Sitting of 18 July 1949

Preamble
The House met at Half-past Two o'Clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  BRITISH TRANSPORT COMMISSION BILL
  Lords Amendments considered, and agreed to.
  ROYAL HOLLOWAY COLLEGE BILL [Lords]
  Read the Third time, and passed with Amendments.
DOVER HARBOUR BILL [Lords]
  FALMOUTH DOCKS BILL [Lords]
    MANCHESTER SHIP CANAL BILL [Lords]
    As amended, considered; to be read the Third time.

RIVER GREAT OUSE (FLOOD PROTECTION) BILL
As amended, considered.
Standing Order 205 (Notice of Third Reading) suspended; Bill to be read the Third time forthwith.—[The Chairman of Ways and Means.]
Bill accordingly read the Third time, and passed.—[King's Consent signified.]

ORAL ANSWERS TO QUESTIONS

  MAGISTRATES (REFRESHER COURSES)
  Mr. Skinnardasked the Attorney-General how many justices of the peace have attended refresher courses for magistrates at Ashridge and other centres since 1st January, 1948.
  The Solicitor-General (Sir Frank Soskice): I am informed that since 1st January, 1948, 2,355 justices of the peace have attended refresher courses for magistrates at Ashridge and other centres.
  Mr. Skinnard: Does that mean that all newly-appointed justices of the peace do now, as a regular practice, take this course in the law applying to their own courts?
  The Solicitor-General: The present refresher courses are run by the Magistrates' Association, which is a purely private body over which my noble and learned Friend the Lord Chancellor, as such, has no control at all. Under the terms of the Justices of the Peace Bill, now before another place, there is provision for the establishment of Magistrates' Courts Committees, which will be asked by my noble and learned Friend to prepare schemes for centres in order to implement the recommendation in that behalf of the Royal Commission on Justices of the Peace. The present view of my noble and learned Friend is that justices of the peace should not be required compulsorily to attend such courses, but he will certainly urge them to do so.

  FOOD SUPPLIES

    Warehousing (Ships)
    Sir Waldron Smithersasked the Minister of Food how many ships in United Kingdom ports are now being used by him for warehousing purposes; what is the tonnage involved; and what is the average time that the ships are so used.
    The Minister of Food (Mr. Strachey): None, Sir.
    Sir W. Smithers: Is the Minister aware that that is quite contrary to the information I have received?

    Storage (Rent)
    Sir W. Smithersasked the Minister of Food how much per month, since 1st January, 1949, his Department have been paying in rentals for food stores.
    Mr. Strachey: On the average, £24,530 a month.
    Sir W. Smithers: Is this rental added to the cost of the produce and charged to the consumer, or does the taxpayer pay it?
    Mr. Strachey: It is partly paid by the consumer price and partly by the subsidies.

    Poultry and Rabbits
    Brigadier Thorpasked the Minister of Food why farmers who require no licence to sell poultry and rabbits to a wholesaler and by retail are not allowed to sell to a retailer without a wholesale licence; and if he will annul this regulation.
    Mr. Strachey: We cannot yet throw the wholesale trade open to anyone, but I think it is logical to allow producers to sell to wholesalers or to the public.
    Brigadier Thorp: Can the Minister explain what advantage it is to the people to retain this control?
    Mr. Strachey: As long as we have to control the prices, I think it is necessary to control the wholesale trade.

    Potatoes
    Mr. John Morrisonasked the Minister of Food what loss has so far been sustained on the new potato crop.
    Mr. Strachey: About £630,000, on potatoes which deteriorated in transit and had to be sold for stockfeed or processing.
    Mr. Morrison: Is the Minister satisfied that the machinery of distribution of his Department is working satisfactorily?
    Mr. Strachey: Yes, Sir; but I am not satisfied that the purchase by my Department of early potatoes is a satisfactory arrangement in perpetuity, and we may hope to alter that arrangement in future years.
    Mr. Awbery: When the subsidy is paid to the farmer, is it paid when he gives a certificate certifying how much produce he has produced, or when the potatoes are taken from his farm?
    Mr. Strachey: That is another question, but, broadly speaking, the potatoes are not paid for wholly until they are taken, though there may be an advance made.
    Mr. Joynson-Hicks: Was not the vast proportion of this loss entirely incurred as a result of mismanagement in the distribution of potatoes, which never ought to have gone bad at all?
    Mr. Strachey: No, Sir.
    Mr. Baldwin: With regard to the reply given by the Minister in answer
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    to the hon. Member for Central Bristol (Mr. Awbery), will the right hon. Gentleman make it quite clear that no subsidy is paid to the farmer on the sale of potatoes, and will he consider in future obtaining all the potatoes necessary for this country under contract, in the same way as beet is under contract, and thus avoid this waste of public money?
    Mr. Strachey: Potatoes are obtained from the farmer under a guaranteed price arrangement and then the consumer may or may not be subsidised according to the price which is ruling, but the farmer, is, of course, subsidised on these potatoes to which the Question refers, which are sold for stock feeding. The farmer is fairly highly subsidised in that case.
    Major Legge-Bourkeasked the Minister of Food what special steps he has taken or proposes taking to meet the possibility of a considerably reduced yield of potatoes this year.
    Mr. Strachey: We shall be ready to adopt such expedients, as, for instance, an increase in the restrictions on the marketing of long-keeping varieties or the building up of the end-of-season reserve, as the situation may necessitate.
    Major Legge-Bourke: Are we to understand from the answer that the right hon. Gentleman is satisfied that if the average yield of the main crop does not come up to seven tons an acre, there are, or are likely to be, sufficient potatoes for all human requirements this year?
    Mr. Strachey: It is rather early yet to speculate on what the yield may be, or what the total ought to be, but I certainly hope that the rain over the weekend has benefited the main crop.
    Major Legge-Bourke: Is the right hon. Gentleman satisfied that there will be sufficient potatoes grown in the main crop at home to make it unnecessary for him this year to import potatoes for human consumption?
    Mr. Strachey: That depends on the yield.
    Sir John Barlowasked the Minister of Food what quantity of early potatoes have been shipped from Cornwall to Manchester in May and June, 1949; and

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    what tonnage was subsequently sold for stockfeed, stating the price paid by the Government and the loss per ton.
    Mr. Strachey: No new potatoes were sold by the Ministry during May. About 3,220 tons were sent from Cornwall to Manchester between 1st and 9th June, the guarantee price to growers at the outset being £34 per ton and at the close £29 per ton. Of these, some 1,520 tons which had deteriorated because of delays in transport had to be sold for stockfeeding at a loss of about £28 per ton.
    Sir J. Barlow: Does not the Minister realise that there was a large quantity of potatoes available in Cheshire during June and that it was quite impossible for the growers to sell them in view of this large importation from Cornwall at the time?
    Mr. Strachey: I could not regard potatoes sent from one part of the country to another as an importation, although it is certainly true that there was a glut of potatoes at the time and that some had to be sold for stockfeed.

    Surplus Fish
    Mr. Stokesasked the Minister of Food how much fish surplus to the market's requirements has been sent either to the farmers for manure or to manure factories each month this year.
    Mr. Strachey: I will, with permission, circulate in the OFFICIAL REPORT a table showing the quantities sent to fish-meal factories in the first six months of this year. The proportion is less than 2 per cent. of landings and by far the greater part will have been used for animal feedingstuffs.
    Mr. Stokes: While, of course, I cannot calculate the figures at such short notice, is my right hon. Friend aware that the general view is that he is considering the old Tory policy of "dear scarcity" rather than "cheap plenty," and that this leads to the destruction of surplus fish?
    Mr. Strachey: This fish must be used, I think, for animal feedingstuff purposes.
    Mr. William Shepherd: Is it not a fact that at the same time as this fish has been sent to the mealyards to be made into fertilisers, the right hon. Gentleman has been importing foreign fish at guaranteed prices?
    Mr. Strachey: We import fairly large quantities of foreign fish in order to satisfy the demand at the fixed maximum prices to the consumer.
    Mr. Shurmer: Would my right hon. Friend consider temporarily decontrolling the price of fish whilst there is a great glut at the present time, and thus give the people in the great industrial centres an opportunity of getting cheaper fish?
    Mr. Strachey: If I thought that the decontrol of the price of fish would produce a reduction, then I would certainly decontrol it, but I fear it might produce the opposite result.
    Air-Commodore Harvey: Can the Minister say how much fish has been sent to the manure factories in the last month?
    Mr. Strachey: The figures will show the hon. and gallant Member exactly how much. I cannot read out the table.
    Following is the table:
    The table below shows the disposal of unsold edible white fish for each of the first six months of 1949. Only in the case of the East Anglian ports where there is no fish meal factory are separate records kept of edible fish sold for manure or fertiliser and these figures are shown in column (iii); elsewhere the small quantities disposed of in this way are included in the figures of fish waste sent to the fish meal works, for processing into animal feeding meal or fertiliser, according to quality. We have no record of quantities sold directly to farmers.

    1949

    Total landings of Fresh White Fish

    Edible White Fish

    Sold for manure

    Sold to Fish Meal Works for feeding meal or fertiliser

    (i)

    (ii)

    (iii)

    (iv)

    tons

    tons

    tons

    January

    …

    52,203

    —

    2

    February

    …

    57,170

    —

    39

    March

    …

    75,350

    —

    192

    April

    …

    75,935

    —

    67

    May

    …

    95,423

    12

    1,890

    June

    …

    83,059*

    20*

    2,650*

    * Provisional.

    We have no record of any herrings having been sold for manure but 5,050 tons of herrings have been sent during the period for reduction to oil and meal. As on many days of the year herring landings are bigger than market requirements, the use of herrings for this purpose is a valuable development which His Majesty's Government are encouraging.

    Split Peas (Quality)
    Mr. Scott-Elliotasked the Minister of Food whether he is aware that the quality of split peas available to the public has deteriorated during the past year; and what steps he is taking to improve the quality.
    Mr. Strachey: Recent supplies of yellow peas for splitting have been obtained from Denmark and Sweden and their quality has been very satisfactory. Green peas for splitting are mainly imported from Morocco and are also of good quality.
    Mr. Scott-Elliot: Will my right hon. Friend agree to look at a sample of these split peas, if I send them to him, which will show him how difficult they are to make into soup.
    Mr. Strachey: Certainly.

    Meat Ration
    Sir Ian Fraserasked the Minister of Food whether he now has any statement to make about the future level of the meat ration.
    Mr. Strachey: As the House knows, the meat ration will be increased from 1s. 1d. to 1s. 4d. on 31st July.
    Sir I. Fraser: What assurance can the right hon. Gentleman give that that increase will go on through the winter?
    Mr. Strachey: I can never speculate on the future level of rations. It is not announced as a temporary increase but as an increase in the ration, which, of course, we shall seek to maintain and indeed, if supplies allow, to improve.

    New Housing Estates (Rationed Goods)
    Mr. Skinnardasked the Minister of Food whether the owners of travelling shops serving new housing estates can obtain additional supplies of rationed and
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    points goods as the number of their customers increases with the completion of houses; and on what basis such supplies are allocated.
    Mr. Strachey: Yes, Sir; as the population of new housing estates increases, additional allowances of rationed foods, based on the number of new registered customers, and additional points credits, based on turnover, are allowed to all shops, including travelling vans, that serve the estate.
    Mr. Skinnard: Is my right hon. Friend aware that some of the owners of these travelling vans, which perform very good service on remote estates, find great difficulty in getting a points allocation, particularly for soap?
    Mr. Strachey: I shall be very glad to look into any particular case which my hon. Friend has in mind. I am certainly totally opposed to any discrimination against travelling vans.

    Hygiene Councils
    Mr. Skinnardasked the Minister of Food how many local authorities have now established food hygiene councils; and what assistance is given by his Department in the formation of such organisations.
    Mr. Strachey: My Department is not necessarily consulted about the formation of food hygiene councils, so I do not know how many local authorities have set them up. If consulted, we can provide information about leaflets, posters, films and speakers and put the inquirer into touch with local authorities already operating councils or guilds of this type.
    Mr. Skinnard: Am I to understand that my right hon. Friend is of the opinion that such councils are performing very useful services?
    Mr. Strachey: Yes, Sir, I think so.
    Mr. A. Edward Davies: Has my right hon. Friend received widespread complaints about the manner in which food is served in the country generally, particularly to tourists and so on, as many hon. Members have been approached on this matter?
    Mr. Strachey: If there is room for improvement—and no doubt there is—I think these food hygiene councils can play a very useful part.
    Captain Crookshank: Will the right hon. Gentleman say exactly what they do?
    Mr. Strachey: One local authority—Guildford, as a matter of fact—whose work I inspected, appears to carry on a consistent propaganda for the improvement of hygiene in the retailing of food, which seems a praiseworthy object.

    Herrings (Price Control)
    Sir David Robertsonasked the Minister of Food whether, in view of the fact that herring fishermen have sustained serious losses since the season opened in April and that the Herring Industry Board have been compelled to abandon their controlled schemes, he will restore complete freedom to the industry by withdrawing price controls.
    Mr. Strachey: No, Sir. The principal outlets for herrings covered by the Herring Industry Board schemes were for curing, export and reduction to oil and meal. The price control of the Ministry of Food relates to herrings sold for home consumption.
    Sir D. Robertson: Will the right hon. Gentleman bear in mind that this industry receives no subsidy—not even a guaranteed price—and does he think that a maximum price of 2½d. a pound is fair to the fisherman? Does he know that every boat is in debt, and that the fishermen are not getting a living wage?
    Mr. Strachey: The herrings have been bought, if not at guaranteed prices, at prices fixed with the Herring Industry Board, and I should certainly not be in favour of an increase in price to the consumer today.
    Sir D. Robertson: How does the Minister expect a famine catch to pay at 2½d. a pound?
    Mr. Strachey: I do not think that in recent years the herring industry has done badly, but it is very true that today the catches are very disappointing. We hope that is a passing phenomenon.
    Mr. A. Edward Davies: Will my right hon. Friend tell us what happens to the difference between 2½d. and 7d. which is the consumer price in the shop, and will he not lift up the price, because this is
    950
    of great importance to working-class families?
    Mr. Strachey: We could not contemplate an increase in the retail price.
    Sir D. Robertson: In view of the unsatisfactory nature of the reply, I give notice that I shall raise the matter on the Adjournment at the earliest possible moment.

    Pigs (Transport)
    Miss Colmanasked the Minister of Food how many pigs have died during the recent hot weather at collecting centres or in transport vehicles on their way from collecting centres to bacon factories.
    Mr. Strachey: We have no figures, but there is no reason to suppose that there have been many cases. If my hon. Friend will let me know of any, I will gladly investigate them.
    Miss Colmanasked the Minister of Food whether arrangements can be made for pigs to be transported direct from owners to bacon factories during the summer months, and thus ensure that these animals are not exposed to the heat of the sun for long periods at collecting centres where there is often no covering or shelter.
    Mr. Strachey: Producers can already send their pigs direct to bacon factories if they wish and about half the pigs we buy are handled in this way.

    Slaughterhouses, N.W. Area
    Sir J. Barlowasked the Minister of Food whether he is satisfied that there are sufficient slaughterhouses to meet requirements in the North-Western area; and what he proposes to do to increase their capacity in the future.
    Mr. Strachey: With the exception of certain places in North Wales, I am satisfied that the number of slaughterhouses in the North-Western area is adequate. We are planning to extend slaughtering capacity in North Wales.
    Sir J. Barlow: Is the Minister aware that pigs have recently been shipped from the North-Western area to Glasgow to be slaughtered, thereby losing great weight on the way?
    Mr. Strachey: We are aware that there is a difficulty in certain North Wales areas and the slaughtering facilities will be extended.

  TRANSPORT

    Public Service Vehicles (Empty Running)
    Mr. J. Langford-Holtasked the Minister of Transport what instructions have been given to the officers responsible for allocating fuel for essential contract public service vehicle work to ensure that the fuel is not wasted by unnecessary empty running.
    The Minister of Transport (Mr. Barnes): Before allocating fuel for essential contract work the regional transport commissioners examine the proposals closely to ensure that there is no unnecessary or excessive light running.
    Mr. Langford-Holt: Is the right hon. Gentleman aware that petrol has been granted for contracts in the Worcester area which involve 40 miles of empty running per vehicle each day?
    Mr. Barnes: No; I am not aware of that, but of course if the hon. Member will give me details I will look into them. I observe, however, that he used the term "contracts" in his supplementary question whereas in his original Question he used the term "essential contract work." There is a difference.

    Sawley Cross Roads
    Mr. Follickasked the Minister of Transport in view of the serious accident which occurred recently, in which three persons lost their lives and two others were injured, and the number of accidents there has been at this spot, he will give orders that a traffic island shall be constructed at the junction of A6 and A453 in Lockington-Hemington parish, known as Sawley Cross Roads.
    Mr. Barnes: A scheme has been prepared for the improvement of Sawley Cross Roads by constructing a roundabout and the works will be put in hand as soon as possible.
    Mr. Follick: While offering my right hon. Friend great thanks for this, I should like to ask him if he is aware
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    that 17 accidents have taken place on this spot within the last three years, that the chairman of the Loughborough magistrates has complained about the difficulty in getting this roundabout and that three people have been killed there quite recently?

    Special Trains (Government Departments)
    Mr. Errollasked the Minister of Transport how many special passenger and goods trains have been run on British Railways for Government Departments during the most recent convenient statistical period; and how much have they cost.
    Mr. Barnes: I am informed by the British Transport Commission that during the week ended 9th July, 1949, 153 special passenger trains and 19 special goods trains were run for Government Departments. No separate accounts are kept in respect of personnel or goods carried by special trains and, therefore, the cost to Departments cannot be stated.
    Mr. Erroll: In view of the very large number of such special trains, will the Minister take steps to see whether it can be reduced?
    Mr. Barnes: As a matter of fact, this is a very substantial decline in special traffic compared with previous years and it is not necessary to take special steps, because it is charged either by tonnage or tickets when the traffic comes to the station.

    Bus and Underground Tickets
    Mr. Stokesasked the Minister of Transport whether he has considered the saving in manpower and general expense which would be achieved by abolishing the use of tickets on buses and on the underground railway in the Metropolitan area; and if he will make a statement as to the directions he will issue to the Transport Commission to bring about this reform.
    Mr. Barnes: I do not consider this a very practical proposal and I have no intention of issuing a direction to the British Transport Commission on the lines suggested.
    Mr. Stokes: That is one of the difficulties in putting down a Question on this

    953
    subject. May I ask my right hon. Friend whether he has considered the fact that at rush hours all these vehicles are always full, and whether he—I mean he himself; I do not mean the Transport Commission—has calculated the manpower involved in printing tickets, issuing tickets, punching tickets, collecting tickets and counting tickets; and whether he will devise some more intelligible means of dealing with the transport system than the antiquated system incepted by the Opposition?
    Mr. Barnes: I quite admit that there is a point of substance in the issue raised by my hon. Friend, but London itself is really a special problem. We are always examining that problem, but if we are reaching the stage which my hon. Friend suggests I think experiments will have to be undertaken elsewhere than in London.
    Mr. Keeling: Has the Minister considered the statement of the Chancellor of the Exchequer, that as it is quite unnecessary for nationalised industries to avoid making a loss, there can be no objection in principle to everybody travelling free?
    Mr. Barnes: I am glad to see the rate of progress which even the hon. Member for Twickenham (Mr. Keeling) is making.
    Mr. Sydney Silverman: Would my right hon. Friend say whether the problem in London is very different from the problem in New York, where they dispensed long ago with the issue of tickets on all the 'bus services and on all the subways?
    Mr. Barnes: The finance of London transport is entirely different. This strikes very deeply at the financial results and I am afraid it is too big an issue for me to be able to deal with it in Question and answer.
    Mr. Stokes: While accepting my right hon. Friend's statement that it is a bit difficult for him to deal with this by Question and answer, may I ask him whether he is aware that I have no objection to his extending the system I suggest to other concentrated areas of population? Will he really pay serious regard to this problem and realise the difficulties hon. Members face in being unable to ask constructive questions on this very vital issue?

    Roads and Bridges, London
    Sir Wavell Wakefieldasked the Minister of Transport if he can give an estimate as to the total capital expenditure which will be necessary to improve road facilities in the London area during the period in which it is proposed by the London Plan Working Party of the British Transport Commission that £340 million should be spent on improving rail transport in that area.
    Mr. Barnes: Until development plans have been prepared and approved by the various planning authorities responsible for the Greater London areas, it will be quite impossible to give any estimate such as that required by the hon. Member.
    Sir W. Wakefield: In view of the fact that the total amount of capital expenditure which presumably is to be spent on both roads and railways is known, how is it that one amount, for railways, is stated and another amount, for road improvements, which are just as urgently needed, is not known?
    Mr. Barnes: With regard to the London railway plan, the hon. Member will bear in mind that there was a separate and exhaustive examination. It more or less came under one body which could go into the whole matter. In dealing with the roads, a number of planning authorities are involved and their plans are not yet developed to the extent necessary for us to form a definite estimate.
    Mr. Ellis Smith: Will my right hon. Friend give an undertaking that this expenditure will not be proceeded with until the urgent needs of the large industrial areas of Lancashire and North Staffordshire have been considered?
    Mr. Barnes: I do not know what expenditure my hon. Friend is referring to. I must have notice of that question.
    Lieut.-Colonel Sir Thomas Mooreasked the Minister of Transport, in view of the proposals which are made in the London Plan Working Party Report relating to river bridges, what steps it is proposed to take to relate these plans to bridges for carrying road traffic; and whose responsibility it will be to ensure that in the final plans with regard to cross river traffic both road and rail are properly co-ordinated.
    Mr. David Rentonasked the Minister of Transport, in view of the publication of the London Plan Working Party Report proposing an ultimate expenditure of some £340 million on improving railway communications in the London area, what steps are to be taken to co-ordinate this plan with plans for relieving the present road traffic conditions in the London area and improving London road facilities in general.
    Mr. Barnes: Before any decisions are taken on the proposals in the Report, the traffic and planning authorities will be consulted. The responsibility for ensuring proper co-ordination between such proposals and plans for roads and road bridges rests upon the local planning authorities and the Government. The Government have the need for such co-ordination fully in mind.
    Sir T. Moore: Will the right hon. Gentleman bear in mind that there is considerable anxiety in the public mind, and has been for some time, in regard to the future traffic—the road and the cross-river traffic—of London? Will he take some steps to induce his colleagues in the Government to get out plans as soon as possible so that rebuilding and reconstruction can start at last?
    Mr. Stokes: Was it not the Lord President of the Council who did more to relieve this congestion than anybody of the Opposition parties?
    Mr. Barnes: The capital expenditure is so considerable that I can assure the hon. and gallant Gentleman that the Government, in particular, will consider this very carefully.
    Mr. Ellis Smith: Before proceeding with these plans, will my right hon. Friend consider the urgent needs of the great industrial areas of Lancashire and North Staffordshire?
    Mr. Henry Strauss: Is the right hon. Gentleman aware that the plans prepared by Sir Patrick Abercrombie and his colleagues are very directly affected by these new proposals? Is it proposed to invite Sir Patrick to comment on this report before action is taken?
    Mr. Barnes: I could not say, With regard to the point raised by my hon.
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    Friend the Member for Stoke (Mr. Ellis Smith) about Lancashire and North Staffordshire, I should like to suggest to him that the traffic problem in London is just as acute as, if not more acute than, that in any other part of the country.
    Colonel Clarke: Will the Minister bear in mind that the under-bridge river traffic is very important, too, and that the cost of electricity and gas in London is largely dependent on facilities given to the ships?

    Employees (National Insurance Benefits)
    Mr. Rentonasked the Minister of Transport if he will make a statement as to the instructions of a general character which he intends to give to the British Transport Commission to ensure that employees who contribute in full both to a superannuation scheme and under the National Health Insurance Act, 1949, will be entitled on reaching 65 years of age to receive both their superannuation and their retirement pensions in full, and that no deductions will be made from one in respect of the other.
    Mr. Barnes: Because of the pension provisions of the National Insurance Act, 1946, the British Transport Commission proposes that the rules of the present superannuation funds should be modified and that members of the funds at 31st December, 1947, should be given the option of continuing their existing rates of contributions and benefits or of reducing their contributions with corresponding reductions in benefits on retirement. Details of the proposed modifications are being worked out and will be discussed with the trade unions who have, I understand, already accepted the principle involved.
    Mr. Renton: In view of the reply which the right hon. Gentleman has just given, could he explain how it is that certain railway employees, contributing in full both to National Insurance and to their own superannuation schemes, are having deductions made? If he does not know of that, will he please look into it further?
    Mr. Barnes: If the hon. Member will give specific instances I am sure the British Transport Commission will look into the matter. If he will read my reply carefully, he will be able to see whether it is a contravention of that statement or not.
    Mr. Sidney Shephard: Can the right hon. Gentleman say whether new employees will be entitled to participate in superannuation?
    Mr. Barnes: No, I cannot say; that appears to me to be another Question.
    Mr. Rentonasked the Minister of Transport whether he is aware that the Railway Executive are deducting from the salaries of railway clerks, stationmasters and supervisors, who contribute to a superannuation fund, all sickness benefits due under the National Insurance Act, even though full insurance contributions have been paid; by what authority such deductions were made; and if he will make a statement as to the instructions of a general character which he intends to give to the British Transport Commission to ensure that the employees concerned obtain full satisfaction of their rights as to sickness benefit under the National Insurance Act, 1946, and Part VII of the Transport Act, 1947.
    Mr. Barnes: Sick pay does not come out of any superannuation fund but is granted by the Railway Executive. Their regulations, I understand, have been adjusted to take into account the sickness benefits provided under the National Insurance Act, 1946. The principle followed is that sick pay and State benefit together shall not exceed the equivalent of standard full pay. It is not for me to give the British Transport Commission instructions on such a matter.
    Mr. Renton: Is the right hon. Gentleman aware that employees who before July, 1948, were contributing to a superannuation scheme are, in fact, being treated differently from other employees, and will he tell the House why there is this discrimination?
    Mr. Barnes: I can give only a general statement with regard to this specific case. The hon. Gentleman should take the matter up with the British Transport Commission, or if he will furnish me with the information I will see it is looked into.

    Long-term Road Plans
    Mr. Errollasked the Minister of Transport whether, in view of the necessity of ensuring proper co-ordination between the road plans of all county councils as well as co-ordination with the
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    long-term trunk road proposals, he will take steps to encourage all county councils to follow the example of Lancashire and publish their plans in this connection as soon as possible.
    Mr. Barnes: All local planning authorities have to work out proposals for the principal traffic routes in their areas for the purposes of the development plans which, under the Town and Country Planning Acts, must be prepared within the next two years. In so doing they will consult with neighbouring planning authorities. As regards the remainder of the Question, I would refer the hon. Member to the reply I gave him on 4th July.

    Accidents (Special Features)
    Mr. Keelingasked the Minister of Transport why no inquiry under Section 23 of the Road Traffic Act, 1930, was held concerning the accident, of which details have been sent to him, which caused the death of a child who was leaning against the front of an electric milk float, the driver of which could not see the road nearer than nine feet ahead; and whether he will order an inquiry about any future accident presenting this or any other special feature.
    Mr. Barnes: My technical officers have inspected this vehicle and reported that visibility from the driver's seat is good. I doubt, therefore, whether an inquiry into this accident would produce any significant information beyond that already available. When an accident presents special features worthy of investigation I arrange for an inquiry to be held.
    Mr. Keeling: Does not the Minister realise that the reason for Parliament putting this Section into this Act was that it thought that the technical officers of the Ministry were not infallible? Would it not be a good thing to get an outside fresh mind to bear on matters like this? A suggestion for a new design for such floats might have been the result in this case.
    Mr. Barnes: I certainly agree that technical officers are not infallible, but in this case the issue is quite clear. We know the construction of the vehicle, and we know the circumstances of the accident, and I do not see that any inquiry would bring forth any fresh facts.

    Bus Stops
    Mr. Granville Sharpasked the Minister of Transport why it is still necessary to prove to the satisfaction of the regional transport commissioner that exceptional hardship would be caused by not having more than four omnibus stops to the mile before this number may be exceeded; and whether the convenience of the public cannot now be given greater consideration by the withdrawal or modification of this instruction.
    Mr. Barnes: The reason for limiting the number of bus stops was to save fuel and wear and tear on vehicles. That reason still holds good. Sympathetic consideration has always been given to any reasonable case for additional stops.
    Mr. Sharp: Is my right hon. Friend aware that, although the answer he has given now is the same as that which he gave two years ago, conditions have improved since that time? Is he further aware that there are many occasions on which a bus company is quite agreeable to providing an additional stop which the local authority thinks is necessary, Would he do something to avoid all this unnecessary application to the regional transport commissioner?
    Mr. Barnes: I do not agree that the need for economy is less urgent today. In some respects it is even more urgent. With regard to these matters of stops, all local opinion is consulted. I am not aware that there is an unreasonable attitude to any proposal.

    Road Works, West End
    Mr. Walter Fletcherasked the Minister of Transport what consideration has been given to the timing of road repairs in the West End of London in relation to peak traffic periods.
    Mr. Barnes: The timing of road works in the West End is in accordance with a programme which I have prescribed. I realise that this year there has been considerable inconvenience, mainly owing to the extensive works necessary to make up for the war-time arrears of maintenance, but I will make every effort to prevent this incurring such inconvenience in future.
    Mr. Fletcher: In view of the reply given to the previous Question, in which the Minister referred to the wastage of fuel
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    and to wear and tear of vehicles, does not the right hon. Gentleman think that a better plan than this could have been produced, for this one does lead to great waste as well as to loss of time and to inconvenience?
    Mr. Barnes: I always agree, in respect to all these matters, that improvements could probably be achieved. If the hon. Member will consider the last part of my reply, he will perceive that I am taking that probability into consideration.

    Electrified Rails (Children)
    Colonel Clarkeasked the Minister of Transport how many children have been electrocuted in the last year on live rails, other than those belonging to the London Transport Executive; and what steps are being taken to prevent children getting access to these lines.
    Mr. Barnes: The answer to the first part of the Question is 11 killed and 12 injured during 1948. As regards the second part, full information is given on pages 27 to 29 of the Annual Report of the Chief Inspecting Officer of Railways for 1948, of which I am sending the hon. and gallant Member a copy.
    Colonel Clarke: Is the right hon. Gentleman aware that an expert committee recently reported that overhead transmission was more economical than live rails, and will he assure the House that no more rails will be electrified and that overhead transmission will be employed instead?
    Mr. Barnes: I cannot make a pledge for the future, but in the extension of electrification to Shenfield the overhead system is being introduced.

    Pedestrian Crossings
    Mr. W. Fletcherasked the Minister of Transport whether he is aware that at Sloane Square and elsewhere in London pedestrians are being deprived of the right of passage at pedestrian crossings by the drivers of motor vehicles, with consequent danger to life; and whether he will now review his regulations dealing with this matter.
    Mr. Barnes: I am aware that drivers do not always give way to pedestrians on crossings. I am about to make new regulations which are designed to clarify the

    961
    rights and obligations of road users at pedestrian crossings.
    Mr. Fletcher: Will the right hon. Gentleman bear in mind, while this action, which one appreciates very much, is being taken, that at Sloane Square the enormous numbers of passengers coming out of the Underground are quite unable to get across until after a considerable amount of time because the traffic surges forward?
    Mr. Barnes: That point has been looked into.
    Mr. Wilson Harris: Is the right hon. Gentleman aware that many motorists there would never get from Lower Sloane Street and Sloane Square unless pedestrians did give way, and that there should be a reasonable amount of give and take in this matter, because there is a perpetual stream of pedestrians there?
    Mr. Barnes: Everyone is seized of this problem, and the new proposals are the outcome of considerable investigation and, I consider, will ease this problem.

  MINISTRY OF SUPPLY

    Motor Vehicles (Ministry's Purchases)
    Mr. J. Langford-Holtasked the Minister of Supply the total cost of motor vehicles bought by his Department since the termination of hostilities with Japan; and the total amount of Purchase Tax payable by private purchasers but not paid by his Department.
    The Minister of Supply (Mr. G. R. Strauss): The cost of cars, utilities and commercial type motor vehicles bought by my Ministry for all Government Departments and delivered between 1st August, 1945, and 28th May, 1949, is £27,320,000. The second part of the Question is not a matter for my Department, but on a rough calculation, the amount involved is about £1,100,000.
    Mr. Langford-Holt: Is the right hon. Gentleman aware that that is the sort of reply one would have expected from a wealthy Government and not the impoverished one of which the right hon. Gentleman is a Member?

    Official Car Service
    Mr. Langford-Holtasked the Minister of Supply the number of cars operated in his Department's car pool for the years 1946, 1947 and 1948, respectively.
    Mr. G. R. Strauss: The number of cars operated by the official car services on 31st December, 1946, 1947 and 1948 was 598, 649 and 649 respectively.

    Conference, Annecy (Motor Cars)
    Mr. Joynson-Hicksasked the Minister of Supply how many motor cars of his Department's car service were used to transport delegates to the International Trade Conference last month at Annecy; what was the cost to the taxpayer; and why the delegates did not use public transport.
    Mr. G. R. Strauss: Nine cars and two utility vans were sent to Annecy for the use of United Kingdom and Commonwealth delegates attending the Conference. The estimated cost of these services during June 1949, is £1,685, of which we expect to recover about £850. Public transport at Annecy is limited, but was used whenever practicable.
    Mr. Joynson-Hicks: Is not this a most extraordinary use to which to put the taxpayers' money; and cannot the right hon. Gentleman arrange for some form of local conveyances instead of sending cars from here to Annecy for this delegation?
    Mr. Strauss: It was because local conveyances were scarce and very expensive that it was thought desirable to provide these cars, not so much for the United Kingdom representatives only as for the Commonwealth representatives, too.
    Colonel Gomme-Duncan: From whom is this £850 expected to be recovered?
    Mr. Strauss: From various Commonwealth Governments.

    Engineering Industry (Standardisation)
    Mr. Edelmanasked the Minister of Supply whether, in view of the great advantages to the motor industry which would come from a greater measure of standardisation and pooling of technical

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    knowledge, he will state what recommendations he has received on this subject from the Lemon Committee on Standardisation in the Engineering Industry; and what action he is taking.
    Mr. G. R. Strauss: I have not had any recommendations on this subject from the Lemon Committee.
    Mr. Edelman: Has my right hon. Friend's attention been drawn to the decision of the Austin and Morris motor companies not to proceed with their plans for co-ordination; and as this appears to be contrary to the general undertaking given by the motor industry about standardisation, what steps is he taking in the matter?
    Mr. Strauss: We have no information about the proposed co-ordination between these two firms, nor did we have at the time. I am satisfied, however, that the mutual aid scheme set up and operated by the Society of Motor Manufacturers and Traders is a very good one, and I have no reason to think that standardisation is not proceeding reasonably well in this industry.
    Mr. Martin Lindsay: Is it not very much better that any decision of this nature should be made within the industry concerned by the firms concerned, without any guidance from the Minister?

  PARLIAMENT ACT (AMENDING LEGISLATION)
  Sir Ian Fraserasked the Prime Minister when it is intended to introduce legislation in the course of the present Session to amend the Parliament Act.
  The Prime Minister (Mr. Attlee): Presently.
  Sir I. Fraser: Does that mean that the right hon. Gentleman has not yet made up his mind about an autumn Election?
  The Prime Minister: In due course.

  ECONOMIC COMMISSION FOR EUROPE
  Mr. Warbeyasked the Secretary of State for Foreign Affairs what was the amount of the British contribution to the Economic Commission for Europe in the last financial year.
  The Minister of State (Mr. Hector McNeil): I would refer my hon. Friend to the reply given to the hon. Member for South Edinburgh (Sir W. Darling) on 12th May.
  Mr. Warbey: Can my right hon. Friend say whether it is not true that our contribution to the budget of the Economic Commission for Europe is a very tiny fraction of what we are spending, for example, in Germany, Austria, Greece, and the Middle East?
  Mr. McNeil: It is certainly much smaller than our aggregate expenditure in those countries, but the budget for E.C.E. last year was over one million dollars.
  Mr. Warbeyasked the Secretary of State for Foreign Affairs for what reasons he has proposed a reduction in the budget of the Economic Commission for Europe.
  Mr. McNeil: His Majesty's Government, as one of the main contributors to the budget of the United Nations, consider it essential that there is no wasteful expenditure by the Commission. In the recent Debate on the Economic Commission for Europe in the United Nations Economic and Social Council, I paid tribute to the good work done by the Commission, and I urged that it should not embark on activities which show little prospect of achieving practical results. I stressed that it should confine its work to these subjects on which effective international action can be taken on the regional planes without duplicating the work of the functional commissions and specialised agencies of the United Nations.
  Mr. Warbey: While my right hon. Friend criticises expenditure on wasteful items in the budget of the E.C.E., will he give an assurance that it is the policy of His Majesty's Government to expand and promote all the useful activities of this body?
  Mr. McNeil: Yes, most gladly. I fear that my hon. Friend is suspecting me, but I assure him that there is no reason for suspicion. On all reasonable activities of the E.C.E., His Majesty's Government have sent people of good calibre. We have been anxious to assist, and we do not grudge money that is legitimately and well spent. All we are anxious to avoid is extravagance.
  Mr. Warbeyasked the Secretary of State for Foreign Affairs if he will make a statement on his attitude to the future work of the Economic Commission for Europe.
  Mr. McNeil: His Majesty's Government will continue to support those activities of the Economic Commission for Europe which they consider likely to contribute to the economic rehabilitation of Europe.
  Mr. Warbey: Is my right hon. Friend not aware that in none of the three answers he has given me has he given any indication of what His Majesty's Government regard as useful activities; will he agree that, in the light of the statement made two years ago, an increase in trade between Eastern and Western Europe is an essential condition of the fulfilment of the Marshall Plan; and is he endeavouring to use the E.C.E. for that purpose?
  Mr. McNeil: The E.C.E. has got into rather a tangle upon this subject. I would refer my hon. Friend to the figures, which show that the trade of His Majesty's Government in this respect has consistently expanded.

  BRITISH SUBJECT, SHANGHAI (IMPRISONMENT)
  Mr. Gammansasked the Secretary of State for Foreign Affairs if he will make a statement on the conditions under which Mr. R. Matheson, an employee of the Shanghai Tramways Corporation, was imprisoned by the Chinese Communists; if he was allowed to be interviewed by the British Consul-General; and with what crime he was charged.
  Mr. McNeil: Mr. Matheson was arrested on 23rd June for an alleged assault on a Chinese employee of the Tramways Corporation. He was held in police custody until 5th July; he was then transferred to gaol, but was released, apparently unconditionally, on 8th July. He was not physically ill-treated. His Majesty's Consul at Shanghai was not permitted to visit Mr. Matheson.
  Mr. Gammans: Was any protest made by His Majesty's Government at this treatment and, in particular, at the fact that the British Consul-General was not allowed to see him?
  Mr. McNeil: We kept in very close touch upon the subject. I think the hon. Gentleman will agree that, since Mr. Matheson is still on the site, as it were, I should probably not advance the subject of his welfare in too detailed a manner.

  BRITISH EMBASSY, MOSCOW (MISS PETERS)
  Mr. Keelingasked the Secretary of State for Foreign Affairs why an interval of 14 weeks passed between the disappearance of Miss May Peters on leaving His Majesty's Embassy in Moscow and the presentation of a note to the Soviet Government.
  Mr. McNeil: The hon. Member is under a misapprehension. It is true that, as was stated on 11th July, the cases of Miss Peters and others formed the subject of an aide-mémoire to the Soviet Government dated 27th April; but the individual cases, including Miss Peters', had all previously formed the subject of separate representations to the Soviet Government.
  Mr. Keeling: Is it not a fact that this period of 14 weeks' delay might have been deduced from the answer given last week; and would it not be better that all the facts should be given so that an impression may not be conveyed that the Government were not really serious about it?
  Mr. McNeil: I am sorry, but I cannot agree. I think the answer last week was quite clear.
  Mr. Blackburn: What form of reply was given by the Soviet Government to explain the disappearance; and did they accept responsibility for the disappearance?
  Mr. McNeil: The reply was unsatisfactory, but the nationality of Miss Peters is rather difficult precisely to define.

  YUGOSLAVS (TRIAL)
  Mr. Stokesasked the Secretary of State for Foreign Affairs whether he has yet any news regarding the trial of the six Yugoslavs who were handed over by the British authorities in Germany to the

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  Yugoslav Government on 2nd August, 1948, and about whom he undertook to make inquiries in Belgrade.
  Mr. McNeil: The Yugoslav authorities have stated to us that they propose to bring those six Yugoslavs to trial very shortly.
  Mr. Stokes: Is my right hon. Friend not aware that that is precisely the answer given to me nearly a year ago; as he has no further information, and as I understand that they were put to death immediately on arrival, will he please explain how it is proposed to bring them to trial when they are already dead; and cannot His Majesty's Minister find out something about it?
  Mr. McNeil: I know that my hon. Friend has been of that opinion for some 14 or 15 months, but I must repeat that the Yugoslav Government have very recently—since my hon. Friend put down the Question—given us this assurance.
  Mr. Stokes: Will my right hon. Friend give me a rather more definite reply if I put down another Question before the House rises for the summer Recess?
  Mr. McNeil: It does not depend completely upon me.
  Mr. Stokes: Will the right hon. Gentleman try?
  Mr. McNeil: Certainly.

  SPAIN

    British Subjects
    Mr. Skeffington-Lodgeasked the Secretary of State for Foreign Affairs the nature of the protest he has made to General Franco about the arrest by a Spanish gunboat of four British subjects from the yacht "Whispering, Wind"; and what reply has been received.
    Mr. McNeil: The crew of the yacht "Whispering Wind" included three British subjects. So far as I am aware none of them was arrested, and no protest on this point has therefore been made to the Spanish Government.

    Detained British Vessels
    Mr. Skeffington-Lodgeasked the Secretary of State for Foreign Affairs on
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    what grounds six British vessels have been impounded by Spanish coastguard officials; and what action he proposes to take with the Spanish Government to secure that the owners should be compensated and that similar acts should not be repeated in the future.
    Mr. McNeil: The vessels concerned, which are British registered, have been detained rather than impounded by the Spanish authorities. I understand that they are suspected of carrying contraband cargoes, and that the cargo manifests of one were not in order. There is evidence, however, that two of the vessels at least were outside the three-mile limit of Spanish territorial waters at the time of their arrest. Under instructions from my right hon. Friend, His Majesty's Embassy on 13th June informed the Spanish Government that in His Majesty's Government's view they had no right to arrest British ships outside the three-mile limit. The Embassy also asked for an assurance that similar incidents would be avoided in the future, and have been instructed to press for the release of those vessels which were arrested outside Spanish territorial waters. The question of compensation will be considered if and when it arises.
    Mr. Skeffington-Lodge: Has there so far been any reply from the Spanish Government to this protest?
    Mr. McNeil: No. Sir.
    Air-Commodore Harvey: As this happened on 13th June, what are His Majesty's Government going to do to get these vessels released; and are they going to tolerate this treatment from Franco?
    Mr. McNeil: I am certain that the hon. and gallant Gentleman can depend upon this Government not to be feeble in their attitude towards the Franco Government.

    Royal Ordnance Factories (Employees)
    Mr. Emrys Hughesasked the Minister of Supply how many persons were employed in ordnance factories at the end of June; and how many of these were in Scotland.
    Mr. G. R. Strauss: 43,150 persons were employed in the Royal Ordnance

    969
    Factories on 1st July, 1949, of whom 3,258 were working in factories in Scotland.
    Mr. Emrys Hughes: May I ask whether the dollar shortage has had any effect on employment in this particular industry?
    Mr. Strauss: No.

  MINISTRY OF WORKS

    Aircraft Factory, Feltham
    Mr. Keelingasked the Minister of Works whether he will now give an assurance that the aircraft factory at Feltham will not be converted into a Ministry of Works store.
    The Minister of Works (Mr. Key): The proposal to use the main factory building of the General Aircraft Co. at Feltham as a store for public records has been dropped. I have no intention of making use of any part of this factory, with the possible exception of one or two outbuildings not required for production purposes.
    Mr. Keeling: Can the Minister say whether, after that satisfactory decision was taken, any decision was made as to what use would be made of this factory?
    Mr. Key: I understand that my right hon. Friend the Minister of Supply is arranging to use the buildings for Industrial purposes.
    Mr. Keeling: Good.

    Building Workers (Service Departments)
    Mr. Emrys Hughesasked the Minister of Works how many building workers were employed at the end of June on building work for the Army, Royal Navy and Royal Air Force.
    Mr. Key: At the end of May, which is the latest date for which figures are available, approximately 29,600 building workers were employed on building work for the Service Departments.
    Mr. Emrys Hughes: Can the Minister tell us how many of these 29,600 were employed on housing for the Services.
    Mr. Key: Some 5,000 were employed on the building of new houses and a con-
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    siderable number of the remainder on maintenance and repairs, of which housing forms a considerable part.

  FUEL AND POWER

    Opencast Mining
    Lieut.-Colonel Sir Cuthbert Headlamasked the Minister of Fuel and Power whether he intends to proceed with the opencast coalmining near Whitley Bay which in some places is in close proximity to dwelling houses, is causing grave concern to the inhabitants and is ruining the amenities of a popular seaside resort.
    The Minister of Fuel and Power (Mr. Gaitskell): Yes, Sir. The urgent national need for coal makes it imperative that these sites shall be worked. I cannot agree that the amenities of this neighbourhood will be ruined, and I would remind the right hon. and gallant Member that, after working, the sites will be restored. Every effort is being made to reduce to a minimum any inconvenience to local inhabitants, and careful attention has been given to the representations of the Whitley Bay Council on this matter.
    Sir C. Headlam: Would the Minister have us believe that blasting operations on this scale are causing no inconvenience to the inhabitants? Does that answer tally with the complaints that have been made that over 20 feet of stone have to be blasted in order to get to a two-foot seam of coal? Is the coal that he expects to get of such quantity and quality that it is worth causing all this inconvenience to the people of this place?
    Mr. Gaitskell: I never suggested it would cause no inconvenience to the local inhabitants, but merely that we would try to reduce the inconvenience to the minimum. As regards the coal, it is certainly worth getting in this area, there are some two million tons there.
    Mr. Wilson Harris: Can the Minister say how close this working is to the dwelling houses, and whether there is a normal distance which is recognised between opencast mining and dwelling houses?
    Mr. Gaitskell: Perhaps the hon. Member will let me have notice of that question.
    Brigadier Thorpasked the Minister of Fuel and Power if he is aware that the opencast mining proposed near Amble will destroy valuable dairy land; that in due course this coal can be extracted by normal deep mining; and if he will take steps to ensure that the former method is not adopted.
    Mr. Gaitskell: No, Sir. It would not be practicable to extract this coal by normal deep-mining methods, but I am consulting with my right hon. Friend the Minister of Agriculture in the usual way before deciding whether or not the site is to be worked. If it is worked it should yield over 75,000 tons of coal, and the land should be restored to agricultural use within two years.
    Brigadier Thorp: Is the Minister aware that one of the local experts of the National Coal Board has informed me that it can be extracted by deep mining?
    Mr. Gaitskell: My information is precisely to the contrary. The National Coal Board are of the opinion that it must be done by opencast mining.
    Mr. Gomme-Duncan: Can the Minister say how long this permanent devastation of food-producing land is to go on? To say that the land can be put back to its previous condition is sheer nonsense.
    Mr. Gaitskell: There is no question of permanent devastation of food-producing land. On the contrary, there is evidence to the effect that it may positively benefit. [Interruption.] I said that there was evidence to that effect. I am not claiming the evidence is necessarily the final word in the matter. The opencast mining programme, as the hon. and gallant Member is probably aware, will continue until 1950–51, and after that it should tail off.

    Petrol Allowances (Valuers)
    Mr. Turtonasked the Minister of Fuel and Power whether he is aware that, as a result of his refusal to grant additional petrol to valuers where current supplementary ration has been exhausted in the preparation of claims under the Town and Country Planning Act, appeals to the Land Tribunal and tenant right valuations are being held up, and great inconvenience and loss is being caused to the agricultural community; and whether he will reconsider this decision.
    Mr. Gaitskell: No, Sir. Regional petroleum officers were authorised to grant special allowances to valuers and surveyors with which to carry out the extra work they were called upon to perform in connection with the preparation and submission of claims under the Town and Country Planning Act.
    Mr. Turton: Is the Minister aware that I have been writing to him for the last six weks about a part of the country where valuation has been held up through the refusal of his regional officer to grant extra petrol for this work?
    Mr. Gaitskell: I can only say that in the cases I am aware of, there has been no refusal of a reasonable claim for extra petrol.

BUSINESS OF THE HOUSE
The Lord President of the Council (Mr. Herbert Morrison): With permission, I will make a short statement on the alteration in Business for this week.
In addition to the Business announced for consideration today, we shall ask the House to take the Report and Third Reading of the Airways Corporations Bill.
On Wednesday, we shall ask the House to take the Second Reading of the National Insurance Bill instead of Lords Amendments to the Housing Bill, which have not yet been received from another place.

CHANCELLOR OF THE EXCHEQUER (ILLNESS)
The Prime Minister: With your permission, Mr. Speaker, I desire to make a statement.
My right hon. and learned Friend the Chancellor of the Exchequer has for many years suffered from a digestive ailment, which has at times necessitated special treatment at a clinic at Zurich. The doctors there have a special knowledge of his case and advise from time to time on treatment which he receives in this country. His medical advisers some time ago decided that a course of some weeks special treatment at the Zurich clinic was necessary, and that only by going there could he get a quick recovery.

973
My right hon. and learned Friend has, however, been anxious to complete his dealing with the pressing economic and financial problems which are now facing us, and to conclude the first stage of the necessary consultations with other Governments. These are now almost complete, and in the opinion of his medical advisers it has become essential that treatment should no longer be postponed, especially if it is to be completed satisfactorily in time to enable him to visit Washington to take part, in company with the Foreign Secretary, in the projected Ministerial discussions there.
As the House is aware, the foreign exchange for visits to Switzerland for health reasons is controlled by my right hon. and learned Friend with the help of a Medical Advisory Committee. The Chancellor of the Exchequer considered that it would be improper for him to decide his own case, and he therefore placed all the facts before me. I have decided that, in view of the need for ensuring as far as possible a quick recovery, it was right that the foreign exchange should be provided. My right hon. and learned Friend expects to leave in the course of this week.
I am sure that the House will wish to join with me in expressing the hope that the treatment will be successful, and that his restoration to health will be speedy, so that at the end of next month he will be able to take up again his onerous task. During his absence, I shall myself be in charge of the Treasury, and shall supervise the carrying on of the general policy which my right hon. and learned Friend outlined to the House last Thursday. I shall be assisted by my right hon. Friends the President of the Board of Trade and the Minister of Fuel and Power, as well as by the Financial and Economic Secretaries of the Treasury.
Mr. Eden: I am sure that all have heard with very sincere regret the news of the Chancellor's illness. Although some of us may be politically opposed to the Chancellor of the Exchequer, that
974
does not prevent us from understanding how very severe must be the strain at a time like this on anyone holding so responsible an office. I merely conclude by expressing my own—and I am sure my colleagues'—very best wishes and hopes that, as a result of this, as I think very proper, course which has been taken, the Chancellor will soon be restored to full health.
Mr. Clement Davies: May I join with the right hon. Gentleman and say that, whatever our political views, there is no one of us who does not admire and respect the Chancellor of the Exchequer and his unselfish devotion to public service? May I join with the Prime Minister in wishing him a full and speedy recovery?

BILL PRESENTED

  LOCAL GOVERNMENT BOUNDARY COMMISSION (DISSOLUTION) BILL
  "to dissolve the Local Government Boundary Commission and repeal the Local Government (Boundary Commission) Act, 1945; and to make consequential provision as respects certain enactments of the Local Government Act, 1933, which were amended or repealed by the said Act of 1945;"
  presented by Mr. Bevan; supported by Mr. Blenkinsop; read the First time; to be read a Second time upon Thursday, and to be printed. [Bill 175.]

BUSINESS OF THE HOUSE
Proceedings on Government Business exempted, at this day's Sitting from the provisions of Standing Order No. 1 (Sittings of the House).—[The Prime Minister.]

SCOTTISH ESTIMATES
Committee of Supply discharged from considering the Estimates set out hereunder and the said Estimates referred to the Scottish Standing Committee—
Class I., Vote 24—Scottish Home Department.
Class VI., Vote 20—Department of Agriculture for Scotland.—[Mr. H. Morrison.]

ECONOMIC SITUATION
[SECOND DAY'S DEBATE]
Motion made, and Question proposed. "That this House do now adjourn."—[Mr. Whiteley.]
3.30 p.m.
Mr. Eden. I am glad to be able to begin with at least one comment which I think will be non-controversial, and that is to express the gratitude which the whole House feels towards the six Finance Ministers of the Commonwealth for responding so immediately to the call for a meeting which was issued to them; it was characteristic of the spirit that our sister nations always show when we have to face together the urgent needs of the hour.
On the whole I think it was perhaps fortunate that this Debate was adjourned over the week-end so that we could have a chance, in the interval, to consider last Thursday's Debate and to weigh and confront the stern realities of our national problems. After re-reading that Debate carefully my own reflection remains unchanged: it is that the Minister of Fuel and Power, in his comments ten days ago, seems to have been much nearer the mark than the Chancellor of the Exchequer was last Thursday. The Minister of Fuel and Power at Porthcawl spoke of "this moment of supreme crisis for the Government." I agree with him, and I would add of supreme crisis for the nation, also.
On the other hand, the Chancellor gave me the impression—whether he intended to do so or not I cannot tell; and here I am in agreement with the hon. Member for Ipswich (Mr. Stokes), and not a secret agreement, either—that he was much too optimistic, that he was trying to play down the gravity of the situation. I do not want to play up the gravity of the situation; I want to state the situation exactly as I see it, and as fairly as I can. I think it is too serious to try to tilt the balance either way.
To reduce our imports from the dollar area by a quarter of their total or by £100 million sterling, would at any time be an extremely serious step, but it is much more so when already, over a long period, we have been striving hard to reduce our dollar imports to the very minimum. Yet the whole tenor of the Chancellor's speech seemed to me to
976
minimise the effect of these cuts. The right hon. and learned Gentleman seemed as if he were saying, "You will lose a little here and a little there, but you will not really feel it because we shall make it up somewhere else." I do not believe that to be a true assessment of the situation. Indeed, that mood seems rather contrary to the right hon. and learned Gentleman's own character. I often disagree with him on political issues, but I always thought he was a man who would not hesitate to put the picture, however starkly, before the nation. He has done so before, and has done a service in doing so. [Interruption.] I wish the hon. Member for Nelson and Colne (Mr. S. Silverman) would let me make my speech, instead of interrupting. We are entitled to our opinions, and I am not girding at the Chancellor now. If I were he would say so, but he is beaming.
I believe it is better that we should be given the warning that the nation is going down the slippery slope if, indeed, it is going down the slippery slope. I just do not believe that we can cut £100 million sterling from our dollar imports without the nation feeling it severely. Out of the proposed reduction of 400 million dollars on last year's imports the cut in sugar and the restoration of sweet rationing will save, on the Government's own estimate, less than 20 million dollars—a twentieth part of the whole. As for tobacco, the Chancellor said that we should spend substantially more dollars in the United States this year than we expended on payments for last year's crop. That is rather surprising in the circumstances.
It follows that practically the whole weight of the cuts will fall upon imports of raw materials for industry and American machinery. I do not think that that is disputed. The Chancellor said we should make up these losses by buying elsewhere, but without more evidence I cannot accept that as true, and I am astonished that the Chancellor should suggest it. If there are these alternative supplies available why have not we been using them all this time? Are we to believe that they have become available to us now, at the time when we are in need of them? It all sounds rather like a too fortunate circumstance to be acceptable. We have been buying machinery and raw materials from the dollar area

977
because we could not buy them elsewhere. They will not suddenly become available from other countries because we badly need them today.
May I give one or two figures by way of illustration? In 1948, we obtained from the United States and Canada £34 million worth of timber out of total imports amounting to £93 million and £7.6 million worth of papermaking materials out of a total import of £16.7 million; and £19 million worth of cotton out of a total import of £106 million. This underestimates the importance in terms of volume of these purchases because, in many cases, they were cheaper than the purchases from the sterling area. From America, Canada and Chile came about one-third of our copper, a quarter of our lead and half our zinc. Even if we exclude questions of special qualities and special material, how can these quantities be replaced from elsewhere? Certainly, American price reductions will help, and no doubt that is what the right hon. and learned Gentleman had in mind. But I cannot see how they can eliminate the effect of the 25 per cent. cut, and how it can still fail to be very serious.
I hope the Foreign Secretary, or whoever is to reply to the Debate, will tell us how large a proportion of these cuts will fall on Canada and how much on the United States. I ask this deliberately because we must all feel the greatest reluctance to stop any purchases from Canada. No country in all our history has ever treated us more generously than Canada, or stood more loyally by us, and it must be hateful to have to take any action which must create difficulties for her economy and prosperity.
I know that when I was in Canada—and the President of the Board of Trade will bear this out—manifest good will was shown by Canadians towards this country. They desired to take our goods so far as possible, and it seems all the harder and harsher, therefore, that we should have to inflict cuts on Canada at this time, especially as we have to face the fact that there are some people there who do not feel that we have treated Canada as well as we might have done. I do not say we are right or wrong, but the right hon. and learned Gentleman knows that some bilateral agreements are
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not very popular in Canada. I did what I could to defend them, as he no doubt knows, but there is that sentiment.
Mr. Stokes: Can the right hon. Gentleman justify Canada buying something in the order of 560 million dollars worth less goods from us than we are buying from her, and 305 million dollars worth more goods from the United States than the United States is taking from her?
Mr. Eden: The hon. Gentleman knows very well that the whole Canadian position has been queered by the post-war situation. Canadian pre-war trade was largely three-legged, but that has now gone. It is no easy thing for the Canadians with all their adaptations to trade with the United States, to swing from American markets to this one. If I may give one illustration, the contents of the advertisements in the Canadian papers are almost exclusively American, and they have become used to certain lines of goods and to turning to the American market. I do not say that it cannot be changed, but it is going to be a large task to undertake and it is going to cost a great expenditure of dollars to bring it about. That is the short answer to the hon. Member for Ipswich.
There is another aspect of this problem about which I hope we may be given some explanation. It is true that the prices of raw materials we import from the dollar countries are lower than the prices of those from the non-dollar world. It is certainly true of oils and fats. I have here a large number of figures, with which I need not trouble the House, but what is going to be the effect of this action which the Chancellor is compelled to take? It is going to make the gap still wider, because if the payment for raw materials is going to be increased, owing to the price of non-dollar materials being higher, it will raise the price still more in proportion to the dollar raw material.
So I think we are going to have this position, that our industries will have to manufacture from raw materials more expensive than the dollar countries have to pay, and having done that, we shall still have to face competition from the dollar countries. I do not know whether that is true or not, but we should like to know how far that has been considered

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by the Government, and what reply, if any, they have to it.
I want to give one other example of that. It seems to me that we are in some danger of being involved in a spiral where our industry has got to buy raw materials more expensively than the dollar area, and then to sell our manufactured goods in competition with those of this same dollar area. For example, supposing we have to buy more Egyptian cotton and for that we have to pay higher prices, is it not going to make it even more difficult to sell British cotton goods in Canada, where already price competition is serious? I should say that the effect of the widening gap between the price levels in what are becoming the free world's two main price areas, the dollar area and the sterling area, will hamper and obstruct trade all over the world.
It seems that we have just the same difficulty in respect of machinery. Last year we imported £43 million worth of machinery, and of that we imported £31 million from the United States—a very high proportion indeed. Are the Government going to tell us that that machinery can be replaced from anywhere else or that its loss is not going to be a very serious handicap to our industries in their production for export? "The Times" had a fair comment on that on Friday, when it said:
"Many would-be exporters have wanted to improve their plant over the last three years and have been held back because the interests of basic industries and development areas have been put first."
I am not arguing for the moment whether the policy is right or wrong to put the basic industries and development areas first, but what I am saying is that if we cut dollar imports of machinery now following on the long delays which a large number of exporters have had to suffer, is a very serious blow to them.
As the Chancellor is aware, a great deal of machinery has been exported, though our industries need it very badly themselves in order to earn the maximum foreign exchange at the earliest moment. There again our industries will be under a handicap if deliveries of machinery are to be further delayed. I cannot see how all this can be regarded as other than extremely serious for our national position. Nor, I must add, after studying the
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chief Government speeches last Thursday, do I yet understand how the immediate standstill is going to be made effective or how the subsequent cuts are going to be worked out.
The Chancellor said there were to be exceptions. I agree there will have to be exceptions, but how are they to be decided upon? If a company shows that it requires a certain raw material that can only be got from a dollar country, will it have to show that the article that is going to be manufactured as a result is going to be exported, or will it have to do more than that? Will it also have to show that it is going to be exported to a dollar area, and if so how much percentage it requires of the dollar raw materials and how much of other raw materials? That seems to me to be the kind of problem that will arise.
Last Thursday the Chancellor said that he wanted to carry through this standstill "in a manner causing the least dislocation." I am sure he does, but I cannot see how it is practicable to do so. Take again the example of machinery. Suppose a company has got some machinery on order from the United States. Will it have to show that that production of that machinery is to be used exclusively for export to the United States, or that a certain percentage will go to the United States? How is this going to be measured and worked out? We have seen enough in the last few years of the immense difficulties of allocating scarce raw materials between the myriad uses of peace-time industry to be pretty reluctant to add any more to the extension of these practices.
What does this arrangement imply? I think we are all agreed that restrictions on the free flow of trade are generally undesirable, but when those restrictions have to be imposed in this sudden manner without any clear explanation of how they are going to work—and I will admit that any such explanation is extremely difficult to make—then there is a most undesirable situation for all British industries. The Chancellor in his speech kept referring to the importance of maintaining full employment. We entirely agree with him about that. [Interruption.] The hon. Gentleman knows that the White Paper on Full Employment was not the work of one party alone, but was put out in the days of the Coalition Government, and in a moment I am going to

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say a few more words on this subject in relation to full employment.
We entirely agree with the right hon. and learned Gentleman about full employment, but surely he will admit that over and above the assistance we get from Marshall Aid, full employment can be maintained only if we sell our goods in world markets. Again that must depend on the quality as well as the quantity of our products and upon price. I submit that the question of price is going to be further influenced if we have to buy our raw materials in the more expensive markets, and then sell our goods in other markets in competition with those produced from cheaper raw materials.
On this side of the House we have been challenged whether we are in favour of a full employment policy. I have referred to the White Paper, which represents the views of all of us, but what I am concerned about is that this standstill and these cuts are inevitably going to have an effect on our employment, not at once, but over a period, for the reasons I have given. If, to an increasing extent, we have to buy these raw materials in the more expensive areas, and sell them in competition with those who have access to cheaper raw materials, then inevitably our problem is going to increase to large dimensions. That is why I am distressed that these cuts are going to fall so much on raw materials and machinery for industry.
It seems to me extraordinary that more tobacco is to be bought this year than last. Surely, if we accept the stern realities of the cuts, a further cut in tobacco, grim as it is, should come before a reduction of raw materials and machinery, upon which depends our power to keep our people employed. I cannot see how the Chancellor's proposals measure up to our real dangers. On the contrary, it seems to me that their effect must aggravate them. The "Manchester Guardian" summed up the whole matter last Friday in these words:
"The crisis is not being met. It is bound to get worse."
I myself cannot see how there is any escape from the truth of those observations, however reluctant one may be to have to endorse them.
Mr. Harrison: On the question of tobacco, it appears to everyone to be astonishing that the
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Government should propose to purchase more tobacco this year from the United States than we did last year. But is the right hon. Gentleman aware of the fact that we bought hardly any tobacco from the United States last year?
Mr. Eden: I was quoting actually from the Chancellor's statement. Of course I know that we were largely using up stocks last year. The only argument I am making now is that if we have to make these cuts, they should first come on articles like tobacco rather than upon the raw materials and machinery which our industries so urgently need. That we should be buying more seems to be strange, even though we bought so little last year.
I want to look at the long-term argument. I should like the attention of the Foreign Secretary for a moment, because this is a subject in which I know he is interested. In my view, there is no long-term solution to this problem unless our American friends do, in one form or another, what we did in the 19th century, and that is to make available by overseas investments or by other means, sufficient dollars to other countries that want to buy American goods. I am laying down what seems to me to be the long-term solution. It is true that we are facing a world problem, the lack of balance of trade between the Eastern and Western hemispheres, made worse by the threat of a contraction of world trade.
Further restrictions of any kind tend in the end only to make matters rather worse than better, because they set up a kind of chain reaction—I think that is the correct chemical term—one restriction leading to another. An effective and lasting solution can be found only by more freedom of trade, by moving away from further restrictions and by making it easier for trade and capital to flow from one nation to another. I think we all agree about that. We all wish to see a return to conditions where currencies are freely convertible and where exchange rates reflect the realities of world economic conditions and have sufficient flexibility to reflect changing conditions.
Upon one issue I am in entire agreement with the Chancellor of the Exchequer. I have yet to see any convincing argument for unilateral devaluation of the pound sterling. The whole world has to find some means of escape from the

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present conditions of inconvertibility of currencies and artificially fixed rates of exchange which breed multiple currency valuations and every kind of complexity and artificiality. The worst of it is that we are just adding to those features by this new arrangement. I realise the immense practical difficulties that are involved in trying to obtain freer convertibility in the face of the lack of trade balance between the Eastern and Western hemispheres.
I feel that our American friends can play some part in helping to find a solution to this problem by providing some underpinning for a freer and more flexible system of world currencies. Many suggestions have been canvassed as to how the Americans could do that—by distributing some of the gold they have got or increasing the dollar price of gold—but the point that I would make to the House is that these decisions, important and interesting as they are, are for the American people to take and not for us. Our job is to match our policy to the stern reality of the hour, so far as it concerns ourselves.
Meanwhile, the Government say, "What would you do about it?" I embark upon this aspect of my task in the conscious knowledge that it is extremely controversial, but I think that certain things need to be said. We should try to arrange this standstill and the cuts so that, as far as possible, the burdens fall upon comparatively luxury imports like tobacco, rather than on the raw materials and machinery which are indispensable for our national recovery. Our further proposals are still more controversial, but they are designed, in our judgment, to tackle the problem of prices and costs, which is fundamental. We should call a halt to all further schemes of nationalisation. We suggest that not only because we have no faith in nationalisation but because, among other things, we are convinced that nationalisation is the most expensive way of producing goods.
I do not know whether on this subject there is any particular challenge. If there is, I have here the percentage figures, taken from the "Board of Trade Journal," of the prices of coal and steel respectively. Taking 100 for 1938 in each case, the figure for 1949 for steel was 185.9, and
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for coal was 245. Considering that steel is a very large consumer of coal, there seems to be something to explain in those figures. Apart from the particular pleasure which, in the view of the Government, the steel industry feels at being nationalised, I would point out that these are comparative figures. If hon. Gentlemen opposite look at them, they will see the costliness of nationalisation.
Then there is the heavy burden of Government expenditure. We think that one of the best economies the Government could make would be to scrap the Iron and Steel Bill, in view of the evidence which is before us of the rising costs which nationalisation entails. [Laughter.] I knew there would not be agreement on that point.
Mr. Stokes: The right hon. Gentleman is talking of economies. Would he explain how it is possible to effect an economy in something which we have not yet succeeded in implementing?
Mr. Eden: I thought it was clear enough. My warning was that, if the Iron and Steel Bill were put through, the result will be in that industry what it has been in other nationalised industries, rising costs. I do not want to see the spiral of rising costs proceed any further, and therefore I do not want to see the Government proceed with further nationalisation Measures. I should have thought that point was clear enough.
Now I would mention another aspect of our exports to dollar areas. I touch for the moment on a personal matter, because I happen to be a director of an insurance company which does business with the dollar areas. It is going to be difficult in any case greatly to increase our exports of manufactured goods to the dollar countries. We may do something with Canada, but the general trade, and the exchange of manufactured goods between the countries, as United Nations statistics show, do not exhibit much variation, because of the tendency of countries to an increasing extent to build up those industries for strategic or other reasons. I do not think there is great scope there.
There might be some scope in invisible exports such as shipping and insurance services. The earnings of in-

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surance companies in the dollar areas are not those against which we have to set any bill for the expense of importing raw materials. They are the earnings of the experience of our own country, and of the confidence which is felt in the way that we conduct our business. It seems strange at a time like this, when the dollar position is so serious, that the Socialist Party should still appear to be contemplating the nationalisation of any part of our insurance industry. I know the distinction which will be drawn among the various companies, but the distinction is much easier to draw in this country, where we are used to these issues in the industry of insurance, than it is to people overseas who do business with insurance companies in this country. If the Government want to make one more contribution they should drop any proposal to nationalise any part of the insurance industry. I am trying to be helpful and making constructive suggestions.
I have this to say in conclusion. In our present difficulties we all realise that in some respects these speeches are difficult to make, because no one wants to say anything to weaken sterling, but frankly, I put it to the House, that I do not think it is our speeches that weaken or strengthen sterling particularly or affect confidence. I think it is the action or lack of action by the Government itself which does. If what the Government does is of a nature to inspire confidence in sterling, then the effect of words will not decide the issue.
The published figures of the Chancellor, as indeed his statement on Thursday, have shown that the extent of our increased loss of gold, particularly in the last quarter, has greatly exceeded the anticipations set out in the Government's own Economic Survey published barely four months ago. I admit that that can be attributed, in part at any rate, to the change from a sellers' to a buyers' market, but surely nobody could have been very surprised by that change. Warnings have been given repeatedly by the Government, and indeed by some of us on this side of the House, that that change was inevitable. As "The Times" said so well on Friday:
"In production this country has a fine record, but so have other countries, especially the U.S."
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What troubles me about this situation is that the very steps which the Chancellor has felt compelled to take will have the effect of increasing the costs to our own manufacturers, and will, therefore, make it more difficult for them to compete not only in the United States and with the United States but in the markets of the world in general. To that extent, instead of being a measure to meet our difficulties, these proposals are adding a further burden to the heavily laden animal of British industry which is struggling so gallantly up the hill. The Chancellor is rich in exhortations and in imprecations. He cracks the whip but he adds to the burden all the time. Until that practice is reversed and until a start is made with easing the burden which British industry has to bear. [An HON. MEMBER: "Which burdens?"] The hon. Gentleman is scornful. The right hon. and learned Gentleman made the point on Thursday that the taxation of profits was not a burden on industry, but surely all taxation on undistributed profits is a heavy burden on industry, and so is all taxation, because it is only from savings that industry can hope to get its new money. I do not see how the Chancellor or anybody can be complacent in the light of the savings figures which have just been published.
Mr. Parkin: Does the right hon. Gentleman suggest that this is a time when an increase in capital investment by private industry would in some way meet our difficulties?
Mr. Eden: I was dealing with an argument of the Chancellor's the other day, that taxation of profits was not a burden on industry. That would be truer if it were a fact, for instance, that all non-distributed profits were not taxed. There would then be a much stronger case for the argument. We all know that the Chancellor has given some assistance in that respect, but it is true, broadly, that taxation is a burden on industry because it is from industry that all our available finance and wealth resources are ultimately derived.
The Chancellor of the Exchequer (Sir Stafford Cripps): I believe that the right hon. Gentleman has misquoted me by inadvertence. What I said was that it was not an element in costs, not that it was not a burden on industry.
Mr. Eden: I give the right hon. and learned Gentleman that. That is technically absolutely correct, but it is only technically correct, and if he would look at it in a broader aspect he would see that it is not true, because the more a company is able to use its non-distributed profits for its own purposes the better it will be able to lower its costs. I do not think that is in dispute? Is that right?
Sir S. Cripps: I think the right hon. Gentleman will agree with me that there is no form of cost accountancy in which one is arriving at net cost on an article which would introduce an element of the profit.
Mr. Eden: No, but the right hon. and learned Gentleman must surely admit this. Suppose a company has made £100,000 in profits, and that, after various reserves, it distributes £25,000. If the remainder were not subject to taxation, that would be, in fact, if not arithmetically, something which the company could make use of, knowing that it had that, in making its own cost arrangements—
Sir S. Cripps Sir S. Cripps indicated dissent.
Mr. Eden: I think that is so. I ask the Government and the right hon. and learned Gentleman to consider it. I repeat that I do not see how anybody else can escape the fact that, broadly, the present taxation on industry is a matter which affects costs, if not in detail, over the broad field of industry. It must be so. However, if the right hon. and learned Gentleman does not think so, let us see what we can do about getting the taxation down and then see what the effect is.
To sum up, all these tendencies will simply add further burdens, direct or indirect upon industry. Unless and until the Government reverse that process we shall be getting deeper and deeper into trouble. I have no doubt whatever that that is what the "Manchester Guardian" meant in its summing up the other day. That is what we feel and it is why we view the situation with infinitely more concern than the Chancellor of the Exchequer allowed to appear in his speech last Thursday.
4.7 p.m.
Major Bruce: We have been listening this afternoon to the more progressive wing of the Conserva-
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tive Party. On Thursday we were privileged to hear the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) and the hon. Member for Chippenham (Mr. Eccles), and the tenor of their speeches was in singular contrast to the speech which we have had from the right hon. Gentleman the Member for Warwick and Leamington (Mr. Eden). I only wish that when he was mentioning—I was extremely pleased that he did so—that he did not desire that there should be any unilateral devaluation of the £, the right hon. Gentleman had been able to see the faces of his supporters behind him.
The speech of the right hon. Gentleman was directed to some very considerable practicalities which during the next few months our manufacturers will undoubtedly have to face. These questions of priorities within industry concerning imports—whether we should import luxuries or such important things as machinery—are of vital significance, and the House is extremely indebted to the right hon. Gentleman for raising these matters, to which no doubt in due course my right hon. Friend will reply.
The whole tenor of the speech of the right hon. Gentleman was in complete contradiction to the speeches of his right hon. and hon. Friends on Thursday and, indeed, to the whole of the campaign which is going on in the country at present in the Conservative Press. My right hon. and learned Friend made it quite clear when he made his announcement last week that the principal causes of the dollar drain on our country, which is responsible for our most immediate distress, were threefold. He said that, first of all, there had been a drop in our own exports to the United States and to the hard currency area generally; there had been a decrease in our shipping revenue; and there had also been a decline in the import by the United States of certain raw material imports from the remainder of the sterling area. These were the immediate problems facing us, and they were expressible in terms of a drain of some £65 million on our gold and dollar reserves.
The right hon. Gentleman this afternoon has made no endeavour to suggest how this immediate problem can be solved. He has not even made any suggestion as to how the ultimate long-term

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chronic problem can be solved. That, at least, he shared with his right hon. Friend who spoke last week.
Mr. Hugh Fraser: And the Chancellor.
Major Bruce: Last Thursday the right hon. Member for Aldershot and his hon. Friend the Member for Chippenham had two solutions which have been well publicised in the Press. The first solution to the immediate problem which they put forward was that there should be a reduction in Government expenditure, and that solution has been propounded in every Tory editorial throughout the United Kingdom. The other suggestion they made towards solving our immediate problem was that we should restore confidence in the pound. Those are the only constructive suggestions, if they can be called that, which we have had so far from the Opposition.
I really think that the Conservative Party ought to give up being coy about this. If there be any virtue in making considerable reductions in Government expenditure, if it can be reasonably shown that such a course would be of lasting benefit to our people and to our nation, surely it is the duty of those who propose it to acclaim it as a virtue and to be able to give us much more detail about it? If a proposal of this kind is made, we ought to have some idea as to the extent of the cut in Government expenditure which the Opposition think would be necessary to restore confidence in the £ or to be able to give taxation concessions to manufacturers to enable them to reduce their prices. What is the amount to be? Speaking for the Opposition the other day, the hon. Member for Chippenham said that some several hundred millions of pounds would have to be taken away from the spending departments. He did not say which spending departments. The right hon. Gentleman the Member for Woodford (Mr. Churchill), speaking at Manchester on 7th December, 1947, was much more specific. There was no fol-de-rol about him. He said that we should reduce Government expenditure by £500 million.
The first question I wish to ask the Opposition—I will give way to the Deputy Leader of the Opposition if he wishes to reply—is whether the figure is
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still £500 million. Is it to be lower or is it to be higher, or are we to presume that the figure should remain at approximately £500 million? It would be extremely useful if we could have a reply to this question from the Opposition. I will willingly give way to the right hon. Gentleman if he will confirm or deny the figure given by the right hon. Member for Woodford. No, I did not think there would be a reply because, of course, all Conservative Party policy has to await the pronouncements of the Leader, and it is not yet 23rd July which, I understand, is the magic date when, in the ancient town of Wolverhampton, the Leader of the Conservative Party is to make his pronouncement upon policy. It is understandable, therefore, that nobody from the Conservative Front Bench dare make any pronouncement upon policy.
This leaves us with a certain scope for speculation on matters which I submit are of importance. If, indeed, there be virtue in reducing Government expenditure by £500 million and an overall case is made for this, it matters considerably from the economic standpoint just how these cuts are applied. For example, the immediate economic impact of taking, say, £100 million off food subsidies would be of a different type to the immediate economic impact of reducing the Health Services by 100 million. When the Opposition make proposals of this kind, they might take the House and the country into their confidence and give more precise details.
If they are going to save the nation by this tremendous plan then, surely, there is no reason for them to be coy. As it is, we are left—as, indeed, we always are left when considering Conservative Party policy—with nothing but speculation. Where would they be able to make the cuts? There have been several indications. Would it be food subsidies? The right hon. Member for the Scottish Universities (Sir J. Anderson) said not long ago that they should be reduced to the irreducible minimum. He also said in a subsequent Debate that he thought the Government had acted too hastily in introducing family allowances and in raising the old age pensions. Would it be on the family allowances and on the old age pensions that the cut might fall? Indeed I remember that on the Second Reading of the National Insurance Bill

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the right hon. Member for Saffron Walden (Mr. Butler) said he thought that the National Insurance provisions had been weighted too heavily in favour of the older age groups. This seems to give additional sanction to the notion that perhaps this is where the cut would fall.
Would the cut fall on the health service? The right hon. Member for Woodford announced that the Minister of Health had been guilty of "squandermania." Thereafter he retreated and did not seem able to debate this matter in the House. Yet he is the Leader of the Conservative Party. Is the cut to fall there, or is it to fall on housing? In a letter to "The Times" the other day the hon. Member for Chippenham said:
"It would be a crime if the Government now maintain their own programme for the construction of amenities when industrial investment is brought to a standstill."
This seems to indicate that there is a desire to reduce the expenditure on houses, hospitals and schools. All we ask the Opposition, as I think we are entitled to ask them, is that they should give their plans in greater detail, and we are entitled to demand of the Opposition, if it is in their minds that we should make cuts of £500 million, that they cease this quite dishonest propaganda which suggests to the people that if they were returned to office they would augment the social services.
I say that if this course were carried out it would bring disaster on the country. It would not in any way solve the problem we have before us. The Opposition said last week that it was the high cost of our exports that was responsible for their reduction in the United States. This afternoon the right hon. Gentleman seemed to differ from his colleagues because, whereas the hon. Member for Chippenham referred to high cost, the right hon. Gentleman today was careful to refer to high price. He, of course, well knows that cost is not the only ingredient in the selling price indeed, there is a considerable amount of evidence at present that there is a great market for a considerable amount of our exports in the United States, even at their present prices, if only we endeavoured to penetrate a little further than the Eastern seaboard.
For the last four years some exporters in this country have been content, on an
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easy market—which hon. Gentlemen opposite have described as the sellers' market—to sell their wares to the merchant importers on the eastern seaboard of the United States, and there is little evidence that any determined effort has yet been made by the exporters of this country to penetrate further into the middle of America or to the western seaboard itself.
Mr. Sidney Shephard: Is the hon. and gallant Member not aware that almost every buyer in America, whether from the eastern or the western seaboard, comes to New York to make his purchases?
Major Bruce: I have many and valued friends in the U.S.A., and my information is that that is not so. But even assuming that costs here are too high, and that the prices of our commodities overseas are too high, we have to face the fact that as time passes we must keep our prices competitive in all parts of the world. If that is so, what is wrong with increasing efficiency?
In all their talks about prices, the first impulse of hon. Gentlemen opposite is to moan about taxation, but there is not the same drive in their voices when it comes to talking of efficiency. As everybody knows, a good number of the industries which are now exporting and upon which this country depends are industries which, owing largely to the policies of the party opposite, are extremely obsolete and for whom tax remissions would act merely as a shield and not as any kind of incentive. The policy announced by the Opposition simply has no contact with reality at all, except—
Mr. Walter Fletcher rose—
Major Bruce: Let me finish my sentence—except, of course, within its political context. The reason why the Opposition bring in their cry for the reduction of Government expenditure and of taxation is really very simple: they know it is a popular cry in the country, and they think that by using it, and by introducing this particular solution on this particular problem, they can lay it about in the country that it is the policy of this Government which is responsible for the overall evil and difficulties from which the sterling area and the Commonwealth are suffering.

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If the policy of hon. Members opposite has any reality at all, why do they not tell the Australian Government that the reason why the U.S.A. are not buying wool is because the social services of Australia are too high; or tell the Government of India that the reason why the United States are not buying jute is because the social services in India are too high; or that they are too high in Malaya and in West Africa? If there is any meaning in the Opposition's policy of this overall panacea of reducing Government expenditure and it is, in fact, a solution, then they ought to be making these suggestions to the Commonwealth, for it is quite clear that our problem here is one which is shared with the Commonwealth as a whole—whose representatives we are proud to have with us—and also with the rest of the sterling area.
Mr. W. Fletcher: The hon. and gallant Member has twice used the word "reality" in that enormous sentence. Has he ever undergone the reality of risking his capital in any manufacturing or exporting business or tried to sell a single export himself? If so, his words would carry more weight when he is condemning industries.
Major Bruce: Unlike quite a number of hon. Gentlemen, whenever I speak on a matter in which I have a financial interest, I always disclose that financial interest first. Had I any financial interest in any of these transactions, I should immediately have declared it.
I now pass to the second part of the argument which is used by the Opposition and which is concerned with the restoration of confidence. According to the Opposition, the reason why we are in trouble today is, by and large, because the world in general and the United States in particular have no confidence, or very little confidence, or not as much confidence as they ought to have, in the productive capacity of our people and in the organisation of our economy. That is the plea put forward by the Opposition.
From whence springs this lack of confidence, if it exists at all. It certainly cannot exist on a logical examination of the records because, although hon. Gentlemen opposite may not know it,
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for the year 1948 the output per man in the United Kingdom was higher than that of any other country in Europe responsible for more than one per cent. of the industrial production of Europe, and we had achieved the greatest increase in production per man since 1938 in the whole of Europe. Our output per man figures are today about 8 per cent. above 1938.
Mr. W. Fletcher: That is the unofficial figure.
Major Bruce: Quite clearly, no lack of confidence is revealed by the records. At the end of 1948 our industrial production was 21 per cent. above what we achieved in 1938, and agricultural production was between 15 and 20 per cent. higher; we were employing more workpeople; and by the end of 1948 we had invested some £3,402 million in the great capital industries—housing and all the rest—and had replaced over two-thirds of the damage and loss we sustained during the war. At the same time, we have maintained full employment. Clearly, therefore, if there is any lack of confidence abroad it certainly does not rest on the facts relating to the situation, because this record shows that the nation can be very proud and can hold up her head against any nation in productive endeavours since the end of the war.
If the Opposition deny creating the impression of lack of confidence, from where does that impression come? I can suggest only one thing. If there be any such impression, it is because the world has been listening a little too frequently to the right hon. Member for Woodford (Mr. Churchill). During the war the right hon. Gentleman attained a reputation which no one will begrudge him, a reputation that will ensure his lasting place in history. Therefore, the words he speaks in all parts of the world carry a far greater significance that he, perhaps, apprehends. On 17th April, 1947, the right hon. Gentleman was speaking at a meeting of the Primrose League, and he said:
"Our country is being driven into ruin and our Empire is being scattered and squandered."
At that time production had risen to 5 per cent. above what it was in the year 1946 and 11 per cent. above the same period in the year itself. The number of people

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employed in the manufacturing industries had never before reached such a height. But that did not seeem to deter the right hon. Gentleman, for on 11th September, 1947, in a message to the Edge Hill by-Election, he said:
"We are thus falling behind other countries in regaining our prosperity."
He returned to the same theme on 29th September, 1947, when he said these words:
"There is not one single aspect or sphere of British national life that has not undergone a marked deterioration."
At that time our production was 16 per cent. above 1946, our exports were 13 per cent. above 1938, and our numbers of unemployed were lower than they had ever been in their recorded history. But even that did not deter the right hon. Member for Woodford. On 29th October, 1947, he said that the Government had broken the mainspring of our production apparatus. And on 12th November, 1947, he said that the Government
"have paralysed and stifled the whole native life effort of our people."
But at that time our production had risen to 21 per cent. above 1946, our exports to 17 per cent. above 1938, and the number of our unemployed still remained at 262,000. Indeed, at the end of that year, when the figures from the Economic Survey for Europe became available, it was found that in 1947, despite all the damage and devastation we had sustained during the war, this country had actually achieved a total of industrial production 8 per cent. above the level of 1938.
On 22nd April, 1948, the right hon. Gentleman was talking of the
"dismal retrogression in our world position…"
and on the 1st May he was saying
"they had squandered the resources of the nation and restricted and hampered its qualities and initiative."
On 29th May, at Perth, he said:
"Every year our plight becomes worse and every year more was squandered of our painfully gathered assets, every year more industries were crippled or hampered."
At this particular time production had risen up to 23 per cent. above 1946; our exports had risen to 34 per cent. above 1938 and our unemployed were
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still under 300,000. So one could go on with the right hon. Gentleman, the really sublime one being on 28th June, 1948, when he referred to the
"quagmires in which we are now floundering and sinking,"
being entirely unaware that production had reached 21 per cent. above what it was in 1938 and our export figures were the largest ever.
Can it be that business men in the United States—I do not speak of all people, or of the great United States trade union movement—can have been listening too much to the right hon. Member for Woodford? What would he have said if our production had sunk below what it was in the year 1938? What would he have said if, after six years of war, with the £7,000 million losses we sustained we had not struggled up in 1947 and 1948 to reach our prewar production figures? I venture to suggest that he would probably have burst a blood vessel if that had happened and a Labour Government had been in power.
What did the right hon. Gentleman say in the similar period after the last great war, when the party he supported were in office and when he was in office for quite a considerable time? In 1920 the production of our country stood at 92.6 per cent. of its 1913 production; in 1921, production in Britain had sunk to 55.1 per cent; in 1922, to 73.5 per cent.; in 1923, to 79.1 per cent.; in 1924, to 87.8 per cent.; in 1925, to 86.3 per cent. and in 1926, to 78.8 per cent. Never once during the six years after the first world war did production rise above the 1913 level.
But what was the right hon. Gentleman saying in those days? Was he denouncing and castigating the Government for haggling and hobbling industry? No, on 9th January, 1920 he said:
"There is no reason whatsoever why the serious financial problems which lie before us should not be properly solved if they are studied with coolness and attention and faced with courage. In fact we are on the highway to recovery from the injuries and retardation of the war; and to consolidate for the lasting benefit of the whole British nation the great position won by the powers of our soldiers in the field."
Mr. Shurmer: Two million unemployed.
Major Bruce: What was the right hon. Gentleman saying in January 1926? Unemployment during this time had never been below a million and production had never gone up to the 1913 level. Yet what was he saying? He was saying:
"Prosperity, that errant daughter of our house, who went astray in the Great War, is on our threshold. She has raised her hand to the knocker on the door. What shall we do? Shall we let her in, or shall we drive her away? Shall we welcome her once again to our fireside settee, or banish her once more to roam about among the nations of the world? That is the choice that will be before the British nation in the next few anxious months."
Just what does that reveal? It reveals that so long as the right hon. Gentleman is not ruling the country the more production, the more prosperity and the more effort put out by our people, the more vituperative the right hon. Gentleman becomes. It also shows what the Tory Party really regard as prosperity, because in those years we had the cuts in Government expenditure. It was in those years when this universal Tory panacea for all ills was applied, and up to 1926 they had not achieved more than 78.8 per cent. of pre-war production. On 30th May, 1949 the right hon. Member for Woodford said:
"It is pathetic to witness the prostitution of a fine intellect to the desire to retain office and power. The most charitable explanation I can suggest is that Sir Stafford Cripps has a mental blackout every quarter."
I say to the right hon. Gentleman, and I have given him notice of the material I was going to use, that it is pathetic to witness the prostitution of a great personality to whom this country and the world owe so much, to the desire to get back to power at any price. I say the right hon. Gentleman over those years has not scrupled for purely petty, sectional and personal reasons to drag the good name of Britain through the gutter. If there is one reason why there may be—I am not saying there is—a lack of confidence by certain sections in the United States it is probably because of the propaganda of the right hon. Gentleman and his Tory cohorts and the newspapers who support them in this country.
I must add to this the little financial foxes who have their holes in Throgmorton Street who have been busy whispering for the last few months about devaluation and who have been enlarging the rumours of it. If there is one thing
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which has injured the purchase of our goods in the United States it is the people in the United States thinking that devaluation would happen and holding off from buying goods because they thought it might happen. It is high time the Conservative Party disciplined some of these little foxes in Throgmorton Street who have done this country more injury and themselves no good in the process.
We should take very great pride indeed in the achievements of our country since the end of the war. It surely is not being too sentimental or mealy mouthed to be proud of the achievements of one's own country. What one would expect from a responsible Opposition, instead of all this carping denigration directed at the heart of the British people, would be that we might have had some praise. But no, we have had nothing of the kind, simply this denigration.
On this side of the House we believe that the emergency measures adopted by my right hon. and learned Friend will certainly help to ease the immediate position. We have not pretended, and my right hon. and learned Friend did not pretend, that they would not inflict injury because, of course, they must, but we are convinced that our people will bear them in good heart. We also remember that the people of the United States who elected President Truman to office last year on substantially the same kind of programme as this Government came into power in 1945—
Mr. H. Fraser: Nationalisation of everything?
Major Bruce: —are not averse from making that co-operative effort which will be made between the Commonwealth, the sterling area and the United States themselves. All that this conference will do, if it is to be successful, is to put into operation on an international scale the same principles His Majesty's Government have been applynig internally in the United Kingdom. In the last four years our country has made itself a citadel of decency and honesty. It has eliminated some of the worst evils of the hang-over of the pre-war days. I have every confidence that in conjunction with the Commonwealth and our good friends in the United States we shall be able to reach a long-term solution.
4.40 p.m.
Mr. Hurd: The House has listened to a party knockabout turn which we know how to assess at its true value, and which I have no doubt that the electors of North Portsmouth will be able to assess at its true value.
I wish to bring the attention of the House back for a few minutes to the statement which the Chancellor of the Exchequer made last Thursday, and particularly to one vital aspect of that statement which has scarcely yet been touched upon in this Debate. I refer to our food supplies and the effect which these dollar cuts will have on every breakfast table in this country. I do not wish to treat this matter on party lines but to try to bring to bear such knowledge as I have which may possibly be helpful to His Majesty's Ministers, whether of the present complexion or of the different complexion which we may see in the near future
We need to be quite clear as to what the severity of these import cuts will mean, because the Chancellor, in telling us of these stop-gap changes, played down very much their effect on our daily lives. More than half of the Marshall Aid assistance which has come to European countries up to 31st May has been in terms of food. That is very substantial. The United States has been shipping us substantial quantities of cheese and dried eggs as well as wheat. Until recently she was financing our purchases of wheat in Canada. She is no longer doing that. We now have to pay with free dollars or by means of the Canadian credits for the wheat we buy from Canada under our agreement with her. It is important to know that there is quite a long list of surplus products in the United States, such as linseed, lard, cheese, butter, peanuts—our old friend groundnuts—and coarse grains, and for none of these commodities will any E.C.A. dollars be available for offshore purchases.
The Chancellor, and indeed the Government as a whole, take pride in writing down our dependence upon dollar sources. The Minister of Food told us last Thursday that we are to buy only 12 per cent. of our imported food from dollar sources; over 88 per cent. is to come from non-dollar sources, including our own Commonwealth countries, and
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including increased supplies of vegetables from Western Europe which we could very largely grow for ourselves. We should bear in mind that quite a lot of the 88 per cent. which is to come from non-dollar sources under the new arrangements depends upon raw materials which are purchased with E.C.A. dollars. I am referring to coarse grains and maize which go to the Western European countries.
Our Ministry of Food has a curious belief that it pays us to let the Danes, the French and the Dutch use United States dollars to buy coarse grains and maize and for us to buy the bacon and eggs from them. We can see what has been happening if we look at the numbers of pigs in European countries at the present time. In Denmark the proportion is one to two of the population and in France it is one to six; we have only one pig to every 14 persons.
Mr. Alpass: The hon. Member will agree that there has been a large increase in the last six months?
Mr. Hurd: I am allowing for that. At present the figure is one to 22 but we hope that it will soon be one to 14. Are we for ever to have a small high cost pig industry and a small high cost poultry industry in this country? That is what we are heading for.
Until now the Government have shown very little gumption in deciding bow best we should spend our E.C.A. dollars in ways which to me, as a producer of food in this country, seem important. I shall list three considerations. The first should be to help to build up our own food producing capacity on the most economic lines. The Chancellor again told us last Thursday that the greater the import difficulties the more important our own agriculture becomes. We have a very limited number of dollars to spend. Let us see that we use them to the best advantage to get the highest possible return from one great industry which is a direct dollar saver—our own agriculture.
The second point is that we must not injure our traditional trade with Canada, which is still a member of the British family of nations, any more than we can help. The third point is that we have to please the Americans in the way in which we set out our shopping list. We must be

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frank about it. The Americans will naturally enough wish to see some part of the E.C.A. dollars which they are providing used to relieve their home market of surpluses which threaten to become embarrassing. Their crops this year, according to the latest estimate, are 31 per cent. above the pre-war average and have only been exceeded by last year's record harvest.
Looking at what is available and what we need and can afford, I should plump for coarse grains, maize and oil seeds, and put those items near the top of our shopping list. There is plenty available which is going to other countries, but none of it is coming here. The Chancellor has some superhuman qualities, but he has special needs in his diet, and we all hope that those needs will be carefully looked after in the next few weeks so that he will return to us fully restored to health again. His idea of an adequate diet is not what the ordinary man in this country requires if he is to produce to the full. The ordinary man in this country wants more meat.
I wish that the Chancellor had been with me when I was at Brantford in Ontario last month. I went over the Massey Harris foundry. It was amazing to me how hard the men there were working for an eight-hour day. I congratulated the manager and the men, and I was told, "It may seem strange to you but these men will eat a pound of meat a day." That is very different to what our men get even if they have the benefit of a heavy workers' canteen. The output in that foundry exceeds ours to the extent of a quarter to one fifth, according to the estimate I was given.
Mr. Collins: If there is any deficiency in the diet of our own men is it not all the more credit to British farm workers that they are producing more food per man than any other farm workers in the world?
Mr. Hurd: I agree that it is most creditable, especially in view of the miserable attitude which the Ministry of Food takes about extra rations for harvest workers.
The pig is the animal which can give us the quickest increase in home meat production. We have heard in Debates in this House, particularly from my hon.
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Friend the Member for West Perth (Mr. Snadden) about the great increase which the hills can give us in beef and mutton. I fully agree with what he has told the House: I have seen for myself what he is doing. But I would urge the Government once again to give the "all clear" in regard to pigs for bacon and pork production. We should use E.C.A. dollars, such as we have, to get food for them. Feedingstuff rations are based on little more than one-fifth the pre-war quantities in this country.
We have been buying some feeding-stuffs from Russia, but we cannot rely upon Russia. The President of the Board of Trade had to admit as much on Thursday night, when he wound up the first day's Debate. He has told us that provisional grain contracts have been initialled which will not take effect until the main agreement is signed. It is because we cannot rely on Russia that we still have these miserably low rations for our pigs and poultry. Much of the stuff from the last purchase has been kept in store, but we have never been sure whether we can do another deal with Russia or whether after this harvest they might not suddenly decide to send the coarse grains into China to promote the world revolution, or into India, or somewhere else.
The Minister of Agriculture has been very unfortunate in the treatment he has received from his Cabinet colleagues. In August, 1947, he was led to talk about a rapid expansion in pigs and poultry and set targets for the increased production. But farmers have never been allowed the means to expand to anything like that capacity. We on this side of the House have been taunted that we have no positive policy of our own. I should like in a sentence to draw a contrast. The Conservative policy has been, is still and will be when we are in office, to get overall food production to at least half again as much as pre-war. In the case of meat products, that is pigs and poultry, it will obviously be considerably more than half as much again. It will not be, and should not be, as much as that in the case of wheat.
The Minister of Agriculture has been denied the means to carry out this urgent expansion for pigs and poultry and he has been led, at the behest of the Treasury, into appealing to farmers to grow still

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more wheat again next year; and to postpone once again the expansion of our vital livestock industry which can give us the best possible return in sustaining food, and also real progress towards getting sound long-term development in our agriculture. Whose advice is he taking? This is not an agricultural expansion programme. It is a makeshift dictated by the Treasury. It will not give us a balanced system of farming on lines that suit this country—[An HON. MEMBER: "Why not?"]—because it is threatening the fertility of the soil. We cannot continue wheat production at anything like the peak, the upper limit, we attained during the war years, when everything was sacrificed to get a high wheat acreage, without seriously prejudicing the future production from the soil.
I hope that neither the county agricultural committees nor the National Farmers' Union will be partners in any extreme measures that the Minister may be forced to take by his Cabinet colleagues if he is to reach this wheat target of 2¾ million acres. We cannot allow the ignorance of the Chancellor of the Exchequer and the Minister of Food to wreck the sound economical development of the one great industry which can certainly give us more food, whatever happens to international trade.
The gloss of a very high price has been put on this demand for extra wheat for the next year or so. The British farmer is offered £28 a ton for wheat for the 1950 harvest, but that will not, I hope, deceive farmers and the many others who realise what British agriculture can contribute economically to the nation's wealth. Economically we can grow 2 to 2¼ million acres of wheat oil suitable land in suitable areas. If we force wheat growing on the hills of Devon again, as we did in the war, our costs will inevitably be high and our production will become quite uneconomical. Apart from the 2 to 2¼ million acres we can grow economically, we should look to Canada, Australia, and if possible to other countries outside the dollar area for our wheat supplies. Any attempt to build up a permanent future wheat production of anything like 2¾ million acres in this country would lead to bad farming and a complete denial of a sensible policy of agricultural expansion.
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The Canadians would welcome the assurance that we are not ourselves going crazy about wheat growing, and I would add that we must stand by our wheat agreements with the Canadians. We have treated them shabbily over newsprint and wood pulp. We have left them entirely at the mercy of the Americans while the British Government buys wood pulp and newsprint from Scandinavia at higher prices than they would have paid for rather better material from Canada. That has undoubtedly caused and has placed a heavy burden on our own newspaper industry. The Chancellor says we shall have a further cut of one-third in the newsprint supplies from Canada. I regard that with regret, and if it is not absolutely inevitable I would ask that he look at the matter again. We do not want to force the Canadians into one monoply market for their newsprint and wood pulp if we can possibly provide them with some outlet.
Having been to Canada at the same time as the President of the Board of Trade, I would say that I am sure the Canadians wish to help us all they can. I endorse what the President said that we must take more trouble in catering for the Canadian market. It is no use expecting them to buy British when the prices are 15 to 20 per cent. higher than Canadian and American prices and the quality is no better. I wish I did not have to say this in the House of Commons, but it is the only proper report to bring from Eastern Canada. In many cases, such as leather goods, and textiles, our quality is no better than the products from the Canadian factories, and in too many cases the price is wrong by 15 to 20 per cent. We can say, "Buy British" till we are blue in the face, but Canadians remind us that they have lent or given us 900 million dollars and they wish to go on helping, but they do want to buy on reasonable terms.
Mr. Stokes: Would not the hon. Member agree that the price of capital goods is pretty well right?
Mr. Hurd: Yes, Sir. I went over one or two milk factories and I was glad to find one in process of putting in British equipment. It was big plant, costing £80,000. I think that we are still holding our own pretty well in that direction.

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In the export trade our manufacturers are handicapped by the slow pace of production and the high level of taxes in this country. That is the opinion of the Canadians themselves, and they know the several factors which are adding to our costs of production. We have Canadian goodwill. Undoubtedly it is still there, but it will operate fully only if we can offer the right goods at the right price. I am sure that the Canadians will understand if we say frankly that for the present we shall use our free dollars and Canadian credits—such as remain—to buy whole wheat, barley and oats for animal feedingstuffs.
We should not be buying so much Canadian flour, which means that the valuable by-products, middlings and sharps, stay in Canada. As a farmer it gave me the greatest pleasure to handle the meal given to pigs and poultry in Canada. It had substance in it. Any hon. Member who is a farmer—and I see one or two hon. Members from Norfolk opposite—will know what I mean when I say that if we put some of our feedingstuffs in our hand and blow upon it, it is wafted away. The Canadian farmers have good quality feedingstuffs, and I believe that is the reason why they and others can produce more cheaply than we can. We are missing good quality feed to give to pigs and poultry in this country.
Let us face the fact that today we have here high-cost meat production on a limited scale and that involves wasteful expenditure in food subsidies. We are continually being asked by the Government—because they cannot think out these problems for themselves—how we would cut taxation and economise. I would say that if he would let the British farmer and the smallholder have more feedingstuffs of better quality, the Chancellor of the Exchequer could cut the cost of food subsidies by £60 million a year. We have today a high-cost, restricted livestock industry. We are not taking advantage of the foodstuffs that are available in the world. Our people need better food, particularly more meat, and we can and must produce more of it here. Remembering how much of our dollar expenditure has been on food, and bearing in mind the long-term character of the dollar deficit, let us ensure that now—almost too late—we
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develop to the full our own capacity for economical food production and use E.C.A. dollars, or such other dollars that we have, with that always in mind
5.0 p.m.
Dr. Stephen Taylor: I am afraid that I cannot follow in detail the argument presented by the hon. Member for Newbury (Mr. Hurd). I would merely say that I am very glad to hear that if the Conservative Party should ever be returned to power they will follow a different agricultural policy from that which they followed in the inter-war years inasmuch as they hope to see a high target set for British agriculture rather than a continual drift from the land such as we used to have when they were in power.
We have had from the right hon. Member for Warwick and Leamington (Mr. Eden) quite the most interesting speech delivered from the Front Bench opposite for a very long time. The only point is that I think that the right hon. Gentleman should have faced the other way and delivered it to his supporters. Apart from some rather nasty references to nationalisation, the speech was a well-balanced exposition of the true problems which face the dollar and the non-dollar worlds. It was a great contrast to the speeches delivered on Thursday by hon. and right Gentlemen opposite. Very largely, they cancelled themselves out. For example, there was the plea for bilateral trade by the hon. Member for East Aberdeen (Mr. Boothby), which contrasted with the words of the right hon. Member for Aldershot (Mr. Lyttelton) when he said that bilateralism was mollycoddling British industry with cotton wool and that it was a cushion which should be removed at the earliest possible moment.
I thought I detected a certain amount of disappointment among hon. Gentlemen opposite that the Chancellor was able to balance his cuts with the announcement of the import of food and, to some extent raw materials, from alternative non-dollar sources. This should not be a cause of disappointment: it should be a cause for rejoicing and for great satisfaction that we are able to come through in spite of these difficulties. The right hon. Member for Aldershot said that the only things the welfare State could not provide were food and work. I should have said that those are precisely the things that we have man-

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aged to provide so far and we intend to continue to provide them. We are very proud that we have managed to do that. But, of course, hon. Gentlemen opposite make gloomy forecasts of what will happen in the future. Then there were arguments that high taxation plus the welfare State were the causes of the dollar deficit. The only item of high taxation which bears directly on the cost of production is the social insurance payments. They are a cost which must be borne, but I have not heard any pleas from hon. Gentlemen opposite that they should be cut.
The right hon. Member for Warwick and Leamington got a little muddled over the question of undistributed profits as a source of capital investment. Surely, hon. Gentlemen opposite are not advocating a further expansion in our capital programmes at the moment, because only if they are will the undistributed profits of industry be of any value at all. The hon. Member for Chippenham (Mr. Eccles) said that if high taxation was cut production would increase. To some extent, he was answered by the right hon. Member for Aldershot when he warned us that no matter how much we increase our production there is a limit to the absorptive capacity for manufactured goods as far as the dollar market is concerned.
The right hon. Gentleman proceeded to argue—and his right hon. Friend the Member for Warwick and Leamington argued similarly—that there is a discouragement to United States and other dollar investment in the Eastern Hemisphere as a result of our nationalisation programme. That is not really a very serious argument. All that is necessary is to spend sixpence on "Labour Believes in Britain" and one can see precisely the extent of the risk. It is not a very serious risk unless one proposes to invest in cement, industrial insurance or water supplies. It is very much smaller than the risk which this country ran when it invested its capital in overseas development in the 19th century and built railways in teritories subject to continuous revolution. Indeed, ultimately we have had to give up those capital assets.
However, it would only postpone the difficulty if the United States invested
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capital in the Eastern Hemisphere, because the interest on that capital must be paid for by exports to the Western Hemisphere. That means that we should again be faced with the same kind of problem, only spread over a longer period of time.
Mr. Oliver Lyttelton: That is on the assumption that the capital from the west which is invested in the east does not fructify in any further production.
Dr. Taylor: No, certainly not on that assumption. The difficulty will be in the actual sending of exports to the United States and the dollar world to pay the interest on the invested capital.
Viscount Hinchingbrooke: Has the hon. Gentleman never heard of the re-investment of the exportable surplus?
Dr. Taylor: Yes. One can go on indefinitely, but sooner or later one must pay in the form of exports in the reverse direction.
The truth is, as the right hon. Member for Warwick and Leamington said, that we are facing a new kind of problem. In the 19th century the world could balance its economy because the greatest creditor country was also the greatest importer. Today the greatest creditor country seems not to need the world's exports. That is essentially the fundamental problem. I do not criticise the United States. I admire their great productive capacity and their great pragmatic capacity for adapting themselves to new situations and working out solutions without a very clear theoretical basis.
But I shall try to describe what I believe to be the situation in the United States, and try to show that our problem is also their problem. Indeed, the crux of the problem is really the capacity of Canada and the United States to absorb two things—first, their total production for their own home market; and, secondly, our exports or the exports of those to whom we export. Only by taking our exports, or the exports of those to whom we export, can they be paid for their exports. There is no alternative way of paying them for their exports. That is the problem put in a simple way.

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At the moment, the absorptive capacity, the purchasing power, of the people of the United States is high. But it is not high enough to enable them to absorb their own total production. That is evidenced by the fact that they have 3,750,000 people out of jobs. I think that figure is correct. I hope that they never have any more and that they may soon have less. Those people were mainly engaged in manufacturing industries. The products which those people should be making cannot be bought by the people of the United States because they have not got enough money. Naturally, if that situation obtains, it is not too easy for us to sell our exports there. In fact, it is very difficult to sell them, because the ordinary working people and the manufacturers feel that by buying our products, they are, to that extent, denying themselves the right to work.
In simple Keynesian terms, the solution to this problem is expansion of the purchasing power of the people of the United States and Canada until there is a total take-up of all their own production, plus our exports, so that we can pay for the commodities we import from them. Indeed, I think that is the short-term answer to the world's problem.
Mr. Norman Smith: Social credit?
Dr. Taylor: No, not social credit, because the pumping out of purchasing power must be equated with actual production and the actual available goods. That is the short-term answer, and I think that, judging from President Truman's message, he and his advisers realise that that is their short-term problem; they have to step up their own purchasing power to cope with their own under-consumption, plus their under-consumption of non-dollar exports, in order to pay for their exports.
But, long-term, it is not as simple as that for the people of the United States, because, at the same time as they are struggling to maintain purchasing power, they are having to struggle with a tendency towards high prices and inflation; they have got both factors operating at the same time in the same economy. The truth is that the Keynesian extension of purchasing power in their economy would cure unemployment, but, at the same time, it would be exploited by human nature in the form of raised prices, raised wages
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and a raised rate of profits. The only long-term answer for the United States is to adopt a combination of the Keynesian full employment policy, plus price control, but I think that is a long way off. I hope very much that the United States will adopt at any rate the first part of this policy in the reasonably near future, but I do not expect them to adopt the second in the near future.
It seems to me that the United States economy is, as it were, wobbling between two alternatives. There are two things which may happen to it in the future, and the first of those possibilities is that this wobbling may continue for an indefinite period. I think this is the likely thing to happen. First, there will be, as there was immediately after the war, a pushing-out of purchasing power in the United States. After the war, the veterans came back with their extra spending power and there was a pushing-out of purchasing power, terrific industrial activity, full employment and a reasonable export absorptive capacity. As inflationary signs developed, there was a reduction of purchasing power, with a consequent mild recession, an increase in unemployment and the rest.
I think we can expect these two to alternate; soon, there will be another expansion of purchasing power, and with that the recession will disappear; then the cycle will again reverse as inflationary signs develop. We shall have these small cycles at a very high level of economic activity—small, man-made cycles going along at a high level. I think that is the likely situation to eventuate. If it does, it will lead to quite considerable problems for the non-dollar world, not the least of which will be a fluctuating market for non-dollar products in the United States. Similarly, there will be inverse fluctuation in the drive for exports from the United States, and both these fluctuations will tend to be reflected in the economies of other people unless they are very careful. Indeed, it will be our duty to be very careful.
But there is a much less pleasing longterm picture which we should face, and that is the possibility that there might be a serious decline in confidence in the United States, with restrictionist measures, which are the worst possible things to apply, with cuts in income,

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whether profits, wages, or unemployment benefit and the rest, and an under-consumption slump. I hope there will not be. If there is, we and the rest of the world will have a very difficult time, but we should know what we are going to do about it.
If this happens, we shall have to do without our dollar imports, or most of them, because the dollar world will be unable to take any, or almost any, imports from us in return. I am assuming that this situation will happen, although I do not think it will. If it does, we shall have to do without a good deal of Canadian wheat, Canadian timber, raw cotton, petrol and various rare metals and certainly United States tobacco and films.
Viscount Hinchingbrooke: But that will help to make it worse.
Dr. Taylor: Whether we shall make it worse or not, we shall not be able to pay for these goods, and that is all there is to it. We do not want this to happen, because it is the worst thing for all of us, but we should be prepared and ready for it. To maintain full employment will then be painful and difficult, but it can be done by a sort of gigantic redeployment operation to make industry independent of dollar raw materials. It is a most unpleasant plan to contemplate, and I hope we shall never have to do it, but, in case we should have to do it, we should have that plan ready. It would mean a very great extension of the switching over to substitute raw materials. It would mean switching our industry, as we already have done once during the war and a second time after the war, away from, say, cotton mills to building, always assuming that we can find any building alternatives to Canadian timber.
If we could maintain full employment in these circumstances, as I believe we could and would do, it would be of immense importance to the world and to our own people. It would be of tremendous importance in showing the United States people that a controlled economy can cope with this dreadful situation and can maintain full employment in spite of somebody else's slump. It would be of even more importance in showing the people and the rulers of Soviet Russia
1012
that their Marxist hypotheses are absolutely wrong; they consist of two points—first, that capitalism produces slumps and leads to alternate booms and slumps—and that part would be proved right if there was a slump in the United States; and, second, that slumps lead to aggressive war.
If we maintain full employment and keep Europe steady through such difficulties for the period of the United States slump until the United States applies the proper remedial action—I should hope that, in those circumstances, there would be great hope of peace for the world. Let nobody suppose that it would not be difficult; it certainly would be. But it would be a most worthwhile job by the people of Britain to show to all the people of the world what they can do for themselves. I do not think a United States slump will come; the likely thing is a United States economy fluctuating at a high level. Under these circumstances, our duty is perfectly plain. It is to do what the Government has done—that is, stop buying what we cannot afford, though very reluctantly; to do without all those things which we cannot buy.
I think that when the Chancellor goes to Washington in September, it will not be that he is in a weakened bargaining position. I hope it will not be a bargaining situation at all. The desire to buy from other people places a country in quite a strong position, and I am sure that he will in fact make full use of that argument. It is useless for us to talk in short-term multilateral terms, if we have no guarantee about the fluctuations in the United States which are going to be reflected in everybody else's economy. We all want to see a multilateral world. But until the United States decides to maintain full employment and to maintain its own purchasing power at such a level that it can absorb its own production, plus the exports of the rest of the world with which to pay for its imports, multilateral trade is simply something which countries that believe in full employment, alas, just cannot do.
5.20 p.m.
Mr. Cuthbert: We have listened this afternoon to at least one speech from the other side which almost made me believe that we were living in a wonderful sort of prosperity. The speech was that

1013
of the hon. and gallant Member for North Portsmouth (Major Bruce) who cited figure after figure of wonderful production, and so on. That may all be true, but what the ordinary man in the street wants to hear today—and he heard it from the Chancellor of the Exchequer only the other day—is what has caused us to get into this perilous position. We can spout our heads off about all the good things that have happened, but he wants to know what is wrong now, and how we got into this position.
I am going to deal with only one aspect of the situation, and I hope that the suggestion I shall make will be taken to America by the Chancellor when he goes, because the Americans are, to my mind, the only people who can help us out of our difficulties, at any rate in the next year or two. I remember that in 1945 we were all very thankful that the great American nation came to our help with a loan. At the time, I was all for that loan, but, on looking back, I would now be much happier had it been a loan of a different kind. As we all know, we then accepted dollars—Marshall Aid came later—but had we, instead of accepting dollars and now goods, been loaned a similar quantity of gold out of the vast hoard that is frozen in America at the present time, and stabilised, not only our currency, but all the European currencies as well, we should be in a much different position today as far as world trade is concerned.
That is now a thing of the past, but I am wondering if we cannot, perhaps, revive this subject with America. As I see it at the moment, the difficulty is to fill our dollar deficit with America. Some hon. Members have told us that with more production we can certainly meet that deficit. I do not believe that for one moment. I think it was the hon. Member for East Aberdeen (Mr. Boothby) who the other day agreed that we shall never fill the gap from our own production. The gap must be filled, as it always has been, by invisible exports—by which I mean insurance, banking, shipping and so on—first and finally backed by gold. That is the only way in which we shall ever meet that deficit. We can certainly narrow the gap at the present moment, but except by this means we shall never completely fill it.
1014
That brings us back to the problem of where we are to get the gold. I make the suggestion—I hope the Economic Secretary will make a note of it and that when he replies he will tell me whether he does not think it is a good idea—that in our talks with the Americans we should tell them that we require more gold with which to build up our gold reserves in order to stabilise the pound. I have spoken to many Americans on this subject—bankers and business people—and have told them, as I have just told the House, what I imagine we should have done in 1945, that is, have taken gold instead of dollars, and now goods. They have told me, "You are dead right, but it is too late now." I wonder if it is.
We know that at the moment the flight from the pound is extremely serious. I agree with my right hon. Friend the Member for Warwick and Leamington (Mr. Eden) that the more we speak about our difficulty the better. It is much better to let the Americans know that we are worried about the situation than to put our heads in the sand and pretend that everything is rosy. Therefore I would tell the Americans that our small gold reserve is the trouble. Why is it our trouble? Because in trade with other nations we cannot make the pound convertible. It must be obvious to everybody that if the pound is not convertible, it must be very unpopular with a great many nations of the world. They require currency which they can turn into francs and dollars. That is what is meant by convertibility, and without gold, of course, we cannot stand the drain on our reserves at the moment.
How could America help us in this way? We have talked about the devaluation of the pound, and so on, but I am dead against that. What I am in favour of is enhancing the price of gold in the world. If America were to raise the price of her gold in order to bridge the gap between the black market rates in currencies and the ordinary rates, the enhanced value of the frozen gold reserves in America would represent about £2,000 million. I think that those who have studied this particular problem will agree that the difference between the black market rate and the official rate is about 20 per cent. We know that the American reserves at the present moment are something between £7,000 million and £8,000 million. The 20 per cent. would not come

1015
from the taxpayers—of which they are always so frightened—but from the enhanced value. They could lend it to us and to Europe in order to stabilise our currencies and to get us back to world free trade and the convertibility of currency. Until that is done, I can see no hope at all.
What are the Government's suggestions? My right hon. Friend the Member for Warwick and Leamington described them very well indeed this afternoon. The Government intend to cut £100 million of American imports to this country. That is only going to mean more misery and more austerity for our people. Indeed, I am not at all sure that if we tried to put more austerity and more cuts on to this great British public, we should not take the heart right out of them and that productivity would not suffer accordingly. I hope the Economic Secretary will reply to my suggestion about the assistance which American gold could give us.
5.28 p.m.
Mr. Norman Smith: The hon. Member for Rye (Mr. Cuthbert), has, of course, got something, but he is singularly ill-informed as to the details, and nothing could have been more egregiously wrong than when he suggested that if, in 1945, we had had gold instead of dollars, it would have made some difference. How could it have made any difference? Under the Bretton Woods Agreement, an ounce of gold is 35 dollars and contrariwise. If we had had gold in 1945, it would have gone as quickly as the dollars went, because gold is dollars and dollars are gold.
Mr. Cuthbert: I think the hon. Member has overlooked my point, that we wanted the gold in order to stabilise our currency first of all. Of course, a certain amount of gold would have gone back, but in stabilising our currency we should have increased the purchasing power of the pound, which would have made all the difference in the world.
Mr. Smith: The hon. Gentleman has only got himself further into the mire. We stabilised our currency under the Bretton Woods Agreement; we agreed that our currency should, except as to a
1016
possible 10 per cent.—we have never taken advantage of that—be invariable from the dollar at 4.03. The hon. Member's idea about the revaluation of gold is a good one, provided always that it will be regarded purely and simply as a short-term emergency measure. The hon. Member seems to think that if gold be revalued we can get back to convertible currencies and 19th century free trade. That could not be done, because the revaluing of gold would not in the least remove any but one of the causes of the present hemisphere disequilibrium, and it is therefore only a short-term measure.
I want to make the House a present of a new law. With becoming modesty I am calling it Smith's Law. It arises from what the hon. Member has said. Smith's Law is just as apposite in the sphere of finance as Newton's Laws of motion are apposite in the field of physics. Smith's Law says that so long as gold is accepted as the basis of the monetary system, then for every world war financed by massive credit creation, there must sooner or later be a revaluation of gold in terms of the dollar and, therefore, under Bretton Woods, of all currencies. If one applies Smith's Law to the present condition of things, one sees that it is singularly apposite. There is a widespread superstition that a dollar is always one thirty-fifth of an ounce of gold, but it is not true. That price was fixed not in heaven, but here on earth. I can remember when about 20 dollars went to the ounce of gold, but consequent on the Great War it was necessary—
Mr. W. Fletcher rose—
Mr. Smith: I shall not give way until I have developed this part of my case, and then the hon. Member can interrupt me. I am only pointing out that because of the circumstances arising out of the 1914 war it was necessary to revalue gold in 1933. That was done by Mr. Roosevelt, just after the abject failure of the World Economic and Monetary Conference which Mr. Ramsay MacDonald staged with singular appropriateness in the Geological Museum. Mr. Roosevelt then had a depression on his hands, just as Mr. Truman today has a recession on his. Mr. Roosevelt offended all the high priests of financial superstition by revaluing gold in terms of the dollar, but the revaluation worked. Just as the 1849

1017
Californian gold discovery stimulated trade throughout the world, so in 1933 the revaluation of gold stimulated trade. It led the way out of the trade depression by which the world at that time was beset.
Since 1933 we have had a second Great War with corresponding massive credit inflation and, therefore, the circumstances today of recession developing in America are entirely favourable for the application of Smith's Law. The time is ripe for a revaluation of gold in terms of dollars, and, therefore, under Bretton Woods in terms of all currencies. I have no doubt that my right hon. and learned Friend the Chancellor of the Exchequer, whose illness we all deplore, when he goes to Washington in September will put this idea of the revaluation of gold to the authorities and he will no doubt get a very sympathetic hearing, provided always that one little trap be avoided. If I may draw on a homely illustration from "David Copperfield," provided always that Mr. Spenlow of the International Monetary Fund does not pass the buck to Mr. Jorkins of the American Treasury.
It is interesting to see what revaluation of gold would do at this time. It is only a short-term measure, but I can see no other quick remedy for the situation that has arisen. Let us look at what it will do. First, it would have an important effect upon our very exiguous gold reserve. Our gold reserve is running out. Revaluation of gold would send up the value of our gold reserve in terms of dollars, so that because any consequential rise in prices arising out of the revaluation would entail a long time lag, we should get a very valuable breathing space.
What my right hon. and learned Friend, however, has to prove to the Americans is how they will get an advantage out of it. Their advantage arises in that their gold reserve, which is 24,244 million dollars, some 15 times our own, would be revalued in such a way as to cover a much larger proportion of the American internal National Debt, making for confidence all round and helping President Truman to combat the recession. But that is not all. The sterling area, being a very large exporter of gold to the United States, would find an immediate benefit in its balance of payments if gold were revalued.
1018
Hon. Members are perfectly well aware that there is in the East a black market in gold—the Bombay bullion market, and, curiously enough, respectable publications like "The Times" and the "Economist" both offend the financial high priests by publishing these bullion prices of gold, though they cover it up by publishing them in terms of rupees and tolas. Not everyone knows of rupees and tolas, but everyone knows of pounds and ounces. The Bretton Woods gold price is £8 12s. 3d. an ounce, but it is interesting to learn what has been the black market price in the last three years, which gives some idea of the immense short-term value of this expedient. We all know that a rupee represents 18d. and a tola is three-eighths of an ounce, so the conversion factor is the reciprocal of five; which means that, one has to divide five into the published price to get pounds an ounce.
If one considers the sterling area output of gold over the three years, 1946, 1947 and 1498, and what was the average free market price, it will be seen how attractive is the Eastern market for gold. Multiplying the difference between the artificial Bretton Woods price and the average Bombay price by what would probably have been the sterling area's output if the price had been more attractive than it actually was, the effect of an arithmetical calculation is simply that in those three years the sterling area loss in balance of payments vis-a-vis the dollar area was no less than £904 million, compared with £1,120 million of eleemosynary dollars which we had from North America in the same period.
The hon. Member for Rye certainly made a very valuable contribution to this Debate when he suggested that there should be a revaluation of gold. I am not suggesting that the revaluation price of gold should reach the level of the Bombay bullion market price, which at the moment is about £23 as against £8 12s. 3d. under Bretton Woods. All I am suggesting is that revaluation would be of immense benefit not only to us but also to the Americans. I put it to my right hon. Friend the Foreign Secretary—that man of massive physique and massive common-sense—that he should bear in mind a speech which he made a couple of years ago at the Trades Union Congress at Southport when he said:

1019
"America handicaps herself and causes high taxation in her own country by her failure to redistribute the Fort Knox gold. If you found another gold mine in the world, it would assist you; but there is gold which has already been mined and is doing nothing. I am quite sure it is one of the readiest ways there is to assist in increasing the purchasing power of the devastated areas of the world."
That is what my right hon. Friend suggested, the sort of eminently commonsense suggestion one would have expected a common-sense man to put up. What he said in effect was, "We have been playing the game for years; all the counters are now in the hands of one player; let us redistribute the counters and start again." That was asking rather a lot of the human nature of the people over in America who control these things. I was not surprised we were given to understand that my right hon. Friend's eminently sensible suggestion had not found favour.
However, I cannot for the life of me see why anyone in America—if hon. Members like, the cosmopolitan controllers of the International Monetary Fund—could possibly disapprove of a revaluation of gold under Smith's Law at a time like this. If they do disapprove, we are bound to come to a very grim and significant conclusion, namely, that it is the intention, not of the American politicians, not of the American Administration, certainly not of the generous-hearted American people, but of the handful of gold standard money controllers in the United States, to apply to the British welfare State—if I may again borrow the Southport words of my right hon. Friend—to apply to us "the old bankers' methods of starvation." Personally, as a cautious man, having been trained in Fleet Street for 30 years, I prefer to reserve judgment. We on this side of the House are not judging anybody in America. We know that the American people are generous-hearted, but we do discriminate between, on the one hand, ordinary Americans and, on the other, those people who control the gold standard financial business located over there.
The extraordinary thing about this Debate today has been the way in which it was opened. It was opened by the right hon. Member for Warwick and Leamington (Mr. Eden), of whom everybody in this House is personally very fond. Nevertheless, it was not quite what we
1020
had expected. Where was the Leader of the Opposition? What was the right hon. Member for Woodford (Mr. Churchill) doing? In this great crisis of our country's fortunes, at this time when the House of Commons is engaged on what is the most important Debate it has had since the war, what lead had the Leader of the Conservative Party got to give?
Mr. Ellis Smith: Next Saturday.
Mr. Smith: My hon. Friend says we shall know on Saturday. I have always understood, as a very humble and unimportant back bencher, that if one is an important person and a Member of this House, and has anything to tell the country, he does it in this House. The Leader of the Opposition, as a salaried official of the House—[HON. MEMBERS: "He does not draw his salary."]—I apologise to him. Still, he is an official of the House. One would have expected his wisdom to be distilled in this Chamber and not reserved for Wolverhampton.
So instead we have had the right hon. Member for Warwick and Leamington, who insisted on what we are bound to assume is Conservative policy in this matter. It was the most amazing suppression of relevant facts I have ever heard, because the right hon. Gentleman said that above all things we had to encourage saving—the low state of which he deplored—encourage saving and get taxation down. I cannot think where the party opposite derives its curious idea, which is hopelessly wrong, that saving in this country is at a low ebb. Are they not aware that in the last two years this country has in fact devoted to capital formation—and that is saving: physical saving. I do not care about financial saving, and can distinguish between physical and financial saving, as some of the hon. Members opposite cannot—is the party opposite not aware that in the last two years physical saving in this country, as represented by capital formation, is in fact 20 per cent. of the national income?
They talk about saving. They, of course, mean personal saving. They forget that things have changed since they and I were boys. In this era of the managerial revolution saving proceeds not so much from individuals as from firms' allocations to reserves, from com-

1021
panies' undistributed profits, and, to a smaller extent, from Budget surpluses. In virtue of these financial savings we have in the past three years put up net capital formation equivalent financially to five times the dollar aid we have had from America. It represents 20 per cent. of our total national income in a three-year period. A nation that does that is saving on the heroic scale. It is practising Spartan austerity—austerity of which I approve—but it is Spartan austerity, to which I would draw the attention of our good friends in the United States.
When we come to examine the physical implications of this business of reducing taxation we are led to the most appalling conclusion, and I can see why the Leader of the Opposition thought better than to speak in this Debate, if the Opposition have nothing to put up except this business of reducing taxation. Let us look where that leads us financially and physically. Financially, of course, it is very simple. Hon. Gentlemen opposite want to reduce taxation on the class which is traditionally the saving class: they mean, the well-to-do. They can only do it by slashing Government expenditure. That, in fact, means reducing the social services. But let that pass. That has been said over and over again.
Let us consider the physical consequences. They are always telling us we are spending too much. We have only to look across the North Sea into the bankers' paradise of Belgium to see exactly where the Tory policy would land us. We in the last three years have had this massive capital formation which is the physical reflection of the employment of a very substantial proportion of our labour, raw materials and factory capacity on capital expansion, notably in the basic industries. We have had our workers at work improving railways, collieries, electric power stations, and those all important key, basic industries which are the physical capital of the country.
Belgium has done precisely the opposite. Belgium has in the last three years, neglected her capital equipment—as the "Financial Times" very obligingly a fortnight ago today pointed out. Belgium has neglected her capital equipment at the price of having a large army of unemployed. Through a taxation policy generous to the rich, and a social services
1022
policy niggardly to the poor, she has filled her shops and restaurants with luxury goods while the great army of unemployed, spending little and, therefore, requiring few imports, has contributed to the soundness of Belgium's gold reserve.
As a "monetary reformer," I have always recognised that, if a country is prosperous by gold standard rules, it is miserable by the rules of human decency. The English-Belgian contrast is very relevant to that. In Belgium the workers have undergone misery in the last few years. Capital equipment has been neglected; but the gold reserve has piled up and Belgium, by bankers' rules, is sound. In England we have had full employment; we have improved tremendously our capital equipment, which has necessitated substantial imports of food and raw materials; because of that, our gold reserve has run down, and, by bankers' rules, England is sick. Is it not quite evident that bankers' rules and the rules of human decency conflict?
Let this House never forget that the position we are in today is the result of the Bretton Woods Agreement of 1945. Bretton Woods gave the world an international gold standard. On that we are working today. That is, indeed, the cause of this crisis. That is why the crisis has arisen. It is the attrition of our gold reserve which has brought this crisis. I do not want to be cock-a-hoop and say, "I told you so." I think, probably, Bretton Woods was imposed on this country. Whatever else is the way out, there is no way out which entails permanent trading in the world on any gold standard basis whatsoever. The whole thing rather reminds me of some lines of doggerel written by Eimar O'Duffy, a very good friend of mine, shortly before he died. He wanted to depict the position we had at a time when the bankers had all their own way and the gold standard was the ruling factor in the situation. These were his lines:
"The banker in his counting house was counting out his money;
The land was overflowing with bread, and milk, and honey;
The shops were full of good things, the factories likewise
The banker closed his books and said 'We must economise.
Sing a song of plenty, a planet full of fools:
Everybody starving, by sound financial rules.'"

1023
That was a very accurate picture indeed of the world in 1930, when the gold standard was bringing us all down. Whatever else we do, we have to avoid that.
In the last few days the people of this country have had a very striking object lesson. There is on the one side bilateral trading—that is, making the best bargain one can with people who are willing to swap goods for goods—and on the other sound financial trading, or dollar trading—that is, trading goods for gold, or goods for debt. What does bilateral trading—which experts say is unsound—do? It gives us more meat, bacon and butter. What does dollar trading—the gold trading which experts say is sound—do? It gives us less tobacco and less sugar. Can it be wondered at that there is a firm belief, I believe on both sides of the House—certainly on this side—that our longterm way out of all these difficulties will be to develop bilateral trading to its logical conclusion. This very practical bilateral trading does give us the stuff, and people who let us have it will take our goods in return, instead of wanting to play this crazy game of gold. Can anybody wonder that there has developed a widespread belief as to what we shall have to do?
Again I should like to recall the sane eloquence of my right hon. Friend the Foreign Secretary at the T.U.C. Conference in 1947 when he said:
"I hope our Commonwealth, and certainly the Empire, will agree to the possibility of a customs union for the British Commonwealth and Empire";
to which I would add "and of the Western European countries as well." We want a trichotomy in the world. I mean the existence of three great, nearly self-contained trading areas, exchanging with each other their various surpluses: the Communist area, the dollar area, and the Western Europe plus the British Commonwealth and Empire area. That trichotomy would entail much greater safety for the peace of the world than the present dichotomy, in which the Iron Curtain separates two peoples mutually hostile, both animated by the crazy Marxist conviction that sooner or later war to the death is inevitable.
I have attacked the party opposite, and to be fair to them it is necessary to say
1024
something else, because I am essentially objective in all these things. First, let this be said, because it is right that it should be. The right hon. Member for Warwick and Leamington made a valuable contribution to this Debate when he said he was resolutely opposed to the devaluation of the £. That is not true of all the party opposite. My hon. and gallant Friend the Member for North Portsmouth (Major Bruce) was quite right there. The "Financial Times" and other papers are running a campaign for devaluation. On that I only want to say a few things, of which our American friends ought to take notice.
If people argue for devaluation, as many Conservative financial writers are arguing today, they must put up the case. Now what is the case? The only honest measuring rod that can be applied is: what will the dollar buy in America and the £ buy here? Even leaving out our food subsidies, it is true to say that the pound in London buys more food—and a good deal more food—than 4.03 dollars will buy in the United States, so that on purchasing power parity there is no case for devaluation. Moreover, if we were to devalue the £ by one-fifth—which is a very popular figure with the financial writers of the Tory persuasion—it would mean that we should have to send abroad to the dollar area one-fifth more by volume of our manufactured goods in order to get, not more but the same amount of dollar food and raw materials.
Now I deem it to be axiomatic that the business lobby in Washington just would not stand for an increase of one-fifth by volume of British goods going into the United States. They would get busy; they would protest, and use American tariffs against "unfair British competition." But supposing that the Americans could be induced to accept the very substantial increase of one-fifth by volume of British imports, what would be the effect over here and over there? The effect over here would be that we should have to divert, either from our capital formation or from our home production, a corresponding amount of labour power, raw materials and factory capacity. If we diverted it from capital production the outcome would be an eventual, and if from home production an immediate, sharp fall in the standard of living; and the only beneficiary of that

1025
sharp fall in our standard of living would be the American consumer, who would get British goods more cheaply at the cost of substantial unemployment in his own country. I think that should be put up to them.
Moreover, devaluation would increase substantially the price of all our dollar imports, which would be reflected in the cost of production in this country. Again, as the experience of France ought to have taught the world, devaluation does in fact pro tanto whittle away the savings of the very middle-class people for whom the party opposite and their financial journalists profess such great solicitude.
There is no case whatsoever for devaluation, except the jungle case, which is that the price of the £ in terms of dollars must be determined by the law of supply and demand in a world where dollars are wanted and £s are not. Let us look at that. Here we come back to my old friend the "Financial Times." If I may say so, there are two "Financial Times": there is the day-to-day "Financial Times" which lets a lot of politics creep into it, and there is the occasional "Financial Times Banking Survey"—a very valuable and objective commercial sheet which has no politics at all. I quote from its edition of 25th April of this year:
"In the 18 months that have passed since the 1947 convertibility debacle, confidence in the £ has been rising. In terms of hard currencies no less than in terms of the weaker European and Asiatic currencies, sterling is today adjudged to have a value more closely approximating the Bretton Wood parity than at any time since the war."
That was three months ago, before this denigration by Tory financial writers got going. In the light of that evidence the Chancellor was quite right on Thursday last to say "That is that" to devaluation.
In conclusion I want to say only this: That there is no final positive remedy for this kind of disequilibrium which has arisen in international payments, unless each and every country will first make itself sovereign in monetary matters by taking away from private bankers the right, which they have usurped, to create money. In 1946 this Labour Government nationalised the Bank of England. In doing that, we removed out of our way an internal financial Second Chamber, only to find three years later that we are now confronted with an external
1026
financial Second Chamber, namely, the people who run what is called the International Monetary Fund, located geographically on American soil. Already the authority of that international body is being evoked by the less respectable, more cosmopolitan and least patriotic element of the party opposite, who want the veto of that body to be used to strangle at birth the welfare State in this country. The positive way out of all these things is that we should have in the world a financial system that will work, which the present one does not.
The financial system that will work internally is to arrange quite simply, through Budgetary methods, that in any given period the aggregate prices demanded for goods and services on sale internally shall not exceed the collective purchasing power available. Internationally, it will work by arranging that payments across national frontiers shall be made, not in dollars, gold or any international currency, but through a series of exchange clearing houses on a multilateral basis, with exporters being remunerated by their own Governments in local currency and importers paying their own Governments in local currency, with the result that a country like the United States, which wants to sell goods to the world, but not take goods from the world, will have the option of either importing goods or, under statutory limitations, eventually forfeiting any right to be paid for its exports.
But before we can have a system like that we have to exorcise in men's minds, and the minds of economists, the singular superstition that any form of money must necessarily be tickets for goods and must also, like the Bretton Woods gold dollar, be something of intrinsic value which can be stored. So long as that superstition exists, the financial system will not work, and the world will go from one crisis to another, from one slump to another, and from one war to the next; and that, as my right hon. and learned Friend says, will be that.
If there is any Member who is so singularly and childishly naive as to believe that banks do not in fact create money, I will end by quoting the "Financial Times" of last Monday, which in a very interesting book review quoted a remark of Dean Swift at the end of the 18th century, when the Bank

1027
of England was formed, that "half of the bank's capital will be real and the other half imaginary"; to which the "Financial Times" reviewer added the comment, which I hope escaped the notice of the right hon. Member for Bournemouth (Mr. Bracken): "I dare not think what Swift would have to say about our bankers today, when nineteen-twentieths of our money is imaginary."
6.3 p.m.
Colonel Houghton: Like many others who have been fortunate enough to be called in this Debate, I find there are many points which have been raised that I should like to take up. I should like to dissect Smith's Law which has been invoked in a very remarkable speech and I should like to go back to last Thursday's Debate, when the Chancellor of the Exchequer exhorted industry to bring their plants and methods up to date. If, as I think, he was considering American methods, I would point out that the elements in America's high output are not only efficiency both in methods and plant, but also high wages and hard work. During this Debate something has been said about hard work as well as efficiency, which is both salutary and good.
But as I have promised to be very brief, I shall turn straight away to a matter of considerable importance, a matter of sufficient importance to lead me, at any rate, to write to the President of the Board of Trade. I told him that I intended to challenge certain things he said at the end of his speech last Thursday, in a rather heated and stormy atmosphere. I am addressing him not as the hon. Member for the Ormskirk Division of Lancashire, but as President of the Board of Trade. In his former capacity, I have no doubt that the things he said were important, but coming from the President of the Board of Trade, the head of a great Department of State, they have to be considered and re-considered. If we turn to the OFFICIAL REPORT, we find that he said this:
"I do not myself subscribe to the dangerous illusion, which is shared, I think, by some of my hon Friends, that the Tory Party have not got a policy. It is quite clear from their speeches and their Press articles that their policy at this time would be one of chronic deflation and the reversion to a system under
1028
which a million or, perhaps, two million would be unemployed."
Hon. Members: Hear, hear.
Colonel Houghton: I doubt whether Members opposite will applaud just as much when I have finished my speech. He then went on to say:
"Responsible Tory papers are advocating cuts in expenditure scarcely less painful than in 1931. We know what that means—cuts in unemployment benefit, intensification of the Means Test."—[OFFICIAL REPORT, 14th July, 1949; Vol. 467, c. 801–2]
What I wish to ask the right hon. Gentleman is this: Has the deduction he has drawn from his reading of Tory speeches and articles in the Tory Press convinced him so completely that he, as President of the Board of Trade, really and sincerely holds the view that the deliberate policy of the Conservatives is unemployment and lower wages?
Mr. Crossman: Hear, hear.
Colonel Houghton: I am very interested to get that reply from the hon. Member for East Coventry (Mr. Cross-man). If the President of the Board of Trade holds that belief about Conservatives in and out of this House, then what part is he to play in this great drive for increased output? In his capacity as President of the Board of Trade, he will doubtless continue to address meetings throughout the country of textile workers, clothing and furniture manufacturers, and so on. If so, will he preface his remarks on each occasion, knowing that at least 50 per cent. of his audience will be Conservative, by saying, "I have come here to encourage you to produce more and better goods at cheaper prices, but I want you to know that I believe 50 per cent. of this audience who are Conservatives are not going to do anything about it, because they, as business men, are really only concerned with more unemployment and lower wages"? That is the point which has to be met.
I, as a business man, and, incidentally, as a member of the Grand Council of the Federation of British Industries, where I serve with my hon. Friend the Member for Edgbaston (Sir P. Bennett), believe that the President of the Board of Trade intends to continue his co-operation with such bodies throughout the country, but is he going to tell these

1029
bodies and associations, "I do not believe in your efforts at all, because I have deduced from the speeches of the Conservatives that you are concerned only with more unemployment and lower wages"?
While it is distasteful in a way to bring in personal matters, it is true that I am giving up politics at the end of this Parliament so as to concentrate once more upon industrial activities. I hope very much—and I do not think it is a pious hope, or a hollow aspiration—to increase employment where it exists and to provide some where it does not. So I am wondering whether, when I come to part company with the President of the Board of Trade as fellow Members of Parliament he will say to me, "I do not wish you good luck, because I do not believe in your intentions. I believe you are really going back to industry to create unemployment and lower wages."
Mr. George Wigg: I should like to ask the hon. and gallant Member this question. Doubtless he is aware that Sir Francis Joseph, a well-known industrialist in North Staffordshire, and Sir Hugh Chance, a well-known industrialist in the Midlands, sent out a confidential circular to businessmen asking them if they would give a proportion of their profits to Tory Party funds. Does he think that that was done to help the workers, or to further the policy of the Tory Party?
6.11 p.m.
Mr. Zilliacus: The hon. and gallant Member for Antrim (Colonel Haughton), like so many of his party, is beginning to show a little discomfort at being "rumbled." Since he has asked a question of the President of the Board of Trade, I should like to quote a further passage from what the right hon. Gentleman said in last Thursday's Debate:
"Responsible Conservative leaders are advocating large cuts in Government expenditure. … Will they get up and say that, whatever other items of Government expenditure they would cut … they would not cut the social services, or food subsidies … and that they would not cut the programme of providing factories for the development areas?"—[OFFICIAL REPORT, 14th July, 1949; Vol 467, c. 802.]
Could the hon. and gallant Gentleman answer that question?
Colonel Haughton: I have not that particular quotation before me, but I
1030
asked the President a straight question: whether he is laying his accusations against Conservatives in this House, the Conservative Party as a whole or Conservatives throughout the country, who represent at least 50 per cent. of those in industry? I do not feel that a counter question helps in any way to answer that question.
Mr. Zilliacus: In other words, as I expected, the hon. and gallant Gentleman has not been able to give an answer to that specific question, and none of us ever will get the answer for the simple reason that the Conservative Party are afraid to tell the country what is their policy. I do not think we shall even hear it at Wolverhampton on Saturday—not this part of it. Their attitude on these matters is one of belief in the law of the jungle tempered by political prudence and electoral hypocrisy. Their social morality mingles the intransigence of the impenitent thief on the cross with the unction of Uriah Heap. That is where they stand on these matters of domestic Government expenditure.
I wish to try to answer a remark made by the hon. Member for Rye (Mr. Cuthbert), who said that what the man in the street wants to know is what is wrong now and how we got into the present crisis. I shall try to answer that question in the light of that passage in the official communiqué which said:
"The general approach to existing problems must be based upon full recognition of their profound and long-term character."
I shall try to situate the causes of this crisis in space and time. In space, it is obvious that the crisis is international, because it affects many countries, not only ours, and, therefore, in so far as the policy of the Government is responsible, they must be primarily responsible for failure to adjust our relations with other countries correctly—that is, responsible in the domain of foreign policy—and for that reason I am glad that the Foreign Secretary is present today to reply to the Debate.
As regards time, I think it is illuminating—and several speakers have already strayed into this field today—to look at the very suggestive parallel with what happened last time. That is where I came in, so to speak, because there is a haunting familiarity about many of the remedies being discussed today and many

1031
aspects of this crisis. After the First World War the whole of post-war reconstruction was based on an attempt to restore the prewar social order.
The first item in that programme was the removal of State control and the establishment of conditions favourable to private enterprise. There was also the stabilisation of currencies, the facilitating of international trade and investment, the development of social services and the creation of the League of Nations. The policy also included counter-revolutionary intervention to restore capitalism and a cold war even at the cost of supporting Fascism but masquerading as the defence of democracy against Communism. There was even a Western Union—the Locarno Agreements.
The whole of this policy collapsed in the great slump. Thereupon attempts were made, rather frenzied and incoherent, to apply a double dose of the orthodox remedies for capitalism in crisis. There were swingeing cuts in social services and wages, a vast amount of unemployment and devaluation. But all these remedies did not work. Production never got anywhere near the 1929 level; it lagged far behind. Unemployment remained at a level much higher than before the great slump. Partial recovery, such as it was, was chiefly due to increasing concentration on the armaments race.
The moral of the whole business was drawn by the senior Burgess for Oxford University (Sir A. Salter), who occupied a key post in the reconstruction fight after the First World War as Director of the Economic and Financial Section of the League of Nations Secretariat. He drew the moral in the early 30s in his books, "World Trade and its Future," "Recovery," "The Framework of an Ordered Society," and other works. The right hon. Gentleman's conclusion was that the reconstruction effort failed because it was directed to restoring the prewar social order. It overlooked the fact that the foundations needed renewing, strengthening and enlarging. The right hon. Gentleman went on record, in a broadcast, as saying that the only way out was sweeping advances in public ownership and control of industry and trade. I am sorry he is not here today, as I should
1032
have liked to ask him whether he still holds that view. I rather doubt it.
In Britain, the May Committee proposed extremely drastic measures of economy, cutting wages, social services and unemployment benefit. We went off the Gold Standard. But, nevertheless, unemployment rose to nearly three million. Before the First World War the irreducible minimum of unemployment was regarded as 500,000. It rose to one million between the first post-war slump and the great slump, and doubled again and stopped at two million after the great slump. In so far as there was recovery in our case, too, it was largely due to rearmament. Take this passage from the Report, publish on 23rd February, 1937, of the Unemployment Insurance Statutory Committee, of which Lord Beveridge was then Chairman:
"In view of the defence programme there is practically no prospect of an appreciable recession of employment from the present level for 1937 or for some time thereafter. On the completion of the intensive phase of the programme, however, and in the normal course of the trade cycle we should be prepared for a relatively severe recession. But nothing has happened to justify an assumption that levels of unemployment will be either materially higher or lower than those assumed in the original estimate of 16¼ to 16¾ per cent."
That meant around 2,200,000 unemployed. That figure was mentioned by Lord Beveridge in 1936, in a speech in which he forecast that in the next few years unemployment would not go below 1½ million and would be likely to rise to 2,200,000.
On 29th January, 1937, Lord Beveridge said that if the arms race was stopped unemployment would rise again to nearly three million. On the same day the Chancellor of the Exchequer, Mr. Neville Chamberlain, said that unless the expenditure on armaments was reduced it would pull down the standard of living for a generation. In spite of this recovery being so partial, being accompanied by a high degree of unemployment, and itself being tied up with re-armament, we were, in fact, heading for a further slump. There was a race between the next war and the next slump and the next war won by only a short head.
To complete that picture of the past, which casts such an abundance of light on the present, and I hope not on the future, I would quote the following passage from a very remarkable speech

1033
on the arms race by the present Leader of the Opposition. In the House of Commons on 23rd April, 1936, he said:
"The Chancellor of the Exchequer used an argument about how expenditure would rise to a peak, then fall a little and then remain level but at a much greater height than at the present time. That is not the future as I foresee it. I cannot believe that, after armaments in all countries have reached a towering height, they will settle down and continue at a hideous level far above the present level, which is already crushing and that that will be for many years a normal feature of the world's routine. Whatever happens, I do not believe that will. Europe is approaching a climax. … Either there will be a melting of hearts and a joining of hands between great nations which will set out upon realising the glorious age of prosperity and freedom which is now within the grasp of the millions of toiling people, or there will be an explosion and a catastrophe the course of which no imagination can measure, and beyond which no human eye can see."—[OFFICAL REPORT, 23rd April, 1936: Vol. 311, c, 339.]
That was what happened last time and how it all ended.
This time post-war reconstruction has again been based on the attempt to restore the pre-war social order. But there are significant differences. Last time the initiative was chiefly British and French and the Americans came in as what I might call half-time voluntary associates. This time the United States are carrying out this policy single-handed and are pressing Britain, Western Europe, Italy and Japan into service as more or less willing auxiliaries and vassals. Last time this policy covered the whole world outside the Soviet Union. This time one-third of humanity has contracted out and is proceeding to lay the foundations of Socialist economies by revolutionary methods. A Labour Britain is a fly in the ointment because we are trying in this country to do the same job gradually by Parliamentary methods.
Last time the workers were demoralised, divided and defeated. This time the position of the working-class is much stronger in Europe and in this country. Their refusal to submit to cuts in wages and cuts in social services is more determined and their will to Socialism is more effective. The most important difference of all is that last time this policy of restoring the pre-war social order was successful for ten years after the war and it was successful without an arms race. By that time it had raised up such powerful forces in the process of restoring capitalisms
1034
of counter-revolution and reaction in the shape of Fascism and its Tory accomplices in the West that when the arms race started after the slump it also exacerbated and spread Fascism; and so the arms race took us straight into a Second World War.
This time the whole policy has broken down barely four years after the last war; it has broken down, been deadlocked or defeated in the Far East, the Middle East, Eastern Europe, the Balkans and Germany, and it is failing in Western Europe, in spite of the unprecedented outpouring of material and money from the United States and in spite of an arms race several times bigger than the one that was regarded as crushing and monstrous before the war. These are, in their nature, temporary measures which could not in any case be long continued without some kind of breakdown.
The fact is that it is too late to restore the old order in Europe and Asia. I firmly believe that it is also too early for the diehard defenders of the old order to drag their peoples into a third world war as their last despairing gamble. The final stroke is that the United States, which is the fount and origin of this policy, is itself getting involved in difficulties. I do not want to exaggerate; I do not think there is any reason to be pessimistic and assume that the United States is heading today for a major slump. It is fervently to be hoped that nothing of the sort will happen because the results would be terrible indeed for a large part of humanity, including ourselves. The present beginnings of a recession may level off and pick up.
The United States' reserves of economic strength are very great indeed. The President and his advisers have put forward a number of bold measures which, if they were applied, would probably save the situation. These measures, incidentally, include such measures as increasing the minimum wage from 2s. to 3s. 9d. an hour, strengthening the social services, expanding the housing programme, starting public works, more and cheaper exports, a cut in taxes—and never mind about unbalancing the Budget. On the other hand, it would be foolish to be optimistic, because whereas the President proposes Congress disposes. Congress has already disposed of the social security programme on which the President was elected and is likely to give short shrift to

1035
his present proposals. The only part of the proposals that seems to interest Congress is the proposal to cut taxation. The uncomfortable truth is that the majority of Congress belong to the economic stone age, like the Leader of the Opposition, and many of its members are economic Neanderthalers, like the hon. Member for Orpington (Sir W. Smithers).
In the meantime, Marshall plan countries are in such a weak position that even the beginnings of an American slump could create very serious difficulties. The fact has to be faced that the whole of the reconstruction effort based on American aid and leadership is in danger of collapsing, in general because it is directed to restoring the pre-war order and in particular because the United States business community has resisted planning and price controls, social reform and the redistribution of wealth through taxation, and has instead gone in for inflation, massive rearmament and a drive for foreign markets and fields of investment. Congress and the Administration have been unable to check these tendencies, to cope with growing unemployment or to bring down tariffs.
As a result, there is a permanent export surplus and a chronic dollar famine in the world. On top of all that the United States policy of anti-Communist intervention and anti-Soviet power politics has led the world back to the balance of power and has started a new arms race, embodied in the Atlantic Pact, and has imposed an excessive arms burden on Western Europe as well as creating obstacles to trade with Eastern Europe and the Soviet Union.
I think it would be dangerous to rely on the United States to get us out of the mess into which, however good the intentions—and many of the intentions have been very good—they have been very large instrumental in landing Western Europe. If any one has any illusions I would urge them to consult the views of Mr. Snyder as recorded in the Economic Review of the "New York Herald Tribune" of 11 th July. Mr. Snyder is reported as being strongly opposed to the European view that what is wrong is the permanent export surplus of the United States and the failure to cope with unemployment in the United States. He denies that there is any
1036
recession and says the problem is solely one of productive efficiency in Western Europe, that competition and a freer world trade will also help Europe greatly and that in no circumstances will any more dollars be forthcoming from the United States than have already been appropriated.
This report further says:
"Europe has now been warned that the United States will not support, and, in fact, will use her enormous wealth to oppose any measures, national or international, which tend to restrict a growing business among all nations and all currency areas. For Great Britain, this positive renewal of American economic policy … presents the sobering possibility that the sterling area, as now set up, may have to be abolished."
It also means: the United States oppose bilateral trade treaties and bulk purchase; pressure for the devaluation of the £; restoration of private enterprise, or at least a full stop to any further measures of Socialisation; cuts in such matters as house building, expenditure on schools and hospitals, social services, food subsidies, and so on. On top of that, it means choking our trade with Eastern Europe and the Soviet Union, and the piling up of arms burdens.
It is no good the Government pleading that they had no alternative to landing us in this situation. I in no way regret that I voted for the Government on the American loan, because I believe there was no alternative at that time. But immediately that loan was acquired the Government should have gone all out to increase trade with Eastern Europe and to cultivate friendly relations with those countries. There was at that time still a vast amount of goodwill towards us. Instead, the Foreign Secretary pursued a policy based upon the same emotional reaction as that of the Leader of the Opposition, a policy of hostility.
Mr. Crossman: The hon. Member says that the Government were not wrong to negotiate the loan but should have followed it by increasing trade with Eastern Europe. Will he say how much production there was in 1945 and 1946 which was available for supplies to this country from Eastern Europe at that time? If there was no likelihood of such supply, will be say what was the good of expecting much trade?
Mr. Zilliacus: I am glad that the hon. Member has raised that point. At that

1037
time I had a purely informal talk with the Polish Minister of Industry—I think I may mention his office—and he said: "We have a planned economy and you have a planned economy. Your planners and our planners are perfectly able to sit down and work out, on an ascending scale over a period of years, what we could provide you with, by way of food and raw materials, in exchange for your manufactured goods. The first year it would be a trickle, the second year a stream and in the third and fourth years we should be able to produce very large quantities." We lost our chance of starting then and of getting in on the ground floor. Today we should be reaping benefits if we had done that.
The next step was, having put all our eggs into the basket of American capitalism, a good half of them were smashed. Controls were taken off, prices shot up and we lost nearly half the value of the loan. Hence the necessity for the Marshall plan. Here, for the second time, we missed our chance. I said at the time in the House of Commons what I think is obviously true that we should have insisted upon using the European Economic Commission of the United Nations as the executive organ of that plan. If we had done that we should not have lost Eastern Europe and the Soviet Union from the plan. The whole thing would have taken place on a far sounder foundation, or else we should have been faced with the fact that the rulers of the United States were not genuinely concerned with aiding Europe but were primarily concerned with splitting Europe and preparing Western Europe for war against Eastern Europe.
Having made this initial error and committed ourselves to the United States, it was logical in the period of American boom to go all out to step-up exports to the United States. The Government did in fact achieve a very considerable measure of success in that short-run policy. But it is folly to continue with that policy today, when the problem we are facing is that of an incipient American slump, with the consequent contraction of the American market and growing unwillingness on the part of the United States to buy from abroad. To show how ridiculous that policy is becoming in the present situation, I venture to refer to an interview which appeared in the "Manchester Guardian" of 25th June
1038
with the chief British trade adviser in the United States, Mr. Neville Blond. He was reported as follows:
"He felt optimistic about the chance of increasing British exports to the United States. Among British products which he singled out as selling well in America at competitive prices are: whisky, cocoa preparations, biscuits, chocolate, table waters, pickles and confectionery."
There is a Dutch legend about a little boy who stopped a leak in the dyke with his arm until the rescuers came. But I do pot believe that we are going to be saved by a glamorous Blond plugging the dollar gap with pickles and table waters, nor even with biscuits, cocoa preparations, chocolates and whisky.
The truth is that neither the Government nor the Opposition sees a way out of this situation, although the Government have a short-term policy, whereas the Opposition do not appear to have any policy at all. The vision of both of them on this issue is blinded by their obsession about one-third of humanity, and about the working class leadership of France and Italy, which has had the temerity to go through a social revolution and to adopt rough-and-ready methods. I am referring, of course, to the Communist leadership of those countries. The emotional reaction of the Government and of the Opposition leaders to those countries, with which we must do business if we are to get out of this mess, is one of fear and hatred. The Leader of the Opposition has frequently congratulated the Foreign Secretary, the Prime Minister and other Members of the Government, on sharing his emotional attitude to Communism. All I can say is that Members of the Government richly deserve the commendation of the Leader of the Opposition.
I do not mean it offensively, but it is sociologically true that there is a curious parallel between their attitude and that of the late Mr. Hitler and Mr. Goebbels. The Fascists held that all social unrest was due to conspiracies, plots and malevolent action by what they used to call Judeo-Marxists, who were obeying the orders of some mysterious centre acting in pursuance of the Protocols of the Elders of Zion. Today, the idea seems to be that all social unrest is due to Communist conspiracies, plots and agents acting under orders from the Cominform, which itself is presumably

1039
acting in pursuance of the Protocols of the Elders of the Kremlin. Every day I expect some honourable and excited Member to pop up and announce that he has seen strike leaders with snow on their boots. In that case I suppose they will have arrived on flying saucers.
The Opposition are at any rate consistent in these curious beliefs. They do not believe that anything very much is wrong with Capitalism, and so naturally anyone who believes in drastically changing the social order must have something wrong with him, and is probably a traitor to his country. I understand that view, which is consistent. It is equally consistent that those who start from those intellectual and moral premises believe as a remedy in more hairs of the dog that bit them last time. Their remedy' boils down to: Back to 1931 in home policy and, in foreign affairs, go all the way with the United States in making, Britain safe for the American investor and the world safe for private enterprise, in stepping up the arms race, in warming up the cold war and in creating the risk of a shooting war.
Unfortunately, the Government are caught in the dilemma of their own schizophrenia. For four years they have been pursuing a Tory foreign policy and a Socialist home policy. The result is that they have landed themselves in a situation, as the hon. Member for East Aberdeen (Mr. Boothby) pointed out last Thursday, in which they are trying Socialism at home and economic Liberalism abroad. As he says, we cannot have a planned Socialist economy at home and international competitive anarchy abroad.
More curious is that no one has been more eloquent than the Prime Minister about the impossibility of separating foreign affairs from domestic policy. He has a very strong passage on that in his book, "The Labour Party in Perspective" which has just been re-issued. He rejects the whole idea of national unity in foreign policy, and says that the Labour Party has no use for that idea. He concludes:
"There is a deep difference of opinion between the Labour Party and the capitalist parties on foreign as well as on home policies because the two cannot be separated. The foreign policy of the Government is the reflection of its internal policy."
1040
Even the election publication, "Labour Believes in Britain," says:
"Foreign affairs and domestic affairs cannot be separated."
That is true. That is why I agreed with the delegate at Blackpool whom I overheard saying, "Stafford is carrying the can for Ernie." We have had a "Winston and water" foreign policy for four years and now we are ending up with a "Coalition and Coca-Cola" home policy. That is why I am very glad that the Minister of Health recently warned against the dire consequences of any attempt to go back to the idea of a Coalition.
As the crisis develops the Government will have to go either to the Right or to the Left. To the Right means back to 1931 at home because we have already gone back to the balance of power and an arms race abroad and are utterly subservient to American foreign policy. Going to the Left means more Socialism at home and it means at long last a break with the Tories in foreign policy and an attempt to carry out the foreign policy on which the Labour Party was elected.
The road back to 1931 is doubly closed. In the first place, if it did not work in 1931 it cannot possibly work today when the rot has gone much further and capitalist society is in far worse case than it was even after the great slump. For instance, are we to compete with Italy, France, Western Germany and Belgium in lowering the standards of living of the workers and creating a pool of unemployment? If so, how can we explain the fact that these countries are much worse off in all these respects than we are but are no better off so far as their trade is concerned? Or are we to compete in de-valuation with those countries, who are several jumps ahead of us already in de-valuation and who will, I am sure, always beat us on this point?
Mr. W. Fletcher: The hon. Gentleman said that these countries were worse off economically than we are. Will he quote a few facts about France to substantiate that?
Mr. Zilliacus: Yes, Sir. The standard of living of the French workers has gone back to 1884. It is half what it was in 1938. That does not matter to the hon. Gentleman as much as it does to those of us on this side of the House.

1041
By these methods we would not win the American market but merely present the people in the United States and Canada with irresistible arguments for defending the standards of living of their people against competition by pauperised labour. That is the argument we should find starting up in those countries for taking additional measures of protection. All we should do would be to lose our home market by destroying the consuming power of our people, with no corresponding gain in international trade.
In the second place, the road back to 1931 is closed because the workers are no longer fatalistic and resigned about mass unemployment and cuts in their standard of living and social services. They have got it firmly into their heads that these things can be provided by government and should be provided by government, and if they cannot get them under capitalism, they will try to get them under socialism. The road back to 1931 is so heavily mined by the will to resist of the workers that any government that tries to tread that road will be blown up by the explosion of popular wrath. That has to be remembered by would-be realists in this field.
To get out of this mess, I agree with Sir George Schuster's recent letter in "The Times," that it
"is not possible to rely on the free play of the price system of private enterprise …. National plans and carefully concerted international arrangements are necessary."
I agree also with the somewhat unexpected article I found in the "Wall Street Journal" of 29th June, outlining what they call:
"A reasonable American policy in the cold war breathing space."
I believe that it also outlines a reasonable British policy. It said:
"On the one hand, abandon the idea of turning Western Europe into an armed camp and thereby permit America and Western Europe the chance to develop economic strength. On the other hand, trade and still more trade. Trade between Eastern and Western Europe (last year it was only 42 per cent. of pre-war); trade between the United States and Eastern Europe as well as Western Europe …. As a very practical matter, it ought to be realised that if trade between Eastern and Western Europe is not revived the Marshall Plan will be a failure and the United States will be expected to support Western Europe until the end of time"
1042
The importance of reviving and expanding trade with Eastern Europe in this situation can hardly be exaggerated. The industrial Western countries cannot live by taking in each other's washing; they must resume large-scale business with the agrarian economies of Eastern Europe, which are expanding, planned and slump proof economies.
The United Nations European Economic Survey for 1948 has drawn attention to the success of these countries and the extent to which they are advancing from bilateral to triangular agreements. We could enter into agreements with those countries which would be not only bilateral agreements but would eventually be regional multilateral agreements for the exchange of goods on an ascending scale. These are the lines on which trade could be expanded, and which we should look to for a way out of this crisis. At home it means a series of drastic measures, re-planning for maximum export to the sterling area and to the soft currency areas, and for fitting into these multilateral regional agreements as well as mutual tariff preference groups.
This might mean a revival of the Ministry of Production, more controls and measures of nationalisation, and the planning of exports as comprehensively and stringently as we plan imports today. It may mean unpleasant things such as reviving the Essential Works Order, a national wages policy, a capital levy, revision of compensation agreements. It would certainly mean slashing the arms budget and conscription in half, limiting and taxing profits, the workers sharing in the management of nationalised industries and economic planning. Wages would be the first charge on industry; the social services and the stability of prices the first charge on the Budget; full employment and maximum production the first responsibility of government; and "Forward to Socialism," not "Backward to capitalism," the first principle of action.
6.48 p.m.
Mr. Peter Thorneycroft: The hon. Member for Gateshead (Mr. Zilliacus) said that it was too late to restore the old order. I gather that his solution to our problems was to smash up what was left of our industrial and economic system as quickly as

1043
possible, and, I gathered from an intervention, rather quicker than the hon. Member for East Coventry (Mr. Cross-man) was really quite prepared for.
Mr. Crossman: Hear, hear.
Mr. Thorneycroft: The hon. Member for Gateshead took opportunities during his speech, so often taken by hon. Members opposite, of having a quick sneer at the United States. I gathered that he supported the loan and borrowed the money, but he now refers to Congress as belonging to the economic Stone Age. His criticism of the Government was not for borrowing the money from the United States but for not dishonouring all the terms upon which they had borrowed the money as quickly as possible after they had actually got it.
Mr. Harold Davies: That was the hon. Member for East Aberdeen (Mr. Boothby).
Mr. Thorneycroft: That suggestion was rather characteristic of the hon. Member for Gateshead.
Mr. Zilliacus rose—
Mr. Thorneycroft: I have not time to give way. The hon. Member has had 38 minutes and there are other hon. Members who wish to speak. Speaker after speaker from the benches opposite had this as their main theme; "It was not our slump but somebody else's." "Anybody's baby but our own" has been the main cry.
I have listened to almost every speech made in this Debate. I have heard the Americans blamed. Heaven knows, we are indebted to them for a lot, but the number of people who have analysed the American problem and offered to solve it, is nobody's business. The Belgians have been blamed. All the people from whom we have borrowed money have had their whole economy examined in detail on the Floor of the House. The bankers have been blamed. Bretton Woods has been blamed. It has been suggested that Lord Keynes ought to have done something about it in America, that they ought to fix their prices or that we ought to change the price of gold. A hundred and one different cures have been put forward.
Mr. Harold Davies: By the Leader of the Opposition.
Mr. Sydney Silverman: It was the hon. Member's Leader who said that.
Mr. Thorneycroft: I am saying what has been put forward in this Debate. None of these things has anything to do with the real problem that confronts us, which is that large sections of the population in this country have not the faintest idea that there is a crisis at all. That is the main problem which confronts us at present, and when I listened to, say, the hon. and gallant Member for North Portsmouth (Major Bruce) I begin to understand why. Surely it is time to drop this old stuff about which party will slash the social services or which party will introduce unemployment; surely, in this crisis and at this moment which I should have thought was grave enough, it is about time to cut some of that party clap-trap right out?
Mr. Follick: Have a Coalition.
Major Bruce: The hon. Gentleman's party raised it in the first instance, and I only referred to what was said by his hon. Friend the Member for Chippenham (Mr. Eccles).
Mr. Thorneycroft: The hon. and gallant Member made many references to the fact that if the Tories were returned, in his view they would introduce unemployment.
Mr. Shurmer: And so they would.
Mr. Thorneycroft: When my hon. and gallant Friend the Member for Antrim (Colonel Haughton) was speaking, the same thing was said about him. Hon. Members know well enough that unemployment may come in this country; quite likely it may, but it will come not through the act of any politician but through the relentless march of events. That is the real danger we are up against, and it is a deception on the British public to pretend that politicians in any party desire to see that sort of thing brought about. Hon. Members opposite talk about a slash in the social services. It may be that there will be a savage reduction in everybody's standard of living. It may well come, but it will

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not be the deliberate act of a political party that will bring that about. I know perfectly well that no hon. Member opposite in his heart believes that it would be the act of a political party. [An HON. MEMBER: "We lived through it."] We all know that it may come as an outcome of this crisis, but surely we may go—
Mr. S. Silverman: Do not talk such nonsense.
Mr. Thorneycroft: The hon. Member for Nelson and Colne (Mr. S. Silverman) interrupts a lot. Hon. Members on all sides ought to realise that the situation in recent months has changed.
Mr. Silverman: You have not.
Mr. Thorneycroft: We are not now debating who would or would not cut the food subsidies—
Mr. Silverman: Who did?
Earl Winterton:Go outside.
Hon. Members: Order.
Mr. Thorneycroft: If I might have the attention of the hon. Member for even a moment—
Mr. Wigg rose—
Mr. Nigel Birch: Sit down.
Mr. Wigg: Is it in Order, Mr. Speaker, for the noble Lord the Member for Horsham (Earl Winterton) to refer to the race of my hon. Friend the Member for Nelson and Colne (Mr. S. Silverman)? Surely that is a strange thing in the British House of Commons?
Mr. Speaker: I did not hear anything said.
Mr. Thorneycroft: If I might resume my argument, I was saying that the real gravity of the situation we have to face can be summed up in this way, that whereas a few weeks ago, people were debating whether there should be a cut in the food subsidies, we are now facing whether there should be a cut in food, which is a much more realistic thing to be talking about.
I would say this to the right hon. Gentleman the Foreign Secretary who is to reply, because he is well qualified to deal with this aspect of the matter. It
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seems to me that the measure of the failure of the Government to bring the realities of this situation home to the British people is to be found in the fact that we have a dock strike and a dollar balance problem at one and the same moment. If we are to solve this problem, if we are even to create the conditions in which we could solve it, we have to create those conditions here at home.
I will not make a long speech about the dock strike for we had a Debate about that the other day, but I want to say that I do not believe that it is Communists, or at any rate Communists alone, who are responsible for that strike. I believe that for 25 years men in that industry have been told that work does not matter, that it merely puts money into the pockets of the rich—
Mr. Harold Davies: Do not be so ignorant.
Mr. Thorneycroft: I believe they have been told that exports do not matter. [HON. MEMBERS: "Oh!"] Certainly. That is one of the things that have been said up and down the industrial valleys of South Wales and in my own home in the industrial North. Those statements are made, and if one goes on saying those things long enough to men, then one day they begin to believe them.
Mr. Harold Davies: Would the hon. Member give way one moment? Is he implying that up and down the valleys of South Wales the South Wales miner did not know the value of export coal?
Mr. Thorneycroft: If they did, it was not due to the Minister of Health, for it was he who claimed that exports were something which merely put money into the pockets of the rich, that it was a hobby which the wealthy played at. If one says those things long enough it leads men to believe them.
Let me take one other example. This is a difficult crisis to solve—almost an insoluble one—but most people would agree that some reduction in costs is one of the things which would help us towards creating the conditions necessary for a solution. How do hon. Members opposite do that? The railways at present are losing between £20 and £30 million, and what does the right hon. Gentleman the Minister of Transport do about it? He goes along to the Railway Clerks Association and says it does not matter

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that that great national monopoly is losing money because we can take the profits from the road section and make up the losses on the railways. Now what does Mr. Figgins do in those circumstances? Mr. Figgins does what a great many other people would do, charged with his job of seeing that the railwaymen get the best possible deal; he puts in a claim for 10s. a week all round. It is difficult to see that that is the right way at a moment of crisis to bring home matters to the men.
The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): Would the hon. Member mind my calling his attention to the fact that we would not have a transport system in London at all, if the buses had not paid for the tubes for years.
Mr. Thorneycroft: It may be that the right hon. Gentleman the Foreign Secretary and the Minister of Transport think that this is a perfectly good Socialist idea. All I have said is that at this moment, when our costs are vital, it seems an extraordinary way of trying to bring them down.
That brings me to the speech made last Thursday by the Chancellor of the Exchequer. It was a great occasion. The right hon. and learned Gentleman had an opportunity of making a speech which would bring home to everybody in this country, no matter in what jobs they work, just what we are really up against. I, for my part, expected him to do it. What did he say? He said that we would have to cut a little tobacco, but that we could go on smoking over the holiday, probably until the next Election came along. He said we would cut cotton but it would make no difference whatever to employment in Lancashire. He said that we would cut timber but, of course, houses would go up just the same. [HON. MEMBERS: "Hear, hear."] Hon. Members say, "Hear, hear," but how much did all this do—
Mr. Wyatt rose—
Mr. Thorneycroft: Let me finish my sentence. How much did that speech do to bring home the gravity of the problem with which the British people are faced?
Mr. Wyatt rose—
Mr. Thorneycroft: Just let me finish what I am saying. When they picked up their newspapers the next morning and read that they were to have more meat and an assured supply of lollipops, what did that do really to bring home to them that this country was right up again it?
Mr. Wyatt: Is the hon. Member's real complaint that the crisis is not yet severe enough for the Tories to be able to produce the panic conditions of 1931?
Mr. Thorneycroft: Quite plainly, I made a mistake in allowing the hon. Member to make an intervention of that character, which does not merit even an answer. He should know by this time that what faces the country is quite grave enough without any party wanting to make it worse. If that is the attitude of hon. Members opposite, things will be made worse instead of better. What we must do is to face the position here, in the House of Commons, and in the country. If we fail to do that, we are not likely to get very far. What the party opposite should have been saying is the truth: that they have sold every asset they could lay their hands upon and every gift which has come their way.
Mr. Shurmer: Who to?
Mr. Thorneycroft: They have borrowed all the money they possibly could. That is what they should have said, and they should have added that even so, they were not able to make both ends meet. Let me put it this way. The Socialist Party should have said to their supporters in the country, "Chums, you have had it. We have borrowed money from the neighbours. We have cashed in the savings certificates. Now we have sold the dining room furniture, and still we cannot made a do of it." That is the truth of the situation.
Mr. Shurmer: We have not robbed the Post Office savings yet.
Mr. Thorneycroft: The Chancellor and numerous other hon. Gentlemen opposite have said, "This is something which is due to a deep maladjustment of world affairs."
Mr. Harold Davies: So it is.
Mr. Thorneycroft: That is one of the most dishonest half-truths ever

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uttered. Of course there is a chronic maladjustment of world affairs. Most of us found that out a long time before we reached the present age and experience of the Chancellor of the Exchequer. We all know that the job of a statesman is to govern in spite of circumstances and not because of them. I will only say this about that chronic maladjustment of world affairs. Hon. Members opposite ought not to try to blame all this upon an American slump. I have spoken recently to quite a number of Americans who have arrived in this country. They had never heard of this slump until they got here.
Miss Jennie Lee rose—
Mr. Thorneycroft: One moment. The hon. Lady has made a speech about this and before she interrupts I should like to quote what the "Economist" had to say. It said this:
"The British Government's economic policy is so delicately balanced between contradicting rigidity that it cannot be made to work at all except at the height of a world boom, and then only with the aid of a dollar subsidy."
If that is true, and if a slight recession of prices in the United States is inevitably going to produce a crisis here, the sooner we have a change of Government the better.
Miss Lee: I hope the hon. Member realises that the four million unemployed in America are not able to afford to come here. Some of their friends, however, are over here, and one of the important things is that millions of Americans agree entirely with us on the remedies both for their situation and for ours.
Mr. Thorneycroft: I have no doubt that the hon. Lady sincerely believes what she says, but the hard fact is that employment in the United States is now at a peak level and production there is soaring at a tremendous speed. If there has been some recession in prices it really is not a matter for us to complain about.
There has been a great deal of argument about whether we ought to have a multilateral or a bilateral system of trading. My hon. Friend the Member for East Aberdeen (Mr. Boothby) spoke a few days ago in favour of the bilateral system. I believe very much in the merits of a multilateral system. What we shall have, probably, is some mixture of the two. But there is one system which
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could not conceivably work under any circumstances at all, and that is the system for which the Chancellor of the Exchequer has argued. We could not conceivably have a multilateral system, based on free competition in the markets of the world, at the very moment when the party opposite are pursuing a policy of eliminating competition at home. Of conditions outside this country I say also this: whether we have a multilateral system or a bilateral system, we shall not get out of our difficulties unless in the long run we make what the world wants and when the world wants it, and we produce at a price which the world is, prepared to pay. That ought to be the real lesson of this Debate, and it is the direction in which we ought to be directing our minds.
I want to say what I think is the fundamental factor of our problem here at home. Right hon. and hon. Gentlemen opposite have never troubled to find out the way in which this country managed to keep 40 or 50 million people living in these islands. Despite all their propaganda, 40 or 50 million people have lived here and, by and large, they have lived at a steadily rising standard of living. The conditions under which we lived and the way in which it was done were due to our great natural resources. We had a great coal industry—
Miss Lee: Cheap coal.
Mr. Thorneycroft: —and we had cheap transport. Above all, we had a free competitive system. We could seize an opportunity in every market of the world. If we lost one market we could jump into another. We were flexible. We used our resources quickly. I know it can be said that we paid—and, no doubt, we did pay—a very high price for that system—I am not denying that for a moment.
Mr. Shurmer: We had three million unemployed.
Mr. Thorneycroft: At one moment we had two million unemployed—
Mr. Shurmer: We had three million unemployed.
Mr. Thorneycroft: That was only under the hon. Gentleman's own Government. I hope hon. Members will respect my complete sincerity when I say that we

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paid a price for that. Of course, we did. Of course, the system could be improved. But if the party opposite set out to smash that system altogether, we shall not be able to keep 40 or 50 million people living here, certainly not at the standard of life which any hon. Member in this House will think of tolerating.
What hon. Members opposite fail to see is that this country's problem is utterly different to the problem which confronts the Soviet Union or the U.S.A. Those are large, different countries. They have much more within their compass. A Government in either of those two countries, if it so wished, could control the producer, the distributor and a great number of consumers. We cannot do that. We can control only a few of the producers. Everybody knows that we cannot control the markets of the world. Systems which are applicable in other countries, therefore, are wholly inapplicable here.
Mr. Crossman: The hon. Member has made a very important point about our not being able to control the markets of the world. Is it, therefore, quite fair for him to forget that it was a sudden recession in American stock prices of Malayan tin and rubber, of Indian jute and of Australian wool which caused four-fifths of the drain on our dollars? It was America, and not we, who were controlling those markets. Therefore, is it so unfair to say that the slump in America has something to do with the situation?
Mr. Thorneycroft: The hon. Member is bearing out exactly what I am saying.
Mr. Crossman: Good!
Mr. Thorneycroft: What I am saying is that this country, however much we would like it—however much the hon. Member would like it—cannot control all the markets of the world. Sometimes people in those markets are buying, and sometimes they are not. We cannot control them over here. Therefore, it really is no good trying to produce or to follow a system which demands, as part of itself, that we control both the producer and the consumer.
What should any Government be trying to do now to get us out of our difficulties? They should be trying to get
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dollars by every possible means, not because dollars are nice things to look at, but because with them we can buy the food and the raw materials which are vital to our system. That is what the Government should be doing. All party policy, all doctrinaire stuff, should be shelved in order to get the dollars. Dollars have to be earned, but what do the Government do to earn dollars? What are they doing to the insurance companies? I have an interest, but not a nationalisable one, in this industry. Everyone knows that our competitors in insurance used to say, "Do not insure with the British companies because we think they will be nationalised." We indignantly denied that, but now it is to be proved true. Can anyone suggest that that is a way of getting dollars? Quite plainly it is not. It may be good Socialism, but it has absolutely nothing to do with the survival of this country in a moment of really great crisis.
I am not a great economist, but I am convinced that one way of getting dollars is to encourage American investment in the sterling areas. But, if people want their money invested, they want a return on it, and taxation does undoubtedly affect the returns on investments. Above all, they do not want the investments taken over quite arbitrarily, at a moment's notice, by a Socialist Government. That is no inducement to American private interests to come over here. The hon. Member for Barnet (Dr. Taylor) said that that was all right, that it is only cement and sugar. But is it only cement and sugar? I did not know hon. Members were so timid, but thought they wished to go ahead with Socialism, and if I read aright the writings of the hon. Member for Cannock (Miss Lee) in the "Tribune," I think I am right.
Miss Lee: Yes, quite right.
Mr. Thorneycroft: How do hon. Members opposite expect Americans to invest dollars over here merely to have those industries taken over by the hon. Lady's friends? That seems to be the situation which confronts us; the country has not been brought up to the real situation which exists, and the Government in power are soft peddling its arguments and dare not talk of the realities with which we are faced, but take refuge in some talk of the maladjustment of world affairs. If I find myself sinking in the middle of

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some bog with the earth quaking about me, I might well talk of maladjustment and decide to take a better guide next time, or even not to come that way again, but I would try to get my feet on to something solid and to get out by my own efforts. That is what the Government have to do, and what the people have to do, and the first step towards that is to stop pulling down the economic machinery of this country and to start building it up again.
7.13 p.m.
Mr. Follick: I have listened to nearly all the speeches in this Debate and I do not think any has really touched on the root of the problem. The hon. Member for Monmouth (Mr. P. Thorneycroft) said it was insoluble.
Mr. P. Thorneycroft Mr. P. Thorneycroft indicated dissent.
Mr. Follick: I do not think it is insoluble. I think there is a solution to this problem. But, before going into that, I will analyse how we got into this trouble, because even the Chancellor's explanation of what we are going to do immediately will not get us out of the trouble. It may get us out of the immediate difficulty, but there will be troubles for some long time to come, unless we get at the root of the problem.
We must not forget that this country has been through two major wars. We went into the first major war four days after France and Russia, and remained in long after every other nation. We were the first in, in the Second World War, and the last out. Wars cost money. America came into the First World War in the third year only when she had been forced into it by the killing of American citizens. She came into the Second World War in the third year only after she had been attacked by Japan. There was no indication to the other Allies of America's intention, whether she would come in, or stop out of those wars. But, in the meantime she had taken advantage of the circumstances to invade other people's commercial markets and make herself terrifically prosperous in the markets which she had been able to attain because the other great industrial nations had been engaged in warlike operations.
In neither of the two wars did America go over to fully militarised industry. All
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the time in both wars she not only maintained her commercial industry, but also advanced her industry in what were formerly other people's markets. The trouble we are having at the moment is over the bilateral agreement with the Argentine and about our taking their market but we are in reality only recovering a market which we formerly held.
That is one reason for the terrific expansion of American industry. That expansion has been at the cost, and remains at the expense, of every other industrial nation in the world. While we were fighting, the Americans were improving their industrial status. When the Second World War broke out, on account of availability of skilled labour in America and her distance from bombing, we developed and implanted industries in America with our overseas investments to supply us with the necessary military equipment for carrying on the war. Those plants which we had to develop and support in America were the nucleus of the military expansion of America when she entered the war. By that expansion of industry, doubtless, we saved hundreds of thousands of American lives.
In one of Roosevelt's fireside talks, in which he spoke of a neighbour's house being on fire, I heard him say, "When your neighbour's house is on fire, you help to put it out by whatever means you can, and when the danger is past you hand back whatever equipment was given to extinguish the fire." What the world is suffering from today is really the death of Roosevelt. He was followed by a very capable man, but one who had not 14 years Presidential experience and 40 years of public life. Roosevelt understood exactly how to handle his people and he handled them rightly.
No matter how skillful Truman might have been, he had not this experience. The result was that almost immediately the war was over, a telegram was sent to the Prime Minister terminating Lend-Lease without any negotiation or previous warning. Had Roosevelt lived, that would never have happened. There would have been proper negotiations about the termination of Lend-Lease which might have extended over a long period. The result of the action taken was that we were

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immediately forced into a dollar difficulty. We had had no time to re-equip our industry. Our industry had been overworked and partially depleted; it had to change over from being a war-time industry to a peace-time industry.
With a great amount of difficulty we negotiated the American Loan. I voted against that loan. I could not help reflecting that if we were unable to pay the American debt which Baldwin settled on behalf of Bonar Law in 1923, how should we be able to pay, under much worse conditions, 33 million dollars a year from 1951? I could not see that it was possible. If one binds oneself financially to another nation without the hope of being able to repay that nation, then one binds oneself politically, and I did not want this nation to be bound politically to any other nation in the world.
Apart from that, I could see quite clearly that with an over-geared market—and the American market was over-geared and reaching beyond its capacity in 1945 and early in 1946—the throwing of £1,000 million of orders on to that market was bound to force up the price of every class of merchandise. As a result of the convertibility clause and the terrific rise in prices that took place after the granting of the American Loan, I very much doubt if we ever received the value of a quarter of that loan. We are due to start paying back the full loan in 1951.
Some six months elapsed between the application for and the granting of the loan. In that period not only had prices soared but soaring prices forced wages up. That made the loan of little worth to ourselves or to any one else in the world. That is really the cause of the difficulties through which we are now going, and Marshall Aid is only the American recognition that it was a very bad thing—not to use a worse word, it was an unbusinesslike thing—to stop Lend-Lease in the way they did without any negotiation. Marshall Aid is, in fact, only a continuation of Lend-Lease.
I said that I intended to offer a solution to this problem. I have given as briefly as I could an analysis of the cause of the trouble through which we are going. Not only are we going through this struggle, but despite the apparent
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prosperity of France and Italy, about which I know as much as anyone in the House, there is overhanging those countries the shadow of trouble probably worse than we are experiencing here. In Italy there are 120 Communist Members of Parliament in a gathering of, I think, 550. That is very dangerous, Italy being so close to Austria, where the Russians are still in occupation. To turn to France, I know quite well that I can obtain what I like there by paying for it. But how about the man who cannot pay, who cannot go into a first-class restaurant or stay in a first-class hotel? We have to see that he gets a decent meal also. Both in France and Italy some are getting far too much and some are getting far too little. For that reason there is a very threatening strike of the peasants in Italy. I have never before known the peasants in Italy to strike.
In considering the solution of this problem, one has to look a long way back. In 1900 our population was 42 million, including Ireland. Today it is more than 50 million without Ireland. In 1900 we were at the very apex of our prosperity. We had about 85 per cent. of the oceangoing shipping of the world either under our own or another flag. We transacted about 90 per cent. of the marine insurance of the world. We were bankers for the whole world. London was the sole centre for arbitrage and agiotage; the whole of both was worked from the City of London. In brokerage, whatever deal there was in the world of any importance had to come to London.
Yet the prosperity which this country enjoyed in 1900 could only sustain 42 million people, including Ireland. Today we are trying to sustain, feed and bring happiness to more than 50 million people. When, a few months ago in this House, I spoke about a 50 million population I was laughed at; the official figures today are more than 50 million. Between 1900 and 1914 emigration from this country proceeded at a rate of a quarter of a million a year; that is to say 3,500,000 people emigrated between 1900 and 1914. By this large-scale emigration we populated our Dominions; Canada, Australia and New Zealand were developed by our population.
We provided markets for our produce and our merchandise in those countries, and today if the figures are analysed it will

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be found that the only reliable markets which we have in the world are in our own Dominions overseas. I know that the Swedish market is important, but it is not reliable. I know that the Swiss market is important, but it is not reliable. When the Polish coal industry is in full production the Swedes will get their coal from Poland. When the Ruhr is working the Swiss will get their coal from there, and so will Italy. Those countries cannot be called reliable markets. Our Commonwealth provides reliable markets for us.
The only solution—there is no other—if we are to feed our people satisfactorily, house them properly, and give them every advantage in happiness and education that we can provide through the social services, is that we must reduce the number of our population to proportions for which we can provide. By this means we shall be populating our sister-nations of the Commonwealth with our own stock, and building up our great markets overseas. Of that we can be sure. If, over a long period of time—because this is not a short term project but it must be started soon—we bring down our population to about 35 million, we shall be able to feed that population with our own basic foods, and we shall be able to provide for the happiness and prosperity of that population, while at the same time we shall have built up in Australia, Canada, New Zealand and other parts of the Commonwealth and Empire markets which we do not at present possess.
What we are doing at present is to export all we can to import the bare necessities of life. We are even bringing in people from other countries to help us to export in order to bring in, not all the food we want, but as much food as we can provide; and they themselves are helping us to eat it. We are chasing something which is impossible to catch, and the more we chase it the less possibility we have of catching it. We should go back to the emigration system which we very wisely carried out in 1900 to 1914, and bring down our population to the size and level we could provide for, and build up sure markets with our sister-nations overseas.
While I was in South Africa recently I spoke to Field-Marshal Smuts and to Dr. Malan. We were rather perturbed here in this country. We were wondering whether it was the intention of Dr. Malan to come out of the Commonwealth. When I spoke about that to Field-Marshal Smuts
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he said that there was no intention whatever on the part of Dr. Malan to secede from the Commonwealth. When I saw Dr. Malan himself I had a long talk with him. He said, "No, I have no intention at all of trying to take the Union of South Africa out of the Commonwealth; but what I want is a different relationship between ourselves and Britain."
Sir Patrick Hannon: Would the hon. Member state if he discussed with Field-Marshal Smuts and the present leader of the Government in South Africa, how the dollar gap would be bridged in this country?
Mr. Follick: I was speaking to Dr. Malan, the Prime Minister of South Africa. He said he wanted a different—I just cannot think of the word he used—idea of the position between the countries. Instead of being a mother-country with Dominions, we should all be sister-nations. I told him that I thought that was right. I think we should alter the position of mother-country and daughter-nations, and become sister-nations. I spoke to him of this idea I had of immigration and emigration. Our ideas may be rather different on that point, but there is no reason for them to be different with regard to Australia, New Zealand and Canada.
The historical transition is: You start your development with a settlement; you become a colony; the colony develops into a dominion which later becomes a commonwealth. The final goal, which never has yet arisen in the world, is that of the sister nation. If we could bring about that final situation, which has never yet been attained by any great colonising nation, the Romans, the Spaniards or the Portuguese, of setting up the British Commonwealth of Sister Nations and bringing them together as one unit, we should be the greatest entity in the world with the greatest markets in the world. We should be in the same position as the Soviet Union with her republics which form themselves into one entity, or the United States with the different States all forming one block. If we did that we should be as powerful as either of the other great units, not only from a military point of view but from every other point of view.
We have to bind the whole thing together in one last effort, because if we

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do not, there will be no survival for us. There is hardly any hope of survival for Australia with the approaching difficulties in the East. Australia had enough to fear from Japan alone; goodness only knows what she will have to fear from that terrific Power which will shortly be threatening her existence.
If we adopted this course we should get out of our difficulties. It is our only solution. The only possibility of survival is to spread our population as we used to do over the rest of the Empire and make one large consolidated British Commonwealth. Let there be no difference between the man who goes from London to Edinburgh or from London to Sydney or from Sydney to any other part of the Commonwealth. Let it be one Commonwealth for all the British. In that way we would have a splendid future, and we could be useful to the rest of civilisation as we were in the 19th century. In that way sterling would come back into its own and the dollar gap would only remain as a nightmare of the past.
7.36 p.m.
Sir Patrick Hannon: I find myself in complete agreement with the hon. Member for Loughborough (Mr. Follick) in the reference he made to the co-ordination of our Commonwealth and its constituent parts in giving us a brighter outlook for the future, both with regard to the spread of population and the feeding of our people in these Islands. Let me say at once how glad I was when two years ago the Secretary of State for Foreign Affairs made a remarkable speech on the Empire. I thought at that time that that policy would be developed from day to day; and that the party opposite, following the lead of the Foreign Secretary, would take a much more intensified interest in the economic situation of the Empire, and the political situation as well.
To a very limited extent indeed have hon. Members opposite indicated any desire to bring the Commonwealth and the constituent parts more closely together, and only recently was any real interest taken in the development of the Colonial Empire. I wish that the Foreign Secretary when he made that speech could have induced his party to
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concentrate more on that possibility, which would have had a beneficial result both to this country and to the world.
I join with my hon. and gallant Friend the Member for Antrim (Colonel Haughton) in censuring speeches made in the country by Ministers in which they charge the Tory Party with every crime under the sun in relation to the economic situation in which this country now finds itself. At a public function the other day I paid my modest tribute to the efficiency, integrity and zeal of the President of the Board of Trade. I said what an admirable Minister he was, and how enthusiastic he was in his intention to discharge the duties of the great office which he held. To my astonishment my hon. and gallant Friend the Member for Antrim called attention this afternoon to a speech by the President of the Board of Trade in which he accused the Tory Party of being responsible for the economic situation of the country. We cannot afford to mix politics and economics in that reckless way and when I see him, I shall apologise to him for paying the tribute which I paid the other day.
I should like to put two questions to the Economic Secretary in the most forcible terms that I can command. Does he seriously say that 40 per cent. of our national income must continue to be paid into the Exchequer without any fixed period being stated when that monumental contribution can be reduced? Does he contend that the two million people employed in the national and municipal services, cannot be reduced substantially if a real examination of the work they perform is carried out?
I cannot imagine that the huge body of public servants—one in every nine of the population—could not be reduced so that some of them could be usefully employed in other work. There are supernumaries in various departments. I am an old civil servant and I know that in many Departments the Civil Service is overloaded and that it is not giving the quality of service which the nation has a right to expect. I suggest that, at the instance of the Treasury, there should be an examination of the work of every Department with the object of reducing the present volume of national expenditure. If the Treasury were to say that public expenditure should be reduced by,

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say, 10 per cent., and if they informed the various public departments of the reductions they must make in their respective departmental administrations, that would give great satisfaction to the country.
If the Chancellor had told the House that instead of cutting imports by £100 million, he intended to cut public expenditure by that amount, that would have given tremendous stimulus to industrial activity. There is no use in Ministers making exhortations to people to work more and to managements to increase their efficiency. What is really necessary is that we should make the burden upon industrial production as light as possible. With present taxation and all the retrictions and limitations placed upon industry, the struggle of management and workers to maintain efficient production at competitive prices in hard currency markets is becoming more and more impossible.
I happen to have been the President of the National Union of Manufacturers. There are nearly 7,000 manufacturers in the union with which I have the honour to be associated. All these manufacturers work in their respective ways to expand our export trade, to increase production and to make their contribution to the vitalising of our national economy. They consider that something more than mere speeches and appeals to patriotism, chivalry and sense of responsibility, ought to take place.
There ought to be more leadership from the Government Front Bench. An effort should be made to enable people to appreciate the position, to cut costs and increase output and, at the same time, achieve a competitive level which will enable us to enter more fully the markets of Canada and the United States. Nobody knows better than the Economic Secretary to the Treasury how difficult it is to deal with the United States and Canadian markets. The difficulties are increasing from day to day. I say to him that, while there are many difficulties, our national economy has reached a limit, and the burden op industry is one which cannot be carried.
I am very pleased that the President of the Board of Trade has joined us. Before he made his appearance I had been saying pleasant things about him. I say to him in particular that there are
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many directions in which he can cut national expenditure. He can help by a more active and intensified examination of local expenditure in our municipal and local authorities. Great economies could be brought about. If from the Front Bench we were told that active steps would be taken by the Treasury and the various Ministers responsible to cut expenditure and to save the country what I am bound to assert is a volume of waste in many Government Departments, we should feel that the Government were rendering a real service and giving a lead which would increase our competitive power in hard currency areas.
Today the small manufacturer is faced with many restrictions and difficulties at a time when he is making a hard fight to discharge his obligations in response to Ministerial appeals to increase production. Let us not try to cripple him. The Chancellor says that he cannot reduce taxation. My right hon. Friend the Member for Warwick and Learning-ton (Mr. Eden) referred to the retort he gave that taxation on profits did not interfere with the costs of production. Hon. Members opposite ought to tell that to any manufacturer, and they would see what his response would be. He would say that a substantial reduction of taxation on reserves would enable him to expand his activities, to reduce his costs and to strengthen himself to meet competition in foreign markets.
No one appreciates more than I do the work done by the President of the Board of Trade. I want to say to him, quietly between ourselves, "Do not mix politics with the immense economic services you are rendering to the country." It is no use going to meetings and saying that the wicked Tories brought about this crisis. That kind of comment always invites a retort. The wicked Tories could say some very nasty things about hon. Gentlemen opposite in relation to their contribution to the economic situation. I am glad to have had the opportunity of saying a few nice words to the President of the Board of Trade. I invite him to take an active interest in the reduction of public expenditure. The National Union of Manufacturers have published a brochure which I shall send him. I shall underline certain comments they make in which they outline the way in which industry can recover and the assist-

1063
ance which can be given by His Majesty's Government. I shall make him a present of it, and I hope it will give him ideas which, in his practical-minded way, he will introduce into the administration of his Department, and thus substantially help our manufacturing enterprises.
7.48 p.m.
Mr. George Wigg: I hope the Iron. Member for Moseley (Sir P. Hannon) will not be too hasty in withdrawing the compliments he paid to my right hon. Friend the President of the Board of Trade. Perhaps he does not realise it, but my right hon. Friend certainly did not charge the Conservative Party with responsibility for the present difficulties. The hon. Gentleman must have misunderstood his hon. and gallant Friend the Member for Antrim (Colonel Haughton) who, quite properly, was quoting from the speech of the President of the Board of Trade in which he said that hon. Members on this side of the House often said that the Conservative Party had not got a policy. My right hon. Friend described such statements as dangerous illusions, because they have a policy—that of deliberately creating unemployment. I have never doubted that. I have said repeatedly since 1945 that hon. Gentlemen on this side of the House who say that the Conservatives have not got a policy misunderstand completely the nature of politics in this country.
The hon. Member for Moseley said that the President of the Board of Trade should not mix politics with business. If that is good advice for the President of the Board of Trade and Members of the Government, it is perhaps equally good advice for business men. Like the hon. Gentleman, I speak for a Midland constituency and, like him, I have many good friends there, some of whom are Members of the Conservative Party. They sent me copies of Conservative Party publications, some of which are confidential. For example, I am well aware of the methods employed by the friends of the hon. Member for Moseley in raising funds. It is as near political blackmail as anything can be. I have photostatic copies which I can show to any hon. Member.
A book is sent round to manufacturers, and all sub-contractors are invited to place their names in the book, alongside
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an adequate subscription. If they do not do so, a peremptory note is sent them drawing their attention to the fact. I have got photostatic copies of a subscription list to the Conservative Party in the West Midlands which has been extorted—that is the right word—from business people, irrespective of their political views. They have got to pay, even though many of them, being intelligent men, are members of the Labour Party. They have got to pay; otherwise, they know that their businesses must suffer.
Sir P. Hannon: I apologise for interrupting the hon. Gentleman, but I hope he is not misrepresenting the action taken by certain industrial leaders who desire to promote research in their respective industries and who collect funds for that purpose.
Mr. Wigg: No, I am not making any mistake about research. The photostats of the little book which I have bears the name and address of Conservative Party headquarters, and it contains the names of the firms and their subscriptions. The hon. Member for Moseley must not be disingenuous, because he knows of the circular which was sent out and to which I refer.
I interrupted the hon. and gallant Gentleman the junior Member for Antrim (Colonel Haughton) at the end of his speech, and suggested that Sir Francis Joseph and Sir Hugh Chance, who are well known to us in the Midlands, sent round a confidential circular urging firms to pay. I think the suggestion was that a fraction in the pound, perhaps a few coppers in the pound, on their salaries and wages bills, should be given as a subscription to the party opposite—and they were quite frank about it—in order to kick this Government out of office. Let us have no mistake about it. These boys are in business for what they can get out of it, and I say to the hon. Gentleman—
Sir P. Hannon: May I interrupt the hon. and gallant Gentleman again? Surely the collection of funds for party purposes is the right of every political party in this country, and if they do so there is nothing particularly wrong about it?
Mr. Wigg: I have not the least objection to the party opposite doing so if they will be honest and say, "We stand

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for unemployment; we will cut the social services." I object to them adopting the methods of conspiracy to bring that about. Great sums are extorted by blackmail from firms who have got to pay or go out of business. Furthermore, the only point about Sir Francis Joseph—
Sir P. Hannon: I think it should not go out from this House that we are casting reflections about leading industrialists in the West Midlands, without my making a protest.
Mr. Wigg: I am not casting reflections on industrialists; I am talking about the methods of the Conservative Party, and I am saying that they are making industrialists subscribe to that policy and making them pay, irrespective of their political views. I am merely pointing out to the hon. Gentleman that he cannot really object when some of us say that we doubt if Sir Francis Joseph is wildly enthusiastic in subscribing to these funds in order to maintain the social services for the workers. Nobody, and certainly not my hon. Friend the Member for Stoke (Mr. Ellis Smith) believes such a thing.
But let me go further. We have heard from the hon. Member for Monmouth (Mr. P. Thorneycroft) a great deal about political clap-trap. My introduction to politics when I came out of the Army was in the by-election when the hon. Member for Monmouth was elected for Stafford. My hon. Friend the Member for Leek (Mr. Harold Davies) also helped in that by-election. We did our best to try to keep the hon. Member out, and we were fighting on grave issues—on the question of the methods to be taken to keep this country out of war. I will not weary the House with the details of that by-election, but before the hon. Gentleman who now sits for Monmouth comes to this House to talk about political clap-trap, he should take another look at his own methods and his own speeches in that by-election, because they had little or nothing at all to do with politics.
Let me now come back to the hon. Member for Moseley and his friends of the Conservative Party, who so easily talk about political clap-trap. I have in my hands a copy of "Birmingham Illustrated" published just before last Christmas by the Tory Party. It is entitled, "We're dreaming of a Bright Christmas," and it describes presumably
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the kind of Christmas which the workers of this country are to get if they vote for the Tory Party:
"Turkeys, Ready for Oven, 8s. 9d. each."
"Just like the old Christmases we knew in the good old (pre-Socialist) days!"
"Christmas spirit in abundance at only 12s. 6d. a bottle."
"Hams galore at 1s. 2d. per lb."
"Mixed nuts at 6d. per lb."
This publication was scattered widely over the Midlands with the intention no doubt of showing what the Tories would do if only they got the chance. If anybody asks me to deny that that is possible, I do not deny it. I say, Yes, you vote for the Tory Party and you can have all that in three months. The Tories would abolish all queues except one and the price you will pay will be two million unemployed." All over Europe the shops are full, but the queues of the unemployed are very long. Therefore, I hope the hon. Member for Moseley and the hon. and gallant Member for Antrim will agree that we have every right to say to the Conservative Party that, if it told the truth, it certainly stands for one thing, and that is the creation of the conditions which make possible the return of the queues outside the labour exchanges.
Sir P. Hannon: I am very much obliged to the hon. and gallant Gentleman for giving way again. I only want to say that, since he has mentioned their names, Sir Francis Joseph and Sir Hugh Chance are both gentlemen of the highest personal character in the Midlands, and, in collecting funds for their party, they were acting in an entirely legitimate way.
Mr. Wigg: I do not doubt that for a moment, and I am making no personal reflections on them. All I am saying is that they are collecting money for the Conservative Party and not for the good of the working classes.
Again, may I return to the question of political clap-trap. I have listened to almost every speech in the Debate, and I listened with very great interest to the speech of the right hon. Member for Aldershot (Mr. Lyttelton) who criticised the Chancellor's policy, and used as one of his arguments that we must cut down some of the expenditure on Ministerial limousines. That is the contribution of one of the bright boys of the Conservative Party to the deliberations of this House. I want to say a word or two

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about limousines, because there was another occasion when the same subject was raised. On the 7th March, the hon. Member for Altrincham and Sale (Mr. Errol]) asked a question about the use of Government cars, on which I asked a supplementary:
"Can my hon. Friend say how many cars were used by the Leader of the Opposition and how much expense was incurred during the 1945 General Election?"—[OFFICIAL REPORT, 7th March, 1949; Vol. 462, c. 783.]
I only draw the attention of the House to this subject of limousines because I want to give the right hon. Member for Aldershot and the Deputy Leader of the Opposition a little advice and it is this. Those who go around the country in trains at election times paid for at the public expense should be very careful before attacking Members of the Government for using cars—[AN HON. MEMBER: "Who had the trains?"]—I will leave that to the Conservative Party.
Now may I turn to the subject of dollar shortages? Listening to the hon. Member for Monmouth, to the right hon. Member for Aldershot and to the hon. Member for East Aberdeen, one would suppose that the economic difficulties of this country were the creation of the present Government. Indeed, the hon. Member for East Aberdeen helped his country's cause by calling us "spongers," and the right hon. Member for Aldershot said that Socialism will not work.
Mr. H. Fraser: Hear, hear.
Mr. Wigg: I am glad to have the approbation of the hon. Member. They think that Socialism will not work, and that the dollar shortage is due to this Government. I take it that is the view of the hon. Member for Stone? No reply. One can always find something if one goes to the works and speeches of the right hon. Member for Woodford. I am one of those who have a considerable admiration for the Leader of the Opposition, and I read his works and buy his works. I only wish that all members of the Tory Party would read his works, and particularly the first volume of his "History of the War," because I believe that no intelligent man of integrity can read that book and still remain a member of the Conservative Party, so damning is their record in the years between the wars.
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What does the right hon. Member for Woodford say about the dollar crisis in that book? If we turn to page 491, we find that he says that we entered the war with £4,500 million in dollars or gold, or in securities, and that by November, 1940, we had reached the point where, unless something were done, we might have had to give in because of the dollar shortage. We had disposed of all the marketable securities we possessed; we had got rid of all our gold reserves and the additional gold that we received from South Africa. In his book the right hon. Gentleman reprints a letter he wrote to the President of the United States putting the facts before him and making it plain that, from an economic point of view, this country was flat on its back, and that surrender was staring us in the face. Therefore, for hon. Members opposite to blame the Government for the dollar shortage is nothing more than bare-faced hypocrisy or—I am charitable—the most flagrant stupidity. That is what I always think about the Tory—that he is stupid and not a knave.
It is very important that the fact of our position at that time should be driven home. What a great thing it would be if hon. Members opposite would only tell their constituents that the dollar position in this country arises directly from the fact that for 16 months we fought on with no hope of relief, and that it was only the great generosity and the great wisdom of the President of the United States which enabled us to carry on. I want to pursue this theme a little further because it seems to me to be very important and to go right to the heart of our difficulties.
I was greatly impressed by some correspondence which appeared in "The Times" in August, 1947. I do not wish to steal another man's ideas without acknowledgement, and therefore I will give the name of the writer of the letter. He was a Mr. J. L. Gibson who, I have also discovered, wrote other very able letters on the dollar shortage in August, 1945. He pointed out that it was a principle laid down by Mr. Roosevelt that the economic burden of the war should be borne equally by all countries. He quoted Mr. Roosevelt as saying
"that each country should devote roughly the same fraction of its national productions to war

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so that the financial burden of war is distributed equally among the United Nations in accordance with their ability to pay."
Mr. Gibson argued on the basis of figures which he claimed to be authentic, but which I have been unable to check, that this country had borne a very much greater burden than it should have done. He assessed the total income for the United Kingdom for 1939–45 at £47,719 million. He pointed out that our due, on the basis of the Roosevelt formula, was £18,088 million, but that in actual fact our contribution to the war had been £30,000 million, that is to say, we have paid, on the basis of the Roosevelt formula, £12,000 million more than we should have done. On the other hand, the United States, whose total income was £216,600 million, and whose due was £82,103 million, only paid £70,000 million, roughly about the same less than we had in fact paid more.
Mr. Gibson worked it out not only for the United Kingdom, but for Russia, Canada, New Zealand, Australia and the United States. He showed that the Soviet Union, Canada and New Zealand had broken square, and that Australia had paid about £500 million less than she should. It cannot be too often said that this country bled itself white in two wars. It bled itself white of its young men in the first world war, but thank goodness we were spared that tragedy in the second world war. Nevertheless it must not be forgotten that in the last war we broke our economic back.
Nothing that the right hon. Member for Woodford can do can ever wipe out the debt of gratitude I feel towards him for his leadership during the war, and it causes me great pain to see him descend from the heights of a great national leader—speaking, as he did, for every man, woman and child who loved their country—to the depths of the worst form of political partisanship, and to see his name dragged in the mud in order that he can return to power. The harm he is doing is, I am afraid, going to outlive the great service he rendered during the war because he is managing to persuade a considerable section in the United States that we are, in fact, spongers.
How maddening it must be for one of the four million unemployed men in the United States, whose family is in need of the basic things of life, to read the
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statement of the right hon. Gentleman, perhaps reprinted in the Middle or Far West, and perhaps even distorted, to the effect that we are a nation of spongers, and that that man would have a higher standard of life if things were not exported to this country. The truth is, of course, the very opposite. The United States with its vast economic potential can never hope to have a stabilised economy unless it adopts the same measures as we ourselves have adopted.
There is another aspect to which I think some attention should be paid. I was very glad when my hon. Friend the Member for East Coventry (Mr. Cross-man) interrupted the hon. Member for Monmouth to point out that the basis of the present short-term difficulties arises from a cessation of buying of colonial primary products by the United States. What is the good of sending our young men out to Malaya to maintain law and order there if the United States, as the result of its economic policy, is in fact creating more havoc? We are acting as a world policeman in a situation which is bound, ultimately, to get out of control. There has got to be a balanced long-term approach to the economic problem disposing of primary products such as the tin and rubber of Malaya, and the cocoa of West Africa, unless those countries are to descend to chaos.
I heard the speech of the hon. Member for Chippenham (Mr. Eccles). If that is the doctrine of the Conservative Party, if that is the doctrine on which they are to fight the election, heaven help this country if they come to power, because, in fact, what he was saying was, "Each for himself and the devil take the hindmost." This country cannot live by itself alone and, in the ultimate, I do not believe any country in the world can live by itself alone. It took us a Second World War to learn the simple truth that peace is indivisible. I pray it will not take a third world war, and that we shall learn by easier ways, that there is another truth, that no country can prosper at the expense of the misery of another.
8.11 p.m.
Mr. Pickthorn: I have at least the strongest reasons for endeavouring to be short because I can hardly remember the time when I last had something to eat. I know we are

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on the Adjournment, and I hope I may be forgiven if I try to return to the topic which I thought was meant to be our main topic in this Debate—that is to say, the economic situation and what, if anything, can be done about it—incompetent as I very sincerely feel for that task. I am very glad, indeed, very gratified—although, of course, not flattered, because I am sure it is accidental—that the Chancellor of the Exchequer should be here at this moment and I will try to save time by not making what I think could be a continuous argument but rather by making comments and asking questions on two or three of his sentences and one or two sentences of the President of the Board of Trade.
When I first knew about the pound sterling I did not know much about it and I did not often see one, but then it was a lump of gold, as you remember, Sir, in the now fairly distant past, and then I thought I understood the first steps in the theory and the practice of international exchange. When it ceased to be a lump of gold I rather gave up hope of understanding. That did not altogether shake my confidence in my own intellectual capacity for other tasks, because I observed that almost all those who did pose or were taken as experts very frequently failed to make themselves understood to each other and quite often failed to understand themselves.
But one thing I think is fairly clear about the pound that is not a gold pound—that its value for exchange purposes depends almost more upon what people think about it than actually upon what it is, if anything. It has been said today, I have forgotten by which hon. Member from the other side of the House, that if you look at the internal buying capacity of a pound, it is worth here a good deal more than four dollars is worth in New York, and he said that that really was what ought to settle the exchange relations between the two. But it is not a question of "ought" in that kind of quasi moral sense, and though, of course, no doubt the internal buying-power of the pound has something to say to the question of what it is worth, not only here but elsewhere, still more important is what people think about it, especially, outside, what foreigners think.
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If I may, I want to ask the Chancellor of the Exchequer some questions. It is possible that there might be time for somebody to answer these questions later on. He began by saying that he wanted to be factual and objective and then he told us that production was now up over 1938 by about 25 per cent. and productivity was up by about 10 per cent. Surely the most important thing this Debate can do, if it can do anything, is to try to get into the heads of people in our country and elsewhere what the most authorised persons regard as the facts, and what they think about the facts. I fully admit that I am not very competent in this statistical technique, but surely most people everywhere do not know, and the more people are told the better, what production means in that sense and what productivity means in that sense, the more the better, and it would be a good thing to get the definitions in HANSARD.
I think I know what production means, but does productivity mean production divided by the number of man-hours or by the total labour force, or what does it mean? In any case, is it fair for the right hon. and learned Gentleman in charge of our financial and economic affairs to use these figures in comparison with 1938 when he knows perfectly well that there is a considerable element of guess-work in these figures and that the people who invented and developed them during the last five or six years have always said that these figures could not be used for comparison with the years before they were started, the years before the war. That has always been said by the experts who invented this calculus and if, now, something is known which makes a comparison possible and useful in spite of what they have always said, then we should be told; and if something new is not known which makes that comparison possible, then the use of words like "factual and objective" in the exordium of the right hon. and learned Gentleman's speech seems to me to be seriously misleading.
The second point to which I come in his speech is where he talked about this trouble not being new. He had a horrible phrase about "high-lighting a deep-seated maladjustment." Let no hon. Member think that that kind of literary horror is irrelevant to the question of whether the thinking involved should be accepted or not. There has never been a horse with a grotesquely illiterate name that has won

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the Derby. He told us that we must not think that that maladjustment has happened just now, but that it was the result of decades of unfavourable balance with the United States and Canada. He and the President of the Board of Trade, afterwards, told us how it was that this unfavourable balance in the past did not seem to matter, apparently. But now, they said, it does matter. They explained why that was so. The gap was made up in the past with invisible earnings, colonial materials, and with dividends on capital, especially risk capital, sent abroad. I think both right hon. Gentlemen took that line and told us that was how it happened. One, indeed, talked about these things being the props of the multilateral system and about these props having now been knocked away.
But, really, right hon. Gentlemen opposite should not talk on these topics without first saying a good deal by way of confession; because who knocked these props away? Has not the whole campaign which has brought these men who are now the masters to their greatness, has not the whole of that campaign been built upon condemning the habit of foreign investing, of condemning the habit of teaching Malays and Tamils to grow rubber and then seeking a profit by sending the rubber to New York or Houston, Texas, or wherever it may be? Has not that been regularly condemned as something both morally wicked and economically, in the long run, likely to do more harm than good?
How can people now begin to have confidence in a managed pound sterling the props of which have not only been knocked away by what almost seems to be regarded as the perversity of Mr. Roosevelt in dying when right hon. Gentlemen opposite were still finding him useful—[Interruption.] Certainly that has been the burden of more than one speech this afternoon, that if only he could have lived a little longer everything would have been all right. Had not hon. Members heard about mortality before they undertook to make everything on earth come right in 14 days?
The President of the Board of Trade (Mr. Harold Wilson): Since the hon. Member does not understand English I shall put it into Latin next time. No doubt he will understand that. The facts simply' are that our raw materials no longer earn
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the same proportion as they did before the war and secondly, there was the decline of investments. There was no reference in that passage or any other part of my speech to Mr. Roosevelt or anything to do with him.
Mr. Pickthorn: But, really, the right hon. Gentleman, who kindly looks in on our Debates now and then, must not suppose—[Interruption.] Wait a minute.
Mr. Harold Davies: On a point of Order. Is there any protection against this misrepresentation about the attendance of Ministers, that comes constantly from the other side of the House?
Mr. Deputy-Speaker (Major Milner): The House is well able to judge of the accuracy or otherwise of what the hon. Gentleman says.
Mr. Pickthorn: What I said was, no doubt, rather sharp, and may have been too sharp. If it was too sharp, I apologise to hon. and right hon. Gentlemen. However, I should not have said what I did say if the right hon. and learned Gentleman had not presumed to assume that something which I said had been said could not have been said, because he had not said it. I quoted the right hon. and learned Gentleman with complete accuracy, but other speakers on that side of the House did use the argument about Mr. Roosevelt.
Mr. Kenneth Lindsay: Leave him out of it, for goodness sake.
Mr. Pickthorn: Why should I? Death is a thing that happens to everyone, and while there is death there is hope. There is no disrespect to any man in saying that he is dead.
Mr. Benn Levy: It is a question of taste, but the hon. Member does not understand that.
Mr. Pickthorn: The next question I would put is the question of the figures of the deficit during the first six months of this year—the gold deficit of £239 million. The Economic Survey guessed it would be £195 million. In the first quarter it was £82 million; in the second £157 million. That is to say, at the moment of the Economic Survey the rate of loss was doubling. Well, that is very nearly arithmetically accurate. And the

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rate was increasing, according to speeches from the other side in this Debate, because of the lack of confidence more than because of any true trading change. That seems to me to throw a very odd light upon the whole business of planning. An extremely distinguished economist of my acquaintance has taken the trouble to compare the Economic Surveys of each of the last four years with Old Moore's Almanac and he assures me that each year Old Moore's Almanac has been—not very much, but notably—more accurate than the Economic Survey; which is highly creditable to Old Moore, when hon. Gentlemen remember that he comes out six months before the Economic Survey.
But now we are told it is no good remaking the programme of imports until we are in a position to make a reasonable judgment of the position for a year ahead. What position is it that we have to judge a year ahead before we can remake our programme? Presumably we have got to be able to judge the course of prices a year ahead, of employment, and of activity, especially in the United States. When are we going to be able to do these things without which, we are told by the Chancellor of the Exchequer, it is no use trying to remake our import programme?
I thought that when it came to the question of devaluation the right hon. and learned Gentleman was really less than fair to himself and to the House. He read out a sentence about devaluation not being mentioned, and said:
"And that, Mr. Speaker, I hope is that"—[OFFICIAL REPORT, 14th July, 1949; Vol. 467, c. 688.]
There has really been—if I may use Latin, as the right hon. Gentleman just now threatened to—there has been no such "Sic volo, sic jubeo"—saving your presence, Mr. Deputy-Speaker, and at the risk of blasphemy—almost since God said "Let there be light." Where is the good of saying that because three or four eminent gentlemen on a particular occasion did not mention devaluation—"that, I hope, is that"?
We have got devaluation. When buyers who have pounds sterling are told or influenced or commanded by the Government to go to markets where things are dearer than they are elsewhere, when sellers are directed or compelled by the
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Government to go into markets to get less money than they could get elsewhere—when these things are done, when there are 32 different pounds sterling—the right hon. Gentleman will correct me if I am misleading the House, but I am told by experts that there are, in fact, at this moment 32 different pounds sterling, which may be used on this condition or that, 32 different categories—it may be exaggeration, I do not know—
Mr. H. Wilson: I do not know how many black market rates the hon. Gentleman has knowledge of, but I must correct his previous statement, that exporters have been compelled or directed to export to particular markets. We are using no such compulsion or direction.
Mr. Pickthorn: I shall return to that matter in a minute, if I may; because if it is so, I must have wholly misunderstood the right hon. and learned Gentleman's speech on Thursday: I must wholly have misunderstood him. We were told discrimination was to be used, that "we should not hesitate" to use discrimination. One of the things I am coming to in a minute is, to ask if the House may be told what is the technical machinery by which this is being done. That, at least, we have the constitutional right and duty to demand to know. I say that so long as pounds may not be spent by British subjects as those British subjects choose, but as directed by the Government, so long there is devaluation, and, what is more, a kind of devaluation which necessarily raises the prices of our imports and lowers the value of our exports. I say to right hon. Gentlemen opposite that I do not believe they will find an English economist who is not a practising member of the Socialist Party to deny that, and I do not believe they will find any foreign economist at all who will deny that.
Mr. Stokes: It is all the fault of the International Monetary Fund.
Mr. Pickthorn: I could not welcome that more. It is always somebody else's fault, and generally some system's fault. But the fact is there.
I apologise for putting my question disjointedly, and for not coming to any peroration. The last question I have to ask is in respect of the President of the Board of Trade. He said we should not

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hesitate to discriminate openly in favour of firms which can increase their exports to the dollar areas and elsewhere. He said the same thing the other way round, that we must be prepared to take lower profits by accepting dollar orders; and that is being done by public enterprise as well, he said. It is fair, I think, that the House should ask—and the House ought to ask—what the public enterprise is that is doing that. I think the House ought to ask what is the machinery by which this discrimination is being used. He has just said that there is no discrimination.
Mr. H. Wilson: No.
Mr. Pickthom: I thought so. The right hon. Gentleman interrupted to say so. I am in the recollection of the House. The House ought to know what the machinery of discrimination is. Hon. and right hon. Gentlemen opposite pride themselves on being what they call Social Democrats. Here there is to be planning, control, economic compulsion, but yet at the same time democracy, freedom and political liberty. Some of us think that that is quite impossible, and we have at any rate the majority of our ancestors, their ancestors, and everybody else's ancestors with us. They may prove to be right. At any rate that is their claim.
Now I think they would all agree with me about this, that if there is one single foundation of political liberty in that sense in this country it is the control of taxation, this House's control of finance, and especially of taxation. I ask them: Is it or is it not taxation when Government says to people, "Unless you keep out of markets which you have quite a legal right to go into but which we do not want you to go into, unless you go into markets which you have a perfectly legal right to keep out of because you could make better profits elsewhere but which we tell you to go into, unless you go into markets where you will make smaller profits when you are selling and into markets where you will pay larger prices when you are buying, we will in some way or another make things impossible for you. We will not hesitate to discriminate against you."? When Government says that, is it or is it not taxation without representation? I think that ought to be considered. I am quite sure myself
1078
that in a general, moral, historical and political sense the answer is "Yes." But whether or not it is technically taxation is, I think, open to question, and to answer that question we ought to know the details of the machinery by which this is being done.
Those are the questions which I desired to ask. I only say this one last thing. One thing on which I agree with the Chancellor of the Exchequer is that I do not think that this is a crisis. I think that we had the crisis long ago. The crisis was when we were still hanging on to the edge of the precipice. Once we had gone over, the crisis was over. What is now coming is the bump; we are beginning to see the world come up to hit us. I wish this were a crisis, but I think it is something much worse than that, and something which will last much longer. Still less is this "a problem," as some people call it; I am sure that there is no answer at the back of the book. This thing cannot be settled. What I ask hon. and right hon. Gentlemen opposite to consider in their consciences, if they will, in the stilly watches of the night is this: Can men who have reached the positions in which they now find themselves by saying that the search for profit was a bad thing, and that overseas investment was a bad thing—
Mr. Harold Davies: We never said that.
Mr. Pickthorn: Oh yes—that exports were a will-o'-the-wisp—
Mr. Davies: That is not true.
Mr. Pickthorn: Can people who say those things possibly deal with it—crisis or problem or what not? And will any foreigner think they can possibly deal With it?
Mr. Mitchison rose—
Mr. Pickthorn: I cannot give way now. I am just finishing. Will any foreigner think that they can possibly deal with it? Will they ask themselves that question first, and secondly this question: Is it really decent to go on with this stuff about the Tories wishing to see unemployment?
Mr. Stokes: They cannot help it.
Mr. Pickthorn: I will be honest with the hon. Gentleman. I think it is very

1079
likely that the Tories would not be able to help unemployment. I think it is even more likely that hon. and right hon. Gentlemen opposite, if they stay in office, will not be able to avoid unemployment. But that is not the only test. They may find all sorts of things which are "intolerable" but which they have to live through if they can. How are they to hold an immovable currency and an immovable standard of living, and yet somehow insist on foreigners from all over the world sending them the things they must have if they are not to have unemployment? How they are to do those things not one of the hon. or right hon. Gentlemen opposite has yet begun to try to explain. I ask them to consider in their consciences whether, unless they can explain that, they had not better lay off this nonsense of pretending that the Tories want to use unemployment and misery.
8.34 p.m.
Mr. Edelman: I will not speak of the hon. Gentleman's reference to the death of President Roosevelt, except to say that it fell below the standard which we expect, and usually receive from the hon. Gentleman.
Mr. Pickthorn: Since I have already been rebuked about three times for this, I really should like to have it explained what it is that I am supposed to have said that is in any way unkind or disrespectful about Mr. Roosevelt. I said that hon. Gentlemen opposite had produced all sorts of reasons why they are in a mess, one of them being the death of Mr. Roosevelt. They really ought not to reckon on one foreign statesman being immortal.
Mr. Edelman: I am quite sure that on reading his speech tomorrow the hon. Member will recognise why his reference to the late President Roosevelt was in the most execrable taste. I listened very carefully at this time of grave national crisis for some glimmer in the hon. Member's speech of a constructive suggestion for dealing with it; but all we heard was a prolonged dribble of political recrimination.
I cannot help feeling that what is required is not the sort of carping speech which the hon. Member made, but some suggestion as to what should be done at
1080
this grave hour to get the nation out of its difficulties. I observe that many Tory commentators are continually seeking to find some Jonah to throw out of the boat, and the Jonah the Tory Party point to is what was called yesterday by one of the lesser Tory columnists the "pampered proletariat." However much Members opposite may say they do not want to see cuts in the social services or in consumption, the fact is that the economists who speak the underlying thoughts of the Conservative Party are precisely in favour of these two things.
The crisis which we are experiencing is not something that has arisen suddenly, but is a chronic crisis which has been going on since 1945 as a result of Britain's impoverishment by the war. It is the crisis of our adverse balance of payments, and what we are facing is an acute manifestation of that crisis. If we are to survive we have to apply a twofold solution, the first a short-term one, and the second, a long-term one, which will ultimately make us independent of foreign aid.
As far as the short-term solution is concerned, it is quite clear that there can be only one answer to our present difficulties, and that is the continuation of American aid. If the Americans want to make a reality of the Atlantic Pact, and if they want us to sustain our part in it, they must continue to give us the aid they have been giving us since 1945.
Mr. Pickthorn: Is this the constructive suggestion?
Mr. Edelman: If the hon. Member will allow me to develop my argument, I hope that the constructive ideas will be clear even to him. As far as aid from America is concerned, it was always envisaged by the Americans, as much as by ourselves, that we should receive from the United States help until at least 1952. It was in pursuance of this idea that the countries who constituted the Marshall Aid group were invited by the United States to put forward plans for their ultimate release from American dependence by 1952, and it is of these plans that I particularly want to speak today, because I believe it is only by the co-ordination of these plans that we can and our economic salvation.
One thing that impressed me, when these plans were first submitted in the

1081
interim report of O.E.E.C. last December, was the fact that there was an internal contradiction in the plans themselves. Each country was occupied with increasing its exports and cutting down imports in order to have a favourable balance of trade. Quite clearly, with each of the countries concerned occupied with that task, it was obvious that certain countries would not be able to fulfil their plans.
In addition, there were contradictions between the various Marshall aid countries in their plans for capital investment. In certain cases, as in the case of engineering and textiles, their programmes for capital investment were duplicated, and the effect of that duplication is likely to be two-fold. In the first place, excessive capital investment clearly sets up an inflationary process by withdrawing goods and resources from general consumption, and, in the second place, an excessive programme of capital investment creates great and illusory hopes about the prospects of full employment which are only destroyed when the capital investment projects are finally fulfilled.
The most striking example of that is in the case of the tractor industry. We in this country have a tractor industry which is more than capable of supplying both our needs and a substantial quantity of exports. The French under their four-year plan are laying down tractor plants and engaging in a heavy capital investment in agricultural machinery. The result is that the total capacity of both countries for the production of tractors is far higher than either we or the French or any of the countries in Western Europe at present require either in the home market or for export.
While I welcome American investment in Europe, it is quite obvious that if on top of that we are to invite the Americans, in an entirely unplanned way, to engage in capital investment in such plants, we may inflate productive capacity to a point where there will be a vast amount of wasteful competition, with resultant hardship both to the industrialists and to the workers concerned. If the contradiction in the plans of the Marshall aid countries were limited to one or two industries, then one might say that the situation was tolerable, and that out of that competition something constructive and useful for Western Europe might emerge as a
1082
by-product. But in fact the conflict which exists in a typical industry like the tractor industry is present in many other industries, one of the principal of which is the engineering industry.
In our country we enlarged our engineering industry during the war and now rely for a considerable proportion of our exports on engineering products, but the French under their four-year plan propose to expand their engineering production by approximately 40 per cent. And not only do they want to expand their engineering production for their domestic market but also in order to enter into the field of world competition. If that happens in the case of France, Italy and ourselves, it is quite clear that all our hopes, and the hopes of our neighbours in Western Europe will not be fulfilled. We are trying to compete in markets where we are seeking to undercut each other in price, where we are duplicating the products we are trying to sell, where we have to meet the major fact of American competition, and where our potential customers have considerably diminished.
Instead of the flow of trade between the East and West which existed before the war, we now have to direct the great bulk of our exports towards the Western Hemisphere and Western Europe. At the same time we have had the further dilemma that, in order to save ourselves from the necessity of paying for the sustenance of Western Germany, and in order to make Western Germany viable, we have had to build up Western Germany in conjunction with our American friends into potentially a most dangerous competitor; for whereas before the war there was a natural movement of products from Western Germany to the Balkans and Eastern Europe in exchange for agricultural products, today the whole tendency of exports from Western Germany will be towards the Western Hemisphere and Western Europe.
To summarise, we who hope to save ourselves by increasing our exports and cutting down our imports find ourselves in the very grave dilemma that our associates within the Marshall Plan are trying to do the same, and that our plans are incompatible with each other. Unless we find some means of

1083
harmonising and co-ordinating our projects, the end will be bankruptcy for all or a continued and increasing dependence on American charity.
I do not need to add, even in parenthesis, that the help we are getting from America is part of America's contribution to the total effort of the Western democracies in peace as it was in war.
Mr. Ellis Smith: In gratitude for our war effort.
Mr. Edelman: Each of us during the war gave according to our means and our ability and it is only proper that today in our common task we should receive from America all the help that the Americans are capable of giving us. At the same time, our national dignity and the standard of life of the people of Britain and the countries of Western Europe depends upon our ability to stand ultimately on our own feet. While I would gladly accept from America the help in dollars by which alone we can solve the problem that arises from the fact that the Americans, the world's greatest producers, are anxious to sell, and not to buy, at the same time it is quite clear that we in Western Europe must find our own solution by means of co-operation.
In this connection I refer my right hon. Friends on the Front Bench to the interim report of the O.E.E.C., which I mentioned at the beginning of my remarks. I am surprised that they appear, at any rate, to have overlooked to such an extent the recommendations put forward in that report. One of its major recommendations is that there should be specialisation in production as between the countries of Western Europe. Obviously, it is farcical that we in Britain should concentrate on the production of certain types of machine tools while the French and Italians devote a great deal of their resources and energies to the production of the identical tools, at a time when all three countries have to import from America alternative machine tools which are not manufactured in Europe. From a technical point of view we are perfectly capable of producing the tools which today we import from America.
Clearly, one of our first measures must be to increase the extent of specialisation
1084
so that in the case of motor cars, for example, we in Britain may make a medium horsepower car, while France may make smaller cars and Italy, perhaps, cars of higher horsepower. That is the form of specialisation which will result in lower prices, in the abolition of some of the wasteful competition now taking place, and which will also bring about the result that in Europe, instead of producing blindly, as it were, in the hope of competitively capturing export markets, we will produce what is needed both by ourselves and by our potential customers and direct agreed production to agreed markets.
Then there is the question of standardisation to which reference has often been made. Only by standardisation and creating "long runs" of production in Western Europe, shall we be able to compete with the Americans in price. A lot has been said about price and I do not believe the American market, even if our prices were forced down very severely, would secure us an export market such as hon. Members opposite appear to believe. Nevertheless, I believe there are important dollar markets to be won if by co-operating in productive techniques Western Europe can cheapen its costs, and revert to the pre-war position when its export of manufactures was two and a half times those of the U.S.A.
I am sorry that the hon. Member for Cambridge University has forgotten his customary courtesy, and, having invited me to put forward certain suggestions, has left the Chamber before I advanced them. The agency we must employ in Western Europe, if we are to achieve the results of co-operation, specialisation and standardisation must be an agency based on planning by consent. We have not yet reached the stage in which some central authority can give instruction to the industrialists and workers in Britain, of Italy, France and the other countries of Western Europe—a sovereign economic authority which can instruct them as to what they can and should do.
For that reason, we must rely on planning by consent and the only way in which we can do that is by joint consultations between the industrialists, the technicians, the trade unions and, above all, the Governments of the Marshall Aid countries. That should be done industry

1085
by industry. We should have consultations in the steel industry, the coal industry, the cement industry, the agricultural machinery industry, the textile industry and so on. Only in that way will we be able to safeguard what I would describe as the legitimate vested interests of the industrialists and workers in each country. Only if we can achieve a harmony between the production of all the Marshall Aid countries and establish a master plan under O.E.E.C. can our crisis in the long-term be brought to an end and individually and collectively can we escape from our dependence on American aid by 1952 and achieve the solvency, by which alone our national dignity can be maintained.
8.54 p.m.
Mr. E. L. Gandar Dower: I am glad to have caught your eye even at this late hour. I feel rather weary after sitting through the whole Debate—
Mr. Ellis Smith: The hon. Member is not the only one.
Mr. Dower: —but it is always the fate of the last speaker to fear that he may be rather dull. I expect many hon. Members are awaiting the valuable remarks we shall receive from the right hon. Member for Saffron Walden (Mr. R. A. Butler) and the Foreign Secretary in his new rôle, so I shall not detain the House longer than I can help. Back benchers regret, however, that the average length of speeches on Thursday was 34 minutes and today it has been 27 minutes, and, although no one wishes to apply four wheel brakes to our deliberations, perhaps speeches have been a little long.
If I may relieve the tedium, I would like to high-light the deep-seated gloom into which we have sunk. The perfect economy was described by Gonzalo in "The Tempest." He said:
"No kind of traffic
Would I admit; …
… riches, poverty,
And use of service, none; …
No occupation; all men idle, … all,
All things in common nature should produce
Without sweat or endeavour."
Would that not be a delightful easement of our problems today? I have omitted one line: "And all the women innocent and pure," because I thought
1086
it scarcely appropriate to an economic Debate. [Laughter.] Some Members of the House may have more experience than I have. But seriously, would those conditions bring content? It is well known that happiness is only appreciated by knowing sorrow and for the real enjoyment of rest, one needs a body weary with toil.
I wish to ask why we have reached this fragile dollar condition. I do not ascribe the crisis to the Socialist Government. [HON. MEMBERS: "Hear, hear."] Hon. Members must not cheer too soon, for I believe that their procedure has tended to aggravate the crisis. [Interruption.] So that I may finish in reasonable time I beg hon. Members to stomach the distasteful things which I may say. In 1945 this nation was heavily in debt, exhausted after a titanic struggle which had lasted nearly six years. It needed a united effort to sort out that chaos. I am very sorry that the control of this country passed to party government. It was unfortunate that the Socialist Government came into full power and were obliged to implement a programme which they had been offering to their supporters for many years. It was unfortunate, because this programme meant class legislation, and experiments in State ownership and an endeavour to pass in four to five years legislation which really required from 10 to fifteen years for the country to assimilate.
I am a simple soul and I shall not reach the highlights of the economic experts on both sides of the House whom we have heard. When the hon. Member for South Nottingham (Mr. Norman Smith) spoke I almost left the Chamber, feeling that he was so much in advance of my economics that I had better keep quiet and go away. But I have, for the last two and a half years, been saying on platforms throughout my constituency, "We must work harder. We must work longer, we must take less, we must take advantage of vast areas which have received no goods for nearly six years. By selling as much as we can we shall regain prosperity. Later we shall be up against competition. The sellers' market will give place to a buyers' market." I do not wish to suggest that the workers should be the only people to suffer but we have to be realists in relation to our

1087
economy. We can no longer afford to be Right wing or Left wing.
The policy of the Government has been to approve shorter hours of work and to increase wages. They continued also the high rate of taxation which, although it may have relieved wealth from the upper classes, if any are left, has discouraged the weekly wage earner from working overtime. Please do not think that I wish to deliver a party speech. I am at present an Ishmaelite, or Wandering Jew. I have no party. There is a good deal of discontent among all wage earners—
Mr. Ellis Smith: There may well be.
Mr. Gandar Dower: If the hon. Member would give me a chance to continue, I would like to suggest that this is due to the Government allowing the cost of living to rise, making the increase in wage packets very largely illusory.
Then we have the unofficial strikes which are spreading throughout the country. Unofficial strikes can destroy the trade unions and the Socialist Party. I think it would be most unfortunate for the workers—or the weekly wage earners as I prefer to call them, because surely we all work—if they lost what they have gained through years of organisation and discipline. Why do these unofficial strikes take place, and have the effect they do on the economy of the country? Surely it is because the trade union leaders and officials have grown away from the rank and file. In the ranks of the weekly wage earners a leader arises with some gift of verbosity, and he leads the troops on a wild goose chase. It is not my belief that Communism is at the bottom of it. It may take advantage of the situation, but it is discontent which provides the opportunity.
The statement is frequently made by the Government that this country is making a wholehearted effort towards recovery. I cannot accept that. I ask hon. Members to believe that I am sincere and not a feudal member when I say that, in my view, there is not throughout the country the same keenness to work which existed in 1938 and 1939. There is not the same keenness while at work, and there is a desire to regard work merely as a mode of earning a wage. It is my view, and I am certain it is the view of
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members of the Government, that while labour produces a wage, it also produces something more wonderful—a sense of self respect and pride in a job well done.
I beg this House, irrespective of party, to try to put that feeling back in the mind of the weekly wage earner, and get him to regard his weekly effort not as something for the benefit of himself or of any party, but for the good of the nation. The aftermath of war always produces slackness. I feel that the youth of the country has insufficient interest in the amount of toil it does and that the middle-aged are carrying an unfair burden today.
All parties in this House are pledged to the gospel of full employment. It carries a great responsibility. I ask hon. Members to regard full employment as a game of "musical chairs." If there were chairs for everyone, where would be the keenness? If there is one chair short, then the people in the circle enjoy the game. In that simple way I would point out that if full employment means slackness through no fear of unemployment, it is a gospel which will fail.
We have a universal franchise, but I fear that the average elector is not interested in international trade. I suggest that the average elector does not realise that we have borrowed 4,000 million dollars from America since victory in the East. He does not realise what the sterling bloc means. I am speaking tonight because I voted against the American Loan and Marshall Aid. I did it because I felt that the recovery of this country depended upon tightening our belts, working harder and taking less. I felt also that these loans could never be repaid. I recall that after 1914–18 we were challenged by the Americans because we did not meet our war debts.
I should like to stress that if we borrow consistently from America, we shall create a piper who can call a tune. I believe that America has studiously avoided doing this so far, but hon. Members will have noted that a few days ago the Senate just failed to approve a motion that no financial assistance should be given to any country which nationalises industry. I am dead against nationalisation, but I should not like to be dictated to by America. In conclusion, I appeal to the Government to give us the opportunity to work as hard as we like, to work as long as we like, and to earn as

1089
much as we can, but not to take it away by taxation. I ask hon. Members to remember that, if risk is taken, it deserves a reward.
Mr. Deputy-Speaker (Mr. Bowles): Mr. Butler.
Mr. Ellis Smith: Mr. Deputy-Speaker, I cannot rise on a point of Order, but I want to rise on a point of procedure. I have sat here for two days. I should like to know upon what basis the speakers in this Debate have been selected.
Mr. Deputy-Speaker: That is a matter purely for the occupant of the Chair.
Mr. Stokes: Further to that point of Order. Is it not without precedent in the history of Parliament that three Parliamentary Private Secretaries have been called.
Mr. Deputy-Speaker: The same applies to that remark.
Mr. Ellis Smith: Six Front Bench men have spoken in this Debate.
Mr. Deputy-Speaker: I cannot allow any further criticism of the Chair. I shall not allow it.
Mr. Ellis Smith: No, but I am asking on what basis—
Mr. Deputy-Speaker: Order. I am on my feet. I cannot allow the hon. Gentleman to proceed with this questioning. Mr. Butler.
Mr. Ellis Smith: I am asking on what basis speakers have been selected in this Debate.
Mr. Deputy-Speaker: The hon. Gentleman will now resume his seat and not rise again.
Mr. Ellis Smith: Well, I shall rise.
Mr. Deputy-Speaker: I do not want to ask the hon. Gentleman to withdraw. It will be quite unnecessary, I hope.
Mr. Ellis Smith rose—
Mr. Deputy-Speaker: I am sorry, but I must ask the hon. Gentleman to withdraw unless he now resumes his seat for good.
Mr. Ellis Smith rose—
Mr. Deputy-Speaker: I now order the hon. Gentleman to withdraw from the Chamber.
Mr. Stokes rose—
Mr. Deputy-Speaker: Order. I am on my feet. The hon. Gentleman will now kindly withdraw from the Chamber The hon. Gentleman must really be sensible and withdraw from the Chamber; otherwise, I shall take further steps.
Mr. Ellis Smith: I am sufficiently well-known—
Mr. Deputy-Speaker: There can be no conversation about this. The hon. Gentleman must withdraw.
Mr. Ellis Smith rose—
Mr. Deputy-Speaker: Order. I shall name the hon. Gentleman in one second unless he does withdraw. I am sorry, but I must suspend the sitting, while Mr. Speaker is called for.
Mr. SPEAKER resumed the Chair.
Mr. Deputy-Speaker: I am sorry, Sir, to have to ask you to come. The hon. Member for Stoke (Mr. Ellis Smith), I very much regret to say, repeatedly refuses to obey the Chair. He raised a point of Order repeatedly about the selection of speakers during the Debate. I asked him, I think four or five times, to withdraw that remark and resume his seat. He refused to do so. I asked him twice or three times to withdraw from the Chamber, and he persisted in his refusal. I had no alternative, Sir, but to ask you to come.
Mr. Speaker: Do I understand that the hon. Gentleman named the hon. Member?
Mr. Deputy-Speaker: I asked the hon. Member for Stoke to leave the Chamber. I did not name him.
Mr. Speaker: If the hon. Member for Stoke has disobeyed the order of the Chair I must now, I am afraid, direct him to leave the Chamber at once. The hon. Member refuses. Then I have no option whatsoever. He must understand that. I name the hon. Member for Stoke.
The Lord President of the Council (Mr. Herbert Morrison): I beg to move, "That Mr. Ellis Smith be suspended from the service of the House."
Mr. Stokes rose—
Mr. Speaker: This cannot be debated; it is not debatable at all.
Question put, and agreed to.
Original Question again proposed.
9.24 p.m.
Mr. R. A. Butler: I almost hesitate to intervene in the Debate at this late hour, and I shall, in the circumstances, attempt to cover the subject as rapidly as I reasonably can, and give an opportunity to the right hon. Gentleman the Foreign Secretary to take part in the Debate. As we see it, it is the task of the Opposition to spur the Government on to adopt right measures, and if they will not do so, to turn them out. I should like to say at the outset that no Government handling the present crisis are in any way to be envied, and it is certainly not in the spirit of seeking responsibility for the sake of power, that we on this side of the House put forward our criticisms tonight. We are deeply anxious about the situation, and, faced with that situation as I shall attempt to describe it, we shall put forward our constructive suggestions, and criticise the Government where we think they are wrong.
I do not think that any man has borne a greater share of physical strain than the Chancellor himself. I have had no opportunity myself of mentioning this matter, and I hope he will have the most expensive treatment in the most expensive way, and return to us not unduly impressed by the Calvinistic gloom of Zurich and Zwingli. I hope, too, that as a result of the diet as advertised in the newspapers, and as a result of those melodious bells which I know so well in Zurich—and in spite of the hospitality of the population—we may expect his return fully restored to health.
What I think has been the least useful, as well as a most unfortunate, feature of this Debate has been the travesty by the Government of the motives of the Opposition, and, if I may so describe it, the unfortunate cacophony of the President of the Board of Trade, who himself made the most unconvincing contribution of all. This may have been the only unfinished symphony or cacophony to which we have listened, for the hon. Member for Caithness and Sutherland
1092
(Mr. Gandar Dower) who preceded me did, in the end, conclude his address. But, apart from that, we have had many variations on the theme, and the theme of the Debate on the side of the Government and those who support the Government, has been that this is all someone else's fault.
If we look back over the chequered story of the last four years, we see that one crisis has succeeded another. At one time the Government blamed American high prices. They are now blaming American low prices. The Lord President, speaking in 1947 of the cuts at that date, said:
"Are these import cuts leading to others still worse? Will they really see us through?"
Look at what we have today. He went on:
"It does not rest with us to answer that."
The case of the Opposition is that the Government have blamed other countries' courses far too much. They and their supporters have paid too little attention to their own policies, which could have helped to put things right at an earlier date. There have been too many expedients and too few long-term constructive policies, and this pursuit of expedients seems to us to be at the root of the trouble. The Government must, in our view, have seen that the post-war conditions through which we have been passing would change. It should have been clear that the sellers' market would change to a buyers' market, and that sterling would come into a very difficult position.
Abroad it seems to us that they have not yet brought economic collaboration with the Western Hemisphere in line with the political and strategic developments which they have undertaken, following the advice we have consistently given to the right hon. Gentleman in foreign affairs Debates. At home they have further restricted our economy. They have imposed a dead weight of taxation and expenditure, and have upset our industry by nationalisation. The real credit for the great drive in the export trade, which has resulted in such remarkable results, is due primarily to the efforts of private enterprise, despite all the terrible difficulties which have been imposed on it by the Government. I had intended to describe in rather more detailed terms some of the

1093
financial conditions with which we are faced, but I understand that it is impossible to proceed after ten o'clock. Therefore, if we may, we will take that portion of my speech—no doubt much to the satisfaction of hon. Members—as read. I am unable, however, to circulate it in the OFFICIAL REPORT.
In the last few minutes available to me I will come at once to the two spheres of the front upon which I think there ought to be far more pronounced Government action. The first is the international and the second the domestic front. Now what are our objectives on the international front? We have the I.T.O. Charter, we have much lip service to the word "multilateral," we have evident bilateral pacts, we have attempts to make trade more frequent between Eastern Europe and ourselves, and we are attempting to organise Western European union. At the same time, some of us like to think that it would be a fine thing to develop Commonwealth trade.
It seems to me that on a Sunday, or when a notice is issued from Chequers, the Government are in their best multilateral mood. On the next day they come here with a bilateral pact. A little later they appease some hon. Gentlemen opposite with the view that there must be closer trade with Eastern Europe. It seems to me that their whole policy in the international field is summed up in the words "multi-coloured appeasement." They seem to try to meet everybody at once and to have no definite line upon which to go.
In this connection I should like to ask the right hon. Gentleman: What is the position about non-discrimination?—because, frankly, it will be impossible to build up a trade with Western Europe if we have to stick too closely to what is evidently an undertaking given on that point. I do not want to go into further detail, but it is not only impossible to build up Western Europe and for the Lord President to proceed to Strasbourg and say something constructive unless there is an understanding of what is meant by "non-discrimination," but it will let down the Commonwealth, quite apart from the question of Imperial Preference.
I should like further to ask whether the right hon. Gentleman could supple-
1094
ment the somewhat meagre answers given by the President of the Board of Trade on the subject of freeing European trade. As far as we can see, no single country and no single commodity has been mentioned by him as being advanced by his own proposal, and all that those of us who sit for agricultural districts can understand is that it is possible that horticultural products will flood this country and undermine the horticultural industry, which has already been insufficiently protected by this Government.
The broad appeal I want to make to the right hon. Gentleman is to take the next stage of our relations with the American Continent and the dollar area into a more imaginative and fruitful region. We have passed through the period of a direct loan; we have gone through part, or a great deal, of Marshall Aid to Europe; and we are now apparently approaching this problem from the standpoint of the sterling area. I have spent a great deal of my life concerned with the Indian question, and I should like to ask the right hon. Gentleman whether in the imaginative approach which we should like to press on him, as we have done in all matters of foreign policy, he is taking into account the need for widening the interdependence of the American Continent and the dollar area with the sterling area, thus relieving us of many of our grave problems.
But what is the truth of this matter? We shall never get Congress to help us unless we help ourselves. It is, therefore, particularly healthy that we should talk frankly in Parliament, just as they talk frankly in Congress. We must prove to the Americans in Congress and in the administration that we can compete, that we have a resilient and elastic economy, and that we are prepared to lower our costs. Our outlook can be summarised—and this comes from a quotation of the 19th Report of the Bank of International Settlement—as follows:
"If, then, a country is in disequilibrium because its budget expenditure is too high, or its investments are too ample, or costs are maintained at an uneconomic level, or the exchange rates have got out of line with reality, with the result that an untoward deficit has arisen in the balance of payments; if, in such a state of affairs, the country concerned obstinately refuses to make any alteration either in its budget or credit policy, or in its control of prices or exchanges, there is no reason to assume that the lack of equilibrium will not continue."
Mr. Stokes: What does that mean?
Mr. Butler: The hon. Member knows quite well that I have only 13 minutes to spend on my argument, otherwise I could explain it to him. What it means is, as it says, that despite the obvious difficulties here of a high taxation system and an expenditure higher than we have ever known, the Government obstinately refuse to remove the rigidity from our economics. We believe that this rigid taxation, rigid expenditure and rigid costs, with rigidity of the bargaining machine for labour through the joint negotiating machinery—which is practically not operating owing to the extreme rigidity of our economic system—we believe that this rigidity is the cause of the troubles affecting the working men and women, the financiers and the industrialists.
In short, our case is that until we can restore to the individual some freedom of choice, and until we can restore some elasticity of manoeuvre to our economy, we shall not be able to deal with the problem of the balance of payments. The inflationary tendencies which we see at home are, we believe, at the basis of many of our troubles in foreign fields. It is for this reason that we see a grave risk to the standard of living, a grave danger of unemployment and a grave danger of the value of social benefits collapsing. That is our answer to Members opposite who taunt us with objectives which are in no way ours.
There is no one who has taken part in this Debate from this side of the House who does not stand for the social services, and it is because—[Laughter.] After all, many of us have dealt with the framing and preparing of these social services, which is more than can be said in the case of some Members opposite. We have helped to frame and prepare them and we know that if the present state of our economy is allowed to persist, and the cuts in our raw materials are allowed to continue, the threat of all these grave matters to the standard of living of our country comes from Members opposite. We therefore ask the right hon. Gentleman to give us some indication of his imaginative approach to this subject, some indication that the Government will at last acknowledge, that the situation in our
1096
internal economy is vital, if we are to solve our balance of payment problem.
9.38 p.m.
The Secretary of State for Foreign Affairs (Mr. Ernest Bevin): I do not approach this discussion in any spirit of recriminations. Nor do I wish to answer in a party sense the points that have been put. This is a critical period in which we are living, and it was bound to be critical. I think that the right hon. Gentleman the Member for Saffron Walden (Mr. R. A. Butler), in his remarks on rigidity, really had in mind deflation. Deflation is a way of dealing with this problem which has grave consequences politically. I gave some figures in the House when the White Paper on full employment was published in 1944, and I think they will bear quotation in regard to what we did in times of deflation from 1922 to 1938.
I am not putting this in any party sense; it is purely historic. We tried that business. We lost 250 million working days in strikes and lockouts. We tried to solve the problems which the employers and the workmen could not solve. It was beyond them. We had an average of 1,700,000 unemployed during the period. We paid £1,290 million in unemployment pay in the same period. That was an experiment in trying to deal with the problem without control, by the non-rigid system, by mere manipulation, by endeavouring to get this balance of exchanges working. It had such terrible consequences for this country that the Government cannot approach the problem in the same way today.
Then from the point of view of what is called the welfare State and social services, I beg this House and everybody concerned not to drag this business into a kind of partisan warfare. I shall give hon. Members my reason although I have not many minutes. This so-called welfare State has developed everywhere. The United States is as much a welfare State as we are only in a different form. One of our troubles in the balance of payments today is the fact that the United States, in carrying out its welfare policy, has given basic prices to its agriculture, I do not object to it. I think it is right. But, on our side, where our raw materials are concerned, we have not

1097
yet worked out the basic price for commodities.
America has unemployment insurance, far higher, just three times what we pay to our unemployed. America's sick pay is growing and she is discussing the question on a great medical service. So the answer to the hon. Member for Chippenham (Mr. Eccles) is that I wish he would tell his friend the shipowner from Scandinavia, who has far higher social services than we have, that he must look it up when he gets home. The automatic operation of unemployment and deflation was dealt its death blow when Mr. Lloyd George and the present Leader of the Opposition introduced the social services in 1910, 1911 and 1912. The system advocated by the last speaker can only work if starvation operates quickly; if unemployment and other things operate quickly. Immediately the social services were introduced into the world, resistance became stronger, the system would not operate, and has never worked since. Therefore I cannot recommend the House to adopt it.
It is said that we have been inconsistent. May I suggest that the problem itself has been a little inconsistent? The rises and falls have been exceedingly difficult to cope with as a result of the war. I remember so well in the Coalition days that we said to one another, "Unless America comes forward with far more than she has come forward with yet, it will be a bad time for Europe and the rest of the world." I am not revealing any secrets when I say that time and time again from the days of Lend-Lease, when we discussed, from 1942, right up to the end of that Coalition, the problem of how to pull the world round, we realised that without a tremendous amount of American aid it was beyond the contemplation of the minds responsible at that time. Therefore I do not apologise for taking American aid.
America has tried different methods of dealing with the situation. The first was the loan—we are grateful for that. The second was the Marshall Plan. I do not want this House or the country or America to belittle the Marshall Plan merely because its results are at the moment over-shadowed by the problem of the sterling area and the dollar. The Marshall Plan has helped to organise Europe. The organisation which has been
1098
built up as a result of that Marshall Plan must not be belittled; it must not be allowed to run down; it must be carried on till European unity and co-operation are secured.
But the fact remains, that the other problem exists and it must be met by different methods. When we saw the problem—I will not call it a "recession "; because the use of slogans is dangerous—what were we to do? Were we to get in a panic and run back and start cutting the standard of living of the British people? Nothing of the sort. We had to face it as we have to face every political problem that arises. One of the difficulties of handling this problem hitherto has, been that it has been dealt with very largely in isolation from political considerations. It is essential, if a solution is to be found, to take the political aspects into account. The Brussels Pact, the Atlantic Pact and the other political developments have helped to create stability; but we have not yet carried this co-operation into the field of exchanges as we must now do.
When the purchases by America fell off and economic difficulties were again arising, naturally we discussed it with our American friends. Mr. Snyder and his assistants came here. The House must agree that that was a very wise step, far better than accusing each other of doing this or that, or not doing this or that. Speaking for myself I have said to my American friends over and over again, "This mechanism of exchange is so delicate, it is of such tremendous importance to the stability of the world and peace itself, that the talk of devaluation, or the use of slogans which affects the question of either currency, is one of the biggest dangers that can happen to peace in the world. Therefore, we must deal with the matter on a higher plane and in a different environment."
The Chancellor felt that it was essential to call the Commonwealth together. The Commonwealth has met and the communique is issued tonight. I have not time tonight to describe it, but let me draw attention to this fact: this conference of the Commonwealth has not been constitution-making; it has not been doing anything in that sphere. What it has been doing is examining a problem, conscious, I think more conscious than ever they have been before, that we are

1099
the banker for the Commonwealth. Instead of placing the liability on the bank to save the clients, the conference showed itself conscious of the fact that there must be a common effort to save each other for the time being. This necessitates a different approach to the question of purchases of goods from the dollar area and a very close study and examination of the problem to bring about and devise—I am quite frank, we have not the answer yet—the right kind of mechanism to deal with the dollar problem of the Commonwealth as a whole.
What is this sterling area? It represents 600 million people. It also exerts its influence on other people not strictly within it. In all, that must affect about 800 million. Within that area there is a vast, teeming, population which is the biggest market for American and British craftsmanship and ingenuity in the world. In fact if we could bring the dollar area and the sterling area together and produce the right co-operation then we could make Truman's fourth point a living reality in helping to lift up the standard of life throughout the whole of that great area.
India has been mentioned. I am told that India must have dollars to buy food. What India must get to help her vast population is capital goods of all kinds. Pakistan's resources must also be developed. All these great areas must be developed to a point at which the dollar earnings from India can go to buy capital goods and not food, she having provided her own requirements. In that way the standard of life of these millions can be raised.
The aim of the Government is this: They put forward these short-term cuts because they must. It would be absolutely stupid to go on buying and buying and letting the reserves run away. We have to reduce purchases and to reduce them in such a way as to have the minimum effect upon our economy. We must search around and buy wherever purchases do not involve dollars. America understands that. In our discussions Canada and the United States have come together representing the dollar area and Canada has been of enormous assistance. Moreover, Canada, a dollar country, is nevertheless part of the Commonwealth
1100
and, acting in those two capacities, she has been a great bridge between the two which will ultimately help us to discuss all our common problems and bring both sides together in a common endeavour.
There is a great consciousness in the Commonwealth that there is a vital problem to solve. I was asked with what imaginative concept we had approached this problem. I do not want to paint the lily. All I can say is that I am absolutely convinced that it is not by constant debating of this or that loan that we shall get the final answer. I am conscious that the loans which have been given and the Marshall Aid which has been voted have helped to save Europe from a terrible tragedy. I think every penny America has spent on it will return to her as the years go on, fourfold.
Our conception is to sit down with our American and Canadian friends—the representatives of the dollar area sitting down with the representatives of the sterling area—to examine the problem in all its aspects. They will probably have to compromise a little to find the right answer; we shall have to compromise a little too. We shall, in this sphere, have to do just as we have done in the political arena in order to arrive at agreement. In that sense the Chancellor and I will go to Washington at the end of August or the beginning of September and try with our friends to find a solution to the problem. If we succeed, it will be one of the greatest achievements in which this country has taken part and to which it has contributed.
I have been asked about negotiations with Russia. I sometimes hear hon. Members opposite being facetious on the subject. I am often called upon in Foreign Affairs Debates to try to find a solution to the great Russian problem. It will have to be found some day, but refusal to trade is not the best contribution which we can make towards it. I shall not be a party to creating another Iron Curtain. We did not build the one which is there now, and as I have said before, I would rather break through it. I do not want to see the world divided into three systems, as one hon. Member suggested to me this afternoon. His proposal was that there should be a sterling area and Western Europe, a dollar area—
Viscount Hinchingbrooke: That was suggested by the hon. Member for South Nottingham (Mr. Norman Smith).
Mr. Bevin: I trust that the House will forgive me; I do not remember who it was. The suggestion was that there should be the Russian autarky, our system, including Western Europe, and the dollar area. The best contribution which we can make to the world is to reduce the number at least to two, because if we try to develop the three, I can see one of the most terrible conflicts arising. I confess that I have been tempted in that direction. When one feels baffled by one's problems, one has to examine every possible solution. I have examined that one on more than one occasion, but I could not fail to see, as I have already indicated, all the political repercussions that could flow from it.
I do not believe that the talk about this country having one system and somebody else having some other system has anything to do with the matter. It has nothing whatever to do with it. I do not intend to encourage one side of the House to blame the other. What I am out for, and what my colleagues in the Government are out for, is to solve this problem. We must do so because of the consequences of failure, because of the dangers inherent in the political situation, if it remains unsolved, and because peace is imperative to the world for many generations to come.
The Parliamentary Secretary to the Treasury (Mr. Whiteley): I beg to ask leave to withdraw the Motion.
Motion, by leave, withdrawn.

ORDERS OF THE DAY

  PATENTS AND DESIGNS [MONEY] (No. 2)
  Considered in Committee of the Whole House under Standing Order No. 84 (Money Committees). [King's recommendation signified.]
  Resolved:
  "That, for the purposes of any Act of the present Session to amend the enactments relating to Patents and Designs and to provide for the appointment of an additional puisne judge of the High Court, it is expedient to authorise the payment out of moneys provided by Parliament of any sums required for the payment of remuneration to scientific advisers appointed to assist the Scottish Appeal Tribunal, to be set up by the said Act of the present Session, in pursuance of any provision of that Act."—[Mr. Glenvil Hall.]
  Resolution to be reported Tomorrow.

  ISLE OF MAN (CUSTOMS) BILL
  Bill read a Second time.
  Committed to a Committee of the whole House for Tomorrow.—[Mr. Snow.]

  NAVY, ARMY AND AIR FORCE EXPENDITURE, 1947–48
  Resolutions reported:
  "I. Whereas it appears by the Navy Appropriation Account for the year ended the 31st day of March, 1948, that the aggregate Expenditure on Navy Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Navy Services over the net Expenditure is ¼15,776,537 8s. 9d., namely:

  £

  s.

  d.

  Total Surpluses

  26,779,440

  0

  2

  Total Deficits

  11,002,902

  11

  5

  Net Surplus

  £15,776,537

  8

  9

  And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants for Navy Services as is necessary to make good the said total deficits on other Grants for Navy Services.
  1. That the application of such sums be sanctioned."
  [For details of Schedule see OFFICIAL REPORT, 11th July, 1949; Vol. 467, c. 145.]
  "II. Whereas it appears by the Army Appropriation Account for the year ended the 31st day of March, 1948, that the aggregate Expenditure on Army Services has not exceeded the

  1103
  aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Army Services over the net Expenditure is £13,219,660 13s. 11d. namely:

  £

  s.

  d.

  Total Surpluses

  21,054,438

  11

  3

  Total Deficits

  7,834,777

  17

  4

  Net Surplus

  £13,219,660

  13

  11

  And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants for Army Services as is necessary to make good the said total deficits on other Grants for Army Services.
  2. That the application of such sums be sanctioned."
  [For details of Schedule see OFFICIAL REPORT, 11th July, 1949; Vol. 467, c. 149.]
  "III. Whereas it appears by the Air Appropriation Account for the year ended the 31st day of March, 1948, that the aggregate Expenditure on Air Services has not exceeded the aggregate sums appropriated for those Services and that, as shown in the Schedule hereto appended, the net surplus of the Exchequer Grants for Air Services over the net Expenditure is £32,477,294 15s. 7d., namely:

  £

  s.

  d.

  Total Surpluses

  …

  41,040,465

  18

  10

  Total Deficits

  …

  8,563,171

  3

  3

  Net Surplus

  …

  £32,477,294

  15

  7

  And whereas the Lords Commissioners of His Majesty's Treasury have temporarily authorised the application of so much of the said total surpluses on certain Grants for Air Services as is necessary to make good the said total deficits on other Grants for Air Services.
  3. "That the application of such sums be sanctioned."
  [For details of Schedule see OFFICIAL REPORT, 11th July, 1949; Vol. 467, c. 151.]
  Resolutions agreed to.

  AIRWAYS CORPORATIONS BILL
  As amended (in the Standing Committee), considered.
  AIRWAYS CORPORATIONS BILL

    New Clause.—(EMPLOYEES OF CORPORATIONS NOT TO BE DISMISSED ON9 ACCOUNT OF REDUNDANCY.)
    No person who is employed by either of the Corporations at the time of the transfer of the rights, obligations and liabilities of the British South American Airways Corporation to the British Overseas Airways Corporation, shall be dismissed solely by virtue of any redundancy of employees which may exist after such transfer without prior consultation by the British Overseas Airways Corporation with such organisations as appear to the Corporation to represent
    1104
    a substantial proportion of the persons in the employment of each of the Corporations at the time of the said transfer.—[Mr. Lennox-Boyd.]
    Brought up, and read the First time.
    10.2 p.m.
    Mr. Lennox-Boyd: I beg to move, "That the Clause be read a Second time."
    May I ask, Mr. Speaker, whether you propose to call the other new Clause which stands in my name and the name of my hon. Friend relating to "Terms and conditions of employment of staff."
    Mr. Speaker: Certainly not; the second new Clause is clearly out of Order. The first one is the only one to be called.
    Mr. Lennox-Boyd: Realising that you do not propose to call the second Clause, and naturally bowing to your Ruling, I shall move this first Clause as briefly as I can, though in considering that Clause I think one or two points arising out of the second Clause would be relevant.
    The purpose of the new Clause at this stage of the Bill is to ensure that employees of the new Corporation, which hon. Members may remember is a merger of B.O.A.C. and B.S.A.A., should not be dismissed on account of redundancy, without some reference being made to organisations that appear to the Corporation to represent a substantial proportion of the persons in their employment. It is unfortunate for the people working in the Corporation that this highly important matter affecting their interests should come on late at night and after a great Debate on our economic situation. I hope I am in Order in reminding the House that although the great economic Debate affects all our citizens generally, this particular merger also affects quite a number of our citizens personally, and we must give some consideration to the consequences to these people of this merger.
    Some of the things which have been said by the Parliamentary Secretary in previous Debates have given us cause for alarm as to whether the people in the old Corporation, B.S.A.A., who are now being merged with B.O.A.C., will have their interests properly safeguarded. The Parliamentary Secretary will forgive me if I say that there has been an indication

    1105
    from time to time that he might look on these matters more in his capacity as a loyal trade unionist affiliated to the Trades Union Congress than in the impartial capacity which he ought to exercise as Parliamentary Secretary in a Government department.
    We propose in this new Clause to introduce almost exactly the same words which were in the original Bill which set up these three Corporations. I am sorry to keep the House at this hour, but it is important that I should remind hon. Members of a little of the past history of this business. When the Civil Aviation Bill was first introduced in 1946, it provided in Clause 19 that it should be the duty of the three Corporations then set up to seek consultation on terms and conditions of employment with any organisation which appeared to the Corporations to represent a substantial proportion of the persons in the employment of the Corporations, or of any class of such persons. That was clearly laid down in the original Bill.
    This would have meant that the three Corporations would have had to negotiate with the Aeronautical Engineers' Association, which at that time had an undisputed majority of members in B.O.A.C., in the B.E.A. branch of B.O.A.C. and also in British South American Airways. Shortly before the passing of that Bill they sent in a petition signed by over 50 per cent. of the hourly-rated engineers in B.O.A.C.
    The Parliamentary Secretary to the Ministry of Civil Aviation (Mr. Lindgren): I think the hon. Gentleman meant B.S.A.A.
    Mr. Lennox-Boyd: No. I meant B.O.A.C. The proportion was even higher in B.S.A.A. If the hon. Gentleman corrects me I might bow to his correction, but I think I am right.
    A few weeks later, in May, 1946, the A.E.U., which hon. Members realise is a very powerful trade union, wrote to the Trades Union Congress complaining about this Clause. For all I am about to say, I am indebted to the 78th Report of the Trades Union Congress which was published in 1946. Page 218 of that report tells the story of this transaction. In May, 1946, the Amalgamated Engineers' Union wrote to the T.U.C. complaining of a Clause in a Bill
    1106
    brought before the House of Commons. A few days later, on 6th June, 1946, the Trades Union Congress Finance and General Purposes Committee met with the various unions represented in the National Joint Council in civil aviation from which, incidentally, the A.E.A. has been continuously kept out. They said that this Clause was unsatisfactory and that the Trades Union Congress should approach the Government and ask them to withdraw it.
    The then Lord Privy Seal of this Government—the right hon. Gentleman the Member for Wakefield (Mr. Arthur Greenwood)—and the Minister of Labour went down to Bournemouth and met the Finance and General Purposes Committee of the Trades Union Congress. In response to what this body told them, the Clause was redrafted; but even then it was not regarded as satisfactory. I understand that the Lord Privy Seal told the Trades Union Congress that he was not prepared to alter the Clause again, whereupon they wrote to the Prime Minister. Once more, I am indebted to the annual report of the T.U.C. After they had written to the Prime Minister, the right hon. Gentleman the Lord Privy Seal introduced an Amendment during the Committee stage of this Bill on 19th June, 1946.
    This Amendment provided that it should be the duty of the Corporations to consult with bodies of workpeople, as in the words I have already used, except in so far as the Corporations were satisfied that adequate machinery existed for achieving the purposes of the subsection. The right hon. Gentleman said that this was done for greater flexibility, but I think that in the light of our recent experience, there can be no doubt that it was done to secure that the Aeronautical Engineering Association, which had a majority of the members in at least one of the Corporations, should not be consulted on the terms and conditions of employment.
    It is more than ever important for a Government constituted as the present Government is constituted to see that there is impartiality between one union and another. Many hon. and right hon. Gentlemen opposite have twin loyalties—loyalty to their country and this House, and a quite proper loyalty to their own particular trade union. It appears to me to be more than ever essential that if

    1107
    there should be any suggestion that a union which they do not like is being unfairly treated, the Government should be impartial and should not weigh down heavily in favour of one of the unions.
    In the recent Debates which we have had on the subject of this air merger, with the merits of which I am not at this moment concerned, the Parliamentary Secretary has called the A.E.A. a number of derogatory names, and it appears highly unlikely that he can apply to this body the fair and disinterested consideration which a Minister of the Crown should apply. The hon. Member for Reading (Mr. Mikardo), who is himself an active member of another trade union, has also attacked this particular body. If Parliament, and above all the Government, are to retain a reputation for impartiality and standing outside this sort of internecine conflict, it is particularly important that they should consult with that body of employees which the employees themselves choose, and should not attempt to impose upon them a particular form of organisation with which alone the Government are prepared to negotiate.
    The purpose of our new Clause, therefore, is to ensure that the Corporation shall consult with that body which appears to them to represent a substantial proportion of the persons in the employment of each of the Corporations at the time of the transfer. If there is any doubt as to which body does represent these people, it should be put up to the free and unfettered vote of the men and women in the industry, and if they decide on one particular body, that ought to be the body with which the Government should negotiate. If the hon. Gentleman repeats the kind of unflattering phrases which he used about the body which many people believe still commands the majority in B.S.A.A., he will be abdicating from that position of impartiality which we are entitled to expect from a Minister of the Crown.
    Air-Commodore Harvey: I beg to second the Motion.
    There is no doubt that, when we were discussing the B.S.A.A. and B.O.A.C. amalgamation last week, the Parliamentary Secretary was most unfair to the engineering side of B.S.A.A. They were recruited at the end of the war by the
    1108
    shipping companies, and they were mostly ex-Service men, ex-R.A.F. men, who at that time had little experience of civil aircraft engineering. The Parliamentary Secretary was anything but fair and not his usual self in the way in whch he referred to the Aeronautical Engineers' Association. Be that as it may, that Corporation, in its first two years of operation, did operate at a profit, though not a large profit. In comparison with other Corporations, it operated efficiently in spite of having indifferent equipment.
    These men now expect to be fairly treated when they go to B.O.A.C. who are the most numerous, probably at the rate of five to one, and, in any redundancy which takes place, the numbers in each Corporation ought to be taken into account. Up to 1946 most of the engineers of even B.O.A.C. belonged to the Aeronautical Engineers' Association. I think I am right in saying that 80 or 90 per cent. belonged to that particular union. Furthermore, in air services like the charter company now operated by British Railways and subsidised by the taxpayer—about which we do not know how they stand financially, or whether they are making a profit or a loss—I am told that 100 per cent. of their engineers are also members of the Aeronautical Engineers' Association.
    10.15 p.m.
    It appears that because this body of men are not recognised by the Trades Union Council they are to be excluded. I suppose that if the accurate figures were taken of all three Corporations we should find that probably something like 60 to 80 per cent. of the men were members of this particular association. I ask the Parliamentary Secretary, who is usually very fair in these matters, to go into the position with the leaders of that organisation to find out how many men actually belong to that particular union. If he does, I think he will find that something like 70 or 80 per cent. are members of it. If that is the case, then they should have some form of recognition, and I think that the sooner the Parliamentary Secretary recognises that fact, and gives this body the recognition it deserves, the better.
    Mr. Ivor Thomas: There is no danger that the amalgamation of B.O.A.C. and B.S.A.A. will lead to any general redundancy. As B.O.A.C. employ,

    1109
    on the average, about three times the number of men employed by B.S.A.A. for a four-engined aircraft—
    Air-Commodore Harvey: Five times.
    Mr. Thomas: My hon. and gallant Friend says five times; that would strengthen my argument, but I am content with three times. It depends upon one's calculation of the number of aircraft in the fleet, on which there is some room for difference. As I was saying, on the average B.O.A.C. employ about three times the number of men employed by B.S.A.A. for a four-engined aircraft, and it is quite clear, therefore, that the merging of the two Corporations is almost certainly bound to lead to an increase in the total staff employed. There is, however, some reason to fear that advantage may be taken of the merging of B.S.A.A. in B.O.A.C. to get rid of the existing engineers in the Aeronautical Engineers' Association. That is the point to which this Clause is addressed, a Clause so cogently moved and seconded, and which I am glad to support.
    We are entitled tonight, I think, to have the most explicit assurance from the Parliamentary Secretary that the present merger will not be used for that purpose. I hope he can give us an assurance that if there should be any redundancy in one particular section of the merger, the question will not be decided by reason of membership or non-membership of the A.E.A. It would not be right for me to go into the matters so revealingly dealt with by my hon. Friend the Member for Mid-Bedford (Mr. Lennox-Boyd), but I should like to take up a point made by my hon. and gallant Friend the Member for Macclesfield (Air-Commodore Harvey) namely, that the membership of A.E.A. is largely recruited from ex-Service men.
    The Parliamentary Secretary has used a phrase which I admit is unfamiliar to me—a "goose club"—about the A.E.A. If the suggestion is that it is a kind of breakaway union or scab union, then I am bound to say that within my recollection that is not the case. I bow to the superior knowledge of the Parliamentary Secretary in these matters, and as I was not expecting this Debate to come on tonight I have not armed myself with the facts, but my recollection is that the A.E.A. came into existence at a time when the A.E.U. and other unions of long standing were afraid that men who
    1110
    had learned their trade in the war would swamp them when normal conditions of peacetime returned. They were not willing to see absorbed into their ranks men who had become engineers in the course of the war and who might, they feared, be surplus to requirements in time of peace. If the average member of the A.E.A. had been allowed into the A.E.U. perhaps he would have joined, but there was a certain amount of suspicion in the ranks of the A.E.U. against men who had learnt their trade in the Services in time of war.
    If that explanation is correct, I believe the House will tend to look sympathetically upon the membership of the A.E.A. In fact, our peacetime experience has shown that this danger of a dilution of the ranks of the skilled aeronautical engineers in this country has been exaggerated. There is room for the membership both of the A.E.U. and of the A.E.A. and therefore, suggest that the Parliamentary Secretary can without fear give us the most complete assurances which I sought—that there will, in fact, be no attempt to get rid of men simply because they are members of the A.E.A.
    Mr. Oliver: Can the hon. Member say whether members of the A.E.A. are debarred from joining the A.E.U.?
    Mr. Thomas: The point I am putting is that when the A.E.A. was formed there was a reluctance in the A.E.U. to admit men trained in the Service's into membership. I put this forward as no higher than my recollection. I think there was undoubtedly a fear of the sort I have mentioned. It is quite possible that now, after a matter of four or five years, if a member of the A.E.A. applied for membership of the A.E.U. things might be different, but I believe the reason I have given for the formation of the A.E.A. is historically the correct one.
    Mr. Lindgren: Except that it was formed before the last war.
    Mr. Thomas: I must accept what the Parliamentary Secretary says. I had not heard of it between the wars. At any rate, it came into prominence during the last war, and my argument is not affected.
    Mr. Niall Macpherson: We cannot let a gross mistake like that go past. The A.E.A. was founded in 1943

    1111
    at Aldergrove aerodrome, with 200 members, not one of whom was a member of any other union.
    Mr. Thomas: I am surrounded with such good advice that I hardly know which to take. I thought that the A.E.A. was, as I said, founded in the last war, and the Parliamentary Secretary must argue it out with my hon. Friend the Member for Dumfries (Mr. N. Macpherson). What he said agrees with my own recollection, but it is sufficient for my argument that members of the A.E.U. were reluctant to take these Service-trained engineers into the ranks of the union, and that caused this struggle.
    I am sure the House will sympathise with these men who have learned their training in the course of war service, and the best way to show that would be to accept the new Clause which, as has been said, is in the words which originally appeared in the Civil Aviation Bill but which were subsequently altered. If the Parliamentary Secretary is not prepared to accept the new Clause I ask him at least to give the most complete assurances.
    Mr. Lindgren: I am afraid I cannot accept the Clause, but I can give some of the assurances which are required. May I first of all correct an impression, if I did give that impression—and, of course, I certainly did not intend to—that I was in any way disparaging during my speech either on Second Reading or on Committee, to the engineering side of B.S.A.A. The only remark which I made which could be taken as disparaging by some people—and I tried to temper it by saying that I did not want to be unkind in any way—was my reference to the A.E.A., as an organisation, as a goose club rather than a trade union. So far as the engineering side of B.S.A.A. is concerned, I want to make it quite clear that I had no intention and no desire to be disparaging.
    Mr. Lennox-Boyd: Will the hon. Gentleman allow me? Surely he must recognise, as a very prominent and honourable trade unionist himself, who is now a Minister, that it is of outstanding importance that he should be impartial as between one trade union and another. No doubt, he has his own personal preferences, but surely he will agree that in
    1112
    his Parliamentary and Ministerial duties we should look to him not to call a union he may not like a "goose club."
    Mr. Lindgren: Persons associated with the trade union movement would not have taken my remark about a goose club as offensive. I do not know if hon. Members opposite have to go to such clubs for their Christmas dinners, but amongst the working class—and perhaps they do not know this—
    Mr. Lennox-Boyd: Who votes for us, does the hon. Gentleman think?
    Mr. Lindgren: Working class people have to save up a long while for their Christmas dinner, and the term "goose club" means that an organisation so called is a benefit society rather than a trade union.
    However, this new Clause is not necessary, because under Section 19 of the Civil Aviation Act, 1946, the Corporations are obliged to consult the organisations appearing to them to be appropriate. They have done that, as required by Act of Parliament, and there is established the National Joint Council for Civil Air Transport. That covers 14 unions which cater for the employees of all grades in all the Corporations. An employer having to negotiate with trade unions has to take into account the desire of the majority of those unions that cater for the members of his staff.
    It is not uncommon—in fact, it is the common practice—in a number of industries for a particular organisation to claim to represent certain grades of employees, not, perhaps, on the best of terms with other organisations. The employer then has to choose between one of several organisations in the light of the circumstances with which he has to deal.
    Mr. Lennox-Boyd: I am sorry to interrupt the hon. Gentleman again, but would he arrange to use his influence with the new merged Corporation to carry out a confidential inquiry to make sure that members of the staff, including, the staff of B.S.A.A., may join which of the unions they want to represent them?
    Mr. Lindgren: No, Sir. I wish the hon. Gentleman would see where he is trying to lead this Government and the Corporations. At the moment, the Corporations are not "closed shops." I am one of those trade unionists who do not

    1113
    believe in the "closed shop." I believe that a trade union is a voluntary movement, and that if a person does not come in voluntarily he is more nuisance than he is worth if he is forced to come in. It is a voluntary movement. We do not compel any member of the Corporations' staffs to be a member of a trade union. We let it be known, and the Corporations let it be known, that we desire that they all, men and women, should be members of their appropriate trade unions, but it is not the function of my Ministry or of the Corporations to go round inquiring of the staff of which unions they are members, or whether they are members of a union or not. It is for the individuals themselves to decide to which trade union they should belong.
    Mr. Edgar Granville: Can the hon. Gentleman tell us whether the A.E.A. were invited to joint the Joint Council?
    Mr. Lindgren: They were not invited to join the Joint Council. They applied later to joint the Joint Council, and the 14 unions of the Joint Council refused to allow them to come in. That is nothing uncommon.
    Mr. Lennox-Boyd: Call that democracy? There was 100 per cent. membership.
    Mr. Lindgren: I wish the hon. Gentleman would get his facts right. The A.E.A. claims to cater for every worker in the Corporation, from pilots down to the sweepers in the shops. The staff of the two Corporations—I mean B.O.A.C. and B.S.A.A.—is 20,000—near enough. The highest membership, I think, that the association has had is 2,500. There is a substantial difference between 20,000 and 2,000. If we take the engineering staff—
    Mr. Lennox-Boyd: It is not fair to talk like that.
    10.30 p.m.
    Mr. Lindgren: What would be fair would be to take the engineering staffs of both Corporations, which are just over 5,000. The highest membership ever claimed for the A.E.A. is 2,500. As the hon. and gallant Member for Macclesfield (Air-Commodore Harvey) quite rightly stated, the major proportion of the employees of charter firms is organised in the A.E.A., and the majority of its
    1114
    membership is drawn from the charter companies. Let us take another instance.
    Air-Commodore Harvey: The hon. Gentleman says that these employees are organised. May I ask what he means by "organised"? They are not organised at all. They happen to be the A.E.A.
    Mr. Lindgren: I am using the technical language of the trade union movement. If a person is a member of a trade union we refer to him as organised. If he is not a member of a trade union, then we refer to him as being un-organised. Surely that is quite proper. The purpose of a trade union is to get a group of workers together in order that they can collectively negotiate with employers. We call that organisation. If employees are not in an organisation, they are unorganised.
    Mr. Granville: I want to know the facts. The Parliamentary Secretary says that out of 20,000 the membership of A.E.A. is just over 2,000. Can he say whether all the others, the 18,000, are members of the other unions?
    Mr. Lindgren: We do not know. We have not taken—and I hope that as a Ministry we shall never take—a census of the staff to see who are members of a trade union. We have not asked the Corporations to take such a census, and they have not done so. All we can take is the published figures, or the figures which are alleged.
    Mr. Lennox-Boyd: Will the hon. Gentleman answer this? Will he agree or deny, that a majority of the organised workers on the engineering side in that Corporation with which we are concerned, namely B.S.A.A., belong to the A.E.A.?
    Mr. Lindgren: My information is that that was so at one time, but it is not so today.
    Mr. Lennox-Boyd: The hon. Gentleman has whittled it away.
    Mr. Lindgren: So far as my information goes, there was at one time a majority of membership in the B.S.A.A., but after all, the engineering staff of B.S.A.A. is only a few hundred. It was at that time a very small staff. It is a little higher now because of expansion in the

    1115
    organisation. But I am informed that today that state of affairs no longer exists. Even if it did, surely it is not the function of the Ministry of Civil Aviation, or of any Government Department, to decree by Act of Parliament, or by an assurance in this House, with what trade union an employer shall, or shall not, negotiate. That, surely, is a free function for the employer and employee. Where I think the hon. Gentleman is on the safest ground is in claiming, and rightly so, that a person shall not suffer in an organisation because he is, or is not a member of a particular trade union. I think one is entitled to ask that that shall not be done. That certainly shall not be done.
    If hon. Members opposite had taken the trouble to get a pamphlet issued to all members of the staffs, and which is signed by both sides of the National Joint Council for Civil Air Transport, they would have seen in black and white, the assurance to staff that, first of all, the fact whether a person is, or is not, a member of a trade union does not affect his right of making representations to a local panel, and of having his case dealt with by that local panel. Furthermore, the fact that they are, or are not, members of a particular trade union does not interfere with their normal rights as employees of free access to the management of the corporation. If that is not sufficient guarantee, I am quite prepared to discuss the point if any hon. Member rises to interject again.
    In so far as redundancy is concerned, I agree that there is very little likelihood of there being redundancy, especially on the engineering side; and here I must disagree with the hon. Member for Keighley (Mr. Ivor Thomas). The hon. Member said that B.O.A.C. engineering staff was three to one of B.S.A.A., but he did not deal with the point on the basis of dispersed bases throughout the length and breadth of the land, but on the basis that engineering staff was on the lean side, and redundancy would not exist. But I would remind hon. Members that if there was redundancy for one man, or 20 men, or even 200, that redundancy would be dealt with through the machinery agreed and negotiated well before the merger was thought of—machinery agreed through the National Joint Council and the men in the local shops.
    1116
    If there is redundancy and a man has to go, he will be dealt with in general on the basis of "last in, first out," and any concessions made will take account of special domestic circumstances which can be dealt with and settled in the locality. By way of example, if the last man in was married with eight children, and the question of redundancy arose concerning that man and a single man of 30, then full consideration would be given to those special circumstances.
    Mr. Granville: Otherwise the Corporations would be on the same footing?
    Mr. Lindgren: Yes, and it is no function of the employer to discriminate in any way between one organisation and another. Here is machinery for dealing with wages and conditions of employment and we, as employers, must observe those conditions. That will be done faithfully by the Corporations; and there is always an appeal to this House if the arrangement is violated. I can give the assurance that, whether the man is a member of A.E.A. or A.E.U. or B.A.L.P.A. or any other union, he will have the matter dealt with through the normal negotiating machinery which is available to protect his rights. B.S.A.A. is in no difficulty in this matter, and no member of A.E.A., whether in B.O.A.C., or B.S.A.A. will in any way find that he is forgotten.
    Mr. Lennox-Boyd: They are still human beings.
    Mr. Lindgren: Yes, they are human beings, and I should like to think that in every industry throughout the land, men and women are being dealt with on as human terms as they are now being dealt with in the nationalised air corporations.
    Air-Commodore Harvey: The hon. Gentleman referred earlier to the fact that A.E.A. claim membership from top to bottom among aeronautical engineers. Can he elaborate that statement and say how many aircrew claimed membership of A.E.A.?
    Mr. Lindgren: I do not know. In the trade union movement there are two groups of unions. One is the industrial trade union, which claims that every man in an industry should be a member of one single organisation. After all, in the industry with which I am associated—the

    1117
    railways—the N.U.R. claims that every railwayman, whether clerical, technical, professional or anything else, should be a member of the N.U.R.
    There are other unions, which are craft unions, whose members are members by virtue of their trade or craft. The A.E.U. is a craft union; the A.E.A. claims to be an industrial union, with a right to secure membership in every grade throughout the airline corporations. What membership they have I do not know, but there again, hon. Members opposite would say I would be making remarks which were unworthy of me if I said that a pilot should be a member of B.A.L.P.A. rather than of A.E.A., though, quite frankly, in my personal opinion, a pilot should be a member of B.A.L.P.A.; an engineer should be a member of the A.E.U.; an electrician should be a member of the E.T.U., and so on.
    Mr. N. Macpherson: I am sure the House will be very pleased to have received the assurances that the Parliamentary Secretary has given in his somewhat alphabetic speech. The House will have noted that his speech took two forms. First of all, there was the assurance to B.S.A.A. that there would be no discrimination against them as compared with B.O.A.C.; and secondly, he has given an assurance that there will be no discrimination against anybody because he belongs to a particular union or because he does not belong to any.
    The House will be very satisfied to have that assurance, but the fact remains that that assurance would be still more valid and valuable if the original intention of the Civil Aviation Act were given force for the purposes of dealing with redundancy and if recognition was given to A.E.A.; because it is always true that if somebody who belongs to one organised body and goes to people who belong to other organised bodies, there is always the risk that if he does not come out on the side on which he expected to come out, he will feel he has been victimised. That risk could so easily have been overcome if only recognition had been given to the A.E.A. which could not have been withheld if the Civil Aviation Act had been passed as it was originally drafted.
    This is really the crux of this whole amendment, and it was a thousand pities that that amendment was made which had the effect of causing the employers—that is, the Corporations—wilfully to shut their
    1118
    eyes to the organisation of the A.E.A. which, in some cases, had an undoubted majority and had a claim thereby to be recognised. Among highly rated engineers A.E.A. will have a majority, and that is true of certain other grades. The effect of this was that when the change was made on the Works Council at Langley, whereas there were nine A.E.A. members and one National Joint Council member, all were swept away in accordance with an instruction from above, of which instruction I have seen a copy. I have seen a copy of a letter saying that instructions were being received stating that they were no longer to deal with the A.E.A., and N.J.C. men were substituted instead. That, of course, was a great error and it could still be rectified in this particular case. I hope that the Parliamentary Secretary will see the force of the argument that justice must seem to be done as well as be done, and that he will either accept this new Clause or see that this matter is remedied in another place.
    10.45 p.m.
    Mr. Lennox-Boyd: I can only speak again by leave of the House. We were all disappointed with the Parliamentary Secretary's reply. All we were trying to do here was to insert into the Bill the exact words which the Government had inserted into the Coal Industry Nationalisation Act and the Civil Aviation Act. In view of my reference to the way in which the original intention had been altered, after a conference between the T.U.C. and the Government, and in view of the grave disquiet among many people affected, I had hoped that the Government would take a different view and accept this new Clause. They have not done so, and they have the majority on their side. We must reserve our right in the fulness of time, which will not be long delayed, to look at the matter again from the Government benches.
    Question, "That the Clause be read a Second time," put, and negatived.
    Mr. Lindgren: I beg to move, "That the Bill be now read the Third time."
    I do not intend to delay the House on the Third Reading of the Bill, because the case was fairly fully made on Second Reading. There have been points raised, but all I would take time for now is to thank Members for the facility given to get this Bill through quickly, in order to facilitate the merger.
    10.48 p.m.
    Mr. Lennox-Boyd: The hon. Gentleman has just thanked all Members of the House for the facilities given to pass this Bill quickly into law. I would be wanting in my duty if I did not say that the speed with which, the Government have desired to pass this Bill is a little strange. Matters of this kind usually have longer discussion. The House has had little time to discuss the Bill. We do not in any way abate our view that no case has been made out for the merger, and we reserve our full freedom as a Conservative Party to alter this in the fulness of time. One of the reasons why this Bill has been rushed through may be that certain action has been taken already in anticipation of legislation, and it now seems naturally desirable for the Government to cover the action they have taken with the cloak of law.
    Mr. Deputy-Speaker (Mr. Bowles): I am sorry, but the hon. Gentleman must not refer to administrative action except on a Supply day.
    Mr. Lennox-Boyd: When the right Supply day comes, I shall draw attention to the many actions by the Executive in anticipation of legislation. Now I merely close by saying that we regard this Bill as not proven and reserve our full freedom to alter it.
    10.49 p.m.
    Air-Commodore Harvey: I should like to support what my hon. and gallant Friend has just said. It is less than three years since the Civil Aviation Bill was made an Act of Parliament. During that time the air Corporations have lost £40 million, and now have reached the stage where the Corporations are to be reduced from three to two because B. S. A. A. has had an unfortunate run of accidents, not through their own fault. They have put up a very good show from the point of view of efficiency, but we think there are other reasons for the Government trying to reduce the number of Corporations. The time is not long distant when we on this side of the House will have the matter dealt with in order that a loss may be turned to a profit and this may not be more than a few months ahead. We reserve the right to look after the interests of these men who, we feel, have had a very unfair deal.
    10.50 p.m.
    Mr. N. Macpherson: The effect, indeed possibly the purpose, of this Bill is to put an end to the British South American Airways as an entity. It would be churlish for this House to complete this Measure without saying that this Corporation has performed a great pioneering work, and that in putting an end to it we are doing something which we cannot be certain is right. We have not yet had sufficient experience to know what is the right size of the Corporation. It may be there should be smaller corporations. In the view of this side of the House, it would have been desirable to have kept alive a corporation of this particular size, even if it meant a certain degree of reorganisation in order to fit it with the aircraft requirements of the time.
    The Corporation that is now passing away or being absorbed, really deserves applause before it finally goes, but if I may borrow the words of Shakespeare:
    "The fault, dear Brutus, lies not in ourselves,
    But in our stars."
    Question put, and agreed to.
    Bill read the Third time, and passed.

  AGRICULTURAL LAND (AIRFIELDS)
  Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Popplewell]
  10.52 p.m.
  Brigadier Medlicott: It has been said that one of the keys to the solution of the economic problems with which we are faced is a great expansion of agricultural production. Perhaps, therefore, it may not be out of place if, for a few minutes, we consider some of the ways in which we can increase the total area of land available for agricultural and horticultural purposes. I would like to say how sorry we are that the Parliamentary Secretary to the Ministry of Agriculture, who was to have replied to this Debate, is indisposed, and we wish him a speedy recovery.
  I want to make it clear at once that I do not intend to range over the whole of the ground involved, if I may so put it, but to give just three examples, and three examples only, to show that the

  1121
  total amount of agricultural land is not as large as it could be. On 12th April, the Minister of Town and Country Planning, in reply to a question by my hon. Friend the Member for Eddisbury (Sir J. Barlow), gave the figures of the annual loss of agricultural land in this country. It was I think, helpful that those figures were given because some very exaggerated suggestions are made from time to time. Figures as large as a net loss of 50,000 acres a year have been mentioned and it was reassuring to be told that, after all, the average loss each year is not more than 8,000 acres, although that is large enough.
  I understand that the Minister of Town and Country Planning is, in fact, considering how a more accurate method of disclosing the variations in agricultural acreage can be devised, and it would seem to be necessary to have some such method because, for example, we find that during the year 1946–47, 73,000 acres of agricultural land were lost to agriculture. But during the following year, 1947–48, 80,000 acres were gained. These are large figures and without analysing them, one cannot deduce any very accurate lesson except that it is quite clear that when 80,000 acres come back into agricultural use, they are not immediately available for food production and may well be lost to effective agricultural use for some considerable time longer.
  I mention these figures as a necessary background to the particular points I want to make. During the last war a large number of aerodromes were constructed in this country and a particularly large number of them were sited in East Anglia. Perhaps few counties contained more, certainly few could have contained more in proportion to their size, than Norfolk. It was clear when the war ended that there could be no question of an immediate decision as to which would be retained and which could be released. These matters inevitably take time and I am most anxious not to appear to be critical of the Service Departments, whose work is directed to our welfare and defence, but I do suggest that the time lag has been longer than it might have been. There might have been a rather more speedy release of some of this land for agriculture. We are now four years from the end of the war, and some of these sites are not yet cleared up.
  1122
  At the same time it is only fair to say that progress has been made in Norfolk. The agricultural executive committee have taken over, with the co-operation and assistance of the Air Ministry, some 13 of these aerodromes and the committee have done valuable work in clearing up rough ground and bringing land back into cultivation, either by themselves or by means of sub-tenancies granted to local farmers. There is no need to mention the number of air stations in the county which have been retained for operational purposes. There are, however, still five in respect of which, apparently, no very definite plans have yet been made for their future agricultural use. I understand that these five have recently been de-requisitioned and I want to suggest that de-requisitioning of air stations, with the fairly large acreage involved, can and does afford a special opportunity for bearing in mind the needs of smallholders. Smallholding is a feature of the countryside which is particularly popular and successful in Norfolk. A great deal has been done, but there are still some 400 to 500 people waiting the opportunity of securing smallholdings in this county. Is enough being done to put land at their disposal as quickly as possible?
  The case I have particularly in mind is that of the aerodrome at Ludham, or Fritton as it is sometimes called, which was originally the centre of a large smallholding area. The Minister will agree that there has been rather a lot of delay. I do not know that blame can be attached to anyone in particular. This is one of those situation where so many interests are involved, but if anything can be done to see that, in other cases, the procedure is quicker than it has been at Ludham, I am sure many people will be very grateful.
  The second of the three points I want to raise is the question of dispersal sites. I have no official figures and I want to make it clear that I have not been asked by any local body or individual to raise these matters. The figures I give are those I have collected from my own observations and inquiries in Norfolk. It would seem that each of these dispersal sites occupies a minimum of 50 acres, or at least the average size of these sites is not less than 50 to 60 acres. There are some 18 air stations in the county

  1123
  which have either been handed over to the agricultural committee or have just been de-requisitioned and passed back into private hands, and in connection with each of them there is a dispersal site of the average size I have mentioned.
  The result is that there may be anything up to 1,000 acres—it may be a little less—in the county of Norfolk involved in these various dispersal sites. Presumably figures of that order would be applicable throughout the rest of the country. I appreciate that the major difficulty with these sites is that they are now covered with concrete, and that the cost, in money and labour, of removing this tremendous quantity of concrete is formidable. I also agree that many of these sites were put on indifferent quality land, that the top soil was removed, and that even if the concrete could be taken away tomorrow the land underneath would be poor. There are, however, some exceptions, and I think it is generally agreed in the county that some of the land used was among the best in that county of good agricultural land.
  To give examples, I think that the stations at Swannington, Oulton, Seething and Ludham are instances of air stations at which dispersal sites have taken a lot of good land, and that some means ought to be found of bringing that good land back, ultimately, into production. I am not minimising the immense difficulty of dealing with these acres of unwanted concrete, but I ask the Minister what is the long-term view with regard to these sites. Unless something is done—and I am not suggesting that it can be done immediately—it will mean that these acres of concrete will be left on hundreds of acres of land, possibly for generations.
  It may well be that the Air Ministry are keeping an eye on these concreted sites against the unhappy possibility that the Air Force will need to use them again. If that is so, I suggest that the Air Ministry ought to take some measure of responsibility for the sites—if only for the reason that they are becoming quite a danger from the point of view of weed infestation. Weeds are growing up and becoming an inconvenience and nuisance to the good agricultural land surrounding the sites. A further question I would like to ask is what is happening in the case of air stations which the Air
  1124
  Ministry are retaining for operational purposes. I believe that the Minister will have no difficulty in giving us a satisfactory assurance, but if he can give any up-to-date statistics as to the amount of cropping and the agricultural use made of the land available on some of the stations retained for the Air Force these figures will be received with interest.
  Finally, I want to make one other point which does not affect the Air Ministry alone. I refer to the continuous acquisition of agricultural land by various departments and local authorities for a great variety of purposes such as housing, school playing-fields, road widening, sewage disposal, factory extensions and other purposes. For each of these purposes a good case can be made out, and those of us who are Members of this House are perhaps in a measure responsible, because we all play our part in urging that this or that scheme should be initiated by the local authority. But in the result there is a great loss of agricultural land, and it all contributes to that gradual whittling away of the agricultural acreage to which I have referred.
  I want to say, in conclusion, that these pieces of land taken away from agricultural holdings may not always be large in size, but they are sometimes the most vital part of the holding. I have instances, with which I will not trouble the Minister now, but of which I can give the fullest details, showing where farms of 100 acres or so have had a vital piece of ground taken away from them; in one instance the farm buildings have been separated from the rest of the holding, with results that can well be imagined.
  These are the three points I wanted to urge. Certainly in the case of Norfolk there has been an immense amount of work done by the agricultural executive committee and by the smallholdings committee of the county council and their officers, and they have received great encouragement and sympathetic help from the Ministries concerned, but there is this question of the slowness of the procedure, as well as the three specific points to which I have referred and on which I hope the Minister will be able to give us some further reassurance.
  11.7 p.m.
  Mr. Dye: The hon. and gallant Member has raised

  1125
  a problem of some concern to the people of Norfolk. A large amount of land had to be taken for airfields, and we can now see into the future far enough to know that we shall want both airfields and agriculture to continue in a county like Norfolk for a number of years. Therefore, the problem that concerns us is how quickly the Air Ministry can dispose of those airfields which it will no longer require, either for immediate operational use or for the possibility of some future use of the runways, and the getting back of that which is not wanted to its fullest and best agricultural purpose.
  It is not correct to assume that because certain land has been taken for use by the Services that it is not bearing good crops. There is land in Norfolk still under the Ministries that is growing better crops than it did before the war. The War Office and the Air Ministry have done some good work to enable local farmers to make good agricultural use of certain land which comes under their Ministries. But, on the other hand, there have been in certain cases delays which we hope can be shortened, so that the land may be brought back to agricultural use. It is not good enough just to continue on a year-to-year basis. If we are to make the best use of the land it must be planned for a number of years. There must be not only rotation of crops, but if possible there must be stock and crops on the land.
  The Air Ministry will continue to have certain bases in the Eastern Counties. I am concerned to know whether on some of these very large airfields the Air Ministry can combine cultivation of the soil, and if necessary the grazing of sheep or cattle where they are covered with grass, so that we can get out of that land in between the runways that which the nation, and indeed the world, needs, for with the rapid increase in world population at the rate of 55,000 a day we must, in our island home, make the utmost use of every piece of land surrounding the runways and between the runways, if we are to make the utmost use of the soil. Therefore, I hope that the Minister will do his utmost, while maintaining the upkeep of the runways for present and future use, to see that the land is also used to produce the food we so urgently need.
  11.11 p.m.
  The Under-Secretary of State for Air (Mr. Geoffrey de Freitas): In the 10 minutes I have, I will try to answer all the points raised in this Debate. I think I should first deal with the point raised by the hon. Gentleman who opened the Debate and by my hon. Friend—namely, the use the Air Ministry is making for agriculture of airfields they still hold. During the war there were 640 airfields in this country, and about half of these—350—are still in use. Agricultural use of these 350 airfields is arranged by using the grass areas between the runways, in the case of runwayed airfields, and the airfield generally in the case of grass airfields, for grass-drying, and in this we employ the most modern methods. The work is usually carried out, not by us, but by the people who really know the job—neighbouring farmers.
  On land adjoining airfields, we have schemes for growing vegetables for use on the stations, and for small-scale farming. The hon. and gallant Member asked me for some figures on this. I can give him two, which I think will satisfy him. Last year, the acreage and value of crops produced on R.A.F. stations rose in each case, by 50 per cent. compared with the previous year. At last year's R.A.F. horticultural show, Horsham St. Faith, a station in the hon. and gallant Member's constituency, more often praised for its fighter pilots, was highly commended for the vegetables which it had grown.
  What I have said concerns the 350 airfields still in use. I now come to the 290 no longer in use as airfields. They fall into two categories. One hundred and twenty of them have been de-requisitioned and returned to their owners. The remaining 170 have been made available to the county agricultural executive committees for unrestricted agricultural use, pending either and de-requisitioning and return to their owners, or purchase by the Air Ministry for transfer to the Ministry of Agriculture for rehabilitation and management under the Agricultural Land Commission. I was asked about the use made by the county agricultural committees of these 170 airfields. Nearly all of them—80 per cent.—are let to neighbouring farmers, preference being given to the former occupiers. The remaining 20 per cent. are farmed by the

  1127
  county agricultural committees themselves.
  The point was made, both by the hon. and gallant Member and my hon. Friend, that the Air Ministry was slow, that there was a long delay in dealing with these 170 airfields. We were slow. We could have been very much faster, but we could only have been faster if we had resorted to powers of compulsory purchase. We were slow because each of these airfields has many owners, and we are going ahead by negotiation with each one of these owners. I admit it has not been so fast as we would like, but I think speed would be bought at too high a price, because it would involve compulsory purchase. We should remember, however, that although the ultimate future of these airfields may not yet have been decided, they are in the meantime being used productively for agriculture.
  Norfolk, particularly, was mentioned by both hon. Members, as their constituencies lie within that county. I think we should have the figures for Norfolk. One out of every 20 war-time airfields was in that county, or just over that proportion—namely 37. There are 19 airfields which we still use, and 18 which we no longer require. Five of these 18 have been de-requisitioned and returned to their owners, and, as the hon. Member mentioned, 13 which have been made available to the county committees for unrestricted agricultural use pending either de-requisition or purchase, for handing over to the Ministry of Agriculture for management by the Agricultural Land Commission.
  A particular point was put about the dispersed sites near the airfields. I think it would help hon. Members if I describe the procedure to which we work for these sites. If we want the buildings where they are, we buy the site. If we do not want the buildings where they are, we remove what we want, and then we ask the Temporary Defence Works Committee, which is an inter-departmental committee under the chairmanship of the local Ministry of Works regional officer, to consider whether restoration is necessary in the
  1128
  public interest. This committee considers such things as the hon. and gallant Member mentioned in connection with the airfields in Norfolk. It considers, in consultation with the Ministry of Agriculture's Land Commissioners to whom it always goes for advice on land matters like this, the cost of restoration, balanced against the quality of the land, and the other agricultural aspects. The cost of removing concrete, as hon. Members may imagine, is enormous. I have not figures relating to runways, which are usually 12 inches thick; but I have seen a figure of £4,000 for removing ordinary three-inch concrete from the floors of six or seven 60-ft. huts. This will give hon. Members some idea of the cost of removing concrete. If the committee decides in favour of restoration, the Ministry of Works restores the land and the Air Ministry then de-requisitions. If the committee decides against restoration, the Air Ministry de-requisitions, and the owner can claim against the Air Ministry for compensation under Section 2 (1, b) of the Compensation (Defence) Act, 1939.
  The last point which the hon. and gallant Member made was a general one about development of agricultural land. It is Government policy that, in planning the use of land, as much agricultural land as possible shall be kept for the production of food. Under the Town and Country Planning Act, 1947, machinery is set up for the preparation of long-term development plans by the local planning authorities, and administrative arrangements are made and function daily, so that at all levels up to Ministers, and the Cabinet if necessary, the Ministry of Agriculture is brought into consultation on every scheme involving the use of agricultural land. In conclusion, I can assure the House that the very greatest care has been taken by the Minister of Agriculture to see that at all stages the Government's policy of preserving agricultural land for food production is carried out.
  Question put, and agreed to.
  Adjourned accordingly at Twenty Minutes past Eleven o'Clock.

FOOD SUPPLIES
  Potato Crops
  Potato Crops
  Leased Areas, Tanganyika (Shops)
  Leased Areas, Tanganyika (Shops)
  Sugar Refining
  Sugar Refining
  Sandwiches (Points Goods)
  Sandwiches (Points Goods)
  Bacon
  Bacon
  Eggs
  Eggs
MINISTRY OF TRANSPORT
  Railway Line (Fencing)
  Railway Line (Fencing)
  Street Lighting, Brentford
  Street Lighting, Brentford
  British Shipping Council (Report)
  British Shipping Council (Report)
  Severn Bridge (Plans)
  Severn Bridge (Plans)
  Railway Footbridge, Hull
  Railway Footbridge, Hull
  Heavy Lorries, Southwark
  Heavy Lorries, Southwark
  GERMANY (RESTITUTION LAW)
  GERMANY (RESTITUTION LAW)
MINISTRY OF WORKS
  Professional Firms (Rehabilitation Allowances)
  Professional Firms (Rehabilitation Allowances)
  Building Projects, Newport
  Building Projects, Newport
  Constitution Hill (Resurfacing)
  Constitution Hill (Resurfacing)
ELECTRICITY SUPPLIES
  Battersea Power Station
  Battersea Power Station
  Surcharge
  Surcharge
  Load Spreading
  Load Spreading
PETROL SUPPLIES
  Hire Car Services, Cardiff
  Hire Car Services, Cardiff
  Supplementary Allowances
  Supplementary Allowances
  ROYAL COMMISSION ON THE PRESS (REPORT)
  ROYAL COMMISSION ON THE PRESS (REPORT)
  PETROL LIGHTERS (DUTY)
  PETROL LIGHTERS (DUTY)
  SURPLUS WEAPONS (DISPOSAL)
  SURPLUS WEAPONS (DISPOSAL)
  DUTCH BEES (IMPORTS)
  DUTCH BEES (IMPORTS)
  BRITISH ARMY (STRENGTH)
  BRITISH ARMY (STRENGTH)
  SCHOOLS (COLONIAL AFFAIRS)
  SCHOOLS (COLONIAL AFFAIRS)
Preamble
The House met at half past two of the clock, The LORD CHANCELLOR On the Woolsack.
Prayers

  PIER AND HARBOUR PROVISIONAL ORDER (CRARAE) BILL
  2.35 p.m.
  Order of the Day for the Second Reading read.
  LORD SHEPHERD: My Lords, I am advised that there is no special point in this Bill to which I need draw your attention. I therefore beg formally to move that the Bill be read a second time.
  Moved, That the Bill be now read 2a.—(Lord Shepherd.)
  On Question, Bill read 2a, and committed.

PIER AND HARBOUR PROVISIONAL ORDER (SOUTHWOLD) BILL
Order of the Day for the Second Reading read.
LORD SHEPHERD: My Lords, there is just one small point in this Bill to which I should draw your attention. The pier mentioned in the Bill is of a different character from the one in the Bill to which your Lordships have just given a Second Reading. This pier is intended
2
for amusement and health purposes generally. There has recently been a transfer of the property involved from one company to another, and in the new Order there is a provision, to enable the new company to provide for passenger-carrying vehicles on the pier. The Southwold Corporation objected to this clause and wanted to prevent the use of passenger-carrying vehicles for amusement only. After listening to the arguments on both sides, the Minister came to the conclusion that it was a case in which he should not intervene. And as he has not amended Clause 7 of the Bill he has left it open to the Corporation, if they are so disposed, to proceed by means of Select Committee. That has not been done up to the moment. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Shepherd.)
On Question, Bill read 2a, and committed.

TEESIDE RAILLESS TRACTION BOARD (ADDITIONAL ROUTES) PROVISIONAL ORDER BILL
Order of the Day for the Second Reading read.
LORD SHEPHERD: My Lords, there is no special point in this Bill to which I need draw your attention. I beg to move that the Bill be read a second time.
Moved, That the Bill be now read 2a.—(Lord Shepherd.)
On Question, Bill read 2a, and committed.

IRON AND STEEL BILL
2.38 p.m.
Amendments reported (according to Order).
Clause 1:
The Iron and Steel Corporation of Great Britain
(3) Every member of the Corporation shall hold and vacate his office in accordance with the terms of his appointment and shall, on ceasing to be a member, be eligible for reappointment:
Provided that any member may at any time by notice in writing to the Minister resign his office.
(6) A member of the Corporation who is in any way directly or indirectly interested in a contract made or proposed to be made by the Corporation, or in any contract made or proposed to be made by a subsidiary of the Corporation which is brought up for consideration by the Corporation, shall, as soon as possible after the relevant circumstances have come to his knowledge, disclose the nature of his interest at a meeting of the Corporation; and the disclosure shall be recorded in the minutes of the Corporation, and the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract.
LORD WOLVERTON LORD WOLVERTON moved in subsection (3), to omit all words from the beginning down to the commencement of the proviso and to insert:
"The Minister shall make regulations with respect to the appointment of and the tenure and vacation of office by the members of the Corporation."
The noble Lord said: My Lords, in moving the Amendment which stands in my name, perhaps I may remind the House that I moved an Amendment on Committee stage suggesting that there should be laid down in the Bill a rotation for the retirement of directors. My noble friend Lord Bridgeman moved an Amendment, just after mine, about the disqualification of directors. The noble Lord who spoke on behalf of the Government said in each instance that the Amendment was drawn too narrowly and did not allow enough flexibility and that the Government would prefer the matter to be dealt with by the letter of appointment, but that they would look into the question again. The Amendment which now stands in my name makes it obligatory on the Minister to make public regulations respecting the matter. I feel that these are public companies and that
4
Parliament should know what are the terms of engagement. The House may remember that it was done by regulation under the Electricity and Gas Acts and that similar provision was made in the Bank of England Act. It is much more satisfactory if the thing is done by regulations, and the regulations are laid before the House. I urge the Government to accept this Amendment as a compromise. I beg to move.
Amendment moved—
Page 2, leave out lines 16 to 19, and insert the said new words.—(Lord Wolverton.)
LORD GIFFORD: My Lords, I rise to support this Amendment standing in the name of the noble Lord, Lord Wolverton, Lord Davidson and myself. It seems to me that it produces a happy compromise. It was suggested in Committee that statutory provision should be made in the Bill itself for the appointment of members of the Corporation, but I think the noble Lord, Lord Morrison, pointed out that this made it rather too rigid. The suggestion in this Amendment is that the appointment of members of the Corporation should be made by regulation of the Minister, and it seems to me that that is the right way to do it. The third method is by the letter of appointment, but I do not think that that is right. Moreover, it seems to be rather a backhanded compliment to the person concerned to send him a letter of appointment as a member of the Corporation and tell him in the same letter what will happen if he misbehaves, and how you are going to get rid of him. Surely it is better to put it into a regulation, so that everybody knows exactly what are the terms of the appointment. There have been discussions since the Committee stage, I understand, but they have not reached any finality, and I think that this Amendment forms the best compromise.
LORD RENNELL: My Lords, I should like to add one or two words in support of this Amendment. Your Lordships will remember that there was a good deal of talk in Committee about the form of the letter of appointment which was suggested by the noble Lord, Lord Morrison. I am not concerned with the term or period of the appointment, which I admit has a bearing on this particular issue, but I think it must be agreed by the Government that a letter of appointment cannot properly contain the sort of

5
thing that we discussed during the Committee stage. However, if the appointment is made only by a letter of appointment, irrespective of the term for which it is made, the letter must contain, unless there are other provisions, the conditions upon which the appointment is tenable, The restrictive conditions upon which the appointment of any directorship is tenable are stated in the Companies Act. If a regulation were issued by the Minister it could simply refer to the Companies Act so far as the general provisions are concerned. It seems to me much more appropriate to do it in the form proposed in this Amendment rather than by trying to incorporate in the letter of appointment the provisions of the Companies Act. I speak without firsthand knowledge, only from what I have heard. For instance, when directors have been appointed to the Civil Aviation Corporations, the letters of appointment have not referred to the pains and penalties that might be incurred or the reasons why a man must resign or be "sacked" for misbehaviour—in other words, they are just plain letters of appointment. That would not satisfy the public generally. The public would require to know a little more than that, and that little more could be made public in the regulations, rather than be elaborated in detail in the peculiar circumstances which might arise in any particular letter of appointment, which is private between the Corporation and the recipient. Without reference to things like salaries, for instance, the public have a right to know the general conditions upon which these kinds of appointment are tenable. It would be easier to do that in the form of a regulation than in a letter of appointment, and therefore I am in favour of the insertion of something of this nature in the Bill.
LORD LUCAS OF CHILWORTH: My Lords, His Majesty's Government have given careful consideration to all the points which were raised during the Committee stage upon the Amendments to which the noble Lord, Lord Wolverton, has drawn attention. I cannot add much to the full answers which were then given by my noble friend Lord Morrison. After this consideration, His Majesty's Government have come to the decision that they cannot accept this Amendment. The noble Lord, Lord Gifford, said that it
6
was rather a "back-handed compliment" to put in a letter something giving a particular member of the Board all the reasons why he could be dismissed. In our experience in appointing members of the Transport Commission by letter, we have not found that any of them have thought that they had received a "backhanded compliment."
LORD HAWKE: My Lords, did the noble Lord really put in his letters to the Transport Commission all the misdemeanours for which they could be dismissed? Does he really mean to say that?
LORD LUCAS OF CHILWORTH: I will come to that point in a moment. The noble Lord, Lord Rennell, said that all these terms could not properly be included in a letter of appointment, and then he cited the Companies Act. The Companies Act, and the regulations regarding directors in the Companies Act, are there to protect the shareholders against misdemeanour by the directors. The Companies Act has nothing to do with the Iron and Steel Corporation. That is not set up by the shareholders; it is set up by His Majesty's Government. It is an entirely different conception. I cannot add anything useful to what my noble friend Lord Morrison said in short we feel that the required degree of flexibility could not possibly be introduced into a set of regulations. A letter of appointment will contain all the major points which have been raised by noble Lords opposite during the Committee stage. All that is proper to be included in that letter will be included, but the terms may vary as between different members of the Board. I will just cite one case by way of example. It may be that one very desirable member would not give up his present occupation unless he had a substantial period guaranteed, whereas it may be that another very desirable man would perhaps be so advanced in years that he would consent to serve only for a short period.
On behalf of His Majesty's Government, I am prepared to give this firm undertaking: that normally the appointments to the Corporation would not be for periods exceeding five years. Retiring members would be eligible for reappointment and the Minister would make such arrangements as were appropriate to the circumstances of particular

7
appointments to secure suitable staggering of retirements. I am prepared to give that undertaking on behalf of His Majesty's Government, but for the reasons that have been so well put all through the Committee stage, and which I have now reiterated, I regret that I cannot accept this Amendment.
LORD HAWKE: My Lords, I was not going to speak on this Amendment, but the noble Lord told us something about the letters of appointment to the members of the Transport Commission containing a list of the things they must not do, failing which they would be removed. I asked him if he could confirm that, and he has not confirmed it. Later on in his speech, he went on to say that different terms might be applicable to different members. Are we to understand that certain members of the Transport Commission hold office so long as they attend 50 per cent. of the board meetings, and another 25 per cent. so long as they remain of sound mind? Possibly, for great intellects, there is not the same discretion. The noble Lord has definitely told us that. I think he should be more specific as the general public are interested in this matter.
LORD LUCAS OF CHILWORTH: My Lords, may I, by leave of the House, speak again? I thought I said that all the points raised by noble Lords opposite which were proper to be put in a letter of appointment would be so put. They have ranged from insanity to insolvency.
LORD RENNELL: Put into all the letters?
LORD LUCAS OF CHILWORTH: Put into all the letters, where it is applicable.
LORD HAWKE: They have been in the case of the Transport Commission?
LORD LUCAS OF CHILWORTH: They have been in the case of the Transport Commission, and they will be carried on with that degree of flexibility which in the Minister's discretion is applicable to the individual cases.
VISCOUNT BRIDGEMAN: My Lords, I can see the point which the noble Lord, Lord Lucas, has made about tenure of appointments of members of the Transport Commission, although I still agree with my noble friend behind me that that
8
could perfectly well be put into regulations. But I submit that nothing which the noble Lord, Lord Lucas, has said really affects that part of the case for this Amendment which rested on the Amendment which I myself moved during Committee stage of the Bill—namely, the Amendment which dealt with the compulsory retirement of the members of the Transport Commission when they become insolvent or become of unsound mind and so forth. The noble Lord opposite has made a plea for flexibility. Flexibility is something which we on this side all want in proper cases, but I would ask whether the noble Lord or His Majesty's Government really want flexibility in the following matters which were the subject of my Amendment on the Committee stage—namely, that a member should retire compulsorily if he took another job when he was a whole-time member; became bankrupt; made personal profit out of a contract; dealt with other interests which he had not disclosed; and so on and so forth. Those are matters on which there ought to be no flexibility at all, and my Amendment on the Committee stage was designed to make sure that there could be no flexibility there, any more than there was under the Companies Act.
With regard to the question which the noble Lord raised as to whether the Companies Act applied, of course he is perfectly right in saying that where there is only one shareholder there is no need for the Companies Act to apply, and that a public corporation is not a company under the Companies Act. So far, so good. But my point is not quite covered by that answer, because a public corporation ought, surely, to have the same standards in its conduct of business as any company, public or private, constituted under the Companies Act. My original Amendment was designed to make sure, and to write into the Bill, that the standards regarding members of the Corporation would be the same high standards as Parliament rightly expects in public or private companies. Therefore, though I can see the point of wanting enough flexibility to make special conditions for the tenure of office, retirement by rotation and that sort of subject which would be dealt with by regulations, I am still absolutely unconvinced that the point which I originally made cannot be written into the Bill.

9
If His Majesty's Government require flexibility to appoint lunatic directors, or to allow directors to take another job at the same time, or to make money out of a contract, then I for one am entirely against it.
THE EARL OF DUDLEY: My Lords, I hope that the Government will give serious consideration to this matter before the next stage of the Bill. Although I made rather a flippant speech on this matter in Committee, I do feel that it is considerably more dignified to make regulations in regard to all these basic matters—from insanity to insolvency, I think the noble Lord said—which affect all members of the Corporation, rather than to embody them in a letter. Because it is done in that way in regard to transport it does not mean that it is the right way to do it. I believe that that is the only nationalisation Bill which has adopted that form of procedure. The noble Lord talked about flexibility. I cannot see that the more flexible way of dealing with the matter is to put all these things in the form of a letter. It must be a very long letter and, if I may say so, rather a stupid letter—and certainly a very undignified letter. Surely the right way to do it is to embody it in regulations. I hope the noble and learned Viscount, the Lord Chancellor, will lend his ear and his weight to the matter of this rather important procedure, although I have no doubt it is not important enough for noble Lords to press to a Division. But if this is to be a dignified business, as I think noble Lords hope it will be, it is important that the Government should deal with this matter in the proper, sensible and dignified way, rather than in the stupid way in which it is to be done.
LORD TEYNHAM: My Lords, we feel that the Government's answer in not accepting this Amendment moved by my noble friend is not satisfactory. Surely it is desirable that certain basic standards should be applied uniformly to all members of the Corporation; and surely the best way of doing that is by way of regulation. The noble Lord, Lord Rennell, said that plain letters of appointment would be insufficient, and I think his point is true. The public have the right to know the general content of appointments, and regulations must be the best way of conveying that information to the public. It is not a matter that we feel
10
should be pressed to a Division, but I hope the noble Lord, Lard Lucas, will be able to give us an assurance that letters of appointment will embody a uniform series of disqualifications; otherwise such letters may lead to variations in the terms of appointment as between different members of the Corporation. I am sure that with this assurance my noble friend would be willing to withdraw the Amendment.
THE LORD PRIVY SEAL (VISCOUNT ADDISON): On behalf of my noble friend, may I say that I hope noble Lords will realise that the Minister will exercise his powers with ordinary good sense and with due judgment. I think we are entitled to assume that, otherwise he ought not to be a Minister. I do not think it will be possible to, give a uniform letter in view of the variety of persons, with varying experience and so forth, whom it may be desirable to appoint. I think noble Lords are pressing the case too hardly, and it really is not practical.
LORD WOLVERTON: My Lords, I must say that I have not been very impressed. Although I am sure we all agree that the present Minister would write a good letter, Ministers come and go, and if this measure reaches the Statute Book it will last for a long time. I cannot see why, since it has been adopted in two Acts—the Electricity anti the Gas Acts—His Majesty's Government cannot accept this Amendment. I hope they will give further consideration to the matter between this stage and the next stage of the Bill. If they can do that, I am willing to withdraw the Amendment.
Amendment, by leave, withdrawn.
2.58 p.m.
LORD LLOYD LORD LLOYD moved, in subsection (6) to leave out "disclosure" (where that word last occurs) and to insert:
"the relevant circumstances have come to his knowledge."
The noble Lord said: My Lords, your Lordships will remember the discussion which we had in Committee on this question of disclosure of interest by members of the Corporation. With the permission of the House, I would like to discuss both this and the next Amendment now; they hang together, and I think it will be easier to discuss them in that way. On the Committee stage we put down the

11
first of these Amendments, and our intention was to prevent a member of the Corporation taking part in the deliberations of the Corporation once his interest had come to his knowledge, not once he had disclosed it—which was a slightly different thing. The Government's objection to that Amendment at the time—and I think it is a very valid objection—was that since the Corporation was not covered by Section 180 of the Companies Act, if a member intentionally or accidentally took part in proceedings when he had an interest (he might not know it, or he might have failed to disclose it) doubt would be cast upon the validity of the Corporation proceedings. I am advised that that is a perfectly substantial argument.
Accordingly, we have tried to get over that difficulty by adding this second Amendment, which, broadly speaking, is modelled on Section 180 of the Companies Act and which attempts to cover the Corporation if a member acts whilst he is disqualified in any way. I must confess I am not entirely certain whether even this Amendment will work, because again there is a possibility of a certain inconsistency with paragraph 3 of the First Schedule which deals with the quorum of the Corporation. I would ask the noble and learned Viscount who sits on the Woolsack if he would deal with that point in his reply.
Apart from that reason, I was impressed by the argument of the noble Lord, Lord Morrison, during the Committee stage, to the effect that if the member in question were an honest man—and of course we hope that he will be—these Amendments would be unnecessary, whereas if he were not an honest man the Amendments would in any case be inadequate. Nevertheless, I think the situation needs clearing up, and particularly the position of third parties. As the Bill is drawn, it seems to me that the contractual rights of third parties are adequately protected, because no member can be disqualified until he has disclosed his interest. Once he has disclosed his interest, he is specifically debarred from taking part in proceedings of the Corporation. If we could have an assurance on general lines that third parties' contractual rights cannot be upset under the Bill as it stands, I think that would go a
12
long way to satisfy noble Lords on this side of the House. I beg to move:
Amendment moved—
Page 2, line 47, leave out ("the disclosure") and insert ("the relevant circumstances have come to his knowledge").—(Lord Lloyd.)
THE LORD CHANCELLOR: My Lords, I have been asked to reply on this matter. I confess that I think the noble Lord would be very ill-advised to press this Amendment for it would have exactly the effect which he does not want to achieve. As subsection (6) of this Clause is drawn, your Lordships will see that it provides an obligation for disclosure by a member "after the relevant circumstances have come to his knowledge." The subsection goes on to state that:
"the disclosure shall be recorded in the minutes of the Corporation, and the member shall not take any part after the disclosure in any deliberation or decision of the Corporation with respect to that contract."
Now suppose that a man is dishonest and does not disclose. He thereby commits one offence under that subsection and not two. He has not disclosed the relevant circumstances, but in that the second limb of the subsection deals with what is to happen after the disclosure, and there has been no disclosure, then consequently the second limb never comes into play. In our view it is very important that it should not come into play. What we want to ensure is that third persons who are dealing with the Corporation in perfectly good faith are in no sense prejudiced. There is a provision under Section 180 of the Companies Act, which provides
"The acts of a director or manager shall be valid notwithstanding any defect that may afterwards he discovered in his appointment or qualification."
If we took these two Amendments—I think the noble Lord was probably acting for the convenience of the Committee in discussing the two together—I am afraid that we should get into considerable trouble. The second of the Amendments deals with any defect that may afterwards be discovered in the appointment or qualification of a member of the Corporation. There can, I think, be no question of a defect in his qualification unless he is a Member of Parliament, because, for

13
the rest, his qualification depends on the opinion of the Minister and so on—it is not objective, it is subjective to the Minister. It is hardly conceivable that the Minister would appoint a Member of Parliament—that would be much too obvious a breach. The real difficulty conies from the Amendment that was made to the First Schedule. If your Lordships will turn to page 67 of the Bill you will find that paragraph 3 of the First Schedule contains these words:
"The quorum of the Corporation shall be such number, not being less than three, as the Corporation may from time to time determine, and where any member is disqualified from taking part in any deliberation or decision of the Corporation with respect to any matter he shall be disregarded for the purpose of constituting a quorum of the Corporation for deliberating on or deciding that matter…"
Observe what would be the effect of the Amendments with regard to a quorum. As we have it at the present time, there is no question of disqualification, because the obligation is disclosure and after disclosure disqualification. If you eliminate the word "disclosure" and put in some such words as "the relevant circumstances" and so on, you might bring about disqualification. That might have an adverse effect on the words in paragraph 3 of the First Schedule, and mean that some innocent third person might find himself in a difficult position because, owing to the disqualification which these Amendments would bring about, there would no longer be a quorum. Consequently, if I may suggest it to the noble Lord—I know that he wants the same thing as I do—I think it would be unfortunate from the point of view of innocent third persons that such Amendments should be put in.
As to the director who ought to have disclosed and who does not disclose, he conies under the full wrath of the Minister, because he has already prejudiced his position in not disclosing, and he can he dealt with or dismissed or whatever it may be, for that. To go further than that would, I think, bring about a result exactly the opposite of that which the noble Lord wishes to achieve. I can give the noble Lord the assurance that under the Bill as it is drafted the proceedings of the Corporation will not be invalidated under subsection (6) of Clause 1, to the prejudice of third parties. Under the subsection as
14
drafted, disqualification arises only where an interest has been disclosed. If you altered the Bill in the way which the noble Lord has suggested you might bring it about that disqualification resulted because there had not been disclosure when there ought to have been and, consequently, you would find all sorts of results arising with regard to the quorum. If I may suggest it, the noble Lord would be well advised, in his own interests and in order to achieve the result which he wants, not to press these Amendments.
LORD HAWKE: My Lords, the noble and learned Viscount, the Lord Chancellor, has dealt very effectively with the more obvious points of these Amendments, but there is one point—actually it may not be a point at all—which is still obscure to me. That relates to the question whether the acts of a member of the Corporation are covered—I refer to acts committed by him out of board meeting. If he is an executive of the Corporation and has delegated powers to decide contracts and so on, it seem; to me, as the Bill is now drafted, he can decide contracts to which he might happen to be an interested party and then be not bound to declare his interest until the next fleeting of the Corporation. That is so far as the disclosure of interest by the man is concerned. As regards the third party would they be covered too? In such circumstances, does the Bill validate any acts that a man may have done, notwithstanding that at the tine he was an interested party?
LORD RENNELL: My Lords, if I follow what the noble Lord, Lord Hawke, has said, I think the instance which he has in mind would be something like this—perhaps it may serve to clarify the matter if I put it in this way. A person being a member of the Board is delegated by the board to negotiate a particular contract. After that board meeting he disqualifies himself by some act such as is provided for in subsection (6). I think the noble Lord is inquiring whether at that point a third party might not be injured by reason of the delegated powers having been invalidated by an action committed by the person between the time of the delegatior of power and the time he committed the Corporation by his signature of the contract.
LORD HAWKE: That is the second point.
THE LORD CHANCELLOR: My Lords, I speak again only by leave of the House. We are dealing here only with the proceedings of the Corporation, and not with those of individuals. If an individual is authorised by the Corporation to make a contract, if it is within the scope of his authority, the Corporation are bound. If outside the scope, they are not bound. If he acts fraudulently towards the Corporation, possibly by entering into a contract with a third party, then he is responsible to the Corporation. This clause deals only with the proceedings of the Corporation.
LORD LLOYD: My Lords, after what the noble and learned Viscount has said, this is not an Amendment I would desire to press. I hope your Lordships will not feel that time has been wasted; I felt it worth while to clear up this matter. I am still not absolutely certain about my noble friend's point being covered or not, but in the circumstances I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 4:
General duty of the Corporation.
4. It shall be the general duty of the Corporation so to exercise their powers as—

(a) to promote the efficient and economical supply of the products of the principal activities of the Corporation and of the publicly-owned companies, and to secure that those products are available in such quantities, and are of such types, qualities and sizes, and are available at such prices, as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and to further the public interest in all respects; and

(b) to secure that neither the Corporation nor any publicly-owned company shall show undue preference to or exercise unfair discrimination against, any such persons or any class thereof in the supply and price of those products, but without prejudice to such variations in the terms and conditions on which those products are supplied as may arise from ordinary commercial considerations.

LORD CLYDESMUIR LORD CLYDESMUIR moved, in subsection (4) (a) to omit all words beginning "to secure" down to and including "prices," and to insert:
"the availability of those products in such quantities, types, qualities and sizes and at such prices."
The noble Lord said: My Lords, your Lordships will recollect that during the Committee stage one night, at a late hour, at eleven o'clock, we had a Division and
16
inserted an Amendment in the Bill. The noble Lord, Lord Lucas, in resisting the Amendment, said that in one respect our Amendment would impose on him an impossible task. We had laid certain duties on the Corporation, and the noble Lord said that to produce enough to satisfy the consumers' demands was a difficult thing to do if the Corporation did not own the whole trade. I admitted that that was so, but I said that that was not the only duty laid down; and on balance your Lordships decided to pass this Amendment. With this Amendment, I attempt to overcome the difficulty to which the noble Lord, Lord Lucas, took exception. My suggestion to the Government is this. The previous Amendment having been carried, if they will accept this Amendment as making a workable proposition then the whole matter may be considered in another place; and if the original Amendment is retained, it will, with this addition, be workable. If it is not retained, of course, that is another matter on which I cannot comment here. I do not want to make a long speech, because my Amendment is designed only to make the Amendment already carried by your Lordships reasonable and workable. I hope the Amendment as a whole will be retained with this improvement. If it is not, I can say no more. It is part of a general effort to secure decentralisation, to which the Government are fully a party.
Amendment moved—
Page 5, line 27, leave out from the second ("and") to ("as") in line 30, and insert the said new words.—(Lord Clydesmuir.)
THE EARL OF DUDLEY: My Lords, I beg to support the Amendment moved by my noble friend Lord Clydesmuir. It is really only consequential upon the Amendment which was carried by your Lordships in Committee. It is clear that as the Corporation will not have a monopoly over the whole field of steel production they cannot possibly secure all the necessary products for the whole field of consumers (I see that the noble Lord, Lord Lucas, nods his assent); therefore, while they can promote a total production, they cannot secure it. For that reason this Amendment is necessary. As my noble friend Lord Clydesmuir pointed out, it also gives effect to the decentralisation policy to which noble Lords opposite agreed. I hope it t will be brought into effect because the

17
Corporation, as the Corporation, cannot secure the necessary products from the publicly-owned companies and the publicly-owned companies themselves must be responsible for providing the necessary products to satisfy consuming interests. For that reason, also, the Corporation can only promote; they cannot secure. This seems a very common-sense Amendment, and I hope the Government will accept it.
LORD LUCAS OF CHILWORTH: My Lords, may I preface my remarks on this Amendment by offering to the noble Lord opposite my complete and total sympathy? As he said, at eleven o'clock, much against his own better judgment, he was pushed ink) the Division Lobby to support an Amendment which was entirely nonsensical and could not work, though no persuasive powers of mine could persuade the noble Viscount, Lord Swinton, that such was the case. That is as I understand it, and I had hoped that the noble Lord, Lord Clydesmuir, was going to be helpful to-day. With your Lordships' permission, I suggest that we consider four Amendments together—namely, those on page 5, line 27; page 5, line 32; page 5, line:33; and page 5, line 37. In manufacturing these four Amendments, the noble Lord tried to make two lifeboats in which he hoped to row to the shore from the torpedoed wreck in which he had left himself by the previous Amendment. There are two alternatives here. I have puzzled these out as best as I can. The first alternative is a combination of the three Amendments on page 5, at lines 27, 32 and 37.
VISCOUNT SWINTON: The Amendments to page 5, lines 27 and 33, go together.
LORD LUCAS OF CHILWORTH: The Amendments to lines 27 and 33 together form the second alternative. If we add them all together, we get even less sense than from the original Amendment. If noble Lords will bear with me, I will read the first alternative. I will not ask your Lordships to puzzle it out for yourselves; that would take too long. The first alternative reads:
"(a) To promote the efficient and economical supply of the products or the principal activities of the Corporation and of the publicly-owned companies and the availability of those products in such quantities, types, qualities and sizes, and at such prices as may
18
seem to the. Corporation best calculated to satisfy the reasonable demands of consumers of those products desiring to purchase them from the Corporation or from a publicly-owned company and to further the public interest in all respects; and
(b) To secure that neither the Corporation nor any publicly-owned company shall show undue preference to, or exercise unfair discrimination against, any such consumers or any class thereof in the supply and price of those products…"
and so on, to the end of the paragraph.
The second alternative says something entirely different—namely,
"(a) To promote the efficient and economical supply of the products or the principal activities of the Corporation and of the publicly-owned companies, and the availability of those products in such quantities, types, qualities and sizes and at Arch prices as may seem to the Corporation best calculated to satisfy the reasonable demands of the persons who use those products for manufacturing purposes and desire to purchase those products from the Corporation or from a publicly-owned Company, and to further the public interest in all respects…"
The first alternative brings back our old friend, the stockist, as the noble Earl, Lord Dudley, said, because it mentions the word "consumers." The second alternative leaves out the stockist and reverts to the person who is a manufacturer. Frankly, I do net know what the noble Lord wants to di
VISCOUNT SWINTON: The second alternative is the stockist.
LORD LUCAS OF CHILWORTH: No. It is the first alternative, because in that you bring in the consumer, and in the definition of "consumer" in the Interpretation Clause is the merchant, whether he be stocking Dr otherwise. In the second alternative you entirely ignore the stockist.
LORD CLYDESMUIR: Just to clear this up, I would like to have the alternatives clearly. I have not yet moved the Amendment that brings in the word "consumers."
LORD LUCAS OF CHILWORTH: I am sorry, but we cannot deal with these Amendments except at a group. In one alternative the noble Lord wants to bring in the reasonable requirements of the consumer—that means the stocking merchant—which we argued previously, and an Amendment was then somewhat reluctantly withdrawn. We could not take into consideration the requirements of

19
the stockist, because they are sometimes duplicated. I argued last time, and I argue again, that the only effective demand comes from the manufacturer. Noble Lords opposite accepted that argument with some reluctance. The first alternative brings in the stockist, and the second alternative leaves him out.
LORD CLYDESMUIR: Would the noble Lord repeat the alternatives as he has put them? It is the second Amendment of the group that mentions "consumers."
LORD LUCAS OF CHILWORTH: The Amendments to page 5, at lines 27, 32 and 37 hang together; it does not make sense unless they do. There is then the second alternative of the Amendments at page 5, lines 27 and 33, which go together. I would say this to the noble Lord. If he will treat either group as consequential, he can have which he likes. I cannot anticipate, but it was mentioned that this Bill will go to another place. All I can hope is that they will not only throw out this Amendment but that they will throw out the first Amendment; that is the only way in which the noble Lord will be rescued from the impossible situation in which he has landed himself through not taking my advice in the first place. But if the noble Lord accepts the first Amendment, I must reserve the Government's position securely upon this question of the consumers. Therefore, as it is a consequential Amendment, I now leave the noble Lord to "pay his money and take his choice."
VISCOUNT SWINTON: My Lords, we have had a very entertaining, if not very enlightening, discourse from the noble Lord. I do not know what is the difference between a Government maintaining their position and a Government maintaining their position securely. No doubt this Government appreciate that rather fine metaphysical—or, indeed, physical—distinction, and have to safeguard it. I would like to say a word about the main Amendment to which this Amendment is consequential. Of course, nobody was hustled into the Amendment by a mistake. We had every intention of moving the Amendment and, if the Committee did not accept it, every intention of dividing upon it. It was an
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extremely sensible Amendment. What did it do? The Bill as drafted gave the Corporation and their subsidiaries the power to manufacture what are called Second Schedule products—broadly, what ordinary people have understood as iron and steel manufacture. It then proceeded to take in a number of other things, which for convenience are called the principal activities, embracing an enormous range of engineering works, from bridge building to ping pong balls.
LORD LUCAS OF CHILWORTH: And babies' bottles.
VISCOUNT SWINTON: And babies' bottles, as the noble Lord says. From the cradle to the grave, this industry is to be taken over—and I am afraid there is likely to be more grave than cradle about it. The Corporation then put upon themselves an obligation to be efficient and to supply the requirements of their customers as regards their Second Schedule activities—iron and steel in the ordinary sense—but they impose no obligation upon themselves vis-à-vis their customers for all the other activities they take over. The very fact—and this is an elementary rule of construction in Acts of Parliament—that you include one thing with a special obligation and exclude another means that you impose upon yourself an obligation as regards the first duty from which you exclude yourself with regard to the second. Therefore, if the Bill had stood in the brilliant way in which the Government presented it to us, they would have had an obligation to be efficient and serve the interests of consumers with regard to iron and steel but no obligation whatever to be efficient or to serve the interests of the consumers with regard to the other principal activities.
That was too much for your Lordships to swallow. Therefore, we decided—quite rightly, if I may respectfully say so—that if the obligation was to be put upon the Corporation and the subsidiaries at all in the terms of the Act, obviously that obligation should extend both to Second Schedule products and to the principal activities. And we stand by that. If it came to the issue as to which proposition is right, I do not think any impartial observer, or indeed any reasonable draftsman, would have the least hesitation in saying what ought to be done. The only defence which the

21
noble Lord can raise for his incontinent rejection of this proposal is that in the words of the Bill as drafted—for which he was responsible—it would not read very well, because it would impose on the Corporation, as regards products in which they had a monopoly, an obligation which was not strictly applicable in its wording to those principal activities in which they had not a monopoly.
I think the noble Lord was only partially right over iron and steel—the Second Schedule products—because actually the Corporation are not taking over the whole of the Second Schedule activities. We had all this out on the Second Reading. In some cases they take over 99 per cent., in other cases 60 per cent., and in another case only 40 per cent. Therefore the glib assurance with which the noble Lord commended this to us before contained a good many loopholes. If he wishes to be logical he will have to re-cast his obligation to vary it with the variation of monopoly which he is applying. We agreed that it was reasonable, if we placed upon the Corporation the new obligation to promote efficiency as regards the other activities—which certainly ought to be there—that we should try to help him to make it not only a better Bill but a better drafted Bill, and include a provision which would best fit both those products in which the Corporation had a monopoly and those in which they had only a subsidised competing interest.
Our proposal, I think, achieves that end. I would say that the first Amendment, at page 5, line 27, and the third, at page 5, line 33, undoubtedly have that result. The others are only partly alternatives. It is true that to be 100 per cent. embracing, and to include a special obligation as regards the stockists, then some special words are required; and I agree that the words about the consumers of those products would probably have to come in. If I may suggest it, I think the need would he sufficiently met if the first alternative were taken and the Amendments at lines 27 and 33 were added. We have a further stage in the Bill and we can look at them to make sure they are right. As regards the Amendments themselves, of course they are consequential upon the main Amendment which the Committee have already made. I do not in the least anticipate what will happen, but obviously if that Amendment is
22
retained Oren the two consequential Amendments will be retained, but if that Amendment should go—I hope it will not—then these Amendments would follow.
VISCOUNT ADDISON: My Lords, on behalf of my noble friend I would like to say that we concur with what the noble Viscount has said with regard to these Amendments being consequential—rather distantly consequential, it seems to me—on what your Lordships did before. So far as we on this side of the House are concerned, we shall not resist them. With all respect to the noble Viscount's reflections upon other aspects of the Bill, he quite properly and discreetly steered clear of the Amendment which was passed in Committee. It is just rubbish and it will not work. However, so far as we are concerned we leave it to noble Lords opposite to choose which alternative they like. We consider they are both absurd.
LORD CLYDESMUIR: My Lords, the noble Viscount has had an opportunity of a very pleasant opening to the debate. The alternative of taking the first Amendment—which, indeed is the only one before the House—and the third Amendment in this group, is the one that we would select. That will secure that the Amendment which was made on the Committee stage is in every sense workable. We can only hop; that the other place will leave it so and thereby improve this Bill, if that is possible.
On Question, Amendment agreed to.
3.35 p.m.
LORD CLYDESMUIR LORD CLYDESMUIR moved, in subsection (4) (a) to omit "the persons who use those products for manufacturing purposes" and to insert:
"consumers of those products desiring to purchase them from the Corporation or from a publicly-owned company"
The noble Lord said: My Lords, during the Committee stage there was a discussion about the position of the stockholding merchants. My noble friend Lord Dudley moved an Amendment to ensure that they would have representation on the Consumers' Council. We did not get a wholly satisfactory reply from the noble Lord, although he attempted to give us some assurance. I wonder whether, between that time and to-day, he has thought the matter over and is able to say anything more about the protection which might be provided. I beg to move.
Amendment moved—
Page 5, line 32, leave out from ("of") to ("and") in line 33 and insert the said new words.—(Lord Clydesmuir.)
LORD LUCAS OF CHILWORTH: My Lords, I thought I made it abundantly clear in Committee that the merchants, whether they are stockists or whether they are not stockists, are included in the definition of "consumer" in Clause 60. It says:
"'consumer,' in relation to any products, means a person who uses those products for manufacturing purposes or is engaged in the merchanting of those products."
That covers a merchant, whether he carries stocks of steel or whether he does not—if he is just one of those ordinary intermediaries between the producer and the consumer. I explained that during the Committee stage. If I did not make it clear then, I trust I have now. Both types of merchant are included in the definition "consumer" in the definition clause and, therefore, are included in the representation upon the Consumers' Council.
THE EARL OF DUDLEY: My Lords, that does not answer the question. The stockholding merchants are a special tribe. They cannot be included as consumers and be represented as consumers on the Consumers' Council. We want to know definitely whether there will be at least one representative of stockholders on the Consumers' Council. This is a matter upon which the National Association of Iron and Steel Stockholders feel very strongly. They want an assurance that:
"a stockholder will definitely be included amongst the fifteen to thirty persons constituting the Consumers' Council to be set up under Clause 6."
I am quoting from a letter from the National Association of Iron and Steel Stockholders. Whatever the Minister may say in defining stockholding merchants, they supply a very significant proportion—in some cases over 10 per cent.—of consumers' requirements, and they are entitled to representation on the Consumers' Council. Their function is a most important one. As I said on the Committee stage of the Bill, a Committee of the Federation has been set up for some years now, which means that these stockholding merchants study their requirements in every possible way. That state of affairs should be continued by giving
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them representation on the Consumers' Council. I hope we shall get a definite answer from the noble Lord about whether they will be represented as an association of stockholding merchants on the Consumers' Council to be set up under this Bill.
LORD LUCAS OF CHILWORTH: My Lords, by the leave of the House I would reply to this one point. I will try to make it crystal clear. Will the noble Earl refer to Clause 7 (2) (b), where it says that the Council shall consist of
"not less than fifteen nor more than thirty other persons appointed by the Minister, after consultation with such bodies (which may include organisations representing workers) as he thinks fit, to represent the interests of persons (hereafter in this section referred to as 'the consumers') who are consumers of the products of any of the principal activities of the Corporation and the publicly-owned companies…"
In the definition clause, "consumers" includes those engaged in merchanting, so I would suggest to the noble Earl that the common-sense interpretation of paragraph (b) of Clause 7 is that the Minister will consult with the authorities representing merchanting interests when he comes to select the people to fill this Council of "not less than fifteen nor more than thirty." I would suggest to the noble Earl that it is perfectly well covered. The interests are going to be consulted with a view to nominating representatives to represent those interests on the Consumers' Council.
VISCOUNT BRIDGEMAN: My Lords, the noble Lord opposite has come very near to giving the assurances that we want, but he has not done exactly what my noble friend hoped he would do, and that is to assure us that the Minister would include the Iron and Steel 'Stockholders' Association as one of the bodies which he thought fit to consult. If that assurance can be given we shall get very near to agreement.
Amendment, by leave, withdrawn.
3.41 p.m.
LORD CLYDESMUIR LORD CLYDESMUIR moved, in subsection (4) (a), after "purposes," to insert:
"and desire to purchase those products from the Corporation or from a publicly-owned company."
The noble Lord said: My Lords, I move this Amendment but I am not going to

25
speak to it, as the matter was discussed on an earlier Amendment. This is the third Amendment in the same group, and I understand the noble Lord is prepared to accept it.
Amendment moved—
Page 5, line 33, after ("purposes") insert the said words.—(Lord Clydesmuir.)
VISCOUNT ADDISON: We acquiesce; we do not accept.
On Question, Amendment agreed to.
LORD CLYDESMUIR: My Lords, the effect of this Amendment will be to make paragraph (b) of this clause into a subsection no longer governed by the opening words of the clause, and this will lay upon the publicly-owned companies themselves the duty not to show undue preference or exercise unfair discrimination. Your Lordships will recollect that the Government accepted an Amendment in Committee providing that this paragraph should apply to preference or discrimination on the part of publicly-owned companies as well as the Corporation. It was a matter upon which we divided. The Government saw good reason for acceptance of this Amendment, and my Amendment now is intended to improve what has already been done. As the paragraph stands, it is left to the Corporation to secure that companies under the Corporation do not show undue preference or exercise unfair discrimination. It is inconsistent with the principle of decentralisation to which the Government and the Opposition alike are committed that the Corporation should have to secure this. It seems right that the companies should stand on their own feet and should be responsible for seeing that discrimination or undue preference is not exercised. The point is a very clear one and need not be elaborated. If the Government accept this Amendment there will require to be an amendment of the marginal note in the Bill. I beg to move.
Amendment moved—
Page 5, line 34, leave out from ("respects") to ("neither") in line 35 and insert ("(2)").— (Lord Clydesmuir.)
LORD LUCAS OF CHILWORTH: My Lords, it is a pity that in the middle of the very good-humoured conversation which we have been having on four Amendments there should be inserted this Amendment which has nothing to do with
26
the others. This is a very serious point. I must, I am afraid, join issue with the noble Lord when he said that we did not object to the original Amendment; it was forced upon us in this House at eleven o'clock at night It brings up once again a vital principle to which we cannot agree: it is putting a statutory obligation not only upon the Corporation—which we accept fully—but upon the publicly-owned companies. The effect of the Amendment would be to split the clause into two distinct sections, and it would place an absolute obligation not only on the Corporation but on the publicly-owned companies not to show undue preference; and the placing of an obligation of this character directly by Statute on the publicly-owned companies does not fit in at all with the conception of this Bill. The conception of the Bill is that the publicly-owned companies shall operate as independent units under the Statute under which all public companies have to operate, and hat is the Companies Act. We say that to impose a statutory obligation of his nature over and above anything in the Companies Acts is something which cannot be done. We suggest that a statutory obligation of this character is a matter—if I may so put it—of moral policy. You cannot put that obligation upon the publicly-owned companies. You can put it on the Corporation, and it will be for the Corporation to see that all their subsidiaries conform to it. We maintain that the duty imposed by Clause 4 must rest on the Corporation, who exercise the duty through control of the companies; it cannot rest on the companies themselves. For that simple reason I must say I cannot accept the Amendment, and I hope the noble Lord will not press it.
VISCOUNT SWINTON: My Lords, I must say this Bill gets queerer and queerer as the debate goes on, and the ideas of what are the duties of the Corporation and the independence of the companies become more involved. What the noble Lord has just said has a bearing upon the more important series of Amendments which will follow presently and upon which I shall have something to say. I would ask the Government this question: Do you or do you not intend that these companies shall show undue preference? The answer must surely be "No." I should have thought that at any rate there should have been an

27
answer to that, because it may be that if there is not a perfectly clear answer we shall have to divide upon it. Who is going to show undue preference? It is not the Corporation, because they are not going to be entering into any contracts. The people who might show undue preference are the people who sell the commodities; and the one body who are not going to sell the commodities are the Corporation. Every selling transaction will be entered into by one of these publicly-owned companies. Therefore, the people who are to be prevented from showing undue preference—and I hope it is common ground between us that undue preference is not to be shown—must be the companies. It seems to me beside the point to say that because we do not find in the Companies Act, which deals with other things, provision concerning undue preference, we ought not in this Act to impose a duty in respect of undue preference upon the individual companies. It has nothing to do with the Companies Act. The Companies Act is the code to which all companies registered in this country, public and private, are subject; and it would be entirely inappropriate to put into the Companies Act anything about undue preference.
How does undue preference arise? Parliament has always said that where something in the nature of a monopoly is created—such as the railways—an obligation should be imposed that those companies (and there were in the old days a large number of railway companies) which are given a special franchise and monopoly by Parliament shall so exercise it that, broadly speaking, they treat all their customers alike. Therefore, the obligation was put upon the railway companies. In the General Act of Parliament which deals with undue preference with regard to the railway companies, you will find that the obligation is imposed upon all railway companies. Therefore, it is quite irrelevant to say that because it is not in the Companies Act it ought not to be imposed upon the individual companies.
It is agreed that there shall be an obligation to ensure that the companies do not grant an undue preference. Very well. And then the noble Lord says, "But it is for the Corporation to see to that, and I am so keen on decen-
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tralisation that I will not allow Parliament"—which, after all, was the body which had something to say as to how this industry was to be run—"to lay down in an Act of Parliament that no company shall give an undue preference. I will insist on having it done in this way: that the obligation is put upon the Corporation and then the Corporation must go to every one of these companies to give them their overriding orders and see that they do not give any undue preference." I should have thought that that was the antithesis of decentralisation. I should have thought that that was putting a wholly unnecessary duty upon the Corporation to go and interfere with every one of these companies, and that the natural thing would be that Parliament, which says, "There shall not be undue preference," should lay the obligation upon the people concerned, and that that principle should be followed also in the case of the subsidiaries. If what we all want to do is to put an obligation upon the companies that they shall not be guilty of undue preference, it would be a more commonsense method to put in the Act of Parliament, "Neither the Corporation nor the companies shall…"
On Question, Amendment negatived.
3.53 p.m.
LORD LAYTON LORD LAYTON moved to add to the clause:
"It shall be the general duty of the Corporation to secure the largest degree of decentralisation consistent with the proper discharge by them of their duties under this Act."
The noble Lord said: My Lords, it may be convenient if we discuss at the same time this Amendment and the two which follow. It has been stated a number of times from this side of the House that it is a matter of great regret that in this Bill there is no group of clauses defining the rights, duties and functions of the publicly-owned companies. A great deal is said about the Corporation, but almost nothing about the publicly-owned companies. To use a political analogy, it is as though we were drawing up a federal scheme. A phrase which has been used about this Bill is that it is a new departure, or inclined to be a new departure, from previous nationalisation Acts. But it would be a strange federal scheme which defined the duties

29
and responsibilities of the central authority and said nothing about the State rights.
This series of Amendments is put forward with a view to bringing to the front that aspect of the nationalisation of the iron and steel industry and endeavouring, as was suggested in the discussion during the last debate, not merely to talk about the Corporation but to state positively what is expected of, and what protection is given to the autonomy of the independent units.
From that point of view these three Amendments are small and moderate. But they at least serve the purpose of opening the issue of giving some kind of protection to the individual companies. The first Amendment is a statement of the general principle of decentralisation. The second requires that the Corporation should proceed to do something about it, and not leave it merely as a vague and general aspiration. That having been done by the Corporation in drawing up any statement of the rights, duties and functions of the separate companies, it is essential, if the separate companies are to act on their own, to some extent in defiance of authority, and in order to have time to prove themselves right, there must be some sort of security of tenure for the directors while they are doing it. The third Amendment represents an attempt to give some sort of security of tenure. Though these Amendments are a very small charter for the independent companies in the iron and steel industry, they embody the three points I have mentioned—namely, a statement of general principle, an obligation to prepare a statement as to how decentralisation is in practice to be carried out, and an indication that there must he security of tenure for the directors.
It may be said that as the Government are in general terms in favour of decentralisation, and believe that this Bill should be built up on the basis of decentralisation, then all that is necessary is to pass the first of these Amendments and leave the others to the good sense of the Corporation. I venture to say that that is not sufficient. First of all, an assurance cannot bind a succeeding Parliament, even if that assurance is given in the utmost good faith. We accept
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absolutely at their face value the various assurances that have been given by the present Minister of Supply, but before the Minister carries out in detail the provisions of this Bill there is, first, the hurdle of a General Election and, secondly, the question whether, even if Labour is returned to power, the present Minister of Supply will still be in charge of that Department, seeing that the turnover of Ministers in that particular office has been rather rapid.
It is not merely that we are unwilling to depend upon assurances. The fact of the matter is that the Government themselves will have to include safeguards against a trend in the opposite direction. A strong tendency towards bureaucracy has shown itself under the present Government. But I want to make this point: it is not merely the tendency towards bureaucracy that has to be resisted; it the fact that very definite arguments in favour of centralisation can be adduced. Indeed, they have been heard even during the course of this debate. It is true that if there were intervention in the management of all the firms concerned, and if all were made to work on what is at this moment the best practice, in an attempt to secure increased efficiency, the results might at first be beneficial. The argument has been used by analogy with war time, and I myself am convinced that a great deal of the background of feeling in favour of this Bill arises from wartime experience. It is said, with truth, that when the Government took control of the engineering shops and told them how to do this and that, there was built up a tremendous production. But it is always possible to do that in war time, and in the short run, when there are standard products. You will even get an advance in technical development under the high pressure of war time. After all, the enemy is producing product after product and your life depends upon matching and beating him.
But in spite of the fact that war time is a time when the maximum initiative must be shown on the home front, war-time experience showed that this tendency to centralisation led to stereotyping production; and many of your Lordships know the difficulties and the problems of getting innovations accepted and passed under conditions of war. You can raise efficiency by standardisation, and raise it

31
to the highest level. But that, after all, is the totalitarian argument; it is the case put forward by the Communists. The point is that in the long run you undermine efficiency; you standardise; and you rule out the enterprise which is absolutely essential if an industry of this type is to do that which it is necessary to do for the country as a whole.
Therefore, we need all these three things—a statement of principle, the instrument to draw up a plan of relationship between the centre and the units, and security of tenure. I strongly urge the Government to accept these three Amendments, first for their own protection against what they know will be a strong pressure towards centralisation and, secondly, because I think it is exactly the kind of thing that your Lordships' House should do. This Bill was under discussion for months in another place and never was this point raised. I suggest that it is essentially the kind of thing that your Lordships' House should do—namely, to put these three Amendments into the Bill and send it back to the other place amended in that way. My Lords, I beg to move the first Amendment standing in my name.
Amendment moved—
Page 5, line 42, at end insert the said new words.—(Lord Layton.)
VISCOUNT SWINTON: My Lords, all your Lordships will be grateful to my noble friend Lord Layton for putting down this Amendment and for continuing the important discussion we had on an Amendment of mine in Committee. I believe that the whole House felt then that something had to be done. We were not happy to leave the Bill as it stood; nor were we altogether happy with any of the suggestions put forward on that occasion. Since then we have had an opportunity to reflect and to have a good deal of discussion, and these three Amendments do three things to give effect to the policy of decentralisation. First, they lay down a cardinal principle in the Bill; secondly, they provide that the Corporation, when they have made their plan as to how they are to decentralise, shall inform the Minister, and the Minister Parliament; and thirdly, there is the provision about security of tenure for the directors.
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Let me first say a word about the last point, because, frankly, I attach much less importance to that one than I do to the first two. The first two I regard as essential. I think the Government would be well advised to accept the third Amendment because it would give a feeling of confidence to all the boards of these companies. The Government may say that when the Corporation becomes the sole shareholder in these companies, it could, upon twenty-eight days' notice, get rid of every board of directors from the companies—it could sack the lot; and I agree that in those circumstances it is not much use inserting into this Bill a provision to the effect that with regard to the rotation in the appointments of directors the Articles of Association shall not he changed when, by this overriding arbitrary power the Corporation can do everything they please with any board. Therefore, while I feel that it would be a sensible thing to do, I do not attach overwhelming importance to it.
Having said that, however, I think it makes the first two of the Amendments all the more essential. It is agreed even, I think, by the Government—that decentralisation is desirable. If so, and if it is to be (as Lord Lucas told us to-day) the cardinal principle on which the Act is based and the method on which the Act is worked, I should have thought that the cardinal article of faith and conduct would find its place even in the shortest of short catechisms—and much more in the long catechism which contains all the faith. The noble Lord, Lord Lucas, told us on June 28, when dealing with the particular Amendment in regard to decentralisation:
"I can tell the noble Lord frankly that we accept it in principle, but there is no necessity for it because the principle is there now. The very set-up of this system by which we keep in existence the identity of the individual firms shows that we require decentralisation as much as possible."
But in that argument the noble Lord forgot that one wholly new factor has come into consideration. The set-up is not the old set-up of ninety-six competing companies; the set-up now is that of a Corporation which will become the sole shareholder and controller of every one of those companies. As Lord Layton said, one learns from experience that the whole tendency, the inevitable tendency, of these nationalised monopolies is towards centralisation and uniformity.

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When we said that on the first of the nationalisation Bills we were told that we were talking theory. To-day, we are not talking theory; we are talking in the light of experience. Look at the experience we have had! As an example may I take coal, which to-day is centralised to a very large degree? There is great complaint, both among the miners and among the managers, about this excessive centralisation. Even the Government admit it, and yet they said on the Bill we discussed the other day, "We know we shall have to alter all this, but the time is not yet ripe." I thought the time was ripe when one had found the mistake. But having fallen into that error in coal, let us guard against it in the much more diverse and difficult conglomeration of industries with which we are dealing here. It is not only so in the case of coal; in the case of transport it is even worse. In the coal industry there are regional boards with some independent power. In the transport industry, regional boards have been set up on a pattern which makes any individuality quite impossible. The members of these regional boards are really projections of the people on the board at the centre. Each member of the regional boards is responsible to his opposite number at the centre, and, as we all know, a completely centralised policy is carried out.
We put a great many duties upon the Corporation by this Bill. It is made the duty of the Corporation to see to efficiency and all the rest of it. The noble Lord emphasised just now that it is for the Corporation to see that there is no undue preference. Of course, the Corporation will have to give broad directives on policy. It may well be that they will sometimes have to get down to a certain amount of detail. Suppose, as I said during our previous discussions, there was a slump and the production of steel had to be curtailed. It may well be that plans which have been made and which the Government said were inadequate will, in a normal world, be rather more than adequate. If steel production has to be cut down, clearly the Corporation must say how much steel is to be produced; they must say how production is to be cut and where it is to he cut. The difficulty is not in regard to giving broad directives on policy but with respect to the method
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of execution. That, of course, is the field of the managements, and we say that it is essential that these firms should be free to carry out their own ideas.
I cannot say how much I agree with Lord Layton as to the value of diversity in this matter, as against uniformity. You have to consider not only steel making in the broadest sense but particular engineering enterprises the names of which have become household words because of the particular way these individual firms do theft jobs, whether it is in producing structural steel, in bridge-building or whatever it may be. What is right for firm A is not necessarily in the least right for firm B. Surely the wise thing to do is to say in the Bill that a diversity of practice is required. If we do not do that we shall certainly get uniformity. A duty is imposed on the Corporation to see that each of these firms is most efficient, and that the most efficient practice is followed. I have heard it said that one of the things the Government will do—I thought it was going to be the Corporation but now I hear it said by a Government spokesman that it is going to be the Government—will be to make less efficient firms more efficient, presumably by applying to the less efficient firms the standards of other firms. I can visualise the Corporation saying: "We have that duty. It is our duty to compare, it may be, Dorman Long's with Guest, Keen's, and see which, in our view, gives the better results. Then it may be that to carry out our duty of seeing that the industry is efficiently conducted, we shall have to say to Dorman Long's: 'You shall work in the way Guest, Keen's work if we think it the better way.'"
Even if on occasion the Corporation were right and they succeeded in improving the efficiency of one firm by making; it carry out the practice of another, in the long run it appears to us to be certain that tendencies to centralisation and uniformity will destroy all the initiative of competing practice and will land us in a far less competent, because far less practical, practice in steel and engineering than we have at present. Companies must retain their initiative; and not only that, but they must have confidence that they will retain it. And the Corporation, on their side, must know, by the direction given by Parliament in the Bill, that hat is the inten-

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tion of Parliament and that that is the policy which they have to carry out. Therefore I think it is essential that we should lay down that decentralisation shall be a principle under which the Bill is to work. It is no mere question of administration. So I think the first Amendment is absolutely essential. And I am bound to say that I think the second Amendment is hardly less necessary. After all, what are the Corporation going to do when they get started? Presumably the first job of the Corporation during the nine months' period of gestation before the companies are absorbed—that metaphor may not be quite the right one; the Corporation no doubt will proliferate too; indeed it will do both—will be to decide how they are to run their business. They are given no direction in the Bill or by the Minister. In fact, I beg leave to say that I do not believe the Minister has the faintest idea how the Corporation are going to do their job. Therefore, what they have to do, in consultation with the companies, which they will not by then have taken over, will be to work out how this principle of decentralisation is to be applied. Why should we not know? It is not going to be easy.
I was reading recently—and I am sure the noble Lord, Lord Lucas, who reads the best books has read it also—T. S. Eliot's Definition of Culture, and I came upon this sentence in it.
"Decentralisation under central direction would be a contradiction."
The noble Lord, Lord Lucas, is much more cultured than I am, but I am bound to say that that is a contradiction which the Government have not yet attempted to overcome. And I do not think they have the least idea how they are going to overcome it in the operation of this Bill. Surely it is reasonable that Parliament should know how they are going to do it. That is all we are asking here. We do not ask for it to be laid down in regulations or in any orders to be brought forward. We ask that the Corporation, when they have made up their minds how decentralisation is to work, should inform the Minister. Presumably they will do that because he has the responsibility. And when the Minister is told by the Corporation how they are going to work why should not Parliament be informed? After all, it is with us in Parliament that responsibility lies. The Minister is respon-
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sible to Parliament. Why should he not come to Parliament and say: "This is the way in which the Corporation will do it"?
Perhaps the noble Lord will tell us to-day exactly how they are going to work, but I shall be surprised if he does. If he is honest with the House—and I know that he will be—I am sure he will say to the House in effect: "I have not the least idea how this is going to work." I am sure that if he has been instructed correctly—and he must have been instructed as to what he is to say—the Minister will say: "I do not know how they are going to work. I am not going to give the Corporation any direction. If the Bill goes through I, or my successor, will form a Corporation." And then what? If he is asked: "Do you know what the Corporation are going to do?" he will reply: "Of course I do not. I shall not know until the Corporation are appointed. The Corporation, when they have been appointed, will not know until they have directed their minds to it and engaged in contemplation and"—I hope—" in consultation as well. Then they will make up their minds as to how they are going to do it and I shall know."
If that is the position, why on earth should not Parliament know? We have had far too much—I do not want to use an offensive word; I was going to say "evasion"—may I say, "avoidance" in these matters. The Minister may say, "I am not concerned with details. It is not for me to answer to Parliament for that. This is an administrative detail, because it is the responsibility of the Corporation." If the Bill is left as it is, the Minister would be constitutionally able to say that to Parliament. But your Lordships will agree that that is not good enough for us. This is a most hazardous experiment. No one knows how it is going to be carried out. No one knows, and many of us are anxious or suspicious, how it is going to succeed or fail. At least we have the right to be informed about how things go. That is all the Amendment asks. It says that when the Corporation have made up their minds about how they are going to carry out this process of decentralisation, they shall inform the Minister and the Minister shall inform Parliament. Parliament has a clear right to that information. Ordinarily, when we have Bills brought before us, we are told how they are going

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to work. But this Bill does not tell us. Never has such a Bill been presented to Parliament in the history of the country. At least Parliament is entitled to say, "If you do not know now, when you do know, come and give Parliament the information."
4.22 p.m.
LORD RENNELL: My Lords, since this group of three Amendments also stands in my name, and since it has been agreed that the general principles underlying them should be debated now, I should like to turn to one aspect which seems to me to be of outstanding importance. The question of decentralisation is now accepted, I hope. The status of the Corporation as a holding company and the question of decentralisation have been the subject of many debates, and I do not propose to continue on those lines; but there is one aspect which I do not think has been fully emphasised in the course of any of the debates that have so far taken place on the Bill. I would go back to what the noble Lord, Lord Lucas of Chilworth, said this afternoon in connection with the Amendment to page 5, line 34, where the Amendment sought to place statutory obligation on one of the publicly-owned companies. The noble Lord said that the whole scheme behind this Bill was that statutory obligations should be imposed on the Corporation but not on the publicly-owned companies—the publicly-owned companies being governed in their existence by the Companies Act—and that the obligations which were not contained in the Companies Act but which were contained in this Bill should be placed on the Corporation and not on the publicly-owned companies. That was the gist of his argument—the noble Lord will correct me if I am wrong.
The fact remains, however, that while these publicly-owned companies continue to exist and have their being under the Companies Acts under which they were founded, and under the last Companies Act, so far as it governs their activities this Bill alters their status to a remarkable degree. In the first place, the Ninth Schedule alters the rules and regulations which govern them under the present Companies Act. Not to put too fine a point on it, what this Bill does is to create an entirely new relationship for the companies which have their
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existence under the various Companies Acts. The relationship which they will have with the Corporation hereafter will be something quite new. The main method by which the Corporation will impose their wishes on these companies, however much decentralised they are, is ultimately through getting rid of the directors; that is the sanction. The status of directors will be profoundly modified by the provisions of the Ninth Schedule. Therefore, having modified that position, it is essential to consider what the status of the directors and boards will be after that modification has been effected.
Under the present provision which governs companies and commercial relations generally, no one can give an order to a board, yet this Bill requires that the Corporation shall in fact give orders to boards. That is an essential difference. The whole theory behind the governing of companies up to date has been that the directors of a company take certain actions, and ex post facto they are held responsible to and by the shareholders for all they have done—but after the event, not before. No shareholder to-day can in law go to a board of directors and say he wishes them to do this; no man can go to any director and say he wishes him to do that. Yet this Bill, as is manifest throughout, requires that the Corporation shall in certain circumstances go to these boards and tell them that the Corporation wish them to do this or that. That imports an entirely new relationship and, broadly speaking, it is with that new relationship which these three Amendments deal, especially the second.
If this Bill had had a little more thought given to it before it was drafted and presented to Parliament, a Committee or a body of people would have been summoned to consider what might be the relationship between the Corporation and these separate companies. There are all sorts of administrative questions that must leap to the mind upon even a superficial consideration of this matter. Do the board or the Corporation, through their chairman or collectively, send for the chairmen of the companies they are taking over under the Third Schedule and tell them what their programme is to he for the next week or the next month? If properly decentralised, the answer is

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"No, they do not. They wait until after the event." Throughout the Bill, nevertheless, the Corporation are required to do some things which involve anticipation of the event and not approval or disapproval after the event. How then is that direction, those orders, those programmes, to be conveyed? Does the chairman, through the secretary or the machinery of the Corporation, say to every individual company, "I want you not to draw wire, but to make rods," or, "We want sections of this size and not of that size for the next two months." Or do the directors of those companies still, in their wisdom, as they do to-day, roll the sections which they think, by ascertainment from the Iron and Steel Federation, the market requires and will require for the next few months? In other words, what is the administrative relationship between the Corporation and the companies?
I can readily see that a centralised machine would be much easier to work, at any rate in theory, than a decentralised machine. Do not think I am in favour of centralisation, because ever since the Second Reading I have been harping on that subject, as have most of your Lordships on this side. If we were to reduce the boards of all the Third Schedule companies to nonentities, to rubber stamps, and have a direct relationship between the managerial set-up in the Corporation and the managerial set-ups in the companies, then we should have a single operating Corporation throughout. I can conceive that that would be workable, at any rate on paper, but we have been assured by the noble Lord, Lord Lucas, and by other noble Lords throughout the debate—and we have heard it said in another place—that that is not the intention. We have been told that it is the intention to keep both the management and the directors of the Third Schedule companies in existence as independent bodies, and to have that minimum of control which will direct them alone the lines of the various clauses in this Bill.
If you disregard the centralisation theory in favour of the decentralisation set-up, which Lord Lucas and everyone has accepted, that connotes a new relationship for which there is no provision anywhere in this Bill. But even these three Amendments will provide
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only a slight indication of the administrative change made, which would become public only on the laying before Parliament of the scheme referred to in the second of this group of Amendments. I confess that I am still left with the idea that, even if the Government accept all these three Amendments (I do not know how many they will accept, if any), the question of what is or ought to be the administrative connection between the top and lower levels has not been thought out. It was not considered when the Bill was drafted, and does not appear to have been in the Government's mind at any time during the months that this Bill has been debated by both Houses. We have had no indication that this matter has been considered. If it had been thought out, I believe that we should have had some sort of indication.
I agree with the noble Viscount, Lord Swinton, that if Lord Lucas were to give a straightforward reply to the question as to what this administrative connection between headquarters and the companies ought to be, he would say: "I do not know." If he said that, he would probably go on to say: "It will not be the same between the Corporation and company A as it will be between the Corporation and companies B, C, D and E." In other words, he may say (I do not know what he will say, and I do not want to put words into his mouth) that it will be a different relationship in each of the cases of the larger companies. If it is different in each of those cases, it nevertheless creates a new relationship, because if it is tight in one case and loose in the other it requires a whole new corpus of administrative thought, and, indeed, a legal set-up, which goes far beyond anything contemplated in the Companies Act or in this Bill. It is quite clear that there is no such scheme as yet in existence, because otherwise not only would it have figured in statements made but I believe it would also have figured in the Ninth Schedule, whereas in the Ninth Schedule all we find is one sanction only—namely, the removal of the directors.
The removal of the directors is a very interesting subject. It is open to a board of directors, on being told that the Corporation desire to remove Mr. A from the board because they consider him obstructive or difficult—I am not talking

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about the removal for incompetence, but the removal for disagreement—to say that they also will resign. Obviously that would create a good deal of publicity if it happened in the case of a large company, and it would necessitate the Corporation, after consultation with the Minister, invoking the powers provided in the Ninth Schedule to get rid of the whole board. But as a piece of administrative machinery, is it really suggested that it is a good and easy working machine where you provide only one sanction—namely, the sanction of sacking? It is rather like trying to use a shotgun to exterminate flies. There may be a little piece of grit in the administrative machine between the Corporation and a company. Are the Corporation, every time that little piece of grit appears, from the mentality or the actions of a person on the board, always to hold out the threat of the big gun, always to hold out the threat of sacking—and sacking not only that director but also the other directors if they happen to agree with the candidate for removal? That suggests to me so crude a relationship that I am fortified in my conviction that what this relationship is and ought to be has never been thought out, and that if it had been thought out we should have had a differently drafted Bill.
I shall have one other thing to say when we come to the third of these three Amendments, but I will not anticipate that now. I hope the Government will find it possible to agree with the first of the three Amendments, to which other noble Lords and I have spoken, and I now beg to support it.
4.35 p.m.
LORD LUCAS OF CHILWORTH: My Lords, may I first express my gratitude to the noble Lord, Lord Layton, for putting these three Amendments together? As he quite rightly said, they hang together. May I also, with respect, say how much I appreciate the tenor, not only of his speech but of those of the noble Viscount, Lord Swinton, and the noble Lord, Lord Rennell? These Amendments raise the general question of the relationship between the Corporation and the publicly-owned companies, a matter which was raised in Committee by the moving of two Amendments—namely, the new clause after Clause 4 and the addition to
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the Ninth Schedule. I agree with most of what has been said this afternoon, and I do not think there is much between the Government and the noble Lords who have spoken on these Amendments. To show the Government's sympathy with the spirit that is behind these Amendments, I am prepared on their behalf to accept the first Amendment, if the noble Lord, Lord Layton, will move it in slightly different terms, which I will mention in a moment. However, I hope to be able to persuade the noble Lord to withdraw the other two, by convincing him that they would be absolutely inoperative.
On a number of occasions the Minister has declared his intention that the Corporation should act as a holding company, leaving a wide measure of discretion and initiative to the boards of the underlying companies—I am now trying to deal with the question of centralisation that has been raised. The holding company technique has been well developed, not only in this country but throughout the world. The precise form which it has taken in any particular group has varied according to the circumstances of the industry concerned. However, there has been one common element in them all—namely, that the shareholding concentrates the ultimate control at the centre. That is the one common factor in any holding company that has been formed, not only in this country but throughout the world. The precise way in which this technique will be applied to the iron and steel industry following the implementation of this Bill must depend in large measure on the respective personalities of the Corporation and the directors of the underlying companies. These directors will retain a large measure of independence and initiative. Surely, there is no reason why, with good will and common sense, those qualities cannot be preserved and enlarged upon quite a substantial scale.
The next two Amendments are an attempt to write into the Statute something which in the ultimate must depend upon the human relationships. Quite frankly, they fail in exactly the same manner as the two Amendments on the same subject, which were moved in Committee, because they attempt to define the indefinable. It is the view of the Minister that his responsibility for the success of this Bill is at its height when

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he makes the initial appointments of the members of the Corporation. It is his intention to find persons who can set and maintain a course of high policy and who can run the organisation, not as a single manfacturing unit directed from above at every point but as an organisation which depends upon the good will, tolerance and integrity of those at every level, including in particular the chairman, directors and technicians of the individual companies. I submit to your Lordships that if the good will and tolerance of these people cannot be secured by good sense, no statutory provisions, however brilliantly drafted, will ensure that success will be achieved. Those are the general grounds on which I ask the noble Lord not to move the second and third Amendments. As an earnest of the Government's firm intention—it has been repeated times without number—that we shall carry on this policy of decentralisation, if the noble Lord will move his first Amendment in the following terms I shall be prepared to accept it. It will be to insert as a new sub-paragraph (c):
"to secure the largest degree of decentralisation consistent with the proper discharge by the Corporation of their duties under the preceding provisions of this section and under any other provision of this Act."
With the second Amendment, the noble Lord is really asking the Corporation to do something which is absolutely impossible. The noble Viscount, Lord Swinton, made my case when he said that the conditions which will suit firm A are totally different from the conditions and the set-up which will suit firm B. Yet you are asking, by this Amendment, that, before the date of transfer, the Corporation shall disclose to the Minister and public at large some cut-and-dried scheme showing the manner in which they propose to exercise their rights. There may be all sorts of schemes appropriate to a wide division of 250 firms. How can you ask the Corporation, nine months before the vesting date of this Bill, to come before Parliament and say "This is precisely how"—
VISCOUNT SWINTON: Will the noble Lord forgive me? It is not to come nine months before the vesting date. It is between the date of the Act's coming into force and the transfer date, which is again nine months. One job of the Corpora-
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tion will be to find out how they are going to do it. That is what we ask that they should tell us.
LORD LUCAS OF CHILWORTH: It may be nine years before the technique is worked out with some of the divers interests in the steel industry. You are asking the Corporation to do something which I suggest no noble Lord sitting as chairman of that Corporation would ever take the responsibility of doing. For an industry like the iron and steel industry to arrive at a cut-and-dried plan in nine months everybody's interests would have to be ridden over roughshod. How are you going to have consultation with boards of directors of 250 firms to see whether an overall plan suits every particular set-up? The noble Lord does not want this uniformity or cast-iron rigidity of working to a planner's plan. It is an absolute impossibility, and it could not but break down. It could not succeed, because you could not have the necessary consultations with the 250 boards of directors of the principal companies in this industry. I suggest that the plan in some regards will never be finalised at all.
VISCOUNT SWINTON: Not even before the Judgment Day?
LORD LUCAS OF CHILWORTH: Not even before the Judgment Day—or at least before the noble Lord appears on the Judgment Day. With regard to the third Amendment—
LORD RENNELL: I was proposing to speak to the third Amendment when we reach it.
LORD LUCAS OF CHILWORTH: Then the noble Lord will have an opportunity of answering anything I say now. The noble Lord who moved the first Amendment really spoke to all three, and I thought I should deal with the points he raised.
LORD LAYTON: In moving the first Amendment, I suggested that it should be possible for the debate to cover the other two.
LORD LUCAS OF CHILWORTH: That is what I am doing.
LORD LAYTON: But I take it that there will also be an opportunity of speaking to the other Amendments.
LORD LUCAS OF CHILWORTH: When the noble Lord has listened to me, I hope there will be nothing further to be said. So far as I understand the third Amendment—and I may be wrong—it appears to me in any event to be ineffective unless you alter the provisions of the Ninth Schedule in paragraphs 4 and 5. You could not have this Amendment and leave those paragraphs as they are. That may be a technical reason for not accepting this Amendment. The purpose of this Amendment, as the noble Lord said when he moved it, is to freeze for five years the boards of these companies and to freeze the Memorandum and Articles of Association as affecting the appointment and the dismissal of the directors.
LORD LAYTON: With respect, that does not freeze the board.
LORD LUCAS OF CHILWORTH: If you say that the provisions of the Articles of Association as they affect the dismissal are to be inoperative, I do not know what it is but freezing. I think the noble Viscount, Lord Swinton, gave the noble Lord the best answer. Is it conceivable that any Minister, unless he qualifies for that category about which noble Lords were so anxious this afternoon—the category of insanity—for the sole purpose of riding roughshod over the board of directors would "sack the lot"?—they were the noble Viscount's words. That is the only object which has emerged from the discussion we have had upon the third Amendment. If it is because you think their security of tenure is necessary to give them the incentive to carry on that they should have the fear of the sack removed, are you going to extend it to the technicians?
LORD HAWKE: This is very important. The noble Lord is definitely giving out to the world at large that our Amendment freezes the directors in their jobs. I cannot see that at all. They hold their jobs according to the Articles of the company, and the company can always get rid of them.
LORD LUCAS OF CHILWORTH: The Amendment says:
"A publicly-owned company shall not, within the period of five years immediately following the date of transfer, add to or alter any of the provisions of its memorandum or articles of association which relate to or affect the appointment or tenure of office of its chairman or
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president or similar officer or of its directors or any of them, except in pursuance of a recommendation of its board of directors."
VISCOUNT SWINTON: That does not mean that every director is to hold his appointment for five years. The ordinary Articles of Association provide that some of the directors come up every year for re-election. If you leave the Articles alone the Bill goes through and the Corporation is formed. On July 1, five directors of Dorman Long come up, under the Articles of Association, for re-election. The Government, without altering the Articles of Asscciation, could say "We do not want these five gentlemen, we want five other gentlemen." It does not freeze anybody.
LORD LUCAS OF CHILWORTH: Perhaps I had better wait and hear what the noble Lord, Lord Layton, says is the purpose of this Amendment because I cannot see its force. If it is not to make security of tenure for existing directors then I do not know what it means. Perhaps I have entirely misunderstood the clause, and I will therefore wait until the noble Lord speaks again in the hope that he may throw on the Amendment some light which has escaped me at the present time. But with regard to the first Amendment, if the noble Lord will move it in the terms I have suggested I am prepared to accept it.
LORD CLYDESMUIR: My Lords, I should like to draw your Lordships' attention to the very serious position into which the Government have got themselves. As the noble Lard has said, they have given assent to the principle of decentralisation and are prepared to go further by accepting the first of these Amendments, but they are quite unready to consider what decentralisation means and are quite prepared to visualise a period, which might be up to nine years, before the principle of decentralisation can be defined.
LORD LUCAS OF CHILWORTH: Will the noble Lord forgive me? I did not say that. I said before the ultimate plan can be worked out.
LORD CLYDESMUIR: I will accept the noble Lord's amendirent, "before the ultimate plan can be worked out." This is in line with what has all the time been happening in relation to the Government's treatment of the iron and steel

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industry. Ever since the present Government took office there has been indecision, and the Bill has been brought forward only after many vicissitudes and changes; and now they do not know what the Corporation are going to do. I speak from experience of the industry in Scotland, and it is a long way from London. As I said before, there is no iron curtain across the Border; the industry in Scotland is integrated with the industry in England, but on a voluntary and flexible basis; and there is a great anxiety that decentralisation should not only be accorded to it in name but should be a fact. I therefore suggest that the noble Lord should press this Amendment and should seek from the Government something more than the Micawber-like attitude of "waiting for something to turn up" which is all they have shown up to the present time. Surely it should be possible, in the time before the general date of transfer, for some serious thought to take place and a provisional scheme brought forward; otherwise, the noble Lord's assurances that decentralisation is the intention of the Government are without avail. I hope the noble Lord will press his Amendment.
LORD LAYTON: My Lords, I am quite prepared to accept the Government's redrafting of the first Amendment. I beg leave to withdraw my original Amendment.
Amendment, by leave, withdrawn.
LORD LAYTON: My Lords, I beg to move the Amendment as suggested by Lord Lucas.
Amendment moved—
Page 5, line 42, at end insert—
"(c) to secure the largest degree of decentralisation consistent with the proper discharge by the Corporation of their duties under the preceding provisions of this section and under any other provision of this Act."—(Lord Layton.)
On Question, Amendment agreed to.
4.55 p.m.
LORD LAYTON LORD LAYTON moved to add to the clause:
"The Corporation shall, before the general date of transfer, prepare and submit to the Minister a scheme showing the manner in which they propose to exercise the rights conferred on them by the holding of interests in publicly-owned companies so as to secure for those companies the largest measure of
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autonomy consistent with the proper discharge by the Corporation of their duties under this Act, and the Minister shall lay a copy of such scheme before each House of Parliament."
The noble Lord said: My Lords, I beg to move the second of these Amendments, and in doing so may I say that I find Lord Lucas's explanation completely unsatisfying. After all, it is not as though this were a new problem; it is not something that has to be discovered by experiment. The holding company technique existed in this country, in Germany and in the United States many years ago. I.C.I. has its holding company; there is Unilever, and the German steel cartel—they all have long experience of drawing up the relationship between the centre and its subsidiaries. Generally speaking, this problem of decentralisation in huge mammoth organisations is one which has been growing and developing over a decade. The Government now seek to ask us to accept the view that they will find out by trial and error. This proposition of trial and error, and nothing more, which the Government offer us, will, I fear, end in error.
The noble Lord said the ultimate solution will not be reached for ten years. Of course not. We are not here asking the Government to write out from A to Z a complete organisation, with every detail of the relationship of the centre. All we are asking them to do is to indicate the limitations of the power which the Corporation will exercise over the management of the companies. We are not asking them, for instance, to enumerate every single possible thing that they will not do. It is significant that in this Bill there is hardly a clause which contains the phrase "the Corporation shall not" do anything. This is a very mild Amendment asking the Corporation, before they begin to function, to say that they will not go beyond a certain line. It is absurd to say that it is impossible to give any general indication. Of course, in the first instance, it will be a general indication, and of course it will be flexible. It is not suggested that once it is laid upon the Table of Parliament it is there for all time; naturally it can be changed by experience.
I am left completely cold by the suggestion that one would not find anybody to accept a position on the Corporation on these terms. It is not a very astonishing proposition to try to collect a group

49
of people and say, "We want you to launch this particular industry; we ask you first to band yourselves together and say how you are going to do it, and we then want to have a look at the result before it is brought in." I cannot conceive anybody saying that that is an intolerable proposition to put up. I do not feel disposed to withdraw this Amendment; indeed, I ask your Lordships to carry the Amendment for its own sake, as well as for the argument which I made in the last sentence of what I said before: that this is the sort of function which we can properly undertake—namely, to present an Amendment like this to another place and ask them to consider it. I beg to move.
Amendment moved—
Page 5, line 42, at end insert the said words.—(Lord Layton.)
THE EARL OF DUDLEY: My Lords, I do not think your Lordships realise what a very important function the British Iron and Steel Federation plays in this industry. It controls the policy of the industry, and it has a wide network of committees which cover every aspect of the industry. I think I may safely claim that the good conduct story of the industry and the high standing which it enjoys in the eyes of the public, and particularly the consuming public, is due lamely to this highly efficient organisation which governs the policy of the industry. For many years now it has formed an effective link between the Ministry and the individual companies, and yet they are outside the ambit of the Federation. Once the policy has been laid down by the Federation—a policy which is, of course, largely directed by the Government—the individual companies, under their boards of directors, are entirely free to carry on within the ambit of that policy. We have not been told to-day what is to take the place of the Federation. I think that is a most important question; we must know that. We must be told at the earliest possible moment what kind of organisation this Corporation is going to set up. Will it take the place of the Federation? Will it have a similar constitution to that which the Federation now has? If so, noble Lords will be well satisfied, because the Federation has worked well. But we must have some kind of idea of how this organisation is going to work;
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and I submit that the matter is being left on a very unsatisfactory footing. For that reason alone I am glad to hear that the noble Lord is going to press his Amendment to a Division.
There is another aspect. Every manager, at a great many levels, is wondering what his position will be. These managers, as I have explained before, are men upon whom the industry depends. Many of them are very independent men—they are by no means "Yes men"; and it is their healthy, stubborn and independent point of view which has been largely responsible for the success of the industry. Theirs is a healthy, independent point of view. These men will not continue in the industry unless they know that under nationalisation they will have the same measure of responsibility as they enjoy at present. Therefore, if the Government are going to retain the services of these men at various levels they must offer them some security of tenure and some responsibility in the future—I am speaking not only of the present managing directors but of men at various levels who are working up to that position. It is very important that the Government should give some indication of what they are working to and what the position of these people will be in the future.
VISCOUNT BRIDGEMAN: My Lords, I think the noble Lord, Lord Lucas, when he was discussing this second Amendment during the passage of the first Amendment, dealt more or less under two headings with the problem of what is to happen to the nationalised companies. There was the questien of the directors themselves, and also the question of how the administrative arrangements would be worked by the Corporation and the nationalised companies. As this debate has proceeded, I, for one, have become less and less clear about what is going to happen; and I can assure noble Lords opposite that the steel companies themselves, small and large, are getting very perplexed about it.
Take the question of the directors themselves. I understood the noble Lord, Lord Lucas, to say that the Corporation would like to wait and see how the directors behaved themselves and what they were like. If they were satisfactory they would no doubt remain in office, but if not, the Ninth Schedule

51
would be brought into play and they could be put out straight away. Then the noble Lord likened the position between the Corporation and the publicly-owned companies to the position between a holding company and its subsidiary companies. I do not think that is quite a fair parallel, because if the noble Lord will reflect on some companies of which he knows, he will recall that there is an exchange of directorships between the holding companies and the subsidiaries—if, in fact, the directors are not the same. That produces a different personal aspect from the aspect in this case, where the Corporation will consist of one set of people and the boards of the publicly-owned companies of another, with no connection. That is why the noble Lord's argument that it will be the same in this case as in the case of a holding company and its subsidiaries will not fill the bill, and why it is necessary that some sort of indication should be given of what are going to be the relationships between two entirely different sets of people.
I was interested to hear the noble Lord's remarks about the administrative aspects. What is the working going to be between the publicly-owned companies and the Corporation—and possibly the Federation? This is really fundamental, whereas, perhaps, the question of the directors themselves is not. This question of administrative working takes us right back to the good old days, when it was still thought necessary by noble Lords opposite to say that this Bill for the nationalisation of iron and steel was necessary for making certain administrative improvements, to improve the integration and to increase the efficiency. If that was ever true, then presumably the Government must have had some idea in mind how they were going to work it and what they were going to do. It makes a great deal of difference, because if the companies are to carry on with their commercial and productive operations in the same way as before, why in the world is nationalisation necessary? Conversely, if nationalisation is necessary, then what steps are to be taken to bring about the benefits which Parliament and people have been assured will flow from it? The noble Lord, Lord Rennell, when he spoke on the preceding Amendment made a great deal of
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that point and I wish to emphasise everything he said about it. There must be some commercial changes which have been thought of in the Ministry of Supply; there must be the question concerning the way in which responsibility will be placed. Technicians, for instance, may have their own technical channel of communication independently of the boards. If that has not been thought out, then the case for the Amendment standing in the name of the noble Lord, Lord Layton, is a cast-iron one.
But when the noble Earl, Lord Dudley, began to talk about the Federation, then, I think, the full case for this Amendment came out. He dealt clearly with the matter and with the co-ordinative functions exercised by the Federation. If the Federation disappears, or if arrangements are made whereby the companies have to work for the Corporation on subjects in respect of which they now work for the Federation, then there will be major interference with the day-to-day administration and with the commercial business of the companies, and therefore interference with the day-to-day production of steel. Surely, if we want—as we all do—to maintain the record-breaking production of steel, we ought to use the time we have in getting down to the problems posed by this Amendment. It is in order to make sure that these problems are really studied that this Amendment has been moved.
LORD LUCAS OF CHILWORTH: My Lords, I fear that nothing that has been said by the noble Lord who proposed the Amendment, or by any other noble Lord, has convinced me that this would be other than the greatest burden and handicap to put upon the Corporation. You are asking the Government to manufacture in nine months a strait jacket into which to place approximately 250 companies. Are you asking it to produce this master plan before consultation with those companies? If so, what are you going to do with 250 companies who disagree with the plan and say: "That particular plan will not suit my method"? How are you going to consult 250 companies and get a large measure of agreement in nine months?
THE EARL OF DUDLEY: My Lords, may I interrupt for a moment? Noble Lords may remember that in 1930 the steel industry was invited by the then

53
Chancellor of the Exchequer and the Prime Minister to appoint an independent chairman and entirely reorganise its constitution on condition that it was given a preference to bring it into line with the industry in competing countries. That was done within the space of six months and the constitution then drafted has never been altered.
LORD LUCAS OF CHILWORTH: My Lords, there is no parallel at all between the two. I cannot accept this Amendment, for the reasons already stated. It may seem desirable. It is rather like one of those delightful educational graphs that appear in a weekly periodical which the noble Earl knows as well as I do. It looks lovely as a graph, but I am far more interested in the practical, human difficulties of resolving some of the problems which will have to be resolved by 250 boards of directors in nine months. I am surprised at the noble Earl. I hope he will forgive my saying that a speech like his about security of tenure is a damaging speech and is far more likely to undermine any sense of security in the industry than do otherwise. Other noble Lords on these Benches and I—indeed the Minister himself—have made it plain that we intend that the boards shall run largely as they now do. They will have a great measure of decentralisation. And now the noble Earl makes a speech like that. It is a shameful thing to try and make a point in this debate by introducing discord.
THE EARL OF DUDLEY: Wait and see what happens.
LORD LUCAS OF CHILWORTH: It is for those reasons I cannot accept this Amendment.
VISCOUNT SWINTON: My Lords, I think that is the most extraordinary speech that anybody has ever heard from the "Ministry of Planners." A Bill is introduced, and the whole industry is to be transferred to the Corporation. We ask the Government: "What is the broad, plan of relations between the commander-in-chief and the corps commanders?" They reply: "We do not know." We say: "We think it rather odd that you should have produced the Bill without in the least knowing how it is going to work. When you have set up the Corporation and know what their plan is and how it is going to work, will you tell us?" The reply is "No." When we ask why, we are told "It is because we do not know when they will have a plan or whether they will have a plan." I say that you have no business to transfer ninety companies, 290 companies or even one company to this Corporation until you know, or, at any rate until the Corporation know, how it is going to work. The short answer of the planner—I am not sure whether the Minister of Supply is an Etonian, but I rather think he is, and no doubt he relies upon the "Distant Prospect" of his old school—is:
"Where ignorance is bliss,
'Tis folly to be wise."
On Question, Whether the said words shall be there inserted?
Their Lordships divided: Contents, 63; Not-Contents, 21.

CONTENTS

Cholmondeley, M.

Swinton, V.

Hawke, L.

Salisbury, M.

Trenchard, V.

Howard of Glossop, L.

Townshend, M.

Jessel, L.

Willingdon, M. [Teller.]

Sheffield, L. Bp.

Layton, L.

Llewellin, L.

Beatty, E.

Ashton of Hyde, L.

Lloyd, L.

Buckinghamshire, E.

Baden-Powell, L.

Mancroft, L.

Dudley, E.

Balfour of Inchrye, L.

Milverton, L.

Fortescue, E. [Teller.]

Barnby, L.

Montagu of Beaulieu, L.

Halifax, E.

Blackford, L.

Moyne, L.

Howe, E.

Brassey of Apethorpe, L.

O'Hagan, L.

Lindsay, E.

Carrington, L.

Remnant, L

Munster, E.

Cherwell, L.

Rennell, L.

Selkirk, E.

Clanwilliam, L. (E. Clanwilliam.)

Rochdale, L.

Ypres, E.

Rockley, L.

Clydesmuir, L.

Saltoun, L.

Bridgeman, V.

De L'Isle and Dudley, L.

Somers, L.

Buckmaster, V.

Derwent, L.

Strathcarron, L.

Caldecote, V.

Fairfax of Cameron, L.

Strathcona and Mount Royal, L.

Cowdray, V.

Forester, L.

Davidson, V.

Gifford, L.

Teynham, L.

Falmouth, V.

Grenfell, L.

Wardington, L.

Monsell, V.

Hacking, L.

Wolverton, L.

NOT-CONTENTS

Jowitt V. (L. Chancellor.)

Ammon, L.

Kershaw, L. [Teller.]

Archibald, L.

Lucas of Chilworth, L.

Addison, V. (L. Privy Seal.)

Chorley, L. [Teller.]

Macdonald of Gwaenysgor, L.

Crook, L.

Marley, L.

Huntingdon, E.

Darwen, L.

Morrison, L.

Hare, L. (E. Listowel.)

Pakenham, L.

Hall, V.

Henderson, L.

Shepherd, L.

St. Davids, V.

Holden, L.

Strabolgi, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
5.24 p.m.
LORD RENNELL LORD RENNELL moved to add to the clause:
"A publicly-owned company shall not, within the period of five years immediately following the date of transfer, add to or alter any of the provisions of its memorandum or articles of association which relate to or affect the appointment or tenure of office of its chairman or president or similar officer or of its directors or any of them, except in pursuance of a recommendation of its board of directors."
The noble Lord said: My Lords, I beg to move this Amendment on behalf of my noble friend, Lord Layton. This is the third of the group of Amendments. I told Lord Lucas in the course of my remarks on the first part of this group that I would have something to say; as a matter of fact, I have many things to say. First, I think the noble Lord was misinformed in what he started to say but stopped saying when we dealt with the first of these Amendments. It is not true that this would "freeze" a board of directors. The intention is to leave the provisions in the Ninth Schedule as they are, but that the Corporation should not exercise their right as the sole shareholder to alter the method in which directors are appointed or re-appointed. For instance, if one-third of the directors of a company retire at the end of each year, the Corporation should not put in the articles a provision requiring that all the directors should retire every year. This Amendment by no means carries out our full intentions, but its sole object is to give the boards of directors a greater feeling of security during the initial five years; and it is limited in its operation to five years.
We have spoken a great deal, ad nauseam almost, of centralisation and decentralisation, and I am not going over that argument again. But suppose the Minister appoints a Corporation who find it difficult to organise the group of
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companies for which they become responsible as the sole shareholder, otherwise than by centralising more than is the intention of the Minister and the Government to-day, the object of the Amendment is to ensure that the boards of directors shall not be made into "rubber-stamp" boards within a short period of the commencement of operation of the Act. At the end of five years things will perhaps have settled down a little and some of the plans to which the noble Lord referred may have evolved in the minds of the Corporation and the Government and they may have a scheme by then. The object of the Amendment is to avoid in the initial period a snap decision by the Corporation designed to alter the composition of boards of directors without taking sufficient time to think about it; and also to ensure that the people who have so effectively carried on the direction of the steel industry up to date shall feel that their work has been recognised by having at least five years during which to look around and, if they do not agree with the Corporation, eventually to fade out of the picture. This is not a powerful Amendment; it is an Amendment designed mainly to secure confidence and to ensure what the noble Lord himself, I think, had in mind—that there should be continuity and that people should not feel that they were at the mercy of the Corporation, to be got rid of each year by the simple process of altering the articles.
Before I close my remarks on this Amendment (because I dare say there will be a number of speakers upon it) I would like to point out that to-day we have eight Amendments to Clause 4. On Committee stage this particular clause was discussed for some time. I have not calculated the number of man-hours that have been spent in your Lordships' House in dealing with Clause 4, but the fact that so much has had to be said about Clause 4 shows how unsatisfactory it appeared to be to us in the form in which it came—and it is not satisfactory

57
even now. Much attention has been devoted to this clause and it is right that a great deal of attention should be devoted to it, because in a sense it is the most important part of the whole Bill. I wonder whether a case has not been made out, as shown by this debate and all these Amendments, for recasting the whole of Clause 4, and whether that course should not be taken between now and the time when the Bill as amended will have to be reconsidered in another place. I do not want to be controversial about it, but I do not think the question of the relationship between the Corporation and the subsidiary companies has been properly thought out. I do not believe that it was ever properly discussed with the industry; in fact, I do not think it was discussed at all. I believe that if Clause 4 remains even as now amended, it will still be a very bad statement of the duties of the Corporation as a whole. I hope the Government will consider the desirability of re-casting the whole of the clause so as to devise a text which will satisfy the real and sincere opposition which has been expressed from this side of the Committee to the clause in its present form. I beg to move.
Amendment moved—
Page 5, line 42, at end insert the said words.—(Lord Rennell.)
LORD LUCAS OF CHILWORTH: My Lords, I have only a very brief word to say in regard to this Amendment. I have said, and I repeat it, that the Minister and the Government recognise that the whole success of the Iron and Steel Corporation, under this Bill, must rest upon the confidence which can be brought into the relationships between the Corporation and the boards of the individual companies. If anything such as the noble Lord fears is likely to happen, no provision such as that which he has moved will alter the position. But if there is that confidence which I hope and believe there will be, nothing which he has set out in this Amendment will be necessary. I am sorry that I cannot accept the Amendment, but, as I say, I take the view that there will be that confidence of which I have spoken. The Government and the Minister will do everything they possibly can to inspire that confidence between themselves, the Corporation and the boards of the companies.
On Question, Amendment negatived.
5.33 p.m.
VISCOUNT SWINTON VISCOUNT SWINTON moved to add to the clause:
"() If any such undue preference or unfair discrimination as aforesaid is shown or exercised or reasonably apprehended, any person affected shall have a right of action for damages, or for an injunction or other relief as may be just."
The noble Viscount said: My Lords, we had some discussion last time not as to the merits of this Amendment but as to whether special provision was necessary. I was advised by very high legal authorities that such provision was necessary. I have since been supplied with a report of a judgment delivered by the late Lord du Parcq, in a case as recently as April 1 of this year. I would like to read to your Lordships an extract from that judgment. Lord du Parcq said:
"The question whether the imposition of a duty by a particular Statute impliedly gives a right of action to a person injured by reason of a breach of that duty frequently demands the attention of legal practitioners and of the courts."
The noble and learned Lord then went on to cite a number of authorities in which it depended upon the particular Statute, whether an individual had, or had not, a right. He went on—I am sure that your Lordships will pay to his words attention which you would pay to the words of few in matters of this sort—to deliver a passage which was characteristic of his very charming sense of humour.
"To a person unversed in the science, or art, of legislation it may well seem strange that Parliament has not by now made it a rule to state explicitly what its intention is in a matter which is often of no little importance, instead of leaving it to the courts to discover, by a careful examination and analysis of what is expressly said, what that intention may he supposed probable to be. There are no doubt reasons which inhibit the Legislature from revealing its intention in plain words. I do not know, and must not speculate, what those reasons may be. I trust, however, that it will not be thought impertinent, in any sense of that word, to suggest respectfully that those who are responsible for framing legislation might consider whether the traditional practice, which obscures, if it foes not conceal, the intention which Parliament has, or must be presumed to have, might not safely he abandoned. The questions which this traditional legislative reticence so often brings before the courts are sometimes difficult…"
Then he says that in the case before him the question is not so difficult, and he goes on to state the conclusion to which he came.
I think we should pay this tribute to Lord du Parcq's memory. We should carry out the very serious advice which he gave us—that when Parliament means there to be a right of action in a case like this it had better say there should be a right of action. I beg to move.
Amendment moved—
Page 5, line 42, at end, insert the said new subsection.—(Viscount Swinton.)
LORD STRABOLGI: My Lords, this Amendment looks attractive at first sight. Before saying a few words about its merits I am going to suggest that the language of the Amendment is capable of improvement. If the noble Viscount will look at the last line I think that if instead of the words "or for an injunction or other relief as may be just" he might agree that we should substitute: "or for an injunction or for such other relief as may be just." I suggest that the addition of the two words "for such" would he an improvement, if it is intended to press the Amendment.
VISCOUNT SWINTON: Yes; I think I agree.
LORD STRABOLGI: With regard to the merits of the Amendment I understand that, in any case, it is really redundant as there is ultimate recourse to the courts long before that stage is reached. There is also the most elaborate procedure of the appeal, by way of the Consumers' Council, to the Minister, and I presume that the most rapid way to obtain redress in the case of a flagrant example of discrimination would be for a consumer to approach his own Member of Parliament and get the matter raised in the House. I imagine that it would be perfectly in order to do so. That being so, I suggest that the Amendment is redundant, although, as I admit, at first sight it may seem attractive.
THE LORD CHANCELLOR (VISCOUNT JOWITT): My noble friend the Leader of the House has asked me to speak on this matter. By reason of his kindness and his determination to see that I do not try to do too much, I have not had a great deal to do with this Bill, so I bring, I hope, a rather fresh mind to bear upon it. I would say by way of excuse only that I have not been altogether idle in regard to other Bills which
60
have been, and are being, dealt with. I have looked at this clause, and may I say that of course I am familiar with the speech which the late Lord du Parcq made in the recent case. I think the broad general legal principle is this: that whenever you find an obligation imposed you have to try to find out, from the whole purview of the Act, whether it was or was not the intention of the Legislature to give a right of action to an individual aggrieved by what is alleged to be a breach of the Act. It is by no means always an easy matter to decide. I strongly take the view in this case that on the general purview of this measure an individual would have such a right of action. That is my view as the Bill now stands.
But when I advise your Lordships upon points of law, I always try to give you the benefit, for what it is worth, of my honest opinion, and I cannot say that I think the matter is beyond any doubt. I think that any lawyer who might be listening to me would agree with what I say. If asked for my opinion I say that I take the strong view that the man would have such a right of action. But I do not say it is one of those cases in which I cannot be wrong. I have often in my life been wrong, and this may be one of the cases of that sort. So I state at once that there is an element of doubt. I do not think there is very much, but that element of doubt could be removed if this Amendment were inserted. So far, I think I have candidly given the noble Viscount what he wants.
When the noble Viscount the Leader of the House asked me to take on the task of dealing with this Amendment I looked at it and I also looked at the clause more critically than I had done previously. I must say that to my mind Clause 4 is a most amazing clause—I speak with particular reference to paragraph (b). I am quite familiar with the obligation not to grant undue preference. We might have such a thing as an electricity company or a railway which has particular rates, or anything of that sort, and it is then fairly easy to work. But when you have a concern like the iron and steel concern—not be it observed merely the Corporation, for this applies to every publicly-owned company—when I am told they must not give undue preference. I begin to wonder what on

61
earth it means. When I see the obligation qualified in Clause 4 (b) by the words
"but without prejudice to such variations in the terms and conditions on which those products are supplied as may arise from ordinary commercial considerations"
then I say, with the greatest respect, that all this talk about no undue preference is meaningless.
As a statement of intention, this Amendment is no doubt unexceptionable. Obviously we do not want by malice to put anybody out of business. We are all agreed that would be most improper. Equally it is obvious that these publicly-owned companies must not be hampered in the ordinary conduct of their business. They must not have to say, "If I charge 5s. to Mr. A, I must remember that I charged only 4s. 9d. to Mr. B, and some other public companies somewhere else charge only 4s. 3d." It may be that these would be ordinary commercial considerations. I do not know whether the fact that one has dealt with a man for a long time or the fact that one wanted to secure his patronage is an ordinary commercial consideration or not. These matters are really not fit for the courts at all. They lie in the realm of vague intention, of general moral principles. I suggest that what we ought to do is what we did in the Transport Act. It is true that the Transport Act contains no section against undue preference, because the conditions are so different, but in the Transport Act there are sections imposing duties for the purpose of particular users, as, for instance, reserving for them the right to have a certain method of transport if they like that best. What we did in that case—and your Lordships passed it—was to insert this provision:
"Nothing in this section shall be construed as imposing on the Commission, either directly or indirectly, any form of duty or liability enforceable by proceedings before any court."
That is to say, the remedy is a Parliamentary sanction and the right of appeal to the Minister. I suggest that is the way to do it here. I very much hope that the courts will not be burdened with trying to make sense out of this quite unprecedented provision about undue preference.
This Amendment is pointing a sort of signpost to everybody, and there may be evilly disposed people who want to bring this scheme into discredit and who would start all sorts of actions in the
62
courts. The unfortunate judges would then have to try to determine the meaning of a clause which is really almost meaningless. I suggest that the remedy here is the Parliamentary remedy. If any of these things are done, then do not go to the courts with it, but to the Consumers' Council and the Minister, and have the question raised in Parliament. Though, of course, I agree with the noble Lord who moved the Motion and with Lord du Parcq's reasoning, that we intend that benefit to inure to a particular individual, thanks to this Amendment I have had my attention directed to the statement in Clause 4 dealing with "no undue preference" and to the qualification which is placed upon such preference, and I take the very strong view that this is not a matter for the courts at all. I take the view that the right thing to do is for the Government to table an Amendment at Third Reading (and my noble friend the Leader of the House will be able to speak presently and say whether in his opinion this is not the better course), making it plain that though we accept the general statement that the Corporation and the publicly-owned companies shall not, by means of undue preference, put a man out of business, we consider that this matter is fit not for the courts but for the Consumers' Council and the Minister. The sanction against these things being done shoal be Parliamentary control and not the control of the courts. For these reasons, I am not prepared to accept the Amendment. It is pointing a finger and inviting everybody to bring actions in the courts, when the courts are not fit tribunals to determine an issue of this sort.
VISCOUNT SWINTON: My Lords, while we are indebted to the noble and learned Viscount the Lord Chancellor for his legal advice on this matter, I am sure the House is greatly taken by surprise. After all, this was not our plan at all. It is true we inserted this provision, but it was by common consent. The noble Viscount in charge of tie Bill said he welcomed the Amendment providing that it was the duty of the Corporation to secure that there would not be undue preference; but the duly not to give undue preference was always in the Bill. It was the Government's plan that it should be in the Bill. There was a great deal of discussion in another place and

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upstairs, where they had the benefit of the advice of the Law Officers, and the only issue then raised was not whether there should be a right of action—that, the Government said, was their intention —but whether, if there was to be a right of action for a breach of statutory duty, it was necessary to have a provision to that effect. Then the Law Officers gave advice which was contrary to the advice which is tendered to-day on the purely legal aspect by the noble and learned Viscount the Lord Chancellor. The Law Officers in another place said that undoubtedly there would be a right of action for breach of statutory duty. The noble and learned Viscount said to-day that on a construction of this Bill, if it goes through in this form, he is fairly sure there would be a right of action, but the matter is certainly open to doubt, and if we intended to give a right of action we should follow Lord du Parcq's advice and insert a provision that the right of action would lie.
I thought that the natural conclusion was that the noble and learned Viscount would say the House should accept this Amendment. But he has made the most extraordinary proposition. On an Amendment which is merely to clarify a common legal intention, he has asked the House, without any notice or anything on the Order Paper, to revise the whole structure of the Bill and the whole intention of the Government as presented by the Minister of Supply in another place and presented in this House by the galaxy of talent which has occupied the Front Bench throughout your Lordships' debates on this measure. If it be the considered intention of the Government to make us a proposal on Third Reading which is entirely contrary to everything the Government have advanced and advocated hitherto, we shall, of course, see it on the Order Paper and your Lordships, I am sure, will always consider such a proposition on its merits, even if it is produced as a complete change and at the last moment. I do not know what view your Lordships will take about it. Frankly, I do not know what view I shall take about it, because I have never had the chance of considering it. We will certainly consider it between now and Third Reading, but I think it would be most unreasonable of the Lord Chancellor to ask the House to reject my Amend-
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ment, which he agrees is necessary and desirable if the Bill is to retain the structure and purpose which up to now, both here and in another place, every Government spokesman has said it shall have. Therefore, with great respect, I would suggest to your Lordships that the right course now is to insert my Amendment, which is necessary if the Government plan as hitherto before us is to be made effective. The Lord Chancellor, if he is so disposed, could then on Third Reading put down an Amendment to delete the Government clause and my Amendment, and whatever other provisions have to be deleted if this plan is to succeed, and to insert all the constructive Amendments about the Consumers' Council and reproducing the provisions which exist in the Transport Act. We must have time, of course, but we will certainly consider those matters when they come before us.
I make no complaint of the Lord Chancellor—he was not invited to study it—but it is a little odd that we should have got so far and then be told (we are grateful that we have been told) by the highest legal authority on the Government side that everything the Government, fortified by their Law Officers, have said hitherto is quite unintelligible—they were almost the Lord Chancellor's words, though I do not want to misquote him. I ask your Lordships to make the Government scheme a workable scheme by passing my Amendment now. We can then decide on Third Reading whether my Amendment and the Government's main clause should be deleted.
VISCOUNT ADDISON: My Lords, perhaps I may intervene for a moment; I do so with considerable hesitation when these highly legal questions are at issue. May I first of all call attention to the history of this particular Amendment, about which I confess I caused more careful inquiries than usual to be made for my own information? It appears that this provision was not in the Bill at all when it was introduced; it was moved on Report in the other place at the instance of the Federation of British Industries. The qualifying words were always intended and understood to reduce the number of cases going to the courts. But I agree with the noble Viscount, Lord Swinton, that it is not fair to Parliament

65
to pass a Bill in which there is a provision which is open to doubt. Therefore, when these explorations were continued more carefully, I definitely took the line that we were not acting fairly by leaving the question in doubt, whichever way it was.
There then came the question as to whether that doubt should be resolved in the way the noble Viscount has suggested. His is an attractive and simple way of resolving it, but when one thinks about it a little more carefully, on the question of whether this really is fair, one finds that it would open the door to vast numbers of actions and claims for damages by all sorts of people on exceedingly vague terms. Your Lordships will notice that the clause, as the Lord Chancellor pointed out, uses the words
"exercise unfair discrimination against"—
what "unfair" means I do not know—or acted
"without prejudice to such variations in the terms and conditions.…"
VISCOUNT SWINTON: My words are the same as those used in the Bill.
VISCOUNT ADDISON: I know. But when you come to suggest that these things are to be put in the Bill, and are to be grounds for actions for damages, vague as they are, one begins to wonder what masses of cases may not be presented. It would be hopelessly embarrassing to the Corporation. There is also this point, which to my mind makes it worse. This is a part of the ordinary duty of the Corporation. In general terms I suppose it would be sufficiently well understood, but if you look at paragraph (a) you will see that it is the duty of the Corporation to supply products of certain types, qualities and sizes and at certain prices, to various people. If a case of unfair discrimination is to be brought into the courts, I should have thought that any one of a multitude of questions arising out of the others might, with the same fairness, be brought into the courts.
VISCOUNT SWINTON: The noble Viscount will forgive me for interrupting. We have suddenly been faced with this without notice at all.
VISCOUNT ADDISON: I accept that.
VISCOUNT SWINTON: I would like to clear up this matter. If my Amend-
66
ment is not accepted, the Lord Chancellor has told us—not because of the difficulty of construing this, but because of this particular case—that he is practically certain that a right of individual action will lie by the imposition of the statutory duty. My Amendment does not make the action any more difficult; it only makes perfectly clear that that is the intention.
5.58 p.m.
VISCOUNT ADDISON: I am well aware that what the noble Viscount seeks to do is to resolve the doubt—if there be a doubt—in one particular way. I say quite definitely that he would resolve it. But what I am addressing myself to is the question whether this is the right way to deal with it. This is the business of the Corporation, just as is the provision of bars, wire, and other things, under paragraph (a). What is the provision we have before us? It is not that the Corporation should be brought before the courts if one firm or another does not get the right casting or bar or whatever it is; that is not the scheme at all. It seems to me to be completely impossible to run the business on those lines. This Corporation I hope will behave sensibly and have the confidence of the different boards, and there will be the Consumers' Council to deal with questions brought before them. But one thing which I am sure will make the scheme unworkable is if all these business details are to be the subject of actions in the courts. We could not do it. Therefore, I myself—I confess it to the noble Viscount opposite—have reluctantly come to the conclusion that what we ought to do is to adopt the provisions in the Transport Act and say deliberately that cases shall not be brought before the courts. That resolves the doubt in the other direction.
In the Transport Act it is provided in Section 3 (5):
"Nothing in this section shall be construed as imposing on the Commission, either directly or indirectly, any form of duty or liability enforceable by proceedings before any court or tribunal to which they would not otherwise be subject."
That was specially put in, and we agreed to it. Quite honestly, Mien you look at the considerations involved in paragraph (b) and compare them with the considerations involved in paragraph (a), which are very much akin in a hundred different ways, it seems to me that the

67
better thing to do is to say that these cases must be dealt with in the ordinary business dealings of the Corporation. The proceedings of the Consumers' Council will be reported to the Minister, and if there is any grievance it will be brought before Parliament, just as in the case of the Transport Commission. The better thing to do is to remove the doubt by saying that grievances shall not come before the courts, but will be dealt with in the practical businesslike way. I admit that this is unexpected, and it is only as a result of the most anxious consideration, but I am quite sure it is the right way of dealing with it.
LORD BALFOUR OF INCHRYE: My Lords, the noble Viscount the Leader of the House has put forward the proposition that the doubt which is admitted to exist should be resolved in a particular manner. But, with respect, the manner in which the Leader of the House suggests it should be resolved is not the proposition before your Lordships' House at the present time. Therefore, I think we are put in some difficulty. Surely, that would come at a later stage in the Bill. What is now before your Lordships is: Shall we pass the Report stage of the Bill to-day with that doubt existing, or shall we remove that doubt by adopting the Amendment moved by my noble friend? Again, with respect, I do not think that the alternative is really germane to our discussions here this afternoon. That must be decided when your Lordships have had time to consider the proposition, and no doubt it will be decided one way or the other. But surely it would be wrong in Parliamentary practice, and would not be a right course for your Lordships to pursue, to leave the matter in doubt now with the intention at a later stage of doing something in a completely different way to correct it. Therefore, I submit that the right thing to do is for the Government to accept this Amendment now, removing the doubt, and leave themselves free to put a proposition to your Lordships at a later stage to deal with the matter as the Government feel is correct.
VISCOUNT ADDISON: My Lords, with the leave of the House may I speak again? I hope noble Lords will not insist on this Amendment. On the Third Reading we will put down what is now being sug-
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gested, and I think it would be much better to leave it open for discussion then.
VISCOUNT SWINTON: My Lords, I really cannot accept that. We are not debating whether the plan which the Lord Chancellor has put forward is good or not. The only issue now before the House is: doubt, or no doubt? All my Amendment does is to resolve a doubt which should certainly be resolved. At a later stage let the Government put on the Paper whatever Amendment they think right to knock out most of their own clause as well as my own.
THE LORD CHANCELLOR: My Lords, there are two ways of removing this doubt which I quite agree has to be removed. One way is the way the noble Viscount is suggesting, and the other is the way I suggest. Surely, the right thing to do is to discuss them both on Third Reading, when we shall have before us both methods of removing the doubt, and then the House can decide which is right.
VISCOUNT SWINTON: My Lords, with great respect, I submit not. We have no proposition before us except the Government's original proposition. If your Lordships will pass my Amendment, that makes the Government's original proposition a logical Bill, as it ought to be. Then let us discuss on Third Reading whether the whole of that should be knocked out and something else substituted. We should have an impossible debate if we had three alternatives before us. We should have the present alternative, which at present holds the field, that the whole matter is left in doubt with the betting a good deal on an action lying. That is what the Lord Chancellor said. The second alternative would be to have the Government's original proposal with that doubt removed, making sure the action would lie. Then we should have to debate the third alternative, which is that the Government's present plan should go entirely by the board and the new plan of the Lord Chancellor to substitute the Transport Act provision for it should be adopted. I think we should have the most extraordinary debate when there were three horses in the race. Let us have a perfectly clean race between two horses, each horse being a logical horse and a probable runner, running under the proper rules.
On Question, Whether the said subsection shall be there inserted?
Resolved in the affirmative and Amendment agreed to accordingly.
Clause 7:
Appointment of Consumers' Council and committees
(4) The Council shall be charged with the duties—
6.14 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, in subsection (4) to insert as a new paragraph:
"(c) of considering and making recommendations to the Minister with respect to any representations which may be made to them by any person who has applied for a licence required under section thirty-one of this Act in regard to such application."
The noble Lord said: My Lords, this Amendment aims at providing that an applicant for a licence under Clause 31—that is. an applicant in respect of a new business or an existing producer—may have his application considered by the Consumers' Council. I would like, in a very few words, to remind your Lordships of the position of this question as it was left on the Committee stage of the Bill.
Their Lordships divided: Contents, 60; Not-Contents, 22.

CONTENTS

Aberdeen and Temair, M.

Falmouth, V.

Grenfell, L.

Cholmondeley, M.

Long, V.

Hacking, L.

Reading, M.

Monsell, V.

Hawke, L.

Salisbury, M.

Simon, V.

Howard of Glossop, L.

Townshend, M.

Swinton, V.

Layton, L.

Willingdon, M. [Teller.]

Trenchard, V.

Llewellin, L.

Lloyd, L.

Beatty, E.

Ashton of Hyde, L.

Mancroft, L.

Buckinghamshire, E.

Baden-Powell, L.

Milverton, L.

Dudley, E.

Balfour of Inchrye, L.

Moyne, L.

Fortescue, E. [Teller.]

Barnby, L.

Moynihan, L.

Halifax, E.

Carrington, L.

O'Hagan, L.

Howe, E.

Cherwell, L.

Remnant, L

Lindsay, E.

Clanwilliam, L. (E. Clanwilliam.)

Rennell, L

Munster, E.

Rochdale, L.

Selkirk, E.

Clydesmuir, L.

Rockley, L.

Ypres, E.

De L'Isle and Dudley, L.

Saltoun, L.

Ellenborough, L.

Somers, L.

Bridgeman, V.

Fairfax of Cameron, L.

Teynham, L.

Buckmaster, V.

Forester, L.

Wardington, L.

Caldecote, V.

Gifford, L.

Wolverton, L.

Davidson, V.

NOT-CONTENTS

Jowitt, V. (L. Chancellor.)

Ammon, L.

Kershaw, L. [Teller.]

Archibald, L.

Lucas of Chilworth, L.

Addison, V. (L. Privy Seal.)

Chorley. L. [Teller.]

Macdonald of Gwaenysgor, L.

Crook, L.

Marley, L.

Huntingdon, E.

Darwen, L.

Morrison, L

Faringdon, L.

Pakenham, L.

Hall, V.

Henderson, L.

Shepherd, L.

St. Davids. V.

Holden, L.

Strabolgi, L.

Stansgate, V.

At that stage an Amendment was moved which was designed require the Minister to consult the Consumers' Council before refusing a licence to a prospective new entrant into the industry or to an existing member. That Amendment was resisted by Lord Morrison on behalf of the Government and he said:
"The Government feel that it is not necessary to have a statutory prevision in order to ensure that the consumers' interests are taken into account. That would he done in any case through the machinery of Clause 6."—
which is now Clause 7.
"It will also be open to other interests wishing to provide new or additional production to represent their point of view to the Consumers' Council or its committees, with the object of securing support for new manufacturing projects."
There is in fact no such provision in Clause 7 which entitles an existing producer or a new entrant producer to complain, and this Amendment seeks to write into the Bill the assurance given by Lord Morrison, and to make it perfectly clear that a prospective licensee has a right of access to the Consumers' Council if he feels the Minister is likely to refuse his application.
I would ask your Lordships to note that the words of the Amendment do not require the application to be made in the first place to the Consumers' Council, because that we admit would be improper, since it is the Minister who issues the licence and it is the Minister to whom the intending licensee must apply; but the Consumers' Council is, by this Amendment, able to make a representation to the Minister on behalf of any person who has applied to the Minister for a licence. I want to remind your Lordships of one sentence which is appropriate in respect of this Amendment, and perhaps in respect of other Amendments, which was spoken by a member of the Government—I think the Parliamentary Secretary to the Ministry of Civil Aviation—which explains why we have asked for this Amendment. The Parliamentary Secretary said:
"An Act of Parliament must be operated as an Act and not in the way that persons who speak about it would like it to be operated."
That is a very germane expression in connection with another Bill given by a Minister of the Government, and it is in accordance with that expressed view that "an Act of Parliament must be operated as an Act and not in the way persons who speak about it would like it to be operated" that I beg to move this Amendment.
Amendment moved—
Page 8, line 13, after ("Corporation") insert the said new paragraph.—(Lord Balfour of Inchrye.)
THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL): My Lords, now that we are in calmer waters I think we may, by just a brief speech on my part, make some progress. The noble Lord who moved the Amendment will realise that without this Amendment there will be nothing to stop applicants for licences endeavouring to secure the views of the Consumers' Council, but we have no objection to the position being made clear as is proposed in this Amendment. Indeed, I think there is an Amendment later in the Marshalled List which will be governed by the same principle. I am therefore prepared to accept the Amendment.
On Question, Amendment agreed to.
Clause 9:
Compulsory purchase of land
9.—(1) The Minister may authorise the Corporation to purchase compulsorily any land required for the exercise and performance of their functions or the carrying on of any activity by a publicly-owned company, and the Acquisition of Land (Authorisation Procedure) Act, 1946 (except section two thereof) shall apply as if the Corporation were a local authority within the meaning of that Act and as if this Act had been in force immediately before the commencement of that Act.
THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM)THE MINISTER OF CIVIL AVIATION (LORD PAKENHAM) moved to add to subsection (1):
"Provided that the Minister shall not authorise under this section the acquisition by the Corporation for the purpose of the carrying on of any activity by them or any publicly-owned company of land which is being used wholly or mainly by any other person for the purpose of carrying on that activity or for purposes incidental to the carrying on of that activity."
The noble Lord said: My Lords. I hope that this Amendment will go far enough to meet the apprehensions expressed by the noble Lords opposite at the last stage. I remember that the noble Lord, Lord Lloyd, spoke particularly compellingly on this subject, and I hope he will feel that we have gone a long way in his direction. As I understood the argument of the noble Lord, he was nervous lest the Government should use the compulsory powers of land acquisition, which in principle he did not question, to take over and operate competitive businesses. That I thought was his main anxiety. This Amendment is intended to make sure that that cannot happen.
We are certain that it will effectively prevent the Corporation from acquiring works in order to carry on the activity which was already being carried on at those works. The Corporation cannot acquire someone else's business and then run it themselves. We feel sure that the noble Lord should be satisfied, if he is in a helpful mood. The Government Amendment in some ways (I do not say in all ways) goes rather further than does the noble Lord's own Amendment. In one way it does and in another way it does not say in the essential way it does go further. Having said so much, I hope the noble. Lord will not move his Amendment but will recognise that he

73
has persuaded us to go forward with a suggestion that meets his point.
Amendment moved—
Page 13, line 3, at end insert the said proviso.—(Lord Pakenham.)
LORD LLOYD: Let me say at once that I am grateful to the noble Lord for the advance which he has made. I cannot pretend that I think his Amendment entirely meets the point, or that I do not rather prefer my own Amendment below it on the Marshalled List. It is perfectly true that the noble Lord, by his Amendment, has now provided that the Corporation cannot acquire the business of a competitor in order to carry out exactly the same operations as the competitor was carrying out in those premises. For example, the Corporation could no longer buy up a rod mill from a private competitor and then proceed to turn out rods. On the other hand, they would be able to acquire a private competitor's rod mill and use it for drawing wire, or something like that. That case is not covered by the noble Lord's Amendment; and that is why I prefer the Amendment which we have put down on the paper, for it would cover a case of that kind. However, I am so delighted that the noble Lord has come so far that, lest he begin going back again, I had better say now that I shall not move the Amendment in my name next on the paper.
On Question, Amendment agreed to.
Clause 11:
Corporation not to be exempt from taxation, etc.
11. Nothing in this Act shall be deemed to exempt the Corporation from liability for any tax, duty, rate, levy or other charge whatsoever, whether general or local.
6.24 p.m.
LORD HAWKE LORD HAWKE moved, after "exempt" to insert "or relieve." The noble Lord said: My Lords, this and the next Amendment are moved in order to provide an opportunity for His Majesty's Government to make some statement on the question of taxation of these nationalised companies. There are four main items of information which we require, and I understand that notice has been either given by me or sent through other channels to the Minister who is to reply. First, there is the question whether in respect of profits tax the companies owned
74
by the Corporation are to be considered as being owned by the Crown. The noble Lord, Lord Pakenham gave an assurance on that point on a previous stage of the Bill, and I have no doubt he will confirm it this time. Then again, there is the question of split establishments, the treatment of a company that is split—one half going to the Corporation and the other half staying out. Will it be treated as a "continuing company" or as a "discontinuing company" in respect of that portion which passes to the Corporation? We should, of course, like an assurance that it will be treated as a "discontinuing company" to the extent of the portion that passes.
Then there is the case of the same company and the incidence of balancing charges. We should like an assurance that in respect of the part that passes to the Corporation no balancing charges shall be levied. The fourth point, which was not raised at the last stage of the Bill, is this: What is the position of a company of which some portion passes to the Corporation and the company receives in return Government scrip? Not requiring those reserves in its business it proceeds to distribute that scrip to its shareholders. Will this attract or will it not attract profits tax? We should like to hear that it will not. I hope the noble Lord will be able to give me these assurances. I beg to move.
Amendment moved—
Page 13, line 23, after ("exempt") insert ("or relieve").—(Lord Howke.)
LORD PAKENHAMThe noble Lord and other noble Lords have been kind enough to give me notice of these questions and I have furnished myself with full replies. I ask leave of the House to take up a few minutes while I read them —slowly and carefully because they are not easy for a layman to follow. I have obtained these answers from the Revenue authorities. I understand from the remarks of the noble Lord that he is chiefly concerned with three distinct points in connection with this clause. The first is the question of what is perhaps loosely called "double taxation." The problem seems to arise where segregation of assets takes place in connection with nationalisation. For instance, a company now in the Third Schedule might, with the approval of the Minister, hive off its iron and steel interests to a new company in

75
return for shares in that company, so that the new company may be taken into public ownership and the original company with its remaining interests be taken out of the Third Schedule and remain in private ownership. In such a case the Opposition seem to fear that the original company in the year following the transfer may be liable for income tax on the profits of the original complete business for the preceding year.
The tax position, in fact, depends on whether the hived-off part can be treated as a separate business for taxation purposes. If it can be so treated, and this is a question of fact, what is known by the Revenue authorities as "partial discontinuance" will operate, and no question will arise of the company having to pay tax after the date of transfer in respect of the transferred part of its business. It is, in fact, unlikely that the Minister would ever approve of any hiving-off schemes which did not leave a self-contained iron and steel undertaking for transfer to public ownership, and therefore it is unlikely that there will he any cases such as the noble Lord has in mind. However, some complications may arise, especially where the hiving-off was done before the publication of the Bill and for which the Minister's approval was not required. In all cases the individual companies concerned should, if they have not already done so, take up the matter with the Inland Revenue authorities (it is essentially a matter for them) in order that they may establish to the satisfaction of the Inland Revenue that the hived-off part of their business was a self-contained entity, and if this can be proved they will not, in the year after transfer, be liable for income tax on the profits of that part of the original business that is scheduled for nationalisation. I hope the noble Lord is reassured on the first question.
LORD HAWKE: No.
LORD PAKENHAM: The second point which the noble Lord raised referred to balancing charges in cases where part of the original business is hived off in anticipation of nationalisation—and here I think I may satisfy the noble Lord completely. These charges arise where machinery and plant, or industrial buildings, are sold and the sale moneys exceed the capital expenditure not so far allowed for income tax pur
76
poses on such assets—that means the value written down for income tax purposes. The Opposition wish for an assurance that no balancing charge in respect of the transferred assets will be made in such cases; that is, where the value, which we may suppose was £10,000 at the beginning, was written down to £5,000 and the sale was for £6,000. I take it that is the case the noble Lord has in mind.
Where hiving off takes place in anticipation of nationalisation, however, the sale will normally be between the original company and a new company which, prior to the date of transfer to public ownership, will be a subsidiary of the original company. In such cases the provisions of Section 59 of the Income Tax Act, 1945, as to sales between associated companies apply and if the two companies so elect under subsection (4) of that section the assets will be taken over by the new company for taxation purposes at their written-down value and no liability to a balancing charge will arise. So that, if they arrange it properly between them no liability to a balancing charge will arise. The general answer, therefore, is that if the companies wish to ensure that no balancing charges should be levied, the transfer of the iron and steel assets should be carried out in such a way that Section 59 of the Income Tax Act, 1945, will apply. I feel that the noble Lord will be satisfied on that point.
The third point relates to the question of profits tax in cases where the Government compensation stock is received by holding companies in exchange for shares of subsidiary companies which are being nationalised under the Iron and Steel Bill, and where the stock is subsequently distributed to the shareholders of the holding company. The Opposition suggest that such a distribution of Government stock should not be treated as a distribution for profits tax purposes attracting the higher rate of 25 per cent. Of course there is no obligation on a holding company to distribute the Government stock to its shareholders. It can either keep it as an investment, or realise it and acquire a new investment, and then there will be no question of a profits tax charge. If the company wishes to distribute the stock to its shareholders but reduces its capital correspondingly, because

77
of the reduction of its activities, there will again be no profits tax charge. It is only— and this is the point—when there is a distribution of stock and no corresponding reduction of capital that a charge to profits tax arises; and even in that case the charge is limited by reference to the amount on which relief for undistributed profits has been given since January 1, 1947, which, of course, may be a small fraction of the total capital.
On this point, the Solicitor-General recently explained in another place that, in cases like that of the holding company referred to, where Government compensation stock was given in exchange for shares of a company which was being nationalised, that effect was merely that the holding company was substituting one investment for another. If the company goes into liquidation, or otherwise distributes the Government stock it receives, there is no reason why it should not pay profits tax upon the amount it distributes, on liquidation or otherwise, just like any other company in parallel circumstances.
LORD RENNELL: My Lords, the noble Lord has made a very important statement and, as he rightly supposed, a statement which will require a good deal of digestion. Obviously, it is not the sort of statement to which one can just listen and say: "Yes, that is quite all right," or indeed that it is quite all wrong. There were really four points raised when the Amendment was moved in Committee stage. There was the question of discontinuance with which the noble Lord has dealt—I will come to my conclusions a little later. Then there was the question of balancing charges with which he dealt: and there were two questions of the incidence of profits tax. If I recollect rightly, the first one was, how far the Corporation would be treated like any other company or any other corporation in the trade in its liability to profits tax—-1 am not now talking about the distribution of stock. On that point, I do not recollect that the noble Lord said anything just now.
So far as we were able to make out when this matter was debated in Committee, the Corporation would have an advantage over other companies in the trade in respect of profits tax, but would, on the other hand pay a slightly higher
78
amount in income tax by reason of paying the lower rate in profits tax. That comes under the Finance Act, which deals with national corporations. The general effect of that was that it would leave the Corporation in a slightly more advantageous tax position than an ordinary commercial corporation in the same trade. I do not think the noble Lord dealt with that point—I did not hear him refer to it—whether the position of the Corporation would be mere advantageous or less advantageous, or that there was nothing in it as between the Corporation and the companies in a heavy industry that was not being nationalised.
LORD PAKENHAM: My Lords, I should make it clear dirt I did not feel it necessary to-day to repeat what I said last time. I said last time that the fact of nationalisation gave no legal advantage to the Corporation or its subsidiaries. The advantages might or might not accrue from the form of nationalisation, but that would take into account every sort of interest. That could not be pushed very far at present. As I said last time, the fact of nationalisation gives no legal advantage.
LORD RENNELL: But it was not the legal advantage; it was the financial advantage with which we were concerned.
LORD PAKENHANI: There would he no financial advantage at all.
LORD RENNELL: The conclusion is that the Corporation ha; a slight advantage financially as compared with the commercial corporation in ordinary business.
LORD PAKENHAM: No. The noble Lord says: "The conclusion is." I am advised that there is no ground for that conclusion, which is his conclusion.
LORD RENNELL: No doubt we shall come to that later, but I thought there was a calculation made in the Committee stage which showed that there was a slight advantage.
My main point is on the question of the distribution of compensation stock received. Listening to aim, I gathered that the noble Lord made two points. A company receiving compensation stock could do either one of two things, and its shareholders would not be adversely

79
affected. First, it could distribute compensation stock and have a proportionate reduction of capital, so made that that distribution would then not fall to be taxed as a distribution of profits. Alternatively, the holding company—that is, the commercial corporation receiving compensation stock—might not deal with its capital at all, and, of course, it would fall to be assessed for distribution of profits. I think I heard the noble Lord say that if a corporation distributed compensation stock and did not make a reduction in capital, it would be liable for profits tax on distributed profits.
But that is not a distributed profit at all, and that is one of the main points that was raised by, I believe, the noble Lord, Lord Hawke, in Committee. It is not a distribution of profits. A commercial corporation which has most of its business taken over, or indeed all its business taken over, is left with compensation stock which is much in excess of any possible requirement of capital for the remainder of its business. What it has received is compensation for capital. If it distributes that, it is a distribution of capital. It does not seem fair that that should be treated as a distribution of profits and that the company should be forced to reduce its nominal capital, which, as we know, as the result of the accumulation of years of profits in reserve, often bears no relation to the total amount of capital invested in the business.
What we are seeking here is an assurance that a holding company shall not be penalised because as a result of nationalisation it has received compensation stock which it is riot likely to be able to use but which it does not want to sell and re-invest, thereby becoming an investment company. There is no reason why shareholders in an iron and steel company should want to invest in, for instance, a company making cigarettes. What they want back is the money which they have had in their business and which has accumulated in a period of years—money which they could get back by the sale of the compensation stock and its distribution as a capital asset. For them to be taxed on that as a distributed profit seems to be a contradiction in terms. They have had their capital assets taken away; they have had pieces of paper to a certain value in the market given to them in exchange: and
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to represent the sum of those pieces of paper and the distribution to the shareholders of money as a result of the sale of those pieces of paper as a distribution of profit, is monstrous. It has nothing to do with profits; it is the actual capital value that they have in the business.
LORD PAKENHAM: I do not want the noble Lord to get too heated. I will explain what I said in one rather long sentence that I offered the House before, with an explanatory sentence. What I said was that it is only when there is a distribution of stock and no corresponding reduction of capital that the charge to profits arises and even in that case the charge is limited by reference to the amount on which relief for any undistributed profits has been given since January 1, 1947. I added, though I am not quite sure of the exact words that I used, that that would be only a fraction of the total capital sum.
LORD RENNELL: The relief would only be a fraction?
LORD PAKENHAM: No, the sum on which there would be tax would be only a fraction. The charge is limited by reference to the extent by which the company has hitherto profited by the lower rate of profits tax on undistributed profit. It is only the extent to which they have profited; that is the only extent to which they will be taxed. The noble Lord really is barking up an unnecessarily awkward tree, because I can assure him that what I have said need not cause him anxiety at all.
LORD RENNELL: I am very glad to hear what the noble Lord has said, and I sincerely hope that I am barking up an awkward tree. But what I understood him to say was that if capital stock were distributed, though there would be relief in the conditions to which he referred on a certain part of it, the rest of it would be treated as a distribution of profits. If that is so, I submit I am not barking up either an awkward or any other tree, but I am justified in saying that that would not be fair. But I shall have to study this and, so far as I am concerned, I should like to feel free to move an Amendment on Third Reading if the examination of this statement which will appear in Hansard to-morrow does not meet the various points which were made.
VISCOUNT BRIDGEMAN: My Lords, I have been looking carefully at the tree up which my noble friend Lord Rennell has been barking, and I am fairly certain that there is at least one cat, if not two, at the top. First of all, I agree entirely with Lord Rennell that Lord Pakenham's statement, which is very technical, will have to be looked at between now and Third Reading; anything I may say on it now must be the result only of a first impression, and not of a detailed reading of it. But in regard to partial discontinuance what struck me when I first heard the noble Lord was that the question of a separate business which he mentioned would probably work out all right, and it ought to work out all right—if only because there is such a thing as the Second Schedule to this Bill. Surely Second Schedule activities ought to be capable of being treated by the Inland Revenue as distinct from any other activity, just as they are capable of being treated by the Ministry of Supply and by those who drafted this Bill. Therefore at first sight it looks as if there ought to be no reason for double taxation because of partial discontinuance. I am not absolutely certain, because the statement which the noble Lord read out—and I am sure we would like to thank him for the carefulness and detail of the reply—appeared to have been drafted by the Inland Revenue in the light of their general practice without consideration of the fairness and unfairness arising out of this Bill. The Bill is not yet an Act, but there are here special problems which the Inland Revenue ought to consider which have not yet arisen in any other nationalisation Bill and which will have to he dealt with sooner or later. I think the solution to the problem is for the Inland Revenue to take the line that the fact that there is such a thing as Second Schedule activities is a sufficient warrant for them to be able to say without further ado that any segregation of assets between Second Schedule assets and other kinds of asset constitute a certain activity from the point of view of partial discontinuance.
When it comes to the balancing charges, I formed the opinion that if companies made use of their existing rights and privileges under the existing Finance Act that would work out fairly
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well. There again, I do not want to commit myself definitely until we come to Third Reading. But it is when we come to the question of profits tax on distributed profits that I want very strongly indeed to support my noble friend Lord Rennell in what he said, because here is another problem which is entirely new. The rules were made by the Inland Revenue for profits tax, and the situation under the Bill is not at all in line with the ordinary financial state of affairs where this question of profits tax on distributed assets applies. The common ease is where, out of an ordinary carry-over in the profit and loss account, the company seeks to distribute a dividend which may be as high as 300 per cent. arising through the ordinary operations of the company.
But here we have a different state of affairs. It is no part of the shareholders' will or wish that this Dart of their business should be discontinued. The money comes back to them and then, as Lord Rennell said, you have the dual tax. To discontinue that part of the business and give the money back to the shareholders, which is what most shareholders in most ordinary iron and steel companies would wish, you pay profits tax unless you decide to reduce your capital; otherwise you keep the money there, realise no doubt the British Iron and Steel Stock, and really carry on as an investment trust or acquire some other business, no doubt with the approval of the shareholders. That, I think, would he the exceptional course, as I think Lord Rennell agrees. But if you want to do the ordinary thing, by paying the money to the shareholders who subscribed it for a particular purpose, then either you pay profits tax or you reduce the capital of the company. Reducing the capital of the company means destroying an asset of that company: capital duty was paid on that capital, and that capital duty will be lost. Why should you involve a company in this destruction of an asset, however small? Why involve a company in having to go to the courts?—because, unless I am much mistaken, a claim for reduction of capital does have to go to the courts. And on top of that you propose to charge profits tax. This part of the Government answer will require study between now and the Third Reading, but to-night two points do emerge clearly. One is that the

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Inland Revenue Authorities have given a stock answer, and have not yet applied their minds to the special problems connected with this Bill. The second is that, if we have the views of the Inland Revenue authorities correctly, then profits tax will be charged in cases where a company wishes to make a distribution and yet not to reduce its capital. That point is unfairly taken. It is unfair to the companies and to the shareholders. This is not an ordinary case, where a company of its own volition returns capital. It is a case into which it has been forced, and it should have the full benefit to which in these circumstances we think it is entitled.
LORD HAWKE: My Lords, we have listened to a clear statement from the noble Lord—I might say that it was a clear statement by the Inland Revenue of the law as it stands to-day. We had hoped that we should get some undertaking that His Majesty's Government would look into the position with a view to introducing legislation to amend these anomalies, as in fact they did in respect of the coal mines. As it is, I fear that the statement has "passed the buck" firmly into the hands of the Inland Revenue. Unless something is done, either in a Finance Bill or in this Bill, the existing law stands and the existing anomalies stand. Therefore, though the statement is a clear one, as a satisfying draught, I can only tell the noble Lord it comes out in my estimation at a gamtna minus. We shall have to examine the position between now and the next stage of the Bill. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The Sitting was suspended at seven o'clock, and resumed at a quarter past eight.
Clause 15:
Disclaimer of agreements and leases
15.—(1) Where any company which comes into public ownership under this Part of this Act has made or varied an agreement or lease on or after the twenty-first day of October, nineteen hundred and forty-seven, and before the date of transfer, and the agreement or lease remains unperformed or unexpired, in whole or in part, on the date of transfer, and the Corporation are of the opinion that the making or variation of that agreement or lease was not reasonably necessary for the purposes of the activities of the company. or that the agreement or lease was made or varied with
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an unreasonable lack of prudence on the part of the company, regard being had in either case to the circumstances at the time, the company shall, if so directed by the Corporation, by notice in writing given to the other parties to the agreement or lease at any time within six months after the date of transfer, disclaim the agreement or lease:
Provided that any of the said other parties may. within two months after the date on which the notice is served, refer to arbitration under this Act the question whether or not the agreement or lease ought to be disclaimed under this section. and the Corporation (as well as the publicly-owned company) shall be made a party to the arbitration.
(2) If the arbitration tribunal are satisfied on any such reference that the making or variation of the agreement or lease was not reasonably necessary for the purposes of the activities of the company, or that the agreement or lease was made or varied with an unreasonable lack of prudence on the part of the company, regard being had in either case to the circumstances at the time, the tribunal shall confirm the notice and if not so satisfied shall revoke it:
Provided that, if the arbitration tribunal are satisfied of the matters aforesaid but are also satisfied that the making or variation of the agreement or lease was a proper transaction made in the ordinary course of business, regard being had to the circumstances at the time, and was in no way connected with any provision made by this Act or with any anticipation of the making of any such provision, the tribunal shall revoke the notice.
LORD HAWKE LORD HAWKE moved, in subsection (1) to omit all words from and including "reasonably necessary" down to and including "either case" and to insert:
"a proper transaction made in the ordinary course of business, regard being had."
The noble Lord said: My Lords, in Committee we moved an Amendment with a similar effect but slightly more embracing. We made it necessary that the Corporation should prove that any action which defeated the purposes of the Bill, had been taken for that purpose. The noble Lord, Lord Lucas of Chi/worth, probably rightly, said it was a question of motive and it was not reasonable that the Corporation should, in the first instance, have to prove a question of motive. So we have dropped that part of the Amendment. Now we move on more simple and common-sense lines. The Bill as drafted provides much too wide an opportunity for the Corporation to challenge the actions of these companies before the date of transfer. We think that this very wide wording would act as a Sword of Damocles hanging over the heads of these companies from

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August, 1947, up to the ultimate date of transfer.
What is a reasonable or unreasonable lack of prudence? That seems to me an extraordinarily difficult thing to define. Is it reasonable or unreasonable lack of prudence when the Ministry of Supply are long at the top of the market and short at the bottom of the market? I do not think the Minister himself would know. I do not know. Therefore, why should the directors of these companies be put into the position of having to answer a possible charge, when they are unable to judge whether their actions could be set aside or not? Of course, if the Bill goes through as drafted, the directors will immediately have to take every step to cover themselves, and they have the means of doing that. Under subsection (7) of the clause they can apply to the Minister for his permission in writing to do anything which they think might be subject to criticism afterwards on the ground that it was "unreasonable lack of prudence" on their part. I wonder whether the Minister has really stopped to think what he is letting himself in for! He has 250 companies—so the noble Lord, Lord Lucas, has said to-day—and every one of them will want to cover up on this particular aspect.
I would remind your Lordships that there is a similar clause further on in which there is another list of their deeds which might be questioned. There is going to be an absolute flood of applications to the Minister, that means to the permanent officials, which means in turn to Whitehall, the Ministry of Supply; and each one is going to demand in writing to be "whitewashed" in advance for something they are thinking of doing. Anyone who has had any dealings with Whitehall knows that the one thing you cannot get out of them is a quick answer in writing; they have to consult too much. The result will be that the whole of the day-to-day business of these 250 companies will be stultified, frustrated and held up by this clause. Even if the Minister has realised what he is doing, has he the staff to do this? If he has the staff to do it, why have the Treasury not been looking at what they have been doing in the past for some time?—because this is entirely new work that will be thrust on the Ministry. I believe he has not the staff, and that there are not the arrangments
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for doing (his; and if the Bill goes through as it is there will be a grave holding up of all vital decisions of the 250 companies. To my mind it is the old, old story of the Minister and his advisers aiming at the very small bulls-eye of the improper contract, and in order to hit it they sorround it with an immense target background comprising every conceivable action that these companies can take. I beg to move.
Amendment moved—
Page 16, line 16, leave out from ("not") to ("to") in line 20, and insert the said new words.—(Lord Hawke.)
LORD ROCHDALE: My Lords, my noble friend Lord Hawke has made it quite clear how we have altered this Amendment, as compared with the Amendment that was moved in Committee, in order to try and overcome the objection the noble Lord, Lord Lucas, had to that Amendment. That was the Amendment on which the noble Lord said it would be difficult to prove many years afterwards a question of intention as opposed to ore of fact. We have attempted to meet that point, and I think we have met it. As I see our Amendment now, not only does it meet that objection of the noble Lord opposite, but it is also completely consistent with the assurances that many Government spokesmen, both in your Lordships' House and in another glace, have given on the whole question of disclaimer. I do not want to repeat what was said in Committee more than I need, but let me remind your Lordships that, either in this House or in another place, over and over again Government spokesmen made the point that no proper transaction would be challenged. That is exactly what we say we have put into this Amendment. The assurance was that no proper transaction will be challenged, and yer the clause does not say that. The clause says that a transaction may be challenged if it is not reasonably necessary or if it shows unreasonable lack of prudence. That is entirely inconsistent with the assurances which have been given, and we think that by this Amendment we have brought the clause into line with those assurances.
I would like for a moment to visualise how the new clause, as compared with the present clause, would operate. Under the

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present clause, it lies with the Corporation to prove that there is a prima facie case against one or other of the companies, and then it lies with the company to prove to the tribunal that that is not so. We think that is an entirely wrong point of view. We see our Amendment working something like this. First, the Corporation would form the opinion that a transaction was not a proper one made in the ordinary course of business. It would then order a disclaimer to be issued. The company would presumably dispute that and take the matter to the arbitration tribunal. The arbitration tribunal would then require the Corporation to establish that the transaction was not a proper one and, of course, if the Corporation succeeded in establishing that and the company was unsuccessful in establishing that the contrary was the case, the disclaimer would have to stand. We regard that as the proper procedure and entirely in accord with all Government spokesmen's assurances.
The noble Lord, Lord Lucas, strongly urged one further point. He spoke of the difficulty which would arise in establishing these matters owing to the lapse of time which might have occurred. The question is, why should it be any more difficult for the Corporation after such a lapse of time to form the opinion that a transaction was not a proper transaction, than it would he for them to form the opinion that a transaction had not been reasonably necessary or had shown unreasonable lack of prudence? The time factor enters into it in either case. I hope that when the noble Lord comes to reply he will realise that in putting down this Amendment all we have tried to do is to meet his objections and to comply with the repeated assurances of various Government spokesmen.
LORD CLYDESMUIR: My Lords, I intervene for a moment only to say that this Amendment is of considerable practical interest to the iron and steel trade at the present time. Many contracts entered into in connection with the development plan will remain uncompleted at the date of transfer if the Bill is enacted. A very large development plan which may affect many firms is proceeding at the present time. Great developments are in progress, and to the credit of the steel industry let it be said that those
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plans are going ahead and are not being held up. It is right that they should go ahead, because upon that depends to a great extent the prosperity of the country and the employment of the workers. Most of these contracts will have been entered into in a sellers' market, and in anticipation of a shortage a company may have to build up an excess stock of materials at high prices. As your Lordships know, the market has changed and these shortages may not occur. A firm may have contracted at an abnormally high price to secure delivery of plant in three years' time and by the time delivery is due the plant may be easily obtainable. I would call your Lordships' attention to the fact that such a firm might find itself in considerable difficulty in proving its case under the existing terms of the Bill. Therefore I urge that this Amendment will provide a reasonable safeguard for firms that have in fact gone ahead with a development plan as part of a national plan of national importance. I hope your Lordships will press this Amendment.
THE EARL OF DUDLEY: My Lords, may I, like the noble Lord, Lord Clydesmuir, narrow this issue down to the development plan? May I ask one question for the sake of guidance? If the noble Lord does not know the answer I hope he will ask his advisers. What is the correct procedure for persons engaged in the development plan to safeguard themselves against the dangers of this clause? The development plan has been agreed in principle as a whole by the Ministry and, therefore, by the Minister. Does that cover the developers in detail? If it does not cover the developers in detail, what must they do? That is all I am asking. Have they to cover themselves by writing every single detail of their development plan to the Minister and by obtaining his sanction to all those details? What is our exact procedure? I hope the noble Lord will tell me because I am very much affected by it. As I say, the plan has been approved in principle by the Ministry, but not in detail. How are we to cover ourselves in detail?
THE MARQUESS OF READING: My Lords, I intervene now, having taken a somewhat brief and somewhat unrehearsed part in the discussion in Committee, only to say that I hope the Government will see fit to accept this

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Amendment. The objection, as I understood, to the clause as it stood then and stands now was largely that although it might ultimately work out satisfactorily there was considerable doubt as to where the balance of proof of these curious phrases about not being "reasonably necessary" or "an unreasonable lack of prudence" lay. It seems to me that the words now on the Order Paper considerably clarify that issue. After all, taking it on the broad line, the clause lays down that if the agreement
"was not reasonably necessary for the purposes of the activities of the company or…was made…with an unreasonable lack of prudence on the part of the company…"
and so on. What those somewhat prolix words seem to me to mean, when reduced to their proper essence, is that it was not a proper transaction made in the ordinary course of business.
THE LORD CHANCELLOR: I have spoken once and received my baptism of fire in regard to this Bill. I had to confess that I thought a particular clause dealing with undue preference was misconceived, but in regard to this clause I must say that I think it is exceedingly well drafted. This clause is quite clear and it should not be departed from. Now, my Lords, what does it say? I would remind your Lordships of a very old saying which is often quoted by the lawyers:
"The Devil himself knoweth that the thought of [nail is not triable."
What you have to try to find here is certain objective tests; if you find them present, then and then only you have to consider whether or not what has been done is proper. I believe we all want the same thing here. I believe we all think it proper that if one of these companies has been deliberately dissipating its assets, has been giving things away or selling them at inadequate prices, the transaction should not, be allowed to stand. If, on the other hand, what is done has not been done from that point of view, but merely was an imprudent or unwise contract—if, in short, it is a proper contract—I think it should stand. I believe that that issue is what we all want.
Now let us see how this clause is expressed. The wording is not the same but the principle is the same as in the Gas Act, and when I suggested an Amendment like this at that time the noble Viscount, Lord Swinton, accepted
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it. Let us see what this Amendment does. Let me first say to the noble Lord, Lord Hawke, who said that t he Ministry would be flooded out with applications as to whether contracts were good or not, that this clause dates back to February, 1947. The Bill was published nine months ago, and in those nine months there have been fifty applications—no more; and, incidentally, I may add that all those have been granted. So let us have a little reality in our views about this clause. The clause says:
"Where…the Cor7oration are of the opinion that the making or variation of that agreement or lease was not reasonably necessary for the purpose of the activities of the company, or that the agreement or lease was made or varied with an unreasonable lack of prudence en the part of the company, regard being had in either case to the circumstances at the time, the company shall, if so directed by the Corporation…disclaim…"
I would point out to Lord Hawke that subsection (2) says:
"If the arbitration tribunal arc satisfied…that the making or variation of the agreement…was not reasonably necessary…or that the agreement…was made or varied with an unreasonable lack of prudence…regard being had in either case to the circumstances at the time, the tribunal shall confirm the notice and if not so satisfied shall revoke it."
Now I pray in aid what Lord Hawkesaid—that it may be difficult in some cases to determine this matter. All the better: if it is difficult to determine, the tribunal will not be satisfied. But suppose they are satisfied that it was made with an unreasonable lack of prudence. Even then it does not necessarily follow that the agreement is to he avoided, because business men, perfectly honestly and with no sense of trying to dissipate assets, do sometimes make unwise or imprudent contracts. Sometimes a man's mind is not following his pen, or perhaps he has neglected to consider a particular factor—I am not talking about a case where a man has been misled or something of that sort, in which the Court of Chancery might interfere; I am talking of a case where a man has made a thoroughly bad contract by neglecting to keep some consideration in mind.
Your Lordships will remember that I assume that the tribunal would then be satisfied that the contract was made "with an unreasonable lack of prudence." If that is so, it is right surely that the onus should shift. But then you have

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the proviso to, subsection (2) which provides that, even if the tribunal do consider the contract was made with an unreasonable lack of prudence or was not reasonably necessary, yet if it is shown to their satisfaction (you will note that the onus is on the company) that it was made properly—and by that I mean that it was not an attempt to dissipate the assets and was not a dishonest affair—then, notwithstanding the lack of prudence, and notwithstanding that it was not in the interests of the company, the contract shall stand. That seems to me absolutely fair. I see nothing whatever the matter with it.
First, the Corporation have to satisfy the tribunal that the variation was not reasonably prudent or that it was not necessarily made and if they do not satisfy the tribunal on that point, if they leave any doubt, the next question never arises. But, if the tribunal are satisfied that the variation was not prudently made, or that it was not reasonably necessary, then the onus shifts and the company has a chance of saying: "In spite of those things, it was a perfectly honest contract. It was imprudent. We made a mistake. We did not realise this, we did not realise that or we did not realise the other, but we were acting with propriety in the sense that we were not seeking to dissipate our assets, though we made fools of ourselves." If they establish that, the disclaimer is avoided. That is what we did in the case of gas. This is a properly-balanced clause and is perfectly fair.
So far as the development plan about which the noble Earl, Lord Dudley, asked, is concerned, we are here dealing with agreements and leases. I do not pretend to be competent to discuss this matter. I do not understand it. I have not gone into the details of this Bill but if by "development plan" he meant to, refer to some agreement or lease, then the agreements or leases will be dealt with in that way. There is always this further method of dealing with the matter so far as a company is concerned. Under subsection (7) they can always refer to the Minister if they are in doubt. If they want to put the matter beyond any argument, they can go to the Minister and say: "Look here, we propose to make this lease," or "We propose to
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make this agreement. On the face of it, it may seem rather strange. Those are the circumstances in which we make it, they may be peculiar, but we want you to approve it." That has been done during the course of the last nine months. It has been done in fifty cases, every one of which the Minister has approved.
That is the scheme. I think it is entirely unfair to ask the Corporation to put the burden upon themselves of proving impropriety. They cannot do that. They will not know. You can ask the Corporation to prove, and prove up to the hilt, and satisfy the tribunal that the contract which has been made is a contract which was made "with an unreasonable lack of prudence" or "was not reasonably necessary" for the company's business. If they prove that and satisfy the tribunal of those facts, then it is right that the contracting party should still have the right to say, "Although those things have been said about the contract, and although all those things are true, yet it was an honest contract. We made a mistake, but we did not mean to dissipate the assets." That is the scheme which we worked out in the Gas Act, with your Lordships' approval. I believe it to be a fair and sensible scheme. I commend the drafting of this clause which is quite clear, and I ask your Lordships not to accept this Amendment.
8.44 p.m.
VISCOUNT SWINTON: My Lords, I am glad that the Lord Chancellor has intervened on this clause because we know that, as he has intervened, everything that can be said for the Government proposal has been said for it. With a longer experience of this Bill and perhaps a longer experience of this industry than the Lord Chancellor—I am not being at all offensive because, as he said, he has looked at the Bill only within the last day or two—I am bound to say that I am left entirely unconvinced that this is a fair or a reasonable clause in the circumstances. Just observe what it is we are dealing with. We are dealing with the right of disclaimer of leases or agreements which are unperformed when the Bill comes into operation, if it is passed, or at the date of transfer, and we go back to transactions made as far back as October, 1947.
The Lord Chancellor has said that if there was a development plan he was

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wholly ignorant of it. But with regard to the development plan and the bearing of that upon this clause and of this clause upon the development plan, let me make this plain to him, subject to his correcting me if I am wrong in the law, although I understand there is no doubt about this. The development plan is an enormous plan of, I believe, £250,000,000. It will involve the placing of a great number of contracts—some very large, some for the complete erection of this or that, but in some cases involving a vast and intricate number of inter-locking contracts which are required in the development of a steel works. You have to go out and get every kind of material. Then you require all sorts of finished articles. You have to go into the electricity industry if you want a development of your electricity plant. These orders have to be placed. I need not elaborate the point. Everybody who knows anything about an agreement to erect a new steel works or to make a large extension of one, knows that it ranges over a vast number of contracts of a highly complicated kind. Every one of these contracts is an agreement within the meaning of this clause.
I am not in the steel industry; I am in the light and power business, and large developments are taking place. One of the most difficult things to know is whether to place an order at a high price, with a guarantee of delivery if you can get it, or to wait. At the same time people are pressing for supplies, and they are being pressed for steel supplies. You have to weigh the matter up. The Leader of the House, in commending this extraordinary Bill to your Lordships on Second Reading, said, "Of course, we have got to take over this industry. We are short of steel at every point. Everything is held up for lack of steel." I am not so sure that he is going to say that quite so emphatically in six months' or a year's time. But the justification he advanced to the House for passing this Bill was the urgent need for steel and therefore for nationalisation.
Nobody is accepting the urgent need for steel more readily than these companies who have not only surpassed every target that has been set them but have increased their output as the target has been put up and up. That seems to depart from any practical use of the term. You say you raise a target, but you probably
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put it a greater distance away. They have gone right ahead with the development plan, but they have to enter into all these contracts and are urged by the Government to get on with the job. I have no doubt that many of them have quite rightly placed contracts at high prices, because they had to place the contracts a year or a year-and-a-half ago. Some of those prices—if you are looking at the matter as an economic proposition—may appear improvident or imprudent to-day; they may seem much more improvident or imprudent in 1950 or 1951. Yet it is those contracts which are going to be reviewed. The Lord Chancellor said that we had a similar clause in the Gas Bill and that I agreed to it. I agree that that is so. But we were dealing with an extraordinarily simple matter when we were dealing with gas. Making gas is a uniform process. It has some by-products and some people may make it better than others. But compared with steel, and not only with steel but with this infinite variety of activities embracing almost the whole of the engineering industry which, big or small, are being taken over here—
THE LORD CHANCELLOR: Will the noble Viscount forgive my interrupting him? It was not to the making of gas that the clause related, but to the making of particular contracts by gas companies —contracts, it might be, for steel and all sorts of things.
VISCOUNT SWINTON: I am quite aware of that and I do not propose to shirk the question. The noble and learned Viscount will, I think, agree that I am not apt to shirk these problems. What I am saying is that gas is a simple proposition and that the ordering of plant for gas concerns is a comparatively simple proposition. There was not a great development plan in the gas industry to the extent of £250,000,000, nor were there a variety of engineering products to be considered. It was quite different altogether. Also we were dealing with it at a time when markets were not fluctuating as they are to-day. I accepted the idea then because it was a simple and straightforward matter. But I maintain that the last thing that ought to be claimed is that because it was right in the case of gas it is right now in the case of steel.
Let me come to the words of this clause. The Corporation is to judge this

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thing three or four years after the event, in wholly changed circumstances. They are going to be able to attack it, first on the ground that it was "not reasonably necessary for the purposes of the activities of the company." The Leader of the House said that I was guilty of some rather loose words in an Amendment which I put forward. I daresay I was. I am not as experienced a draftsman as the noble Viscount. But what about these words for looseness—"not reasonably necessary for the purposes of the activities of the company"? Suppose a thing was not necessary but very desirable. In business you enter into a great many contracts that are not necessary. If you limit yourself to what is necessary you are apt to take no risks and to do a very limited amount of business. Contracts you may have made, though not necessary when construed strictly in a legal sense, may have been highly desirable contracts to enter into. Then, take the next words:
"or that the agreement or lease was made or varied with an unreasonable lack of prudence on the part of the company."
Observe that the judgment is going to be formed and the challenge is going to be made not at the time when the contract is made—which is really the only time when you can get into a man's mind and decide whether what he did was reasonable or unreasonable—but it is going to be looked at in 1950 or 1951. It is not going to be easy to envisage the circumstances in which a man or a firm entered into a contract in 1948.
The Government who deal with our economic affairs on a wide scale are to-day pleading that though they have made some great mistakes, though they have acted with what appears to-day to be unreasonable lack of prudence, though they have done things which were not strictly necessary for the business, yet, having regard to the circumstances, not two or three years before but two or three months ago, it was not unreasonable or imprudent or unnecessary that they should have done what they did. I wonder how the Government would like it if they were, as perhaps they will be. questioned in 1950 or 1951 as to whether what they did in 1947 was altogether prudent or reasonably necessary for the conduct of the country. I am perfectly satisfied that what they are going to say
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then is, "It is not fair of you to judge us by the circumstances that exist to-day. You should think of the difficulties we were in." If I may adopt the language of the noble and learned Viscount the Lord Chancellor, who spoke so charmingly, agreeably and persuasively on this matter, they would say, "In 1947 we, the Government, were fools; but we were not dishonest fools, we were honest fools. And that ought to be our escape."
Observe this: it is not even the whole conduct of the business that is going to be looked at. In a great business one enters into many contracts and agreements. Some of them turn out well and some turn out badly. In the best businesses, in the most easy times of doing business, they do not all turn out well. On balance, if 60 per cent. turn out all right and 40 per cent. do not come out so well, one has made not a bad show for the shareholders and workers. But it is not the 60 per cent. that have come out well that are going to be called into question. One single isolated transaction entered into three years ago is going to be picked out and it is going to he said that that transaction was entered into with an unreasonable lack of prudence or was not reasonably necessary at the time. We could go even farther back than 1948. This clause goes back a year beyond the introduction of this Bill.
Is that really the course we want to encourage? We have heard a great deal to-day from the noble Lord, Lord Lucas, and from the noble Viscount the Leader of the House, about the determination of the Government to encourage initiative in these firms, to leave firms their independence even after they have been nationalised. What do you want them to do at the present time? Are they to come running to the Minister—running to mother!—about every contract they are to make, in order to be safe? I should have thought that the Minister, like most wise mothers, would say, "Do not come worrying me about everything." He would he quite right. If that is how the Government are going to encourage them. I do not know what will become of initiative and decentralisation.
The proposal we make is to use the words, in perfectly simple language, "a proper transaction made in the ordinary course of business." We all agree that nobody is going to defend a "racket"—

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anything that is not bona fide. We have deliberately dropped from this Amendment the provision that it had to be shown that it was done in contemplation of or in order to defeat the Bill. I think it is reasonable to drop those words. Everyone knows a "racket" when he sees one, and I am not going to define it in an Act of Parliament. If we have a transaction the terms of which are so odd that it raises the presumption of a "racket," then by all means disclaim it and say, "You are entering into a racket"—if that is what you want to get at. The noble and learned Viscount the Lord Chancellor said he wanted to get at only the thoroughly bad contract. I took the words down at the time, and I think I am right, I ask the House which words better describe what the Lord Chancellor says he wants to get at—namely, a thoroughly bad contract—our words here:
"a proper transaction made in the ordinary course of business"
or this rigmarole about a contract that
"was not reasonably necessary…or was made…with an unreasonable lack of prudence…"
I say without hesitation that any practical man would say that if you want to know whether the contract is thoroughly bad you must see whether it was made in the ordinary course of business. The noble Lord, Lord Lucas, said (I sympathised with him when we debated this matter last time; in fact, I thought he would rise now to accept this Amendment, as I thought it meant exactly what he said) that we ought not to be concerned with intention; we ought to confine ourselves to fact. I thought that was very reasonable and convincing. Therefore, we deliberately cut out all question of intention made in anticipation of the
act, and so on, and confined ourselves to fact, as the noble Lord asked us to do. I cannot state a fact more factually than to say it was a proper transaction made in the ordinary coarse of business.
Finally, may I refer to what was said by the noble Viscount Lord Hall, who presented the Bill to us so persuasively on the Second Reading? He then said:
"No proper action taken by any company in the ordinary course of business will be challenged."
If the Lord Chancellor would like us to substitute the word "normal" for the word "ordinary" I dare say my noble friend who moved this Amendment would accept that. I know the noble Viscount, Lord Hall, meant what he said. Surely, this Amendment gives effect to it. This is a matter on which we cannot compromise. The Government have said all that can be said. In the face of the difficulties this industry is encountering, in view, of the urge the Government have placed upon them to continue with the development plan, and the response of the industry to all that has been urged upon them, is it right, reasonable or fair to put this Sword of Damocles over the heads of men who are trying to bring this country through its economic difficulties at the present time, and say, "Three years hence you will have this Sword of Damocles still suspended over your heads"? The Bill is a bad Bill, and the country will decide whether or not it is to go through. But if it does go through, let it be said that you have dealt fairly by men who have dealt more than fairly by you.
On Question, Whether the said new words shall be there inserted?
Their Lordships divided: Contents, 48; Not-Contents, 20.

CONTENTS

Aberdeen and Temair, M.

Caldecote, V.

Fairfax of Cameron, L.

Cholmondeley, M.

Davidson, V.

Forester, L.

Reading. M.

Falmouth, V.

Gifford, L

Salisbury, M.

Hailsham. V.

Hawke. L.

Townshend, M.

Swinton, V.

Howard of Glossop, L.

Willingdon. M.

Llewellin L.

Ailwyn, L.

Mancroft, L.

Buckinghamshire, E.

Ashton of Hyde, L.

Mendip. L (V. Clifden.)

Dudley, E.

Baden-Powell, L.

Moyne, L.

Fortescue, E. [Teller.]

Balfour of Inchrye, L.

O'Hagan, L.

Howe. E.

Barnby, L.

Remnant. L.

Lindsay, E.

Carrington, L. [Teller.]

Rennell, L.

Munster, E.

Cherwell, L.

Rochdale, L.

Selkirk. E.

Clanwilliam, L. (E. Clanwilliam.)

Rockley. L.

Vane, E. (M. Londonderry.)

Clydesmuir, L.

Teynham, L.

Derwent, L.

Wardington, L.

Bridgeman, V.

Ellenborough, L.

Wolverton, L.

NOT-CONTENTS

Jowitt, V. (L. Chancellor.)

Ammon, L.

Kershaw, L. [Teller.]

Archibald, L.

Lucas of Chilworth, L.

Addison, V. (L. Privy Seal.)

Chorley, L. [Teller.]

Macdonald of Gwaenysgor. L.

Crook, L.

Marley, L.

Huntingdon, E.

Darwen, L.

Morrison, L.

Douglas of Kirtleside, L.

Pakenham, L.

Hall, V.

Hare, L. (E. Listowel.)

Shepherd, L.

Stansgate, V.

Holden, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
LORD HAWKE LORD HAWKE had given Notice of an Amendment to leave out subsection (2) and insert:
"(2) On such arbitration, the arbitration tribunal shall either confirm or revoke the notice."
The noble Lord said: My Lords, on rereading this Amendment my noble friends and I have come to the conclusion that it does not quite fit the bill; we think we can word it better. We therefore propose to move something different at the next stage of the Bill. I do not move.
Clause 27 [Other transactions resulting in dissipation of assets]:
LORD HAWKE: My Lords, the Amendment to this clause is complementary to that in Clause 15 upon which we have just divided. This Amendment deals with the other types of transaction which can be disclaimed and I feel that almost precisely the same arguments apply. I beg to move.
Amendment moved—
Page 39, line 6, leave out from ("not") to the end of line 10 and insert ("a proper transaction made in the ordinary course of business, regard being had to the circumstances at the time").—(Lord Hawke.)
THE LORD CHANCELLOR: My Lords, I am inclined to agree with the noble Lord that this seems to be the same point, in a somewhat different setting, as that concerned in the Division which we have just had. Therefore, subject to what the noble Leader says, I hardly think it necessary to divide again, it being understood that we are as strongly opposed to this Amendment as we were to the last. I may point out that the word "proper" brings in this subjective element: it depends on the thought of the man, and wherever you use the word "proper" it is right therefore that the man himself should prove the propriety of the transaction. He is the only person who can.
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If I may take this opportunity of speaking, I would again say that the right thing to do is to have first of all the objective tests. The objective tests on this, having regard to the time the contract was made, are whether it was an unreasonable contract or an imprudent contract. Those are the objective tests. Then if you have established that it is for the man who made the contract which has been found to be "imprudent" or "unreasonable" to say, notwithstanding all those facts, that it was proper, in the sense that he was not concerned in deliberately dissipating the assets. He is the only person in the world who can prove that. I have said those things again because I wanted to make it quite plain beyond peradventure that I am not accepting this Amendment. We are resisting this Amendment, but at the same time we realise that this is the same Amendment as we had last time, and therefore it does not seem to be necessary to trouble the House to go to a Division again.
LORD HAWKE LORD HAWKE had given notice of an Amendment in subsection (3) to omit all words from "applies" down to and including "any such provision". The noble Lord said: My Lords, the same considerations apply here as to the last Amendment, one which I did not move with a view to putting down something at the next stage. I do not desire to move the Amendment now.
Clause 31 [Activities in Second Schedule not to he carried on except under licence]:
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE had given notice of an Amendment, after subsection (2) to insert as a new subsection:
"() A licence shall not be refused under the last foregoing subsection unless before refusing the same the Minister has satisfied himself after a consultation with the Iron and Steel Consumers' Council that it is in the

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public interest that such licence shall be refused."
The noble Lord said: My Lords, in view of the acceptance of the Amendment on Clause 7, that covers this point, I do not wish to move this Amendment.
Clause 32:
Rights of existing businesses.
(4) Where the Minister is required by this section to issue a licence to a person in whose case the average annual output during the years nineteen hundred and forty-six and nineteen hundred and forty-seven of the works used for carrying on any such activity of the business at the passing of this Act was greater than the quantity specified in the second column of the Second Schedule to this Act in relation to that activity, the licence shall, instead of being subject to the condition specified in paragraph (a) of the last preceding subsection, be subject to a condition limiting the extent of the production of that activity to the average annual output of the works during those years; and the licence shall be subject also to a condition that the Corporation may require the holder of the licence to sell to them so much of the output to which the licence relates as the holder of the licence does not require for purposes of manufacture in the works of the holder of the licence, at such price as may be agreed, or, in default of such agreement, as may be determined by arbitration having regard to the prices at which similar products are sold in the open market by the Corporation or publicly-owned companies.
THE EARL or DUDLEY THE EARL or DUDLEY moved, in subsection (4) to omit all words beginning "and the licence" down to the end of the subsection. The noble Earl said: My Lords, this Amendment is consequential on the acceptance—the ready acceptance—by the Government in Committee of the Amendment moved by my noble friend, Lord Balfour of Inchrye, to Clause 31—which was then Clause 29 —deleting the provision that a licence may impose restrictions as to the persons to whom Second Schedule products may be sold, and in particular conferring on the Corporation the option to purchase any such products. If this provision is unnecessary for new entrants to the industry and for existing businesses requiring supplementary licences (and indeed the noble Lord, Lord Morrison, agreed to this deletion without any question) then it is equally unnecessary for the concerns to which this subsection applies.
As the Bill was originally drafted this subsection applied only to the Ford Motor
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Company, and it was intended to enable the Corporation to buy that company's surplus pig iron. The company are now making about 200,000 tons of pig-iron per annum, of which nearly three-quarters is sold outside their own works. However, it is only in very exceptional circumstances that they produce pig-iron suitable for steel making. Their output is entirely of low phosphorous foundry iron, which gives a wide range to consumers in the foundry industry. Admittedly, after the vesting date the Ford Motor Company will be competing with be blast furnace products of the Corporation's companies, but such competition is rightly regarded as healthy. Moreover, the price of these blast-furnace products would be controlled, either by the Prices Board which this House accepted in Committee, or, if that should die an unreasonable death, then by the Minister; and there can therefore be no justification for the retention of this subsection so far as Ford's are concerned. Any attempt at profiteering by them can be controlled by statutory price control.
As the result of an Amendment made on Report in another place, some additional companies are now eligible for licences under this subsection: Bayliss, Jones & Bayliss, Limited, the Carron Company, the Clay Cross Company, Limited, Richard Johnson & Nephew, Limited, and the Executors of James Mills, Limited. However, nearly the whole of the Second Schedule output of these firms is absorbed, either in their own works or in the works of firms belonging to the same group, and the proportion sold outside is negligible. The Corporation need have no fear of competition in Second Schedule products from any of these firms, and there thus no case at all for the retention of the words proposed to be left out. I feel sure that the Government will accept this Amendment as readily as they accepted the corresponding Amendment in Committee. I beg to move.
Amendment moved—
Page 44, line 16, leave out from ("years") to the end of line 24.—(The Earl of Dudley.)
VISCOUNT HALL: Lords, I am afraid there is some misunderstanding in this matter, because the Government are not inclined to accept this Amendment. As the noble Earl rightly said, this subsection deals with companies which have

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been specifically exempted on the grounds that their main activities lie outside the production of iron or steel. Each of them takes up in some form of finishing activity a good proportion of its output of Second Schedule products. The principle of subsection (4) is that they should be able to produce on the same scale as in recent years—this is fortified by the assurance which I gave with regard to cases where output in 1948 or under a development scheme exceeds the output which would be authorised by Clause 32 as drafted—and that within their permitted output they should be able to continue to absorb the output required for their own finishing purposes, but that in order to ensure distribution in conformity with a comprehensive plan, the Corporation should be able, if they so wish, to acquire the disposable surplus at a price related to that of the similar products of the publicly-owned industry Although subsection (4) would require that the licence should contain the condition conferring an option on the Corporation, the exercise of the option is entirely at the discretion of the Corporation The option will probably be exercised only in times of shortage in order to direct the licensed products to the most essential uses at a time when the licensee might otherwise be tempted to sell for non-essential but highly profitable purposes.
The noble Earl referred to the fact that the possibilities are that the additional production would be negligible. He mentioned Ford's. In the case of foundry pig iron particularly, the annual output disposed of in 1946 and 1947 was about 140,000 tons, or over 10 per cent. of the total United Kingdom output. Indeed, in the case of Ford's, their average output for 1946–47 was 171,600 tons, and the approximate annual output disposed of was 96,000 tons—a fairly substantial proportion of their output. The same can be said of some of the other concerns. For instance, in the case of the Clay Cross Company, the average output for 1946–47 was about 41,000 tons, and the approximate annual output disposed of was 26,000 tons—well over 50 per cent. of their total output. I think it is important to ensure that output on this scale can, if necessary, be brought within the Corporation's general distribution plan. There is no hardship to the licensees since the Cor-
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poration must pay a price corresponding to their own companies' selling price for similar products at the time, the price or prices to be agreed or, failing agreement, determined by arbitration, having regard to the price charged in the open market by the Corporation for the publicly-owned companies for similar products.
This point should also be made: that whereas in the case of Clause 31 licensees the Minister can ensure that their production does not interfere with the general plans of the Corporation—he will licence only to the extent that it does not do so and, if need be, he can refuse a licence altogether—in the case of Clause 32 producers their production is on such a scale that, were it not for the special circumstances attaching to the companies concerned, their Second Schedule assets would have been taken into public ownership. In these circumstances, it is important that there should not be a loophole whereby the very considerable production of the companies concerned could be marketed in a manner which might prejudice the national planning of the production and distribution of iron and steel which will be the responsibility of the Corporation. The distinction between Clause 31 and Clause 32 cases rests primarily on the difference in scale of production. I am afraid that for the reasons I have given we cannot accept the Amendment.
LORD BALFOUR OF INCHRYE: My Lords, I am somewhat disappointed that the noble Viscount, Lord Hall, does net give this Amendment the pleasant reception which was given by Lord Morrison to another and similar Amendment of mine on the previous stage of the Bill, because I do not think the arguments made by the noble Viscount are very convincing. He gave us a number of figures which it was difficult to take down straight away and to absorb, but I think he said that these companies were responsible for some 10 per cent. of the pig iron output in the United Kingdom. Then, from those figures he took two particular companies and gave us examples of how much of their output of pig iron was disposed of outside and not required for their own purposes. Roughly, I think the percentage was something about half; therefore there is something in the nature of 5 to 7 per cent. of the total output of

105
pig iron in the United Kingdom which may be disposed of by these companies outside their own requirements. I should have thought that that small amount would be welcomed by the Corporation and by the Government as an opportunity to bring about the healthy wind of competition and to form a yardstick by which the Corporation could he judged in relation to the efforts of private and free enterprise. It cannot upset the conformity of the comprehensive scheme of distribution of the Corporation, that some 5 per cent. of the output is outside its own particular price control.
The noble Viscount then took refuge in the argument that one of the reasons why the subsection was wanted was in order to see that all production in difficult times went where it was most needed. In Standing Committee in another place the Minister made it clear that he felt the best way of preventing exploitation of production by any outside source at a particularly advantageous time for profiteering, was by statutory price control. That is a principle which we on this side have stood by, and it seems to me that the argument of the Minister for the controlling of the market and prices of this outside output, is nothing but an added protection which the Government feel they must give to the Corporation in order that the monopoly may he complete and free from any danger of competition by free enterprise. I do not believe that my noble friend will want to divide the Committee on this Amendment but I think that both he and I would like to register our feeling that this is really an effort to give the Corporation an even more advantageous position than it should have, and to protect it from that small wisp of free enterprise which the Government allow to continue.
THE EARL OF DUDLEY: My Lords, if I may by leave of the Committee, say one further word, I will then withdraw this Amendment. Like my noble friend, Lord Balfour of Inchrye, I was most disappointed at the speech of the noble Viscount and the rather dog-in-the-manger attitude adopted by the Ministry of Supply in this matter. The noble Viscount talked about dangers of profteering. As I said in my speech, that is quite fantastic, because these prices will be controlled, in any case, by the Minister, so there cannot be any
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question of profiteering. He also talked about the surplus products of Ford's, and he agreed entirely with what I said about three-quarters of Ford's output being disposable to outside consumers. What he did not say, and what I said, was that the bulk of that product is not pig iron for steel-making; it is ordinary foundry pig. The only reason for which, as I can suppose, the Corporation might want to buy that product—I repeat it is no good for steel-making—is so that they may he able to sell it at a profit. If that is so, then the Corporation would be profiteering in that way. Otherwise, the product would not be of the least use to them, except in very exceptional circumstances. I am not going to press this Amendment, but I want to register my view that it is completely illogical for the Corporation to demand first call on the products under this clause and yet not to demand it under Clause 31. I cannot see the difference—it seems to me that there cannot logically be any difference. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.38 p.m.
VISCOUNT SWINTON VISCOUNT SWINTON moved, after subsection (4) to insert:
"() Notwithstanding anything in subsection (3) or subsection (4) of this section, the conditions of a licence which is required by this section to be issued shall not limit the extent of any such activity as aforesaid to an annual output less than the highest output of such works as aforesaid in any calendar year between the thirty-first day of December, nineteen hundred and forty-seven, and the date of issue of the licence nor to an Annual output less than the estimated annual output of such works as aforesaid (as approved by the Minister) after completion of any measure of re-organisation or work of development authorised by or on behalf of the Minister."
The noble Viscount said: My Lords, we pass now from the field of acute controversy into the more placid country of agreement and how we should give effect to our agreement. This Amendment seeks to write into the Bill the undertaking which was given to your Lordships on the last occasion by the First Lord of the Admiralty. I think he will agree that I have set out correctly in the Amendment the undertaking which he gave on behalf of the Minister as to what the practice would be. The only question here is whether it is right and reasonable to insert these words in the Bill. I would submit to the Government that it is right and

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reasonable for these reasons. The limitations are already in the Bill—that licences should be limited to 20,000 tons, or whatever it is, on the average annual output over the prescribed years. The limitations are in the Bill and this extension which the Minister proposes to give, I submit, should be in, too.
But observe that this does not apply to new licences; this refers only to existing people. Where there is an existing manufacturer who falls within the undertaking of the Minister, either because his output in the year beginning December 31, 1947, was higher than that laid down in the Bill or because he has put into operation an approved scheme of reorganisation or development and should get the estimated annual output of that development, it is intended that he shall have the increased amount as a right. There is no dispute between us over that matter, but I am advised that unless these words are inserted in the Bill, under subsections (3) and (4) as they stand, the Minister has no power to make these additions to a licence as of right. It is said that the Minister could do it by granting a supplementary licence. There is all the difference in the world between the two licences. Under subsections (3) and (4), the existing operator gets his licence as of right. The supplementary licence is a matter of grace; and in granting a supplementary licence the Minister can impose any conditions he pleases. I need not refer the noble Viscount to the words of the clause, but at the end there is a sort of omnibus provision that the Minister can impose any other condition he thinks fit. I am sure that is not the intention. When the noble Viscount gave his assurance, he meant that everybody would get it as of right and there would not be these conditions attached. I would like him to confirm that to-day.
That being so, the only objection the noble Viscount, the First Lord, raised was that it would be difficult to express the second of the two alternatives—namely, the estimated annual output of the works after extension. There is no difficulty in applying the concession to the actual output in any year after December, 1947. The only difficulty could apply to the product of expansion under an approved plan. But I am advised that these words follow exactly what is done to-day, and
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I would be grateful if the noble Viscount would check me on this matter. When an operator wants to make a development, he sends his plans for the approval of the Minister, with a statement on the level of output to which the development or reorganisation will bring the concern. If the business is so small that it is not worth worrying about, he does not have to do that; but wherever the scheme is to cost over £5,000 in building or civil engineering, the operator must submit to the Minister of Supply details which show to what figures the output will he increased, and in approving the plan, the Minister at the same time approves the increased output. If that is so, and if before the plan is undertaken there has been agreement between the Minister and the steelmaker as to what the development plan shall be and what the results will be in increased output, then I suggest to the First Lord that it is quite reasonable and involves no difficulty to put into the clause "the estimated annual output of such work as aforesaid (as approved by the Minister)," because, in fact, before the thing has been approved the Minister will have agreed to exactly that figure of output. Therefore, I suggest it would be better to put into the Bill itself the conditions which the Minister has already said he proposes to apply. I beg to move.
Amendment moved—
Page 44, line 24, at end insert the said subsection.—(Viscount Swinton.)
VISCOUNT HALL: My Lords, I must say that I was somewhat optimistic when we discussed this matter on the Committee stage that it would be possible to do what the noble Viscount, Lord Swinton, asks us to do in this Amendment. However, I am afraid it is impossible. I am sure your Lordships will realise that the Minister went a long way to meet the points that were put in relation to the excess production which is provided for in this clause. The assurance which I gave was quite definite and was one of good faith on the part of the Minister. I am sure that is not open to question in any way. I think it is a little unreasonable, in these circumstances, for noble Lords to try and push the Minister further than the assurance which he gave. We feel that the under

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taking ought not to be put in statutory terms. The noble Viscount suggested that there was the possibility that the assurance could not be carried out. I am assured that it can be carried out within the terms of this clause. I can tell the noble Viscount and noble Lords interested in this matter that the assurance will he kept for the reasons which I have given, and that it will be far easier to make satisfactory arrangements with the producers on this point than it will be if statutory provision is made in this matter.
VISCOUNT SWINTON: May I just say this? As I understand it, it will not be conditional. Provided the producer complies with the Minister's conditions, that he has a larger output over the years or that he has a development plan, he will have it as of right, and there will not be annexed to it all the conditions which can be annexed to a supplementary licence. That is very important.
VISCOUNT HALL: It is important, but I think the point is made quite clear in the assurance that was given by the Minister. That is what it is intended shall be carried out.
VISCOUNT SWINTON: It will be as of right?
VISCOUNT HALL: I will have that checked, and I will certainly let the noble Viscount know.
VISCOUNT SWINTON: I am obliged. If I may say so, it is of great importance that he should have it as of right. I think it would be more reasonable to write it in the Bill, but provided the assurance can be given that he will have it as of right and that supplementary conditions will not he attached, I do not think it matters very much.
VISCOUNT HALL: I can give the noble Viscount the assurance for which he asks. It is for that reason, and for the other reasons I have given, that I hope he will not press the Amendment.
VISCOUNT SWINTON: Having received that assurance from the Minister, while I think it would have been better to write it in the Bill I certainly do not consider it is worth taking the matter into the Division Lobby. In view of the clear assurance which the noble Viscount
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has given, and the fact that this question is going to be decided as soon as the application is received, and it is once and for all, I do not think it very much matters. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 39 [Sums which are to be chargeable to revenue account]:
9.45 p.m.
LORD ROCHDALE: My Lords, this is little more than a drafting Amendment, and I shall be very brief All it seeks to do is to bring the interpretation of the word "provision", when used in relation to sums to be allocated from revenue for different purposes, into line with the interpretation in the Companies Act, 1948. I beg to move.
Amendment moved—
Page 48, line 21, after ("depreciation") insert ("or diminution in value").—(Lord Rochdale.)
LORD PAKENHAM: My Lords, as I stated at an earlier stage, this is not in our view necessary, but since the noble Lord attaches importance to it, and since the phrase he mentions does occur in the Companies Act, we are ready to accept his Amendment.
Clause 40 [Accounts and audit and statistics]:
LORD RENNELL LORD RENNELL moved to add to the clause:
"() Where it appears from the accounts of a publicly-owned company that in any year such publicly-owned company has incurred a loss from its activities taken together, the report of the Corporation required under section four of this Act shall draw attention to such loss and to the circumstances in which it has been incurred."
The noble Lord said: My Lords, the Amendment which stands in my name, and in the names of two other noble Lords, is one of a grout of three Amendments which were proposed on the Committee stage dealing with the accounting of the iron and steel group. Unfortunately, I was not able to be present in your Lordships' House because I was in bed at the time. The Amendments were discussed, and I am sorry that the particular Amendment which is submitted now was not then carried with the other two Amendments. I submit that the Amendment still seems necessary, be-

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cause, first of all, it is not quite sufficient to have the accounts at the office of the Registrar of Companies. What is required in addition is an explanation as to why an individual company has contracted a loss. If the interpretation which has been placed upon the remarks of the noble Lord, Lord Pakenham, at the time of the Committee stage is correct, it would not be the intention of the Corporation to make a statement in regard to the loss of an individual company. Without the Amendment we now propose, the accounting clauses are not quite so clear as they ought to be.
There is a point that the clause requires that all the accounts of all the companies shall be presented to the Minister and published and that that involves considerable labour. On the other hand, what we on this side of the House want to ensure is that it shall be possible for the public to find out, by presentation of the accounts to Parliament, what companies have made losses on what particular named products, so as to ensure that there is no subsidisation of one production by means of another production or of one company by another company.
If your Lordships will turn to the beginning of Clause 40, you will see that it is stated that the Corporation shall keep proper accounts and other records; that they shall prepare a financial statement of the accounts of the Corporation; that in respect of the first financial year, and each financial year thereafter, a consolidated statement of accounts shall be published, showing the profit and loss of the Corporation and the publicly-owned companies as a whole, and that these accounts shall conform to the best commercial standards. If the Government interpret the phrase "the best commercial standards" as one which would commit the Corporation to stating what loss had been incurred by individual companies of the 200 odd companies in the group, I should be perfectly satisfied, but that is not implicit in the remarks made by the noble Lord, Lord Pakenham, during the Committee stage of this Bill.
There are two alternative courses which can be pursued. If this Amendment is not pressed but we can have an assurance that, in stating the consolidated position and the consolidated profit and loss account of the group as a whole,
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mention will be made in the report that had made a loss on this or that product, such and such a company of the group that would go a long way to satisfy me. Alternatively, if it is not intended to include that in the accounts of the group, then I think it is only reasonable that the accounts of the individual companies should be published as is provided for in the clause in the form in which it now stands, because that would oblige the Corporation to show when any one particular company of that 200 odd companies had made a loss. I do not know if I have made my point clear. In one of those two forms it seems to me that a statement is required of what losses have been made by individual companies in connection with particular products outside their main activities. That should result either from publishing all the accounts of all the companies individually or from a statement which should be made. It would satisfy me and possibly other noble Lords that where accounts are required to conform to the best commercial standards they should include a statement of the loss made by individual companies. I beg to move.
Amendment moved—
Page 49, line 42, at end insert the said subsection.—(Lord Rennell.)
LORD PAKENHAM: My Lords, I stated our objections to a proposal of this kind at the last stage and I have little to add except that in our view those objections still hold good, and there is nothing that the noble Lord has said which in any way weakens them. But if the House and the noble Lord particularly desire to treat the Amendment as consequential on Amendments that were carried last time, we would, with all proper reservations and indeed indicating our very strong objection to the clause, not wish to hold up the business this evening.
LORD RENNELL: I am much obliged to the noble Lord for his very fair offer. There is actually a mistake in the Amendment which is down in my name, in that it refers to "section four of this Act" and it should be "section five of this Act", because the clauses of the earlier part of the Bill were renumbered. If the noble Lord will accept this Amendment in my name with the modifications I have just referred to and treat that as a consequential Amendment to the two

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Amendments which were moved in Committee stage, I shall he glad.
LORD PAKENHAM: I do not think the suggestion the noble Lord has just put forward makes it any worse in our view, and we are perfectly prepared, subject to what I have said, to agree this.
Amendment, by leave, withdrawn.
Amendment moved—
Page 49, line 42, at end insert—
"() Where it appears from the accounts of a publicly-owned company that in any year such publicly-owned company has incurred a loss front its activities taken together, the report of the Corporation required under section five of this Act shall draw attention to such loss and to the circumstances in which it has been incurred."—(Lord Remiell.)
Clause 43 [Compensation to officers in connection with transfers]:
VISCOUNT HALL VISCOUNT HALL moved, in subsection (3) (b) to omit the first word "may" and insert "shall." The noble Viscount said: My Lords, when a similar Amendment was before the Committee I promised to consult my noble and learned friend the Lord Chancellor on this matter. I have done so and this Amendment is the result. I beg to move.
Amendment moved—
Page 53, line 28, leave out ("may") and insert ("shall").—(Viscount Halt.)
LORD BALFOUR OF INCHRYE: My Lords, I cannot let this Amendment pass without saying how glad I am to see that it has come about. I remember how the noble and learned Viscount on the Woolsack leapt upon me when I moved exactly the same Amendment on the Gas Bill. The noble and learned Viscount is always so good in saying that he was not right, and I think in that particular instance he was not; but nevertheless we have come back to it here and I am glad that right has triumphed in the end.
THE LORD CHANCELLOR: My Lords, I cannot say that I remember the incident, but I am glad to see that if I did jump upon the noble Lord he is none the worse for it!
Clause 45 [Establishment of Iron and Steel Arbitration Tribunal]:
THE MARQUESS OF READING: My Lords, on the Committee stage I ven-
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tured to surgest that it was undesirable that the arbitration tribunal having a legal chairman should be free to seek outside aid in their deliberations on questions of law and I suggested extempore that to make the position quite plain the words "not being a question of law" should be inserted after the word "proceedings." I am given to understand that if the Amendment is moved in a slightly different form from that on the Paper it may commend itself to the Government, and, therefore, with your Lordship's leave, I desire to move it in that form.
Amendment moved—
Page 55, line 39, after ("proceedings") insert ("not being a question which in the opinion of the tribunal is primarily one of law").—(The Marquess of Reading.)
THE LORD CHANCELLOR: My Lords, I have considered this matter, and have gone as far as I can to meet the noble Marquess. As he has moved the Amendment in this new form I have much pleasure in accepting it.
9.56 p.m.
LORD PAKENHAM LORD PAKENHAM moved, after Clause 49, to insert the following new clause:
Treatment of land after extraction of iron ore.
". The Corporation shall take such steps as appear to them to be necessary to secure compliance by the publicly-owned companies with any conditions imposed or deemed to he imposed under the Town and Country Planning Act. 1947, with respect to the treatment of land after iron ore has been extracted there-from with a view to restoring the land to its former or same other beneficial use."
The noble Lord said: My Lords, I hope the House will feel that this clause allays the anxieties that were expressed last time; and in particular I hope that the noble Lords, headed by Lord Tevnham, who have their names down to the next Amendment will feel able to accept the proposal of the Government. I think we are all at one, as was clear on the last occasion, in desiring to make sure that there is proper restoration of land, and the only question in the mind of the House was whether the existing powers under the Town and Country Planning Act, 1947, would bring about that object. In spite of some entertaining remarks about the Ministry of Town and Country Planning I made it pain on the last occasion that there is no reason to sup-

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pose that the Ministry of Town and Country Planning will not in fact possess the requisite powers and make full and adequate use of them. Having considered the matter further in the light of the views so strongly expressed on the desirability of making sure that this restoration of land takes place, we have come to the conclusion that it would be appropriate to insert a clause of the kind which appears on the Order Paper.
I would just call the attention of the House to what the effect of these words will be. The publicly-owned companies which produce iron ore already have an obligation to comply with conditions imposed on them under the Town and Country Planning Act. The Corporation, under the draft clause, will see to it that the companies have any assistance that can be provided by the Corporation, and they will make sure that the conditions are strictly complied with. I hope the House will feel that we have done everything in our power to meet the views expressed and will consider that this is a satisfactory Amendment. I beg to move.
Amendment moved—
After Clause 49, insert the said new clause.—(Lord Pakenliant.)
LORD TEYNHAM: My Lords, we are grateful to the Government for setting down this Amendment, which meets our case as regards the restoration of land. We are also grateful for the assurance that the Minister of Town and Country Planning in fact has the necessary powers, which of course he will exercise with the local authority, to effect this restoration. On that assurance, I will not move the next Amendment standing in my name.
Clause 53 [Duty to furnish information]:
LORD LUCAS OF CHILWORTH: My Lords, with your permission I would like to deal with this Amendment and the Amendment on page 59, line 33, together. These are two Amendments that were foreshadowed by my noble friend Lord Morrison on the Committee stage. With these Amendments, Clause 53, subsection (1) will provide that the companies and persons referred to shall furnish such
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information and produce such documents and so on,
"as may be reasonably required by the Minister for the purposes of the provisions of this Act or by the Corporation for the purposes of Part II and Part IV of this Act."
As a result of these Amendments, the Corporation will have no powers whatever under the clause after twelve months from the date of transfer. Within the twelve months' period, it will be possible to obtain only such information as they reasonably require for the purposes of Part II and Part IV of the Act and it cannot be obtained except on the authority of the Minister. Thus, in effect, the Corporation could only obtain information needed in connection with the transfer of the companies to public ownership. I think that meets the wishes of noble Lords opposite. I beg to move.
Amendment moved—
Page 59, line 32, leave out ("or the Corporation").—(Lord Lucas of Chilworth.)
LORD TEYNHAM: My Lords, again we are grateful for this Amendment set down by His Majesty's Government. I think it largely covers the points which I raise in the next Amendment standing in my name. Therefore, I shall not move that Amendment.
LORD LUCAS OF CHILWORTH: My Lords, I have already dealt with this Amendment. I beg to move.
Amendment moved—
Page 59, line 33, after ("Act") insert ("or by the Corporation for the purposes of Part H and Part IV of this Act").—(Lord Lucas of Chilworth.)
LORD TEYNHAM LORD TEYNHAM moved to add to the clause:
"() If any person, other than a company which comes into public ownership under this Act, reasonably incurs expense in the course of or for the purposes of complying with any requirement or request whether formal or informal, made or purporting to be made by or on behalf of the Minister or the Corporation under this section, other than a requirement or request made for the purposes of Part III of this Act, that person shall be entitled to recover the amount of that expense from the Minister or the Corporation as the case may be at the option of that person."
The noble Lord said: My Lords, your Lordships will remember that a similar Amendment to this was set down on the

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Committee stage of this Bill and was withdrawn for further consideration of the points which were raised by the noble Lord, Lord Morrison, who pointed out that the powers under this clause to obtain information operate only for a period of twelve months. We accept the noble Lord's argument that it might be undesirable to make statutory provision for reimbursement of expenses involved in the issue of licences, and this Amendment has been framed to meet the point which he raised. On the other hand, we cannot accept the noble Lord's contention that the cost of supplying the information which might fall on companies outside the fold of nationalisation would necessarily be small administrative expenses during the twelve months period; we felt that a person might be involved in considerable expense in providing the information required. Accountants and auditors, for instance, might be required. I would like to point out again, as was pointed out (Luring Committee stage, that the precedent for such payment of expenses has already been established in the Electricity Act, 1947. I beg to move.
Amendment moved—
Page 60, line 5, at end insert the said new subsection.—(Lord Teynham.)
LORD GIFFORD: My Lords, I should like to support this Amendment which stands in my name and that of my noble friend who has just spoken. He has put the case thoroughly. It seems fair that companies not subject to nationalisation should under this clause be able to obtain reimbursement of expenses which they are called upon to bear. In some cases, the legal position may not be clear, and considerable legal expense may be incurred in the employment of auditors to certify the accounts and figures that have been put forward. That might often require considerable extra staff. In some cases, the expenses may be great, and in other cases not so large. In any event, I feel that they should be able to claim these expenses to which they have been put.
LORD LUCAS OF CHILWORTH: My Lords, while I agree with the noble Lord, Lord Teynliam, that this Amendment on the Order Paper is somewhat different from the Amendment which was on the Order Paper in Committee, I still cannot
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accept it, because what the noble Lord seeks to do by it is to secure that expenses upon application should be allowed to any person who is required to give information in connection with the transfer of the industry under Part II of the Bill, other than a company which comes into public ownership. That is now the Part of the Bill to which this Amendment refers. There is no precedent in the Electricity Act, as the noble Lord claims. There are two classes of persons to which this Amendment applies. There is the first class of person who has since October 29, 1948, taken over property or rights of a company Which comes into public ownership; while the second class are companies which were wholly owned by Third Schedule companies on October 29, 1948, but have since ceased to be wholly owned. Information will be required from such persons within twelve months from the general date of transfer only if, as regards those in the first class, it is proposed to use the powers of Part II of the Bill to recover the property or rights in question under Clause 25 or, as regards those in class 2, to take the company into public ownership under Clause 22. What noble Lords opposite wish to do by this Amendment is, in effect, to suggest that no person should be put to any expense in supplying information which the Minister requires in the investigation of transactions for which there would be a prima facie assumption that they had been entered into with the object of evading the Government's nationalisation proposals The Government cannot accept such a principle, and it is upon those very clear grounds that I am afraid I cannot accept this Amendment.
LORD TEYNHAM: My Lords, I am sorry to hear that His Majesty's Government cannot accept this Amendment. I should have thought it was a fair one, and it was framed to meet a particular point which was raised by the noble Lord, Lord Morrison, on the Committee stage—namely, that it would be inadvisable to put anything down statutorily on the question of recovering expenses in connection with the issuing of a lice ace. We agreed upon that, but I cannot see why His Majesty's Government cannot accept the payment of expenses which may be incurred during a twelve months period. It

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is not a point that we want to stand on, and in the circumstances I beg leave to withdraw the Amendment.
THE EARL OF DUDLEY: Very mean; very mean.
Amendment, by leave, withdrawn.
Clause 60 [Interpretation]:
10.7 p.m.
LORD BALFOUR OF INCHRYE LORD BALFOUR OF INCHRYE moved, in the definition of "pension scheme" to leave out "customary practice." The noble Lord said: My Lords, with the permission of your Lordships I would like to deal with this Amendment and the next Amendment together, because the Amendment which I now move paves the way for the next. May I also say that when I come to move the next Amendment I shall ask permission to correct a small slip that has been made in setting down the Amendment. The word "include" should be "includes."
The purpose of these Amendments is to make quite clear and to secure the position of an individual who is serving in a company where there is no pension scheme, but where according to established practice he might reasonably expect to enjoy a pension. For some time we on this side of the House have felt that as now drafted the Bill does not give protection under the definition of "pension scheme" as contained in the Bill, since it cannot be said that customary practice is a "form of arrangements"—to use the words of the Bill. This Amendment overcomes the difficulty by making it clear that "pension scheme" includes "customary practice." I understand that there have been discussions through the normal channels, and I am hopeful that in the interests of those individuals to whom noble Lords on both sides wish to give protection this Amendment, and the subsequent one also, will find favour with the Government. I beg to move.
Amendment moved—
Page 64, line 24, leave out ("customary practice")—(Lord Balfour of Inchrye).
LORD LUCAS OF CHILWORTH: My Lords, how happy is my lot in deal-
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ing with this, the last Amendment with which I have to deal at this particular stage! After having previously experienced a somewhat stormy passage in having to resist Amendments all day, I can now say that the noble Lord, Lord Balfour of Inchrye, has so correctly interpreted the Government's intentions that I am happy to accept both these Amendments.
LORD BALFOUR OF INCHRYE: My Lords I beg to move the ne Amendment.
Amendment moved—
Page 64, line 25, at end insert ("and also includes any customary practice under which pensions are paid")—(Lord Balfour of Inchrye).
Clause 61 [Application to Scotland]:
VISCOUNT ADDISON: My Lords, this is the first Amendment which I myself have actually moved today. Its purpose is to bring the law affecting Scotland into conformity with that of England and Wales. I beg to move the Amendment, and I hope that your Lordships will accept it with the same enthusiasm that you have shown in accepting the last two Amendments.
Amendment moved—
Page 66, line 28, at end insert ("and for the reference in section (Treatment of land after extraction of iron ore) of this Act to the Town and Country Planning Act, 1947, there shall be substituted a reference to the Town and Country Planning (Scotland) Act, 1947").—(Viscount Addison.)
LORD CLYDESMUIR: My Lords, Scotland is always reluctant to be dragged at the coat-tails of England and Wales, but on this occasion the Amendment is obviously desirable and necessary, and I thank the noble Viscount for moving it.

BOLTON CORPORATION BILL
Reported from the Select Committee, with Amendments.
RIVER GREAT OUSE (FLOOD PROTECTION) BILL
Brought from the Commons; read la, and referred to the Examiners.
ROYAL HOLLOWAY COLLEGE BILL [H.L.]
Returned from the Commons, agreed to with Amendments: the said Amendments considered, and agreed to.
BRITISH TRANSPORT COMMISSION BILL
Returned from the Commons with the Amendments agreed to.

TOWN AND COUNTRY PLANNING (MINERALS) REGULATIONS, 1949
Regulations, dated 14th July, 1949, made by the Minister of Town and Country Planning under the Town and Country
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Planning Act, 1947: Laid before the House (pursuant to Act) for affirmative Resolution, and referred to the Special Orders Committee.

TOWN AND COUNTRY PLANNING (MINERALS) (SCOTLAND) REGULATIONS, 1949
Regulations, dated 14th July, 1949, made by the Secretary State for Scotland under the Town and Country Planning (Scotland) Act, 1947: Laid before the House (pursuant to Act) for affirmative Resolution, and referred to the Special Orders Committee.
House adjoined at ten minutes past ten o'clock.