduced by £200 million. That was first announced in the speech by the Minister for Economic Affairs on 23rd October, but he did not pursue it far enough to settle some of the uneasiness in the minds of certain public and local authorities.
  I would like to have in this Budget a clear indication as to how far the proposed reduction of £200 million is to go, and to whom it is to apply. Is it to apply to a reduction of capital expenditure on railways? I take it that in no circumstances will it apply to a reduction of capital expenditure on mines. Where is the £200 million to apply? Is it to apply to housing? If so, how far will it mean a reduction in our housing programme? Most of all, I am interested to ask: will any capital expenditure schemes be disallowed in cities which have been badly blitzed and destroyed, and which have reconstruction programmes? Are we to be allowed to go on with our reconstruction programmes up to 100 per cent. of our plans and proposals? May we continue to build schools? Can we make our plans for the rebuilding of our business centres? What steel allocations are we to get for the building of our commercial and business premises and factories which have been destroyed? How far does the £200 million affect the reconstruction of blitzed cities?
  I am asking that in order that I shall have some reply before this Debate ends, because it is causing grave concern in those centres which were blitzed. I would ask that in this respect it shall not be forgotten that we are the victims of war. We did not ask to be destroyed. There are many cities which will have their allocation of steel for factories which never had a bomb. Some of our cities have been very nearly wiped out, and we say that it is the right of those cities to come first in these priorities. I am asking with all the strength and vigour that I have that, as far as the blitzed cities are concerned, there shall be no interference or reduction of their programme of reconstruction, and I hope before this Debate concludes we shall have a very emphatic assurance on those lines.
  8.31 p.m.
  Air-Commodore Harvey: I agree with much of what the hon. Mem

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  ber for Drake (Mr. Medland) said about Plymouth. I was stationed there during the war and during the raids, and I think that there should be some priority for the rebuilding of that great city. I think it most unfair for the hon. Member to blame the Conservative Party for sabotaging the National Savings Movement. We get blamed for most things—
  Mr. Medland: We lost our collectors.
  Air-Commodore Harvey: A few months ago the Lord President of the Council said we were a poor Opposition and ineffective, and if we wanted any lessons he would give them to us. Hon. Members opposite cannot have it both ways. I have spoken in many parts of the country, on behalf of the National Savings Movement, both in my constituency and in other places. I remember one of my hon. Friends speaking out his mind by saying he did not agree with National Savings, but that is one amongst 200 and there will always be some people in any party who disagree with that party. Again hon. Members cannot have it both ways, and I think that generally it will be found that the Conservative Party is behind the National Savings Movement. The trouble goes much further. It is because people have to some extent lost confidence, and it is no use thinking otherwise. I, personally, shall continue to support the Savings Movement, because I believe that is the right way to prevent a rise in prices and to keep the money until times are better.
  I agree with much of what the hon. Member for West Renfrew (Mr. Scollan) said in what I think was a very witty speech. He referred to the question of bed linen. If anybody needs a break these days, it is the housewives. They have stood the brunt of the war and the two years of peace, and they are going to stand the brunt for the next two years. I should have given the housewives a really good incentive. In a matter of time let them have all the bed linen and things that they want to make life easier. It is only a few months ago since the Minister for Economic Affairs said that he put his foot through his sheet, and I hesitate to think what the state of that sheet is today. It is over a year since it was done.
  The same applies to beer. A penny a pint on beer, which is coloured water,
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  will not bring the Government in a great deal when we think of the astronomical figures with which we are dealing today. It will annoy the workman and it will annoy everyone who drinks beer, and all for the sake of a penny on a pint. I should certainly leave it exactly where it is and would not irritate, inconvenience or trouble them. Instead of helping things it will make matters worse, for it will distress the workman, and the last thing anyone wants to do today is to give any further annoyance.
  The hon. Member for Dudley (Mr. Wigg) spoke about traps being laid for the Government and the Chancellor of the Exchequer by "The Times" and the "Economist." If we cast our minds back to a year ago, there were no two papers which gave the Government greater support. They were great friends of the Government. I do not say they are today, because they are facing up to reality. He went on to refer to the speech made by my hon. Friend the Member for Louth (Mr. Osborne). It is no good saying he speaks for the entire Conservative Party any more than the hon. Member for King's Norton (Mr. Blackburn) or the hon. Member for East Middlesbrough (Mr. A. Edwards) speak for the Labour Party. There again, we must take things as they come. I thought that my hon. Friend made a very courageous speech. I did not agree with it. I would go so far as to say that food subsidies must stop where they are now, and there must be a scaling down, provided always that the working class and the lower wage groups do not suffer. If we can reduce their taxation and see that people like the old age pensioners are looked after, and that there is an overall balance, I would say, scale the subsidies down; certainly do not let them go beyond what they are now. It is no good saying that my hon. Friend spoke for the Conservative Party. This Debate will continue tomorrow, when hon. Gentlemen opposite will get the truth from our Front Bench.
  I was most disappointed with the Budget. The Chancellor of the Exchequer—I say it without any disrespect to him—in his usual conceited way was saying what a fine Chancellor he was and how wonderful it all was. It just was not wonderful. It is no use thinking that because we have balanced our Budget at home and can show a large surplus that things are fine. They are not, and it is just kid-

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  ding ourselves to think they are. We have to think in terms of what we can import to eat and raw materials to keep our factories going, and how they have to be paid for in hard currency. To present any other picture is misleading the people. It would' be much better for the Chancellor of the Exchequer to balance our internal affairs having regard to the balance of payments. There was no reference to the American Loan or to the convertibility of sterling. Those are all gone, all forgotten, by now. It is far better to go a little more into the detail of such things because they are all financial matters which come into this current year.
  I would like to make one reference to betting. I go to a race meeting perhaps once a year. I think it is right that betting should be taxed, but if we are attempting to do it, those who bet should be taxed just as people are taxed who go to cinemas. Why should we tax the tote and not the people who bet on the dogs with bookmakers? The Minister of Labour tells us that he is going to put out his net to catch the drones and the spivs, but the proposals of the Chancellor will find employment for such people. The Chancellor should go into these matters in much greater detail by the time his next Budget comes along, and perhaps he can produce something more concrete to deal with this problem as it should be dealt with. Today, he has only half dealt with it, and in a most unfair way. This country is in for a most difficult time financially. The only thing I would ask of the Chancellor is that he should put his big ideas aside and face realities, and that he should tell the people exactly where we stand. By doing that he will get them to understand the problems and to work. This Budget to a great extent misleads the British people.
  8.39 p.m.
  Mr. Walker: The hon. and gallant Member for Macclesfield (Air-Commodore Harvey) said he was disappointed with the Budget and that he failed to see anything wonderful about it at all. We expect that kind of criticism from the opposite side of the Committee. I have sat here and listened to Debates ever since I was elected to this Parliament, and only on very rare occasions, generally on minor matters, have we had any agreement whatever from the other
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  side, or any meed of praise. Therefore, we do not expect to get any support, admiration or praise from the people who sit over there.
  Air-Commodore Harvey: I did not criticise adversely what was announced in today's speech. I only said what could have been done by the Chancellor in addition to the steps he has suggested-
  Mr. Walker: The hon. and gallant Member simply said that as far as today's Budget was concerned, he was disappointed. He also declared that there was nothing wonderful about the Budget. Those were his words.
  Air-Commodore Harvey: I do not disagree with the hon. Member.
  Mr. Walker:. I suggest that from the first phrases that fell from the lips of the Chancellor this afternoon there was something very wonderful about what he had to say, namely, the fact that already in this financial year there was a surplus of no less than £253 million. If the Government are such a set of incompetent people and so lacking in judgment and administration as hon. Members opposite repeatedly declare, not only in this House, but in the country, there is something wonderful about the fact that the Chancellor can announce a surplus of £253 million in days like these. At the time of the April Budget the Chancellor had a surplus of about £250 million. What did the Opposition say about that? They said that it was a false surplus and that it was not a surplus at all. Yet it was there in hard cash. The same may be said today. I. do not think this Government are making the bad job of our finances that hon. Members opposite are so fond of saying. I congratulate the Chancellor on this interim Budget in which he can declare to the country that the work of the Labour Government in its financial arrangements, administration and general policy has, at the end of six months, shown this magnificent surplus of £250 million.
  I want to say a word or two about food subsidies. There is no doubt that in every middle class and working class home in the country these subsidies are valued very much indeed. They mean something to every working class family, and especially to the younger portion of the community, the newly married and those

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  who are trying to build up their homes. It is a considerable feature when, as the Chancellor indicated, those subsidies represent a value of 12s. 6d. a week to a man with a wife and two children. I was glad to note that the Chancellor gave some kind of promise that though those subsidies had risen at such a tremendous pace during the last few years that today they amounted to £392 million, he was not prepared to cut them although he warned us that they would have to be held in check in the future. If the Government are providing £392 million per year in subsidies, they are giving a substantial amount of benefit to all the homes in the country. I am sure that if there had been any suggestion of a cut in the subsidies, there would have been a tremendous outcry from the people.
  I would like to say a word about the astonishing statement that the arrears of taxes amount to the tremendous sum of £780 million. Of course the Chancellor explained that perhaps that was not the actual amount in arrears. Who are these people who owe arrears to the Inland Revenue? They cannot be the working people, for they have to pay their tax week by week through Pay As You Earn. They must belong to the business and professional classes. I want to know what kind of patriotism, what idea these people have of their country in these days when they fail to pay their Income Tax, and I hope the Chancellor will be severe upon them and make them toe the line. I am glad to think that he will charge them three per cent. on their arrears of over £1,000. It will do them good, and perhaps spur them on to pay.
  I think the Chancellor has adopted a good line over advertising expenses. The amount of advertising in the country today is abnormal when we are short of goods. I know that the businessman regards it as a feature of his business to advertise—
  Air-Commodore Harvey: Would the hon. Member allow me to interrupt?
  Mr. Walker: I shall only speak another three minutes, and then I will sit down. Some years ago I saw a play called "It Pays To Advertise" at the Aldwych Theatre, in which somebody had made a good soap which nobody would buy. By
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  he simple medium of advertising they were able to create a large business in the sale of this good soap. This kind of advertisement is going on all over the place, and if business people—especially big business—advertise at the expense of the Inland Revenue, I think they are a mean lot of folk and that this tax will be rather good for them. At any rate the country will benefit by at least 10 per cent. Taking the Budget as a whole, from the point of view of the general public, it has many pleasant features and I think it will be regarded by the majority of people who are sensible enough to realise what it portends, as something rather wonderful in these days of austerity and difficulty.
  Air-Commodore Harvey: Before the hon. Gentleman sits down, would he explain how advertising can be abnormal when the newspapers are about one-sixth of their prewar size, and it takes six months or more to get an advertisement in a paper?
  Mr. Walker: I have been in the newspaper industry all my life and I am familiar with the fact that no newspaper in the country today would be able to show any profit at all were it not for its advertising.
  Air-Commodore Harvey: The hon. Member said "abnormal."
  Mr. Walker: The point is that a large portion of the small amount of paper available for newspapers is used for advertising purposes and not for news, purposes. That shows that all these firms are taking that way of escape from paying the Inland Revenue, and are advertising at the cost of the Government and not at their own cost.
  Mr. E. P. Smith: Would the hon. Gentleman answer me this question? Has he ever encountered any business which advertises entirely at the expense of the Government?
  Mr. Walker: I can only reply that there must be something in this matter that has prompted the Chancellor to come along and take 10 per cent., which he has the right to do, if this kind of thing is going on. I do not know, because I am only an ordinary individual—
  Air-Commodore Harvey: The hon Member said he knew.
  Mr. Walker: I have never done any advertising in my life, but I am taking it as indicative that this kind of thing is going on. Therefore, I say the Chancellor has a perfect right to take advantage of it for the benefit of the nation as a whole.
  8.50 p.m.
  Mr. House: The Chancellor has brought forward a very good interim Budget, in which he has endeavoured to place extra taxes on elements best able to bear them. I am glad he has resisted the temptation to reduce the food subsidies because, contrary to opinions expressed on the opposite benches, I think the food subsidies ought to be maintained. After all, they benefit persons according to their degree of poverty and are a greater benefit in proportion to the size of the family.
  I am glad he has not increased taxation of tobacco, because that would have been a mistake. I think he has definitely made a mistake in taxing beer by another penny a pint. It will cause irritation which will not be worth the. added increase. He would be well advised to think it over. There is a practical way out, as was suggested by other hon. Members, in that he could transfer the amount of increment which he anticipates from beer to whisky. As was suggested by the hon. Member for West Renfrew (Mr. Scollan), having regard to the black market price for whisky, the added burden there would not be felt at all. The added burden on the whisky at black market prices would to a very large degree be paid by the wealthier classes and in the main by those who have the ability to bear it. The hon. Member also referred to the hardworking steel worker who after spending a day in front of a hot furnace is entitled to his glass of beer if he feels so inclined; I say that although I am a teetotaler. To put a penny on to beer, which is the working man's beverage, is an error, and the Chancellor would be well advised to reconsider it.
  The Chancellor has without doubt made an error in putting a tax on the dog tote and not putting it on the horse racing tote. He should bear in mind that we hon. Members have to meet our constituents, and though, of course, we are glad to meet them, we have to meet their criticism. No hon. Member can stand
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  up and answer the challenge that "The tax has been put on the dog tote, but not on the horse tote." Whatever case the Chancellor puts up—and I do not agree with the merit of the case he has submitted—taxation should not only be morally sound, but should appear to the public to be sound. This impost may be technically sound, but it does not appear sound to the public to put the tax on the dog tote and not on the horse racing tote. That will be a very hard question for hon. Members to answer in their constituencies. The sound statement has been made that dog racing is the working man's sport, whereas horse racing is the wealthy man's sport. Dog racing has been attacked by restricting it to Saturdays only, while horse racing has not been similarly restricted. We shall now have the added charge that dog racing has been singled out as against horse racing. From every aspect, I think the Chancellor should think about that, and should put the tax on the horse tote as well as on the dog tote.
  He then said, if I understood his remarks rightly, that the reason he did not propose taxing the horse racing tote is that it contributes towards improving horse breeding. Horse breeding must be a very fascinating profession for those who are engaged in it, and I cannot imagine any tax that the Chancellor would put on the horse racing tote would have any deteriorating effect on the quality of horse breeding- or on the value of its export market, so I think from that aspect the Chancellor has a poor case. One sentence from the Chancellor's statement with regard to putting a tax on betting is that he proposes putting it on the tote, as far as dog racing is concerned, because it is expedient and practicable. If he is going to put a tax on the dog tote on the basis of it being expedient or practicable, I think from the same standpoint he could have brought in a larger element of the bookmakers. It is my submission that the Chancellor will be very well advised indeed to think again on this aspect, and consider that the tax he is placing on dog racing also ought to be placed on the horse racing tote, and, furthermore, he ought to see whether he cannot bring in the large scale bookmakers as well. Generally speaking, I think this autumn Budget is very well thought out. It is quite a constructive Budget but it is undoubtedly weak in regard to the placing

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  of a penny a pint on beer, and its limitation with regard to the tax on betting.
  8.57 p.m.
  Mr. Berry: I am not sure that my hon. Friend the Member for North St. Pancras (Mr. House) has not an unwarranted attack of modesty when he confesses to his inadequacy to explain to an audience the difference between a tax on the dog racing tote and a similar tax on horse racing. Further, I frankly could not quite follow him when he said that dog racing was the sport of democracy, whereas horse racing was the sport of every class. For as long as I can remember it has been the fashionable sport of people right through all the ages, who desired to have a bet on this horse or that horse. In my opinion it is like music—it is a study in sharps and fiats. That is my personal opinion. It is rather new to hear that horse racing is an aristocratic sport. I can only ask my hon. Friend to use his usual ingenuity and I am sure he will be able to explain it away quite well.
  Mr. House: I think the hon. Member can rest assured that I can explain it quite well. One has only to go to Ascot to see them.
  Mr. Berry: I also have been to Ascot and other places. I have seen them but never joined in them. I am bound to confess that while I am pleased in one direction with regard to this interim Budget, I am also a shade disappointed. I am very pleased that the Chancellor did not succumb to the cooing notes that went out to him to put an increased tax on tobacco. But I am disappointed that the Chancellor did not look at the question of those old age pensioners who are not State old age pensioners. There are many thousands of old age pensioners who have other forms of old age pension and who have been excluded from the State old age pension, but are unable to get tobacco at the cheaper rate. I was hoping that the Chancellor would look into that hardship, which has been brought very much to his attention; it is a very real hardship indeed to those who are excluded from cheap tobacco. Even at this late hour I hope it will not be too late for the Chancellor to look at it once again, and while I agree that from the point of view of administration it may be very difficult, nevertheless,
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  I think we get a very large amount of ingenuity from civil servants when they are told what has to be done. While they can always find 20 good reasons for not doing a thing, if they are pressed they can always find 20 equally good reasons for doing it.
  I do not intend to follow other hon. Members in their speculations on whether an increased duty on beer is better than an increased duty on whisky. It seemed to me that between my hon. Friend the Member for St. Pancras, and the hon. Member for Western Renfrew (Mr. Scollan) there was a danger of a revival of the wars between England and Scotland, the hon. and gallant Member for Western Renfrew standing up for the claims of whisky as the national drink of Scotland, and my hon. Friend the Member for St. Pancras indicating that the plebeian drink which passes under the guise of beer, was the national drink of England. I aim a child in these matters. I am not prepared to pass judgment even though I have a crowd of expert friends always prepared to advise me to give me the benefit of their long, and at times deep, experience. It is true, as I think I heard an hon. Member say, that I have had some experience with the Metropolitan Water Board. If beer be as if is described today, merely coloured water, I would rather pay my water rate and get pure water.
  We must recognise that the Chancellor had a very difficult problem. There is one point which I should like him to clear up. In common with other hon. Members, I appreciate that there is a surplus of £253 million. I believe that it includes a number of non-recurring items. I suggest, therefore, that in arriving at the real surplus we should dismiss from our minds the non-recurring items, because we shall not have the benefit of them next year. We ought to get down to the solid basis of what will be our situation without these non-recurring items. I hope that the Financial Secretary to the Treasury will deal with that point in his reply.
  In regard to national savings, as one who has given years of his life under various administrations of varying political colours, to the National Savings movement, I, like other hon. Members on both sides of the House, have been dis-

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  appointed at the falling off in savings. National savings ought to be encouraged as much as possible. We require something of the wartime spirit in the minds of the people. We should cultivate the feeling that what they save really assists in the salvation of the country. The situation is the same today as it was during the war. What is saved helps towards the financial and economic salvation of the country. I hope that there will be a rallying of all men of good will, no matter what may be their political opinions, to support the National Savings movement. I pay my tribute to all the voluntary workers who have done so much for the movement and I hope that we shall see an increase in savings It is on that, I believe, our financial stability, internally, at least, will depend. I do not touch on the external situation. I think that the Budget, like all things evolved by the human mind, has drawbacks; nevertheless, it is an indication of our increasing internal financial stability.
  Ordered, "That the Chairman do report Progress, and ask leave to sit again."—[Mr. Snow.]
  Resolutions to be reported Tomorrow; Committee also report Progress; to sit again Tomorrow.

  OVER-FISHING (NORTH SEA AND WEST COAST)
  Motion made, and Question proposed, "That this House do now adjourn."—
  [Mr. Snow.]
  9.5 p.m.
  Mr. Douglas Marshall: The first thing I would like to do is to congratulate upon his appointment the Minister, who, I believe for the first time, will come to the Box tonight to answer this Debate. During the period of the Debates on the Gracious Speech, I spoke for about six minutes on the subject of over-fishing in the North Sea and the West Coast areas and, when I mentioned certain points at that time, the Prime Minister nodded his head, and I hoped that, when he came to reply, he would make some mention of the reason why he nodded his head. But he did not do so, and I balloted for this Adjournment Motion, and by good fortune drew it.
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  When I made my maiden speech in this House more than two years ago, I made it on the subject of the fishing industry, and I said that one of the reasons I was speaking on this matter was that—and here I quote from my speech—"it was concerned with sea power, food and employment." At the same time, I asked the Minister whether he would consider the setting up of a White Fish Commission to study the problem which I am putting before the House tonight. For about two and a half years, I have repeatedly asked the Minister to set tip a White Fish Commission, and I would point out to the right hon. Gentleman who is present here tonight that, in the 1938 Act, there appear the following words:
  "There shall be constituted a Commission to be called the White Fish Commission."
  That was in 1938. Since then, there has been the great tragedy of the last war, but that ended in 1945 and we are now in 1947, and there is still no White Fish Commission. In the "Fishing News" of 1st No member, a headline on one page says:
  "Why Fleets of Devon and Cornwall Dwindled to Shadows. Crippled by Over fishing."
  It goes on to say:
  "Steady over-fishing of the Atlantic grounds during the past 20 years is given as the cause of the decline in the West country industry by the Survey Committee of the University College of the South-West."
  The question of fishing in Cornwall is a matter of very great importance to all of us, and if the Minister has ever had the time or occasion to read some of the histories of Cornwall, he will realise that this is not a matter which has arisen overnight. I think one of the best known authors is Gilbert, who, in 1817, wrote as follows:
  "Fisheries. These are sources of great commercial advantage to the country, and provide employment as well as food for a considerable part of the population, particularly the pilchard fishery, which ranks the highest among the whole and has been carried on for centuries on the Cornish coast."
  The question of over-fishing in the vast areas off the West Coast and of the North Sea plays its part on the inshore fishing industry, and that is one of the reasons, among many, why I am bringing this matter before the House again. What are the facts with regard to this matter? First, I think we should be mindful of the scientific approach to the question of over-fishing. I expect the Minister will realise

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  this point, though he may not have had it put to him before, that, whereas in agriculture, during the wars from 1914 to 1918 and 1939 to 1945, great improvements were effected by scientific development, the seas are closed in wartime, and between 1914 and 1918 and again between 1939 and 1945, very little research was done in the matter of fisheries. So worried were all concerned in this matter of over-fishing that an International Convention was set up in 1946 to consider measures for the preservation of fishing grounds adjacent to the British Isles. The representatives at that Convention came from the United Kingdom, France, Belgium, the Netherlands, Denmark, Sweden, Norway, Iceland, Spain, Portugal, Eire and Poland. I think that Convention agreed that over-fishing was becoming an international danger. The size of the mesh was also discussed at that Convention.
  Here is my first question to the Minister. How many countries have ratified that Convention? If, by chance, the Minister should answer that Denmark and Sweden have not ratified it, I suggest that certain import licences which are granted by us to those two countries, should help as a measure of discussion and debate should, and can, take place upon that point. After the Convention had met, an Advisory Committee was set up, but—and this appears to me to be very silly indeed—Spain was not invited to that Advisory-Committee. I shall refer to that matter again when I reach the question of over-fishing off the West Coast.
  I have another suggestion to make, which is that, if, by chance, we find that we cannot get ratification by all the countries who attended that Convention, perhaps it might be possible to get the Netherlands and ourselves to agree with regard to the North Sea. At the present moment, the Netherlands and ourselves fish up to about two-thirds of the North Sea. The Minister may say that there are difficulties because of some form of Customs arrangement between Luxembourg, Belgium and the Netherlands, and that they cannot reach agreement. There are always difficulties. What I am suggesting tonight is that the Minister and his right hon. Friend the Foreign Secretary together should overcome those difficulties. It is not the first difficulty which a Foreign Secretary has overcome in this
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  great land of ours. I wish the House to realise what is happening in the North Sea. I am told that the drop in the catch is very considerable indeed, and that the average size of the fish now being caught is considerably smaller. I have a letter here from a skipper in which he says that within another year the North Sea trawlers may not be able to earn a living.
  Now I wish to take the case of the West Coast. There the position is absolutely appalling on the question of hake. For the first six months of 1946, the amount caught was 624,399 cwt.; for the first six months of this year the figure has been reduced to 371,501 cwt., a reduction of nearly 50 per cent. This over-fishing off the West Coast has been due principally to the intensified fishing by the Spaniards. I wish the House to remember and to take into account how these fleets have increased. This is a veritable armada, and the word "armada" is not one which we do not know in the West Country and in Cornwall. In 1939, the fleet of Spain consisted of 44 large trawlers aggregating 13,308 tons and 228 parejas aggregating 46,295 tons. In 1946, there were 55 deep-sea trawlers with a total tonnage of 35,777 tons and 450 parejas aggregating over 77,954 tons, and I have good reason to believe that there are another 70,000 tons being constructed at the moment.
  Is this the time not to have invited Spain to that Advisory Committee? The failure to do so does not make sense. In a report dated 31st July, 1946, the American consul at Vigo, writing to the United States Department of State, said that the catch of hake in 1945 showed a tremendous increase in Spain, and that the total catch for Spain showed an all-time record. When dealing with the catches of Spain and of Great Britain we must also remember that in Spain there is a great incentive. That incentive is, I understand, that on an average hake fetches is. 4d. per pound. In Spain they catch both small and large hake and different prices are charged; therefore, one has to take an average. That compares with 6d. a pound in Great Britain. Unless an operative international agreement is reached, it may well result in the finish of such a port as Milford Haven. Do not let us forget the great security value of Milford Haven and such

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  ports during the war, and their great benefit to us.
  I believe the Ministry of Agriculture and Fisheries have made certain suggestions with regard to the control of the size of fish caught. I would like to give an example of what the suggested size of this small fish looks like. A dover sole and a dab which I am holding in my hands show the sizes suggested. Those are the two sizes. I brought these fish along so that the Minister could see the minimum size he is suggesting. They are minute. Let us be practical about this matter. It is suggested that if fish under a certain size are caught, they should not be landed. But that does not stop the killing of immature fish. It only means that they are to be dumped into the sea instead of landed. It does not solve the problem. The only way to solve that problem is to get agreement on the size of mesh to be used. The Minister must know that that is the only method of solving the problem.
  When talking of the fishing industry, one must bear the following points in mind. First, one is talking of an article of food which is of great importance and which at present is not rationed. We also have to bear in mind the fishermen themselves. We must never forget those men who are engaged in our fishing industry. Those are the men who are the first to come forward and protect the security of our land. They get no subsidy from the Admiralty. They are the first to man our ships and clear our seas in time of need. Let us also remember that the industry keeps alive the small shipyards. If we allow over-fishing to take place, and if we do not have an international agreement, we may see a decline which will affect the inshore fishermen and the number of boats they can maintain. I trust that the Minister will consult the First Lord of the Admiralty. I had a very disappointing answer to a Question which I put to the First Lord of the Admiralty today with regard to fishery protection vessels. I asked today if the Minister would give us an assurance he would not decrease the number of. our fishing protection vessels. This was the reply:
  "I regret that no such assurance can be given, but any temporary deduction that may be necessary in the strength of the flotilla will not affect its ability to give essential protection to the fishing fleet."
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  What an unsatisfactory answer. The right hon. Gentleman knows perfectly well it is absolutely necessary to maintain those vessels.
  The next question is one that I have mentioned before and must mention again—that he should give consideration to the setting up of a White Fish Commission to study all these matters forthwith. Next, I sincerely trust that the Minister will give me some information as to what he is going to do with regard to the scientific study of fish—what kind of organisation he is setting up. I also wish to ask about the question of experimental ships which will go out and, if necessary, find new fishing grounds.
  Now I come to what I consider to be a major point, and to a proposition in which I believe with all my strength. Here we have got a vast agricultural policy, rightly and properly, for the country. The Minister will be taxed to his full strength in going forward with that policy, a policy with which I absolutely agree. But what happens about the fisheries? Even if one wants to put a Question down in this House, it has to be addressed to the Minister of Agriculture without the word "fisheries." It is time that a separate Parliamentary Secretary was appointed to deal with the fishing industry, a Minister who would work with the Minister of Agriculture and Fisheries. The affairs of the fishing industry constitute a full-time job for a Minister, and there ought to be a Minister to do that job, so that the affairs of the fishing industry are not merely eked out here and there in any time the Minister of Agriculture can spare from agricultural affairs. Many years ago it was written about Cornwall that
  "Cornish men are dauntless in war and mild and just in peace."
  That, I think, really does describe the fishermen of Cornwall. They are the greatest men I know, the greatest men I have ever met. If protection is not provided for them, and if the high seas are over-fished, the deep sea and the inshore fishing of this country will suffer lamentably.
  9.23 p.m.
  Mr. Edward Evans: I shall not detain the House very long because I spoke at some length on this subject when I had the opportunity of raising

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  the matter on the Motion for the Adjournment one day in June. Nor do I propose to give again the long list I presented to the House on that occasion. I should, however, like to support the case made by the hon. Member for Bodmin (Mr. D. Marshall); and also to tell him and the Cornishmen that although we have not had a reputation for wrecking on the East Coast, we have played our part in the development of the fishing industry and we can be relied upon to supply that measure of support to the nation which we always have done in the dire stress of war, as we did on the East Coast in the last war.
  Mr. D. Marshall: Hear, hear.
  Mr. Evans: What I want to urge is that the Government should use every endeavour to try to get this International Convention ratified. The hon. Member for Bodmin spoke of an agreement between ourselves and the Netherlands. One of our biggest competitors, of course, is Denmark, and I should deplore any bilateral agreement with any of the European countries to the exclusion of those other countries that are engaged in a very intensive form of over-fishing.
  Mr. Marshall: I hope I made myself clear. The one thing I desire is that all countries should enter an agreement and ratify it. I was envisaging a position in which, perhaps, some countries would not do so.
  Mr. Evans: I think I apprehended the point made by the hon. Member when he spoke. However, I see a danger if a restriction is imposed on two countries only, for if the other countries are left outside the orbit of that restriction, we should be in just as great a mess as we were before. I can appreciate, too, and sympathise with the difficulty in regard to the very intensive and, indeed, outrageous fishing methods adopted by the Spaniards in these waters. We know very well that our methods are not their methods—the methods of the long nets between boats, and a very heavy type of trawl. We must, I think, press the Government very strongly indeed to go as far as they can in getting the ratification asked for by the hon. Member. He also showed us some specimens of fish, and accused the Minister of establishing that standard of size. Of course, that was
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  the standard agreed upon—and it was the lowest standard that could be agreed upon—at that convention. I was not quite sure whether they were dabs, soles or plaice.
  Mr. Marshall: Soles and dabs.
  Mr. Evans: The agreement in respect of plaice was 25 metres—[Laughter.] As I am telling a fishing story, perhaps I might be allowed a certain latitude. I should, of course, have said 25 centimetres. The minimum size for plaice was 25 centimetres, and for soles 24 centimetres. What I desire to stress is that the industry itself is terribly concerned, and there is not the slightest doubt in my mind—or in the mind of the industry—that unless there is a restriction in fishing in at any rate the North Sea, the bottom will be knocked out of the industry in a very short time.
  About a fortnight ago I attended a trawl market where they were sorting the plaice. There were hardly any soles available, and no nice turbot or halibut. One has only to consult other hon. Members in the House to appreciate whit a very narrow choice there is when buying fish. I believe we can build up a fish-eating community comparable with some of the Mediterranean countries—and particularly the Catholic countries—only if we give not merely good quality but a wide variety. At the trawl market I watched the men sorting the fish; there was one barrel for good-sized plaice, but three barrels for the small or immature fish. Now, even an amateur like myself looking at those immature fish could see that they had been taken from the sea before they had reached spawning age. By taking those immature fish out of the sea we are—and as I was permitted to stretch my fishing yarn perhaps I might here be allowed to mix my metaphors—killing the golden eggs: in this case, silver eggs. There is no chance whatever for a recovery of North Sea fishing unless the immature fish are left in the water to grow to spawning age. The only method is to do it by international agreement, and I hope we shall press for an increased size of mesh. The present size, 80 millimetres, is much too small, for only very small fish can go through an 80 millimetre mesh. I urge strongly that this matter should be taken up with renewed vigour.

  503
  One of the most pleasing features is that the industry itself is in favour of this restriction. The trawl owners and the fishermen, whose living depends upon it—despite the great temptation in these days to earn quick money; and we know that the conditions in the fishing industry are better today than they have ever been—have enough sense to look to the future, and to realise that very soon their living will be taken away from them.
  There are two means of approach. First, by increasing the mesh. I cannot agree with the hon. Member for Bodmin about throwing the fish back. We know that if they are taken straight out of the trawl and thrown back undersized, they will recover, and will probably produce very many more fish. This can only be done by the good will of all those nations which operate in adjacent waters. We know that the food situation in Europe is so bad that there is this great temptation to over-fish, but unless we restrict over-fishing, our fishing industry will be reduced to a mere beggarly pittance for those who do this work.
  9.31 p.m.
  Mr. Duthie: I should like first to support the pleas which have been made for the ratification of the International Convention in regard to over-fishing. I wish to direct my remarks to the inshore fishing industry. With the seine net and the trawl, the slaughter of immature fish is inevitable. We can arrange for a mesh of a large size, when it is in suspense, to allow a larger sized fish to go through, but when any strain is put on it, the mesh is reduced and the immature fish are caught. We must direct our energies towards securing as large a mesh as possible with the seine net and the otter trawl. The leader, or the wings of the net, guides the fish into the bag or cod end. Experiments have been carried out in the Moray Firth with a large mesh in the leader. The result has been that small fish have been noticeable by their absence from the cod end when the net has been hauled in.
  There are other forces at work which are depopulating the fishing grounds and killing our shoals of fish. One of these is the dumping back into the sea of unsold fish. We had the regrettable instance—
  504
  one is almost tempted to use a stronger word—during the earlier part of the summer of herrings being thrown back into the sea in the Moray Firth, instead of being sold to processing factories for the manufacture of fish meal and oil. That fish does one of two things. Either it pollutes the bottom of the sea and kills the young fish, or it attracts vermin.
  Mr. D. Marshall: Also cods' heads.
  Mr. Duthie: The sea is alive with vermin, just as the land is alive with vermin, which is inimical to the continued life of the edible fish which are so necessary.
  I should like to say a word about what is happening in our territorial waters where trawling has been prohibited. There are two particular areas off the Scottish coast, one being in the East, the Moray Firth, and the other in the West, the Firth of Clyde. As from 1st May, 1946, there have been no British trawlers operating in those areas, and during that time there has been a steady catching of the fish we want. The reason is that the bottom of this particular ground is about 50 per cent. sand, or hard, as it is known in the fishing industry. The seine net cannot work on hard ground because it is fragile, and if it catches on the ground, away goes the net. Haddock is the most prolific fish in the North. It spawns on hard ground, and we believe that we have an oncoming growing population of haddock for all the boats we have operating. The trawl can work over hard ground, because its base is fitted with bobbins which enable it to roll over the rocks.
  But there is one phase of research which I should like strongly to commend to my hon. Friend the Parliamentary Secretary, and that is into ways and means of destroying the natural enemies of our edible fish. Chief of these, I would say, is the dogfish. I think it is true to say that in the Orkney and Shetland area haddock has virtually disappeared through the tremendous inroads made by dogfish in that area. Where we have dogfish about our coasts in the north we have smaller numbers of edible fish coming along. Another enemy is the angler fish. In the Recess, together with my hon. Friend the Member for West Renfrew (Mr. Scollan), I spent a week in an Aberdeen trawler, and I was amazed to see the destruction caused to edible fish. The angler fish is a

  505
  most voracious feeder. One reasonably-sized angler fish had in its stomach three large haddock, and another fish in its mouth. If research could be directed successfully towards the elimination of some of these enemies, I think we would find that many of our misgivings about fishing operations would be offset by the increased number of young fish coming along.
  I am very glad to see on the Front Bench my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture and Fisheries, who is my own Member of Parliament, and also my hon. Friend the Joint Under-Secretary of State for Scotland. I know I am pushing an open door tonight, because the Scots are extremely glad to see a practical fisherman in the Scottish Office. We want an international agreement on the mesh question, and consideration to be given to the establishment of closed times for fishing grounds around our coasts. Research can determine what those times should be. We want a closed time in the Moray Firth during the haddock spawning season, and when hake are spawning on the West Coast. The suggestion has been made that equipped research vessels should be put to sea, and I think that is being pursued. I strongly commend to the Parliamentary Secretary the idea of closed times at the right season, together with the need for agreement on the mesh question, which will do much to repopulate our fishing grounds in such a way that our fishing fleets will be able to look forward with confidence to a long era of prosperity.
  9.39 p.m.
  Squadron-Leader Kinghorn: We had an interesting Debate on this subject not many months ago, when, I think, we all went away fairly well satisfied with the answer which the Minister himself gave to our protestations about the perennial tragedy of over-fishing of the North Sea. The Minister then said that he hoped that the advisory committee which had been recommended would be set up, that the responsible Governments would play their various parts and show their willingness to march forward so that we could have a perpetual supply of fish and, at the same time, provide a reasonable existence for those who went to sea to catch fish. This Debate will have served a useful purpose if, tonight, we can find out, from the Par-
  506
  liamentary Secretary—who will be making his first speech in his new office, and who has our good wishes—whether our hopes have been fulfilled.
  My experience in my own fishing constituency has been very similar in the last few months since that Debate to the experiences already retailed tonight. I wish that we could have fish of the size mentioned by the hon. Member for Lowestoft (Mr. E. Evans), because if we could during the coming winter, with the shortages of other kinds of food, we should be very happy. The story, however, has been very different. Over-fishing has already depleted the North Sea so far as my constituency is concerned. I think that it is something deeper than merely an alteration in the size of nets and closing certain areas to trawlers or drifters. It seems to us that the North Sea and other' fishing grounds are complete mysteries to men. We need a great deal more research. We need research in the short run and certainly a great deal of close research by experts in the long run. We shall always depend on areas like the North Sea, the Barents Sea and the White Sea for part of our native foods in this country.
  It always seems, when we have these fishing Debates, that the fishing Department of the Ministry has not a very important part to play. There are elaborate consultations made with farmers and farm workers and about institutions for agricultural research, as a result of which we see in our lifetime many wonderful examples of increase in the size of fruit and flowers. Take, for example, the wonderful chrysanthemums seen lately in this House. I wish the two Under-Secretaries—one is a practical fisherman and we hope that within the next six months the other will also become a practical fisherman—will take these things to heart and realise that we who speak for the fishing constituencies speak for a very important part of the community. We have a g eat part to play in the next few months when so many supplies of food are failing. Shortages are showing themselves by the ridiculously small fish, such as I saw a man trying to skin in Yarmouth recently, and the size of which he was bewailing. It cost him more work to skin one of these small fish than it would have done to skin a real old-fashioned Dover sole. Practical research has to be done there.

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  I hope that we have started something which will cause the Ministry to take more seriously this question of research into the mysteries of the sea.
  It may seem curious that tonight in November, 1947, I am taking part in a Debate on over-fishing in the North Sea. Anyone who has followed the Press reports on the East Anglian herring season knows that we only wish we could do some over-fishing. The herring have abandoned us once more this year. Ask any of the research people of Lowestoft and the drifter fishermen what it is all about and they do not know. One is inclined to think as an amateur that there is something in what has been said about some of the fish having been thrown back and causing harm to the nursery beds. But do we really have enough knowledge to know exactly what happens to the herring?
  One of the frightful things to my mind is that perhaps we are entering upon one of those great turning points in history where the herring are leaving us and may go somewhere else. That happened, I believe, in the Middle Ages when the herring, I am told, left the Baltic, and began to appear off our coasts and started our herring industry. In Roman times, before my constituency was formed, there were not the great herring shoals. In 1939 I was in a Portuguese town and found it desolate. No one was working, children were in the street and the place was "on the dole." I asked for the explanation and they told me that this was the main town of the sardine trade in Portugal. I said: "Why are they not working?" They said "A few years ago the sardines just went away; they left the town full of unemployment." I have been told that since the war ended the sardines have, luckily, gradually come back to that part of the ocean and I suppose that Portuguese town is getting on its feet again.
  There, again, we have the same sort of mystery and we do not know why. One reason surely why we have these Ministry officials is to find out how it is that we get food from the waters around our shores in the way we do, sometimes in gluts when we have to throw the herring back, while sometimes the men are left standing on the quays doing nothing, or the boats bring back only 50 crans instead
  508
  of 250 crans, which was approximately the figure of our winning boat last year in Yarmouth. There are modern scientific aids which should be able to help us. Therefore, I hope to get a reply tonight as to whether the nations have decided to sign the agreement. If they have, we shall be in a happier frame of mind, especially so if, in addition, we get an assurance from these two young Under-Secretaries, who are going to win their spurs tonight and who are going to arouse the confidence of the industry, that great steps are being taken, that science, which helped to win the war and which. has given us the atom bomb, is now going to help us to win our fight for food from the depths of the sea.
  947 p.m.
  Mr. Hector Hughes: If ever there was an argument for the nationalisation of the fishing industry we have heard it tonight. The big fishing industries are doing to the North Sea exactly what the mineowners did to the mines; they are taking the last ounce of profit out of it without regard to the public interest. It is time that their operations were controlled and that the fishing industry was nationalised. Here at our very doors there is a plentiful supply of food of a highly nutritious value. A great supply is becoming impoverished through over-fishing, through lack of control of methods, through lack of control of the size of the mesh and other things which would be attended to if the industry were nationalised.
  Mr. D. Marshall Mr. D. Marshall rose—
  Mr. Hector Hughes: Time is very short. We have only to look to see how the industry has been neglected. In 1913 the North Sea yielded five and a half million cwt. of fish. During the 1914–1920 period, which was a war period, the North Sea had a rest from exploitation and the result was that in the succeeding years 1920–1922 the yield went up by one million cwt. and yielded six and a half million cwt. In the 1925–1935 period there was a disastrous drop by 30 per cent. Again the value of fish taken bears out the same argument. In 1920 there were £21 million worth of fish taken from the North Sea. In 1924 it was £15 million and in 1938 £12 million. That is a serious drop, which is a menace to the food supplies of the people of this island. It

  509
  is a menace to the living of the fishermen who earn their living by that means. I submit that it is an indictment of private enterprise in this industry. It is time that the Government took control of these catches.
  Mr. Deputy-Speaker (Mr. Hubert Beaumont): I regret that I have to stop the hon. and learned Member. What he is now advocating seems to involve legislation which is not permissible on the Adjournment.
  Mr. Hector Hughes: May I say that, apart from legislation, I am arguing in favour of the principle of the nationalisation of the fishing industry?
  Mr. Deputy-Speaker: That is the very thing I cannot allow the hon. and learned Member to do.
  9.50 p.m.
  The Joint Parliamentary Secretary to the Ministry of Agriculture and Fisheries (Mr. George Brown): First of all, may I say "Thank you," to hon. Members who have taken part in this Debate for the very kind words they have said about me? Sometimes I thought I caught in the wish that I should do well, a malicious enjoyment of things to come. For one hon. Member who took part I have special thanks, as my constituent. It was a special kindness in him, and I think I can say that he is becoming worthy of his Member.
  A number of specific points have been raised, to some of which I would like to refer before I talk about the general layout as presented to the House by the hon. Member for Bodmin (Mr. D. Marshall). About the White Fish Commission I fear I cannot give my hon. Friend a great deal of comfort, except to say that we are looking very closely at that matter. As we understand the original proposition, we are not very sure that the efficiency of it will be what was originally claimed for it in that form, but the hon. Member may be happy to know that we are seriously concerned to see what we can do along those lines. He asked me a question about the ratifications, with which I will deal in a moment. Having begun by trying to embroil me with the Foreign Secretary he went on to try to get me into an engagement with the First Lord of the Admiralty. I will do what
  510
  I can, but I cannot undertake a heavy engagement in my first experience of office.
  The hon. Member and other hon. Members made reference to scientific organisation and research. I gather from the hon. Member for Great Yarmouth (Squadron-Leader Kinghorn) that he thought we were doing very little in this regard. It may be interesting to the hon. and gallant Member and to others to know that we are doing a very great deal more than they think. Perhaps the House will permit me to mention one or two of the things we are doing. There are three research vessels, as far as England and Wales are concerned, now at sea. We have a large distant water trawler not yet launched but well on the way. We have the Marine Biological Association at Plymouth which, while not a Ministry organisation, receives a Government grant and is having a research vessel. We have a large research laboratory at Lowestoft, which is, of course a Ministry undertaking. We hive there at the moment a staff of 40, which we intend to extend to 80 as the men become available, which is the only obstacle. In this very important matter of research and in the whole problem of the sea we are doing, we can claim, a considerable amount.
  The hon. Member for Banff (Mr. Duthie) referred to this business of dumping. Recently, I think it was in the early part of this month, the Parliamentary Secretary to the Ministry of Food replied to a Question on the point and gave some figures, which the hon. Member must have overlooked. They stated that from January to October this year the amount of dumping to which he referred was about 609 tons, representing about .07 per cent. of landings. My feeling about it is that while it is regrettable that the incidents occurred, the matter is hardly as serious a; I thought at one time it was, when the ton. Member was suggesting it to us.
  Mr. Duthie: The dumping takes place in our port, and we think it does affect a very large local area for quite a long time. We should like to see dumping looked upon as a criminal offence.
  Mr. D. Marshall: There is another point about dumping. The Minister of Food will not allow cod to be landed in this country

  511
  without-the heads being off, so dumping of the heads takes place. This dumping is said by some people to pollute the sea-bed.
  Mr. Brown: I took a note of what the hon. Member said earlier in the year, when I was researching into this matter in preparation for this assault. I cannot go beyond saying that I did take notice of what he said. On the other problem, I could not agree more than I do with what the hon. Member for Banff said except that the problem does not seem quite as big as I thought it was when I heard him talking. I am not saying that it is not a most serious matter for the inshore fishing, or that fishermen ought not to do it, or that we ought not to do all we can to encourage them not to do that sort of thing.
  The Government would not pretend any more than hon. Members on both sides of the House that the question of over-fishing in these waters is not proven or is not serious. Indeed, it is quite aware that the experience we had after the first world war of catches being brought down very low is being repeated. We appeared to have a recovery during the rather restricted fishing of the North Sea areas during the war, although some nations were pretty hard at it, but the 1946 catches certainly suggested that we should be running very quickly into very dangerous times and that there would be drops in the catches. We must not be unduly self-righteous about this. Our own fellows were taking fairly heavy catches in 1946, and some measure of responsibility rests on us. We are not all the time dealing only with other countries which ought to toe the line.
  To say that the Government are very concerned and that they share the concern of hon. Members on both sides of the House is one thing, but to talk as though one can then command action by everybody involved is quite a different thing. There was a lot of talk tonight about the necessity for getting an agreement with other Governments. My right hon. Friend is entirely in agreement, and we are doing all we can to bring it about, but we must bear in mind that it is a question of getting agreement among a number of Governments each of which has difficulty of some kind or another with its own fishermen. The hon. Member for Bodmin paid great tribute to the Cornish fishing men but he would not say that a lack of individualism was to be
  512
  found among them. All Governments have difficulties with their fishermen in this regard. The circumstances of each nation, of its fishing, of its reliance on food and so on, change, and so there is considerable difficulty in getting agreement.
  Considerable action has been taken. His Majesty's Government were responsible for calling the original International Conference in March, 1946, which produced the convention which has been referred to. That convention got agreement on certain things. It may be thought by enlightened people that that agreement was not wide enough and did not go far enough, but it got agreement on the immediate issues of the size of fish to be caught and the increase in the size of the mesh. The hon. Member for Lowestoft (Mr. E. Evans) referred to the sizes on which agreement was reached and said they were really very small. I quite agree with that, but we did, however, get a measure of agreement.
  I was asked by one hon. Gentleman, whose constituency for a moment escapes me, to say by whom the agreement has now been ratified. I am informed that we have now had ratifications from Denmark, Norway, Poland, Sweden, and, of course, ourselves. Although we have by no means covered the whole field of the countries represented there, it is the earnest desire of His Majesty's Government, to bring about further ratifications. At the same time, we have gone along the road which my hon. Friend thought was at that time most important. Also out of the first international conference came the proposal for a standing Advisory Committee which could agree upon some considerable form of regulation for the prevention of over-fishing in the North Sea and other areas, and that Advisory Committee has had two meetings. It met in January and again in April of this year and discussed a number of measures that might, be taken. I will not weary the House by going through those measures again because my right hon. Friend, when replying to the Debate in June this year, detailed the seven different varieties of conservation measures that were discussed. A number of different actions were agreed upon by different Governments—
  Mr. D. Marshall: The hon. Gentleman has not referred to the question whether or not Spain has been invited.
  Mr. Brown: I am coming to Spain in due course, but I thought we might divide this into the general problem and then the Spanish problem a little later on. I was saying that seven varieties of conservation measures were discussed. Each country there represented in the end agreed upon—
  It being Ten o'Clock the Motion for the Adjournment of the House lapsed, without Question put.
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Simmons.]
  Mr. Brown: Each of the countries there represented agreed upon an offer which it was prepared to make. I will not go through them all because they were detailed by my right hon. Friend in the Debate in June, and hon. Members will no doubt have in their minds what was agreed upon. The United Kingdom offer, as part of the general measure of agreement, was to limit its fishing to 85 per cent. of prewar fishing, and we regard the different measures offered by each of the nations concerned as approximating to equal contributions from them all and, while they were not as effective as we would have liked, it was felt to be an important step forward. There was a third outcome, and that was the recommendation to which my right hon. Friend referred in the June Debate, to set up a standing Advisory Committee as an international commission, consisting of a representative from each nation, accompanied by a scientist, to undertake an annual review of the fishing activities in the North Sea. I am not able to say that it has yet come into being. In fact it remains a recommendation; we have accepted the whole of the recommendations, and we are doing our best to get the agreement put into force by all the countries who were there.
  The hon. Member for Bodmin referred to Spain. This, as he explained, is mainly a question of the hake fishing off the South and South-West Coast of Ireland. Again, unquestionably over-fishing of those waters is going on, but from the evidence we have and from the estimates made by our own fishermen of the extent of Spanish over-fishing—I have the figures here if they are required—it is perfectly true that our own fellows took out in 1946 a catch from that area
  514
  considerably above our own prewar fishing there. The hon. Member referred to pareja fishing, which I understand is fishing by a pair of trawlers with the net between them. On the advice I have, this does not necessarily seem to involve the taking of immature fish. It is sometimes forgotten that these pairs of trawlers cannot operate all the year round and that rough weather, as far as they are concerned, will be a considerable brake; on the other hand, it does mean that they are taking an increased tonnage away.
  As to Spain having a representative on the standing Advisory Committee this, as the hon. Member will realise, is a difficult problem. He knows that in December of 1946 the United Nations organisation adopted a resolution dealing with the question of the participation of the Franco Government in Spain in international organisations run under the aegis of tae United Nations organisation. Without arguing too much from that, at the same time the adoption of such a resolution—and His Majesty's Government did not hide this at the time—obviously led to certain difficulties. Certainly the interpretation of the spirit of such a resolution can quite easily occasionally lead us into difficulties, and there I think is the whole point about the Spaniards and this standing Advisory Committee. However, that is not being allowed to affect the desire of His Majesty's Government, the efforts to put that desire into practice, and to bring about some ratification of the convention by all the countries who were there.
  Mr. D. Marshall: It would include Spain?
  Mr. Brown: Of all the countries who were there. Consequently, in the attempt to get those higher standards agreed upon by the Standing Advisory Committee—the still smaller mesh, the higher standards about the size of fish, and so on—extended to include other countries who were there or not there, I think we can say we have given a lead to all the countries concerned. We have put into effect the whole of our own part of the bargain, hoping that they will follow us in their part. I can only say in conclusion—
  Mr. D. Marshall: I trust that the hon. Gentleman appreciates that the part of the ocean off the Irish coast which has been referred to actually involves not only

  515
  Milford Haven, but Swansea, Cardiff, and all the great Welsh ports.
  Mr. Brown: Yes, I do not think I could add anything to what the hon. Gentleman said, but I agree about the importance of those ports and those men. We are doing what we can, and we are well aware of the. difficulties. We are well aware of the need for further international agreement on this matter, and have no illusion about it at all. I only hope that hon. Members on both sides of the House realise that there are enormous difficul-
  516
  ties, and that it is not in the power of the Government to demand action on the part of other people.
  Mr. D. Marshall: I know this is rather a difficult position, but will the hon. Gentleman consider—
  Mr. Deputy-Speaker: The hon. Member has exhausted his right to speak.
  Question put, and agreed to.
  Adjourned accordingly at Seven Minutes past Ten o'Clock.

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Preamble
The House met at half past two of the clock, The Lord Chancellor on the Woolsack.
Prayers.

  LORD MILVERTON.
  Sir Arthur Frederick Richards, G.C.M.G., having been created Baron Milverton of Lagos and of Clifton in the City of Bristol—Was (in the usual manner) introduced.
  Viscount FitzAlan of Derwent—Sat first in Parliament after the death of his father.

JURY SERVICE.
2.45 p.m
LORD BROUGHSHANE: My Lords, I beg to ask the question standing in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government whether their attention has been called to a recent case in the Law Courts, the hearing of which lasted twenty-five days, during which period the daily attendance of a jury was required, who received no remuneration in respect of loss of time or any allowance towards necessary expenses; and whether the Government will introduce a wholly uncontentious Bill to remedy this serious and long-standing injustice, as recommended unanimously by Lord Mersey's Select Committee over thirty years ago.]
THE LORD CHANCELLOR (VISCOUNT JOWITT): My Lords, I appreciate that the obligation of jury service, especially in a case of the length and complexity of the one to which the noble Lord refers, may involve hardship, but, as he is aware, legislation would be necessary to provide any payment from public or local funds to jurors in respect of the loss of time and the expenses which they incur. This question is now under consideration, but I regret that I can hold out no hope
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of finding time for legislation upon it in the near future. That is the official answer, but may I add this? It may give the noble Lord some slight satisfaction if I say that in my view the matter well merits the consideration which it is now receiving.
LORD BROUGHSHANE: My Lords, I am much obliged to the noble and learned Viscount, but in view of the fact that the matter referred to in the question is wholly uncontentious, surely very little, if any, time would be taken in dealing with it. Alternatively, would it not be possible, so far as criminal justice is concerned, for a clause dealing with the matter to be put into the Criminal justice Bill, which will be shortly before your Lordships' House? Under such a clause a Judge could give a certificate in suitable cases so that payment of some kind could be made to the juror.
THE LORD CHANCELLOR: I regret to say that having gone into this matter I cannot agree with the noble Lord that it is simple, neither can I guarantee that it will prove uncontroversial. There are difficult questions involved here which need careful consideration.

CIVIL AIRCRAFT CONTRACTS.
LORD BALFOUR OF INCHRYE: My Lords, I beg to ask the question standing in my name on the Order Paper.
[The question was as follows:
To ask His Majesty's Government whether the completion of contracts already placed for the Brabazon I civil airliner and the Saunders-Roe civil flying boat, are now under reconsideration and, if so, what new technical reasons have caused this reconsideration, and whether a final decision is likely to be arrived at at an early date.]
THE MINISTER OF CIVIL AVIATION (LORD NATHAN): My Lords, no new decision has been taken. As I informed the noble Lord in answer to his question on November 5, work has not been suspended on either of the aircraft mentioned owing to the economic crisis, but their future will be considered in the ordinary way entirely on merits. The procedure for such consideration is well established. There is a standing Inter-departmental

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Civil Aircraft Requirements Committee, which represents the Ministry of Civil Aviation, the Ministry of Supply and the three Airways Corporations. This Committee has been meeting regularly under the chairmanship of the Permanent Secretary of my Ministry in order to consider and review progress reports on civil aircraft under construction, including the Brabazon I and the Saunders-Roe flying boat, and to assess the position as it may develop from time to time.
LORD BALFOUR OF INCHRYE: While thanking the noble Lord for his reply, might I ask him this? In view of the importance to the future of British civil aviation of these aircraft, if at any time the Government do take a decision to cease work on either or both of these aircraft, would he be so good as to see that an announcement to that effect is made forthwith?
LORD NATHAN: I cannot think it likely that any decision such as that envisaged by the noble Lord, serious as it would be, would be made without a public announcement.
2.48 p.m.

GERMANY.
THE LORD BISHOP OF CHICHESTER THE LORD BISHOP OF CHICHESTER rose to call attention to conditions in the British Zone in Germany, and to the urgent need of completing a Treaty of Peace between Germany and Austria and the Allied Powers as a result of the November Conference of Foreign Ministers; and to move for Papers.
The right reverend Prelate said: My Lords, I should like first to thank the noble Lord, Lord Teynham, for his courtesy in postponing his important Motion on coal to a later date in order to allow my Motion to take first place this afternoon. It is, I think, a sign of general agreement that the time is ripe for a debate in this House on the future of Germany, especially in view of the November Conference of Foreign Ministers, as well as in view of conditions in the British Zone. The subject is vast, and every day adds to its urgency. Indeed, every day opens men's eyes more and more in our own and other countries—and not least in France—to the fact that, terrible as is Germany's guilt for launching the war and for inflicting
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suffering on millions of innocent people, the recovery of Germany on a democratic and peaceful basis is essential to the recovery of Europe, and that the longer it is delayed the more will the situation in Europe and the world deteriorate. So much information about the British Zone now comes through from various sources that the gravity of the material situation is far better appreciated than it was a year ago. It is unnecessary therefore for me to give your Lordships a mass of details. I propose rather to call attention to a few outstanding facts in the British Zone to-day and emphasize the need of a constructive plan; and then proceed to the fundamental issue with which the November Conference has to deal, the shaping of the future of Germany.
The outstanding fact in the British Zone is the crisis of confidence. I have been three times to Germany since the end of the war, and every time the position is worse. I am in constant touch with Germans who during the war suffered imprisonment and other penalties for their anti-Nazi conduct; I see many British people and others who visited or worked in the Zone, and the story pieced together is to the same effect; destruction and devastation on a colossal scale. But the grave faces and the despairing looks of the people are worse. The food situation is extremely serious, though I know it is part of the world shortage. The level of coal production follows the level of the food ration.
The Select Committee on Estimates in another place, speaking of the breakdown in the food supply last spring, write as follows:
"The basic ration, which was nominally fixed at 1,550 calories, fell to below 1,000. As a result, coal production, on which the prosperity of the Zone depends, dropped disastrously at a time when it had just reached a new high level of 233,000 tons a day. In addition, the shortage had a great effect on the morale of the Germans, whose feelings hardened towards those whom they were bound to hold responsible for these conditions."
Add these facts: only 9,000,000 out of a population of 22,500,000 are employed; the great number of refugees from the east of Germany; the sub-human housing conditions; low industrial production; complaints of the export of coal and electric current to western countries when coal is urgently needed for the maintenance of the bare existence of the German people; complaints, right or

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wrong, of the machinery of the economic section of the Military Government which it is said cripples the development of all economic activities; and the fear of next winter. Then one cannot wonder that the great majority of Germans think that the British people want to punish and partly to destroy the German people. Even those who are inclined to listen to arguments suggest that, even if the Allies should not aim at the destruction of the German people, the result would come to something like that, and that therefore it does not really matter whether or not the British do this intentionally.
What the Germans in the British Zone undoubtedly see is a whole series of restrictions, prohibitions, negations and chains. What they do not see and what they crave is a plan. This matter of the lack of plan is also strongly emphasized by the Select Committee, who say:
"Your Committee are impressed by the necessity for the clearest possible directive on British policy in Germany at the highest level and throughout the organization. All concerned should be quite clear as to what they are attempting to do."
There are two topics which are everywhere discussed at the present time. One is denazification. This has been going on for two and a half years. There is great exasperation at its slowness and at the incidental unfairness. There is general agreement that those guilty of crimes should be punished, and that high-ranking Party leaders should also be punished. But the great majority of those involved in denazification were ordinary people, weak, who went with the tide; and the general view, outside certain Left Wing Party members, is that there should be an amnesty for these, or if not, that they should at least be put in groups under trusted Anti-Nazis on probation.
Then there are particular troubles concerning the cases of civilian internees. You often find a husband in one camp and a wife in another for two and a half years, and their children left to chance. You find the Hitler youth leaders, the last people that should be together, herded together and keeping themselves alive and their spirits going by insistence on the old Hitler ideology. It is also said that German tribunals are composed far too much on Left Wing lines. Since October the whole process of denazification has been handed over to German tribunals, and it has been announced that the whole
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process is to be complete in three months, by December 31. I should like to ask the noble Lord who will reply, will they really be cleared by that date? Will all, including the lesser Nazis in internment, have had their cases quite settled by then? Last: January I was told that the number of lesser Nazis at large but excluded or removed from office amounted to 240,000, and it was then estimated that it would take until the autumn of 1948 before their cases were settled. Will their cases be settled by December 31? Will they be set free from these disqualifications? If they are not all clear, will there be an amnesty for the rest?
The other topic which engages public discussion is dismantlement. It is generally accepted that disarmament is virtually complete in the British Zone. That was a difficult and essential task very well done. But in recent weeks there has come this new order for the dismantling of war plants and of industrial plants surplus to the bizonal level of industry as a part of reparations. There are 682 plants in the American and British Zones together, of which 496 are in the British and 180 in the American Zone. There is a fair distinction between war plants and general industrial plants. I agree with the dismantling of the 302 war plants as such; but what is now the justification for dismantling the rest which are not on List A—92 ferrous metal factories, 42 chemical, 224 mechanical engineering and so forth—two and a half years after the end of the war? The Foreign Secretary in another place said that the total amount of man-power needed to pull down all the plants—I suppose the war plants as well as the others—would be 30,000 men and that 50,000 who are now employed would be turned out of employment, besides thousands in dependent small factories which are supposed to survive.
Your Lordships will agree that, if Germany is to recover—and about that I shall have something to say later—it is vital to get the commercial and industrial process going again. Of the non-military, industrial plants, there are 294 in North Rhineland and Westphalia alone. It is said that only one per cent. of the population of the German working people is employed on this process, and this one per cent. is mostly in the Ruhr. An enormous proportion of the total man-power and a very serious threat to morale are

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involved in this matter. I should like to know who was consulted about the precise factories proposed for dismantlement and whether calculations of a precise character have been made, factory by factory, in the British Zone so that there is a guarantee that the now permitted level of industry, eleven and a half million tons of steel, will be reached. The permitted level is far from being achieved as yet with these factories in production. Are the regional commissioners all in sympathy with this plan? I know that it has been said in
this House by the noble Earl, Lord Listowel: How could the British Ministers face their colleagues at the November Conference without some action of this kind having been taken? We could understand putting in representatives of other Powers like Holland, France and Belgium to control the production; but it is surely madness to destroy. Can you wonder at the crisis in confidence being still more aggravated by this, or at the cry "The British have no plans to increase production but only for destruction," or at the growth in silent nationalism, or at the fuel added to the underground power of Communism spreading from east to west?
The noble Lord, Lord Pakenham, addressed the Foreign Press Association at the end of November, and commenting on the destruction of plant that could be converted to peaceful use, said this:
"Few, however, I think, who have had much to do with this problem, doubt that, in the last analysis, wars are made in the minds of men. What matters far more than anything else, therefore, in doing this job in Germany—the real standard by which history will judge us—is what effect we have had or have not had, at the end of it, on the mind of the German people."
The effect on the mind of the Germany people of the policy just described is not for peace. Other destruction has also been ordered, or is going on. I refer to the air-raid shelters on a very large scale in Hamburg, Berlin and many other towns. These shelters, these bunkers, which I myself have been in, are now used for housing in a desperate housing situation. Imagine the effect on the mind of the German people! The Chancellor of the Duchy of Lancaster, at the same Foreign Press Association meeting, said that we are in Germany for three reasons: security, education and economics, and security comes first:
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"Under the first head we have been extremely successful. At any rate on a short run view. The country is disarmed and, in a military sense, tranquil. All that is taken for granted now, but it was not so certain two-and-a-half years ago."
Why then for security reasons destroy airraid shelters? What you are really doing is destroying houses.
Let me give your Lordships an example which puts the whole situation in a vivid way, the case of Lubeck. I will venture to read a letter which I have received from the Evangelical Lutheran Bishop of Lubeck. He writes from Lubeck on October 15:
"I beg to draw your Lordship's attention to a decision made by the Control Commission for Germany and of the utmost importance for the town of Lubeck and its population. After the heavy air raid on Lubeck of March, 1942, a number of air-raid shelters in iron concrete were erected to protect civilians. After the armistice, these were at great cost demilitarized by cutting windows and other apertures in them, thus making them vulnerable to blast and splinters and, at the same time, adapting them as dwellings or storage rooms. The Control Commission has now ordered that they should be made ready for blowing up inside half a year.
All experts agree that for the town the consequences of such a destruction would only be disastrous. As these shelters are mostly situated inside closely built-up areas, the dwelling-houses and stores around them would be destroyed with them if they were blown up. It is estimated that a total of at least 80,000 square yards of dwelling and storage space would thus be destroyed, which corresponds about to the effect of the heavy air raid of 1942. The twelfth-century Cathedral and the thirteenth-century Marienkirche, both already badly mauled by the air raid and just now receiving first aid, as well as the St. Egidy Church, the Roman Catholic Church and the St. Mary's Hospital, would be among the buildings immediately endangered. Incalculable is the misery that would be inflicted on the town, over-populated as it is with refugees from the east, whose numbers are continuously on the increase. In view of the prevailing building difficulties, it would be impossible to make good the loss of dwelling space. Already some 18,000 refugees are encamped in appalling conditions outside the town as there is no possibility of getting dwellings for them.
Furthermore, beside the wholesale destruction of churches and other buildings of great historical value, the town's traffic would almost come to a standstill for a long time, and many leakages would have to be expected in the town's canalization, thus giving rise to the danger of epidemics, not to count the material damage that would amount to many millions. With the greatest apprehension, the inhabitants of Lubeck foresee this calamity without being in any way able to avert or mitigate it. In their anguish they address themselves to the Christian Churches and beg

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them, conscious of the still prevailing common ground of Christian civilization in Europe and a great part of the world, to appeal for a common effort in the name of humanity and indeed of reason."
And the writer signs himself "Paulke."
This is really a typical instance. I know that the Foreign Secretary said in another place on October 27, defending his reparations policy:
"Why all this tenderness in view of the devastation everybody has suffered [at Germany's hands]? I am forgiving, but I am not so forgiving as that."
But, my Lords, this is not a question about what Germany deserves. The real point is that we have got to make a choice between two alternatives. Either you must keep Germany in chains, keep her destroyed, devastated, desperate, and pay the price of a permanent sore in the middle of Europe, with the certainty of universal Communism and war, or you must enable Germany to recover in a peaceable and democratic way and pay the price of allowing them more coal and food, ceasing to dismantle industries and, now that she is completely disarmed, set her free to organize her economic recovery. Believe me, I do not underestimate the difficulties. I have great respect for the heads of the Control Commission in Germany and for many of their staff. They are high-minded, conscientious, and able men. I recognize the enormous difficulties caused by quadripartite action which depends on unanimity. I know that five major Potsdam decisions were never carried out, making the British task correspondingly harder. But in the British Zone British responsibility is involved, and British honour is at stake.
I believe intensely that we have a great deal to give to Germany, and that Germany has a great deal to learn from our way of life. It is very fortunate that we have Mr. Robert Birley in charge of reeducation in the British Zone. But, how can we begin to get access for this good way of life if the actual things seen breathe frustration and negation, and no positive plan is seen? So I would say, now that Germany is thoroughly disarmed—that is agreed—bring denazification to a complete end with an amnesty for all lesser Nazis; return any plants that have been stolen to France, Holland, Belgium, Luxembourg, and Yugoslavia, but give up the dismantling of all plant which is not classified in List A as war plant; stop
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the destruction of air-raid shelters; allow the retention of more coal in the British Zone; increase the import of, food into it; and, while giving expert advice and help when required, place the responsibility for Germany's economic recovery fairly and squarely on the shoulders of the Germans themselves, and give them the means of exercising their responsibilities to the full.
I have said nothing about Anglo-American bizonal administration, but I have only to read from the Select Committee's reference to that to show that:
"The Bi-partite Administration has met with many difficulties. There is a great shortage of accommodation in Frankfurt … the duplication of American and British Staffs is at least wasteful and some integration of staffs is necessary on the grounds of economy if not also of efficiency. Moreover, your Committee gained the impression that it is generally felt that the present bizonal organization cannot be of more; than a transitional character. … This uncertainty affects not only the American and British administrations, but equally the Germans. Your Committee were informed that, until the decision of the next meeting of the Council of Foreign Ministers is known, it will be difficult to persuade responsible Germans to accept positions in the Bizonal Administration, and that there is a lack of feeling of responsibility on the part of the, Germans. What is urgently required is a representative German Central Government with full responsibilities within clearly defined limits, and if this cannot be obtained for the whole of Germany then that regrettable result must not be further prejudiced by a failure to provide responsible government for a part of Germany."
This leads the argument straight to the Conference of Foreign Ministers. Many are said to be pessimistic about the result. What will Russia say or do? Experience tends to damp our hopes. Yet if it is the decisive conference the Western Powers must do everything possible to make it succeed. Not only patience and energy, but a constructive plan are required. What is required is a new approach from the West. I am very glad that the noble Lord, Lord Pakenham, speaking of Mr. Bevin to the Foreign Press Association, said he doubted if he had ever mobilized greater energies than those he is summoning for November to prevent a definitive split of Germany and Europe and the world into east and west. Three points have been referred by the Moscow Conference to the Council of Foreign Ministers; first, ways and means for bringing other Allied States into the treaty making; second, the nature and scope of a provisional political régime for a unified Germany; and, third, compensation for United Nations citizens

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who possess interests in German property taken for reparations or war booty. Far the most important of the three is the second and, therefore, I propose to deal with that alone.
The British representatives at Moscow, it is understood, countered the Russian proposal for political unity by a demand for economic unity as the first step. I suggest that we leave economic unity for the moment and concentrate on political unity, for this reason: Suppose you had economic unity, its direction must be under some governing authority. There are two alternative governing authorities, either Allied control, in which case the system remains a dictatorship and economic recovery will fail, or German control, which must ultimately be political in character. A unified political régime would seem essential from the economic point of view as well as from others. Therefore I propose the setting up by the Four Powers, forthwith, of a provisional political régime for a unified Germany. But the nature and scope of that régime will have to be defined. The first question one asks is: how far is it to depend on the occupying Powers? The experience of the Kommandatura in Berlin is not encouraging. The only way is that any new Central Government should have full powers and that the Allies should exercise only indirect control. Unless the Central Government has powers it will be of no use. Therefore, I say let the Provisional Central German Government have full power in the non-military field, subject to safeguards to which I shall allude in a moment, and let the Occupying Powers have the right to intervene in case of necessity.
As the next point, I suggest that the provisional political régime should conform to four basic principles. First, it must not be a menace to the security of Europe. Therefore military affairs must be excluded, and there will be the right of the Occupying Powers to intervene. Second, it must be consistent with the sound future political development of Europe. Therefore it must cover the whole of Germany, and not allow anything to divide Germany into two blocs with two capitals. Third, it must have real responsibility. It must control all matters of public concern except the military, but including foreign affairs, for if it is not allowed to include foreign
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affairs within its scope, foreign policy will become a matter of secret intrigue, a sort of black market. Fourth, it must be free and democratic. Therefore, there must be an elected Parliament and individuals of all Parties must be eligible for election. It must not be a One-party State, whether that Party is the Social Democratic Party, the Christian Democratic Union or the Communist or any other Party. At the same time, it should be built upon the Land, each with its own Parliament, and each of the Land Parliaments being responsible for education, culture, health, and possibly, police. Elections in the towns and villages should be to the Land Parliament and from the Land Parliament to the Central. In this way you would combine a unitary system, on which it is very difficult now to go back, with a sufficient federal sub-structure.
Obviously, the exact relation of the Land to the Centre will be a matter for discussion. Objection has been made to the Russian plan for political unity on the ground that it is bound to be a Communist régime. That is not at all the case if the régime were to be set up now, tough it might well be so if it is long postponed. I am told that in the existing voting strength of the whole of Germany the Communists together with the Social Unity Party are at the ratio of one to four. Thus if you had an elected Central Parliament you would have the Communists as a minority, a very distinct minority—only one quarter or one fifth.
Then there is a further requirement of great importance. This provisional political régime must be able to act. The Russians in seeking a political unity would certainly wish that régime to have power. It would be madness to exchange the present kind of deadlock when there is no Central Government for another kind of deadlock when there is a Central Government but one which is paralyzed. So it is essential that the Western Powers, in putting forward their conception of political unity, sketched as I suggest, should insist on guarantees: first, that the personal freedom of individuals throughout all Germany should be guaranteed by all the Powers together; second, that elections and democratic institutions throughout all Germany should be similarly guaranteed by all the Allies; and, third, that all decisions taken by the Four Powers in connexion with the government

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of Germany should be decided by a majority. That is to say the requirement of unanimity, which means paralysis, must go.
I believe that if the Western Powers made a proposal for setting up forthwith a provisional political régime for the unity of Germany, conceived in this way and subject to these guarantees, they would be taking a long step forward towards the recovery of Germany and, therefore, of Europe. The Russians could no longer claim that they alone are interested in German unity. It would put new heart into the German people in all four zones. At last there would be a definite plan coming from the West which meets their needs and the needs of Europe, deals with the crisis of confidence, and is firm and strong against war. Will the Russians accept such a plan? It is not impossible. It was they who proposed political unity, and we should nail them down to that fact. It gives what they want—that is political unity—though attaching conditions. I am convinced that such a plan should be pressed very hard by the
Western Powers. If in spite of patient, skilful and energetic pressure it is not
accepted by all four zones at present, then it should be worked forthwith in the full way to cover the three Western zones, with the door kept open for the East. Even that though not ideal, would break the present deadlock for a large part of Germany and give a powerful demonstration in action of the reality of the Western free democratic conception of political life for Germany to-day. But before falling back on a three-zonal political provisional régime for the unification of Germany, let us do our very utmost to secure that it covers the whole. My Lords, I beg to move for Papers.
3.30 p.m.
LORD BALFOUR OF INCHRYE: My Lords, I am sure your Lordships are grateful to the right reverend Prelate for raising an issue which must concern every citizen in this country, regardless of Party, and on which, it seems to me, many citizens must have individual views which largely cut across Party lines. In the course of his speech the right reverend Prelate asked the noble Lord who is to reply on behalf of the Government a great many questions. It will be for the noble Lord to answer these questions and to
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reply to some of the statements and allegations of stupid actions which have been made. I am sure that we on this side of the House will wait with interest to hear the reply to these points.
The right reverend Prelate divided his Motion into two parts. The first was, "to call attention to conditions in the British Zone in Germany" and the second to call attention to "the urgent need of completing a treaty" at the forthcoming Conference of Foreign Ministers. On the second point I would say only that I think most of us hope that a satisfactory treaty will be concluded, but the inference in this Motion is that the need for completing a treaty is urgent.
THE LORD BISHOP OF CHICHESTER: As a result of the Conference.
LORD BALFOUR OF INCHRYE: As a result. I would say that, both for Germany and this country, it is better to have no treaty than a bad treaty. To go to the Conference with the one purpose of appeasing any opposition, of placating those with opposing views in order to arrive at a signed document, would be a policy not consistent with the interests of Europe and this country. Let us look for a moment at what, in my view, would be a, good treaty. A good treaty is one which provides two things—a central, representative Government in Germany, combined with a division of the powers of that Central Government down to strong area government. I will not elaborate that point or the suggestions made by the right reverend Prelate as to how a treaty should be framed, but that is what I would describe as a good treaty. A bad treaty is one which places all the powers in the hands of a Central Government, which is not representative, and allows little or no powers of area government. Whether the legal representation is on the Right or the Left, a Central Government which can be dominated by outside influences and which controls the whole of Germany, would be very bad for this country, for Germany and for the rest of Europe.
In the course of his speech the right reverend Prelate made very strong pleas and if, in the remarks I make, I take a view somewhat on the other side in some matters I am sure that he will take no exception. We must take a balanced view on all these problems. For instance, the

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right reverend Prelate talked about the despair and disillusion in Germany. Like the right reverend Prelate and other noble Lords who have studied this question, I have been fortunate enough to go to Germany recently. I certainly found disillusionment among the youth of Germany, but I still found much resentment against this country and much refusal on the part of the Germans to face the truth. I would hazard the statement that 75 per cent. of the people in Germany are to-day firmly convinced that we are taking food out of the country. We can tell them the opposite; we can tell them the truth, that far from taking food out of Germany we in this country are going short of increases of rations in order that we shall feed Germany; we can send trade union leaders to Hamburg—as was done—to see the bills of lading of ships and let them examine what was taken out of Germany to try and stop the story that German butter was going out of the country labelled "German Butter." The fact remains that the vast majority of people in Germany, though we have done our best to convince them, refuse to believe the truth. In my view a great number of them to-day do not wish to accept the truth.
The right reverend Prelate, if I understood him aright, said that conditions in Germany at present are bound to be attributed to those with whom responsibility lies. I suppose he meant that this country was responsible.
THE LORD BISHOP OF CHICHESTER: I quoted the Report of the Select Committee of another place.
LORD BALFOUR OF INCHRYE: Certainly; but going right back I do not see that the citizens of this country can fail to remember where the responsibility for the major destruction of Germany lies. It lies with the Germans themselves, in their thought and actions in the past. I was glad to hear the right reverend Prelate pay a tribute to the officers of the Control Commission, and I am sure these officers will be heartened by that tribute. Of course, in every large organization there are black sheep, but by and large I think that anyone who goes to Germany will agree that the vast majority of Control Commission officers are hard-working citizens, trying to fulfil not always pleasant duties in an impartial spirit, not
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taking any account of their own particular sentiment on whichever side that may lie. We cannot, however, carry this financial and administrative Lord permanently. So far as we can, we must devolve the administrative responsibility on to local German governments. We have made a start, but it is as well to remember that the pace at which the decentralization of power to local German governments can progress is limited by the ability of the Germans to absorb the functions of government. Local governments often started by passing resolutions on U.N.O., the Marshall Plan, or on our actions in Palestine, instead of getting down to the particular purpose for which they were appointed. My experience in Germany was that the German governments are making a start, but that they will have to be nursed for a considerable time before we can fulfil our wish to decentralize administration.
I would say only a word on denazification, about which there has been criticism to-day and criticism in the Press. We are all for catching the big boys, but do not let us go for the sprats! As the Foreign Secretary said in another place, 4,000,000 Germans joined the Nazi Party and swore the oath of loyalty, and every one of these must bear some share of responsibility for the past. But denazification is now past history, so far as our administration is concerned, because as from September I it has been handed over to the German Land Governments who, I understand, are to appoint a special Minister to look after this problem. We cannot have it both ways. We cannot on the one hand criticize the administration of denazification, if we entrust it to the Germans, and on the other say that we ought to give greater administrative responsibility to the Germans. We must make up our minds which horse we are going to ride. As regards the actual conditions, the right reverend Prelate painted a picture of the British Zone descending in its progress. I think an actual study of statistics on the spot would show a rather contrary picture. Goodness knows, one cannot say things are good, but one can say there is some sign of improvement and some hope. The majority of the Germans are now getting their 1,550 calories a day. When you see our rations coming down and German rations going up, you must give credit to the citizens of this

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country for the sacrifices they have made in order that food conditions in Germany may be improved. I could not understand the right reverend Prelate's reference to a fall in coal production, because, in fact, coal production in the Ruhr has gone up from 180,000 tons a day to the recent all-high record of 273,000 tons. That increase has taken place over nine months. There may have been ups and there may have been downs, but the answer is that there has been a gradual increase.
THE LORD BISHOP OF CHICHESTER: The fall to which I referred was a fall last spring. I did not say it was falling now.
LORD BALFOUR OF INCHRYE: I think that is very relevant to the point I am endeavouring to make, which is not quite in accord with the right reverend Prelate's argument. The right reverend Prelate's argument was that things are going down, and he quoted the coal figures as a sign. When I counter those figures, he says that the figures are in relation to last spring. In Parliamentary debate, if I may say so with respect, I think that is a false point, because he is quoting the past in relation to a situation which is improving in the present. Broadly speaking, I think there is sign of an improvement in the situation. When I was in Germany I took the trouble to look at the figures of the chief notifiable diseases, which are always a good sign, and the infant mortality per thousand live births. Actually, there has been a steady decline. For instance, in July, 1936, there were 104 deaths per 1,000 births, and in July of this year the figure had gone down to 63 per 1,000. The death rate is improving slightly. I give your Lordships those facts only with the object of trying to bear out what I say, that I do not think the picture of increasing depression painted by the right reverend Prelate is really the right one.
The right reverend Prelate talked about the problem of displaced persons and refugees. Actually, refugees are coming into the British Zone at the rate of about 10,000 a week, which creates a very big problem. We have also some 250,000 out of the total of 600,000 displaced persons. We have done our part, and if only Governments in some other zones had fulfilled their duties as we have, the problem would not be so great for us
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or for anyone else to solve. I do suggest that the burden of displaced persons must not be put upon the shoulders of Britain alone. It is an international problem, and if the United Nations would tackle it and divide the 600,000 among some fifty nations, the problem would almost disappear overnight.
I come now to the question of the dismantling of the plants. It seems to me that the issue we have got to face is, reparations or no reparations. We have our Government saying—and I believe the majority of citizens in this country would support the Government in this—that reparations are part of a just price which should be paid by Germany for the war. But let us remember that even if we took an opposite view Belgium., Holland and France are not going to agree with it. One of the things we want to achieve is unity amongst the Allies; to get as much agreement as possible with them, and not to separate ourselves from our Allies on such questions as that. I, personally, rather wish we did not talk about dismantling factories separately from the main question, which is one of reparations, the dismantling of the factories being really part of the total plan. In case one or two of your Lordships are not fully briefed let me say that the dismantling of these factories is part of the plan to bring Germany's level of industry back to its state in 1936. The assumption is that after 1936 Germany inflated her factories—not only war factories, but factories of all types—in order to achieve, first, war supplies, and, secondly, a war potential. The bizonal agreement had to take some date line, and 1936 was taken. My criticism of the 1936 level of industry plan is that 1936 was two years too late. However, having made that criticism, I cannot see any alternative but to go forward on some such plan, unless we are to abandon reparations.
There are 682 plants, 192 of which are war plants; another 100 I understand have already been dismantled, leaving about 400 plants to be dismantled out of a total of some 50,000. My plea to the Government would be this. Let it be a flexible plan. Let there be provisions in the 1936 level of industry plan which, if our experts are shown to be wrong in one or many directions, will allow a review where errors are made. For instance, the level of steel production in the Ruhr was agreed, I think, at

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10,700,000 tons. The right reverend Prelate gave a slightly different figure, but we need not argue about that. As I understand it, the German trade union leaders in the Ruhr who, broadly, have not opposed this 1936 plan so far with any great force, said: "We do not disagree with your level of steel production for the Ruhr, but we do not think that under the dismantling plan you have left us enough plant to produce that steel." I understand that that matter has been adjusted. I think the plan is sufficiently flexible to allow an adjustment. I hope that when the noble Lord replies he will assure us that if it is intended to proceed with this plan, there are ample provisions for flexibility and review where it is found wanting.
The right reverend Prelate mentioned air raid shelters. I was in an air raid shelter at Hanover recently which is used as an hotel. I, too, thought how very absurd it was that it should be dismantled, but on investigation I found that two days earlier it had been reprieved. It may be that there are other reprieves. But let us ask the noble Lord to-day to give us an assurance that there will be flexibility and sensibility in the administration of this plan. I am inclined to support the plan, not only in respect of reparations, but also from the point of view of the efficiency of German industry. There are to-day in Germany far too many factories working 15, 25 and 30 per cent. time, manned only by 20, 30 and 40 per cent. of the man-power required. If, district by district, you can centralize production and get fewer factories, better manned and working longer time, then this plan should have the effect of increasing German production rather than of reducing it, as its critics say it will.
I understand that approximately 25 per cent. of the factories to be dismantled as capital goods reparations are to go to Russia. I hope that we are not going to be told that this is in accordance with the Potsdam Agreement, because, as the right reverend Prelate has said, that Agreement has been breached by five major decisions, and I believe we are all getting a little tired of hearing that everybody else can break the Potsdam Agreement but that this country is bound consistently by it. If this level of industry plan—with its evils and weaknesses which may exist
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and which I hope will be eradicated—can give the Germans the certainty of progress for three or four years, then I believe its advantages will outweigh its disadvantages, because it will be the first real positive step forward that we have offered to Germany. The worst possible thing will be if we start on this plan and then for any reason fail. It would be much better not to start it if we are not determined to go through with it.
The right reverend Prelate said that the alternatives for us were a desert Germany, a Germany barren and down and out, or a revived Germany. I agree with him entirely; I think those are the broad alternatives. Let us say that we will not relinquish our responsibility for the revival of Germany and will not be panicked into the withdrawal of our troops until we have fulfilled our task, purged Germany of the virus of evil which has existed for three generations in her blood, and are quite sure that, for our own sakes and for the sakes of the rest of Europe, a healthy Germany will spring up which can never again be a menace to civilization, as we have seen her in the past fifty years.
3.52 p.m.
LORD RENNELL: My Lords, it is very difficult for me to follow the two speakers who have spoken to this Motion, for which I think everyone in your Lordships' House will be extremely grateful, especially at this juncture on the eve of a meeting which may or may not produce sufficient agreement for a treaty. I find myself perhaps in a different position from that of many speakers who have spoken to Motions of this sort. I have not been in Germany, and therefore I do not propose to speak of what I have seen and there may be some slight advantage in that. It may be an advantage to read and hear about Germany on a more general level, with a more general picture, than to have one's perspective obscured by this or that detailed point.
As a result of visits to Germany, there has been perhaps too much criticism of one particular thing which has gone wrong. By that criticism an immense amount of harm has been done, especially among people who are engaged in trying to administer Germany. I certainly would not wish to follow critics along that road. My approach to this subject,

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for what it may be worth, is on a really totally different line. Much of what the right reverend Prelate has said, equally with what was said by the noble Lord who has just sat down, will be agreed in your Lordships' House. Perhaps the real difficulty of the German situation to-day—and on this I hope to take your Lordships with me—has to do with the pace at which things have been done. We shall probably all be agreed that the major ground of criticism has been about the delay in arriving at a decision or making a certain degree of progress. But I am inclined to agree with the noble Lord, Lord Balfour of Inchrye, that there has been progress and that the position is obviously not so bad as it was last year.
It is all too common to-day to see only the black side. Even in Germany there have been certain definite improvements, and there have been notable improvements during the period of our administration, about which a great deal was said in your Lordships' House in the debate which took place approximately a year ago, I think in December of last year.
There still remains the difficulty in which I find myself, of not being able to get an understanding of what our policy has been or is intended to be. I believe a good deal of the doubt in my mind, and perhaps elsewhere, is due to the fact that no clear direction has been given or carried out on what is the main issue in the Government of Germany to-day. Are we trying to govern Germany—and when I say "we," I mean the Americans, the French and ourselves—or are the Germans supposed to be governing Germany? I believe that obscurity in direction in any policy is as prevalent in our administration and that of the American Zone in Germany as it is here in England. It: is on that accounts—for I see no other explanation—that we have these curious duplications of controls of which I am sure the noble Lord who is going to reply is personally very well aware.
To quote one example—the machinery for the distribution of raw materials: An elaborate control of distribution machinery has been set up in the zones, and in theory that administration is supposed to allocate the raw materials which are available for manufacture. But at the same time, and parallel with that, there is a precisely similar control organization in both the British and American Zones. The result
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of those two parallel control systems, is the infinite delay in allocations and in results which has been the subject of complaint by the Germans as well as by members of our Allied Western administration. I am sure the difficulty i: a people's minds in Germany is caused by their not knowing what it is precisely they are supposed to be doing. Are they in fact supposed to be supervising and inspecting, or are they supposed to be executives? Until that has been made clear I do not think a coherent policy in Germany itself becomes possible. The point is one which will not be lost upon the noble Lord who is to reply, because as a matter of fact he and I have discussed it in the past.
THE CHANCELLOR OF THE DUCHY OF LANCASTER (LORD PAKENHAM): I am sure the noble Lord will not hold me responsible for the opinions he is now expressing or any others he may express.
LORD RENNELL: I hope the noble Lord, in the course of the speech he will make in winding up this debate, will refer to that aspect of our administration and the objectives which our people there are supposed to have in mind. That brings me to another example where I think the same difficulty arises, and that concerns the dismantling of factories. I do not propose to quote figures which have received fairly wide publicity, and I entirely agree with the noble Lord, Lord Balfour of Inchrye, that the problem of dismantling is really whether we want to have reparations, and how many, or how much in reparations we want. I personally do not follow him in the conclusion which I think was implicit in his remarks, that we are entitled and ought to have reparations, and that therefore the dismantling ought to take place. I do not follow him there on account of the economic situation which confronts the world generally, Western Europe in particular, and ourselves in this country. It may sound illogical to use that as a reason for not dismantling or not taking reparation, but is not the real basis of the problem we are facing to-day—which has become so abundantly clear from the Marshall Plan and the Harriman Report—in Western Europe in general, that of under-production; under-production in this country and under-production on the Continent?

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That that is the feeling in America, is borne out by that passage in the Harriman Report which speaks of aid to Germany. I find myself completely in agreement. But if Germany is to be aided to produce more it is illogical, at the same time, to dismantle the manufacturing equipment which there is, in order to reduce the standard of production to the 1936 or 1938 level, or to the level of any other chosen year. I feel that whatever decisions may have been taken in the past and whatever the rights and wrongs of the Potsdam Agreement were, we in Western Europe have reached a stage of economic difficulty which requires a complete reconsideration of the premises of that Agreement and the decision to dismantle 682 German factories. In that decision there is a further example of the lack of clarity in our policy to which I have referred. On the one hand, it was announced that the list of factories which were to be dismantled was a "final" list; on the other hand, it seems to be perfectly clear that it is not a final list, because in addition to those factories which are listed by the various categories already mentioned, there is a proviso that other factories of a more military character, the Category A factories, will also be dismantled. There is consequently really no finality.
The noble Lord who has just sat down has asked for the programme of dismantling to be administered flexibly, and with that I am in entire agreement. At the same time, I do see that the noble Lord sitting on the Front Bench opposite must have been faced with the apparently insoluble problem of being asked, on the one hand, to produce a final scheme, and on the other hand, to make it so flexible that it is not final at all. Where do we go from that point? I do not myself believe there should be a final scheme for dismantling. In fact, apart from what may may be purely military factories I do not believe that it is in the best interests of Western Europe to-day to reduce German productivity to the 1936 level. Many of your Lordships will, no doubt, disagree. I take that view because at the present moment in Western Europe and the world generally we want the maximum production and not any artificial low level either of 1936 or any other year. It is principally on account of that lack of production and lack of consuming power on the part of the population of Germany as a whole, or
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even the Western part of Germany, that we now have the economic difficulties in which we find ourselves.
If your Lordships will cast your minds back to the parallel period at the end of the 1914-18 war, you will recall that it was then commonly held—and to-day is generally accepted—that one of the reasons for the economic difficulties in which the world then found itself, was that 60,000,000 people had been taken out of production. If this was a contributory reason to our economic difficulties then, it is equally a valid reason for some of our difficulties to-day. That is a fact which has now been recognized in America; otherwise I find it difficult to explain the insertion of the paragraph in The Times summary of the Harriman Report which reads:
"In addition, the programme written at Paris may have to be modified by a shift in the amounts going to separate countries. In particular the aid allotted to Germany may have to be higher than was settled in Paris."
I believe that to be entirely right. But if it is right; let us be consistent in what we are trying to do and not pursue two rabbits at the same time—that of cutting down productivity in Germany and that of increasing aid to Germany in order to restore productivity.
That brings me to the last and only other point I wish to make. This is more on the political side, and it refers to an attitude of mind which has been present for many months in the administration of bizonal government in Germany. It has been a matter of common knowledge that the British and American points of view have not coincided at all points. It is quite possible that both in the British and American zones separately there may be something of an imperio in imperium, which it is not always easy to deal with either from Washington or from London. I am afraid it is also true that these divergences have, most unfortunately, led to some recriminations and also to some, I do not say deterioration but to some friction in our relations with the United States of America. If these frictions are due to personalities, as they frequently are, then I hope His Majesty's Government for their part will remove the cause of these frictions as I am sure the United States Government will also do, by changing any personnel that may be at fault.

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But at long last, what really matters is a single policy in the two zones, and that policy may be distasteful for many to accept, for by and large it must be in fact that policy which the United States Government wish to pursue. We have represented to the United States Government that the burden of carrying our administration in the British Zone is beyond our present capacity. It is not reasonable, at the same time, to say:
"You pay, but we will do what we want." If we are going to ask the United States Government to assist with the administration of the two zones of Germany—and I have purposely spoken only of the western part of Germany—the least we can do, I think is to agree to follow the policy which they themselves wish to carry out. I do not think that any other policy would be either possible or reasonable.
I certainly do not want to go down the road which the right reverend Prelate followed in the latter part of his speech. I certainly do not know what sort of Government a united Germany ought to have. Discussion of the matter may be a pleasant intellectual exercise, but I do not think it leads us very far. Accepting the state of things as it is, I believe that if that state had been accepted, as indeed I tried to suggest in December last, you have a line of division to-day which runs not only across Germany but also across Europe.
Nothing which has happened in those twelve months has broken down that barrier. Indeed, the intellectual fortifications of that barrier have been strengthened. That is as much a matter of fact as the rain falling from the skies. You cannot administer either Germany or any other country except within the framework of facts. One of the major troubles I think, has been—indeed, the delays, the doubts and the difficulties to which I have referred have come from this—that we have always thought that what was might be different. Had we a year ago accepted that that dividing line existed, I am quite sure that decisions which have been delayed until now would have been taken before, and
the administration of Germany would have been better than it is. Above all, it would have been possible to reach an economic policy at an earlier stage, as I think it should have been reached.
May I express the hope that His Majesty's Government will not try to con-
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clude a final scheme, or agreement for all time, about the level of German industry? I hope they will take rather the line of flexibility, and if possible say, even before the meeting which is to take place, and irrespective of any decisions that were taken at Potsdam, that the needs of Western Europe, including Germany, have a paramount claim on the attention of the Governments that are going to meet.
4.13 p.m.
THE LORD BISHOP OF SHEFFIELD: My Lords, I do not wish to stand for more than a few moments between your Lordships and the reply of the spokesman of His Majesty's Government. I know only too well that the noble Lord who is to reply, and who is responsible to His Majesty's Government for the Control Commission's work in Germany, needs no exhortation from these Benches to put the very best of his ability and Christian concern to his work. I desire, however, to underline one or two things which have been said in this debate.
It is good to know that there is some material improvement in the condition of affairs in the British Zone, but there remains this sad and sorry fact, that the degree of spiritual malaise and political disillusionment seems to be either constant or on the increase. That is a most serious fact, and one which we have to take into full account. It is exceedingly disappointing to all of us that after two and a half years that should be the condition of affairs. The phrase "crisis of confidence" has been used, and the noble Lord, Lord Balfour of Inchrye, said (with very great truth) that a large number of people in Germany do not particularly want to have confidence in us. That, I think, is the normal psychological state of the people of an occupied country. But the distressing fact is that this jack of confidence extends also to those in that country who do want to have confidence in us and who do want to see a new order of things in Germany
Further, it is very noticeable that people from this country who visit Germany seem to share in this crisis of confidence. I feel that His Majesty's Government should direct their attention to that point. One realizes that they are faced with most complicated political issues and economic issues, but there remains this fundamental problem of spiritual malaise and political

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disillusionment. One of the noble Lords who has already spoken referred to our desire to purge Germany of certain elements which for many generations have produced a state of affairs that has led to war. I have the uneasy feeling that we are not doing that, and that if anything the currents are tending to move in the other direction. So I would ask the noble Lord who is to reply whether he is satisfied that the kind of publicity which we are putting out in Germany is effective. By that I do not mean merely the kind of thing which might get served out to the local Press, but whether, as it were, the Control Commission are making as clear as I think they could make their good intentions, or whether there is not far too much stress on negative controls and other unpleasantnesses.
Again, I should like to ask the noble Lord,—I do this in no spirit of complaint—what is the situation in regard to the appalling refugee problem. Does he see any daylight at all in regard to that very real and desperate problem which, I imagine, is as hampering to our administration as to the German people themselves? Those who visit Germany, and those who speak on this subject, naturally and properly express their appreciation of the service rendered by our representatives in that country. I wonder, though, whether the quality of the service rendered by those in the most important positions might not become a little clearer if the quantity of our representatives were slightly, or even greatly, reduced. Surely, once administration is handed over to the German people themselves, if there is too much dual control a complicated situation will arise. One has the impression that in the lower ranks of the whole business this duality of control is not making for efficient administration.
The last point which I want to make, I make with great diffidence. I feel rather as though I am going outside the book of the noble Lord who is to reply, but I have it on my conscience to make it and I do so in the form of a question. Are His Majesty's Government satisfied that the whole set-up of the Army of Occupation is as good as it can be? I ask that question because we know that the moral price paid by the young men of the Army of Occupation is very great, that they are exposed to an atmosphere which tends to create demoralization. The only
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possible justification for allowing that to go on is to be quite sure that the total Army of Occupation is the most effective instrument available for this particular purpose. I leave my question in that form.
4.20 p.m.
LORD DEL'ISLE AND DUDLEY: My Lords, I think you are all agreed upon the supreme importance of the topic which we are now debating, and I am—and I am sure your Lordships are—grateful to the right reverend Prelate for raising it. I speak with some diffidence on this subject because I am in no sense of the word an expert on this problem and,
unlike almost all other noble Lords who have spoken, I have not visited Germany. I would like to make that perfectly plain before I start. It is not part of my purpose to discuss at any length the general problem, but I would like to indicate my general agreement with the remarks that fell from the lips of the noble Lord, Lord Rennell. On the grounds of common sense, I cannot persuade myself, from anything I have read, that a policy of dismantling Germany can be anything but bad in its effects.
I will take one particular point which has not been mentioned before. Suppose it could be shown that there were large numbers of redundant factories, and that those factories, when dismantled and removed, could be set up again and used effectively in other parts of Europe, what about the transport problem? Has anybody considered that? If they have considered it, is it right that we should preoccupy the over-crowded railways with the transport of dismantled German industries at a time when we are pouring money out to keep Germany alive? However, I do not in the least under-estimate the difficulties which confront His Majesty's Government, and I would like to offer my sympathy, if he will accept it, to the noble Lord, Lord Pakenham. I know that he has a vast problem, and I do not wish in any way to make it more difficult. I am sure that all parts of the House are glad that there is in charge of the administration someone who has, and makes no secret of it, adherence to Christian principles. If I make some remarks which appear to be critical, or at any rate pose questions, it is because I have been deeply moved by certain documents which have come into my hands.

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The right reverend Prelate spoke of denazification. This is one of the crucial problems which have faced and still face us. One is aware that, when speaking of this problem, if one does not make use of the most violent terms condemning the Nazi régime, one is apt to be called a crypto-Nazi or Nazi sympathizer. I wish to say at the outset that I personally have no sympathy with the Nazi régime. When the question of denazification was first considered we were, I think, at war. The mentality of a people and their rulers during a war must naturally be somewhat abnormal. That is no criticism of the Government in office at the time, or of its members, but surely judgment on such problems must be admitted to be at least not clear.
I think it was agreed between the four Powers that we should carry out a process of denazification. When the scope and magnitude of the problem became clear, was it right to pursue it as we have pursued it? That is the first problem I must pose. Mr. Bevin, in another place, told us that there were 4,000,000 members of the Nazi Party in the British Zone of Germany. He has told us that no less than 370,000 persons have been removed from office, and I believe it true to say that there were until recently 23,000 interned.
Now I turn to the speech made in another place by the Foreign Secretary in which he enunciated the general principles which governed our policy towards Germany. He named three. They were:
"… to ensure that Germany is never again allowed to revert to a dictatorship, or to menace world security by the adoption of an aggressive policy; second, to establish constitutional machinery in Germany aimed at developing sound democratic institutions; and, third, to establish economic conditions in Germany which will secure for her a peaceful economy and an adequate standard of living."
As aspirations I have no quarrel with any one of those principles enunciated by Mr. Bevin, but I do submit that in pursuing a policy to ensure that the first condition will be fulfilled we have made it if not impossible at least extremely difficult to fulfil the other two. Consider this. This country has, I believe, a population about double that of the British Zone in Germany. Suppose some 700,000 specialists, civil servants, soldiers, clerks or foremen, had been removed from their jobs, some of them taken from their homes, and some interned for long
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periods, would our already admittedly difficult situation have been made easier?
I am not in any way excusing members of the Nazi Party, but I do say that when you do have to tackle a problem of this scope, it alters in quality. It would have been possible, in my estimation, to single out a certain number of leading Nazis and war criminals but I cannot see that we can ever hope to administer successfully a zone in which one in sixty of the population have been screened and removed from their jobs. We speak of wishing to establish democracy in Germany, I am not going to speak to the vexed question of what is, or what is not, a democracy, but I would venture to assert that, before a régime that we regard as a proper, free régime is installed, we must see elevated the rule of law which precedes the establishment of democratic institutions. It is because I believe that we have not been acting upon this principle, the rule of law, but pursuing what seems to be a form of ideological warfare, that I am profoundly disturbed.
I have here two documents from which I propose to quote. I hope I shall retain your Lordships' attention if I quote somewhat extensively from them because it would be no good my putting a case for the noble Lord, Lord Pakenham, to answer if I did not give him chapter and verse. The two documents which I have here, with which no doubt the noble Lord is familiar, are Zone Executive Instruction No. 3 (Final), and a previous one dated November, 1946, Zone Executive Instruction No. 54. The first document defines the various categories of people who must come before panels for investigation. First of all it defines war criminals, Nazis and militarists. May I take first the definition of militarists?
"Any former Regular officer of the German Navy, Army or Air Force, and any other officer, N.C.O. or man of the German Armed Forces … who by reason of his disposition, past activities and professional military knowledge is considered by the Military Governor as likely"—
I would like to emphasize that word "likely"
"to foster or resuscitate the military ambitions of the German nation."
Then I would like to draw your Lordships' attention to the various categories of person who must be dealt with under the denazification scheme. There are, first, war criminals. I do not propose to

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deal with them. Whatever we may think of the definition of war criminals, most of us will agree that the leading Nazis who would fall into that category should, at any rate, be confined if not otherwise punished. But there are other categories to which I should like to draw your Lordships' attention. There are the people in Category 2, who are called "offenders." These appear to fall into two types. One group consists of internees who are considered by the Review and Interrogation Staffs to be of such potential danger as to merit continual internment, and they will be provisionally categorized into Category 2. Before proceeding further I would like to draw your Lordships' attention to some of the sanctions which can be used against persons in that category. They can be interned for a period not exceeding ten years, but subject to periodical review. On termination of internment an individual will be re-categorized into a lower category by the British Review Board. His property may be blocked for a period unspecified and he may be subject to total forfeiture of wealth or to a fine.
Now we are told that, apart from war criminals, the sanctions that apply to persons in Categories 1 to 4 are not to be regarded as punishment for past misdeeds, but as a means of restricting the activities of persons whom Panels consider on all the available evidence to be a danger to the revival of a peaceful and democratic Germany. That is to say, it is not, apparently, a punishment but a prevention. I would like to draw your Lordships' attention to persons also in Category 2. The directive states:
Internees who are not considered by Review and Interrogation Staffs to be potentially dangerous, but who because there is evidence to show that they are profiteers come under the provisions of Serial 17 of Category 11, will be provisionally categorized into Category 2."
A profiteer, apparently, is a person who, during the Nazi régime,
"gained or possessed substantial economic resources and used these resources for the advancement or maintenance of the Nazi régime, or any who, being already considered to be potentially dangerous as a result of their previous activities or connexions, possess property or income sufficient to command a position of authority or influence in the social, economic or political life of Germany."
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Though a man may not be partially deprived of his wealth if he is placed in that category, he is liable to have all his wealth removed.
I say that the word "profiteer" is a question-begging word. It is a piece of political jargon often used at political meetings by one side or the other. It is not a word known to a code of justice. If I may take an example from our own political life, persons in the City, as a result of Dr. Dalton's cheap money policy, have made large profits. They are not persons, many of them, who at any time have adhered to Dr. Dalton's political views, and yet they may be said to have helped to have maintained his policy and indeed to have profited by it. I submit that it is not the proper word to be used to condemn a person to ten year's internment or less or to the total deprivation of his wealth.
Nor is that all. This next zonal instruction, Number 3, is quite final. I hesitate to say whether it is final in the relative sense used by Lord Rennell. It sets out the constitution of the denazification panels to be set up manned by German personnel. It says:
"In order to achieve maximum truth, fairness and impartiality, the constitution of each panel and committee will be in accordance with the following principles:—"
I am not going to detain your Lordships by reading the whole of them, but I would especially draw your Lordships' attention to the object which is "to achieve maximum truth, fairness and impartiality."
Then I turn to the Appendix. This is designed to give guidance on the political aspects of zone instructions. In particular, in sub-paragraph 2 it is stated:
"The first criterion for all members of the Denazification Panel is that they should be confirmed Anti-Nazis; that is to say, they must have, in the past, given evidence of their positive antipathy for the Nazi régime. Only if it proves impossible to find confirmed Anti-Nazis should non-Nazis be allowed on the Panel. To a considerable extent a man's political views will indicate the strength of his opposition to Nazi principles. In industrial regions, German panels and committees must be predominantly but not exclusively, com posed of trade unionists and representatives of the workers' interests; in other regions representation of trade unions must also be provided where possible. It must not be forgotten that Nazis and many of their sympathisers had, as their first object, the destruction of working-class organizations, and it is particularly desirable that these organizations should be given a chance to name their

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oppressors. It is also important that members of the Left Wing political Parties and religious groups, which were persecuted by the Nazis, should be well represented."
That is an instruction for the selection of persons to sit on panels with powers to condemn people to ten years' internment. Are they to be judicial, or is it to be a policy of revenge? It is no bar that they should be called as witnesses. But to act as judges, to have to decide whether a man is a profiteer! I ask you, my Lords, is that promoting the rule of law? And if profiteers are to meet with condemnation from members so appointed and so selected, for fair measure let it be said workers may also be dismissed from their office if they "have made themselves odious to their fellow-men by their past conduct."
Finally, in cases where they recommend a lenient course—that is the German panels—under paragraph 5 of the directive they must "show clearly the positive evidence which causes them to make such a recommendation." In other words they have got to give positive reasons why they should show clemency. If we look at that document in ten years' time it will not read at all well. It is setting up a People's Court, which will not try people by the well-tested rules of justice but try them because of their political sympathies; not by an impartial tribunal, but by people who have already suffered and must have partial and warped minds. I submit that that is in itself a bar to the development of democratic conditions in Germany, and to the economic revival of that country.
In the same document there is a further appendix called "Application of Control Council Directive No. 24 to the farming industry." This says:
"It is impracticable to denazify all farms in the British Zone without dislocating the production and distribution of food.
"It is, therefore, intended that denazification should affect only

(a) occupiers of farms with a taxation assessment of 100,000 marks or more;

(b) occupiers of less valuable farms who held the rank of Kreisbauernführer or above;

(c) occupiers of less valuable farms who are notorious Nazis."

Surely these admissions show that the policy is harmful to the economic revival of Germany. If this is true of agriculture, must it not also be true of industry? Can industry really bear the loss of the 370,000
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people who have been removed? Is it possible, if we carry out in the way we have carried out the first of the objectives set out by Mr. Bevin, to achieve the other two—the institution of democratic government in Germany and the economic revival of that country?
I am, I confess, gravely moved by what I have read in these documents. In common with many of my generation, I took part in the last war, and I thought I was fighting for the cause of freedom and the rule of law. It is a personal grief to me that I should find in any document bearing the signature of any representative of Britain such an appendix as I have read out, in which Courts are set up to try people for their political offences, manned by persons who must be averse to the people they are trying. I ask the noble Lord to consider this question very carefully. I am sure he has done so. While this lasts and: s a stigma on the fair name of Britain, we shall not get any revival in Germany, and we have no hope of spreading abroad those forms of government which we in this country think are the fairest and best. Until Germany can be set on the road towards, if nor prosperity, at least recovery, there is no hope for the recovery of Western Europe, and I foresee a very dark future both for ourselves and our fellow Europeans.
4.45 p.m.
LORD PAKENHAM: My Lords, I know we are grateful to the right reverend Prelate for giving us a chance to discuss this matter and I would like to express my gratitude on behalf of the Government to all those who have taken part in the debate. They have all, including, I need hardly say, the last speaker, given me a great deal to think about and I will reply to many of the points raised in the course of my remarks, though others may be better discussed in another way with the noble Lords who have raised them. It is high time that we discussed Germany and I hope the House will forgive me if I detain your Lordships for rather a long time. In prolonging my remarks I can-not hold out hope of lightening them by what passes for humour or wit, because that kind of thing is apt to be misunderstood abroad in a debate of this sort. I am afraid that it is rather a long and grim story I have to tell the House. I must ask the House to settle down to it, and if necessary return to it.

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I entirely dissent from the view expressed by the right reverend Prelate that things are getting worse in Germany and I am very grateful to the noble Lord, Lord Balfour of Inchrye, for coming to my assistance, if I may put it in that way without embarrassing him. The last time I spoke I accused the Opposition of not being very helpful, and it would be churlish indeed and very unfair if I accused the noble Lord of not being helpful this afternoon. In every way, he made a most helpful contribution, and he replied in advance to many of the contentions of the noble Lord, Lord Rennell, who argued them with his usual fertility of resource. The noble Lord penetrated deeply into some but he skated gracefully over others. Be that as it may, it is always a great pleasure to listen to him.
I wish to mention at this stage another point raised by the right reverend Prelate, though I do not intend to answer it properly. He asked whether all was well with the Army in Germany. That is not my present responsibility, though I had the great honour to be Under-Secretary at the War Office till a few months ago. Last Friday I was in Hamburg, where there are a great many troops, and I spoke to our Regional Commissioner, who happens to be a man who knows the German people very well. He told me how very much impressed his German friends were with the behaviour of our troops. I do not say that there are not grave moral dangers into which our men may fall unless we take great precautions, but as this point has been raised and there is no spokesman of the War Office present today, I wish to say at least that much on behalf of the British Army.
The right reverend Prelate raised two fundamental questions in relation to the administration of the British Zone. Have we a moral purpose behind our work? And have we a rational plan to give effect to that purpose? He also raised, as was most proper on an occasion of this kind, the whole question of our diplomatic intentions at the forthcoming Conference of Foreign Ministers and even the period beyond so far as Germany is concerned. I think the House will agree that it is absolutely right for the right reverend Prelate and other speakers to be outspoken on those points, but it would be equally wrong if a Minister, on the eve of a vital
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Conference, probably the most vital conference held since the war, were anything but extremely cautious. I hope, therefore, that the House will forgive me if I do not add a great deal to what has been said by my right honourable friend the Foreign Secretary, on previous occasions in dealing with the coming Conference.
I am well aware—perhaps no one is better aware than myself—how much this somewhat "cagey" attitude, if I may use the expression, restricts the area of our discussion. No one, indeed, regrets it more than myself, and for this reason: it is, in my firm opinion, beyond the bounds of honest reasoning to defend adequately the British record in Germany—whether you are thinking of the men on the spot or the Government—without stating certain home truths of a diplomatic, or should I rather say, an undiplomatic character. Germany to-day is certainly not in a prosperous, flourishing or happy condition. Let us admit that frankly, while discounting exaggerated tales of horror and recognizing certain gleams of light which are not always observed—even by the eagle, ecclesiastical eye, if I may put it that way, of the right reverend Prelate who, if he will forgive my saying so, speaking in the language of friendly criticism, is up to date with the bad facts but not so up to date with the good. If you ask me why Germany is in that condition, there are two answers which are of a different order of magnitude from any others. Obviously the first answer is the war itself, which Germany, in a collective historical sense at any rate, precipitated quite unprovoked upon the world. When thinking of the damage due to war, I am not thinking only of the destruction and loss of life in Germany, though that has been colossal, but of the world-wide devastation and its consequences. It will have been observed that in the Paris plan for Marshall aid it is reckoned that not even by 1951 will Europe as a whole have recovered its 1938 level of consumption. That is an indication of what the whole world, including Germany, has suffered as a result of the war.
The second factor is the regrettable amount of disagreement between the Allies. No one in this House, I believe, holds His Majesty's Government responsible for those disagreements; but there they are, an indisputable fact of post-war

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history; and Germany, along with other parts of Europe and the world, has paid a terrible price for them. From the administrator's point of view, of course, they have been a continuing nightmare. On the one hand, there has been uncertainty as to when there would be a peace treaty, and what kind of peace treaty it would be. That has rendered long-distance planning almost out of the question in many fields. On the other hand, the refusal of the Russian Government to allow Germany to be operated as an economic unit has hitherto wrecked the whole conception of how Germany was to be administered after the war. To put it quite bluntly, from factors over which the British Government has had little control our men in Germany have hitherto been set an impossible task. We are determined that, whatever else emerges from the November Conference (and let us hope that much that is good and fruitful will come of it), the task for our men will be possible in future.
One other word about the coming Conference. In certain quarters there is an attitude of complete scepticism about the whole thing. Quite a lot of eminent and well-intentioned people are going about saying that it must be written off in advance. I want to make it abundantly plain that such an attitude in no way represents the spirit in which His Majesty's Government are approaching their task. We may have doubts about the outcome—what sane man could fail to have some doubts, in view of past experience?—but we intend to outdo even our previous exertions in the struggle to achieve success. We have No 1ntention whatever of abandoning our principles—principles, I believe, which are acceptable to the whole nation. We stand for the economic unity of Germany, but it must be a real unity, with a common import-export programme, pooling of resources between all parts of the country and, I need hardly say, freedom of speech and freedom of travel everywhere. I must make it plain that we cannot ignore what has happened since Potsdam, and the cost of it.
If agreement cannot be reached on this basis, no doubt other political and economic expedients will have to be introduced, and rapidly introduced. The present state of things cannot go on indefinitely. If the best way out is denied us by Russian policy a second-best will have to
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be found. Be that as it may, whatever temporary devices are resorted to—and we all hope they will not be necessary—we shall always come harking back to the unity of the whole of Germany. That door will never be shut, because to shut it would be not only to do Germany an irreparable mischief but to effect a division of Europe which might not be ended in our time.
May I descend from the diplomatic stratosphere and breathe the more familiar air where I have my own being, the administration of Germany? Have we a moral purpose? Have we a plan? I am sure the right reverend Prelate will agree with me that you cannot prove the existence of a moral purpose. You only feel that it is either there or not there. I assure the right reverend Prelate from this place that His Majesty's Government recognize that they are in Germany in the relationship of trustees to the German people. With that statement, however, should go on record two others: first, that in our administration of Germany we recognize our responsibility not only to the German people but to the world, including, of course, those countries which the Nazis ravaged and desecrated—and I believe that France will come first into the minds of most members of the House. Secondly, the House appears to agree with the present trend of British policy, under which the power to govern themselves is increasingly devolved on the Germans. Indeed, there seems a general disposition to move still faster than we are moving in that direction. I can quite understand and sympathize with that, but it does mean that the fate of the Germans, their happiness or unhappiness, rests increasingly in their own hands. Nothing I have said about our moral responsibility for them should weaken the force of the lesson which their own best men join with us in teaching: that it is on their own exertions that their future, for good or evil, must depend.
If anyone asks me, "Is there really this moral earnestness you speak of among the members of the Control Commission staff in Germany?" I reply, "Yes, among a surprisingly high proportion." I say "surprisingly high" in view of the frailties of average human nature, whether in Britain or Germany in the public service or out of it. A number of mean and quite unsubstantiated attacks

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have been made on our people in Germany. About some of these attacks I do not hesitate to use the words "deliberate lies." Perhaps the lowest depth of all was plumbed by an article which described a typical member of the Control Commission as a "spiv," besides accusing him of a good many other things. That kind of thing does more harm than members of this House—some of whom may at first be inclined to treat it as something of a joke—may suppose. Among other results it makes members of the Control Commission, particularly men with families who are not so very young, wonder whether they will be able to get jobs when they come back home, and whether they can afford to stay in Germany any longer.
On behalf of His Majesty's Government I want to reiterate the high confidence already expressed by my right honourable friend the Secretary of State for Foreign Affairs and, I may add, by the late Commander-in-Chief, Sir Sholto Douglas, in the integrity and devotion to duty of our men and women in Germany. From my own direct first-hand experience, after thirteen visits to Germany in the last six months, I can assure the House of the widespread seriousness and sense of mission that I have found among these public servants, who are doing with great fidelity an exceptionally difficult job. Until the beginning of this month they were led by that most inspiring and most human chief, Sir Sholto Douglas, who was looked on everywhere with respect and affection. He is certainly the ideal man with whom to go tiger hunting. He would kill all the tigers and give one credit for killing half of them, besides covering up any deficiency of one's own during the actual operations! His departure will be a tremendous loss, and I wish him well wherever he finds an opportunity of serving the country. I do not expect that the country will allow him to languish in idleness for long. He has been succeeded, as the House knows, by his late deputy, Sir Brian Robertson, that remarkable administrator, whose services to the country bid fair to equal those of his ever-distinguished father. I extend to him, on behalf of the Government, and I am sure on behalf of your Lordships' House, the very warmest welcome.
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If we have one worry about the staff—it has hardly been raised to-day, although it was raised in previous debates—it is the question of how to offer them more secure prospects than we have hitherto been able to do. Of course, their presence inevitably depends upon the number of men we shall require to do this job in Germany in the years ahead. Up to now it has been very difficult to make a firm plan along those lines. My right honourable friend the Secretary of State has asked me to report to him as soon as possible on the whole question of the future functioning of the Control Commission and the number of staff required. It may therefore not be very long before I am in a stronger position than I am to-day to give the House some clearer indication of what is to be expected in that direction.
If the question is pushed further back and if I am asked: "Have you, the Government, or, through the Government, the British people, shown as much evidence of good will towards the Germans during the last two and half years as Christian ethics would require?", I would reply that the Christian standard is perfection, and I am not claiming for a moment that we have achieved that. I do not think that any Bench, even the Benches which are situated on my left, represent perfection of this kind. I am afraid that it is beyond us all. But when the historian of the future studies the privations to which the British people have been subjected as a result of the war, and when he observes that out of their diminished substance they have contributed at least £175,000,000 to feed the Germans and to supply them in other ways, then I cannot help thinking that that same historian will find it difficult to discover a parallel, and that on this matter at any rate, he will say to us: "Well done." And it will be to the eternal credit of the British people, to whichever Party they may or may not belong.
While still dealing with this aspect I turn to the work of our education branch in Germany. They have been guided in recent months by a most eminent and, if I may describe him in that way, a most sophisticated chief, Mr. Birley, who gave up a big position in the scholastic world in this country to see what he could do in Germany. He would be the first to say that he is only one of many, but in his

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very person he is an example to those who say there is idealism in the Control Commission for Germany. Our education branch have won high praise from the Select Committee on Estimates which recently visited Germany and made such a valuable Report. I would respectfully suggest, if I may, that those members of your Lordships' House who are particularly interested in education should obtain a copy, when it is published, of the evidence which Mr. Birley gave to the Select Committee on Estimates, because there they will find the whole story set out in a fashion which is obviously beyond my compass this afternoon. I will just say that they have done and are doing a remarkable job.
I myself have visited a good many German schools and universities, and made formal speeches at Kiel and Hamburg Universities, and I will say just this about the students. German youth of to-day do not seem to be so down-and-out as some people are inclined to suggest. They are in a very inquisitive state of mind—you might almost say in a state of high intellectual excitement. Our own students who went out to a summer school and spent three weeks with the students of Bonn told me that the Germans—with whom they got on extremely well—revealed an insatiable appetite for discussion. For hour after hour they pegged away at the great themes and all concerned had a very good time. There is No 1ntellectual languor that I have found, but rather the reverse. I would say that the Germans are in a very malleable state, and it is vitally important that while they are in that condition they should be influenced by ourselves and by German guides in the right direction.
Now we come to denazification, because that also raises moral issues. The noble Lord who spoke last will forgive me if I do not follow him too closely through the documents that he quoted to the House. When the debate is over I will refer once more to those documents and I shall be glad to go into the matter with him in much greater detail at any time. Denazification is a horrid, tiresome business at the best, and I suppose there is no Englishman concerned—and perhaps few Germans—who has not wished to Heaven at some moment that the whole thing could be terminated forthwith. We are nearly all agreed—or all who have gone closely into it are agreed, whether we are
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talking now of Englishmen or Germans—that some such process had to be gone through; some widespread process of that kind had to be employed if Nazism was to be extirpated from the dominant position that it had secured in the life of the people. The real question which interests the House is: When is it all coming to an end?
Let us take first the number of internment camps. The right reverend Prelate will forgive me for not having been attentive enough to be able to offer him detailed information on this subject. He considered together various elements which must be separated; those in internment camps, those going through the process of denazification, and so forth. I will try to explain in a moment the different ways in which those matters are being handled. Let us take first the number in internment camps, something over 19,000 in all. In the first place I would point out that this number has declined, as it is only right that is should, fairly steeply in the last year. In fact, it is just about half of what it was a year ago. The number then was rather over 38,000. It would be a good deal lower now, except that between July and September they received a net inflow from the American Zone of something over 6,000 people, so that when I say it has declined by 50 per cent. in the last year I am not perhaps being quite fair to the authorities in our Zone; they have brought it down faster than that.
Be that as it may, of this 19,000 odd, just over 16,000—that is to say, by far the greater proportion—are awaiting trial by a German court as a result of the Nuremberg judgment Unless we are going to defy the Nuremberg judgment we cannot exonerate these people from trial. The trials are proceeding fairly fast and should be finished by the middle of 1948. I say "should be finished" though it is never well to make promises in these matters. But I am bound to say that they have gone rather faster than we feared would be the case, and it does look as if by the middle of 1948 the trials should be over.
In this connexion I have a piece of news which I am afraid will take a little time to retail but which will bring genuine and proper pleasure to the heart of the right reverend Prelate. I am very glad to be able to announce that it has now been decided to release from civil internment

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camps on parole all non-commissioned ranks of the S.S. awaiting trial who are not regarded as a potential danger to security or wanted for war crimes or crimes against humanity. A similar concession will be extended at the discretion of the Control Authorities to individual internees of officer rank in the S.S. who were born on or after January 1, 1919. No person will 'be released under this arrangement until the German prosecutors have completed their preliminary investigations into his case in preparation for the trial, but this should not cause any excessive delay. Proper safeguards will be taken and, on release, persons will be required to report to a police station once a month and will be subject to the same restrictions on movement and employment as lesser offenders under the denazification regulations.
I must emphasize that the scheme does not constitute an amnesty for these persons. It is still our firm intention to implement fully the judgment of the International Tribunal at Nuremberg by bringing to trial members of the four criminal organizations, including the S.S. The scheme will mean, however, that of the 16,000 odd persons held in internment awaiting trial, some 7,500 will be given their liberty, under suitable safeguards, until their cases are heard. This should result in an immediate improvement in morale in the civilian internment camps.
LORD BEVERIDGE: Would the noble Lord be good enough to say what he means by "as soon as possible?" I gather that it depends on inquiries which the authorities make, and that may take some time.
LORD PAKENHAM: The noble Lord can, I am sure, rely on me to see that they do not take a long time.
LORD BEVERIDGE: But what is expected by "as soon as possible"?
LORD PAKENHAM: I would not care to mention a date, but I think the assurance I have just given should be sufficient for the noble Lord.
I have spoken of the 16,000 who are awaiting trial. Apart from those awaiting trial the other internees number 1,700 who are not yet categorized, recent arrivals; about 200 who are awaiting release; and 900 who are provisionally
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held as suspects while their cases are being investigated. There remain 535 who are regarded as dangerous Nazis or militarists. I should point out that these 535—the number really is reasonably small—who have been sent to a special settlement at Adelheide with permanent buildings, facilities and a special education officer, would have had their cases originally investigated by Intelligence teams and subsequently have been before a review board with a legal chairman. Out of the last forty-two cases which came up for their regular review, twenty-nine were recommended for release, so that their plight is far from hopeless; and I hope your Lordships will feel that the greatest trouble is being taken about this comparatively small nucleus. I have gone into that matter at considerable length, because I want to disabuse the House and the public of the idea that there are thousands of people who have not been tried and are never going to be tried. Apart from the 900 who are provisionally graded, and those awaiting categorization, it boils down to these 16,000 who are definitely awaiting trial. They will all be tried fairly soon, and half of them will shortly be released on parole.
LORD DE L'ISLE AND DUDLEY: There is a certain number of war criminals who are going to be tried and a certain number of people who will be confined in internment camps as being potentially dangerous. Is the noble Lord including those in the trials?
LORD PAKENHAM: It is a very complicated matter. We are not dealing at all in this discussion with war criminals proper. The 16,000 are people who will be tried because they fall into certain categories. In that sense they are war criminals, but they are not being tried for individual war crimes. They are being tried for falling within categories which make them liable under the Nuremberg judgment, assuming them to have had knowledge of the purpose of the organization.
VISCOUNT MAUGHAM: May I suggest that it might make the matter a little more clear to the House if the noble Lord would kindly tell us how many, or about how many, are fixed for trial, or possible trial, by the military courts such as those mentioned in Nuremberg, and how many

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are to be tried by German courts? It makes a very great difference to their position in the future.
LORD PAKENHAM: I am not dealing with people being tried by military courts, but with the Germans in internment camps. The others do not come into the discussion.
VISCOUNT MAUGHAM: But it would make the matter clear if we were told the number of people who are going to be dealt with by military courts. They amount to a certain number which the noble Lord may be able to tell us, because there are still people in imprisonment in Germany. We want to know what the real set-up is with regard to the whole country.
LORD PAKENHAM: I was dealing with denazification and I should have strayed a long way from that if I had got on to the subject of war crimes. I shall be delighted to let the noble Lord have the information for which he asks. What the noble Lord is discussing is something quite different, but of course it is something of sufficient intrinsic value to be discussed. But the point is that these 16,000 will be tried by German courts
under the Nuremberg judgment, because they fall within certain categories, as having knowledge of the nature of the organization. The 535, however, are people who will not be tried but who are simply held because they are judged to be dangerous characters. They will be held until we are satisfied that they can be safely released.
VISCOUNT SWINTON: They are, in fact, "18Bs."
LORD PAKENHAM: I am a very poor linguist, and I am not sure how we could put that into German, but it would be a very close analogy, as I understand it.
VISCOUNT SWINTON: With regard to these people who come before the German denazification panel, has that tribunal to find the fact, without a discretion as to whether or not the persons had knowledge; or has it a discretion to say who ought and who ought not to stay in prison, and who ought or ought not to come out?
LORD PAKENHAM: No. The court has to discover that the persons in fact occupied certain positions and that they
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knew the nature of the organization. Though I am no lawyer, I think one could have guilty knowledge of the nature of the organization.
LORD DE L'ISLE AND DUDLEY: Are those the same as panels?
LORD PAKENHAM: They are not the same as the panels which denazify people. They are special German courts; they would not be the same as panels. I am bound to say that it is an infernally difficult subject. I apologize for not making it more radically plain.
I am afraid that the right reverend Prelate has, in one case only, allowed himself to be unduly optimistic. I hate to discourage any tendency of that kind on his part, and I hope he will forgive an impertinence on my part if I say that he has a weakness which lies the other way. It is not the case that denazification in the broad sense, even leaving out those people in the camps, will come to an end by the end of the year. In the narrower sense it will have come to an end by the end of the year, in that all dismissals from employment will have taken place. But there is a process called categorization, which owing to quadripartite disagreement only got under way in March of this year. Categorization also has been handed over to the Germans, but that only began in March; we cannot expect to finish that straight away or in six weeks' time—by the end of the year.
While I would point out that, under categorization, sanctions such as confiscation and apportionment of goods can still be applied, I hope that they will not be applied too rigorously. Categorization, as I see it, is to improve a man's position and rehabilitate him rather than pull him down, because when he has been denazified and when he has been put into a category you cannot leave him there unless he is in one of the best categories. Obviously there is delay while he makes his way back to normality. Therefore, that particular process cannot come to an end at once, because we assume that it will take a little time for these men to work their way back. While there are certain penalties which can be exercised under categorization, the main purpose will be, as I see it, the recovery from this position of restriction to one of freedom, provided always that the panels are satisfied that a man really has improved in his attitude.
VISCOUNT SWINTON: Forgive my interrupting. While the process of categorization is going on, where a man is perhaps taken from a lower category and put into a higher category and so on, is he all the time interned?
LORD PAKENHAM: No, not at all. I am afraid I am going too fast. These people have nothing to do with the internees at all. The internment people are simply the 19,000 people of whom 16,000 are awaiting trial. They do not come into this at all. Here we are talking of the 300,000 odd—I believe that is the correct figure—who have been removed from employment and who will have gradually to pass through this categorization.
VISCOUNT SWINTON: To continue my question: In that case, if they are not interned and they are denied employment, how do they live?
LORD PAKENHAM: They are not denied all employment; they are denied responsible employment. The figure is 340,000, not 300,000. They are gradually going to work through this process of categorization. I have met them in Germany on farms and in various other capacities. They are not allowed responsible positions. Surely the House is not saying that they should to-day have responsible positions? Your Lordships may say that people ought to be brought back more quickly or you may have views about delays, but you are surely not going to say. that in the case of important positions like those of teachers in universities, these should be held by men who were really active in the Nazi days. I do not think your Lordships would argue that. That being so, something of this kind has clearly to go on in order to give the men a chance of making good. The only other point I would stress in this connexion is the fact that this denazification and categorization has now been handed over to the Germans. It is up to them to say how long it will take and how severe it has to be. It is not, therefore, anything in the nature of an infliction by us upon the Germans; it is placed in their hands, and it is up to them to say how they will use it.
LORD BEVERIDGE: Does that handing over to the Germans mean that the German decision is final, or does it have to be approved by some British authority?
LORD PAKENHAM: I am not absolutely sure of that point but, for all practical purposes, the German decision will be final. I am not sure whether there is any exception.
LORD BEVERIDGE: Perhaps in time the noble Lord may be able to answer that question.
LORD DE L'ISLE AND DUDLEY: I have a document dealing with the matter. Under Category 2, there are certain sanctions which might be applied. This applies to profiteers, as I mentioned. One sanction is to intern them for a period. The question is: Can that sanction of internment be applied by a denazification panel or is it as the result of a trial by a court?
LORD PAKENHAM: The internment would be as a result of trial by court, but what we are now talking of, denazification and categorization, would be as the result of decisions taken by German panels. I confirm that my impression was correct; that the decision of the Germans will be final, except that in extreme cases we can intervene. Any German decision will be final, leaving us the safeguard of intervention in extreme cases—if we thought, for instance, that they were going in for witch-hunting or anything of that kind. I hope we have had enough of this complicated subject. Of course, I entirely sympathize with those who say that we move forward too slowly. Let us push it forward now and let us get through the whole business as fast as is humanly possible.
Now we come to the subject of dismantling. Our objects in dismantling Germany are quite different from what is sometimes alleged. It is quite untrue to say that our objects are the punishment of Germany or the destruction of a business competitor. Our objects, so far from being that, are security and a measure of reparation. Here I thought that the noble Lord, Lord Balfour of Inchrye, put his finger plumb on the spot. We have already had it said by the right reverend Prelate that war plants ought to go. I should emphasize that, out of the 682 on the list, 302 are war plants. If war plants are to go, the cardinal question is the one posed by the noble Lord, Lord Balfour of Inchrye: Should reparations be taken or should they not? That is a serious moral issue whose gravity I do

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not wish to minimize. I must say that, while it would be quite wrong to try to saddle any German whatever at the present time with the view that the dismantling programme is right, it is equally true that I find widespread recognition, to which public expression has been given on many occasions by the leaders in Germany, that some kind of reparations are theoretically justifiable. That is the general view amongst leading Germans, and I am sure it is the view of most people who think about it in this country. But once you reach that conclusion you come, of course, to the question of the amount of reparations that are to be taken. Out of the 50,000 plants in the two zones the number to be taken has been reduced from 1,636 to 682 plants. Here I am bound to say that I felt the right reverend Prelate was unsure of his facts. He gave the impression that the whole thing was over; that there had been some trouble some time last year, and that suddenly there comes along an order which starts the whole thing off again. Of course, he and the House must know that that is utterly remote from what has actually occurred.
There has been steady discussion ever since the war as to how much should be taken, and the final figure is far less than any one supposed it would be. If the right reverend Prelate was under a misapprehension in that respect perhaps he will set it right when he replies. No firm figure has been worked out for the amount that we and the other Allies will receive—and it has to be remembered that we in Britain will receive only about 21 per cent. of the total—or what the total damage to the German economy will be. An outside figure which has been given, and which we can regard as a good deal greater than reality, is a total loss to Germany of £250,000,000, direct and indirect. When we compare that figure with the kind of figures that were discussed after the last war—figures that were to go on for years and years—we must see that this is very small, and one that perhaps two years ago few people would have been ready to entertain.
LORD BEVERIDGE: The £250,000,000 is not the total; is it from our Zone or from the British and American Zones?
LORD PAKENHAM: It is from the Anglo-American Zone. It is an outside figure and, therefore, I can give it in a
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straight-forward form, because I think it is so far outside that it covers everything.
LORD BEVERIDGE: It does not include the Soviet Zone?
LORD PAKENHAM: No; it is the Anglo-American Zone. I think the point is understood by the House, but may I repeat here, especially for the benefit of those who may be following my words in Germany, that apart from a few prohibited industries still under discussion, this really is the end of the reparation claims on the capital equipment of the British Zone? Moreover, the British Government have repeatedly declared their objection to current reparations, which, during the next few years, could only be paid by Germany out of the pockets of the British and American tax-payers. My right honourable friend made it plain in another place that if any current reparations ever came to be paid out of our Zone—and I hope they will not—they could not be paid out of the level of industry which we are discussing to-day.
My Lords, there is the outline of the case. Reparations are to be taken, and the bill which is presented is far less than anyone would have thought likely two years ago, or even quite recently. The question of method may arise. No one will seriously suggest that reparations can be taken out of current production during the next few years, while Germany is being assisted from outside, and so I will deal simply with the practical issue raised by the noble Lord, Lord Rennell. Assuming that it is morally right to do this, is it prudent to do it? That is as I understand it, what was in the mind of the noble Lord. Here are one or two facts which have not been stated at length to-day, though they are firmly in the mind of the noble Lord, Lord Balfour of Inchrye, and, indeed, he referred to them in general terms.
At the present time Germany is able to produce in the two Western Zones only about 42 per cent. of what she produced in 1936. Under the proposed plan she will be allowed to go up to 100 per cent., which is much more than double. The House will mark the significance of that, and of this also; after very careful investigations—one noble Lord asked me whether the investigations had been careful, and

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all I would say is that if anything they have been over-careful; they have been very prolonged, and a great deal of hard work has been done by many people—it has been calculated that even if Germany were not to be asked to pay any reparations, she would not be able by 1951 to get back to her 1936 level, which is now to be permitted her. Globally, therefore (and I am using that word advisedly), the plant which is being taken away from Germany is plant which she would not be able to use herself in the few years immediately ahead, and which can be of great service to build up other countries. Of course, the global picture is not the whole picture; it never is. Of course, a number of individual plants which are now being partially operated will find themselves dismantled, and a very efficient concentration of industry, as the noble Lord, Lord Balfour, indicated, will have to be effected if the results which have been worked out, as I have indicated, on paper are to be achieved in practice, without causing unemployment or local suffering. The House will be glad to know that in all that pertains to the execution of the plan the German authorities are showing themselves co-operative, and joint Anglo-German Committees are now at work in all the regions. I am sure we were right in not saddling these German democratic leaders, who are trying to win their spurs and deserve every encouragement, with the responsibility for the plan itself. Once it was issued, however, we requested their co-operation in making it as humane and as efficient as possible; and German politicians and, may I add with emphasis, the German trade union leaders, are showing themselves wise and reasonable in making the best of the inevitable.
I dare say that some noble Lords read rather exaggerated accounts in the Press of a visit I paid to Dusseldorf. I will not say anything about that to-day. I
think the impression which got about was that I got "the bird." I would not say I got "the bird," though once or twice I heard the beating of her wings in a perfectly friendly and democratic way. On the whole, however, a good time was
had by all, and I think everybody understood everybody else much better afterwards. I would certainly emphasize, however, in case there is any misunderstanding, that there was no disrespect to a British Minister as such, and that there was no
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intention to be obstreperous. Their conduct was, in my opinion, perfectly proper and understandable in the circumstances.
I will just add two further points at this stage. First, we have declared our willingness—showing the spirit of flexibility for which the noble Lord pleaded—to study German proposals for modifications of the list in respect of individual plants, so long as total capacity is unaffected. Secondly, we have suspended until after the November Conference—and I hope altogether—all destruction of buildings except those, such as gun sites, which can be used for purely military purposes. It is extraordinary that no one seems to know about this. They did not know about it in Germany when I went to Essen just over a fortnight ago, although it was in the papers in Germany; and here we have the well-informed right reverend Prelate completely devoid of information regarding this subject. We have, in fact, suspended the destruction of buildings until after the November Conference, except where they can be used for purely military purposes.
LORD BALFOUR OF INCHRYE: Since when has it been suspended?
LORD PAKENHAM: I am asked, since when was this suspended? It was announced at the same time as the main announcement was made by General Robertson, who gave various Press interviews and certainly
broadcast this information to Germany on at least one occasion. But it is most extraordinary that neither in Germany nor over here do the public generally seem to have learnt of this most valuable concession, which should undoubtedly make a great difference to the peace of mind of many people.
May I sum up, at the risk of repetition, the case for dismantling, and explain why the Government are irrevocably committed to their present programme? First, its objects are security and reparations which, in principle, most people accept. Secondly, the amount involved is far less than any of the sums discussed after the last war, and far less than anyone would have expected this time. Thirdly, the only way in which Germany can make a net payment to the outer world during the next few years is by the rendition of capital plant, which is what, in fact, is being taken under dismantling. Fourthly,

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Germany would not, in any case, be able to use the plant involved during the next few years, if we are thinking in global aggregates. Fifthly, we are doing everything possible, in co-operation with the Germans, to make sure that local hardships and unemployment do not result. Sixthly, the plan in no way conflicts with our recovery programme for Germany, under which it is hoped that her
production will be built up during the next few years in the bizonal area from 42 per cent. of the 1936 level to 100 per cent. of that level. I have attempted to sum up the matter under those six headings, and I can assure the House that, as has been suggested, we desire to make it clear that we are going to push on, right to the end. We echo the right reverend Prelate's sentiments, and we intend to carry this through to a proper conclusion.
I have said enough, I suppose, about what might be called the negative part of our plan for Germany, though, be it observed, it is a very essential part in regard to the recovery of Europe. May I now come to the positive problems which are confronting our administration? The right reverend Prelate will understand that, owing to the diplomatic difficulties which I have mentioned, it has been difficult to draw up a comprehensive plan running over a period of years, but if he will look at the targets for the German economy which were presented in the summer to the Paris Committee on European Economic Co-operation, and which are now accessible to the public, he will see that there has been a great deal of what might be called "long-term thinking" done by our people and by others in relation to the future of German industry.
Perhaps the right reverend Prelate will allow me—and I must apologize for detaining the House so long—to deal with four topics in particular, which are certainly integral factors in any plan. Of course, many people will judge the difficulties in Germany by the cost to us, and it is true that this has been a very considerable drain. But one really ought to go behind that and look at the figures of imports and exports. There, I quite agree, improvement has been much slower than we could have wished, but there has been improvement, and it is quite wrong to say that things have been getting worse. We shall not achieve our export
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targets next year, but exports are now running twice as high as at the beginning of the year, in spite of the crisis in the early spring. Therefore, although we have to get exports up to about nine times their present level before Germany becomes self-supporting, I hope the right reverend Prelate will agree that there has been progress—true, it has been slow progress, but still progress—on the export front. Apart from the matter of export figure—I will not detain the House with them, but we have worked at this very hard—many other not unimportant steps have been taken; we are, for example, enabling German business men to travel abroad.
But behind all the export figures there remains the question of production. Germany cannot export very much at the present time because she is not producing very much. If I might, I would suggest one set of figures in this connexion, and upon this set of figures perhaps more than any other set the House may care to keep an eye in the future. I would point to the production index. There is no great success reflected there, but still the figures are moving, though moving very slowly, in the way we should wish to see them go. A year ago the production index stood at 35. Owing to the winter crisis, during which the economic life of Germany was at one time almost completely stopped, the figure had sunk to 26. I should explain that these are percentages of the 1936 statistics. In February, the figure was 26. To-day it stands at 37, which is slightly higher than it was a year ago. That is for the British Zone. For the two Zones it row stands at 42. If anyone asks me why the figure is still so low—only a little higher than it was a year ago—I answer that whether we do get this figure higher or not depends upon the progress that we make under four crucial headings, all inextricably linked—currency, coal, food, and administration.
First of all, as to currency. Everyone who has been to Germany is horrified by the currency situation—I am sure that the noble Lord, Lord Balfour, was—and it certainly is very distressing. The absence of any external value for the mark necessitates some kind of restriction—various kinds of restriction, in fact—on the export trade. Internally, I think, the consequences are worse. The absence of a stable internal currency, together with the

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shortage of consumer goods, are, I believe, the main causes of the black market and all the evil consequences that stem from it. Until we have a proper currency, we shall never establish any normal incentives of a kind calculated to stimulate the producer to go flat out or to sell his product (and here I am thinking particularly of the farmer) through legitimate channels, so that it can be fairly rationed and distributed. The House is probably aware that there has hitherto been a quadripartite deadlock on this subject. To-day I will only say that I shall be mortified if I am permitted to stand here in a few months time and am unable to report that we have got a real move on in this absolutely vital field.
Secondly, there is coal. The coal news is real balm in Gilead, though, as so often happens, there is a fly in the ointment; this time it is the problem of getting it away from the pithead—the problem of transport. But, be that as it may, let us salute good news from Germany when it comes, and coal production in the last month has, at last, moved forward really fast. A year ago the production was 180,000 tons a week. At the beginning of October, after various vicissitudes, food shortages operating on one side, and new incentives and increased numbers of miners on the other, it was round about 240,000 tons. On Monday last (I was hoping to have yesterday's figure but it has not yet come to hand) the figure touched 279,000 tons. That is another 6,000 tons on the figure in the possession of the noble Lord. I cannot help saying respectfully, to those who never see any improvement in anything in Germany: "Laugh that off if you can."
We have a long way to go before we reach the 350,000 tons which might reasonably be expected from the mines in their present state of equipment, and I ought to warn the House that the present set of incentives—special parcels of food and clothing—will have achieved their immediate purpose when the production reaches 280,000 tons, so things may become a bit stickier after that. This is the figure for yesterday which has just been handed to me—279,892 tons, which is still in the right direction. I am sure that the House will wish to approve the good work of all concerned, whether British or German. It is particularly
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gratifying that the North German Goal Control, who have been in charge of the mines up to now, should have seen this reward for their labours just before handing over their executive responsibility to the Germans, while supervision will be maintained by a joint Anglo-American body.
There was a certain amount of ill-informed criticism of the coal people in Germany, but the Anglo-American expert talks on the coal industry, held in Washington this summer, not only resulted in some extremely concrete plans for improving production but also indirectly vindicated the performance of our own British coal authority—which was, indeed, only its due. Fuel has been such a tremendous industrial bottleneck since the end of the war in Germany that improvement in coal production is bound to have a good effect on the general industrial index; how quickly and sharply I will not venture to prophesy. There is another reason why coal production is going much better at the moment than production in most other industries in Germany. While the German miners, and more especially their families, do not receive as much food as one would like them to have, they get a good deal more than other workers, and it makes all the difference to them and makes for better output. That brings me to my third heading—food. I am afraid that for a long time to come food will run through every discussion about Germany. What can I say about food in Germany to-day? Is it better than a year ago? No; it is just about the same. Is it better than it was in the spring, when I myself first went out there? Yes, a great deal better; there has been a steady improvement since that time. The House, I am sure, will understand that I am not trying to make any personal claim or to detract from the great work of my predecessor, to which I have not hitherto had a chance of referring, and which will shine out much more brilliantly as the years bring all these matters into perspective. When I first went out, the food crisis was extremely acute and in the period from April to May the normal consumer received only 900 calories. In the most recent period he received 1,400, or rather more than half as much again. The latest figures have shown a fractional decline below that, but I think we may fairly say that food is at the moment

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50 per cent. better for the normal consumer than it was in late spring and early summer.
How does the German standard of food consumption compare with our own? It is difficult to say, because in the case of Germany one has to include not only supplements received by heavy workers but what is obtained in the black market, and the supplies coming from gardens and parcels. There is also the fact that a larger proportion of the German population live on farms. Without desiring to be dogmatic, I would say that the average German is eating three-fourths as much as the average Englishman—less rather than more. It might be argued that this is a serious underestimation of the relative amount of hardship and distress suffered in Germany. In the first place the German standard of living crept up to the present figures only after the food crisis in the spring and summer, which created great uncertainty about the future. In the second place, while we think our present fare in England is monotonous, the German food is even more so, consisting of 85 per cent. bread and potatoes and a fat allowance only one quarter of our own. In the third place the black market and other supplements do nothing to mitigate the lot of the poorest classes, especially the old, and over the year as a whole I would estimate that the poorest classes had half as much food as their opposite numbers in this country.
Your Lordships may attach what importance you wish to these estimates, but they have been arrived at after a great deal of thought and trouble on my part. There is the food situation. Everything in Germany comes back to it, and I can honestly say that it is never out of the thoughts of the Administration. The real trouble is that Germany, which at the moment lacks many of the old supplies from the East, has to feed in the Western Zone 8,000,000 more people than before the war. The supplies of fertilizer have been very short, as everywhere else, although Germany is now hoping to get 80 to 90 per cent. of her requirements. And, as we all know, there is a worldwide food shortage. We on our side are doing everything we can. Between 1st July and the end of December 1,900,000 tons of grain products will have arrived in the combined zones, compared with
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800,000 tons, or less than half, last year. Controlled grain and flour stocks are the highest since the end of the war and at present are equal to nine weeks' supply. I only wish that the position in regard to some other foodstuffs was equally good. I am afraid that I must decline to give any assurances as to the future. I would just say this, without making a promise of any kind. Provided that domestic supplies are collected at the same rate as last year, imports should be sufficient to maintain the present ration level up to the middle of April, 1948. It is the over-whelming duty of all concerned—British, Americans and everybody else—to see that last year's breakdown is not repeated.
Finally, I come to administration, and here a great many pertinent things have been said to which I would like to reply, but time is running out, and in any case I am not sure that it would be wise today to go very far ahead. Putting it quite crudely, and ignoring all the diplomatic troubles which have added to our difficulties in so many ways, we in the British Administration have been passing through a transitional phase this year, and while we have made considerable progress in preparing the way for the next stage, we are suffering the worst of both worlds. In saying that, I am not thinking of the joint bizonal arrangements with the Americans, with whom our relations have been altogether pleasant and from whom I personally have received every form of courtesy. What I have in mind (and this has come out in the speeches of more than one noble Lord, including Lord Rennell) is the handing over of many of our responsibilities to the Germans, with ourselves retaining a supervisory role. In food supervision, for instance, can we honestly say that the Germans are running the food distribution under our supervision as efficiently as we ran it ourselves? The answer is most certainly, "No." To be fair to the Germans, however, it cannot be said that conditions have enabled them to exercise a proper degree of authority among their own population.
If you talk to a German farmer—and I have talked to quite a few of them—and try to make up your mind as to why the German farmer is not delivering his entire product like the British farmer, and if you ask why the police are

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not protecting the German farmer against those who raid his vegetables, as they protect the British farmer, you would come to the ultimate conclusion that in the present Government structure there is a vacuum, an absence of authority, not on paper, but in fact. These are penalties of a transition; they are penalties which have to be paid; the stage had to be gone through. But, without in any way committing ourselves to any particular proposals such as have been urged with so much talent and ingenuity this afternoon, I quite agree with all those who argue that the sooner the present obscurities are cleared up the better for everyone. I also quite agree that there is no time whatever to be lost.
I have detained your Lordships an unconscionable time, but the subject is a vast one, involving as it does 23,000,000 of our fellow human beings in the British Zone alone, whom we hold—never forget—at our mercy, and for whom one day we shall be called to account. I seem to remember that the father of the noble Lord, Lord Tweedsmuir, once divided European leaders into "the rhapsodists who inflame and embolden, and the plain homely realists who know how to heal." Germany has been tortured and betrayed by the former kind—the rhapsodical maniacs. But I find in Germany to-day, on all levels—in the political Parties, in the Land governments, in the trade unions, in the universities and elsewhere among humbler people—many people coming forward, or going about their business, who are deeply conscious of their sad heritage, and who are deeply resolved to set things right, to wipe clean the slate and enable Germany to make a worthy contribution to Europe. The British people, I believe, are looking for more than one kind of quality in the administrators in Germany., We are seeking among them inflexible determination, unflagging industry, and, above all, surely, a spirit of healing and reconciliation. I believe also that those who have been closest in touch with German affairs will be the first to acknowledge that these are in fact the standards by which our men are endeavouring to govern their lives and to represent our country out there.
6.2 p.m.
THE LORD BISHOP OF CHICHESTER: My Lords, I will not spend more than
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a minute or two, but I should like to thank the noble Lord for the great trouble which he has taken in answering this debate, and for the valuable information which he has given. I should also like to thank the other noble Lords who have spoken for their most valuable contributions. I agree that this is not at all a Party matter. I also agree that we want a balanced judgment. While I do not accept all the darts which have been hurled at me from below, I realize that my eagle, ecclesiastical eye was concerned to bring out things that are sometimes forgotten and which do not emerge into the light of day. I think, after all, that the price of liberty is eternal vigilance, and even an imperfect Bench may sometimes have a slight regard to vigilance. I think the temporal Peers, if I may so describe them, showed an uncommonly satisfactory vigilance in the matter of denazification. I think the noble Lord who replied can hardly have felt entirely satisfied with the unravelling of the skein of the extremely complicated process which is sometimes called denazification, sometimes categorization, sometimes civilian internment, and I think there must be other names as well. I am sure the quotations which the noble Lord, Lord De L'Isle and Dudley, made from the Zonal Order shocked the House, because they did show an extraordinary attitude to law and to justice, let alone to freedom.
I would only add, with regard to the dismantling question, that of course I realize that this question has been brewing for a very long time. Where I would argue that the situation has got worse in Germany is not so much on the basis of statistics, which the noble Lord provided, but in confidence. Rightly or wrongly, there is no doubt that confidence has decreased. Could anything be better calculated to reduce confidence than the announcement of the dismantlement plan—which may be, and certainly is, less severe than it would have been if it had been produced a year ago—on; the very verge of what is certain to be an extremely hard winter? It is in the psychological field that the situation has grown worse.
There is just one point about the matter to which the noble Lord, Lord Rennell, referred of political unity. I do not plead guilty to a purely academic or fanciful picture of what might be. It does seem to me that before the Powers

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generally can decide on whether or no Germany shall be politically united they will want to understand the form of political unity. It is on the character of political unity that people's attention is fixed, and the November Conference is, in particular, charged to work out the nature and scope of a provisional political régime for the unification of Germany. Everything really does depend on the form. I am sure we are also particularly grateful to the noble Lord, Lord Pakenham, for the energy with which he resisted a sceptical view of the coming November Conference. It was very heartening to hear that. Here—and really this is my usual rô 1e, though I am afraid the noble Lord does not
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always see me in it—I am an optimist. I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

JOHNSTONE GAS ORDER, 1947.
Special Order proposed to be made on the application of the Provost, Magistrates and Councillors of the Burgh of Johnstone:
Laid before the House (pursuant to Act) for affirmative Resolution and referred to the Special Orders Committee.
House adjourned at ten minutes past six o'clock.